Document:

Exhibit
10.1 

 

June 3,
2005

 

Timothy
McLevish

724 Jane
Drive

Franklin
Lakes, NJ 07417

Dear
Tim,

The
following is an addendum to our employment agreement dated April 17,
2002.

In the
unlikely event of your involuntary termination from IR for other than gross
cause, as consideration for your release of whatever claims might be made, you
will have three years (not to exceed the ten-year duration of the option
contract) from the effective date of termination within which to exercise
whatever vested options you have earned at the point of your
termination.

Sincerely,

Herbert
L. Henkel

Chairman,
President and 

Chief
Executive Officer

cc: R. C.
Butler 

 

Accepted
By:

_________________________________ Date:
__________________________

Timothy
McLevishCRDENTIA CORP.

                         EXECUTIVE EMPLOYMENT AGREEMENT

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      This Executive Employment Agreement (the "Agreement"),  dated May 31, 2005
(the "Effective  Date"), is between Crdentia Corp., a Delaware  corporation (the
"Company") and James J. TerBeest ("Executive").

1.    POSITION AND RESPONSIBILITIES

      a.  Position.  Executive is employed by the Company to render  services to
the Company in the position of Chief Financial Officer.  Executive shall perform
such duties and  responsibilities  as are normally  related to such  position in
accordance  with the standards of the industry and any additional  duties now or
hereafter  assigned to Executive by the Company.  To the extent not inconsistent
with the express terms of this  Agreement,  Executive  shall abide by the rules,
regulations,  and practices for the  Company's  senior  management as adopted or
modified from time to time in the Company's sole discretion.

      b. Other Activities. Except upon the prior written consent of the Company,
Executive  will not,  during  the term of this  Agreement,  (i) accept any other
employment,  or (ii)  engage,  directly  or  indirectly,  in any other  business
activity  (whether or not pursued for pecuniary  advantage) that interferes with
Executive's  duties  and  responsibilities  hereunder  or create a  conflict  of
interest with the Company.

      c.  No  Conflict.  Executive  represents  and  warrants  that  Executive's
execution of this Agreement,  Executive's  employment with the Company,  and the
performance  of  Executive's  proposed  duties  under this  Agreement  shall not
violate any  obligations  Executive  may have to any other  employer,  person or
entity,  including any  obligations  with respect to proprietary or confidential
information of any other person or entity.

      d. Relocation.  In furtherance of the employment relationship contemplated
by this Agreement,  Executive agrees to, on or before October 31, 2005, relocate
his principal residence to Dallas, Texas.

2.    COMPENSATION AND BENEFITS

      a. Base Salary. In consideration of the services to be rendered under this
Agreement,  the Company  shall pay Executive a salary at the rate of One Hundred
Seventy Five Thousand  Dollars  ($175,000)  per year ("Base  Salary").  The Base
Salary shall be paid in  accordance  with the  Company's  regularly  established
payroll practice.  Executive's Base Salary will be reviewed from time to time in
accordance with the established procedures of the Company for adjusting salaries
for similarly  situated  employees and may be adjusted in the sole discretion of
the Company; provided, however, that the Company may not reduce Executive's Base
Salary unless the base salaries of all executive  employees holding the position
of vice  president or above are reduced by the same  percentage  as  Executive's
Base Salary.
<PAGE>

      b.  Restricted  Stock.  In  consideration  of the  services to be rendered
hereunder,  upon the  requisite  approval of the  Company's  board of directors,
Executive  shall be granted 500,000 shares of the Company's  common stock.  Such
grant shall be evidenced by, and subject to the terms and  conditions  set forth
in, the form of Notice of  Restricted  Stock  Bonus Award and  Restricted  Stock
Bonus Award  Agreement  which is attached  hereto as Exhibit A (the  "Restricted
Stock Agreement").

      c. Benefits.  Executive shall be eligible to participate in the healthcare
benefits  made  generally   available  by  the  Company  to   similarly-situated
executives, in accordance with the benefit policies and plans established by the
Company,  and as may  be  amended  from  time  to  time  in the  Company's  sole
discretion.

      d. Bonus Program.  Executive shall be eligible to participate in the Bonus
Program made generally available to the Company's  executives ("Bonus Program"),
such  participation  to  be  at  a  level  consistent  with   similarly-situated
executives and in accordance with the terms of the Bonus Program  established by
the  Company,  and as may be  amended  from time to time in the  Company's  sole
discretion.

      e. Expenses. The Company shall reimburse Executive for reasonable business
expenses  incurred  in  the  performance  of  Executive's  duties  hereunder  in
accordance with the Company's expense reimbursement guidelines.

3.    AT-WILL EMPLOYMENT; TERMINATION BY COMPANY

      a. At-Will  Termination by Company.  The employment of Executive  shall be
"at-will" at all times.  The Company may terminate  Executive's  employment with
the Company at any time, without any advance notice, for any reason or no reason
at all,  notwithstanding  anything to the contrary  contained in or arising from
any statements, policies or practices of the Company relating to the employment,
discipline or termination of its employees.  Upon and after such  termination by
the Company,  all  obligations of the Company under this Agreement  shall cease,
unless  Executive's  employment is terminated  without Cause,  in which case the
Company shall provide Executive with the severance benefits described in Section
3(b) below.

      b.  Severance.  Except in situations  where the employment of Executive is
terminated  For Cause or By Disability  (as defined in Section 4 below),  in the
event that the Company  terminates  the  employment of Executive at any time, or
upon Executive's death, Executive will be eligible to receive an amount, payable
in a lump sum,  equal to (i) six (6) months of the Base Salary of the  Executive
plus (ii) one (1) month of the Base  Salary of the  Executive  for each month of
employment  beginning  on January 1, 2005 in excess of six (6) months but not to
exceed twelve (12) months. For purposes of such calculation, "Base Salary" shall
refer to the greater of (i) $175,000 per year or (ii)  Executive's  then current
base salary on the termination  date (plus the amount of any cash bonus received
by Executive for the prior year, if any). Executive's  eligibility for severance
is conditioned on Executive having first signed a release  agreement in the form
attached as Exhibit B. Executive shall not be entitled to any severance payments
if Executive's employment is terminated For Cause, By Death or By Disability (as
defined  in  Section 4 below) or if  Executive's  employment  is  terminated  by
Executive without Good Reason (in accordance with Section 5 below).

                                       2
<PAGE>

4.    OTHER TERMINATIONS BY COMPANY

      a.  Termination  for Cause.  For purposes of this  Agreement,  "For Cause"
shall mean:  (i)  Executive is indicted  for or charged  with a crime  involving
dishonesty,  breach of trust, or physical harm to any person (provided, however,
that the foregoing shall not include any misdemeanor  resulting from harm caused
by Executive to another person through the operation of a motor  vehicle);  (ii)
Executive  willfully  engages  in  conduct  that is in bad faith and  materially
injurious  to the Company,  including  but not limited to,  misappropriation  of
trade secrets, fraud or embezzlement;  (iii) Executive commits a material breach
of this  Agreement,  which breach (if  curable) is not cured within  thirty days
after written  notice to Executive from the Company;  (iv)  Executive  willfully
refuses to implement or follow a lawful  policy or directive of the Company that
is consistent with the terms of this Agreement, which breach is not cured within
sixty  (60)  days  after  written  notice to  Executive  from the  Company;  (v)
Executive  engages in misfeasance or  malfeasance  demonstrated  by a pattern of
failure to perform job duties diligently and  professionally,  which failure (if
curable) is not cured within sixty (60) days after  written  notice to Executive
from the Company; or (vi) Executive fails to relocate his principal residence as
contemplated by Section 1(d) of this Agreement.  Except for the notices required
above, the Company may terminate  Executive's  employment For Cause at any time,
without any advance notice.  The Company shall pay to Executive all compensation
to which  Executive is entitled up through the date of  termination,  subject to
any other  rights or remedies  of the  Company  under law;  and  thereafter  all
obligations of the Company under this Agreement shall cease.

      b. By Death.  Executive's  employment shall terminate  automatically  upon
Executive's death. The Company shall pay to Executive's beneficiaries or estate,
as appropriate,  any compensation then due and owing. Thereafter all obligations
of the Company under this Agreement  shall cease.  Nothing in this Section shall
affect any  entitlement of Executive's  heirs or devisees to the benefits of any
life insurance plan or other applicable benefits.

      c. By  Disability.  If Executive  becomes  eligible for the Company's long
term  disability  benefits  or if, in the sole  opinion of a  qualified  medical
doctor in  Executive's  municipality  of  residence  selected by the Company but
otherwise not affiliated with the Company or its senior management, Executive is
unable to carry out the  responsibilities  and functions of the position held by
Executive  by reason of any physical or mental  impairment  for more than ninety
(90)  consecutive  days or more than one  hundred  and twenty  (120) days in any
twelve-month  period,  then,  to the extent  permitted  by law,  the Company may
terminate  Executive's  employment.  The  Company  shall  pay to  Executive  all
compensation to which Executive is entitled through the date of termination, and
thereafter  all  obligations  of the Company under this  Agreement  shall cease.
Nothing in this Section  shall affect  Executive's  rights under any  disability
plan in which Executive is a participant.

5.    TERMINATION BY EXECUTIVE

      a. At-Will  Termination by Executive.  Executive may terminate  employment
with the  Company  at any time for any reason or no reason at all,  upon  ninety
(90) days' advance  written  notice.  During such notice period  Executive shall
continue to diligently perform all of Executive's duties hereunder.  The Company
shall have the option, in its sole discretion,  to make Executive's  termination
effective  at any time  prior to the end of such  notice  period  as long as the
Company  pays  Executive  all  compensation  to which  Executive  is entitled up
through  the last day of the  ninety  (90) day  notice  period.  Thereafter  all
obligations of the Company shall cease.

                                       3
<PAGE>

      b. Termination for Good Reason. Executive's termination shall be for "Good
Reason" if Executive  provides  written notice to the Company of the Good Reason
within thirty (30) days of the event  constituting  Good Reason and provides the
Company  with a period of thirty (30) days to cure the event  constituting  Good
Reason and the Company  fails to cure the Good Reason  within that  period.  For
purposes  of this  Agreement,  "Good  Reason"  shall  mean any of the  following
events,  if such  event is  effected  by the  Company  without  the  consent  of
Executive:  (i)  a  change  in  Executive's  position  with  the  Company  which
materially  reduces  Executive's  level of  responsibility;  (ii) a reduction in
Executive's  Base Salary,  except for reductions in accordance with Section 2(a)
hereof; (iii) a relocation of Executive's  principal place of employment by more
than fifty (50) miles (excluding Executive's relocation  contemplated by Section
1(d) of this  Agreement);  or (iv) a material  breach of this  Agreement  by the
Company.  In such event  Executive may terminate his employment for Good Reason,
in which case  Executive  will be eligible to receive an amount,  payable in the
form of a lump  sum,  equal  to (i) six (6)  months  of the Base  Salary  of the
Executive  plus  (ii)  one (1)  month of the  then-current  Base  Salary  of the
Executive for each month of employment beginning on January 1, 2005 in excess of
six (6)  months but not to exceed  twelve  (12)  months.  For  purposes  of such
calculation,  "Base  Salary" shall refer to the greater of (i) $175,000 per year
or (ii)  Executive's Base Salary on the termination date (plus the amount of any
cash bonus  received  by  Executive  for the prior  year,  if any).  Executive's
eligibility  for  severance is  conditioned  on Executive  having first signed a
release  agreement in the form attached as Exhibit B. Thereafter all obligations
of the Company or its successor under this Agreement shall cease.

6.    TERMINATION OBLIGATIONS

      a. Return of  Property.  Executive  agrees that all  property  (including,
without limitation, all equipment, tangible proprietary information,  documents,
records,  notes,  contracts and  computer-generated  materials)  furnished to or
created or prepared by Executive  incident to Executive's  employment belongs to
the Company and shall be promptly  returned to the Company upon  termination  of
Executive's employment.

      b.   Resignation  and   Cooperation.   Upon   termination  of  Executive's
employment,  Executive  shall be deemed to have  resigned  from all  offices and
directorships  then  held  with  the  Company.   Following  any  termination  of
employment,   subject  to   Executive's   receiving   reasonable  and  customary
compensation,  Executive  shall  cooperate with the Company in the winding up of
pending work on behalf of the Company and the orderly  transfer of work to other
employees.  Executive  shall also cooperate  with the Company,  at the Company's
expense,  in the defense of any action  brought by any third  party  against the
Company that relates to Executive's employment by the Company.

      c.  Continuing   Obligations.   Executive   understands  and  agrees  that
Executive's  obligations under Sections 6, 7, and 8 herein (including Exhibits C
and D) shall survive the  termination of  Executive's  employment for any reason
and the termination of this Agreement.

                                       4
<PAGE>

7.    INVENTIONS AND PROPRIETARY  INFORMATION;  NON COMPETITION;  PROHIBITION ON
      THIRD PARTY INFORMATION

      a.  Proprietary  Information  Agreement.  Executive  agrees to sign and be
bound by the terms of the  Proprietary  Information  and  Inventions  Agreement,
which is attached as Exhibit C ("Proprietary Information Agreement").

      b. Non-Competition.  As an inducement for the Company's entering into this
Agreement and in consideration of the Company's  agreement to furnish  Executive
with certain  confidential  and  proprietary  information  regarding the Company
pursuant to Exhibit C, Executive  covenants  that  commencing on the date hereof
(the "Effective  Date") and for a period ending  eighteen (18) months  following
the  termination  of  Executive's  employment  with the  Company  (the  "Term"),
Executive  shall not,  directly or  indirectly,  manage,  engage in,  operate or
conduct, prepare to or plan to conduct or assist any person or entity to conduct
any business,  or have any controlling  interest in any business,  person, firm,
corporation  or  other  entity  (as  a  principal,   owner,   agent,   employee,
shareholder,  officer,  director,  joint  venturer,  partner,  member,  security
holder,  creditor,  consultant  or in  any  other  capacity)  whose  revenue  is
generated  principally  from a business which is  competitive  with the Business
anywhere  in the United  States  (the  "Territory").  As used  herein,  the term
"Business"  shall refer to the business of the company and its  subsidiaries  of
operating a temporary nurse staffing company, including, without limitation, the
provision  of  travel  and per  diem  temporary  nurse  staffing  services.  The
covenants  set forth in this  Section  7(b)  shall be  construed  as a series of
separate  covenants covering their subject matter in each of the separate states
within the  Territory,  and except for geographic  coverage,  each such separate
covenant  shall be deemed  identical in terms to the covenant set forth above in
this Section  7(b).  To the extent that any such  covenant  shall be  judicially
unenforceable  in any one or more  states in the United  States,  such  covenant
shall  not be  affected  with  respect  to  each  of such  other  states  in the
Territory.  Each covenant  with respect to such state in the Territory  shall be
construed as severable and independent.

      c.  Non-Solicitation;   Non-Disparagement.   Executive  acknowledges  that
because of  Executive's  position in the Company,  Executive will have access to
material intellectual property and confidential information. During the Term (as
previously defined),  in addition to Executive's other obligations  hereunder or
under the Proprietary Information Agreement,  Executive shall not, for Executive
or any third party,  directly or indirectly (a) divert or attempt to divert from
the Company or its  subsidiaries  any  business of any kind,  including  without
limitation  the  solicitation  of or  interference  with  any of its  customers,
clients,  members,  business partners or suppliers,  or (b) solicit or otherwise
induce any  person  engaged by the  Company  or any of its  subsidiaries  (as an
agent, employee,  consultant,  or in any other capacity) to terminate his or her
employment,   consultancy  or  other   relationship  with  the  Company  or  its
subsidiaries.  In addition,  Executive  will not disparage the Company or any of
its  stockholders,  directors,  employees or agents  (collectively  the "Company
Representatives"),  and neither the Company nor the Company Representatives will
disparage Executive.

                                       5
<PAGE>

      d.  Non-Disclosure of Third Party  Information.  Executive  represents and
warrants and covenants that Executive shall not disclose to the Company, or use,
or induce the Company to use, any  proprietary  information  or trade secrets of
others at any time, including but not limited to any proprietary  information or
trade secrets of any former  employer,  if any; and Executive  acknowledges  and
agrees that any  violation of this  provision  shall be grounds for  Executive's
immediate   termination  and  could  subject   Executive  to  substantial  civil
liabilities and criminal penalties. Executive further specifically and expressly
acknowledges  that no officer or other employee or representative of the Company
has  requested or  instructed  Executive to disclose or use any such third party
proprietary information or trade secrets.

      e.  Reasonableness  of  Restrictions.  EXECUTIVE  HAS  CAREFULLY  READ AND
CONSIDERED THE PROVISIONS OF SECTION 7 HEREOF AND, HAVING DONE SO, HEREBY AGREES
THAT THE RESTRICTIONS SET FORTH IN SUCH SECTIONS ARE FAIR AND REASONABLE AND ARE
REASONABLY  REQUIRED FOR THE  PROTECTION OF THE INTERESTS OF THE COMPANY AND ITS
ASSETS AND  PROPERTIES,  INCLUDING,  WITHOUT  LIMITATION,  THE BUSINESS.  IF ANY
COVENANT IN SECTION 7 IS HELD TO BE UNREASONABLE,  ARBITRARY,  OR AGAINST PUBLIC
POLICY,  SUCH COVENANT WILL BE CONSIDERED TO BE DIVISIBLE WITH RESPECT TO SCOPE,
TIME, AND GEOGRAPHIC  AREA, AND SUCH LESSER SCOPE,  TIME, OR GEOGRAPHIC AREA, OR
ALL  OF  THEM,  AS A  COURT  OF  COMPETENT  JURISDICTION  MAY  DETERMINE  TO  BE
REASONABLE,  NOT ARBITRARY,  AND NOT AGAINST  PUBLIC POLICY,  WILL BE EFFECTIVE,
BINDING AND ENFORCEABLE AGAINST THE EXECUTIVE.

8.    ARBITRATION

      Executive  agrees  to sign and be bound  by the  terms of the  Arbitration
Agreement, which is attached as Exhibit D.

9.    AMENDMENTS; WAIVERS; REMEDIES

      This  Agreement may not be amended or waived except by a writing signed by
Executive  and by a duly  authorized  representative  of the Company  other than
Executive.  Failure  to  exercise  any  right  under  this  Agreement  shall not
constitute  a waiver of such right.  Any waiver of any breach of this  Agreement
shall not operate as a waiver of any subsequent breaches. All rights or remedies
specified  for a party herein shall be  cumulative  and in addition to all other
rights and remedies of the party hereunder or under applicable law.

10.   ASSIGNMENT; BINDING EFFECT

      a.  Assignment.  The performance of Executive is personal  hereunder,  and
Executive  agrees  that  Executive  shall  have no right to assign and shall not
assign or purport to assign any rights or obligations under this Agreement. This
Agreement  may be assigned or  transferred  by the Company;  and nothing in this
Agreement  shall prevent the  consolidation,  merger or sale of the Company or a
sale of any or all or substantially all of its assets.

                                       6
<PAGE>

      b. Binding Effect.  Subject to the foregoing  restriction on assignment by
Executive, this Agreement shall inure to the benefit of and be binding upon each
of the parties;  the affiliates,  officers,  directors,  agents,  successors and
assigns of the Company; and the heirs, devisees,  spouses, legal representatives
and successors of Executive.

11.   NOTICES

      All notices or other communications  required or permitted hereunder shall
be made in writing and shall be deemed to have been duly given if delivered: (a)
by hand; (b) by a nationally  recognized  overnight  courier service;  or (c) by
United  States  first  class  registered  or  certified  mail,   return  receipt
requested,  to the principal address of the other party, as set forth below. The
date of notice shall be deemed to be the earlier of (i) actual receipt of notice
by any  permitted  means,  or (ii) five  business  days  following  dispatch  by
overnight delivery service or the United States Mail. Executive shall notify the
Company in writing of any  change in  Executive's  address.  Notice of change of
address shall be effective only when done in accordance with this paragraph.

Company's Notice Address:

14111 Dallas Parkway, Suite 600
Dallas, Texas 75240
Attention: Chief Executive Officer

Executive's Notice Address:

c/o Crdentia Corp
14114 Dallas Parkway, Suite 600
Dallas, Texas 75240

12.   SEVERABILITY

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

13.   TAXES

      All amounts payable to Executive under this Agreement (including,  without
limitation,  Executive's Base Salary and any bonuses and severance pay) shall be
paid  less all  applicable  state and  federal  tax  withholdings  and any other
withholdings required by any applicable jurisdiction.

                                       7
<PAGE>

14.   GOVERNING LAW

      This Agreement  shall be governed by and construed in accordance  with the
laws of the State of Texas.

15.   INTERPRETATION

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

16.   COUNTERPARTS

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

17.   AUTHORITY

      Each party  represents  and warrants that such party has the right,  power
and  authority  to enter into and  execute  this  Agreement  and to perform  and
discharge all of the obligations hereunder;  and that this Agreement constitutes
the valid and legally  binding  agreement  and  obligation  of such party and is
enforceable in accordance with its terms.

18.   ENTIRE AGREEMENT

      This  Agreement  is  intended  to be the final,  complete,  and  exclusive
statement of the terms of  Executive's  employment by the Company and may not be
contradicted  by  evidence  of  any  prior  or  contemporaneous   statements  or
agreements,  except for agreements specifically referenced herein (including the
Restricted  Stock Agreement  attached as Exhibit A, the Proprietary  Information
Agreement  attached  as  Exhibit C and the  Arbitration  Agreement  attached  as
Exhibit D). To the extent that the  practices,  policies  or  procedures  of the
Company,  now or in the future, apply to Executive and are inconsistent with the
terms of this  Agreement,  the provisions of this Agreement  shall control.  Any
subsequent  change in Executive's  duties,  position,  or compensation  will not
affect the validity or scope of this Agreement.

                                       8
<PAGE>

19.   INJUNCTIVE RELIEF AND TERMINATION.

      a. General.  Executive  acknowledges and agrees that (i) the covenants and
restrictions contained in Section 7 of this Agreement are necessary, fundamental
and required for the protection of the Business,  (ii) such covenants  relate to
matters which are of a special,  unique and  extraordinary  character that gives
each of such covenants a special,  unique and extraordinary value; and (iii) the
Company will suffer irreparable harm in the event that Executive breaches any of
his  obligations  under  Section 7 hereof,  and that  monetary  damages shall be
inadequate to compensate the Company for any such breach.  Executive agrees that
in the event of any  breach or  threatened  breach  by  Executive  of any of the
provisions  of Section 7 hereof,  the  Company  shall be entitled to a temporary
restraining order,  preliminary  injunction and/or permanent injunction in order
to prevent or restrain any such breach or threatened breach by Executive,  or by
any or all of Executive's  agents,  representatives or other persons directly or
indirectly acting for, on behalf of or with Executive,  and the Company will not
be obligated to post bond or other security in seeking such relief.

      b. No Limitation of Remedies.  Notwithstanding the provisions set forth in
Section 19(a) above,  or any other provision  contained in this  Agreement,  the
parties hereby agree that no remedy conferred by any of the specific  provisions
of this Agreement,  including,  without limitation, this Section 19, is intended
to be  exclusive  of any  other  remedy,  and each  and  every  remedy  shall be
cumulative and shall be in addition to every other remedy given hereunder or now
or hereafter existing at law or in equity or by statute or otherwise.

20.   EXECUTIVE ACKNOWLEDGEMENT

      EXECUTIVE  ACKNOWLEDGES  THAT EXECUTIVE HAS HAD THE OPPORTUNITY TO CONSULT
LEGAL COUNSEL CONCERNING THIS AGREEMENT, THAT EXECUTIVE HAS READ AND UNDERSTANDS
THIS  AGREEMENT,  THAT  EXECUTIVE IS FULLY AWARE OF ITS LEGAL  EFFECT,  AND THAT
EXECUTIVE  HAS ENTERED  INTO THIS  AGREEMENT  FREELY  BASED ON  EXECUTIVE'S  OWN
JUDGMENT AND NOT ON ANY  REPRESENTATIONS  OR PROMISES OTHER THAN THOSE CONTAINED
IN THIS AGREEMENT.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       9
<PAGE>

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

--------------------------------------------------------------------------------
CRDENTIA CORP.:                                EXECUTIVE:

By: /s/ James D. Durham                        By: /s/ James J. TerBeest
   ------------------------------                 ------------------------------
Name:  James D. Durham                            James J. TerBeest
Title: Chief Executive Officer
--------------------------------------------------------------------------------

                                       10
<PAGE>

                                    EXHIBIT A

                           Restricted Stock Agreement

<PAGE>

                                    EXHIBIT B

                        FORM OF GENERAL RELEASE OF CLAIMS

      This General  Release of Claims  (hereinafter  "Release")  is entered into
this  31st day of May,  2005,  by and  between  James J.  TerBeest  (hereinafter
"Releasor") and Crdentia Corp. (hereinafter "Releasee").

                                    RECITALS

      A. On May 31, 2005,  Releasor became employed by Releasee according to the
terms and conditions of an employment agreement ("Employment Agreement").

      B. On or about __________,  _________,  Releasee terminated the employment
of Releasor without "Cause" as that term is defined in the Employment Agreement.

      C.  According to the terms and  conditions  of the  Employment  Agreement,
Releasor is entitled to certain severance  payments so long as Releasor executes
this  General  Release of any and all  claims.  By  execution  hereof,  Releasor
understands  and  agrees  that this  Release is a  compromise  of  doubtful  and
disputed claims, if any, which remain untested;  that there has not been a trial
or  adjudication  of any  issue  of law or  fact  herein;  that  the  terms  and
conditions  of this  Release are in no way to be  construed  as an  admission of
liability on the part of Releasee and that Releasee denies liability and intends
merely to avoid litigation with this Release.

                                    AGREEMENT

NOW THEREFORE FOR MUTUAL CONSIDERATION, the receipt and sufficiency of which the
parties hereto acknowledge, the parties agree as follows:

      1. Except for claims  arising  under any Stock Option  Agreements  between
Releasor  and  Releasee  ("Stock  Option  Agreements"),   Releasor  does  hereby
unconditionally,  irrevocably and absolutely release and discharge Releasee, and
its affiliates, owners, directors, officers, employees, agents, attorneys, heir,
representatives,  legatees, stockholders, insurers, divisions, successors and/or
assigns and any related holding, parent or subsidiary corporations, from any and
all loss, liability,  claims, costs (including,  without limitation,  attorneys'
fees), demands, causes of action, or suits of any type, whether in law and/or in
equity,  related  directly  or  indirectly  or in any  way  connected  with  any
transaction,  affairs or occurrences between them and arising on or prior to the
date hereof, including, but not limited to, Releasor's employment with Releasee,
the termination of said employment and claims of emotional or physical  distress
related to such employment or termination.  This Release specifically applies to
any claims for age  discrimination  in employment,  including any claims arising
under the Age  Discrimination  In Employment  Act or any other  statutes or laws
that govern discrimination in employment.

      2. Releasor  irrevocably and absolutely  agrees that he will not prosecute
nor allow to be prosecuted on his behalf in any administrative  agency,  whether
federal or state, or in any court, whether federal or state, any claim or demand
of any type related to the matter  released  above, it being an intention of the
parties  that with the  execution  by Releasor of this  Release,  Releasee,  its
owners,   officers,    directors,    employees,    agents,   attorneys,   heirs,
representatives,  legatees,  successors  and/or assigns and any related holding,
parent and  subsidiary  corporations  will be  absolutely,  unconditionally  and
forever  discharged  of and from all  obligations  to or on behalf  of  Releasor
related in any way to the matter discharged herein.
<PAGE>

      3.  Releasor  agrees  that  all  matters  relative  to  this  Release  and
compromise in relation thereto shall remain confidential.  Accordingly, Releasor
hereby agrees that,  with the exception of  Releasor's  counsel,  spouse and tax
advisor,  Releasor  shall not discuss,  disclose or reveal to any other persons,
entities or organizations,  whether within or outside of the State of Texas, the
fact of  settlement  and/or  terms  and  conditions  of  settlement  and of this
Release,  including  the amount  paid to settle  Releasor's  claims.  Similarly,
Releasor shall not make, issue, disseminate, publish, print or announce any news
release,  public statement or announcement with respect to these matters, or any
aspect thereof, the reasons therefore and the terms of this Release. Further, in
keeping with the spirit of this Release,  Releasor shall,  upon the execution of
this Release,  cease and desist from taking any further  action in opposition to
Releasee,  respecting its past employment policies and practices and shall never
reapply for employment  with Releasor;  provided,  however,  that nothing herein
shall be  deemed  to  preclude  Releasor  from  giving  statements,  affidavits,
depositions,  testimony,  declarations  or  other  disclosures  required  by  or
pursuant to legal process.

      4. Releasor does expressly waive all of the benefits and rights granted to
him pursuant to any applicable law or regulation to the effect that:

            A general  release does not extend to claims which the creditor does
            not  know  of or  suspect  to  exist  in his  favor  at the  time of
            executing  the release,  which if known by his must have  materially
            affected his settlement with the debtor.

      5. Releasor does certify that he has read all of this Release, and that he
fully  understands  all of the same.  Except for claims  under the Stock  Option
Agreements,  Releasor hereby expressly agrees that this Release shall extend and
apply to all unknown,  unsuspected and  unanticipated  injuries and damages,  as
well as those that are now known.

      6. Releasor further declares and represents that no promise, inducement or
agreement  not  herein  expressed  has been  made to him and that  this  Release
contains the full and entire agreement  between and among the parties,  and that
the terms of this Release are contractual and not a mere recital.

      7. The validity,  interpretation, and performance of this Release shall be
construed and interpreted according to the laws of the State of Texas.

      8. This Release may be pleaded as a full and  complete  defense and may be
used as the basis for an injunction against any action,  suit or proceeding that
may be prosecuted, instituted or attempted by either party in breach thereof.

      9. If any  provision of this Release,  or part  thereof,  is held invalid,
void or voidable as against the public policy or otherwise, the invalidity shall
not affect other provisions, or parts thereof, which may be given effect without
the  invalid  provision  or part.  To this  extent,  the  provisions,  and parts
thereof, of this Release are declared to be severable.

                                       2
<PAGE>

      10.  As part of this  Release,  Releasor  agrees  to  indemnify  and  hold
harmless Releasee against any claim by any state or the Internal Revenue Service
for Releasor's  income and other taxes payable as a result of the  consideration
being paid by Releasee pursuant to this Release or the Employment Agreement.  It
is understood that the extent of Releasor's  obligation would be to pay all sums
due to either agency as income tax and his/her  portion of social security taxes
related to this Release, plus any applicable penalty and/or interest relating to
failure  to timely  pay the tax.  It is the  intention  of all  parties  to this
Release  that  the  severance  payments  made  to  Releasor  are  proper  and in
accordance with all laws. However,  should there be a different determination by
any state or the Internal Revenue  Service,  Releasor will be obligated based on
the terms of this paragraph.

      11.  It is  understood  that  this  Release  is  not an  admission  of any
liability by any person, firm association or corporation but is in compromise of
any disputed claim.

      12. Releasor represents, acknowledges and agrees that Releasee has advised
his, in writing,  to discuss  this  Release  with an  attorney,  and that to the
extent,  if any, that Releasor has desired,  Releasor has done so; that Releasee
has given  Releasor  twenty-one  (21) days to review and  consider  this Release
before  signing  it, and  Releasor  understands  that he may use as much of this
twenty-one  (21) day  period as he wishes  prior to  signing;  that no  promise,
representation, warranty or agreements not contained herein have been made by or
with anyone to cause his to sign this Release;  that he has read this Release in
its  entirety,  and  fully  understands  and is  aware of its  meaning,  intent,
contents and legal effect;  and that he is executing  this Release  voluntarily,
and free of any duress or coercion.

      13. The parties  acknowledge that for a period of seven (7) days following
the execution of this Release,  Releasor may revoke the Release, and the Release
shall not  become  effective  or  enforceable  until the  revocation  period has
expired.

      14. This Release shall become  effective eight (8) days after it is signed
by Releasor and  Releasee,  and in the event the parties do not sign on the same
date, then this Release shall become  effective eight (8) days after the date it
is signed by Releasor.

      15.  Releasor  has read the  foregoing  Release and knows its contents and
fully  understands  it. Releasor  acknowledges  that he has fully discussed this
Release with his attorney.

      16.  Releasor  has read the  foregoing  Release and knows its contents and
fully understands it. Releasor further acknowledges that he has been offered the
opportunity to discuss this Release and its contents with his attorney. Releasor
acknowledges  that he has fully  discussed this Release with his attorney or has
voluntarily chosen to sign this Release without  consulting his attorney,  fully
understanding the consequences of this Release.

                                       3
<PAGE>

      IN WITNESS  WHEREOF,  the  undersigned  have  executed this Release on the
dates shown below at 14111 Dallas Parkway, Suite 600, Dallas, Texas 75240.

RELEASOR:

---------------------------------
James J. TerBeest

Dated:
      ---------------------------

RELEASEE:

CRDENTIA CORP.

---------------------------------
By:  James D. Durham
Its: Chief Executive Officer

Dated:
      ---------------------------
<PAGE>

                                    EXHIBIT C

                  PROPRIETARY RIGHTS AND INFORMATION AGREEMENT

      In  consideration  of my employment by Crdentia Corp.  (the "Company") and
the mutual  covenants  hereof,  I and the Company  hereby agree to the terms and
conditions set forth in this Proprietary  Rights and Information  Agreement (the
"Agreement").

                                    RECITALS

      Whereas,  my  responsibilities  as an  employee of the Company may include
creating, making, conceiving,  inventing,  discovering,  developing, reducing to
practice or suggesting  Technology (as defined below) that relates in any manner
to the actual or reasonably anticipated business, research, development or other
activities of the Company; and

      Whereas, my compensation as an employee of the Company takes into account,
among other things,  the value of such  Technology  and the  potential  economic
benefit that may be derived therefrom by the Company;

      Now therefore, I and the Company hereby agree as follows:

1.    PROPRIETARY INFORMATION

      a.  Restrictions  on  Proprietary  Information.  I agree  that,  during my
employment and, as long as such information and materials constitute Proprietary
Information  (as  defined  below)  thereafter,   I  will  hold  the  Proprietary
Information  of the Company and its  affiliates  in strict  confidence  and will
neither  use the  information  for the  benefit of myself or any third party nor
disclose it to any third party,  except to the extent  necessary to carry out my
responsibilities as an employee of the Company or as specifically  authorized in
writing by a duly authorized officer of the Company other than me.  "Proprietary
Information"  means any and all  information  and  materials,  in whatever form,
whether tangible or intangible,  pertaining in any manner to the business of the
Company  or its  affiliates,  consultants,  customers,  business  associates  or
members (including its and their officers,  directors, agents and employees), or
any  person  or  entity to which  the  Company  owes a duty of  confidentiality,
whether  or not  labeled or  identified  as  proprietary  or  confidential,  and
including any copies, portions,  extracts and derivatives thereof, except to the
extent that I can prove that such  information  or  materials  (i) are or become
generally  known to the  public  through  lawful  means  and  through  no act or
omission of mine; (ii) were part of my general  knowledge prior to my employment
by the  Company;  or (iii) are  disclosed to me without  restriction  by a third
party  who  rightfully  possesses  the  information  and is  under  no  duty  of
confidentiality with respect thereto.  "Proprietary Information" includes but is
not limited to any and all (a) Creations and other Technology (as defined below)
and related  records;  (b) financial  information  and other  information  about
costs,  budgets,  profits,  margins  markets,  sales,  pricing,  payment  terms,
discounts,  rebates and other concessions or incentives,  forecasts,  customers,
subscribers,  members,  and bids;  (c)  strategies and other plans for business,
marketing,  advertisement,  future  development  and new products,  services and
concepts; (d) employee and personnel information, including, without limitation,
files and information about employee compensation and benefits.
<PAGE>

      b.  Location  and  Reproduction.  I agree to maintain  at my work  station
and/or any other place under my control only such Proprietary  Information that,
and only as long as such Proprietary  Information,  is necessary to carry out my
responsibilities  as an  employee  of the  Company.  I agree  to  return  to the
appropriate  person or location or  otherwise  properly  dispose of  Proprietary
Information  once that  necessity  no longer  exists.  I also  agree not to make
copies or  otherwise  reproduce  Proprietary  Information  except to the  extent
necessary to carry out my responsibilities as an employee of the Company.

      c. Prior Actions and Knowledge.  Except as disclosed on Schedule A to this
Agreement,  I  have  no  knowledge  of the  Company's  business  or  Proprietary
Information,  other than  information  I have  learned  from the  Company in the
course of being hired and employed.

      d. Third Party Information.  I recognize that the Company has received and
will receive  confidential  or proprietary  information and materials from third
parties.   Such   information  and  materials   shall  be  deemed   "Proprietary
Information"  for all  purposes of this  Agreement  and I will be subject to all
limitations  on use and  disclosure  set forth in this  Agreement  with  respect
thereto.  In  addition,  I shall not use or disclose  any such  information  and
materials in any manner  inconsistent with any of Company's  obligations towards
such third party.

      e. Interference  with Business.  I acknowledge that because of my position
in the Company, I will have access to the Company's Proprietary  Information.  I
agree that  during my  employment  with the  Company and for a period of one (1)
year after  termination of my employment with the Company,  I shall not directly
or  indirectly  (i)  divert  or  attempt  to  divert  from the  Company  (or any
affiliate)  any  business  of  any  kind,   including  without   limitation  the
solicitation of or  interference  with any of its customers,  clients,  members,
business partners or suppliers or (ii) solicit, induce, recruit or encourage any
person employed by the Company to terminate his or her employment.

                                       2
<PAGE>

2.    CREATIONS

      a. Definitions.

      (1)  "Technology"  comprises all materials,  information,  ideas and other
subject matter,  including,  without  limitation,  works of authorship and other
creations;  inventions,  invention  disclosures,  discoveries,  developments and
patent  applications;  know-how and trade secrets;  plans, designs and concepts;
drawings,  diagrams and  schematics;  writings,  reports,  notebooks,  and other
information;   specifications,  formulas,  structures  and  other  technical  or
engineering information;  prototypes,  systems,  compositions,  hardware, tools,
equipment,  instruments and other devices,  products and technology;  processes,
methods,  techniques,  procedures  and work in process;  computer  programs  (in
source  code,  object  code  or any  other  format),  applications,  algorithms,
protocols,  data and databases,  programmable logic and  documentation;  and any
copies, extracts, portions,  derivatives,  improvements and enhancements thereof
and modifications thereto.

      (2) "Creations"  means any and all Technology  that (i) is created,  made,
conceived, invented, discovered,  developed, reduced to practice or suggested by
me,  alone or together  with  others,  at any time during my  employment  by the
Company or, whether during or within a reasonable  time after my employment with
the Company,  otherwise in  connection  with my activities as an employee of, or
based upon any  Proprietary  Information or Proprietary  Rights of, the Company,
and (ii) relates in any manner to the actual or reasonably anticipated business,
research, development or other activities of the Company, or were created, made,
conceived,  invented,  discovered,  developed,  reduced to practice or suggested
using the Company's equipment, supplies, facilities, or Proprietary Information.
"Creations" shall not include (a) Technology  expressly set forth on Schedule A,
and (b) other  Technology  to the extent  that any  mandatory  and  non-waivable
applicable  law  prohibits  the  assignment  thereof as set forth  herein  (such
Technology described in the foregoing subclauses (a) and (b) being the "Excluded
Technology"). I acknowledge that I have read and understand the law(s) set forth
in Appendix 1 hereto.

      (3)  "Proprietary  Rights" means,  throughout  the world,  any and all (i)
copyrights, moral rights and other personal author's rights (including,  without
limitation  any  and  all  rights  of  paternity  or   attribution,   integrity,
publication,   withdrawal  or   retraction  or  rights  to  receive   additional
remuneration) ("Moral Rights"),  related rights (including without limitation so
called "neighboring  rights" and "sui generis" rights),  database rights and all
other rights associated with works of authorship  (including computer programs),
creations or performances,  whether  published or unpublished,  (ii) rights with
respect to trade  secrets  and  know-how,  (iii)  patents  and  related  rights,
inventor's certificates,  design rights, industrial design rights, utility model
rights,  (iv)  trademark,  service  mark and trade dress rights and other rights

                                       3
<PAGE>

relating to source or indicia of origin,  and (v) any and all other intellectual
property,  industrial property, and other proprietary rights,  together with (a)
all  rights  related to any of the  foregoing,  including,  without  limitation,
rights with respect to applications and filings for any of the foregoing, rights
with respect to registrations or renewals of any of the foregoing, and rights to
apply  for,  file,  register,  establish,  maintain,  extend or renew any of the
foregoing, (b) all benefits,  privileges, causes of action and remedies relating
to any of the foregoing, whether before or hereafter accrued, including, without
limitation, the right to enforce and protect any of the foregoing,  including to
bring  legal  actions  against  any  party  for all  past,  present  and  future
infringements,  misappropriations  or other  violations of or relating to any of
the foregoing and to settle,  and collect and retain the proceeds from, any such
actions, and (c) all rights to transfer and grant licenses and other rights with
respect to any and all of the foregoing in Company's sole discretion.

      b. Ownership of Creations and Proprietary  Rights. I agree and acknowledge
that all right, title and interest with respect to all Creations and any and all
related Proprietary Rights (including all Rights to Use, as defined below) shall
solely vest in, inure to the sole  benefit of, and be the sole  property of, the
Company  without any  limitations.  I agree and  acknowledge  that all Creations
shall be considered works made for hire and works produced in the service of the
Company within the scope of my employment.

      c. Assignment of Creations and Proprietary Rights. If, notwithstanding the
foregoing,  I retain any right,  title or interest with respect to any Creations
or any related  Proprietary  Rights, I hereby assign,  transfer and convey,  and
agree to assign, transfer and convey, to the Company, without any limitations or
any  additional  remuneration,  all such right,  title and interest.  The rights
assigned,  transferred and conveyed hereunder shall include, without limitation,
(i) all rights to publish, copy, reproduce,  adapt, modify,  translate,  prepare
derivatives based upon,  distribute,  rent, lease,  lend,  transmit,  broadcast,
publicly perform,  publicly display,  otherwise communicate or make available to
the public,  record,  store on any medium,  make, sell,  offer to sell,  import,
practice  any method in  connection  with and  otherwise  use or exploit for any
purpose,  throughout  the world,  by any and all means and in any form or medium
whatsoever,  the  Creations  and any other  Technology  that is the  subject of,
embodies  or uses,  or is made using,  any  Proprietary  Rights  relating to the
Creations,  and (ii) all rights to transfer and grant  licenses and other rights
with respect to any and all of the foregoing rights,  and to authorize any third
party to exercise any of the foregoing  rights, in the Company's sole discretion
(all such rights  described in  subclauses  (i) and (ii) above being  "Rights to
Use").

                                       4
<PAGE>

      d. License of Rights.  If,  notwithstanding  the  foregoing,  I retain any
right,  title  or  interest  with  respect  to  any  Creations  or  any  related
Proprietary Rights, I hereby grant, and agree to grant, to the Company,  without
any  limitations  or any  additional  remuneration,  the  worldwide,  exclusive,
perpetual, irrevocable,  transferable, freely sublicenseable,  right and license
under all my right, title and interest with respect to such Creations, any other
Technology  that is the subject  of,  embodies  or uses,  or is made using,  any
Proprietary  Rights  relating  to  such  Creations,  and  any  and  all  related
Proprietary Rights, including all Rights to Use.

      e. Moral Rights.  If,  notwithstanding  the foregoing,  I retain any Moral
Rights with respect to any Creations or any other Technology that is the subject
of, embodies or uses, or is made using,  any Proprietary  Rights relating to the
Creations,  I hereby  waive  all  such  Moral  Rights.  I  acknowledge  that the
Creations  and the  related  Proprietary  Rights may have  substantial  economic
value,  that any and all proceeds  resulting from use and  exploitation  thereof
shall solely belong to the Company, and that the salary and other compensation I
receive from the Company for my  employment  with the Company  includes fair and
adequate consideration for all assignments,  licenses and waivers hereunder.  To
the extent, if any, that any Moral Rights are not waivable under applicable law,
I hereby promise and covenant not to institute,  support, maintain or permit any
action or proceeding on the basis of, or otherwise  assert any Moral Rights with
respect  to, any  Creations  or any other  Technology  that is the  subject  of,
embodies  or uses,  or is made using,  any  Proprietary  Rights  relating to the
Creations, or any Moral Rights relating thereto in any forum. I hereby authorize
the  Company to  publish  the  Creations  and any other  Technology  that is the
subject of, embodies or uses, or is made using, any Proprietary  Rights relating
to the Creations,  in the Company's sole discretion with or without  attributing
any of  the  foregoing  to me or  identifying  me in  connection  therewith  and
regardless  of the  effect on such  Creations  and such other  Technology  or my
relationship thereto.

      f. Excluded Technology. I hereby grant and agree to grant to the Company a
first right to negotiate a license with respect to all Excluded  Technology  and
all related  Proprietary Rights and to negotiate in good faith such a license if
the Company so requests  within  ninety  (90) days after my  disclosure  of such
Excluded Technology or related Proprietary Rights.

      g. Cooperation.  At the Company's request and expense,  I will, during the
term of my employment and thereafter, cooperate with and assist the Company, and
perform such further  acts and execute,  acknowledge  and deliver to the Company
such further documents,  as the Company may deem necessary or advisable in order
to obtain, establish,  perfect, maintain, evidence, enforce or otherwise protect
any of the rights,  title and  interests  assigned,  transferred,  conveyed,  or
licensed (or intended to be assigned, transferred, conveyed, or licensed) to the
Company under this  Agreement,  or otherwise carry out the intent and accomplish
the purposes of this Agreement.  Such  cooperation and assistance shall include,
without  limitation,  any  execution  of an  assignment,  transfer,  conveyance,

                                       5
<PAGE>

license or waiver of, or any covenant  not to  institute,  support,  maintain or
permit any action or assert any,  rights,  and cooperation and assistance in any
proceedings  before  any  government  authorities  or other  legal  proceedings,
including  being  named a party  for  purposes  thereof.  Without  limiting  the
generality of the foregoing, to the extent permitted by applicable law, I hereby
appoint the Company as my attorney-in-fact (which appointment is coupled with an
interest),  with full power of substitution and delegation,  with the right (but
not the  obligation)  to perform any such acts and to execute,  acknowledge  and
deliver any such  documents on my behalf,  provided  that the Company  shall not
exercise such right unless I fail to perform such act or execute, acknowledge or
deliver such document within five (5) business days after the Company's  written
request therefor.  In addition, I agree to maintain adequate and current written
records  regarding  all  Creations,  and  the  creation,   making,   conception,
invention, discovery, development,  reduction to practice or suggestion thereof.
Such records  shall be the sole property of the Company and hereby  assign,  and
agree to assign, all my right, title and interest,  if any, with respect to such
records to the Company.

      h.  Disclosure.  I agree to maintain  current and accurate written records
with respect to all Creations and to disclose to the Company, promptly after the
earliest  of  their  creation,   making,   conception,   invention,   discovery,
development,  reduction to practice or  suggestion,  all Creations and pertinent
records. I will further promptly notify the Company,  in confidence,  of any and
all  Technology  created,  made,  conceived,  invented,  discovered,  developed,
reduced  to  practice  or  suggested  by me (i) that I  believe  to be  Excluded
Technology,  and/or (ii) during the one-year period following  termination of my
employment,  so as to enable the Company to determine whether such Technology is
a Creation subject to this Agreement.

      i.  Post  Termination   Period.  I  agree  that  any  Technology  created,
conceived, invented, discovered,  developed, reduced to practice or suggested by
me (alone or together with others)  within one (1) year after my  termination of
employment  with  the  Company  shall  be  deemed  a  Creation  based  upon  any
Proprietary  Information or Proprietary  Rights of the Company.  I can rebut the
above  presumption  if I prove  that  such  Technology  is not  based  upon  any
Proprietary Information or Proprietary Rights of the Company.

                                       6
<PAGE>

3.    FORMER OR CONFLICTING AGREEMENTS; NO USE OF THIRD PARTY TECHNOLOGY

      a. Former  Agreements.  I represent and warrant that my performance of the
terms of this  Agreement  will not breach any  agreement  to keep in  confidence
proprietary  information acquired by me prior to my employment by the Company. I
have  listed  in  Schedule  A  all  other  agreements   concerning   proprietary
information,  proprietary rights,  inventions or other creations to which I am a
party and (i) attached copies of any such agreements in my possession,  or (ii),
to the extent that I am bound by legal obligations prohibiting the disclosure of
copies of such agreements to the Company, summarized the relevant terms thereof.
To the best of my knowledge, there is no other contract between me and any other
person or entity that is in conflict with this Agreement or concerns proprietary
information, proprietary rights, inventions or other creations.

      b. Prohibition on Use of Third Party Information.  I represent and warrant
and covenant that I will not disclose to the Company,  or use in connection with
my activities  as an employee of the Company,  or induce the Company to use, any
proprietary  or  confidential   information  or  trade  secrets,  or  any  other
Technology  that is the subject of  Proprietary  Rights,  of myself or any third
party at any time,  including but not limited to any proprietary or confidential
information or trade secrets or such Technology of any former employer,  if any.
I acknowledge  and agree that any violation of this provision may be grounds for
my  termination  and could  subject  me to  substantial  civil  liabilities  and
criminal  penalties.  I further  specifically and expressly  acknowledge that no
officer or other  employee or  representative  of the Company has  requested  or
instructed  me  to  disclose  or  use  any  such  third  party   proprietary  or
confidential  information or trade secrets.  Without  limiting the generality of
the  foregoing,  in the  event  that I  disclose  or use in  connection  with my
activities  as an employee  of the  Company,  or induce the Company to use,  any
proprietary  or  confidential   information  or  trade  secrets,  or  any  other
Technology  that is the subject of Proprietary  Rights,  with respect to which I
have any right,  title or interest,  I hereby grant,  and agree to grant, to the
Company, without any limitations or any additional remuneration,  the worldwide,
non-exclusive,  perpetual,  irrevocable,  transferable,  freely  sublicenseable,
right and license under all such right, title and interest with respect thereto,
including all Rights to Use.

4.    TERMINATION

      a. Return of the  Company's  Property.  I agree to promptly  return to the
Company upon  termination of my employment all  Proprietary  Information and all
personal property furnished to or prepared by me in the course of or incident to
my employment.  Following my termination, I will not retain any written or other
tangible  material  containing any Proprietary  Information or other information
pertaining to any Creations.

                                       7
<PAGE>

      b.  Termination  Certificate.  In  the  event  of  the  termination  of my
employment,  I agree,  if  requested  by the  Company,  to sign and  deliver the
Termination Certificate attached as Schedule B.

      c.  Subsequent  Employers.  I  agree  that  after  the  termination  of my
employment  with the  Company,  I will not enter into any  agreement  that would
cause me to violate any of my  obligations  under this Agreement and will inform
any subsequent employers of my obligations under this Agreement.

      d. Survival. The terms and conditions of this Agreement and my obligations
hereunder  shall survive any  termination of my employment  with the company and
any expiration or termination of any employment or other  agreement  between the
Company  and me, and such terms and  conditions  shall  remain in full force and
effect as set forth herein.

5.    NO IMPLIED EMPLOYMENT RIGHTS

      I recognize  that  nothing in this  Agreement  shall be construed to imply
that my  employment  is  guaranteed  for any period of time.  Unless stated in a
written  agreement  signed  by a duly  authorized  officer  of the  Company,  my
employment is for an indefinite duration and at-will,  and either the Company or
I can terminate our employment  relationship at any time, without notice (except
where  required in my employment  agreement with the Company) and for any reason
or no reason, with or without cause.

6.    REMEDIES

      I recognize that nothing in this Agreement is intended to limit any remedy
of the  Company  under any law  concerning  trade  secrets or other  Proprietary
Rights.  I recognize that my violation of this Agreement could cause the Company
irreparable harm and acknowledge that the Company may have the right to apply to
any court of  competent  jurisdiction  for an order  restraining  any  breach or
threatened breach of this Agreement.

                                       8
<PAGE>

7.    ASSIGNMENT

      I acknowledge  and agree that my obligations  hereunder are personal,  and
that I shall have no right to assign, transfer or delegate and shall not assign,
transfer or delegate or purport to assign,  transfer or delegate this  Agreement
or any of my rights or obligations hereunder.  This Agreement and any rights and
obligations  of the Company  hereunder may be freely  assigned,  transferred  or
delegated by the Company. Any assignment, transfer or delegation in violation of
this Article 7. shall be null and void. Subject to the foregoing restrictions on
assignments,  transfers  and  delegations,  this  Agreement  shall  inure to the
benefit  of  the  Company  and  its  affiliates,  officers,  directors,  agents,
successors  and  assigns;  and shall be  binding  on me and my heirs,  devisees,
spouses, agents, legal representatives and successors.

8.    GOVERNING LAW

      This  Agreement is to be governed by and construed in accordance  with the
internal laws of the State of Texas  without  giving effect to any choice of law
rule that would cause the application of the laws of any jurisdiction other than
the  internal  laws of the State of Texas to the rights and  obligations  of the
parties hereunder, and, to the extent federal law is applicable, the laws of the
United  States of America  without  giving effect to any choice of law rule that
would cause the application of the laws of any other country.

9.    SEVERABILITY

      If any  provision of this  Agreement,  or the  application  thereof to any
person,  place  or  circumstance,   shall  be  held  by  a  court  of  competent
jurisdiction  to be invalid,  void or otherwise  unenforceable,  such  provision
shall be enforced to the maximum  extent  possible so as to effect the intent of
the parties, or, if incapable of such enforcement, shall be deemed to be deleted
from this Agreement,  and the remainder of this Agreement and such provisions as
applied to other persons,  places and  circumstances  shall remain in full force
and effect.

                                       9
<PAGE>

10.   AMENDMENT; WAIVERS

      This  Agreement may not be amended or waived except by a writing signed by
me and by a duly authorized representative of the Company other than me. Failure
to exercise any right under this Agreement shall not constitute a waiver of such
right.  Any waiver of any breach of this Agreement shall not operate as a waiver
of any subsequent breaches.  All rights or remedies specified for a party herein
shall be  cumulative  and in  addition to all other  rights and  remedies of the
party hereunder or under applicable law.

11.   INTERPRETATION AND LANGUAGE

      This  Agreement  shall  be  construed  as a whole,  according  to its fair
meaning, and not in favor of or against any party. Sections and section headings
contained in this  Agreement  are for  reference  purposes  only,  and shall not
affect in any manner the meaning of interpretation  of this Agreement.  Whenever
the context  requires,  references to the singular  shall include the plural and
the plural the  singular  and any gender shall  include any other  gender.  This
Agreement is in the English  language only,  which language shall be controlling
in all  respects,  and all versions  hereof in any other  language  shall be for
accommodation only and shall not be binding upon the parties. I ACKNOWLEDGE THAT
I UNDERSTAND ALL THE TERMS AND CONDITIONS OF THIS AGREEMENT.

12.   ENTIRE AGREEMENT

      This  Agreement,  including all exhibits  hereto,  constitutes  the entire
agreement and  understanding  of the parties with respect to the subject  matter
hereof,   and   supersedes   all  prior  and   contemporaneous   correspondence,
negotiations,  agreements and  understandings  among the parties,  both oral and
written,  regarding such subject matter.  I acknowledge that the Company has not
made,  and  that I  have  not  relied  on,  any  representations  or  warranties
concerning the subject matter of this Agreement  other than those  expressly set
forth herein, if any.

                                       10
<PAGE>

      I HAVE READ THIS  AGREEMENT  CAREFULLY AND  UNDERSTAND  ITS TERMS.  I HAVE
COMPLETELY NOTED ON SCHEDULE A TO THIS AGREEMENT (1) ANY PROPRIETARY INFORMATION
AND  TECHNOLOGY,  AND (2) ANY  PROPRIETARY  RIGHTS AND ANY RELATED RIGHTS THAT I
DESIRE TO EXCLUDE FROM THIS AGREEMENT.

--------------------------------------------------------------------------------
Employee                                       CRDENTIA CORP.

By: /s/ James J. TerBeest                      By: /s/ James D. Durham
   ------------------------------                 ------------------------------
Name: James J. TerBeest                           By:    James D. Durham
                                                  Title: Chief Executive Officer
Date: May 31, 2005                                Date:  May 31, 2005
--------------------------------------------------------------------------------

                                       11
<PAGE>

                                   APPENDIX 1

      I  acknowledge  and  understand  that nothing in this  Agreement  shall be
construed to assign or offer to assign any of my rights in any  invention  which
qualifies fully under the following provisions:

      Any provision in an employment  agreement  which provides that an employee
shall  assign,  or offer to assign,  any of his or her rights in an invention to
his or her employer shall not apply to an invention that the employee  developed
entirely  on his  or her  own  time  without  using  the  employer's  equipment,
supplies,  facilities,  or trade secret  information except for those inventions
that either:  (1) relate at the time of  conception  or reduction to practice of
the invention to the employer's business, or actual or demonstrably  anticipated
research or development  of the employer;  or (2) result from any work performed
by the employee for the employer.

      I further  acknowledge and understand  that the foregoing  exclusion shall
not apply to the extent  that full title to certain  patents and  inventions  is
required  to be in the United  States,  as  required  by  contracts  between the
employer and the United States or any of its agencies.

James J. TerBeest
-----------------
Name of Employee

/s/ James J. TerBeest
---------------------------------
Signature

                                       12
<PAGE>

                                   SCHEDULE A

                              EMPLOYEE'S DISCLOSURE

            1. Proprietary Information. Except as set forth below, I acknowledge
that at this time I know nothing about the business or  Proprietary  Information
of the Company,  other than  information  I have learned from the Company in the
course of being hired:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

            2. Previously Created  Technology.  Except as set forth below, there
are no (i) materials,  information,  ideas and other subject matter,  including,
without  limitation,  works  of  authorship  and  other  creations;  inventions,
invention  disclosures,   discoveries,  developments  and  patent  applications;
know-how and trade secrets; plans, designs and concepts;  drawings, diagrams and
schematics; writings, reports, notebooks, and other information; specifications,
formulas, structures and other technical or engineering information; prototypes,
systems,  compositions,   hardware,  tools,  equipment,  instruments  and  other
devices, products and technology; processes, methods, techniques, procedures and
work in process;  computer  programs (in source  code,  object code or any other
format), applications,  algorithms,  protocols, data and databases, programmable
logic  and  documentation;  and any  copies,  extracts,  portions,  derivatives,
improvements and enhancements thereof and modifications thereto,  created, made,
conceived, invented, discovered,  developed, reduced to practice or suggested by
me, alone or together with others;  and (ii) copyrights,  moral rights and other
personal author's rights  (including,  without  limitation any and all rights of
paternity or attribution,  integrity,  publication,  withdrawal or retraction or
rights to receive  additional  remuneration),  related rights (including without
limitation so called  "neighboring  rights" and "sui generis" rights),  database
rights  and all other  rights  associated  with works of  authorship  (including
computer programs), creations or performances, whether published or unpublished;
rights with respect to trade secrets and know-how;  patents and related  rights,
inventor's certificates,  design rights, industrial design rights, utility model
rights; trademark, service mark and trade dress rights and other rights relating
to source or  indicia of origin;  and any and all other  intellectual  property,
industrial  property,  and other proprietary rights; that I wish to exclude from
the operation of this Agreement:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

                                       13
<PAGE>

            3. Prior  Agreements.  Except as set forth  below,  I am aware of no
prior  agreements   between  me  and  any  other  person  or  entity  concerning
proprietary  information,  technology  or  proprietary  rights  (of  the  nature
described  in Section 2 above)  (attach  copies,  or  summary  of terms,  of all
agreements in your possession):
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

      Date: May 31, 2005

                                               James J. TerBeest
                                               -----------------
                                               Employee Name

                                               /s/ James J. TerBeest
                                               ---------------------------------
                                               Employee Signature

                                       14
<PAGE>

                                   SCHEDULE B

                       TERMINATION CERTIFICATE CONCERNING
                         COMPANY PROPRIETARY INFORMATION

      This is to certify that I have  returned  all property of Crdentia  Corp.,
(the "Company"),  including,  without  limitation,  all materials,  information,
ideas  and  other  subject  matter,  including,  without  limitation,  works  of
authorship and other creations; inventions, invention disclosures,  discoveries,
developments and patent applications; know-how and trade secrets; plans, designs
and concepts;  drawings, diagrams and schematics;  writings, reports, notebooks,
and other information;  specifications, formulas, structures and other technical
or engineering information;  prototypes, systems, compositions, hardware, tools,
equipment,  instruments and other devices,  products and technology;  processes,
methods,  techniques,  procedures  and work in process;  computer  programs  (in
source  code,  object  code  or any  other  format),  applications,  algorithms,
protocols,  data and databases,  programmable logic and  documentation;  and any
copies, extracts, portions,  derivatives,  improvements and enhancements thereof
and modifications thereto, and any other Proprietary  Information,  furnished to
or  created,  made,  conceived,  invented,  discovered,  developed,  reduced  to
practice or suggested  by me, alone or together  with others in the course of or
incident  to my  employment  with  the  Company,  and  that I did  not  make  or
distribute any copies of the foregoing.

      I  further  certify  that  I  have  reviewed  the  Company's   Proprietary
Information  and  Rights  Agreement  ("Agreement")  signed by me and that I have
complied  with and will  continue  to comply  with each and all of its terms and
conditions, including without limitation: (i) materials,  information, ideas and
other subject matter,  including,  without  limitation,  works of authorship and
other creations;  inventions, invention disclosures,  discoveries,  developments
and  patent  applications;  know-how  and  trade  secrets;  plans,  designs  and
concepts;  drawings, diagrams and schematics;  writings, reports, notebooks, and
other information;  specifications,  formulas, structures and other technical or

                                       15
<PAGE>

engineering information;  prototypes,  systems,  compositions,  hardware, tools,
equipment,  instruments and other devices,  products and technology;  processes,
methods,  techniques,  procedures  and work in process;  computer  programs  (in
source  code,  object  code  or any  other  format),  applications,  algorithms,
protocols,  data and databases,  programmable logic and  documentation;  and any
copies, extracts, portions,  derivatives,  improvements and enhancements thereof
and modifications  thereto,  created,  made,  conceived,  invented,  discovered,
developed,  reduced to  practice or  suggested  by me,  alone or  together  with
others, created, made, conceived,  invented,  discovered,  developed, reduced to
practice or suggested by me, alone or together  with others,  and covered by the
Agreement and (ii) the  restrictions  on use and  disclosure of all  Proprietary
Information (as defined in the Agreement) of the Company. This certificate in no
manner limits my responsibilities or the Company's rights under the Agreement.

      On  termination of my employment  with the Company,  I will be employed by
_____________________  [Name of New Employer] [in the  ______________  division]
and I will be working in connection with the following projects:

                                       16
<PAGE>

[generally describe the projects]

Date:

                                               -----------------
                                               Employee Name

                                               ---------------------------------
                                               Employee Signature

                                       17
<PAGE>

                                    EXHIBIT D

                              ARBITRATION AGREEMENT

--------------------------------------------------------------------------------

The Company and Employee  hereby agree that, to the fullest extent  permitted by
law, any and all claims or  controversies  between them (or between Employee and
any present or former  officer,  director,  agent, or employee of the Company or
any parent, subsidiary, or other entity affiliated with the Company) relating in
any manner to the employment or the  termination of employment of Employee shall
be resolved by final and binding  arbitration.  Except as specifically  provided
herein,  any  arbitration  proceeding  shall be conducted in accordance with the
National  Rules  for the  Resolution  of  Employment  Disputes  of the  American
Arbitration Association ("the AAA Rules").

Claims  subject to  arbitration  shall  include,  without  limitation:  contract
claims, tort claims,  claims relating to compensation and stock options, as well
as claims based on any federal,  state,  or local law,  statute,  or regulation,
including  but not  limited to any claims  arising  under Title VII of the Civil
Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with
Disabilities  Act, and the California Fair Employment and Housing Act.  However,
claims for unemployment benefits, workers' compensation claims, and claims under
the National Labor Relations Act shall not be subject to arbitration.

A neutral and impartial  arbitrator  shall be chosen by mutual  agreement of the
parties; however, if the parties are unable to agree upon an arbitrator within a
reasonable  period of time,  then a neutral and  impartial  arbitrator  shall be
appointed in accordance with the arbitrator  nomination and selection  procedure
set forth in the AAA Rules.  The  arbitrator  shall  prepare a written  decision
containing the essential findings and conclusions on which the award is based so
as to ensure  meaningful  judicial review of the decision.  The arbitrator shall
apply the same  substantive  law, with the same statutes of limitations and same
remedies, that would apply if the claims were brought in a court of law.

Either  the  Company  or  Employee  may  bring an  action  in  court  to  compel
arbitration under this Agreement and to enforce an arbitration award. Otherwise,
neither  party  shall  initiate  or  prosecute  any  lawsuit of claim in any way
related to any arbitrable claim. Nothing in this Agreement, however, precludes a
party  from  filing  an   administrative   charge  before  an  agency  that  has
jurisdiction  over an  arbitrable  claim.  Moreover,  nothing in this  Agreement
prohibits either party from seeking provisional relief.

All  arbitration  hearings  under this  Agreement  shall be conducted in Dallas,
Texas,  unless  otherwise agreed by the parties.  The arbitration  provisions of
this Arbitration  Agreement shall be governed by the Federal Arbitration Act. In
all other respects,  this Arbitration Agreement shall be construed in accordance
with the laws of the State of  Texas,  without  reference  to  conflicts  of law
principles.
<PAGE>

Each party shall pay its own costs and attorney's fees,  unless a party prevails
on a statutory  claim,  and the statute  provides that the  prevailing  party is
entitled to payment of its  attorneys'  fees. In that case,  the  arbitrator may
award  reasonable  attorneys' fees and costs to the prevailing party as provided
by law.

This Agreement does not alter Employee's at-will employment status. Accordingly,
Employee  understands that the Company may terminate Employee's  employment,  as
well as  discipline  or demote  Employee,  at any time,  with or  without  prior
notice,  and with or without cause. The parties also understand that Employee is
free to leave the Company at any time and for any reason,  with or without cause
and with or without advance notice.

If any provision of this Agreement shall be held by a court or the arbitrator to
be invalid,  unenforceable,  or void,  such  provision  shall be enforced to the
fullest  extent  permitted by law, and the  remainder  of this  Agreement  shall
remain in full force and effect.  The parties'  obligations under this Agreement
shall survive the termination of Employee's  employment with the Company and the
expiration of this Agreement.

The Company and Employee  understand and agree that this  Arbitration  Agreement
contains a full and complete  statement  of any  agreements  and  understandings
regarding resolution of disputes between the parties, and the parties agree that
this Arbitration  Agreement supersedes all previous agreements,  whether written
or oral, express or implied, relating to the subjects covered in this agreement.
The parties also agree that the terms of this  Arbitration  Agreement  cannot be
revoked or modified except in a written  document signed by both Employee and an
officer of the Company.

THE PARTIES ALSO  UNDERSTAND AND AGREE THAT THIS AGREEMENT  CONSTITUTES A WAIVER
OF THEIR RIGHT TO A TRIAL BY JURY OF ANY CLAIMS OR CONTROVERSIES COVERED BY THIS
AGREEMENT. THE PARTIES AGREE THAT NONE OF THOSE CLAIMS OR CONTROVERSIES SHALL BE
RESOLVED BY A JURY TRIAL.

                                       2
<PAGE>

THE PARTIES  FURTHER  ACKNOWLEDGE  THAT THEY HAVE BEEN GIVEN THE  OPPORTUNITY TO
DISCUSS THIS AGREEMENT  WITH THEIR LEGAL COUNSEL AND HAVE AVAILED  THEMSELVES OF
THAT OPPORTUNITY TO THE EXTENT THEY WISH TO DO SO.

Employee: James J. TerBeest

/s/ James J. TerBeest
-------------------------------------

Date: May 31, 2005

Crdentia Corp.

/s/ James D. Durham
-------------------------------------
By:  James D. Durham
Its: Chief Executive Officer

Date: May 31, 2005

                                       3

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