ASSET PURCHASE AGREEMENT

Exhibit 10.1

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (this “ Agreement ”), is made as of this 2 ^nd day of March, 2009 (the “ Effective Date ”), by and between:

WITNESSETH:

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 (the “ Business ”); and

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; and

WHEREAS, concurrently with the execution of this Agreement, the Buyer, Mr. Rice, Mr. Nelson, and the Seller have or will enter into each of the following agreements: (i) a License Agreement, (ii) a Bill of Sale (the “ Bill of Sale ”) (iii) an Assignment and Assumption Agreement  (the “ Assignment and Assumption Agreement ”); (iv) a service contract for each camera purchased (each, a “ Service Contract ” and together, the “ Service Contracts ”); and (v) a Non-Competition Agreement (the “ Non-Competition Agreement ”).  The Agreement, the Bill of Sale, the License Agreement, Assignment and Assumption Agreement, the Service Contracts and the Non-Competition Agreement are collectively referred to as the “ Operative Agreements .”

WHEREAS, Daniel D. Rice, Denise Nelson and Greg Nelson (together, the “ Guarantors ”) are affiliates of the Buyer.

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

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION

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ARTICLE 1

PURCHASE AND SALE OF ASSETS

1.1            Purchased Assets .  Subject to the terms and conditions hereof, at the Closing (defined below), the Seller shall assign, convey, sell, and/or transfer to the Buyer, and the 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 ”).

ARTICLE 2

PURCHASE PRICE AND PAYMENT

(a)            Purchase Price .  Concurrently with the execution of this Agreement, the Buyer agrees to pay the Seller [***] (the “ Purchase Price ”), payable by wire transfer in immediately available funds in the amount of [***], to an account designated by the Seller to the Buyer.  No adjustment to the Purchase Price shall be made for any reason, including, without limitation, the cancellation of any of the DIS Contracts post-Closing, or the condition of any of the Purchased Assets.

ARTICLE 3

CLOSING

3.1            Deliverables .  Concurrently with the execution and delivery of this Agreement (the “ Closing ”), and in addition to any other actions contemplated elsewhere herein:

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

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

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

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

(iv)         the Non-Competition Agreement, duly executed by the Seller;

(v)          transfer of title, or proof of submitted title transfer application and payment of applicable fees, for [***] vans;

(vi)         the Transition Services Agreement, duly executed by the Seller;

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION

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(vii)        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;

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

(b)           The Buyer and the Guarantors, as applicable, shall deliver, or shall cause to be delivered, to the Seller the items described below:

(i)            the Purchase Price, in immediately available funds, to an account specified by the Seller;

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

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

(iv)          the purchasing arrangement side letter, duly executed by the Buyer;

(v)           the Non-Competition Agreement, duly executed by the Buyer and Guarantors;

(vi)          [***]; and

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

ARTICLE 4

REPRESENTATIONS AND WARRANTIES REGARDING THE SELLER

4.1           Effective as of the Effective Date, the Seller hereby represents and warrants to the Buyer the following:

(a)            Organization and Good Standing .  The Seller is a corporation duly established, validly existing and in good standing under the laws of the jurisdiction 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 properties or activities of the Seller.

(b)            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.

[***] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION

Confidential Treatment Requested by Digirad Corporation

4.2            Title .  The Seller has good title to the Purchased Assets owned by it and all Purchased Assets owned by the Seller are in the possession or under the control of the Seller.  None of the Purchased Assets which Seller owns is subject to any security interest, pledge, lien or encumbrance (collectively “ Liens ”), except such Liens as to which the holder of such Liens has consented to the transactions contemplated hereby and has released its Liens upon the Purchased Assets.

4.3            DIS Contracts .  Each of the DIS Contracts is currently in effect, is enforceable in accordance with its terms, and Seller is not in default in any material respect of any DIS Contract, and, to Seller’s knowledge, since January 1, 2009, the other party to each DIS Contract is not in default in any material respect of such DIS Contract.  Each of the DIS Contracts is assignable by its terms without customer approval. Seller has made available to Buyer a true and correct copy of each DIS Contract, as amended through the Closing Date.

4.4            No Other Warranties . Except as may be expressly written in this Agreement or an agreement set forth in Section 3.1(b) above, all Assets are provided “as is” with no warranties, express or implied.

ARTICLE 5

REPRESENTATIONS AND WARRANTIES OF THE BUYER

5.1           Effective as of the Effective Date, the Buyer hereby represents and warrants to the Seller the following:

(a)            Organization and Good Standing .  The Buyer is a limited liability company duly established, validly existing and in good standing under the laws of the jurisdiction in which it is formed and has the power and authority to carry on its business as presently conducted, to own the assets which it owns and to perform its obligations hereunder.  The Buyer 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 properties or activities of the Buyer.

(b)            Power and Authorization .  The Buyer and each Guarantor has the full legal right, power and authority to enter into and perform its or his 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 the Buyer of this Agreement and the Buyer Transaction Documents have been duly authorized by all necessary actions as a corporation.  This Agreement has been duly and validly executed and delivered by the Buyer and each Guarantor.  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 the Buyer and each Guarantor, enforceable against the Buyer and each Guarantor 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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(c)            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 the Buyer or a Guarantor.

ARTICLE 6

POST-CLOSING COVENANTS AND AGREEMENTS

6.1            RAM License Transfer; Transition Period Covenants .

(a)           The Seller’s radioactive materials licenses for the Las Vegas, Phoenix and Tucson locations (the “ RAM Licenses ”) are currently in full force and effect, and they have not been suspended or cancelled, nor is any such suspension or cancellation pending or, to Seller’s Knowledge, threatened.

(b)