**Exhibit 2.1**

 

 

 

**ASSET PURCHASE AGREEMENT**

 

**by and among**

 

**CRDENTIA CORP.,**

 

**CRDE CORP.,**

 

**STAFF SEARCH ACQUISITION CORP.**

 

**and**

 

**STAFF SEARCH, LTD.,**

 

**SSL GP, LLC**

 

**and**

 

**J.W. IDEN**

 

**dated April 10, 2006**

 

 

 

----

 

**TABLE OF CONTENTS**

** **
| ** **                                                                                               | **Page** |
|----------------------------------------------------------------------------------------------------------|----------|
|                                                                                                     |     |
| ARTICLE I DEFINITIONS                                                                                    | 1        |
| 1.1.                                                                                                     |     | Defined  Terms | 1 |
| 1.2.                                                                                                     |     | Construction  of Certain Terms and Phrases | 9 |
|                                                                                                     |     |   |   |
| ARTICLE II PURCHASE AND  SALE OF ASSETS AND ASSUMPTION OF LIABILITIES                                    | 9        |
| 2.1.                                                                                                     |     | Purchased  Assets | 9 |
| 2.2.                                                                                                     |     | Excluded  Assets | 10 |
| 2.3.                                                                                                     |     | Purchase  Price | 10 |
| 2.4.                                                                                                     |     | Allocation  of Purchase Price | 11 |
| 2.5.                                                                                                     |     | Tax | 12 |
| 2.6.                                                                                                     |     | Liabilities  to be Assumed | 12 |
| 2.7.                                                                                                     |     | Closing | 12 |
| 2.8.                                                                                                     |     | Exemption  from Registration | 14 |
| 2.9.                                                                                                     |     | Payment  of Employees | 14 |
| 2.10.                                                                                                    |     | Reimbursement  of Certain Expenses | 15 |
|                                                                                                     |     |   |   |
| ARTICLE  III REPRESENTATIONS AND WARRANTIES OF THE COMPANY, THE GENERAL PARTNER AND  THE LIMITED PARTNER | 15       |
| 3.1.                                                                                                     |     | Organization  of the Company | 15 |
| 3.2.                                                                                                     |     | Partnership  Interests in the Company | 15 |
| 3.3.                                                                                                     |     | Authority | 15 |
| 3.4.                                                                                                     |     | No  Conflicts | 16 |
| 3.5.                                                                                                     |     | Assignability  of Contracts | 16 |
| 3.6.                                                                                                     |     | Consents  and Governmental Approvals and Filings | 16 |
| 3.7.                                                                                                     |     | Company  Financial Statements | 16 |
| 3.8.                                                                                                     |     | Absence  of Changes | 17 |
| 3.9.                                                                                                     |     | No  Undisclosed Liabilities | 17 |
| 3.10.                                                                                                    |     | Personal  Property | 17 |
| 3.11.                                                                                                    |     | Benefit  Plans; ERISA | 17 |
| 3.12.                                                                                                    |     | Real  Property | 18 |
| 3.13.                                                                                                    |     | Proprietary  Information of Third Parties | 18 |
| 3.14.                                                                                                    |     | Compliance  with Legal Requirements; Governmental Authorizations | 19 |
| 3.15.                                                                                                    |     | Legal  Proceedings; Orders | 20 |
| 3.16.                                                                                                    |     | Contracts | 21 |
| 3.17.                                                                                                    |     | Equipment | 23 |
| 3.18.                                                                                                    |     | Insurance | 23 |
| 3.19.                                                                                                    |     | Tax  Matters | 23 |
| 3.20.                                                                                                    |     | Labor  and Employment Relations | 25 |
| 3.21.                                                                                                    |     | Certain  Employees | 26 |
| 3.22.                                                                                                    |     | Absence  of Certain Developments | 26 |
| 3.23.                                                                                                    |     | Customers | 27 |
| 3.24.                                                                                                    |     | Permits | 27 |
| 3.25.                                                                                                    |     | Regulatory  Compliance | 27 |
| 3.26.                                                                                                    |     | Third  Party Consents | 28 |

 

i

----

 
| 3.27.                                                                            |   | Relationships  with Related Persons                               | 28     |
|----------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|--------|
| 3.28.                                                                            |   | Certain  Payments                                                 | 28     |
| 3.29.                                                                            |   | Brokers                                                           | 28     |
| 3.30.                                                                            |   | Verification  of Credentials                                      | 28     |
| 3.31.                                                                            |   | 2005  Adjusted Branch Income/EBITDA                               | 29     |
| 3.32.                                                                            |   | Material  Misstatements and Omissions                             | 29     |
| 3.33.                                                                            |   | Solvency                                                          | 29     |
|                                                                             |   |                                                              |   |
| ARTICLE IV REPRESENTATIONS  AND WARRANTIES OF PARENT, CRDE AND ACQUISITION CO.   | 29     |
| 4.1.                                                                             |   | Organization                                                      | 29     |
| 4.2.                                                                             |   | Authority                                                         | 29     |
| 4.3.                                                                             |   | Litigation                                                        | 30     |
| 4.4.                                                                             |   | Reports  and Financial Statements                                 | 30     |
| 4.5.                                                                             |   | Absence  of Changes                                               | 30     |
| 4.6.                                                                             |   | Regulatory  Compliance                                            | 30     |
| 4.7.                                                                             |   | Third  Party Consents                                             | 31     |
| 4.8.                                                                             |   | Certain  Payments                                                 | 31     |
| 4.9.                                                                             |   | No  Conflicts                                                     | 31     |
| 4.10.                                                                            |   | Consents  and Governmental Approvals and Filings                  | 31     |
| 4.11.                                                                            |   | Brokers                                                           | 32     |
| 4.12.                                                                            |   | Material  Misstatements and Omissions                             | 32     |
|                                                                             |   |                                                              |   |
| ARTICLE V REPRESENTATIONS  AND WARRANTIES OF THE COMPANY AND THE LIMITED PARTNER | 32     |
| 5.1.                                                                             |   | Requisite  Power and Authority                                    | 32     |
| 5.2.                                                                             |   | Investment  Representations                                       | 32     |
| 5.3.                                                                             |   | Transfer  Restrictions                                            | 33     |
| 5.4.                                                                             |   | Market  Standoff                                                  | 34     |
|                                                                             |   |                                                              |   |
| ARTICLE VI ADDITIONAL  AGREEMENTS                                                | 34     |
| 6.1.                                                                             |   | Access  to Information                                            | 34     |
| 6.2.                                                                             |   | Public  Announcements; Company Literature                         | 35     |
| 6.3.                                                                             |   | Fees  and Expenses                                                | 35     |
| 6.4.                                                                             |   | Confidentiality                                                   | 35     |
| 6.5.                                                                             |   | Parent’s  Covenants With Respect To the Ensuing Period       | 35     |
| 6.6.                                                                             |   | Parent’s  Covenants With Respect To Additional Consideration | 36     |
|                                                                             |   |                                                              |   |
| ARTICLE VII CONDITIONS TO  CONSUMMATION OF THE MERGER                            | 36     |
| 7.1.                                                                             |   | Conditions  to Each Party’s Obligations to Effect the Merger | 36     |
| 7.2.                                                                             |   | Conditions  to the Obligations of the Company                     | 36     |
| 7.3.                                                                             |   | Conditions  to the Obligations of Parent and Acquisition Co       | 37     |
|                                                                             |   |                                                              |   |
| ARTICLE VIII ACTIONS BY  THE PARTIES AFTER THE CLOSING                           | 38     |
| 8.1.                                                                             |   | Survival  of Representations, Warranties, Etc                     | 38     |
| 8.2.                                                                             |   | Indemnification                                                   | 38     |
| 8.3.                                                                             |   | Right  of Offset                                                  | 40     |
| 8.4.                                                                             |   | Non-Exclusivity                                                   | 40     |
|                                                                             |   |                                                              |   |
| ARTICLE IX ARBITRATION                                                           | 40     |

 

ii

----

 
| 9.1.                    |   | Arbitration                                  | 40     |
|-------------------------|--------|----------------------------------------------|--------|
|                    |   |                                         |   |
| ARTICLE X MISCELLANEOUS | 41     |
| 10.1.                   |   | Further  Assurances                          | 41     |
| 10.2.                   |   | Notices                                      | 41     |
| 10.3.                   |   | Entire  Agreement                            | 42     |
| 10.4.                   |   | Waiver                                       | 42     |
| 10.5.                   |   | Amendment                                    | 42     |
| 10.6.                   |   | No  Third Party Beneficiary                  | 42     |
| 10.7.                   |   | No  Assignment; Binding Effect               | 42     |
| 10.8.                   |   | Headings                                     | 43     |
| 10.9.                   |   | Severability                                 | 43     |
| 10.10.                  |   | Governing  Law                               | 43     |
| 10.11.                  |   | Consent  to Jurisdiction and Forum Selection | 43     |
| 10.12.                  |   | Construction                                 | 43     |
| 10.13.                  |   | Counterparts                                 | 43     |
| 10.14.                  |   | Attorney’s  Fees                        | 43     |
| 10.15.                  |   | Exhibits                                     | 43     |

 

**SCHEDULE OF EXHIBITS**

 
| Exhibit A |   | Customer  List/Customer Accounts/Customer Contracts               |
|-----------|--------|-------------------------------------------------------------------|
| Exhibit B |   | Nurses,  Employees and Independent Contractors                    |
| Exhibit C |   | Bill of Sale                                                      |
| Exhibit D |   | Non-Competition  Agreement                                        |
| Exhibit E |   | Non-Solicitation  Agreement                                       |
| Exhibit F |   | Registration  Rights Agreement                                    |
| Exhibit G |   | Transition  Services Agreement                                    |
| Exhibit H |   | Company’s  Certificate                                       |
| Exhibit I |   | General  Partner Officer’s Certificate                       |
| Exhibit J |   | Release  Agreement                                                |
| Exhibit K |   | Opinion of  Counsel to the Company                                |
| Exhibit L |   | Acquisition  Co. Secretary’s Certificate                     |
| Exhibit M |   | Employment  Agreement between Acquisition Co. and Limited Partner |

 

iii

----

 

**ASSET PURCHASE AGREEMENT**

** **

ThisAsset Purchase Agreement (this “**Agreement**”)is made and entered into as of April 10, 2006, by and among Crdentia Corp., aDelaware corporation (“**Parent**”),CRDE Corp., a Delaware corporation and wholly-owned subsidiary of Parent (“**CRDE**”), Staff Search Acquisition Corp., aTexas corporation and a wholly-owned subsidiary of CRDE (“**Acquisition Co.**”), Staff Search, Ltd., aTexas limited partnership (the “**Company**”),SSL GP, LLC, a Texas limited liability company (the “**General Partner**”) and sole general partner of the Company, andJ.W. Iden, the sole member of the General Partner and the sole limited partnerof the Company (the “**Limited Partner**”).

 

**RECITALS:**

** **

WHEREAS,the Company is engaged in the business (the “**Business**”)of providing, on a temporary basis, nurses, allied and other healthcareprofessionals to third parties (collectively, the “**Services**”); and

 

WHEREAS,the Company desires to sell to Acquisition Co. and Acquisition Co. desires topurchase from the Company on the terms and conditions contained in thisAgreement certain of the Assets and Properties of the Company; and

 

WHEREAS,Acquisition Co. has agreed to assume certain of the liabilities of the Company andthe Company agrees to retain all other liabilities and fulfill any and allobligations in connection therewith; and

 

WHEREAS,Parent, CRDE, Acquisition Co., the Company, the General Partner and the LimitedPartner desire to make certain representations and warranties and otheragreements in connection with this Agreement and the purchase and sale of thePurchased Assets and assumption of the Assumed Liabilities as contemplatedherein;

 

NOW,THEREFORE, in consideration of the premises and the mutual covenants andpromises contained herein, and for other good and valuable consideration, thereceipt and sufficiency of which is hereby acknowledged, the parties heretoagree as follows:

 

# **ARTICLEIDEFINITIONS**

# ** **

1.1.                              **Defined Terms**. As used in this Agreement, the followingdefined terms have the meanings indicated below:

 

“**AAA**” has the meaning set forth in Section9.1.

 

“**Acquisition Co.**” has the meaning set forthin the first paragraph of this Agreement.

 

“**Actions or Proceedings**” means any action,suit, proceeding, arbitration, Order, inquiry, hearing, assessment with respectto fines or penalties or litigation (whether civil, criminal, administrative,investigative or informal) commenced, brought, conducted or heard by or before,or otherwise involving, any Governmental or Regulatory Authority.

 

1

----

 

“**Additional Consideration**” has the meaningset forth in Section 2.3(b).

 

“**Additional Consideration Report**” has themeaning set forth in Section 6.6.

 

“**Affiliate**” means, with respect to anyPerson, a family member or another Person that directly, or indirectly throughone or more intermediaries, controls, is controlled by or is under commoncontrol with such Person. A “family member” of an individual Person means (i)the individual’s spouse and former spouses, (ii) any other natural person whois related within the second degree to the individual or the individual’sspouse, or (iii) any other natural person who resides with such individualPerson.

 

“**Agreement**” has the meaning set forth in thefirst paragraph of this Agreement.

 

“**Allocation**” has the meaning set forth in Section2.4.

 

“**Ancillary Documents**” means the Bill of Saleas contemplated in Section 2.7(b)(i), the Non-Competition Agreement ascontemplated in Section 2.7(b)(ii), the Non-Solicitation Agreements ascontemplated in Section 2.7(b)(iii), the Registration Rights Agreementas contemplated in Section 2.7(b)(iv), the Transition Services Agreementas contemplated in Section 2.7(b)(v), the Release as contemplated in Section2.7(b)(viii), the consents as contemplated in Section 2.7(b)(vi),the opinion of counsel as contemplated in Section 2.7(b)(xi) and allother certificates and documents required to be delivered by the Company underthis Agreement.

 

“**Assets and Properties**” and “**Assets or Properties**” of any Person eachmeans all assets and properties of every kind, nature, character anddescription (whether real, personal or mixed, whether tangible or intangible,whether absolute, accrued, contingent, fixed or otherwise and whereversituated), including the goodwill related thereto, operated, owned or leased bysuch Person, including, without limitation, cash, cash equivalents, accountsand notes receivable, chattel paper, documents, instruments, generalintangibles, real estate, equipment, inventory, goods and IntellectualProperty.

 

“**Assumed Liabilities**” has the meaning setforth in Section 2.6.

 

“**Benefit Plan**” means any Plan established,arranged or maintained by the Company or any corporate group of which theCompany is or was a member, existing at the Closing Date or prior thereto, towhich the Company contributes or has contributed, or under which any employee,officer, director or former employee, officer or director of the Company or anybeneficiary thereof is covered, is eligible for coverage or has benefit rights.

 

“**Bill of Sale**” has the meaning set forth in Section2.7(b)(i).

 

“**Books and Records**” of any Person means allfiles, documents, instruments, papers, books, computer files (including but notlimited to files stored on a computer’s hard drive or on floppy disks),electronic files and records in any other medium relating to the business,operations, accounting practices or condition of such Person.

 

“**Broker**” has the meaning set forth in Section3.29.

 

2

----

 

“**Business**” has the meaning set forth in theRecitals.

 

“**Cash Consideration**” has the meaning setforth in Section 2.3(a).

 

“**Closing**” has the meaning set forth in Section2.7(a).

 

“**Closing Consideration**” shall have themeaning set forth in Section 2.3(a).

 

“**Closing Date**” has the meaning set forth in Section2.7(a).

 

“**Code**” means the Internal Revenue Code of1986, as amended.

 

“**Company**” has the meaning set forth in thefirst paragraph of this Agreement.

 

“**Company Disclosure Schedule**” means thedisclosure schedule attached hereto and made a part of this Agreement whichsets forth the exceptions to the representations and warranties contained inArticle III hereof and certain other information called for by this Agreement.

 

“**Company Financial Statements**” means (i) theunaudited, management prepared balance sheets and statements of income for thefiscal periods ended December 25, 2005 and December 26, 2004 and (ii) theInterim Financial Statements.

 

“**Constituent Companies**” has the meaning setforth in the definition of “Ensuing Period Branch Income/EBITDA.”

 

“**Contemplated Transactions**” means all of thetransactions contemplated by this Agreement, including (a) the execution anddelivery of each of the Ancillary Documents; (b) the performance by Parent,CRDE, the Company, the General Partner and the Limited Partner of theirrespective covenants and obligations under this Agreement; and (c) theexecution and delivery of all such documents, instruments and certificates as deemednecessary or advisable by either the Company or Parent.

 

“**Contract**” means any agreement, contract,obligation, promise, or undertaking (whether written or oral and whetherexpress or implied) that is legally binding, including but not limited to theCustomer Contracts.

 

“**CRDE**” has the meaning set forth in thefirst paragraph of this Agreement.

 

“**Customer**” has the meaning set forth in Section2.1(a).

 

“**Customer Contract**” has the meaning setforth in Section 2.1(b).

 

“**Cutoff**” has the meaning set forth in Section2.9.

 

“**Damages**” has the meaning set forth in Section8.2(a).

 

“**Defined Benefit Plan**” means each BenefitPlan which is subject to Part 3 of Title I of ERISA, Section 412 of the Code orTitle IV of ERISA.

 

3

----

 

“**Encumbrances**” means any mortgage, pledge,assessment, security interest, deed of trust, lease, lien, adverse claim,equitable interest, levy, charge, community property interest, right of firstrefusal or other encumbrance of any kind, or any conditional sale or titleretention agreement or other agreement to give any of the foregoing in thefuture.

 

“**Ensuing Period**” means the period commencingApril 1, 2006 and terminating March 31, 2007.

 

“**Ensuing Period Branch Income/EBITDA**” shallmean, for the Ensuing Period, the pre-corporate overhead profit of theAcquisition Co. from the post-closing operations of the offices acquired byAcquisition Co. from the Company in Houston (Greenway Plaza), Austin, SanAntonio, Dallas and Phoenix calculated consistently with the methodology setforth below, which shall include the pre-corporate overhead profit on allrevenues that are derived in whole or in part during the Ensuing Period byParent and/or its subsidiary companies (collectively the “**Constituent Companies**”) from each of thefollowing sources: (i) all employees of Acquisition Co. and all employees ofthe Constituent Companies who were employed by the Company immediately prior tothe date of the Closing, (ii) all current and former Customers of Company and futurecustomers of Acquisition Co. arising from the Houston offices, and (iii) anycompanies that are acquired during the Ensuing Period (in asset purchase orother forms of transactions) that are referred by the Limited Partner to Parentand/or any of its subsidiaries as potential acquisition candidates. Forpurposes of calculating the Ensuing Period Branch Income/EBITDA, the partieshereto agree to the following standards and adjustments: (i) Austin, Phoenixand San Antonio shall be calculated consistent with past practices, (ii) Dallasshall be calculated consistent with past practices, except there shall beallocated a per square foot rent charge and related utility expense uponcombination of the Company’s Dallas office into Parent’s Dallas office, (iii)the Houston operations of Parent shall be included in such calculation and itsrevenues and cost of revenues shall be calculated consistent with historicalstandards, (iv) for the Houston operation (as combined in accordance withclause (iii) above) all non-payroll expense which is part of selling, generaland administrative expenses, and not part of and included in cost of revenues,shall be fixed at $300,000 for the Ensuing Period, and (v) for the Houstonoperation (as combined in accordance with clause (iii) above) all branch levelpersonnel, such as the branch manager, recruiters, staffers andoffice/administrative personnel, shall be accounted for at their direct costs(including salary, benefits and taxes). The summation of the calculations setforth herein for Austin, Phoenix, San Antonio, Dallas and the combined Houstonoperations shall constitute Ensuing Period Branch Income/EBITDA. The cost ofprofessional liability insurance for the Ensuing Period Branch Income/EBITDAfor Austin, Phoenix, San Antonio, Dallas and the combined Houston operationswill be set at $150,000.

 

“**ERISA**” means the Employee Retirement IncomeSecurity Act of 1974, as amended, and the rules and regulations promulgatedthereunder.

 

“**ERISA Affiliate**” means any entity which isa member of a “controlled group of corporations” or which is or was under“common control” with the Company as defined in Section 414 of the Code.

 

“**Exchange Act**” means the Securities ExchangeAct of 1934, as amended.

 

4

----

 

“**GAAP**” means United States generallyaccepted accounting principles, as currently in effect, applied on a basisconsistent with the basis on which Parent’s audited financial statements areprepared.

 

“**General Partner**” has the meaning set forthin the first paragraph of this Agreement.

 

“**Governmental Authorization**” means anyapproval, consent, license, permit, waiver or other authorization issued,granted, given or otherwise made available by or under the authority of anyGovernmental or Regulatory Authority or pursuant to any Legal Requirement.

 

“**Governmental or Regulatory Authority**” meansany court, tribunal, arbitrator, authority, agency, commission, official orother instrumentality of the United States or other country, any state, county,city or other political subdivision.

 

“**IAR**” has the meaning set forth in Section9.1.

 

“**Intellectual Property**” means (i)trademarks, service marks, trade dress, logos, trade names and corporate names,together with all translations, adaptations, derivations and combinationsthereof and including all goodwill associated therewith, and all applications,registrations and renewals in connection therewith; (ii) trade secrets andconfidential business information (including without limitation know-how,customer lists, current and anticipated customer requirements, price lists,market studies and business plans), however documented; (iii) proprietarycomputer software and programs (including object code and source code) andother proprietary rights and copies and tangible embodiments thereof (inwhatever form or medium), including all copyrights; (iv) database technologies,systems, structures and architectures (and related processes, formulae,compositions, improvements, devices, know-how, inventions, discoveries, concepts,ideas, designs, methods and information) and any other related information,however documented; (v) any and all information concerning the business andaffairs of a Person (which includes historical financial statements, financialprojections and budgets, historical and projected sales, capital spendingbudgets and plans, the names and backgrounds of key personnel and personneltraining and techniques and materials), however documented; (vi) any and allnotes, analysis, compilations, studies, summaries, and other material preparedby or for a Person containing or based, in whole or in part, on any informationincluded in the foregoing, however documented; and (vii) any similar orequivalent rights to any of the foregoing, including but not limited to thename “Staff Search.”

 

“**Interim Financial Statements**” means themanagement prepared unaudited balance sheet and statement of income for theCompany for the period ended February 26, 2006.

 

“**Key Employees**” means those employees of theCompany designated as “key employees” prior to the Closing and set forth on Section1.1 of the Company Disclosure Schedule attached hereto.

 

“**Knowledge of the Company**” means theknowledge of any officer, manager or partner of the Company (including theLimited Partner). An officer, manager or partner of the Company will be deemedto have Knowledge of a particular fact or other matter if (i) such individualis actually aware of such fact or other matter, or (ii) a prudent individualcould be expected to

 

5

----

 

discover or otherwise become aware of suchfact or other matter in the course of conducting a reasonably comprehensiveinvestigation concerning the existence of such fact or other matter.

 

“**Knowledge of Parent**” means the knowledge ofany officer or director of Parent. An officer or director of Parent will bedeemed to have Knowledge of a particular fact or other matter if (i) suchindividual is actually aware of such fact or other matter, or (ii) a prudentindividual could be expected to discover or otherwise become aware of such factor other matter in the course of conducting a reasonably comprehensiveinvestigation concerning the existence of such fact or other matter.

 

“**Legal Requirement**” means any federal,state, local, municipal, foreign, international, multinational, or otheradministrative order, constitution, law, ordinance, principle of common law,regulation, statute or treaty.

 

“**Liabilities**” has the meaning set forth in Section3.9.

 

“**Limited Partner**” has the meaning set forthin the first paragraph of this Agreement.

 

“**Material Adverse Effect**” means, for anyPerson, a material adverse effect whether individually or in the aggregate (a)on the business, operations, financial condition, Assets and Properties,liabilities or prospects of such Person, or (b) on the ability of such Personto consummate the transactions contemplated hereby.

 

“**Non-Competition Agreement**” has the meaningset forth in Section 2.7(b)(ii).

 

“**Non-Solicitation Agreements**” has themeaning set forth in Section 2.7(b)(iii).

 

“**Order**” means any award, decision, writ,judgment, decree, ruling, subpoena, verdict, injunction or similar order of anyGovernmental or Regulatory Authority (in each such case whether preliminary orfinal).

 

“**Ordinary Course of Business**” means theaction of a Person that is (i) consistent with the past practices of suchPerson and is taken in the ordinary course of the normal day-to-day operationsof such Person; (ii) not required to be authorized by the board of directors ofthe Company; and (iii) similar in nature and magnitude to actions customarilytaken, without the action of the board of directors or similar body, in theordinary course of the normal day-to-day operations of other Persons that arein the same line of business as the Company.

 

“**OTCBB**” shall mean the regulated quotationservice known as the OTC Bulletin Board.

 

“**Parent**” has the meaning set forth in thefirst paragraph of this Agreement.

 

“**Parent Common Stock**” means the shares ofcommon stock of Parent, $0.0001 par value.

 

“**Parent Common Stock Value**” has the meaningset forth in Section 2.3(c).

 

6

----

 

“**Parent SEC Documents**” means each form,report, schedule, statement and other document filed by Parent beginning inAugust 2004 through the date immediately prior to the date of this Agreementunder the Exchange Act or the Securities Act, including any amendment to suchdocument.

 

“**Permits**” means all licenses, permits,certificates of authority, authorizations, approvals, registrations and similarconsents granted or issued by any Governmental or Regulatory Authority.

 

“**Permitted Encumbrance**” means (a) anyEncumbrance for taxes not yet due or delinquent or being contested in goodfaith by appropriate proceedings for which adequate reserves have beenestablished in accordance with GAAP and (b) any minor imperfection of title orsimilar Encumbrance which individually or in the aggregate with other suchEncumbrances does not impair the value of the property subject to such Encumbranceor the use of such property in the conduct of the business of the Company.

 

“**Person**” means any natural person,corporation, general partnership, limited partnership, limited liabilitycompany, proprietorship, other business organization, trust, union, associationor Governmental or Regulatory Authority.

 

“**Plan**” means any bonus, incentivecompensation, deferred compensation, pension, profit sharing, retirement, stockpurchase, stock option, stock ownership, stock appreciation rights, phantomstock, leave of absence, layoff, vacation, day or dependent care, legalservices, cafeteria, life, health, accident, disability, workers’ compensationor other insurance, severance, separation or other employee benefit plan,practice, policy or arrangement of any kind, whether written or oral,including, but not limited to, any “employee benefit plan” within the meaningof Section 3(3) of ERISA.

 

“**Proceeding**” means any action, arbitration,audit, hearing, investigation, litigation, or suit (whether civil, criminal,administrative, investigative or informal) commenced, brought, conducted, orheard by or before, or otherwise involving, any Governmental or RegulatoryAuthority.

 

“**Purchase Price**” has the meaning set forthin Section 2.3.

 

“**Purchased Assets**” has the meaning set forthin Section 2.1.

 

“**Qualified Plan**” means each Benefit Planwhich is intended to qualify under Section 401 of the Code.

 

“**Real Property**” has the meaning set forth inSection 3.12.

 

“**Registration Rights Agreement**” has themeaning set forth in Section 2.7(b)(iv).

 

“**Release**” has the meaning set forth in Section2.7(b)(viii).

 

“**Returned Stock**” has the meaning set forthin Section 2.3(c).

 

7

----

 

“**SEC**” means the Securities and ExchangeCommission of the United States.

 

“**Securities Act**” means the Securities Act of1933, as amended.

 

“**Services**” has the meaning set forth in theRecitals.

 

“**Shortfall Amount**” has the meaning set forthin Section 2.3(c).

 

“**Shortfall Calculation Number**” has themeaning set forth in Section 2.3(c).

 

“**Shortfall Notice**” has the meaning set forthin Section 2.3(c).

 

“**Stock Consideration**” has the meaning setforth in Section 2.3(a).

 

“**Stock Consideration Value**” has the meaningset forth in Section 2.3(a)(ii).

 

“**Tax**” (and, with correlative meaning, “**Taxes**,” “**Taxable**”and “**Taxing**”) means (i) anyfederal, state, municipal, county, local or foreign income, alternative oradd-on minimum, gross income, gross receipts, sales, use, ad valorem, transfer,franchise, profits, license, withholding, payroll, employment, excise,severance, stamp, occupation, premium, property, environmental or windfallprofit tax, custom, duty or other tax, governmental fee or other likeassessment or charge of any kind whatsoever, together with any interest or anypenalty, addition to tax or additional amount imposed by any Governmental orRegulatory Authority responsible for the imposition of any such tax (domesticor foreign), (ii) any liability for payment of any amounts of the typedescribed in (i) as a result of being a member of an affiliated, consolidated,combined, unitary or other group for any Taxable period and (iii) any liabilityfor the payment of any amounts of the type described in (i) or (ii) as a resultof any express or implied obligation to indemnify any other Person.

 

“**Tax Return**” means any return, report,information return, schedule or other document (including any related orsupporting information) filed or required to be filed with respect to anyTaxing authority with respect to Taxes.

 

“**Third Party Expenses**” has the meaning setforth in Section 6.3.

 

“**Threatened**” means a claim, Proceeding,dispute, action or other matter will be deemed to have been “Threatened” if anydemand or statement has been made (orally or in writing) or any notice has beengiven (orally or in writing), or if any other event has occurred or any othercircumstances exist that would lead a prudent Person to conclude that such aclaim, proceeding, dispute, action, or other matter is likely to be asserted,commenced, taken or otherwise pursued in the future.

 

“**Transition Services Agreement**” has themeaning set forth in Section 2.7(b)(iv).

 

“**United States Person**” has the meaning setforth in Section 3.19(h).

 

“**2005 Adjusted Branch Income/EBITDA**” has themeaning set forth in Section 3.31.

 

8

----

 

1.2.                              **Construction of Certain Terms and Phrases**. Unless the context of this Agreementotherwise requires, (a) words of any gender include each other gender; (b)words using the singular or plural number also include the plural or singularnumber, respectively; (c) the terms “hereof,” “herein,” “hereby” and derivativeor similar words refer to this entire Agreement; (d) the terms “**Article**” or “**Section**” refer to the specified Article or Section of thisAgreement; (e) the term “or” has, except where otherwise indicated, theinclusive meaning represented by the phrase “and/or”; and (f) “including” means“including without limitation.”  Wheneverthis Agreement refers to a number of days, such number shall refer to calendardays. All accounting terms used in this Agreement which are not otherwisedefined shall have the meanings given to them under GAAP.

 

# **ARTICLEIIPURCHASE AND SALE OF ASSETS AND ASSUMPTION OF LIABILITIES**

# ** **

2.1.                              **Purchased Assets**. Subject to the terms and the conditions setforth in this Agreement and on the basis of the representations and warrantiesherein, the Company agrees to sell, convey, transfer, assign and deliver toAcquisition Co. and Acquisition Co. agrees to purchase, receive and accept fromthe Company all right, title and interest in and to the following specifiedassets of the Company which have been used in or for the benefit of theBusiness,****including any assets ofany of the Company’s Affiliates similar to the assets specified below(collectively referred to hereinafter as the “**PurchasedAssets**”).

 

#### (a)                                  Customer Accounts. All of the Company’s clients andcustomers (the “**Customers**”),Customer databases and lists, and Customer accounts relating to the Business,which Customers are set forth on Exhibit A attached hereto, which ExhibitA sets forth each Customer’s name, address, telephone number and annualsales amounts for the period beginning July 1, 2004 and ended December 31, 2004and for the calendar year 2005 and for the current year-to-date period ended onthe Closing Date;

####  

#### (b)                                 Customer Contracts. All Customer, distribution, service andretail sales Contracts with Customers for the Business, which Contracts are setforth on Exhibit A attached hereto (the “**Customer****Contracts**”);

####  

#### (c)                                  Nurses/Employee Databases. All Contracts, contact information(including names, addresses and telephone numbers, which are set forth on ExhibitB), personnel files and databases for all nurses, employees and independentcontractors retained, hired or employed by the Company as of the date ofClosing or at any time during calendar year 2004 and 2005 and for the currentyear-to-date period ended on the Closing Date;

####  

#### (d)                                 Records. All databases, books and records and other documentsrelating to (i) Customers including Customer revenues, credit history andpayment history, (ii) all nurses employed by the Company, (iii) all otheremployees and independent contractors of the Company and (iv) all Contracts ofthe Company, provided, however, that Parent and the other Constituent Companiescovenant that they shall upon Company’s reasonable request provide the Companywith copies of any of the aforesaid documents that Company hereafter needs forpurposes of preparing financial and other reports including tax returns, defendingand/or asserting claims by or against third parties and for any otherreasonable purpose.

 

9

----

 

#### (e)                                  Equipment, Furniture and Fixtures. All tangible property, equipment,furniture and fixtures used by the Company in the day-to-day operations of itsBusiness which are located in the Company’s offices in Houston (GreenwayPlaza), Austin and San Antonio;

####  

#### (f)                                    Other Assets. All of the Company’s software,Intellectual Property, prepaid expenses and deposits, licenses, permits, andcertificates of need to the extent associated with any of the foregoing assetsreferenced in Sections 2.1(a) through (e), inclusive,transferable to Acquisition Co., and the leases on the Company’s offices inHouston (Greenway Plaza) Austin and San Antonio;

####  

#### (g)                                 Name. All of the Company’s rights in and to the name“Staff Search” and all derivatives and permutations thereof. The parties agreethat the Company will have a period of 120 days from the date of the Closing tochange its name to any other name not utilizing the name “Staff Search” or anyderivative or permutations thereof; and

####  

#### (h)                                 Goodwill. All goodwill of the Company associated with any ofthe foregoing assets referenced in Sections 2.1(a) through (g),inclusive.

####  

2.2.                              **Excluded Assets**. The Company is not selling to AcquisitionCo. any of its assets that are not described in or otherwise contemplated by Section2.1. It is expressly understood and agreed that the Purchased Assets shallnot include (i) the cash and accounts receivable of the Company, and (ii) anybooks and records as they pertain to the organization, existence orcapitalization of the Company or any books and records which the Company may berequired by law to retain which do not relate to the Purchased Assets.

 

2.3.                              **Purchase Price**. The purchase price (“**Purchase Price**”) for the Purchased Assetsshall consist of the Closing Consideration and the Additional Considerationpayable as described below:

 

#### (a)                                  Closing Consideration. At Closing, Parent will pay the amount equalto 3.5 multiplied by the 2005 Adjusted Branch Income/EBITDA or $2,116,208 (the“**Closing Consideration**”), payableas follows:

####  

##### (i)                                     Cash Consideration. $1,050,000 of the Closing Considerationshall be paid in cash (the “**CashConsideration**”) to the Company by wire transfer or by cashier’scheck drawn upon a federally insured lending institution on the Closing Date;and

#####  

##### (ii)                                  Stock Consideration. The balance of the ClosingConsideration shall be paid in Parent Common Stock to the Company (the “**Stock Consideration Value**”). The number ofshares of Parent Common Stock to be issued shall be determined by dividing (A)the Stock Consideration Value by (B) the Parent Common Stock Value. Forpurposes of this Agreement, the “**ParentCommon Stock Value**” shall mean the average of the closing prices ofthe Parent Common Stock as reported on the OTCBB or other stock exchange orquotation system for the last fifteen (15) trading days ending two (2) daysprior to the date of issuance of Parent Common Stock taking into account anystock split, reverse split or other recapitalization occurring during thecalculation period or immediately prior to issuance of the Parent Common Stock.For purposes of this Agreement, the “**StockConsideration**” shall mean the aggregate

 

10

----

 

##### numberof shares of Parent Common Stock issuable on the Closing Date in accordancewith this Section 2.3(c), which the parties hereto agree shall be229,128 shares of Parent Common Stock.

#####  

#### (b)                                 Additional Consideration. In addition to the ClosingConsideration, the Purchaser will pay as additional Purchase Price, if earned,an amount (the “**Additional Consideration**”)based on the following formula: (a) Ensuing Period Branch Income/EBITDA minus$804,631 multiplied by (b) 3.5. The Additional Consideration will be paid asfollows:

####  

##### (i)                                     the first $421,291 of the AdditionalConsideration shall be paid in cash (the “**AdditionalCash Consideration**”) to the Company by wire transfer or by cashier’scheck drawn upon a federally insured lending institution; and

#####  

##### (ii)                                  the balance of the AdditionalConsideration will be paid in Parent Common Stock (the “**Additional Stock Consideration**”). Thenumber of shares of Parent Common Stock to be issued hereunder shall bedetermined by dividing (a) the Additional Stock Consideration by (b) the ParentCommon Stock Value determined based on the fifteen (15) trading days ending two(2) days prior to the date of determination of Ensuing Period BranchIncome/EBITDA.

#####  

##### (iii)                               The Additional Consideration will be paidas soon as reasonably practicable after determination of the Ensuing PeriodBranch Income/EBITDA.

#####  

#### (c)                                  Post-Closing Adjustment. If Ensuing Period Branch Income/EBITDAis less than $804,631 for the Ensuing Period, the Company will return to Parenta portion of the Parent Common Stock (the “**ReturnedStock**”) received by the Company at the Closing. The number of sharesof Returned Stock, if any, shall be calculated as follows: (a) $804,631 minusEnsuing Period Branch Income/EBITDA (the “**ShortfallAmount**”), multiplied by (b) 3.5 (the “**Shortfall Calculation Number**”) and then the ShortfallCalculation Number shall be divided by the average closing prices of the ParentCommon Stock as reported on the OTCBB or other stock exchange or quotationsystem for the fifteen (15) trading days prior to the date that the ShortfallCalculation Number is determined.

####  

#### (d)                                 Shortfall Notice. Within 15 days of determining theShortfall Amount, Parent will deliver to the Company a notice containing theShortfall Amount and the number of shares comprising the Returned Stock (the “**Shortfall Notice**”). After receiving theShortfall Notice, the Company shall have 15 days within which to returncertificate(s) of the Parent Common Stock representing at a minimum the amountof the Returned Stock, together with a stock power for each certificateendorsed in blank. Upon receipt of the certificate(s) of the Parent CommonStock and the stock power(s) from the Company, Parent shall cancel all suchcertificates and reissue to the Company a certificate representing the numberof shares of Parent Common Stock owned by the Company prior to cancellationless the amount of Returned Stock.

####  

2.4.                              **Allocation of Purchase Price**. The total Purchase Price shall be allocatedamong the Purchased Assets in the manner that Acquisition Co. shall reasonablydetermine to be necessary and proper (the “**Allocation**”).The Allocation shall be delivered to the Company within 90 days after theClosing Date. Each of Acquisition Co. and the Company shall record the purchase/saletransaction contemplated by this Agreement in a manner consistent with the

 

11

----

 

Allocation and the parties hereby agree notto file any tax return or otherwise take a position with any federal, state orlocal tax authority which is inconsistent with the Allocation.

 

2.5.                              **Tax**. The Company shall be responsible for any use, income or other taximposed with respect to the sale and transfer of the Purchased Assets.

 

2.6.                              **Liabilities to be Assumed**. Except for the liabilities expressly setforth on Section 2.6 of the Company Disclosure Schedule (the “**Assumed Liabilities**”), Acquisition Co.shall not assume, and nothing contained in this Agreement shall be construed asan assumption by Parent, CRDE or Acquisition Co. of, any liabilities,obligations or undertakings (the “**ExcludedLiabilities**”) of the Company of any nature whatsoever, whether fixedor contingent, known or unknown, except for any liabilities, if any, relatingto the fulfillment of any Customer Contract after the Closing Date. Forpurposes of clarification only, Excluded Liabilities shall include but not belimited to (i) any liability arising out of any Benefit Plan of Seller, (ii)any liability arising out of any Contracts not specifically set forth on Section2.6 of the Company Disclosure Schedule, (iii) any liability arising out ofany Contract set forth on Section 2.6 of the Company Disclosure Schedulebut which accrues on or before the Closing Date, (iv) any liability forcompensation or other amounts due to any employee of or consultant to theCompany or for other claims arising out of the terms of any employment orconsulting contract and (v) any liability for payroll or other taxes. TheCompany shall be responsible for all of the liabilities, obligations andundertakings not expressly and specifically assumed by Acquisition Co.

 

## 2.7.                              **Closing****.**

 

(a)                                  Timeand Place. The closing of theContemplated Transactions under this Agreement (the “**Closing**”) shall take place at the offices of Kane, Russell,Coleman & Logan, P.C., 1601 Elm Street, Suite 3700, Dallas, Texas 75201, at10:00 a.m. on April 12, 2006, or at such time and in such manner as the partiesmutually agree (the “**Closing Date**”).

 

(b)                                 ClosingDeliveries by the Company and the Limited Partner. At the Closing, the Company, the General Partner and the LimitedPartner, as the case may be, shall have delivered or caused to be delivered toParent, CRDE and/or Acquisition Co., as the case may be:

 

##### (i)                                     the Bill of Sale and Assignment andAssumption of Liabilities Agreement substantially in the form of Exhibit C(the “**Bill of Sale**”), dulyexecuted by the Company;

#####  

##### (ii)                                  the Non-Competition and Non-SolicitationAgreement by and among Parent, Acquisition Co., the Limited Partner and theCompany, substantially in the form of Exhibit D (the “**Non-Competition Agreement**”), duly executedby such parties;

#####  

##### (iii)                               a Non-Solicitation Agreement by andbetween Parent and each Key Employee (other than the Limited Partner)substantially in the form of Exhibit E (the “**Non-Solicitation Agreement**”), duly executed by all appropriateparties;

 

12

----

 

##### (iv)                              the Registration Rights Agreement by andbetween Parent and the Company in the form attached hereto as Exhibit F(the “**Registration Rights Agreement**”),duly executed by such parties;

#####  

##### (v)                                 a Transition Services Agreement by andamong Parent, the Company and Acquisition Co., substantially in the form of ExhibitG (the “**Transition Services Agreement**”),duly executed by such parties;

#####  

##### (vi)                              a certificate of the General Partner ofthe Company substantially in the form of Exhibit H attached hereto,certifying as of the Closing Date (A) a true and complete copy of theorganizational documents of the Company certified as of a recent date by theSecretary of State of Texas, (B) a certificate of each appropriate Secretary ofState certifying the good standing of the Company in its state of organizationand all states in which it is qualified to do business, (C) a true and completecopy of the resolutions of the partners of the Company authorizing theexecution, delivery and performance of this Agreement by the Company and theconsummation of the transactions contemplated hereby, and (D) incumbencymatters;

#####  

##### (vii)                           a certificate of an officer of theGeneral Partner substantially in the form of Exhibit I attached hereto,certifying as of the Closing Date (A) a true and complete copy of theorganizational documents of the General Partner certified as of a recent dateby the Secretary of State of Texas, (B) a certificate of each appropriateSecretary of State certifying the good standing of the General Partner in itsstate of organization and all states in which it is qualified to do business,(C) a true and complete copy of the resolutions of the sole member of theGeneral Partner authorizing the execution, delivery and performance of thisAgreement by the General Partner and the consummation of the transactionscontemplated hereby, and (D) incumbency matters;

#####  

##### (viii)                        a Release Agreement by and between theLimited Partner and the Company, substantially in the form of Exhibit Jattached hereto (the “**Release**”),duly executed by the Limited Partner;

#####  

##### (ix)                                a report reflecting the results of asearch conducted within ten (10) days of the Closing of the Uniform CommercialCode and judgment and tax lien records of the State of Texas;

#####  

##### (x)                                   one or more releases of liens andtermination statements relating to the Purchased Assets in form satisfactory toParent;

#####  

##### (xi)                                consents to the transfers and assignmentsof the Customer Contracts, as requested by Parent;

#####  

##### (xii)                             an opinion of counsel of Chamberlain,Hrdlicka, White, Williams & Martin, counsel to the Company, in the form of ExhibitK attached hereto;

#####  

##### (xiii)                          an assignment of the leases for theoffices located in Houston (Greenway Plaza), Austin and San Antonio in formsatisfactory to Parent;

 

13

----

 

##### (xiv)                         such other documents as Parent mayreasonably request for the purpose of facilitating the consummation of the ContemplatedTransactions; and

#####  

##### (xv)                            any such documents as may be required byParent’s senior secured lender.

#####  

Additionally,prior to Closing, Parent shall have received such written or oral assurances,as it determines in its sole discretion, that none of the Customers willterminate their relationship with Acquisition Co. following the Closing Date asa result of the assignment of any Customer Contract to Acquisition Co.

 

(c)                                  Closing Deliveries by Parent. At the Closing, Parent, CRDE and/orAcquisition Co., as the case may be, shall have delivered or caused to bedelivered to the Company and/or the Limited Partner, as the case may be:

 

##### (i)                                     each of the documents contemplated in Section2.7(b) to be executed by Parent, CRDE or Acquisition Co., as appropriate;

#####  

##### (ii)                                  the Cash Consideration and StockConsideration to the Company;

#####  

##### (iii)                               a certificate of the Secretary ofAcquisition Co. substantially in the form of Exhibit L attached hereto,certifying as of the Closing Date (A) a true and complete copy of the organizationaldocuments of Acquisition Co., (B) a true and complete copy of the resolutionsof the board of directors of Acquisition Co. authorizing the execution,delivery and performance of this Agreement by Acquisition Co. and theconsummation of the transactions contemplated hereby and (C) incumbencymatters; and

#####  

##### (iv)                              such other documents as the Company mayreasonably request for the purpose of facilitating the consummation of theContemplated Transactions.

#####  

(d)                                 Closing Deliveries by Parent, Acquisition Co.and the Limited Partner.Parent, Acquisition Co. and the Limited Partner shall execute and deliver toeach other the Employment Contract attached as Exhibit M.

 

2.8.                              **Exemption from Registration**. The issuance of the Parent Common Stockissuable as Stock Consideration will be exempt from registration requirementsof the Securities Act pursuant to the private placement exemption provided byRule 505 and/or 506 of Regulation D promulgated under the Securities Act and/orSection 4(2) of the Securities Act and by applicable state securities laws.

 

2.9.                              **Payment of Employees**. The parties hereby agree and acknowledgethat: (a) the Company: (i) is entitled to retain all of the cash and accountsreceivables accumulated or with respect to all Services performed as of April10, 2006, 7:00 a.m. standard Houston, Texas time (the “**Cutoff**”) and (ii) shall be responsible forall the payroll and related employee expenses with respect to all Servicesperformed before the Cutoff. Immediately following the Cutoff, the ConstituentCompanies shall be responsible for all accounts receivable, payroll and relatedemployee expenses accumulated thereafter.

 

14

----

 

2.10.                        **Reimbursement of CertainExpenses**. The Partiesagree that Purchaser shall reimburse the Company for all rent monies paid forthe month of April for the leases for the Company’s offices in Houston(Greenway Plaza), Austin and San Antonio.

 

# **ARTICLEIIIREPRESENTATIONS AND WARRANTIESOF THE COMPANY, THE GENERAL PARTNER AND THE LIMITED PARTNER**

# ** **

TheCompany, the General Partner and the Limited Partner, jointly and severally,represent and warrant to Parent, CRDE and Acquisition Co. as of the date hereofand as of the Closing Date, except as set forth on the Company DisclosureSchedule furnished to Parent specifically identifying the relevant subparagraphhereof, which exceptions shall be deemed to be representations and warrantiesas if made hereunder, as follows:

 

3.1.                              **Organization of the Company**. The Company is a limited partnership dulyorganized, validly existing, and in good standing under the laws of the Stateof Texas. The General Partner is a limited liability company duly organizedvalidly existing and in good standing under the laws of the State of Texas. TheCompany is duly authorized to conduct business and is in good standing in Texasand each jurisdiction where such qualification is required except for anyjurisdiction where failure so to qualify would not have a Material AdverseEffect upon the Company. Each of the Company and the General Partner has fullpower and authority and holds all Permits and authorizations necessary to carryon its business and to own and use the Assets and Properties owned and used bythe Company except where the failure to have such power and authority or tohold such Permit or authorization would not have a Material Adverse Effect onthe Company’s business. Each of the Company and the General Partner, pursuantto the provisions of Section 2.7(a), has delivered to Parent completeand correct copies of its charter documents and organizational documents, eachas amended to date.

 

3.2.                              **Partnership Interests in theCompany**. The LimitedPartner is the sole limited partner of the Company. The General Partner is thesole general partner of the Company. The Limited Partner is the sole member ofthe General Partner.

 

3.3.                              **Authority**. Each of the Company and the General Partnerhas all necessary power and authority and has taken all action necessary toenter into this Agreement and each of the Ancillary Documents to which it is aparty, to consummate the transactions contemplated hereby and thereby and toperform its obligations hereunder and thereunder and no other proceedings onthe part of the Company or the General Partner are necessary to authorize this Agreement,the Ancillary Documents or to consummate the transactions contemplated herebyor thereby. This Agreement and each of the Ancillary Documents to which theCompany or the General Partner is a party have been duly and validly executedand delivered by the Company or the General Partner and each constitutes alegal, valid and binding obligation of the Company or the General Partnerenforceable against the Company or the General Partner in accordance with theirrespective terms except (i) as limited by applicable bankruptcy, insolvency,reorganization, moratorium and other laws of general application affectingenforcement of creditors’ rights generally and (ii) as limited by laws relatingto the availability of specific performance, injunctive relief or otherequitable remedies.

 

15

----

 

3.4.                              **No Conflicts**. The execution and delivery by the Companyof this Agreement and each Ancillary Document to which it is a party does not,and the performance by the Company of its obligations under this Agreement andeach such Ancillary Document and the consummation of the transactionscontemplated hereby and thereby will not:

 

#### (a)                                  conflict with or result in a violation orbreach of any of the terms, conditions or provisions of the charter documents,regulations, partnership agreement or other organizational documents of theCompany;

####  

#### (b)                                 conflict with or result in a violation orbreach of, or give any Governmental or Regulatory Authority the right torevoke, withdraw, suspend, cancel, terminate or modify any term or provision ofany law, Order, Permit, statute, rule or regulation applicable to the Company,the Business or Assets or Properties of the Company or the partnershipinterests of the Company;

####  

#### (c)                                  result in a breach of, or default under(or give rise to a right of termination, modification, cancellation oracceleration under), any of the terms, conditions or provisions of any note,bond, mortgage, indenture, license, agreement, lease or other similarinstrument or obligation to which the Company or any of its Assets andProperties may be bound, except for such breaches or defaults as set forth in Section3.4(c) of the Company Disclosure Schedule;

####  

#### (d)                                 cause any of the Assets or Properties ofthe Company to be reassessed or revalued by any Taxing authority or anyGovernmental or Regulatory Authority; or

####  

#### (e)                                  result in an imposition or creation ofany Encumbrance or Tax on the Business or Assets or Properties of the Company.

####  

3.5.                              **Assignability of Contracts**. Except as set forth on Section 3.5of the Company Disclosure Schedule, all Customer Contracts are fully assignableby the Company to Acquisition Co. without triggering or resulting in a breachor default under any such Customer Contract (or giving rise to a right of termination,modification, cancellation or acceleration thereunder).

 

3.6.                              **Consents and GovernmentalApprovals and Filings**.No consent, approval or action of, filing with or notice to any Governmental orRegulatory Authority on the part of the Company is required in connection withthe execution, delivery and performance of this Agreement, the AncillaryDocuments or the consummation of the transactions contemplated hereby orthereby.

 

3.7.                              **Company Financial Statements**. The Company has previously delivered to Parentthe Company Financial Statements, which are set forth on Section 3.7 ofthe Company Disclosure Schedule. Such Company Financial Statements (i) arematerially true, correct and complete, (ii) have been prepared in accordancewith the Books and Records of the Company, (iii) have been prepared inconformity with GAAP, and (iv) fairly present the financial condition andresults of operations of the Company as of the respective dates thereof and forthe periods covered thereby; provided that the Interim Financial Statements aresubject to normal year-end adjustments and lack footnotes and certain otherpresentation items.

 

16

----

 

3.8.                              **Absence of Changes**. Except for the execution and delivery ofthis Agreement and the transactions to take place pursuant hereto on or priorto the Closing Date, since February 26, 2006, there has not been any materialadverse change or any event or development which, individually or together withother such events, could reasonably be expected to result in a Material AdverseEffect on the Company.

 

3.9.                              **No Undisclosed Liabilities**. Except as disclosed in Section 3.9of the Company Disclosure Schedule or in the Company Financial Statements, andexcept for the Assumed Liabilities, there are no liabilities, whether known orunknown, whether asserted or unasserted, whether absolute or contingent,whether accrued or unaccrued, whether liquidated or unliquidated, and whetherdue or to become due, whether or not of a kind required by GAAP to be set forthon a financial statement or on the notes thereto, including but not limited toany liability for Taxes (the “**Liabilities**”),nor any basis for any claim against the Company for any such Liabilities,relating to or affecting the Company or any of its Assets and Properties, otherthan such Liabilities incurred after February 26, 2006 in the Ordinary Courseof Business which have not had, and could not reasonably be expected to resultin, individually or in the aggregate, a Material Adverse Effect on the Company.To the Knowledge of the Company there is no circumstance, condition, event orarrangement that may hereafter give rise to any liabilities of the Company orany successor to its business except in the Ordinary Course of Business or isotherwise set forth on in Section 3.9 of the Company DisclosureSchedule.

 

3.10.                        **Personal Property**. The Company is in possession of and hasgood and marketable title to, or valid rights under written agreements to use,the Purchased Assets. The Purchased Assets are free and clear of allEncumbrances, other than Permitted Encumbrances which have not had a MaterialAdverse Effect on the Company.

 

3.11.                        **Benefit Plans; ERISA.**

 

#### (a)                                  Section 3.11(a) of the Company Disclosure Schedule listseach Benefit Plan together with a brief description of the type of plan andbenefit provided thereunder. The Company has no commitment, proposal, orcommunication to employees regarding the creation of an additional Plan or anyincrease in benefits under any Benefit Plan. The Company has provided to Parent(i) a copy of each Benefit Plan (including amendments) and a list of personsparticipating in such arrangement, (ii) the three most recent annual reports onthe Form 5500 series for each Benefit Plan required to file such report and (iii)the most recent trustee’s report for each Benefit Plan funded through a trust.

####  

#### (b)                                 Neither the Company, an ERISA Affiliateor predecessor thereof has ever maintained, contributed to or been obligated tocontribute to any Defined Benefit Plan or multiemployer plan (as defined inSections 3(37) or 4001(a)(3) of ERISA) and no condition exists that presents amaterial risk to the Company or an ERISA Affiliate of incurring a liabilityunder Title IV of ERISA.

####  

#### (c)                                  Each Benefit Plan has been operated andadministered in all material respects in accordance with its terms and, as ofthe Closing Date, will be in full compliance, in form and operation, with allapplicable laws (including but not limited to ERISA and the Code).

 

17

----

 

#### The reserves reflected inthe Company Financial Statements for the obligations of the Company under allBenefit Plans are adequate and were determined in accordance with GAAP.

####  

#### (d)                                 Each Qualified Plan has received adetermination letter from the Internal Revenue Service confirming that itqualifies under Section 401(a) of the Code and nothing has occurred since theissuance of that letter which would adversely affect such qualified status orthe plan sponsor’s ability to rely on such determination letter.

####  

#### (e)                                  No Benefit Plan provides benefits,including without limitation death or medical benefits (whether or notinsured), with respect to current or former employees of the Company or anyERISA Affiliate beyond their termination of service (other than (i) coveragemandated by applicable law, (ii) benefits under a Qualified Plan, (iii)deferred compensation benefits accrued as liabilities on the books of theCompany or any ERISA Affiliate or (iv) benefits the full cost of which is borneby any current or former employee (or his or her beneficiary)).

####  

#### (f)                                    The consummation of the transactionscontemplated by this Agreement will not, either immediately or upon theoccurrence of any event thereafter, (i) entitle any current or former employeeor officer or director of the Company or any ERISA Affiliate to severance pay,unemployment compensation or any other payment, or (ii) accelerate the time ofpayment or vesting, or increase the amount of compensation otherwise due anysuch individual.

####  

#### (g)                                 There are no pending or, to the Knowledgeof the Company, anticipated or Threatened claims by or on behalf of any BenefitPlan, by any employee or beneficiary covered under any such Benefit Plan, orotherwise involving any such Benefit Plan (other than routine claims forbenefits).

####  

3.12.                        **Real Property**. The Company owns no real property. Section3.12 of the Company Disclosure Schedule contains a complete and accuratelegal description of each parcel of real property leased by the Company (aslessee or lessor) (the “**Real Property**”)and all Encumbrances (other than Permitted Encumbrances) relating to oraffecting the Real Property. The Company has a valid leasehold interest in allReal Property used in or relating to the conduct of the Business, free andclear of all Encumbrances other than Permitted Encumbrances. The Company hasnot leased any of the Real Property from an Affiliate of either the GeneralPartner or the Limited Partner. The Company has rights of ingress and egresswith respect to the Real Property, and all buildings, structures, facilities,fixtures and other improvements thereon material for the operation of theBusiness. Each lease with respect to the Real Property is a legal, valid andbinding agreement of the Company, subsisting in full force and effectenforceable in accordance with its terms, and except as set forth in Section3.12 of the Company Disclosure Schedule, there is no, and the Company hasreceived no notice of any, default (or any condition or event which, afternotice or lapse of time or both, would constitute a default) thereunder.

 

3.13.                        **Proprietary Information of Third Parties**. No third party has claimed or, to theKnowledge of the Company, has reason to claim that any Person employed by oraffiliated with the Company in connection with and during the Company’soperation of its Business has (i) violated or may be violating any of the termsor conditions of such Person’s employment, non-competition or non-disclosureagreement with such third party, (ii) disclosed or may be

 

18

----

 

disclosing or utilized or may be utilizingany proprietary information or documentation of such third party, or (iii)interfered or may be interfering in the employment relationship between suchthird party and any of its present or former employees. No third party hasrequested information from the Company which relates to such a claim. To theKnowledge of the Company, no Person employed by or affiliated with the Companyin connection with and during the Company’s ownership and operation of itsBusiness has employed or proposes to employ any trade secret or any informationor documentation proprietary to any former employer and no Person employed byor affiliated with the Company in connection with and during the Company’sownership and operation of its Business has violated any confidentialrelationship which such Person may have had with any third party, in connectionwith the sale of any service or proposed service of the Company, and to theKnowledge of the Company, there is no reason to believe there will be any suchemployment or violation.

 

3.14.                        **Compliance with Legal Requirements; GovernmentalAuthorizations.**

 

#### (a)                                  Except as set forth in Section 3.14(a)of the Company Disclosure Schedule:

####  

##### (i)                                     the Company is, and at all times sinceits organization has been, in full compliance with each Legal Requirement thatis or was applicable to it or to the conduct or operation of its Business orthe ownership or use of any of its Assets and Properties;

#####  

##### (ii)                                  no event has occurred or circumstanceexists that (with or without notice or lapse of time) (A) may constitute orresult in a violation by the Company of, or failure on the part of the Companyto comply with, any Legal Requirement, or (B) may give rise to any obligationon the part of the Company to undertake, or to bear all or any portion of thecost of, any remedial action of any nature; and

#####  

##### (iii)                               the Company has not received any noticeor other communication (whether oral or written) from any Governmental orRegulatory Authority or any other Person regarding (A) any actual, alleged,possible, or potential violation of, or failure to comply with, any LegalRequirement, or (B) any actual, alleged, possible, or potential obligation onthe part of the Company to undertake, or to bear all or any portion of the costof, any remedial action of any nature.

#####  

#### (b)                                 Section 3.14(b) of the Company Disclosure Schedulecontains a complete and accurate list of each Governmental Authorization thatis held by the Company or that otherwise relates to the Business of, or to anyof the Assets and Properties owned or used by, the Company. Each GovernmentalAuthorization listed or required to be listed in Section 3.14(b) of theCompany Disclosure Schedule is valid and is in full force and effect. Except asset forth on Section 3.14(b) of the Company Disclosure Schedule:

####  

##### (i)                                     the Company is, and at all times hasbeen, in full compliance with all of the terms and requirements of eachGovernmental Authorization identified or required to be identified in Section3.14(b) of the Company Disclosure Schedule;

#####  

##### (ii)                                  no event has occurred or circumstanceexists that may (with or without notice or lapse of time) (A) constitute orresult directly or indirectly in a violation of or a

 

19

----

 

##### failureto comply with any term or requirement of any Governmental Authorization listedor required to be listed in Section 3.14(b) of the Company DisclosureSchedule, or (B) result directly or indirectly in the revocation, withdrawal,suspension, cancellation, or termination of, or any modification to, anyGovernmental Authorization listed or required to be listed in Section3.14(b) of the Company Disclosure Schedule;

#####  

##### (iii)                               the Company has not received any noticeor other communication (whether oral or written) from any Governmental orRegulatory Authority or any other Person regarding (A) any actual, alleged,possible, or potential violation of or failure to comply with any term orrequirement of any Governmental Authorization, or (B) any actual, proposed,possible, or potential revocation, withdrawal, suspension, cancellation,termination of, or modification to any Governmental Authorization; and

#####  

##### (iv)                              all applications required to have beenfiled for the renewal of the Governmental Authorizations listed or required tobe listed in Section 3.14(b) of the Company Disclosure Schedule havebeen duly filed on a timely basis with the appropriate Governmental orRegulatory Authority, and all other filings required to have been made withrespect to such Governmental Authorizations have been duly made on a timelybasis with the appropriate Governmental or Regulatory Authority.

#####  

TheGovernmental Authorizations listed in Section 3.14(b) of the CompanyDisclosure Schedule collectively constitute all of the GovernmentalAuthorizations necessary to permit the company to lawfully conduct and operateits business in the manner it currently conducts and operates such business andto permit the Company to own and use its assets in the manner in which itcurrently owns and uses such assets.

 

3.15.                        **Legal Proceedings; Orders.**

 

#### (a)                                  Except as set forth in Section 3.15(a)of the Company Disclosure Schedule, there is no pending Proceeding:

####  

##### (i)                                     that has been commenced by or against theCompany or that otherwise relates to or may affect the Business of, or any ofthe Assets or Properties owned or used by, the Company; or

#####  

##### (ii)                                  that challenges, or that may have theeffect of preventing, delaying, making illegal, or otherwise interfering with,any of the Contemplated Transactions.

#####  

Tothe Knowledge of the Company, (1) no such Proceeding has been Threatened, and(2) no event has occurred or circumstance exists that may give rise to or serveas a basis for the commencement of any such Proceeding. The Company hasdelivered to Parent copies of all pleadings, correspondence, and otherdocuments relating to each Proceeding listed in Section 3.15(a) of theCompany Disclosure Schedule. The Proceedings listed in Section 3.15(a)of the Company Disclosure Schedule will not have a material adverse effect onthe Business, operations, assets, condition, or prospects of the Company.

 

#### (b)                                 Except as set forth in Section 3.15(b)of the Company Disclosure Schedule:

 

20

----

 

##### (i)                                     the Company is not subject to any Orderthat relates to the Business of, or any of the assets owned or used by, theCompany; and

#####  

##### (ii)                                  no officer, director, agent, manager, oremployee of the Company is subject to any Order that prohibits such officer,director, agent, manager, or employee from engaging in or continuing anyconduct, activity, or practice relating to the Business of the Company.

#####  

#### (c)                                  Except as set forth in Section 3.15(c)of the Company Disclosure Schedule:

####  

##### (i)                                     the Company is, and at all times has been,in full compliance with all of the terms and requirements of each Order towhich it, the Business or any of the Assets or Properties owned or used by it,is or has been subject;

#####  

##### (ii)                                  no event has occurred or circumstanceexists that may constitute or result in (with or without notice or lapse oftime) a violation of or failure to comply with any term or requirement of anyOrder to which the Company, the Business or any of the Assets or Propertiesowned or used by the Company, is subject; and

#####  

##### (iii)                               the Company has not received any noticeor other communication (whether oral or written) from any Governmental orRegulatory Authority or any other Person regarding any actual, alleged,possible, or potential violation of, or failure to comply with, any term orrequirement of any Order to which the Company, the Business or any of theAssets or Properties owned or used by the Company, is or has been subject.

#####  

3.16.                        **Contracts.**

 

#### (a)                                  Section 3.16 of the Company Disclosure Schedulecontains a true and complete list of each of the following Contracts,agreements or other arrangements to which the Company is a party or by whichany of its Assets and Properties is bound (and, to the extent oral, accuratelydescribes the terms of such Contracts, agreements and arrangements):

####  

##### (i)                                     all Customer Contracts relating to theprovision of Services;

#####  

##### (ii)                                  all collective bargaining or similarlabor agreements;

#####  

##### (iii)                               all Contracts for the employment of anyofficer, employee, manager or other Person or entity on a full time, part time,consulting or other basis and all independent contractor agreements;

#####  

##### (iv)                              all loan agreements, indentures,debentures, notes or letters of credit relating to the borrowing of money or tomortgaging, pledging or otherwise placing a lien on any material asset ormaterial group of assets of the Company;

#####  

##### (v)                                 each written warranty, guaranty, or othersimilar undertaking with respect to contractual performance extended by theCompany;

 

21

----

 

##### (vi)                              all license agreements, distributionagreements or any other agreements involving any of the Company’s current andformer employees, consultants or contractors regarding the appropriation or thenon-disclosure of any Intellectual Property;

#####  

##### (vii)                           each joint venture, partnership and otherContract (however named) involving a sharing of profits, losses, costs orliabilities by the Company with any other Person;

#####  

##### (viii)                        any Contract for payments to or by anyPerson by the Company based on sales, purchases or profits, other than directpayments for goods;

#####  

##### (ix)                                each Contract entered into other than inthe Ordinary Course of Business that contains or provides for an expressundertaking by the Company to be responsible for consequential damages;

#####  

##### (x)                                   all Contracts or commitments that in anyway restrict the Company from carrying on its Business anywhere in the world;

#####  

##### (xi)                                all Contracts or commitments that in anyway grants a third party a right of first refusal for the purchase of theCompany or any of its Assets or Properties; and

#####  

##### (xii)                             each amendment, supplement, andmodification (whether oral or written) with respect to any of the foregoing.

#####  

#### (b)                                 A correct and complete copy of eachContract disclosed in the Company Disclosure Schedule has been previouslyprovided to Parent and CRDE. Each Contract, agreement or other arrangementdisclosed in the Company Disclosure Schedule is in full force and effect andconstitutes a legal, valid and binding agreement, enforceable in accordancewith its terms, of the Company, and to the Knowledge of the Company, the otherparties thereto; and the Company has performed all of its required obligationsunder, and is not in violation or breach of or default under, any suchContract, agreement or arrangement. To the Knowledge of the Company, the otherparties to any such Contract, agreement or arrangement are not in violation orbreach of or default under any such Contract, agreement or arrangement and eachPerson who is a party to such Contract, agreement or arrangement is solvent andable to satisfy such Person’s material obligations thereunder. None of thepresent or former employees, officers, managers or members of the Company is aparty to any oral or written Contract or agreement prohibiting any of them fromfreely competing with other parties or engaging in the Company’s Business asnow operated. No event has occurred or circumstance exists that (with orwithout notice or the lapse of time) may contravene, conflict with, or resultin a violation or breach of, or give the Company or any other Person the rightto declare a default or exercise any remedy under, or to accelerate thematurity or performance of, or to cancel, termination, or modify, any Contractto which the Company is a party. The Company has not given to or received fromany other Person any notice or other communication (whether oral or written)regarding any actual, alleged, possible, or potential violation or breach of,or default under any Contract. There are no renegotiations of, attempts torenegotiate or outstanding rights to renegotiate any material amounts paid orpayable to the Company under any current Contract with any Person and, to theKnowledge of the Company, no such Person has made written demand for suchrenegotiation. Each Contract

 

22

----

 

#### relatingto the sale of Services of the Company has been entered into in the OrdinaryCourse of Business and has been entered into without the commission of any actalone or in concert with any other Person, or any consideration having beenpaid or promised, that would be in violation of any Legal Requirement.

####  

3.17.                        **Equipment**. Other than as noted in Section 3.17 of the Company DisclosureSchedule, all tangible personal property and equipment used by the Company inthe conduct of the Business are structurally sound with no known materialdefects and are in good operating condition and repair (subject to normal wearand tear) so as to permit the operation of such business as presentlyconducted; no such equipment or tangible personal property is in need ofmaintenance or repairs except for ordinary, routine maintenance and repairswhich are not material in nature or cost; and with respect to each item ofequipment and tangible personal property, the Company has received nonotification that it is in violation, in any material respect, of anyapplicable building, zoning, subdivision, fire protection, health or other law,Order, ordinance or regulation and no such violation exists; it beingspecifically understood, however, that all such equipment is being conveyed onan “as is” basis as to physical condition.

 

3.18.                        **Insurance**. Set forth in Section 3.18 of the Company Disclosure Scheduleis a complete and accurate list of all primary, excess and umbrella policies,bonds and other forms of insurance currently owned or held by or on behalf ofand/or providing insurance coverage to the Company, the Business or the Assetsand Properties of the Company (or any of the Company’s directors, officers,managers, members, salespersons, agents or employees), including the followinginformation for each such policy: type(s) of insurance coverage provided; nameof insurer; effective dates; policy number; per occurrence and annual aggregatedeductibles or self-insured retentions; per occurrence and annual aggregatelimits of liability and the extent, if any, to which the limits of liabilityhave been exhausted. All policies set forth on the Company Disclosure Scheduleare in full force and effect, and with respect to such policies, all premiumscurrently payable or previously due have been paid, and no notice ofcancellation or termination has been received with respect to any such policy.All such policies are sufficient for compliance with all requirements of lawand all agreements to which the Company is a party or otherwise bound, and arevalid, outstanding, collectible and enforceable policies and, to the Knowledgeof the Company, provide adequate insurance coverage for the Company, theBusiness and Assets and Properties of the Company and will remain in full forceand effect through the respective dates set forth in Section 3.18 of theCompany Disclosure Schedule. None of such policies contains a provision thatwould permit the termination, limitation, lapse, exclusion or change in theterms of coverage of such policy (including, without limitation, a change inthe limits of liability) by reason of the consummation of the ContemplatedTransactions. Complete and accurate copies of all such policies and relateddocumentation have previously been provided to Parent.

 

3.19.                        **Tax Matters.**

 

#### (a)                                  Except as set forth in Section 3.19,of the Company Disclosure Schedule, all Tax Returns required to be filed by oron behalf of the Company have been duly filed on a timely basis and to theKnowledge of the Company such Tax Returns are true, complete and correct.Except as set forth in Section 3.19 of the Company Disclosure Schedule,all Taxes shown to be payable on the Tax Returns or on subsequent assessmentswith respect thereto have

 

23

----

 

#### beenpaid in full on a timely basis, and no other Taxes are payable by the Companywith respect to items or periods covered by such Tax Returns (whether or notshown on or reportable on such Tax Returns) or with respect to any period priorto Closing. The Company has withheld and paid over all Taxes required to havebeen withheld from employees and paid over (or as such Taxes relate to theBusiness prior to Closing will be paid over when due), and complied with allinformation reporting and backup withholding requirements, includingmaintenance of required records with respect thereto, in connection withamounts paid or owing to any employee, creditor, independent contractor, orother third party. There are no liens on any of the assets of the Company withrespect to Taxes, other than liens for Taxes not yet due and payable. TheCompany is not currently the beneficiary of any extension of time within whichto file any Tax Return.

####  

#### (b)                                 Except as set forth in Section 3.19of the Company Disclosure Schedule, the amount of the Company’s liability forunpaid Taxes for all periods ending on or before February 26, 2006 does not, inthe aggregate, exceed the amount of the current liability accruals for Taxes(excluding reserves for deferred Taxes), reflected on the Company FinancialStatements, and except as provided in Section 3.19 of the CompanyDisclosure Schedule, the amount of the Company’s liability for unpaid Taxes forall periods ending on or before the Closing Date shall not, in the aggregate,exceed the amount of the current liability accruals for Taxes (excludingreserves for deferred Taxes), as such accruals are reflected on the CompanyFinancial Statements, as adjusted for operations and transactions in theOrdinary Course of Business since February 26, 2006 in accordance with pastcustom and practice. There are no Contracts, agreements, arrangements,commitments or undertakings relating to any prior audit of the Company, andthere are no Contracts, agreements, arrangements, commitments or undertakingswith the Internal Revenue Service or any other Governmental or RegulatoryAuthority that have or are reasonably likely to have a material and adverseimpact on the Company’s Taxes that are not reflected in the Company FinancialStatements.

####  

#### (c)                                  To the extent such documents exist,Parent has been furnished by the Company true and complete copies of (i)relevant portions of income tax audit reports, statements of deficiencies,closing or other agreements received by the Company or on behalf of the Companyrelating to Taxes, and (ii) except as set forth in Section 3.19 of theCompany Disclosure Schedule, all federal and state payroll, income or franchisetax returns for the Company for all periods ending on and after December 31,2002.

####  

#### (d)                                 Except as set forth in Section 3.19of the Company Disclosure Schedule, the Tax Returns of the Company have neverbeen audited by a Governmental or Regulatory Authority, nor is any such auditin process, pending or Threatened (either in writing or verbally, formally orinformally). To the Knowledge of the Company, and except as set forth in Section3.19 of the Company Disclosure Schedule, no deficiencies exist or have beenasserted (either in writing or orally, formally or informally) or are expectedto be asserted with respect to Taxes of the Company, and the Company has notreceived notice (either in writing or verbally, formally or informally) orexpects to receive notice that it has not filed a Tax Return or paid Taxesrequired to be filed or paid by it. The Company is neither a party to anyaction or proceeding for assessment or collection of Taxes, nor has such eventbeen asserted or Threatened (either in writing or verbally, formally orinformally) against the Company or any of its assets. Except as set forth on Section3.19 of the Company Disclosure Schedule, no waiver or extension of any

 

24

----

 

#### statuteof limitations is in effect with respect to Taxes or Tax Returns of theCompany. The Company has disclosed on its federal income tax returns allpositions taken therein that could give rise to a substantial understatementpenalty within the meaning of Section 6662 of the Code.

####  

#### (e)                                  The Company is not (nor has it ever been)a party to any Tax sharing agreement or Tax indemnity agreement and has notassumed the Tax liability of any other Person under contract. The Company isnot or has ever been a member of an affiliated group filing a consolidatedfederal income Tax Return and, except as set forth in Section 3.19 ofthe Company Disclosure Schedule, the Company has no liability for the Taxes ofany individual or entity under Section 1.1502-6 of the Treasury Regulations (orany similar provision of state, local or foreign law) as a transferee orsuccessor, by Contract or otherwise.

####  

#### (f)                                    The Company does not have any deferredincome or gains reportable for Tax purposes in any period ending after theClosing Date but that is attributable to a transaction occurring in, orresulting from a change in accounting method for a period prior to the ClosingDate.

####  

#### (g)                                 The Company’s tax basis in its assets forpurposes of determining its future amortization, depreciation and other federalincome tax deductions is accurately reflected on the Books and Records providedto Parent.

####  

#### (h)                                 Each of the Company and the LimitedPartner is a “**United States Person**”within the meaning of Section 7701(a)(30) of the Code.

####  

#### (i)                                     The Company and the Limited Partner shallbe solely responsible for the payment of all Taxes of the Company and LimitedPartner.

####  

3.20.                        **Labor and Employment Relations**. To the Knowledge of the Company, no groupof five or more employees of the Company has or have any plans to terminatehis, her or their employment with the Company. The Company is not a party to orbound by any collective bargaining agreement with any labor organization, groupor association covering any of its employees, and to the Knowledge of theCompany, there are no attempts to organize any of the Company’s employees byany Person, unit or group seeking to act as their bargaining agent. The Companyhas complied with all applicable laws relating to the employment of labor,including provisions thereof relating to wages, hours, equal opportunity,collective bargaining, discrimination against race, color, national origin,religious creed, physical or mental disability, sex, age, ancestry, medicalcondition, marital status or sexual orientation, occupational health and safetyand the withholding and payment of social security and other Taxes. The Companyis not liable for the payment of any compensation, damages, taxes, fines,penalties or other amounts, however designated, for the failure to comply withany of the foregoing Legal Requirements. No employees of the Company are inviolation of any term of any employment Contract, patent disclosure agreement,non-competition agreement, or any restrictive covenant to a former employerrelating to any such employee to be employed by the Company because of thenature of the business conducted or presently proposed to be conducted by theCompany or the use of trade secrets or proprietary information of others. Thereare no pending or, to the Knowledge of the Company, Threatened charges (byemployees, independent contractors, their representatives or governmentalauthorities) of unfair labor practices or of employment

 

25

----

 

discrimination or of any other wrongfulaction with respect to any aspect of employment of any Person employed orformerly employed by the Company. No union representation elections relating tothe Company’s employees have been scheduled by any Governmental or RegulatoryAuthority, no organizational effort is being made with respect to any of suchemployees, and no investigation of the Company’s employment policies or practicesby any Governmental or Regulatory Authority is pending or Threatened. TheCompany is not currently, and in the past has not been, involved in labornegotiations with any unit or group seeking to become the bargaining unit forany employees of the Company. The Company has never experienced any workstoppages and to the Knowledge of the Company, no work stoppage has beenThreatened or is planned.

 

3.21.                        **Certain Employees**. Set forth in Section 3.21 of theCompany Disclosure Schedule is (i) the name, title and total compensation foreach current employee or consultant as of the Closing; (ii) all wage and salaryincreases, bonuses and increases and any other direct or indirect compensationreceived by any such Person since December 31, 2004; (iii) any payments orcommitments to pay any severance or termination pay to any current or formerofficer, director, employee, consultant, contractor, manager or agent of theCompany; and (iv) any accrual for, or commitment or agreement by the Company topay, such increases, bonus or pay. Except as set forth on Section 3.21of the Company Disclosure Schedule, the Company has not received any noticefrom any such Person whether orally or in writing that he or she will cancel orotherwise terminate such Person’s relationship with the Company. Except as setforth in Section 3.21 of the Company Disclosure Schedule, none of suchPersons has an employment agreement or understanding, whether oral or written,with the Company which is not terminable on notice by the Company or anysuccessor in interest without cost or other liability to the Company or suchsuccessor in interest.

 

3.22.                        **Absence of Certain Developments**. Except as set forth on Section 3.22of the Company Disclosure Schedule, since December 31, 2004, the Company hasnot:

 

#### (a)                                  mortgaged or pledged any of the PurchasedAssets or Properties, or subjected them to any lien, charge or any otherEncumbrance, except liens for current property Taxes not yet due and payable;

####  

#### (b)                                 made any changes in any employee,consultant or contractor compensation, severance or termination agreement,commitment or transaction other than routine salary increases consistent withpast practice or offer employment to any individuals;

####  

#### (c)                                  entered into any Contract with anyCustomer other than those made in the Ordinary Course of Business;

####  

#### (d)                                 entered into any transaction or operatedthe Company’s Business not in the Ordinary Course of Business;

####  

#### (e)                                  made any change in its accounting methodsor practices;

####  

#### (f)                                    caused to be entered into any amendmentor termination of any Customer or supplier Contract or other material Contractor agreement to which it is a party, other than in the Ordinary Course ofBusiness;

 

26

----

 

#### (g)                                 made any material change in any of itsbusiness policies, including, without limitation, advertising, distributing,marketing, pricing, purchasing, personnel, sales, returns, budget or productacquisition or sale policies;

####  

#### (h)                                 terminated or failed to renew, orreceived any written threat (that was not subsequently withdrawn) to terminateor fail to renew, any Contract or other agreement that is or was material tothe Company’s Business or its financial condition;

####  

#### (i)                                     permitted to occur or be made any otherevent or condition of any character which has had a Material Adverse Effect onit;

####  

#### (j)                                     waived any rights material to itsfinancial or business condition;

####  

#### (k)                                  made any illegal payment or rebates; or

####  

#### (l)                                     entered into any agreement to do any ofthe foregoing.

####  

3.23.                        **Customers**. The Company has previously provided to Parent a true and correct listof the Company’s current Customers and the Company’s Customers from the periodbeginning July 1, 2004 through the 2005 fiscal year related to the Company’sBusiness. Except as set forth on Section 3.23 of the Company DisclosureSchedule, since January 1, 2005, no single Customer or group of affiliatedCustomers contributing more than $100,000 per annum to the gross revenues ofthe Company’s Business has stopped doing business with the Company, and no suchCustomer has given notice to the Company of an intention to discontinue doingbusiness or reduce the level of gross revenues from that in fiscal year 2005with the Company

 

3.24.                        **Permits**. Section 3.24 of the Company Disclosure Schedule contains atrue and complete list of all Permits used in and material, individually or inthe aggregate, to the Business. All such Permits are currently effective andvalid and have been validly issued. No additional Permits are necessary toenable the Company to conduct its business in material compliance with allapplicable federal, state and local laws. Neither the execution, delivery orperformance of this Agreement, the Ancillary Documents nor the mere passage oftime will have any effect on the continued validity or sufficiency of thePermits, nor will any additional Permits be required by virtue of theexecution, delivery or performance of this Agreement to enable the Company toconduct its Business as now operated. To the Knowledge of the Company, there isno pending Action or Proceeding by any Governmental or Regulatory Authoritywhich could affect the Permits or their sufficiency for the current conduct ofthe Business. The Company has provided Parent with true and complete copies ofall Permits listed in the Company Disclosure Schedule.

 

3.25.                        **Regulatory Compliance**. To the Knowledge of the Company, neitherthe Company nor any of its operations are regulated by any Governmental orRegulatory Authority and the Company has complied with all applicable requirementsof any Governmental or Regulatory Authority with respect to any servicesprovided by it (including but not limited to the Medicare Anti-KickbackStatute, the Health Insurance Portability and Accountability Act of 1996, theFederal False Claims Act, the Federal laws concerning physician self-referralknown as “Stark I” and “Stark II”, and the rules and regulations of the JointCommission on Accreditation of Healthcare Organizations).

 

27

----

 

Neitherthe Company, nor any officer, employee, manager or agent of the Company hasmade an untrue statement of a material fact or fraudulent statement to anyGovernmental or Regulatory Authority, failed to disclose a material factrequired to be disclosed to any Governmental or Regulatory Authority, orcommitted an act, made a statement, or failed to make a statement that, at thetime such disclosure was made, could reasonably be expected to provide a basisfor any Governmental or Regulatory Authority to invoke its policies respectingfraud, untrue statements of material facts, bribery or illegal gratuities orany similar policies.

 

3.26.                        **Third Party Consents**. No consent, approval or authorization ofany third party on the part of the Company is required in connection with theconsummation of the Contemplated Transactions except as otherwise provided in Section3.26 of the Company Disclosure Schedule.

 

3.27.                        **Relationships with Related Persons**. Except as set forth on Section 3.27of the Company Disclosure Schedule, no Affiliate of the Company has, or sinceJanuary 1, 2004 has had, any interest in the property, whether real, personalor mixed, or whether tangible or intangible, used in or pertaining to theCompany’s Businesses. No Affiliate of the Company owns, or since January 1,2004 has owned (of record or as beneficial owner), an equity interest or anyother financial or profit interest in a Person that has (i) had businessdealings or a material financial interest in any transaction with the Companyor (ii) engaged in competition with the Company with respect to any line of theproducts or services of the Company. Except as set forth in Section 3.27of the Company Disclosure Schedule, no Affiliate of the Company is a party toany Contract with or has any right or claim against the Company.

 

3.28.                        **Certain Payments**. Neither the Company nor any director,officer, agent or employee of the Company, or to the Knowledge of the Company,any other Person associated with or acting for or on behalf of the Company, hasdirectly or indirectly (i) made any contribution, gift, bribe, rebate, payoff,influence payment, kick-back or other payment to any Person, private or public,regardless of any form, whether in money, property or services (A) to obtainfavorable treatment in securing business, (B) to pay for favorable treatmentfor business secured, (C) to obtain special concessions or for specialconcessions already obtained for or in respect of the Company or any Affiliatethereof, or (D) in violation of any Legal Requirement, or (ii) established ormaintained any fund or asset that has not been recorded in the Books andRecords of the Company.

 

3.29.                        **Brokers**. Except as set forth in Section 3.29 of the Company DisclosureSchedule, neither the Limited Partner nor the Company has retained any brokerin connection with the transactions contemplated hereunder. Neither Parent,CRDE nor Acquisition Co. has, or will have, any obligation to pay any broker’s,finder’s, investment banker’s, financial advisor’s or similar fee in connectionwith this Agreement or the transactions contemplated hereby by reason of anyaction taken by or on behalf of the Limited Partner or the Company except forthe Success Fee earned by CFO Advisory Services (the “**Advisor**”) of $120,000, fifty percent (50%)of which Parent agrees to pay at the Closing and the remaining amount of whichthe Company agrees to pay at Closing.

 

3.30.                        **Verification of Credentials**. Except as set forth in Section 3.30of the Company Disclosure Schedule, the Company has implemented policies andprocedures to verify the

 

28

----

 

credentials (including, but not limited to,with respect to education and licensure) of personnel that the Company placeswith its Customers and to collect, maintain and update such credentialinginformation. To the Knowledge of the Company, employees, contractors andconsultants each consistently follow and have followed such policies andprocedures.

 

3.31.                        **2005 Adjusted Branch Income/EBITDA**. The 2005 Adjusted Branch Income/EBITDA was$804,631.

 

3.32.                        **Material Misstatements and Omissions**. The statements, representations andwarranties of the Company contained in this Agreement (including the exhibitsand schedules hereto) and in each document, statement, certificate or exhibitfurnished or to be furnished by or on behalf of the Company pursuant hereto, orin connection with the transactions contemplated hereby, taken together, do notcontain and will not contain any untrue statement of a material fact and do notor will not omit to state a material fact necessary to make the statements orfacts contained herein or therein, in light of the circumstances made, notmisleading. There is no fact known to the Company or the Limited Partner thatwill have a Material Adverse Effect on the Constituent Companies or theContemplated Transactions.

 

3.33.                        **Solvency**. Seller is not entering into the Contemplated Transactions with theintent to hinder, delay or defraud any Person to which it is, or may become,indebted. The Purchase Price is not less than the reasonably equivalent valueof the Purchased Assets less the Assumed Liabilities. Seller’s assets, at afair valuation, exceed its liabilities, and Seller is able, and will continueto be able after the Closing the Contemplated Transactions, to meet its debtsas they mature and will not become insolvent as a result of the ContemplatedTransactions. After the Closing of the Contemplated Transactions, Seller willhave sufficient capital and property remaining to conduct the business in whichit will thereafter be engaged.

 

# **ARTICLEIVREPRESENTATIONS AND WARRANTIESOF PARENT, CRDE AND ACQUISITION CO.**

# ** **

Parent,CRDE and Acquisition Co., jointly and severally, represent and warrant to theCompany as of the date hereof and as of the Closing Date, as follows:

 

4.1.                              **Organization.** Parent is a corporation duly organized,validly existing and in good standing under the laws of the State of theDelaware. CRDE is a corporation duly organized, validly existing and in goodstanding under the laws of the State of Delaware. Acquisition Co. is acorporation duly organized, validly existing, and in good standing under thelaws of the State of Texas. Each of Parent, CRDE and Acquisition Co. is dulyauthorized to conduct business and is in good standing under the laws of eachjurisdiction where such qualification is required except for any jurisdictionwhere failure so to qualify would not have a Material Adverse Effect uponParent, CRDE or Acquisition Co., as the case may be.

 

4.2.                              **Authority.** Each of Parent, CRDE and Acquisition Co. has all necessary corporatepower and corporate authority and has taken all corporate actions necessary toenter into this Agreement, to consummate the transactions contemplated herebyand to perform their respective obligations hereunder and no other proceedingson the part of Parent, CRDE or

 

29

----

 

Acquisition Co. are necessary to authorizethis Agreement or to consummate the transactions contemplated hereby. ThisAgreement has been duly and validly executed and delivered by each of Parent,CRDE and Acquisition Co. and constitutes a legal, valid and binding obligationof Parent, CRDE and Acquisition Co., respectively, enforceable against each ofParent, CRDE and Acquisition Co. in accordance with its terms except (i) aslimited by applicable bankruptcy, insolvency, reorganization, moratorium andother laws of general application affecting enforcement of creditors’ rightsgenerally and (ii) as limited by laws relating to the availability of specificperformance, injunctive relief or other equitable remedies.

 

4.3.                              **Litigation.** There are no Actions or Proceedings pending or, to the Knowledge ofParent, Threatened or anticipated against, relating to or affecting thetransactions contemplated by this Agreement, and, to the Knowledge of Parent,there is no basis for any such Action or Proceeding.

 

4.4.                              **Reports and Financial Statements.** As of the date hereof, Parent has furnishedor will make available to the Company and the Limited Partner true and completecopies of all Parent SEC Documents. As of their respective filing dates, allsuch Parent SEC Documents complied in all material respects with therequirements of the Securities Act and the Exchange Act, as applicable, andnone of such Parent SEC Documents contained any untrue statement of a materialfact or omitted to state a material fact required to be stated therein ornecessary to make the statements made therein, in light of the circumstances inwhich they were made, not misleading, except to the extent corrected by adocument subsequently filed with the SEC. The Parent Financial Statementscomply as to form in all material respects with applicable accountingrequirements and with the published rules and regulations of the SEC with respectthereto, have been prepared in accordance with GAAP consistently applied(except as may be indicated in the notes thereto or, in the case of unauditedstatements, as permitted by Form 10-QSB of the SEC) and present fairly theconsolidated financial position of Parent at the dates thereof and theconsolidated results of its operations and cash flows for the periods thenended (subject, in the case of unaudited statements, to normal auditadjustments).

 

4.5.                              **Absence of Changes.** Except as set forth in the Parent SECDocuments, there has not been any material adverse change or any event ordevelopment which, individually or together with other such events, couldreasonably be expected to result in a Material Adverse Effect on Parent, CRDEand Acquisition Co.

 

4.6.                              **Regulatory Compliance.** Parent and CRDE are in full compliance witheach Legal Requirement that is applicable to it or the conduct or operation ofits business. Neither Parent, CRDE or Acquisition Co. nor any officer,employee, manager or agent of Parent, CRDE or Acquisition Co. has made anuntrue statement of a material fact or fraudulent statement to any Governmentalor Regulatory Authority, failed to disclose a material fact required to bedisclosed to any Governmental or Regulatory Authority, or committed an act,made a statement, or failed to make a statement that, at the time suchdisclosure was made, could reasonably be expected to provide a basis for anyGovernmental or Regulatory Authority to invoke its policies respecting fraud,untrue statements of material facts, bribery or illegal gratuities or anysimilar policies.

 

30

----

 

4.7.                              **Third Party Consents.** No consent, approval or authorization of anythird party on the part of Parent, CRDE or Acquisition Co. is required inconnection with the consummation of the Contemplated Transactions.

 

4.8.                              **Certain Payments.** Neither Parent, CRDE or Acquisition Co. norany director, officer, agent or employee of Parent, CRDE or Acquisition Co., orto the Knowledge of Parent, CRDE or Acquisition Co., any other Personassociated with or acting for or on behalf of Parent, CRDE or Acquisition Co.,has directly or indirectly (i) made any contribution, gift, bribe, rebate,payoff, influence payment, kick-back or other payment to any Person, private orpublic, regardless of any form, whether in money, property or services (A) toobtain favorable treatment in securing business, (B) to pay for favorabletreatment for business secured, (C) to obtain special concessions or for specialconcessions already obtained for or in respect of Parent, CRDE or AcquisitionCo. or any Affiliate thereof, or (D) in violation of any Legal Requirement, or(ii) established or maintained any fund or asset that has not been recorded inthe Books and Records of Parent, CRDE or Acquisition Co.

 

4.9.                              **No Conflicts.** The execution and delivery by Parent, CRDEand Acquisition Co. of this Agreement do not, and the performance by Parent,CRDE and Acquisition Co. of their respective obligations under this Agreementand the consummation of the transactions contemplated hereby will not:

 

#### (a)                                  conflict with or result in a violation orbreach of any of the terms, conditions or provisions of the charter documents,bylaws or other organizational documents of Parent, CRDE or Acquisition Co., asapplicable;

####  

#### (b)                                 conflict with or result in a violation orbreach of, or give any Governmental or Regulatory Authority the right torevoke, withdraw, suspend, cancel, termination or modify any term or provisionof any law, Order, Permit, statute, rule or regulation applicable to Parent,CRDE or Acquisition Co. or the business or Assets or Properties of Parent, CRDEor Acquisition Co.;

####  

#### (c)                                  result in a breach of, or default (orgive rise to right of termination, modification, cancellation or acceleration)under any of the terms, conditions or provisions of any note, bond, mortgage,indenture, license, agreement, lease or other similar instrument or obligationto which Parent, CRDE, Acquisition Co. or any of their respective Assets andProperties may be bound;

####  

#### (d)                                 cause any of the Assets or Properties ofParent, CRDE or Acquisition Co. to be reassessed or revalued by any Taxingauthority or any Governmental or Regulatory Authority; or

####  

#### (e)                                  result in an imposition or creation ofany Encumbrance or Tax on the business or Assets or Properties of Parent, CRDEor Acquisition Co.

####  

4.10.                        **Consents and Governmental Approvals and Filings.** No consent, approval or action of, filingwith or notice to any Governmental or Regulatory Authority on the part ofParent, CRDE or Acquisition Co. is required in connection with the execution,delivery and performance of this Agreement or the consummation of thetransactions contemplated hereby.

 

31

----

 

4.11.                        **Brokers.** Neither Parent, CRDE nor Acquisition Co. has retained any broker inconnection with the transactions contemplated hereunder other than the Broker.Neither the Company nor the Limited Partner has, and will have, any obligationto pay any broker’s, finder’s investment banker’s, financial advisor’s orsimilar fee in connection with this Agreement or the transactions contemplatedhereby by reason of any action taken by or on behalf of Parent, CRDE orAcquisition Co.

 

4.12.                        **Material Misstatements and Omissions.** The statements, representations andwarranties of Parent, CRDE, and Acquisition Co. contained in this Agreement(including the exhibits and schedules hereto) and in each document, statement,certificate or exhibit furnished or to be furnished by or on behalf of Parent,CRDE, or Acquisition Co. pursuant hereto, or in connection with thetransactions contemplated hereby, taken together, do not contain and will notcontain any untrue statement of a material fact and do not or will not omit tostate a material fact necessary to make the statements or facts containedherein or therein, in light of the circumstances made, not misleading.

 

# **ARTICLEVREPRESENTATIONS AND WARRANTIESOF THE COMPANY AND THE LIMITED PARTNER**

# ** **

Eachof the Company and the Limited Partner hereby represents and warrants toParent, CRDE and Acquisition Co. as follows (such representations andwarranties do not lessen or obviate the representations and warranties of theCompany and the Limited Partner set forth in Article III above):

 

5.1.                              **Requisite Power and Authority.** The Limited Partner has all necessary powerand authority under all applicable provisions of law to execute and deliverthis Agreement and the Ancillary Documents to which he is a party and to carryout their respective provisions. All action on the Limited Partner’s partrequired for the lawful execution and delivery of this Agreement and theAncillary Documents has been or will be effectively taken prior to the Closing.Upon execution and delivery, this Agreement and each Ancillary Document towhich the Limited Partner is a signatory will be the valid and bindingobligation of the Limited Partner, enforceable in accordance with its terms.

 

5.2.                              **Investment Representations.** The Limited Partner and the Companyunderstand that the shares of the Parent Common Stock to be issued to theCompany pursuant to the provisions of Article II have not been registered underthe Securities Act. The Limited Partner and the Company also understand thatsuch shares of Parent Common Stock are being offered and sold pursuant to anexemption from registration contained in the Securities Act based in part uponthe Company’s and the Limited Partner’s representations and warrantiescontained in this Agreement. The Limited Partner and the Company hereby representand warrant as follows:

 

#### (a)                                  Each of the Limited Partner and theCompany is an “accredited investor” as defined in Rule 501(a) promulgated underthe Securities Act. The Limited Partner controls 100% of the equity of theCompany.

 

32

----

 

#### (b)                                 Each of the Limited Partner and theCompany has such experience so that he or it is capable of evaluating themerits and risks of the Company’s investment in Parent and has the capacity toprotect his or its own interests. The Company must bear the economic risk ofthis investment indefinitely unless the shares of Parent Common Stock areregistered pursuant to the Securities Act, or an exemption from registration isavailable. Each of the Limited Partner and the Company also understands thatthere is no assurance that any exemption from registration under the SecuritiesAct will be available and that, even if available, such exemption may not allowthe Company to transfer all or any portion of the shares of Parent Common Stockunder the circumstances, in the amounts or at the times the Company mightpropose.

####  

#### (c)                                  The Company is acquiring the shares ofParent Common Stock for the Company’s own account for investment only, and notwith a view towards their distribution.

####  

#### (d)                                 Each of the Limited Partner and theCompany represents that by reason of his or its business or financialexperience, each of the Limited Partner and the Company has the capacity toprotect his or its own interests in connection with the transactions contemplatedin this Agreement. Further, neither the Limited Partner nor the Company isaware of any publication of any advertisement in connection with thetransactions contemplated in the Agreement.

####  

#### (e)                                  The Limited Partner has received and readthe Parent SEC Filings and has had an opportunity to discuss Parent’s business,management and financial affairs with directors, officers and management ofParent and has had the opportunity to review Parent’s operations andfacilities. The Limited Partner has also had the opportunity to ask questionsof and receive answers from Parent and its management regarding the terms andconditions of this investment.

####  

#### (f)                                    Each of the Limited Partner and theCompany acknowledges and agrees that the shares of Parent Common Stock acquiredpursuant to this Agreement must be held indefinitely unless they aresubsequently registered under the Securities Act or an exemption from suchregistration is available. Each of the Limited Partner and the Company has beenadvised or is aware of the provisions of Rule 144 promulgated under theSecurities Act as in effect from time to time, which permits limited resale ofshares purchased in a private placement subject to the satisfaction of certainconditions, including, among other things, the availability of certain currentpublic information about Parent, the resale occurring not less than one yearafter a party has purchased and paid for the security to be sold, the salebeing through an unsolicited “broker’s transaction” or in transactions directlywith a market (as such term is defined under the Exchange Act) and the numberof shares being sold during any three month period not exceeding specifiedlimitations.

####  

#### (g)                                 The Company’s chief executive offices arein the state identified in the address of the Company set forth in thisAgreement.

####  

5.3.                              **Transfer Restrictions.** Each of the Limited Partner and the Companyacknowledges and agrees that the shares of Parent Common Stock are subject torestrictions on transfer set forth in this Section 5.3. The Companyagrees not to make any disposition of all or any portion of the shares ofParent Common Stock acquired pursuant to this Agreement unless and until (i)there is then in effect a registration statement under the Securities Actcovering such

 

33

----

 

proposed disposition and such disposition ismade in accordance with such registration statement, or (ii) the transferee(except for transfers in compliance with Rule 144) has agreed in writing to bebound by the terms of Article 5 of this Agreement, the Company shall havenotified Parent of the proposed disposition and shall have furnished Parentwith a detailed statement of the circumstances surrounding the proposeddisposition and if reasonably requested by Parent, the Company shall havefurnished Parent with an opinion of counsel, reasonably satisfactory to Parent,that such disposition will not require registration of such shares under theSecurities Act. Parent shall be entitled to impose stop transfer instructionswith respect to the Parent Common Stock in order to enforce the foregoingrestrictions.

 

Thecertificates representing the Parent Common Stock (when issued pursuant to thisAgreement) shall bear the following legend restricting transfer, and such otherlegends as may be required by any applicable state securities law:

 

**THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THESECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE,PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECTWITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSELSATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESSSOLD PURSUANT TO RULE 144 OF SUCH ACT.**

** **

**THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARESUBJECT TO CERTAIN PROVISIONS OF THE TERMS AND CONDITIONS OF THAT CERTAIN ASSETPURCHASE AGREEMENT DATED APRIL 10, 2006.**

** **

5.4.                              **Market Standoff.** Each of the Limited Partner and the Companyagree that he or it will not, without the prior written consent of Parentand/or the managing underwriter(s), during the period commencing on the date offiling of a registration statement by Parent pursuant to an underwritten publicoffering by Parent of its capital stock or securities convertible into itscapital stock and ending on the date specified by Parent and the managingunderwriter(s) (such period not to exceed 180 days following the filing of thefinal prospectus relating to such offering), transfer or dispose of any sharesof Parent Common Stock owned by the Company. In order to enforce the foregoingcovenant, Parent may impose stop-transfer instructions with respect to suchsecurities of the Company (and the shares or securities of every other Personsubject to the foregoing restriction) until the end of such period.

 

# **ARTICLEVIADDITIONAL AGREEMENTS**

# ** **

6.1.                              **Access to Information.** The Company has given Parent and itsauthorized representatives (including, without limitation, its attorneys andaccountants) reasonable access to

 

34

----

 

all employees, customers, plants, offices,warehouses and other facilities, to (and where necessary, provide copies of)all books and records, Contracts and all personnel files of current employeesof the Company and the Company has caused its managers to furnish Parent withsuch financial and operating data and other information with respect to thebusiness and properties of the Company as Parent has requested.

 

6.2.                              **Public Announcements; Company Literature.** Neither the Company nor the Limited Partnershall issue any press release or otherwise make any public statements withrespect to the transactions contemplated by this Agreement without the priorconsent of Parent and Acquisition Co. The parties agree there shall be a publicannouncement of this Agreement and consummation of its terms by Parent as maybe required by applicable law. The parties agree to announce this Agreement orthe consummation of its terms to the Company’s employees, customers, vendorsand strategic partners after the Closing of this Agreement.

 

6.3.                              **Fees and Expenses.** Whether or not the terms of this Agreementare consummated, all fees, costs and expenses incurred in connection with thisAgreement and the other agreements and transactions contemplated hereby andthereby, including all legal, accounting, financial advisory, broker’sconsulting and other fees and expenses of third parties incurred by a party inconnection with the negotiation, documentation and effectuation of the termsand conditions of this Agreement, the Ancillary Documents and the ContemplatedTransactions (“**Third Party Expenses**”)shall be the obligation of the respective party incurring such Third PartyExpenses. Except as provided in Section 3.29, the Company and Limited Partnershall be responsible and bear all costs and expenses of counsel for the Companyand Limited Partner and to any broker, finder or financial intermediaryrepresenting the Company or Limited Partner. Except as provided in Section3.29, Parent shall be responsible and bear all costs and expenses of counselfor Parent, CRDE, Acquisition Co. and any other broker, finder or financialintermediary representing Parent.

 

6.4.                              **Confidentiality.** The parties hereto will maintain inconfidence, and will direct its directors, officers, managers, employees,agents, Affiliates and advisors to maintain in confidence any written, oral orother information furnished by another party to this Agreement in connectionwith the Contemplated Transactions, unless (a) such information is alreadyknown to such party or to others not bound by a duty of confidentiality or suchinformation becomes publicly available through no fault of such party, (b) theuse of such information is necessary or appropriate in making any filing orobtaining any consent or approval required for the consummation of thetransactions contemplated by this Agreement, or (c) the furnishing or use ofsuch information is required by law. If the Closing does not occur for anyreason, each party will return or, at the request of the party supplying theinformation, destroy as much of such written information as the other party mayreasonably request.

 

6.5.                              **Parent’s Covenants With Respect To the EnsuingPeriod.** Parent on behalfof its self and its subsidiary companies covenants with the Company and theLimited Partner as follows:

 

#### (a)                                  throughout the Ensuing Period, thePurchased Assets and the Company’s Customers as of the Closing Date and thecustomers that the Acquisition Co. acquires during the

 

35

----

 

#### EnsuingPeriod will be retained in the Acquisition Co. and the Business will beconducted by Acquisition Co. in a reasonable and ethical manner;

####  

#### (b)                                 the Constituent Companies will cause theAcquisition Co. to observe sound business practices during the Ensuing Period;

####  

#### (c)                                  the Constituent Companies will carefullyconsider all recommendations and advice that the Limited Partner offers withrespect to the operation and management of Acquisition Co. during the EnsuingPeriod; and

####  

#### (d)                                 the Constituent Companies will usereasonable commercial efforts to employ adequate personnel for the operationand management of Acquisition Co. during the Ensuing Period.

####  

6.6.                              **Parent’s Covenants With Respect To AdditionalConsideration.** Parentcovenants that on or before June 1, 2007 it will provide Limited Partner andthe Company with a written report (the “**AdditionalConsideration Report**”) of its determination of the amount of theEnsuing Branch Income/EBITDA and the “Additional Consideration” as defined inSection 2.3(b) and further that it will permit the Company and the LimitedPartner and their advisors during reasonable business hours throughout thethirty (30) day period following the date of their receipt of the AdditionalConsideration Report to examine the underlying business books and records fromwhich the Additional Consideration Report is prepared for the purposes ofverifying the accuracy of said report. The Parties will endeavor to amicablyresolve any differences of opinion with respect to the Additional Considerationas recorded in the Additional Consideration Report and any unresolved disputeswith respect thereto shall be resolved pursuant to the provisions of Section9.1 of this Agreement.

 

# **ARTICLEVIICONDITIONS TO CONSUMMATION OF THE MERGER**

# ** **

7.1.                              **Conditions to Each Party’s Obligations to Effectthe Merger.** Therespective obligations of each party hereto to effect the terms of thisAgreement are subject to the satisfaction at or prior to the Closing Date ofthe following conditions:

 

#### (a)                                  no statute, rule, regulation, executiveorder, decree, ruling or injunction shall have been enacted, entered,promulgated or enforced by any United States federal or state court or UnitedStates federal or state Governmental or Regulatory Authority that prohibits,restrains, enjoins or restricts the consummation of this Agreement and theContemplated Transactions; and

####  

#### (b)                                 any governmental or regulatory notices,approvals or other requirements necessary to consummate the transactionscontemplated hereby shall have been given, obtained or complied with, asapplicable.

####  

7.2.                              **Conditions to the Obligations of the Company.** The obligation of the Company to completethe sale of the Purchased Assets is subject to the satisfaction at or prior tothe Closing Date of the following conditions:

 

36

----

 

#### (a)                                  the representations and warranties ofParent, CRDE and Acquisition Co. contained in this Agreement shall be true andcorrect in all material respects at and as of the Closing Date with the sameeffect as if made at and as of the Closing Date (except to the extent suchrepresentations specifically relate to an earlier date, in which case suchrepresentations shall be true and correct in all material respects as of suchearlier date, and in any event, subject to the foregoing materialityqualification);

####  

#### (b)                                 each of the covenants and obligations ofParent, CRDE and Acquisition Co. to be performed at or before the Closing Datepursuant to the terms of this Agreement shall have been duly performed in allmaterial respects at or before the Closing Date;

####  

#### (c)                                  Parent shall have delivered all ofClosing deliveries set forth in Section 2.7(c) above; and

####  

#### (d)                                 all proceedings taken by Parent, CRDE andAcquisition Co. and all instruments executed and delivered by Parent, CRDE andAcquisition Co. on or prior to the Closing in connection with the ContemplatedTransactions shall be reasonably satisfactory in form and substance to counselfor the Company.

####  

7.3.                              **Conditions to the Obligations of Parent and AcquisitionCo.** The respectiveobligations of Parent, CRDE and Acquisition Co. to complete the purchase of thePurchased Assets are subject to the satisfaction at or prior to the ClosingDate of the following conditions:

 

#### (a)                                  the representations and warranties of theCompany, the General Partner and the Limited Partner contained in thisAgreement shall be true and correct in all material respects at and as of theClosing Date with the same effect as if made at and as of the Closing Date(except to the extent such representations specifically relate to an earlierdate, in which case such representations shall be true and correct in allmaterial respects as of such earlier date);

####  

#### (b)                                 each of the covenants and obligations ofthe Company, the General Partner and the Limited Partner to be performed at orbefore the Closing Date pursuant to the terms of this Agreement shall have beenduly performed in all material respects at or before the Closing Date;

####  

#### (c)                                  there shall have been no events, changesor effects, individually or in the aggregate, with respect to the Company orits subsidiaries having, or that would reasonably be expected to have, aMaterial Adverse Effect on the Company;

####  

#### (d)                                 none of the Key Employees shall haveterminated their employment with the Company or given written or oral notice tothe Company or Parent, CRDE or Acquisition Co. of their intention to do soafter the Closing;

####  

#### (e)                                  the Company, the General Partner and theLimited Partner, as the case may be, shall have delivered all of the Closing deliveriesset forth in Section 2.7(b) above;

####  

#### (f)                                    all proceedings taken by the Company, theGeneral Partner and the Limited Partner and all instruments executed anddelivered by the Company, the General Partner and the Limited Partner on orprior to the Closing in connection with the Contemplated

 

37

----

 

#### Transactionsshall be reasonably satisfactory in form and substance to counsel for Parent,CRDE and Acquisition Co.

####  

# **ARTICLEVIIIACTIONS BY THE PARTIES AFTER THE CLOSING**

# ** **

8.1.                              **Survival of Representations, Warranties, Etc.** The representations, warranties andcovenants contained in or made pursuant to this Agreement or any certificate,document or instrument delivered pursuant to or in connection with thisAgreement in the transactions contemplated hereby shall survive the executionand delivery of this Agreement and the Closing hereunder (notwithstanding anyinvestigation, analysis or evaluation by any party hereto or their designees ofthe Purchased Assets, Business, operations or condition (financial orotherwise) of the other party) until the second anniversary of the ClosingDate; provided, however, that the representations and warranties of the partiescontained in Sections 3.2, 3.3, 3.11, and 3.19shall continue to survive indefinitely in full force and effect following theClosing Date.

 

8.2.                              **Indemnification.**

 

(a)                                  By the Company and the Limited Partner. The Company and the Limited Partner shallseverally indemnify, defend and hold harmless Parent, CRDE and Acquisition Co.and their respective officers, directors, employees, Affiliates, agents,successors, subsidiaries and assigns from and against any and all costs, losses(including, without limitation, diminution in value), liabilities, damages,lawsuits, deficiencies, claims and expenses, including without limitation,interest, penalties, costs of mitigation, lost profits and other lossesresulting from any shutdown or curtailment of operations, attorneys’ fees andall amounts paid in investigation, defense or settlement of any of theforegoing (collectively, the “**Damages**”),incurred in connection with, arising out of, resulting from or incident to (i)any breach of any covenant, representation, warranty or agreement or theinaccuracy of any representation made by the Company or the Limited Partner inor pursuant to this Agreement, the Ancillary Documents or in the otherdocuments delivered in connection with the Contemplated Transactions, (ii)Actions or Proceedings set forth in the Company Disclosure Schedule or in theother documents delivered in connection with the Contemplated Transactions,(iii) Actions or Proceedings involving the Company or the Business prior toClosing whether disclosed in the Company Disclosure Schedule or not (iv) any ofthe Excluded Liabilities, (v) the ownership or operation of the Company or theBusiness prior to Closing, (vi) all Taxes of the Company, the General Partneror the Limited Partner, (vii) any non-compliance with any Legal Requirement bythe Company or the General Partner, (viii) any liability arising under the WARNAct or other state or local requirement relating to employees or notices to begiven to employees prior to the Closing, (viii) any liability under any BenefitPlan of the Company or the General Partner and (ix) any liability under anyContract prior to the Closing. Notwithstanding anything to the contrarycontained in this Agreement, Parent, CRDE and Acquisition Co. and theirrespective officers, directors, employees, Affiliates, agents, successors,subsidiaries and assigns shall not be entitled to recover from the Company andLimited Partner under this Section 8.2(a) the first $15,000 in Damageswith respect to any inaccuracy of any representations or the breach of anywarranties, covenants, undertakings or other agreements.

 

38

----

 

(b)                                 By Parent. Parent, CRDE and Acquisition Co. shall, jointly and severally,indemnify, defend and hold harmless the Company and the Limited Partner andtheir respective officers, employees, managers, agents, successors and assignsfrom and against any and all Damages incurred in connection with, arising outof, resulting from or incident to any breach of any covenant, representation,warranty or agreement or the inaccuracy of any representation made by Parent,CRDE or Acquisition Co. in or pursuant to this Agreement, the AncillaryDocuments or in any other documents delivered in connection with theContemplated Transactions. Notwithstanding anything to the contrary containedin this Agreement, the Company and Limited Partner shall not be entitled torecover from Parent, CRDE, Acquisition Co. and their respective officers,directors, employees, Affiliates, agents, successors, subsidiaries and assignsunder this Section 8.2(b) the first $15,000 in Damages with respect toany inaccuracy of any representations or the breach of any warranties,covenants, undertakings or other agreements.

 

(c)                                  Third Party Claims; Defense of Claims. If any Action or Proceeding is filed orinitiated against any party entitled to the benefit of indemnity hereunder,written notice thereof shall be given to the indemnifying party as promptly aspracticable (and in any event within ten days after the service of the citationor summons); provided, however, that the failure of any indemnified party togive timely notice shall not affect rights to indemnification hereunder exceptto the extent that the indemnifying party demonstrates actual damage caused bysuch failure. After such notice, if the indemnifying party shall acknowledge inwriting to the indemnified party that the indemnifying party shall be obligatedunder the terms of its indemnity hereunder in connection with such Action orProceeding, then the indemnifying party shall be entitled, if it so elects, totake control of the defense and investigation of such Action or Proceeding andto employ and engage attorneys of its own choice to handle and defend the same,such attorneys to be reasonably satisfactory to the indemnified party, at theindemnifying party’s cost, risk and expense (unless (i) the indemnifying partyhas failed to assume the defense of such Action or Proceeding or (ii) the namedparties to such Action or Proceeding include both of the indemnifying party andthe indemnified party, and the indemnified party and its counsel determine ingood faith that there may be one or more legal defenses available to suchindemnified party that are different from or additional to those available tothe indemnifying party and that joint representation would be inappropriate),and to compromise or settle such Action or Proceeding, which compromise orsettlement shall be made only with the written consent of the indemnifiedparty, such consent not to be unreasonably withheld. The indemnified party maywithhold such consent if such compromise or settlement would adversely affectthe conduct of business or requires less than an unconditional release to beobtained. If (i) the indemnifying party fails to assume the defense of suchAction or Proceeding within 15 days after receipt of notice thereof pursuant tothis Section 8.2, or (ii) the named parties to such Action or Proceedinginclude both the indemnifying party and the indemnified party and theindemnified party and its counsel determine in good faith that there may be oneor more legal defenses available to such indemnified party that are differentfrom or additional to those available to the indemnifying party and that jointrepresentation would be inappropriate, the indemnified party against which suchAction or Proceeding has been filed or initiated will (upon delivering noticeto such effect to the indemnifying party) have the right to undertake, at theindemnifying party’s cost and expense, the defense, compromise or settlement ofsuch Action or Proceeding on behalf of and for the account and risk of theindemnifying party. In the event the indemnified party assumes defense of theAction or Proceeding, the indemnified party will keep

 

39

----

 

the indemnifying party reasonably informed ofthe progress of any such defense, compromise or settlement and will consultwith, when appropriate, and consider any reasonable advice from, theindemnifying party of any such defense, compromise or settlement. Theindemnifying party shall be liable for any settlement of any action effectedpursuant to and in accordance with this Section 8.2 and for any finaljudgment (subject to any right of appeal), and the indemnifying party agrees toindemnify and hold harmless the indemnified party from and against any Damagesby reason of such settlement or judgment.

 

Regardlessof whether the indemnifying party or the indemnified party takes up thedefense, the indemnifying party will pay reasonable costs and expenses inconnection with the defense, compromise or settlement for any Action orProceeding under this Section 8.2.

 

Theindemnified party shall cooperate in all reasonable respects with theindemnifying party and such attorneys in the investigation, trial and defenseof such Action or Proceeding and any appeal arising therefrom; provided,however, that the indemnified party may, at its own cost, participate in theinvestigation, trial and defense of such Action or Proceeding and any appealarising therefrom. The indemnifying party shall pay all expenses due under thisSection 8.2 as such expenses become due.

 

(d)                                 Indemnity Claims. A claim for indemnification for any matternot involving a third-party claim may be asserted by notice to the party fromwhom indemnification is sought.

 

8.3.                              **Right of Offset.** In the event that Parent, CRDE orAcquisition Co. suffers Damages pursuant to this Article VIII, Parent, inaddition to all other remedies set forth in this Article VIII, shall have theright to offset such Damages against the Additional Consideration payable tothe Company, if any.

 

8.4.                              **Non-Exclusivity.** The parties hereto acknowledge and agreethat the indemnity obligations set forth above shall not be the exclusiveremedy of the indemnified parties with respect to the ContemplatedTransactions.

 

# **ARTICLEIXARBITRATION**

# ** **

9.1.                              **Arbitration.** In the event of any dispute among the parties hereto as to theinterpretation of any provision of this Agreement or the rights and obligationsof any party hereunder, such dispute shall be resolved through binding arbitrationas hereinafter provided. If arbitration is required to resolve a disputehereunder, any party may notify the American Arbitration Association in Dallas,Texas (“**AAA**”) and request AAA toselect one person to act as the arbitrator for resolution of the dispute. Thearbitrator so selected shall conduct any such proceedings using theInternational Arbitration Rules (the “**IAR**”)of the AAA and such rules will be binding upon all parties to the arbitrationproceeding. The arbitrator is encouraged to modify the application of the IARas the arbitrator deems appropriate to accomplish the arbitration in thequickest and least expensive manner possible. Accordingly, the arbitrator may(i) dispense with any formal rules of evidence and allow hearsay testimony so asto limit the number of witnesses required, (ii) accept evidence of propertyvalues without formal appraisals

 

40

----

 

and upon such information provided by theparties or other persons and otherwise minimize discovery procedures as thearbitrator deems appropriate, (iii) act upon his understanding orinterpretation of the law on any issue without the obligation to research suchissue or accept or act upon briefs of the issue prepared by any party, (iv)limit the time for presentation of any party’s case as well as the amount ofinformation or number of witnesses to be presented in connection with anyhearing, and (v) impose any other rules which the arbitrator believesappropriate to effect a resolution of the dispute as quickly and inexpensivelyas possible. The arbitrator will have the exclusive authority to determine andaward costs of arbitration and the costs incurred by any party for theirattorneys, advisors and consultants.

 

# **ARTICLEXMISCELLANEOUS**

# ** **

10.1.                        **Further Assurances.** In case at any time after the Closing anyfurther action is necessary or desirable to carry out the purposes of thisAgreement, each of the parties will take such further action (including theexecution and delivery of such further instruments and documents) as the otherparty reasonably may request, all the sole cost and expense of the requestingparty (unless the requesting party is entitled to indemnification thereforunder Article VIII).

 

10.2.                        **Notices.** All notices, requests and other communications hereunder must be inwriting and will be deemed to have been duly given only if delivered personallyagainst written receipt or by facsimile transmission with answer backconfirmation or mailed (postage prepaid by certified or registered mail, returnreceipt requested) or by overnight courier to the parties at the followingaddresses or facsimile numbers:

 

Ifto Parent, CRDE or Acquisition Co.:

CrdentiaCorp.

5001LBJ Freeway, Suite 850

Dallas,Texas 75244

FacsimileNo.: (972) 392-2722

Attention:Chief Executive Officer

 

withcopies to:

Kane,Russell, Coleman & Logan, P.C.

1601Elm Street, Suite 3700

Dallas,Texas 75201

FacsimileNo.: (214) 777-4299

Attention:Patrick V. Stark, Esq.

 

Ifto the Company or Limited Partner:

StaffSearch, Ltd.

24Greenway Plaza, Suite 1508

Houston,Texas 77046

FacsimileNo.: (713) 629-9061

Attention:J.W. Iden

 

41

----

 

withcopies to:

Chamberlain,Hrdlicka, White, Williams & Martin

1200Smith Street, Suite 1400

Houston,Texas 77002

FacsimileNo.: (713) 658-2553

Attention:Sidney B. Williams, Esq.

 

Allsuch notices, requests and other communications will (i) if deliveredpersonally to the address as provided in this Section 10.2, be deemedgiven upon delivery, (ii) if delivered by facsimile transmission to thefacsimile number as provided in this Section 10.2, be deemed given uponreceipt, and (iii) if delivered by mail or overnight courier in the mannerdescribed above to the address as provided in this Section 10.2, be deemedgiven upon receipt (in each case regardless of whether such notice, request orother communication is received by any other Person to whom a copy of suchnotice, request or other communication is to be delivered pursuant to this Section10.2). Any party from time to time may change its address, facsimile numberor other information for the purpose of notices to that party by giving noticespecifying such change to the other parties hereto. Notices should be valid onany party hereto even though such party’s attorney did not receive a copythereof through no fault of the sending party.

 

10.3.                        **Entire Agreement.** This Agreement (and all exhibits andschedules attached hereto and all other documents delivered in connectionherewith) supersedes all prior discussions and agreements among the partieswith respect to the subject matter hereof and contains the sole and entireagreement among the parties hereto with respect thereto, including, withoutlimitation, the binding provision of the letter of intent dated March 1, 2006.

 

10.4.                        **Waiver.** Any term or condition of this Agreement may be waived at any time bythe party that is entitled to the benefit thereof, but no such waiver shall beeffective unless set forth in a written instrument duly executed by or on behalfof the party waiving such term or condition. No waiver by any party hereto ofany term or condition of this Agreement, in any one or more instances, shall bedeemed to be or construed as a waiver of the same or any other term orcondition of this Agreement on any future occasion. All remedies, either underthis Agreement or by law or otherwise afforded, will be cumulative and notalternative.

 

10.5.                        **Amendment.** This Agreement may be amended, supplemented or modified only by awritten instrument duly executed by or on behalf of each party hereto.

 

10.6.                        **No Third Party Beneficiary.** The terms and provisions of this Agreementare intended solely for the benefit of each party hereto and their respectivesuccessors or permitted assigns, and it is not the intention of the parties toconfer third-party beneficiary rights upon any other Person other than anyPerson entitled to indemnity under Article 9.

 

10.7.                        **No Assignment; Binding Effect.** Neither this Agreement nor any right,interest or obligation hereunder may be assigned by any party hereto withoutthe prior written consent of the other parties hereto and any attempt to do sowill be void. This Agreement is binding upon, inures to the benefit of and isenforceable by the parties hereto and their respective successors and assigns.

 

42

----

 

10.8.                        **Headings.** The headings used in this Agreement have been inserted for convenienceof reference only and do not define or limit the provisions hereof.

 

10.9.                        **Severability.** If any provision of this Agreement is heldto be illegal, invalid or unenforceable under any present or future law, and ifthe rights or obligations of any party hereto under this Agreement will not bematerially and adversely affected thereby, (i) such provision will be fullyseverable, (ii) this Agreement will be construed and enforced as if suchillegal, invalid or unenforceable provision had never comprised a part hereof,(iii) the remaining provisions of this Agreement will remain in full force andeffect and will not be affected by the illegal, invalid or unenforceableprovision or by its severance herefrom and (iv) in lieu of such illegal,invalid or unenforceable provision, there will be added automatically as a partof this Agreement a legal, valid and enforceable provision as similar in termsto such illegal, invalid or unenforceable provision as may be possible andmutually acceptable to the parties herein.

 

10.10.                  **Governing Law.** This Agreement shall be governed by andconstrued in accordance with the laws of the State of Texas applicable tocontracts executed and performed in such State, without giving effect toconflicts of laws principles.

 

10.11.                  **Consent to Jurisdiction and Forum Selection.** Each of Parent, CRDE, Acquisition Co., theCompany, the General Partner and the Limited Partner irrevocably agrees thatany legal action or proceeding with respect to this Agreement or any documentor instrument delivered pursuant to this Agreement (including any legal actionor proceeding to enforce the arbitration provisions of this Agreement) or forthe recognition and enforcement of any judgment obtained through thearbitration provisions of this Agreement will be brought and determined in thefederal or state courts or other courts located in Dallas County, Texas, andeach of Parent, CRDE, Acquisition Co., the Company, the General Partner and theLimited Partner hereby irrevocably submits with regard to any such action orproceeding for itself and in respect to its property, generally andunconditionally, to the exclusive jurisdiction of the aforesaid courts.

 

10.12.                  **Construction.** No provision of this Agreement shall beconstrued in favor of or against any party on the ground that such party or itscounsel drafted the provision. Any remedies provided for herein are notexclusive of any other lawful remedies which may be available to either party.This Agreement shall at all times be construed so as to carry out the purposesstated herein.

 

10.13.                  **Counterparts.** This Agreement may be executed in any numberof counterparts and by facsimile, each of which will be deemed an original, butall of which together will constitute one and the same instrument.

 

10.14.                  **Attorney’s Fees.** In the event any action is brought forenforcement or interpretation of this Agreement, the prevailing party shall beentitled to recover reasonable attorney’s fees and costs incurred in saidaction.

 

10.15.                  **Exhibits.** The following exhibits are attached to and made a part of thisAgreement:

 

43

----

 
| Exhibit A |   | Customer  List/Customer Accounts/Customer Contracts               |
|-----------|--------|-------------------------------------------------------------------|
|      |   |                                                              |
| Exhibit B |   | Nurses,  Employees and Independent Contractors                    |
|      |   |                                                              |
| Exhibit C |   | Bill of Sale                                                      |
|      |   |                                                              |
| Exhibit D |   | Non-Competition  Agreement                                        |
|      |   |                                                              |
| Exhibit E |   | Non-Solicitation  Agreement                                       |
|      |   |                                                              |
| Exhibit F |   | Registration  Rights Agreement                                    |
|      |   |                                                              |
| Exhibit G |   | Transition  Services Agreement                                    |
|      |   |                                                              |
| Exhibit H |   | Company’s  Certificate                                       |
|      |   |                                                              |
| Exhibit I |   | General  Partner Officer’s Certificate                       |
|      |   |                                                              |
| Exhibit J |   | Release  Agreement                                                |
|      |   |                                                              |
| Exhibit K |   | Opinion of  Counsel to the Company                                |
|      |   |                                                              |
| Exhibit L |   | Acquisition  Co. Secretary’s Certificate                     |
|      |   |                                                              |
| Exhibit M |   | Employment  Agreement between Acquisition Co. and Limited Partner |

 

44

----

 

INWITNESS WHEREOF, this Agreement has been duly executed and delivered by theparties hereto, or their duly authorized officer, as of the date first abovewritten.

 
|   | **CRDENTIA CORP.**,                 |
|--------|-------------------------------------|
|   | a  Delaware corporation             |
|   |                                |   |
|   |                                |   |
|   | By:                                 | /s/  James D. Durham |   |
|   | Name:                               | James  D. Durham |
|   | Title:                              | Chief  Executive Officer |
|   |                                |   |
|   |                                |   |
|   | **CRDE CORP.**,                     |
|   | a  Delaware corporation             |
|   |                                |   |
|   |                                |   |
|   | By:                                 | /s/  James D. Durham |   |
|   | Name:                               | James  D. Durham |
|   | Title:                              | Chief  Executive Officer |
|   |                                |   |
|   |                                |   |
|   | **STAFF SEARCH ACQUISITION CORP.**, |
|   | a  Texas corporation                |
|   |                                |
|   |                                |
|   | By:                                 | /s/  James D. Durham |   |
|   | Name:                               | James  D. Durham |
|   | Title:                              | Chief  Executive Officer |
|   |                                |   |
|   |                                |   |
|   | **STAFF SEARCH, LTD.**,             |
|   | a  Texas limited partnership        |
|   |                                |
|   |                                |
|   | By:  SSL GP, LLC,                   |
|   |                                | a Texas limited liability company, |
|   |                                | its sole General Partner |
|   |                                |   |
|   |                                |   |
|   | By:                                 | /s/  J.W. Iden |   |
|   | Name:                               | J.W.  Iden |
|   | Title:                              | Chief  Executive Officer |
|        |                                     |  |  |  |  |  |  |  |  |

 

45

----

 
|   | **SSL GP, LLC**,                   |
|--------|------------------------------------|
|   | a  Texas limited liability company |
|   |                               |   |
|   |                               |   |
|   | By:                                | /s/  J.W. Iden |   |
|   | Name:                              | J.W.  Iden |
|   | Title:                             | Chief  Executive Officer |
|   |                               |   |
|   |                               |   |
|   | By:                                | /s/  J.W. Iden |   |
|   |   J.W.  Iden             |
|        |                                    |  |  |  |  |

 

46

----

 

**EXHIBIT A**

** **

**CUSTOMER LISTS / CUSTOMER ACCOUNTS / CUSTOMERCONTRACTS**

 

----

 

**EXHIBIT B**

** **

**NURSES, EMPLOYEES AND INDEPENDENT CONTRACTORS**

 

----

 

**EXHIBIT C**

** **

**BILL OF SALE**

 

----

 

**EXHIBIT D**

** **

**NON-COMPETITION AGREEMENT**

 

----

 

**EXHIBIT E**

** **

**NON-SOLICITATION AGREEMENT**

 

----

 

**EXHIBIT F**

** **

**REGISTRATION RIGHTS AGREEMENT**

 

----

 

**EXHIBIT G**

** **

**TRANSITION SERVICES AGREEMENT**

 

----

 

**EXHIBIT H**

** **

**COMPANY’S CERTIFICATE**

 

----

 

**EXHIBIT I**

** **

**GENERAL PARTNER’S OFFICER’S CERTIFICATE**

 

----

 

**EXHIBIT J**

** **

**RELEASE AGREEMENT**

 

----

 

**EXHIBIT K**

** **

**OPINION OF COMPANY COUNSEL TO THE COMPANY**

 

----

 

**EXHIBIT L**

** **

**ACQUISITION CO. SECRETARY’S CERTIFICATE**

 

----

 

**EXHIBIT M**

** **

**ENSUING PERIOD ADJUSTED BRANCH INCOME/EBITDA**

 

----

 

**EXHIBIT N**

** **

**EMPLOYMENT AGREEMENTBETWEEN ACQUISITION CO. AND LIMITED PARTNER**

 

----