Exhibit 10.1


 


SEPARATION
AGREEMENT


 


THIS SEPARATION AGREEMENT (this “Agreement”)
is executed and delivered as of January 7, 2006 (the “Effective Date”) by
and between Pamela Atherton (“Ms. Atherton”) and Crdentia Corp., a
Delaware corporation (the “Company”). 
Ms. Atherton and the Company each is referred to herein as a “Party,”
and, collectively, as the “Parties.”


 


RECITALS


 


WHEREAS, Ms. Atherton
currently is employed as President of the Company; and


 


WHEREAS, Ms. Atherton
and the Company have mutually decided to end their employment relationship,
upon the terms and conditions set forth in this Agreement;


 


NOW, THEREFORE, in
consideration of the covenants and promises contained herein, the Parties agree
as follows:


 


1.                                      Agreement
By Employee; Severance Payments. 
Ms. Atherton hereby voluntarily resigns from her employment with
the Company, effective as of January 7, 2006 (the “Separation Date”).  In consideration of Ms. Atherton’
execution and delivery of this Agreement, the Company shall pay to Ms. Atherton
the gross sum of $175,000 over the one year period immediately subsequent to
the Separation Date (the “Severance Period”), less all applicable
withholding, payable in twenty six (26) bi-monthly installments in accordance
with the Company’s payroll practice (the “Severance Payments”).  The Company shall also provide Ms. Atherton
with medical coverage and life insurance benefits as in effect on the Effective
Date (or, in the event of a change in the applicable plans, on the same terms
available to the Company’s employees generally) on the same terms as provided
heretofore (including Ms. Atherton’s contribution) to the extent
permissible under those plans during the Severance Period.


 


2.                                      Stock
Matters.  Ms. Atherton’s
stock options to purchase 422,741 shares of the Company’s common stock issued
in accordance with the terms of the applicable Notice of Stock Option Award and
Stock Option Award Agreement dated December 22, 2003 and Notice of Stock
Option Award and Stock Option Award Agreement dated August 3, 2004 and the
Company’s 2004 Stock Incentive Plan (the “Plan”),as well as the 133,310
shares of restricted stock issued in accordance with that certain Restricted
Stock Issuance Agreement dated November 1, 2002 shall continue to vest in
accordance with the vesting schedules set forth in such agreements during the
Severance Period subject to Ms. Atherton’s compliance with the terms and
conditions of this Agreement. The unvested options remaining at the end of the
Severance Period shall accelerate and vest in full and shall be exercisable
until the fifth anniversary of the Separation Date, subject to the continuing
application of the terms and conditions of such Stock Option Agreements and the
Plan other than those relevant to vesting and exercisability.  Ms. Atherton hereby irrevocably forfeits
all right, title and interest into 900,000 shares of restricted stock
potentially issuable to her under that certain Notice of Restricted Stock Bonus
Award and Restricted Stock Bonus Award Agreement dated May 31, 2005.  The Company shall promptly cooperate with Ms. Atherton
in removing legends from her share certificates without charge in compliance
with Rule 144 of the Securities Act of 1933, as


 


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amended.  Ms. Atherton agrees to comply with the
terms of the Crdentia Corp. Insider Trading Policy attached hereto as Exhibit A
during the Severance Period.


 


3.                                      Employment
Agreement.  The Parties
acknowledge and agree that the terms of that certain Executive Employment
Agreement dated December 22, 2003 by and between the Company and Ms. Atherton
are hereby terminated in their entirety, except for the terms of Section 6
(Termination Obligations), Section 7 (Inventions and Proprietary
Information; Non-Competition; Prohibition of Third Party Information), and Section 8
(Arbitration), which terms and conditions shall survive execution of this
Agreement and continue in full force and effect, provided that the period of Ms. Atherton’s
non-compete obligation is hereby modified to twelve (12) months from the
Severance Date rather than eighteen (18) months.  Notwithstanding the foregoing, Ms. Atherton
shall retain e-mail access to “PAtherton@crdentia.com” during the Severance
Period, but shall promptly return her laptop computer and Blackberry device to
the Company.


 


4.                                      Inquiries
and References.  The Company
shall provide Ms. Atherton with a reference letter attached hereto as Exhibit B
(the “Reference Letter”).  The
Company shall refer all inquiries from prospective employers regarding Ms. Atherton
to James D. Durham, who shall communicate only:  last position held, dates of employment and
any information contained in the reference letter.


 


5.                                      Wages
and Vacation Pay.  The Company
shall pay to Ms. Atherton all of her wages through the Separation Date.


 


6.                                      Consulting
Services.  During the one (1) year
period following the Separation Date, Ms. Atherton shall provide
consulting services to the Company, as and when requested by the Company,
including, without limitation, (i) consultation and testimony in
connection with claims, suits, arbitrations or similar proceedings in which the
Company is involved, and (ii) consultation regarding the Company’s
strategic transactions, customers, suppliers, marketing plans, employees and
historical transactions.  Ms. Atherton
shall provide consulting services to the extent reasonably requested by the
Company and its counsel with respect to matters specified in (i) not to
exceed two hundred (200) hours in the aggregate in the preceding sentence
and with respect to matters specified in (ii) in the preceding sentence
not to exceed one hundred (100) hours in the aggregate.  Ms. Atherton shall receive no additional
compensation for the consulting services provided pursuant to this Section 6
other than the Severance Payments.  Ms. Atherton
shall be entitled to reimbursement for all reasonable expenses incurred by Ms. Atherton
in accordance with Company policy in connection with rendering such consulting
services.


 


7.                                      General
Release of Claims.  In
consideration of the Company’s execution and delivery of this Agreement and the
Company’s payment to Ms. Atherton of the Severance Payments, Ms. Atherton
shall execute and deliver a General Release of Claims, in the form attached
hereto as Exhibit C (the “General Release”).


 


8.                                      Covenant
Of Confidentiality.  Ms. Atherton
acknowledges that she has executed a form of the Company’s Employee Invention
and Confidentiality Agreement (the “Invention and Confidentiality Agreement”),
and that, notwithstanding the termination of her employment, she shall continue
to have an obligation not to disclose or use any “Confidential Information” (as


 


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defined therein)
obtained during the course of her employment with the Company on the terms set
forth therein.  Ms. Atherton further
acknowledges and agrees that such “Confidential Information” includes, without
limitation and by way of example, information regarding the Company’s
recruitment and hiring of personnel, information regarding the Company’s
financing strategies, and information regarding potential acquisitions,
business partnerships and collaborations considered by the Company.


 


9.                                      Non-Disparagement.  Ms. Atherton shall not disparage or in
any way criticize the Company or its officers, directors, employees, products,
services or technology at any time in the future.  Similarly, the Company shall not disparage or
in any way criticize Ms. Atherton at any time in the future.  Nothing contained in this Section 9 is
intended to prevent Ms. Atherton or the Company from testifying truthfully
in any legal proceeding.


 


10.                               Choice
of Law.  This Agreement, in all
respects, shall be interpreted, enforced and governed by and under the internal
laws of the State of Texas, without regard to conflicts of law principles.


 


11.                               Successors
And Assigns.  Ms. Atherton
shall have no right to assign and shall not assign or purport to assign any
rights or obligations under this Agreement. 
This Agreement may be assigned or transferred by the Company; and
nothing in this Agreement shall prevent the consolidation, merger or sale of
the Company or a sale of any or all or substantially all of its assets.  Subject to the foregoing restriction on
assignment by Ms. Atherton, this Agreement shall inure to the benefit of
and be binding upon each of the Parties; the affiliates, officers, directors,
agents, successors and assigns of the Company; and the heirs, devisees,
spouses, legal representatives and successors of Ms. Atherton.


 


12.                               Attorneys’
Fees.  In the event that either
Party asserts a claim for breach of this Agreement or seeks to enforce its
terms, the prevailing Party in any such proceeding shall be entitled to recover
costs and reasonable attorneys’ fees.


 


13.                               Interpretation.  This Agreement shall be construed as a whole,
according to its fair meaning, and not in favor of or against either
Party.  Sections and section headings
contained in this Agreement are for reference purposes only, and shall not
affect in any manner the meaning or interpretation of this Agreement.  Whenever the context requires, references to
the singular shall include the plural and the plural the singular.


 


14.                               Amendments;
Waivers; Remedies.  This
Agreement may not be amended or waived except by a writing signed by Ms. Atherton
and by a duly authorized officer of the Company.  Failure to exercise any right under this
Agreement shall not constitute a waiver of such right.  Any waiver of any breach of this Agreement
shall not operate as a waiver of any subsequent breaches.  All rights or remedies specified for a Party
herein shall be cumulative and in addition to all other rights and remedies of
the Party hereunder or under applicable law.


 


15.                               Integration.  This Agreement, together with any exhibits
attached hereto, is intended to be the final, complete and exclusive statement
of the Parties’ agreement regarding the subject matter hereof and may not be
contradicted by evidence of any prior or contemporaneous statements or
agreements.  Notwithstanding the
foregoing, this Agreement


 


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shall not
supersede or otherwise affect any agreements previously or concurrently
executed by Ms. Atherton relating to the Company’s proprietary information
or intellectual property rights, or relating to Ms. Atherton’s
non-completion, non-interference or non-solicitation obligations relative to
the Company’s business or employees.  To
the extent that the practices, policies or procedures of the Company, now or in
the future, apply to Ms. Atherton and are inconsistent with the terms of
this Agreement, the provisions of this Agreement shall control.  Any subsequent change in Ms. Atherton’s
duties, position or compensation shall not affect the validity or scope of this
Agreement.


 


16.                               Severability.  If any provision of this Agreement shall be
held by a court or arbitrator to be invalid, unenforceable or void, such
provision shall be enforced to the fullest extent permitted by law, and the
remainder of this Agreement shall remain in full force and effect.  In the event that the time period or scope of
any provision is declared by a court or arbitrator of competent jurisdiction to
exceed the maximum time period or scope that such court or arbitrator deems
enforceable, then such court or arbitrator shall reduce the time period or
scope to the maximum time period or scope permitted by law.


 


17.                               Counterparts.  This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original of this Agreement,
but all of which together shall constitute one and the same instrument.


 


[SIGNATURE
PAGE FOLLOWS]


 


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IN WITNESS WHEREOF,
the Parties hereby execute this Separation Agreement as of the date first above
written.


 


	
  CRDENTIA CORP. 

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ James D. Durham

  	
   

  	
   

  	
  By:

  	
  /s/ Pamela Atherton

  	
   

  
	
  Name: 
  James D. Durham

  	
   

  	
  Name:  Pamela
  Atherton

  
	
  Title:  
  Chief Executive Officer

  	
   

  	
   

  
							



 


[SIGNATURE
PAGE TO SEPARATION AGREEMENT]


 


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EXHIBIT A


 


CRDENTIA
CORP.


 


INSIDER
TRADING POLICY


 


This Insider Trading Policy provides
guidelines to all personnel, including employees (both domestic and
international), directors and officers of Crdentia Corp. (the “Company”)
for transactions in the Company’s securities and the handling of confidential
information about the Company and the companies with which it does business.


 


We have designated the Chief Financial
Officer of the Company or in his absence the Chief Executive Officer of the
Company as the Corporate Compliance Officer responsible for the administration
of this Insider Trading Policy.


 


In the discretion of the Corporate Compliance
Officer, the Insider Trading Policy may also apply to consultants and
contractors to the Company who may come into possession of such information as
a result of their work for the Company.


 


For purposes of this Insider Trading Policy,
the Company’s securities include common stock, options to purchase common stock
and any other securities the Company may issue from time to time, such as
preferred stock, warrants and convertible debentures.  The Company’s securities also include
derivative securities relating to the Company’s stock, even if not issued by
the Company, such as exchange-traded options.


 


The Company’s Section 16 reporting
directors and officers and certain employees designated by the Board from time
to time who have access to material non-public information are subject to
additional limitations, including pre-clearance and blackout restrictions,
described separately in the Company’s Pre-clearance and Blackout Policy.


 


POLICY


 


It is the policy of the Company to comply
with all insider trading laws and regulations.


 


RESPONSIBILITY


 


Employees, officers and directors of the
Company may create, use or have access to material information about the
Company that is not generally available to the investing public (such
information is referred to in this Insider Trading Policy as “material
non-public information,” as explained in more detail below).  Each individual has an important ethical and
legal obligation to maintain the confidentiality of such information and not to
engage in any transactions in the Company’s securities while in possession of
material non-public information.  Each
individual and the Company may be subject to severe civil and criminal
penalties as a result of unauthorized disclosure of or trading in the Company’s
securities while in possession of material non-public information.


 


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GUIDELINES


 


1.                                       Prohibition.  Every
employee, officer and director of the Company is prohibited from:


 


(a)                                  buying
or selling the Company’s securities while in possession of material non-public
information;


 


(b)                                 communicating
such information to third parties other than those who need to know such
information in connection with doing business with or for the Company;


 


(c)                                  recommending
the purchase or sale of the Company’s securities while in the possession of
material information that has not been publicly disclosed by the Company; and


 


(d)                                 assisting
anyone engaged in any of the above activities.


 


This prohibition also applies to information
about, and the securities of, other companies (e.g., customers or suppliers)
with which the Company has a relationship.


 


There are no exceptions to this Insider
Trading Policy other than those described in Section 8 below.  Engaging in transactions in the Company’s
securities that are otherwise necessary for personal reasons, such as personal
financial commitments, are still prohibited if you possess material non-public
information.


 


2.                                       Transactions By Family Members; Entities Controlled by You.  The prohibitions outlined in this Policy also
apply to your “immediate family” members, including your spouse, minor children
or others living in your home and any entities under your control.  “Immediate family” also includes any child,
stepchild, grandchild, parent, stepparent, grandparent, sibling, mother or
father-in-law, son or daughter-in-law, or brother or sister-in-law (as well as
other adoptive relationships) who shares your same household.  The Company will hold you responsible for the
conduct of your immediate family and any entities under your control.


 


3.                                       Tipping Information to Others.  You may not disclose any material non-public
information to others, including your family members, friends or social
acquaintances.  This prohibition applies
whether or not you receive any benefit from the other person’s use of that
information.  The Securities and Exchange
Commission (the “SEC”) has imposed large penalties even when the
disclosing person did not profit from the trading.


 


4.                                       Material Non-Public Information.


 


Material Information.  Information is considered “material” if there
is a substantial likelihood that a reasonable investor would consider it
important in making a decision to purchase, hold or sell the Company’s
securities (e.g., information regarding a possible
merger or acquisition involving the Company, the introduction of important
products or major marketing changes).  In
addition, any information that could affect the market for the Company’s
securities is material.


 


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Non-public Information.  Non-public information is any information
that has not been disclosed generally to the investing public.  Disclosure by press release or in the Company’s
periodic reports filed with the SEC is necessary to make the information
public. However, even after the Company has released information to the public,
you should generally allow at least two (2) full business days (that is,
days on which national stock exchanges and Nasdaq are open for trading) for the
investing public to absorb and evaluate the information before you trade in the
Company’s securities.


 


Although it is not possible to list all types
of material information, the following are a few examples of information that
is particularly sensitive and should be treated as material:


 


•     changes in
estimates of earnings or sales;


•     increases
or decreases in dividend payments;


•     stock splits
or securities offerings;


•     possible
mergers, acquisitions or joint ventures;


•     termination
or execution of significant contracts, supply arrangements and technology
licenses;


•     changes in
management;


•     changes in
auditors;


•     the introduction
of important products or services, including imaging systems and DIS services;


•     changes in
manufacturing;


•     major marketing changes;


•     unusual gains or losses in major operations;


•     public or private sales by the Company of a
significant amount of securities;


•     purchase or sale of a significant asset;


•     significant labor dispute;


•     financial liquidity problems;


•     establishment
of a repurchase program for the Company’s securities; and


•     loss or
addition of key customer relationships.


 


If you have any question as to whether
particular information is material or non-public, you should not trade or
communicate the information to anyone without prior approval by the Corporate
Compliance Officer.


 


5.                                       Inadvertent Disclosure. 
If material non-public information is inadvertently disclosed by any
employee, officer or director to a person outside the Company who is not
obligated to keep the information confidential, you should immediately report
all the facts to the Corporate Compliance Officer so that the Company may take
appropriate remedial action.  As noted in
the Company’s Fair Disclosure Policy, under SEC rules, the Company generally
has only 24 hours after learning of an inadvertent disclosure of material
non-public information to publicly disclose such information.


 


6.                                       Short-term, Speculative Transactions.  The Company has determined that there is a
substantial risk involved and a substantial likelihood for the appearance of
improper conduct by Company personnel when they engage in short-term or
speculative securities transactions. 
Therefore, Company personnel are prohibited from engaging in any of the
following activities involving the Company’s shares:


 


a)                                      purchasing
the Company’s securities on margin;


b)                                     pledging
Company securities;


c)                                      short
sales;


d)                                     buying
or selling puts or calls; and


e)                                      engaging
in derivative transactions relating to the Company’s securities (e.g., exchange
traded options, etc.).


 


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7.                                       Further Prohibition. 
From time to time, effective immediately upon notice or as otherwise
provided by the Company, the Company may determine that other types of
transactions, or all transactions, by Company personnel in the Company’s
securities shall be prohibited or shall be permitted only with the prior
written consent of the Corporate Compliance Officer.


 


8.                                       Approved Pre-Planned Trading Programs Pursuant to Rule 10b5-1.
Notwithstanding any other guidelines contained herein, it shall not be a
violation of this Insider Trading Policy or the Company’s Pre-clearance and
Blackout Policy for Company personnel to sell (or purchase) securities of the
Company under certain pre-planned trading programs adopted to purchase or sell
securities in the future which are in compliance with SEC Rule 10b5
1.  However, you may not enter into a
trading program during a blackout period.


 


All pre-planned trading programs must be
approved in advance, in writing, by the Corporate Compliance Officer.  In addition, the Corporate Compliance Officer
will need to ensure that the individual who wishes to establish the trading
program does not, at the time of entering into the trading program, posses any
material non-public information about the Company.  Also, the Company may be aware of material
non-public information (that the individual is unaware of) that may make it
imprudent for the Corporate Compliance Officer to approve the trading program
at that time.


 


Each director, officer and other Section 16
insider understands that the approval or adoption of a pre-planned selling
program in no way reduces or eliminates such person’s obligations under Section 16
of the Securities Exchange Act of 1934, as amended, including such person’s
disclosure and short-swing trading liabilities thereunder.  If any questions arise, such person should
consult with their own counsel in designing a trading program.


 


9.                                       Confidentiality Guidelines. 
To provide more effective protection against the inadvertent disclosure
of material non-public information about the Company or the companies with
which it does business, the Company has adopted the following guidelines in
addition to the prohibition in paragraph 3 above.  These guidelines are not intended to be
exhaustive.  Additional measures to
secure the confidentiality of information should be undertaken as deemed
necessary under the circumstances.  If
you have any doubt as to your responsibilities with respect to confidential
information, please seek clarification and guidance from the Corporate
Compliance Officer before you act.  Do
not try to resolve any uncertainties on your own.


 


The following guidelines establish procedures
with which every employee, officer and director should comply in order to
maximize the security of confidential information:


 


a)                                      Do
not discuss any Company matter in public places, such as elevators, hallways,
restrooms or eating facilities, where conversations might be overheard.


b)                                     Use
passwords to restrict access to the information on computers.


c)                                      Limit
access to particular physical areas where material non-public information is
likely to be documented or discussed.


d)                                     Maintain
records in accordance with the Company’s Document Retention Policy.


 


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10.                                 Authorized
Disclosure of Material Non-Public Information.  Under certain circumstances, the Corporate
Compliance Officer may authorize the immediate release of material non-public
information.  If disclosure is
authorized, the form and content of all public disclosures shall be approved by
the Corporate Compliance Officer and Company legal counsel, the Chief Financial
Officer, and the Chief Executive Officer pursuant to the terms of the Company’s
Fair Disclosure Policy.  In the case of
material non-public information which is not disclosed, such information is not
to be disclosed or discussed except on a strict “need-to-know” basis.  All requests for information, comments, or
interviews (other than routine product inquiries) made to any officer, director
or employee of the Company should be directed to the Chief Financial Officer
or, in his absence, the Chief Executive Officer who will consult with the
Corporate Compliance Officer where necessary and will provide responses in
compliance with the Company’s Fair Disclosure Policy.  It is anticipated that most questions raised
can be answered by the Chief Financial Officer or another company
representative to whom he refers the request. 
All officers, directors and employees must comply with the Company’s
Fair Disclosure Policy and should not respond to such requests directly, unless
expressly instructed otherwise by the Chief Financial Officer or the Chief
Executive Officer.  In particular, great
care should be taken not to comment on the Company’s expected future financial
results.  If the Company wishes to give
some direction to investors or securities professionals, it must do so only in
compliance with the Company’s Fair Disclosure Policy.  All communications with representatives of
the media and securities analysts shall be directed to the Chief Financial
Officer or, in his absence, the Chief Executive Officer.


 


11.                                 Company
Assistance.  If you have any
questions about specific information or proposed transactions, or as to the
applicability or interpretation of this Insider Trading Policy or the propriety
of any desired action, you are encouraged to contact the Corporate Compliance
Officer.


 


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EXHIBIT B


 


REFERENCE
LETTER


 


[CRDENTIA
LETTERHEAD]


 


                                  ,
2006


 


 


To Whom it May Concern:


 


I have worked with Pam since January 2002 when we began the
formation of Crdentia.  Pam secured our
first acquisition that enabled the company to commence operations and created
all of the policies and procedures utilized in our staffing businesses.  She has served as its President and been
responsible for day to day operations as well as the company’s mergers and
acquisitions.  During her time with
Crdentia, we have acquired and successfully integrated nine companies.


 


She has a depth of industry knowledge and expertise.  I know her to be dedicated, focused and
committed.  It was a pleasure working
with Pam in Crdentia’s formation and early days of operation.


 


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