Document:

Exhibit 10.1

SEVERANCE AGREEMENT

AND MUTUAL RELEASE OF CLAIMS

1.     Parties.  This Severance Agreement and Mutual Release
of Claims (“Agreement”) is made by and between James D. Durham (“Durham”) and
Crdentia Corp., Delaware
corporation, (“Crdentia”) (individually a “Party” or collectively “the
Parties”).

2.     Purpose of Agreement.  The purpose of this Agreement is to settle
completely and cause the release of any and all known and unknown claims by and
between Durham and Crdentia, including but not limited to any and all claims
relating to Durham’s employment with Crdentia and the severance of Durham’s
employment with Crdentia (other than those expressly excluded herein).

3.     Resignation.  Effective March 1, 2007, Durham retired and
resigned from Durham’s position as Crdentia’s Chief Executive Officer, as
Chairman of the Board and as a member of Crdentia’s Board of Directors, and in
all other capacities in which he currently serves with respect to Crdentia.

4.     Wages and Expenses.  Within three business days of the Effective
Date, Crdentia will mail Durham checks in the gross sum of:  (a) $11,067.92, less payroll withholdings, as
payment of wages through March 1, 2007; and (b) an additional bonus payment of
$60,161.00, less payroll withholdings. 
Crdentia will also reimburse Durham for reasonable business expenses
incurred by Durham relating to Durham’s employment with Crdentia according to
Crdentia’s policy and practice with fifteen days of submission of appropriate
documentation to Crdentia.

5.     Return of Crdentia Property and
Documents.  In consideration of this
Agreement, and the covenants and releases given herein, Durham agrees to return
all property and documents belonging to Crdentia with three business days of
the Effective Date.  Durham, however,
will be permitted to retain the laptop and Blackberry provided to Durham by
Crdentia; provided Durham submits those items within three business days of the
Effective Date to Crdentia’s Chief Financial Officer and IT Consultant for
joint review, inspection, and removal of all Crdentia related information.  Crdentia will provide, and Durham will be
permitted to retain, a copy of Durham’s contact list.  Crdentia’s IT Consultant will assist Durham
in transferring his contact list to the laptop.

6.     Durham’s Continuing Obligations Under
Employment Agreement.  Durham’s
employment with Crdentia was governed by the Durham Employment Agreement
between Lifen, Inc. and Durham, effective August 1, 2002 (“Original Employment
Agreement”), the Amendment to Employment Agreement, effective January 1, 2004,
between Crdentia and Durham (“First Amendment”), and Second Amendment to
Employment Agreement, effective November 8, 2005, between Crdentia and Durham (“Second
Amendment”).  The Original Employment
Agreement, First Amendment, and Second Amendment are collectively referred to 

herein as the “Employment Agreement.”  In consideration of this Agreement, and the
covenants and releases given herein, Durham hereby agrees to comply with Durham’s
continuing obligations under the following Sections of Part Two of the
Employment Agreement:  Section 11(A)
(Non-Competition); Section 12 (Non-Solicitation and Non-Disparagement); Section
13 (Confidentiality); Section 14 (Ownership Rights); Section 18 (Injunctive Relief
and Termination); and Section 19 (Reasonableness of Restrictions).

7.     Consulting Period.  In consideration of this Agreement, and the
covenants and releases given herein, from March 1, 2007 through October 31,
2007, Durham will provide consulting services to Crdentia as an independent
contractor (“Consulting Period”).  During
the Consulting Period, Durham shall, with respect to any reasonable request
upon reasonable notice, (i) cooperate with Crdentia in the orderly transfer of
work to other employees, in the transistion process to a new Chief Executive
Officer, and will cooperate with Crdentia’s reasonable requests for assistance,
information, and/or advice, (ii) cooperate fully with Crdentia in its
investigation or defense of any administrative proceeding, investigation or
litigation without requiring a subpoena, be available to provide information
and answer questions from Crdentia or its counsel, and appear as a witness, all
without compensation (except as provided in the last sentence of this Section 7
and for reimbursement for travel or other reasonable expenses incurred in doing
so), and (iii) cooperate fully with Crdentia in all reasonable respects in the
potential settlement of any claims by iVOW, Inc., or any of its shareholders or
creditors, against Crdentia (except that nothing herein shall require Durham to
pay any money or other consideration as part of any such settlement, other than
a mutual release and the release of the Security Interest as defined and
contemplated in Section 13 below). 
Durham shall have no authority to represent or act on behalf of Crdentia
during or after the Consulting Period. Within five (5) business days of March
30, 2007 and within five (5) business days of the last day of each month
thereafter during the Consulting Period, Crdentia will wire Durham the gross
sum of $31,666.66 or shall make direct deposit of such amount to any account
designated by Durham.  In the event that
Crdentia believes that Durham is in breach of any obligation to provide
services under this Section 7, Crdenita will provide written notice and
opportunity for Durham to cure such breach within seven (7) business days.  The parties agree that Durham is not expected
to provide services during the Consulting Period to Crdentia at an annual rate
that is fifty percent or more of the services rendered on average during  the immediately preceding three full calendar
years.

8.     Severance.  In further consideration of Durham signing
this Agreement, and the covenants and releases given herein, within seven
business days of November 1, 2007, Crdentia will mail Durham a check for the
gross sum of $250,000.04, less payroll withholdings.  Such payment will be made regardless of
whether Durham dies or becomes disabled during the Consulting Period.

9.     Acknowledgement of Full Payment.  Durham acknowledges and agrees that the
payment of the amounts described in Sections 4, 7 and 8 shall constitute full
and complete satisfaction of any and all amounts properly due and owing to
Durham as a result of his employment with Crdentia or the termination of his employment.

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10.   Vested Stock Options and Restricted Stock.  (a) 
Nothing in this Agreement, including the Mutual Release set forth in
Section 18 below, shall affect any rights or obligations of the Parties under
the Restricted Stock Bonus Award and Restricted Stock Bonus Award Agreements
relating to the restricted stock awards granted to Durham on March 24, 2006
(the “2006 Restricted Stock Grant”) and May 31, 2005 (the “2005 Restricted
Stock Grant”) (collectively, the “Restricted Stock Grants”).  In accordance with the terms of the
Restricted Stock Grants, vesting in the restricted stock granted thereunder
will continue during the period Durham continues to provide consulting services
pursuant to Section 7 and shall cease in any event as of October 31, 2007.  [Crdentia confirms that as of the date of
this Agreement, 105,000 shares of restricted stock have vested pursuant to the
2005 Restricted Stock Grant and no shares of restricted stock have vested under
the 2006 Restricted Stock Grant.]

(b)  Nothing in this Agreement, including the
Mutual Release set forth in Section 18 below shall affect any rights or
obligations of the parties with respect to the stock option grants and common
stock purchase rights listed on Exhibit A to this Agreement (the “Options”).  Crdentia confirms that Exhibit A lists
(i) all Options currently held by Durham, including the number of shares of
Crdentia common stock for which each such Option is exercisable, (ii) the
option exercise price with respect to each such Option, (iii) that all such
Options are fully vested and (iv) the period through which each such Option may
be exercised by Durham.  In accordance
with the terms of the Options, such Options will remain exercisable until they
expire pursuant to their terms (including early termination due to the
termination of Durham’s employment or service to Crdentia, but the period for
exercise of any Options shall not expire earlier than ninety days after the
termination of the Consulting Period).

(c)  Durham agrees to take all actions and execute
all documents (including without limitation the endorsement and delivery of
share certificates) required to effectuate the agreements set forth in this
Section 10.

11.   Additional Stock Option Grant.  In further consideration of Durham signing
this Agreement, and the covenants and releases given herein, on the Effective
Date (the “Grant Date”), Crdentia shall grant Durham an option to purchase 1,000,000 shares of Crdentia’s
common stock in the form attached hereto as Exhibit B (“Stock Option”),
at an exercise price of $0.60 per share or the closing price of Crdentia’s
common stock on the Over-the-Counter Bulletin on the Effective Date, whichever
is greater.  The Stock Option shall be
fully vested as of the Grant Date, Durham shall have up to and including the
tenth anniversary of the Grant Date to exercise the Stock Option, and the Stock
Option will contain a cashless exercise provision.  Crdentia will cause the Stock Option and the
shares of common stock underlying the Stock Option to be covered by a Registration
Statement on Form S-8, to the extent permissible by law and the rules and
regulations promulgated by the U.S. Securities and Exchange Commission.

12.   Continuation of Health Insurance Coverage.  In further consideration of Durham signing
this Agreement, and the covenants and releases given herein, Crdentia will
continue to provide Durham with family health insurance coverage during the
Consulting Period, consistent 

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with the coverage received by him immediately prior to
the date of this Agreement.  In addition,
beginning immediately following the Consulting Period, Crdentia will pay for an
additional sixteen (16) months of family health insurance coverage pursuant to
COBRA for Durham and Durham’s family, provided Durham timely completes all
necessary documentation prior to the end of the Consulting Period and Durham
and Durham’s family qualify for such coverage (“Health Insurance Pay”).  The premium amounts for such coverage will be
includable in Durham’s taxable income at the applicable COBRA rates (without
regard to the 2% administrative surcharge). 
Crdentia shall have no further or additional obligation or liability for
continuation of any benefits, including but not limited to medical, dental,
disability, death, travel/accident, and/or life insurance (except that Durham
may exercise any portability rights provided by the plan documents for such
benefits).  Nothing in this Section 12
will limit any right that Durham or his beneficiaries have under COBRA.

13.   Collateral.

(a)   In
further consideration of Durham signing this Agreement, and the covenants and
releases given herein, Crdentia will return to Durham a sum equal to the
certificate of deposit in the principal amount of $500,000 (the “Collateral”)
pledged as collateral by Durham pursuant to that certain Security Agreement —
Pledge, dated as of January 19, 2007, by and between Durham and Comerica Bank,
within fifteen days of Crdentia’s receipt of additional equity investments
(following the Effective Date) in the aggregate amount of $5,000,000 (“Aggregate
Investment”).  (As used herein, “Aggregate
Investment” excludes all equity investments made pursuant to the Securities
Purchase Agreement dated January 25, 2007, as amended, and all subsequent
closings under such Securities Purchase Agreement, as amended, including but
not limited to such subsequent closings on February 7, 2007 and March 5, 2007,
and any additional closings made pursuant to such Securities Purchase
Agreement, as amended, after the date hereof (as amended the “Securities
Purchase Agreement”))  If Crdentia does
not receive the Aggregate Investment on or before September 1, 2007 (the “Collateral
Payment Date”) or has not otherwise returned the Collateral, Crdentia shall
immediately return the Collateral and Durham may institute any and all
proceedings, including those seeking immediate equitable relief, to collect the
Collateral; provided, however, that Crdentia has the right to
extend the Collateral Payment Date to March 1, 2008 (the “Extended Collateral
Payment Date”) upon payment to Durham of an additional $100,000.00 on or before
the Collateral Payment Date; if Crdentia then does not receive the Aggregate
Investment on or before the Extended Collateral Payment Date or has not
otherwise returned the Collateral, Crdentia shall then immediately return the
Collateral and Durham may institute any and all proceedings, including those
seeking immediate equitable relief, to collect the Collateral.

(b)   Durham
agrees to forbear from any declaration of default, institution of any suit or
proceeding or taking of any other form of action to enforce that certain
Acquisition Right of First Negotiation dated November 3, 2006 (“Acquisition
Right of First Negotiation”) and that certain Stock Pledge Agreement dated
November 3, 2006 between iVow, as Pledgor, Crdentia and MedCap Partners, L.P.,
C. Fred Toney, and Durham (the “Stock Pledge Agreement”), or to 

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collect the Collateral, at any time prior to the
Collateral Payment Date.  Durham and
Crdentia hereby terminate the Acquisition Right of First Negotiation with
respect to Durham and the Parties acknowledge and agree that Durham has no
rights pursuant to such Agreement, as of the Effective Date of this Agreement.

(c)   Durham
will further release the security interest (the “Security Interest”) held by him
pursuant to the Stock Pledge Agreement on the earlier of (i) the return of the
Collateral by Crdentia to Durham or (ii) Crdentia’s delivery of a general
release from iVOW inuring to Durham’s benefit, provided that Crdentia also
delivers a general release from iVOW to C. Fred Toney, inuring to Mr. Toney’s
benefit, and C. Fred Toney releases his security interest.  All interest accruing on the Collateral shall
be payable to Durham as provided in the underlying certificate of deposit.

14.   Assignment of Additional Collateral.  In further consideration of Durham signing
this Agreement, and the covenants and releases given herein, and in connection
with the execution of that certain Assignment, dated of even date herewith, by
and between Durham and Crdentia (the “Assignment”), Durham hereby waives and
releases any and all claims to that $100,000 of collateral (“Additional
Collateral”) pledged by Durham pursuant to that certain Security Agreement —
Pledge, dated as of January 19, 2007, by and between Durham and Comerica
Bank.  Crdentia acknowledges that the
Additional Collateral has been exchanged by Durham for 166,666 shares of common
stock of Crdentia, which shares are validly issued, fully paid, and
non-assessable, effective January 25, 2007, and will be included in any
registration statement filed by Crdentia pursuant to the Securities Purchase
Agreement and any related Registration Rights Agreeement.

15.   Interest on Collateral.  In further consideration of Durham signing
this Agreement, and the covenants and releases given herein, and within three
(3) business days of the Effective Date, Crdentia will provide Durham with a
payment in the gross sum of $7,513.89 (“Collateral Interest”) as Durham’s
portion of the interest payment received by Crdentia relating in part to the
Collateral.  Crdentia shall have no
future obligations to Durham concerning payment of any interest relating to the
Collateral.

16.   Bonus Agreement.  Nothing in this Agreement, including the
Mutual Release set forth in Section 18 below, shall affect any rights or
obligations of the Parties under the Bonus and Other Agreement, effective
December 31, 2003, between the Parties, as amended by the Amendment to Bonus
and Other Agreement, dated November 17, 2005, between the Parties (together,
the “Bonus Agreement”).

17.   Announcement.  The Parties will agree to a mutually
acceptable announcement of the severance of Durham’s employment and the
transition to a new Chief Executive Officer and Chairman of the Board of
Directors, as well as the appropriate wording for Form 8-K with respect to the
severance of Durham’s employment.  Except
as otherwise required by law, the parties will not characterize Durham’s
departure from Crdentia except as stated in such 

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announcement, and the parties will not disparage the
personal or business reputation of the other party’s Releasees (as defined
below in Section 18).

18.           Mutual Release.  Except for the rights and obligations
expressly set forth or excluded herein, Durham on the one hand and Crdentia on
the other, for themselves and for each of their respective past and present
agents, assigns, transferees, heirs, spouses, relatives, executors, attorneys,
administrators, officers, directors, employees, predecessors, subsidiaries,
parents, affiliates, successors, insurers, and representatives (“Releasors”),
hereby release and discharge the other and their respective past and present
agents, assigns, transferees, heirs, spouses, relatives, executors, attorneys,
administrators, officers, directors, employees, predecessors, subsidiaries,
parents, affiliates (including but not limited to MedCap Partners L.P., MedCap
Management & Research LLC, and MedCap Master Fund, L.P., MedCap Offshore
Partners, LTD.), successors, insurers, and representatives (“Releasees”) from
any and all claims and causes of action, known or unknown, which Releasors now
have or may have against any of the Releasees arising through the date of this
Agreement, including but not limited to claims relating to the Employment
Agreement, the Collateral, Additional Collateral or Collateral Interest, Durham’s
employment, discrimination, harassment, retaliation, breach of contract, breach
of the implied covenant of good faith and fair dealing, intentional and
negligent infliction of emotional distress, violation of privacy rights,
violation of any other state or federal law, any charge of discrimination filed
by Durham against Crdentia with any state or federal agency, claims for unpaid
wages, paid time off, and/or attorneys’ fees and costs incurred in reaching
this Agreement.  The Parties expressly
acknowledge and agree that neither Crdentia nor Durham would enter into this
Agreement but for the representation and warranty that Durham and Crdentia are
hereby releasing any and all claims of any nature whatsoever, known or unknown,
whether statutory or at common law, which Durham or Crdentia now has or could
assert directly or indirectly against any of the Releasees.  Nothing in this Agreement shall affect
Crdentia’s obligations to defend or indemnify Durham for any suits, errors,
acts or omissions while employed by Crdentia or its affiliates or while serving
as a director of Crdentia or its affiliates, and Durham shall be treated the
same as similarly situated executives, officers or directors of Crdentia under
the terms of Crdentia’s certificate of incorporation, bylaws, or policies for
indemnifying officers and directors and any insurance policies maintained by
Crdentia for Directors and Officers Liability. 
Nothing in this Agreement limits any rights that Durham may have as a
participant in any employee benefit plan of Crdentia that is subject to the
Employee Retirement Income Security Act of 1974, as amended.  Notwithstanding the foregoing, any release in
favor of MedCap Partners L.P., MedCap Management & Research LLC, and MedCap
Master Fund, L.P., MedCap Offshore Partners, LTD. or their respective officers,
employees, directors, managers or members (“MedCap”) shall not apply to claims
against MedCap:  (a) of which Durham is
not aware and should not reasonably be aware as of the Effective Date; and (b)
are completely unrelated to Crdentia and any Releasees other than MedCap.

19.   Age Release.  Durham understands and agrees that, by
entering into this Agreement: (i) Durham is waiving any rights or claims Durham
might have under the Age Discrimination in Employment Act, as amended by the
Older Workers Benefit Protection Act; (ii) Durham has received consideration
beyond that to which Durham was previously entitled; (iii) Durham has

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been advised to consult with an attorney before
signing this Agreement; and (iv) Durham has been offered the opportunity to
evaluate the terms of this Agreement for not less than twenty-one (21) days
prior to Durham’s execution of the Agreement. 
Durham may revoke this Agreement (by written notice hand-delivered to
counsel for Crdentia) for a period of seven (7) days after Durham’s execution
of the Agreement, and this Agreement shall become effective on the eighth (8th)
day after it has been signed by Durham provided Durham has not revoked the
Agreement prior to that date (“Effective Date”).

20.   No Actions or Charges.  Durham acknowledges and agrees that Durham
has no pending lawsuit, administrative charge or complaint against Crdentia or
any of the other Releasees, in any court or with any governmental agency.  Durham also agrees that, to the extent
permitted by law, Durham will not allow any lawsuit, administrative charge or
complaint to be pursued on Durham’s behalf. 
Durham further agrees that Durham will not participate, cooperate or
assist in any litigation against the Releasees in any manner, to the extent
permitted by law.  If lawfully subpoenaed
by a court, Durham agrees to provide Crdentia written notice of such a subpoena
within five (5) days of receipt.

21.   No Assignment or Transfer of Claims.  Durham and Crdentia represent and warrant that
they have not heretofore assigned, transferred or purported to assign or
transfer to any other person or entity any rights, claims or causes of action
herein released and discharged and no other person or entity has any interest
in the matters herein released and discharged. 
Furthermore, Durham and Crdentia shall indemnify and hold the other and
all persons or entities released herein harmless from and against any rights,
claims or causes of action which have been assigned or transferred contrary to
the foregoing representations, or in violation of the foregoing warranties, and
shall hold such persons or entities harmless from any and all loss, expense
and/or liability arising directly or indirectly out of the breach of any of the
foregoing representations or warranties.

22.   No Admission of Liability.  This Agreement is a compromise and settlement
of disputed claims being released herein, and therefore this Agreement does not
constitute an admission of liability on the part of Durham, Crdentia or any
Releasees, or an admission, directly or by implication, that Durham, Crdentia
or any of the Releasees has violated any law, rule, regulation, policy or any
contractual right or other obligation owed to any party.  Durham and Crdentia specifically deny all
allegations of improper or unlawful conduct. 
Durham and Crdentia intend merely to avoid litigation.

23.   No External or Prior Representations.  Each Party represents and warrants that such
Party is not relying, and has not relied, on any representations or statements,
verbal or written, made by any other Party with regard to the facts involved in
this controversy or with regard to such Party’s rights or asserted rights
arising out of Durham’s alleged claims or the execution and terms of this
Agreement, except as provided herein. 
Each Party has consulted with an attorney regarding the terms of this
Agreement and has entered into this Agreement freely, willingly and without any
coercion or duress.

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24.   Entire Agreement.  This Agreement, along with those portions of
the Employment Agreement identified in Section 6 of this Agreement, the
Assignment, the Bonus Agreement, the Restricted Stock Grants, the Options, and
the Stock Option, the Stock Pledge Agreement, and the Acquisition Right of
First Negotiation (except as otherwise modified by this Agreement), constitute
the entire written agreement of compromise and settlement between the
Parties.  There are no other agreements,
whether oral or written, modifying its terms. 
This Agreement supersedes any and all prior written or oral agreements
(including oral or written settlement agreements) between any of the
Parties.  The terms of this Agreement can
only be modified by a writing signed by the Parties expressly stating that such
modification is intended.

25.   Notices.  Any notice required or permitted to be given
hereunder shall be sufficient if in writing and (a) delivered in person or
by express delivery or courier service, (b) sent by facsimile, or
(c) deposited in the mail registered or certified first class, postage
prepaid and return receipt requested (provided that any notice given pursuant
to clause (b) is also confirmed by the means described in clause (a)
or (c)) to such address or facsimile of the party set forth below or to such
other place or places as such party from time to time may designate in writing
in compliance with the terms hereof. 
Each notice shall be deemed given when so delivered personally, or sent
by facsimile or electronic mail transmission, or, if sent by express delivery
or courier service one (1) Business Day after being sent, or if mailed, five
(5) Business Days after the date of deposit in the mail.  The address for such notices and
communications shall be as follows:

	
   

  	
  If
  to Crdentia:

  	
  Crdentia
  Corp.

  
	
   

  	
   

  	
  5001
  LBJ Freeway, Suite 850

  
	
   

  	
   

  	
  Dallas,
  Texas 75244

  
	
   

  	
   

  	
  Facsimile
  No.:  (972) 850-0780

  
	
   

  	
   

  	
  Telephone
  No.: (972) 392-2722   

  
	
   

  	
   

  	
  Attention:
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  With
  a copy to:

  	
  Morrison
  & Foerster LLP

  
	
   

  	
   

  	
  12531
  High Bluff Drive, Suite 100

  
	
   

  	
   

  	
  San
  Diego, CA 92130

  
	
   

  	
   

  	
  Facsimile
  No.:  (858) 720-5125

  
	
   

  	
   

  	
  Attention: 
  Rick Bergstrom, Esq.

  
	
   

  	
   

  	
   

  
	
   

  	
  If
  to Durham:

  	
  To
  the address set forth on the signature page hereto

  
	
   

  	
   

  	
   

  
	
   

  	
  With
  a copy to:

  	
  W. Gary Fowler

  
	
   

  	
   

  	
  Jackson Walker L.L.P.

  
	
   

  	
   

  	
  901 Main Street, Suite 6000

  
	
   

  	
   

  	
  Dallas, Texas 75202

  
	
   

  	
   

  	
  Telephone: (214) 953 5922

  
	
   

  	
   

  	
  Facsimile: (214) 953 5822

  
	
   

  	
   

  	
  Email: gfowler@jw.com

  

 

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or such other address as
may be designated in writing hereafter, in the same manner, by such Party.

26.   Default of Obligation by Crdentia  If Crdentia fails to make any payment due
under Sections 4, 7, and 8 of this Agreement, or if Crdenita fails to make any
payment due under the Bonus and Other Agreement, or if Crdentia fails to return
the Collateral as provided by Section 13, or if Crdentia otherwise commits any
material breach of this Agreement, and any of the foregoing shall not have been
remedied within seven (7) business days of receipt of written notice and
opportunity to cure, or if Crdentia shall file or be the subject of any
bankruptcy proceeding or receivership, Durham shall be released from the
obligations referenced in Section 6 of this Agreement, and Durham may
thereafter pursue an action for breach of this Agreement pursuant to Section 27
below.

27.   Arbitration.  The Parties agree that any and all disputes,
controversies and/or claims between the Parties, whether based on contract,
tort, statute or otherwise, including but not limited to those relating to,
arising from or connected in any manner to this Agreement or any other
agreement between the Parties, or arising out of or relating to Employee’s
employment or severance of employment, shall, upon timely written request of
either party be submitted to and resolved by binding arbitration.  The arbitration shall be conducted in Dallas,
Texas, before a single neutral arbitrator in accordance with the National Rules
for Resolution of Commercial Disputes of the American Arbitration Association (“AAA”)
then in effect.  Either party may bring
an action in any court of competent jurisdiction to compel arbitration under
this Agreement, to enforce an arbitration award and to vacate an arbitration
award.

28.   Governing Law, Forum and Venue.  This Agreement shall be construed in
accordance with, and be deemed governed by, the laws of the State of Texas, and
the Parties agree that the proper forum and venue for any action brought
arising out of or relating in anyway to this Agreement shall be in Dallas,
Texas.

29.   Cooperation in Executing Settlement
Documentation.  The Parties to this
Agreement shall execute any and all further documents that may be required to
effectuate the purposes of this Agreement.

30.   Binding on Successors.  This Agreement shall be binding upon and
shall inure to the benefit of the Parties hereto and to their respective
representatives, successors, heirs, agents and assigns.

31.   Counterparts.  This Agreement may be executed in
counterparts, and if so executed each such counterpart shall have the force and
effect of an original.  Photocopies of
such signed counterparts may be used in lieu of the originals for any purpose.

 9
 

32.   Severability.  In the event any provision of this Agreement
shall be found unenforceable by a court of competent jurisdiction, such
provision shall be deemed modified to the extent necessary to allow enforceability
of the provision as so limited, it being intended that the Parties shall
receive the benefits contemplated herein to the fullest extent permitted by
law.  If a deemed modification is not
satisfactory in the judgment of such court, the unenforceable provision shall
be deemed deleted, and the validity and enforceability of the remaining
provisions shall not be affected thereby.

33.   Modification.  No breach of any provision of this Agreement
can be waived unless in writing.  Waiver
of any one breach shall not be deemed to be a waiver of any other breach of the
same or any other provision of this Agreement.

34.   Further Actions.  Each of the Parties agrees to execute,
acknowledge and deliver such further instruments, and to do all such other
acts, as may be necessary or appropriate to carry out the purposes and intent
of the Agreement.

35.   Construction.  This Agreement shall not be interpreted for
or against any Party on the basis that such Party or its legal representative
caused part or all of this Agreement to be drafted.

36.   Section Headings.  The section headings of this Agreement are
intended solely for convenience of reference and shall not in any manner
amplify, limit, modify or otherwise be used in the interpretation of any of the
provisions hereof.

37.   Authority to Sign.  Each individual signing this Agreement
directly and expressly warrants that he/she has been given and has received and
accepted authority to sign and execute the documents on behalf of the Party for
whom it is indicated he/she has signed, and further has been expressly given
and received and accepted authority to enter into a binding agreement on behalf
of such Party with respect to the matters concerned herein and as stated
herein.  A signature transmitted by
facsimile or as a pdf copy to electronic mail shall be treated as original for
all purposes.

[Remainder of Page Intentionally Left Blank]

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WE, THE
UNDERSIGNED, HAVE READ THE FOREGOING AND, HAVING BEEN ADVISED BY COUNSEL, FULLY
UNDERSTAND AND AGREE TO ITS TERMS,

	
  Dated: March 6, 2007

  	
   

  	
   

  	
  /s/ James D. Durham

  
	
   

  	
   

  	
   

  	
  James D. Durham

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ADDRESS FOR
  NOTICE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  c/o:

  	
   

  
	
   

  	
   

  	
  Street:

  	
       

  
	
   

  	
   

  	
  City/State/Zip:

  	
   

  
	
   

  	
   

  	
  Tel:

  	
   

  
	
   

  	
   

  	
  Fax:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CRDENTIA CORP.

  
	
   

  	
   

  	
   

  
	
  Dated:
  March 6, 2007

  	
   

  	
  /s/ C. Fred Toney

  
	
   

  	
   

  	
  By:

  	
  C. Fred Toney

  
	
   

  	
   

  	
  Its:

  	
  Chairman

  
	
   

  	
   

  	
   

  
	
  APPROVED AS TO
  FORM:

  	
   

  	
   

  
	
   

  	
   

  	
  JACKSON WALKER L.L.P.

  
	
   

  	
   

  	
   

  
	
  Dated:
  March 6, 2007

  	
   

  	
  /s/ W. Gary Fowler

  
	
   

  	
   

  	
  W. Gary Fowler

  
	
   

  	
   

  	
  Attorneys for
  Jim Durham

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MORRISON & FOERSTER LLP

  
	
   

  	
   

  	
   

  
	
  Dated:
  March 6, 2007

  	
   

  	
  /s/ Rick Bergstrom

  
	
   

  	
   

  	
  Rick Bergstrom

  
	
   

  	
   

  	
  Attorneys for
  Crdentia Corp.

  
							

 

[Signature Page to Severance Agreement and Mutual Release of Claims]

 11Exhibit
10.1

KEY EXECUTIVE STOCK OPTION AWARD AGREEMENT

FRIENDLY ICE CREAM CORPORATION

THIS KEY EXECUTIVE STOCK OPTION AWARD AGREEMENT (the “Agreement”), dated
as of the 8th day of January, 2007 (the “Grant Date”) and entered into by and
between Friendly Ice Cream Corporation (the “Company”) and GEORGE M. CONDOS
(the “Recipient”).

WITNESSETH THAT:

WHEREAS, as an inducement material to the Recipient’s employment as
President and Chief Executive Officer of the Company, the Compensation Committee of the Board of
Directors has awarded the Recipient an option to purchase shares of the Company’s
common stock, par value $0.01 per share (“Stock”), subject to the terms of this
Agreement.

NOW, THEREFORE, IT IS AGREED, by and between the Company and the
Recipient as follows:

1.             Definitions.  In addition to the other definitions
contained herein, the following definitions shall apply:

(a)                                  “Affiliate”
shall have the meaning set forth in Rule 12b-2 of the Exchange Act.

(b)                                 “Board”
means the Board of Directors of the Company.

(c)                                  “Code”
means the Internal Revenue Code of 1986, as amended. A reference to any
provision of the Code shall include reference to any successor provision of the
Code.

(d)                                 “Committee”
means the Compensation Committee of the Board, or such other committee
consisting solely of two or more Independent Directors of the Board appointed
by the Board to administer the Agreement, or if there is no such committee, the
Board.

(e)                                  “Employee”
means any person employed by the Company or an Affiliate.  Service as a director or payment of a
director’s fee by the Company or an Affiliate shall not be sufficient to
constitute “employment” by the Company or an Affiliate.

(f)                                    “Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.

(g)                                 “Independent
Director” means a director who is not an Employee and who qualifies as an
Independent Director under the applicable rules of the American

 

Stock Exchange
(and/or the similar rules of any other stock exchange(s) on which the Company’s
securities become publicly traded).

(h)                                 “Retirement”
shall be deemed to occur upon any termination of service from the Company after
the Recipient’s attainment of age 60.

2.             Award and Exercise
Price.  Subject to the terms of this
Agreement, the Recipient is hereby granted an option (the “Option”) to purchase
75,000 shares of Stock (the “Award”). 
The price of each share of Stock subject to the Option shall be $11.80
(the “Exercise Price”).  The Option is
not  intended to constitute an “incentive
stock option” as that term is used in Code Section 422.

3.             Vesting.  Subject to Section 9 hereof, this Option
shall become exercisable in accordance with the following schedule provided the
Recipient is employed by the Company on the respective date:

	
  Vesting Date

  	
   

  	
  Exercisable for the Number of 

  Shares

  
	
  January 8, 2008

  	
   

  	
  33.4% of Award

  
	
  January 8, 2009

  	
   

  	
  33.3% of Award

  
	
  January 8, 2010

  	
   

  	
  33.3% of Award

  

 

Notwithstanding
the foregoing provisions of this paragraph 3, this Option may vest and become
immediately exercisable if the Recipient’s employment with the Company is
terminated by reason of death or disability (as defined in Code Section
22(e)(3) (“Disability”)), as determined by the Committee in its sole
discretion.

4.             Expiration;
Forfeiture.  This Option shall expire
on the earliest to occur of:

(a)                                  the five-year anniversary of the Grant Date;

(b)                                 if the Recipient’s termination of employment with
the Company occurs by reason of death or Disability, the one-year anniversary of
such Date of Termination;

(c)                                  if the Recipient’s termination of employment with
the Company occurs by reason of Retirement, the three-year anniversary of the
date of such termination; or

(d)                                 if the Recipient’s termination of employment with
the Company occurs for reasons other than death, Disability or Retirement, the
three-month anniversary of the date of such termination;

which
shall be the “Expiration Date” for the Option. 
Notwithstanding the foregoing provisions of this paragraph 4, except as
provided in paragraph 3 above, no portion of the Option shall be

 2
 

 

exercisable
after the Recipient’s termination of employment with the Company except to the
extent that it is exercisable as of the date immediately prior to the date of
termination of employment with the Company.

5.             Method of Option
Exercise.  Any portion of the Option
that is exercisable may be exercised in whole or in part by filing a written
notice with the Clerk of the Company at its corporate headquarters, provided
that the notice is filed prior to the Expiration Date of the Option.  Such notice shall specify the number of
shares of Stock which the Recipient elects to purchase, and shall be
accompanied by payment of the Exercise Price for such shares indicated by the
Recipient’s election.  Payment shall be
by cash.

6.             Withholding.  Pursuant to applicable federal, state,
local or foreign laws, the Company may be required to collect income or other
taxes on the grant of this Option, the exercise of this Option, the lapse of a
restriction placed on this Option or the shares of Stock issued upon exercise
of this Option, or at other times.  The
Company may require, at such time as it considers appropriate, that the
Recipient pay the Company the amount of any taxes which the Company may
determine is required to be withheld or collected, and the Recipient shall
comply with the requirement or demand of the Company.  In its discretion, the Company may withhold
shares of Stock to be issued upon exercise of this Option or offset against any
amount owed by the Company to the Recipient, including compensation amounts, if
in its sole discretion it deems this to be an appropriate method for
withholding or collecting taxes.

7.             Transferability.  This Option is not transferable except as
designated by the Recipient by will or by the laws of descent and distribution.

8.             Adjustment of Option.  In the event of any stock dividend,
stock split, reverse stock split, extraordinary cash dividend,
recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination
or exchange of shares or similar corporate transaction, the Committee may
adjust the Option to preserve the benefits or potential benefits of the Option.
Action by the Committee may include: (i) adjustment of the number and kind of
securities which may be delivered under this Agreement; (ii) adjustment of the
Exercise Price; and (iii) any other adjustments that the Committee determines
to be equitable (which may include, without limitation, (I) replacement of the
Option with other awards which the Committee determines have comparable value
and which are based on the securities of a company resulting from the
transaction, and (II) cancellation of the vested and unvested portion of the
Option in return for cash payment of the current value of Option, determined as
though the Option is fully vested at the time of payment, provided that the
amount of such payment may be the excess of value of the Stock subject to the
Option at the time of the transaction over the Exercise Price).  Any such adjustment to an outstanding Option,
shall be effected in a manner that precludes the enlargement of Recipient’s
rights and benefits under such Option.

9.             Change in Control.  If the Recipient is employed by the Company
or an Affiliate at the time of a Change in Control, all outstanding Options
subject to this Agreement then held by the Recipient shall become fully
exercisable on and after the date of the Change in Control (subject to the
expiration provisions otherwise applicable to the Options).  A “Change in Control” shall be deemed to
occur on the earliest of the existence of one of the following events:

 3
 

 

(a)                                  (i) any “person” (as such term is used in
Sections 13(d) or 14(d) of the Exchange Act), other than one or more Permitted
Holders (as defined below), is or becomes the beneficial owner (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more
than 35% of the total voting power of the Voting Stock (as defined below) of
the Company and (ii) the Permitted Holders “beneficially own” (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, in the
aggregate a lesser percentage of the voting power of the Voting Stock of the
Company than such other person and do not have the right or ability by voting
power, contract or otherwise to elect or designate for election a majority of
the Board of Directors of the Company;

(b)                                 individuals who constitute the Board as of the
date hereof (the “Incumbent Board”) cease for any reason to constitute at least
a majority of the Board, provided that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by the
Company’s shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though
such individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office is in
connection with an actual or threatened “election contest” relating to the
election of the directors of the Company; or

(c)                                  approval by the Company’s shareholders of a
reorganization, merger or consolidation of the Company, in each case, with
respect to which all or substantially all of the individuals and entities who
were the respective beneficial owners of the common stock and voting securities
of the Company immediately prior to such reorganization, merger or
consolidation do not, following such reorganization, merger or consolidation,
beneficially own, directly and indirectly, more than 70% of, respectively, the
then outstanding shares of common stock or the combined voting power of the
then outstanding voting securities entitled to vote generally in the election
of directors, as the case may be, of the corporation resulting from such
reorganization, merger or consolidation, or of a complete liquidation or
dissolution of the Company or of the sale or other disposition of all or
substantially all of the assets of the Company.

For purposes of this paragraph 9, the term “Permitted Holders”
means Donald N. Smith, the Company’s then existing executive officers and their
respective Affiliates.  The term “Voting
Stock” of the Company means all classes of capital stock of the Company then
outstanding and normally entitled to vote in the election of directors.

10.           Administration.

(a)                                  The
authority to control and manage the operation and administration of this
Agreement shall be vested in the Committee. 
The Committee has the authority and discretion to interpret this
Agreement, to establish, amend,

 4
 

 

and rescind any rules and
regulations relating to the Agreement, and to make all other determinations
that may be necessary or advisable for the administration of the
Agreement.  Any interpretation of this
Agreement by the Committee and any decision made by it under this Agreement is
final and binding on all persons.  In
controlling and managing the operation and administration of this Agreement,
the Committee shall take action in a manner that conforms to the articles and
by-laws of the Company, applicable state corporate law and applicable stock
exchange requirements.

(b)                                 Except
to the extent prohibited by applicable law or the applicable rules of a stock
exchange, the Committee may allocate all or any portion of its responsibilities
and powers to any one or more of its members and may delegate all or any part
of its responsibilities and powers to any person or persons selected by
it.  Any such allocation or delegation
may be revoked by the Committee at any time.

(c)                                  The
Company and its subsidiaries shall furnish the Committee with such data and
information as it determines may be required for it to discharge its
duties.  The records of the Company and
its subsidiaries as to Recipient’s employment, termination of employment, leave
of absence, reemployment and compensation shall be conclusive on all persons
unless determined to be incorrect. 
Recipient must furnish the Committee such evidence, data or information
as the Committee considers desirable to carry out the terms of the Agreement.

11.           General Restrictions.  Notwithstanding any other provision of
this Agreement, the Company shall have no obligation or liability to deliver
any shares of Stock under this Agreement or make any other distribution of
benefits under this Agreement unless such delivery or distribution would comply
with all applicable laws (including, without limitation, the requirements of
the Securities Act of 1933, as amended), and the applicable requirements of any
stock exchange or similar entity.  The
Company may also require the Recipient to execute and deliver such other
representations and agreements, and take such other action, as may be required
by the Company to comply with applicable law.

12.           Limitation of Implied Rights.

(a)                                  Recipient
shall not, by reason of this Agreement, acquire any right in or title to any
assets, funds or property of the Company or any subsidiary whatsoever,
including, without limitation, any specific funds, assets, or other property
which the Company or any subsidiary, in its sole discretion, may set aside in
anticipation of a liability under the Agreement.  A Recipient shall have only a contractual
right to the Stock issuable upon exercise of the Option in accordance with this
Agreement, unsecured by any assets of the Company or any subsidiary, and
nothing contained in this

 5
 

 

Agreement
shall constitute a guarantee that the assets of the Company or any Subsidiary
shall be sufficient to pay any benefits to any person.

(b)                                 This
Agreement does not constitute a contract of employment, and the Award granted
to Recipient pursuant to this Agreement does not give the Recipient the right
to be retained in the employ of the Company or any subsidiary, nor any right or
claim to any benefit under this Agreement, unless such right or claim has
specifically accrued under the terms of this Agreement.  Except as otherwise provided in this
Agreement, the Award does not confer upon the Recipient any rights as a
shareholder of the Company prior to the date on which the individual fulfills
all conditions for receipt of such rights and is issued shares.

13.           Amendment.  This Agreement may only be modified or
amended by a writing signed by both parties.

14.           Notices.  Any notices required to be given under this
Agreement shall be sufficient if in writing and if hand-delivered or if sent by
first class mail and addressed as follows:

if to the Company:

Friendly Ice Cream
Corporation

1855 Boston Road

Wilbraham, MA  01095

Attn:  Vice President, Human Resources

if to the
Recipient:

George M. Condos

299 Great Bay Street

East Falmouth, MA  02536

or to such other address as either party may designate
under the provisions hereof.

15.           Successors
and Assigns.  The rights and
obligations of the Company under this Agreement shall inure to the benefit of
and be binding upon the successors and assigns of the Company.

16.           Entire Agreement.   This Agreement constitutes the entire
agreement of the parties with respect to the subject matter hereof and
supersedes in their entirety all prior undertakings and agreements of the
Company and Recipient with respect to the subject matter hereof including,
without limitation, the offer letter and employment agreement.

 6
 

 

17.           Governing Law.  The terms of this Agreement shall be governed
by and interpreted in accordance with the laws of the Commonwealth of Massachusetts.

IN WITNESS WHEREOF, the Recipient has hereunto set his hand, and the
Company has caused these presents to be executed in its name and on its behalf,
all as of the Grant Date.

 

	
  

  	
   

  	
  RECIPIENT

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ George M. Condos

  	
   

  	
   

  
	
   

  	
   

  	
  GEORGE M. CONDOS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FRIENDLY ICE CREAM CORPORATION

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/ Garrett J. Ulrich

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  GARRETT J. ULRICH,

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  VICE PRESIDENT, HUMAN
  RESOURCES

  	
   

  	
   

  

 

 

 7

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