ASSET PURCHASE AGREEMENT

Exhibit 10.1

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (this “ Agreement ”), is made as of this 2nd day of February, 2009, by and between:

Digirad Imaging Solutions, Inc., a Delaware corporation with offices at 13950 Stowe Dr., Poway, California, 92064 (“ DIS ”, being referred to from time to time as the “ Seller ”),

MD Office Solutions, a California corporation (the “ Buyer ”), and

Digirad Corporation, solely with respect to specific representations and covenants made by Digirad Corporation herein.

W I T N E S S E T H:

WHEREAS, DIS owns certain assets and has such contractual and business relationships which it uses in connection with solid-state medical imaging business and activities in the Territory (the “ Business ”).

WHEREAS, the Seller desires to sell, and the Buyer desires to purchase certain assets of DIS for the consideration and upon the terms and conditions set forth in this Agreement and the exhibits hereto.

WHEREAS, concurrently with the execution of this Agreement, the Buyer and Seller shall enter into (i) a License Agreement of even date herewith (the “ License Agreement ”); (ii) a Bill of Sale, Assignment and Assumption Agreement, in substantially the forms attached hereto as Exhibit A and Exhibit B (the “ Bill of Sale ” and “ Assignment and Assumption Agreement ”); (iii) two promissory notes of even date herewith (the “ Notes ”); and (iv) a service contract for each camera purchased, in substantially the forms previously provided to Buyer (each, a “ Service Contract ”).

NOW, THEREFORE, in consideration of the premises and the mutual representations, warranties, covenants and agreements herein contained for good and valuable consideration, the parties hereto, intending to be legally bound, agree as follows:

ARTICLE 1

PURCHASE AND SALE OF ASSETS

1.1     Purchased Assets . Subject to the terms and conditions hereof, at the Closing, the Seller shall assign, convey, sell, and/or transfer to Buyer, and Buyer shall purchase or be assigned all the Seller’s rights in and to the following assets (the “ Purchased Assets ”):

(a)    all tangible property set forth on Schedule 1.1(a) ; and

(b)    the contracts to which DIS is a party listed on Schedule 1.1(b) (the “ DIS Contracts ”).

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1.2     [***]

ARTICLE 2

PURCHASE PRICE AND PAYMENT

2.1     Purchase Price . The Buyer agrees to pay [***]

2.2    (the “ Purchase Price ”) payable as follows:

(a)    [***] by wire transfer of immediately available funds;

(b)    A secured promissory note in the principal amount of [***] (“ Note A ”); and

(c)    A secured promissory note in the principal amount of [***] (“ Note B ”)

2.2     Note A Terms . Note A shall bear interest at a rate of [***]% per year, which shall begin to accrue on the Closing Date. Payments on Note A shall be due in cash monthly beginning on [***], and shall be payable in [***] equal monthly installments, [***]. Note A shall be secured by the Collateral (as defined in the Security Agreement). [***]

2.3     Note B Terms . Note B shall bear interest at a rate of [***]% per year, which shall begin to accrue on the Closing Date. Payments on Note B shall be due in cash monthly beginning on [***], and shall be payable in [***] equal monthly installments, [***]. Note B shall be secured by the Collateral. [***].

ARTICLE 3

CLOSING

3.1     Time and Place of Closing . The closing of the purchase and sale of the Purchased Assets (the “ Closing ”) pursuant to this Agreement shall take place on or before February 2, 2009. The Closing shall be held at the offices of Digirad Corporation, commencing at 10:00 A.M., local time or at such other date, time or place as may be agreed to by Buyer and the Seller (the “ Closing Date ”).

3.2     Deliveries at the Closing . At the Closing, in addition to the other actions contemplated elsewhere herein:

(a)    Seller shall deliver, or cause to be delivered, to Buyer the following:

(i)    the License Agreement, duly executed by Seller;

(ii)    the Bill of Sale, Assignment and Assumption Agreement, duly executed by Seller;

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(iii)    the Service Contracts, duly executed by Seller;

(iv)    copies of the resolutions of the Board of Directors of Digirad Corporation and DIS authorizing the execution, delivery and performance of this Agreement and the other agreements and instruments referred to herein;

(v)    pink slips for [***] vans (which shall be provided after the Closing as soon as they are available);

(vi)    those closing deliverables set forth in Section 7.1; and

(vii)    such other documents and instruments as Buyer may reasonably request to effectuate or evidence the transactions contemplated by this Agreement.

(b)    Buyer shall deliver, or shall cause to be delivered, to Seller the items described below:

(i)    the License Agreement, duly executed by Buyer;

(ii)    the Bill of Sale, Assignment and Assumption Agreement, duly executed by Buyer;

(iii)    the Service Contracts, duly executed by Buyer;

(iv)    the Notes, duly executed by Buyer;

(v)    the Security Agreement of even date herewith;

(vi)    the cash portion of the Purchase Price to DIS in cash or immediately available funds; and

(vii)    such other documents and instruments as Seller may reasonably request to effectuate or evidence the transactions contemplated by this Agreement.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES REGARDING SELLER

As of the date hereof and as of the Closing Date, the Seller hereby represents and warrants to Buyer, subject to such exceptions as are specifically disclosed in writing (and that reference the specific representation that they qualify) in the disclosure letter supplied by the Seller to Buyer dated as of the date hereof and certified by a duly authorized officer of the Seller (the “ Seller Disclosure Schedule ”), as follows:

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4.1     Organization and Good Standing . The Seller is a corporation duly established, validly existing and in good standing under the laws of the in which it is incorporated and has the power and authority to carry on the Business as presently conducted, to own the assets which it owns and to perform its obligations hereunder. The Seller is duly qualified and in good standing in each jurisdiction where the character of its properties owned or leased or the nature of its activities makes such qualification necessary, except where the failure to be so qualified would not have a Material adverse effect on such Seller.

4.2     Power and Authorization . The Seller has full legal right, power and authority to enter into and perform its obligations under this Agreement and under the other agreements and documents (the “ Seller Transaction Documents ”) required to be delivered by it prior to or at the Closing. This Agreement has been duly and validly executed and delivered by the Seller and constitutes the legal, valid and binding obligation of the Seller enforceable against it in accordance with its terms. When executed and delivered as contemplated herein, each of the Seller Transaction Documents to which it is a party shall constitute the legal, valid and binding obligation of the Seller, enforceable against it in accordance with its terms; except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and by the availability of equitable remedies.

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4.3     Condition of Purchased Assets . Each of the Purchased Assets is in good working order and Seller is not aware of any damage or defects in any of the Purchased Assets not detectable through visual inspection.

4.4     Consents . [***]. No consent or approval of, or registration, notification, filing and/or declarations with, any court, government or governmental agency or instrumentality, creditor, lessor, customer or other person are required to be given or made by Seller or Buyer in connection with the execution, delivery and performance of this Agreement and the other agreements and instruments contemplated herein.

4.5     Litigation . There is no action, suit, proceeding at law or in equity, or any arbitration or any administrative or other proceeding by or before, or, to the knowledge of the Seller, any investigation by, any governmental or other instrumentality or agency, pending, or, to the knowledge of the Seller, threatened, against or affecting the Purchased Assets.

4.6     DIS Contracts . Each of the DIS Contracts is currently in effect, not in breach and is enforceable in accordance with its terms. Each of the DIS Contracts is assignable by its terms without customer approval. To Seller’s Knowledge, there have been no oral or written amendments to any of the DIS Contracts that have not been disclosed to Buyer. Seller has made available to Buyer a true and correct copy of each DIS Contract, as amended through the Closing Date.

4.7     No Conflicts .

(a)    The execution, delivery and performance of this Agreement and the Seller Transaction Documents by the Seller do not and will not (with or without the passage of time or the giving of notice):

(i)    violate or conflict with the organizational documents of the Seller, or any law, statute, regulation, permit, license, certificate, judgment, order, award or other decision or requirement of any arbitrator, court, government or governmental agency or instrumentality (collectively, “ Laws ”) binding upon such Seller; or

(ii)    result in, require or permit the creation or imposition of any claim, lien, pledge, charge, security interest, equitable interest, option, mortgage, right of first refusal, condition, restriction of any kind, including any restriction on use, transfer, receipt of income or exercise of any other attribute of ownership, or other encumbrance of any nature whatsoever (collectively, “ Encumbrances ”) of any nature upon any Purchased Asset.

(b)    There are no judicial, administrative or other governmental actions, proceedings or investigations pending or, to the Seller’s Knowledge, threatened, that question any of the transactions contemplated by, or the validity of, this Agreement or any of the other agreements or instruments contemplated hereby or which, if adversely determined, would have an adverse effect upon the ability of the Seller to enter into or perform its obligations under this Agreement. The Seller has not received any request from any governmental agency or instrumentality for information with respect to the transactions contemplated hereby and has no obligation to obtain any governmental approval or consent.

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4.8     Title . The Seller has good title to the Purchased Assets owned by it free and clear of any Encumbrance and all Purchased Assets owned by the Seller is in the possession or under the control of the Seller.

4.9     Full Disclosure . The information contained in the Schedules attached hereto and all written information provided to Buyer in the course of Buyer’s due diligence is true and correct. To the Seller’s Knowledge, there is no fact that materially and adversely affects the Business or the Purchased Assets which has not been set forth in this Agreement or in the schedules, exhibits, certificates or statements in writing furnished in connection with the transactions contemplated by this Agreement.

ARTICLE 5

REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer hereby represents and warrants to the Seller as of the date of this Agreement as follows:

5.1     Organization and Good Standing . Buyer is a corporation duly organized and in good standing under the laws of California and has all the requisite power and authority as a corporation to carry on its business as presently conducted, to own and lease the assets which it owns and leases and to perform its obligations hereunder.

5.2     Power and Authorization . Buyer has the full legal right, power and authority as a corporation to enter into and perform its obligations under this Agreement and under the other agreements and documents required to be delivered by it prior to or at the Closing (the “ Buyer Transaction Documents ”). The execution, delivery and performance by Buyer of this Agreement and the Buyer Transaction Documents have been duly authorized by all necessary action as a corporation. This Agreement has been duly and validly executed and delivered by Buyer. This Agreement constitutes, and when executed and delivered as contemplated herein, each of the Buyer Transaction Documents shall constitute, the legal, valid and binding obligation of Buyer, enforceable against it in accordance with its terms; except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and by the availability of equitable remedies.

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5.3     No Conflicts .

(a)    The execution, delivery and performance of this Agreement and the Buyer Transaction Documents do not and will not (with or without the passage of time or the giving of notice):

(i)    violate or conflict with Buyer’s organizational documents or any law binding upon Buyer; or

(ii)    violate or conflict with, result in a breach of, or constitute a default or otherwise cause any loss of benefit under any agreement or other obligation to which Buyer is a party.

(b)    No consents or approvals of, or registrations, notifications, filings and/or declarations with, any court, government or governmental agency or instrumentality, creditor, lessor or other person are required to be given or made by Buyer in connection with the execution, delivery and performance of this Agreement and the other agreements and instruments contemplated herein, other than such as have been obtained or made or which the failure to obtain would not have a Material adverse affect on Buyer’s ability to consummate the transactions contemplated herein and therein.

(c)    There are no judicial, administrative or other governmental actions, proceedings or investigations pending or, to the Buyer’s Knowledge, threatened, that question any of the transactions contemplated by, or the validity of, this Agreement or any of the other agreements or instruments contemplated hereby or which, if adversely determined, would have a adverse effect upon the ability of Buyer to enter into or perform its obligations under this Agreement or any of the other agreements or instruments contemplated hereby. Buyer has not received any request from any governmental agency or instrumentality for information with respect to the transactions contemplated hereby.

5.4     Brokers . No broker, investment banker, financial advisor or other Person is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Buyer.

ARTICLE 6

PRE-CLOSING COVENANTS

6.1     Affirmative Covenants of Seller . The Seller hereby covenants and agrees that, prior to the Closing Date, unless otherwise expressly contemplated by this Agreement or consented to in writing by Buyer, the Seller will operate its Business within the Territory in the ordinary course consistent with past practice.

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6.2     Representations True . The Seller shall not take any action or omit to use its commercially reasonable efforts to take any action to the extent such action or omission might result in any of the representations or warranties being inaccurate or incorrect on and as of the Closing Date.

6.3     Confidentiality . Each party hereto agrees that this Agreement and every provision hereof shall be strictly confidential and shall not be disclosed to any other person other than: (i) disclosure to potential officers of Buyer each of whom shall be bound by a confidentiality agreement consistent herewith; (ii) with the written consent of the parties; (iii) if it is required by law; (iv) if it is made pursuant to existing contractual obligations; or (v) if it is required by any rule or regulation of any securities exchange or regulatory or governmental entity whether or not this has the force of law.

6.4     Consents . The Seller shall promptly apply for or otherwise seek and use its commercially reasonable efforts to obtain all cons