Document:

Exhibit 10.1

VIASYS HEALTHCARE
INC.

AMENDED AND
RESTATED

EMPLOYMENT AGREEMENT

THIS AGREEMENT is made and entered into as of the 26th
day of September 2006 (the “Restatement Effective Date”), by and among VIASYS
Healthcare Inc., a Delaware corporation (together with its successors and
assigns permitted under this Agreement, the “Company”), and Edward Pulwer (the “Executive”).

W I T N E S S E T
H :

WHEREAS, the Company previously entered into an
employment agreement dated as of November 29, 2004, with the Executive to
embody the terms and provisions of the Executive’s employment (the “Original
Agreement”);

WHEREAS, the parties entered into an employment
agreement (the “Restated Agreement”) which amended and restated the Original
Agreement as of May 26, 2006;

WHEREAS, the Company desires that the Executive
continue to be employed by the Company and the Executive is willing to continue
to be employed by the Company;

WHEREAS, effective as of the Restatement Effective
Date, the Company and the Executive now desire to amend and restate the
Restated Agreement as set forth herein.

NOW, THEREFORE, in consideration of the premises and
mutual covenants contained herein and for other good and valuable
consideration, the receipt and sufficiency of which is mutually acknowledged,
the Company and the Executive hereby agree as follows:

1.                                       DEFINITIONS.

(a)           “Affiliate” means a person or other
entity that directly or indirectly controls, is controlled by, or is under
common control with the person or other entity specified.

(b)           “Base Salary” means the salary
provided for in Section 4 or any increased salary
granted to the Executive pursuant thereto.

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

(d)           “Cause” means the occurrence of any
one or more of the following events:

(i)            the Executive’s willful and repeated
failure to comply with the directives of the Board;

(ii)           the Executive’s conviction of a
felony or any crime involving moral turpitude; or

 

 

(iii)          the Executive’s willful and continued
gross neglect of his duties with the Company (other than any such occurrence
resulting from incapacity due to physical or mental illness);

provided, however, that, with respect to events described in subsection
(i) or (iii), (A) the Executive must be provided with a written demand by the
Board which specifically identifies the manner in which the Executive is
considered to have breached his obligation and providing the Executive with at
least a thirty (30) calendar day period in which to cure the breach, if the
breach is curable; and (B) following such event, the Executive must receive a
Notice of Termination for Cause from the Company indicating that the majority
of the outside directors of the Board has made a good faith determination that
the Executive has engaged in conduct that constitutes Cause.  For purposes of this Section 1(d), no act or
failure to act, on the part of the Executive, shall be considered willful
unless it is done, or omitted to be done, by him in bad faith and without a
reasonable belief that his action or omission was in the best interests of the
Company.

(e)           “Change in Control” means an event or
occurrence set forth in any one or more of subsections (i) through (iv) below
(including an event or occurrence that constitutes a Change in Control under
one of such subsections but is specifically exempted from another such
subsection):

(i)            the acquisition by an individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”)
of beneficial ownership of any capital stock of the Company if, after such
acquisition, such Person beneficially owns (within the meaning of Rule 13d-3
promulgated under the Exchange Act) forty percent (40%) or more of either (i)
the then-outstanding shares of common stock of the Company (the “Outstanding
Company Common Stock”), or (ii) the combined voting power of the
then-outstanding securities of the Company entitled to vote generally in the
election of directors (the “Outstanding Company Voting Securities”); provided,
however, that for purposes of this subsection (i), the following acquisitions
shall not constitute a Change in Control:

(1)                                  any
acquisition by the Company;

(2)                                  any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company; or

(3)                                  any
acquisition by any corporation pursuant to a transaction that complies with
clauses (A) and (B) of subsection (iii) of this Section 1(e);

(ii)           the Continuing Directors (as defined
below) do not constitute a majority of the Board (or, if applicable, the Board
of Directors of a successor corporation to the Company), where the term “Continuing
Director” means at any date a member of the Board (i) who was a member of the
Board on the date of the execution of this Agreement or (ii) who was nominated
or elected subsequent to such date by at least a majority of the directors who
were Continuing Directors at the time of such nomination or election or 

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whose election to the
Board was recommended or endorsed by at least a majority of the directors who
were Continuing Directors at the time of such nomination or election; provided,
however, that there shall be excluded from this clause (ii) any individual
whose initial assumption of office occurred as a result of an actual or
threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or consents, by
or on behalf of a person other than the Board;

(iii)          the consummation of a merger,
consolidation, reorganization, recapitalization or statutory share exchange
involving the Company or a sale or other disposition of all or substantially
all of the assets of the Company in one or a series of transactions (a “Business
Combination”), unless, immediately following such Business Combination, each of
the following two conditions is satisfied: (A) all or substantially all of the
individuals and entities who were the beneficial owners of the Outstanding
Company Common Stock and Outstanding Company Voting Securities immediately
prior to such Business Combination beneficially own, directly or indirectly,
more than fifty percent (50%) of the then-outstanding shares of common stock
and the combined voting power of the then-outstanding securities entitled to
vote generally in the election of directors, respectively, of the resulting or
acquiring corporation in such Business Combination (which shall include,
without limitation, a corporation which as a result of such transaction owns the
Company or substantially all of the Company’s assets either directly or through
one or more subsidiaries) (such resulting or acquiring corporation is referred
to herein as the “Acquiring Corporation”) in substantially the same proportions
as their ownership, immediately prior to such Business Combination, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities,
respectively; and (B) no Person (excluding the Acquiring Corporation or any
employee benefit plan (or related trust) maintained or sponsored by the Company
or by the Acquiring Corporation) beneficially owns, directly or indirectly,
forty percent (40%) or more of the then outstanding shares of common stock of
the Acquiring Corporation, or of the combined voting power of the
then-outstanding securities of such corporation entitled to vote generally in
the election of directors; or

(iv)          approval by the stockholders of the
Company of a complete liquidation or dissolution of the Company.

(f)            “Change in Control Date” means the
first date during the Employment Term on which a Change in Control occurs.

(g)           “Code” means the Internal Revenue
Code of 1986, as amended.

(h)           “Disability” or “Disabled” means the
Executive’s inability to substantially perform his duties and responsibilities
under this Agreement due to physical or mental incapacity, as determined by a
medical doctor selected by the Company and the Executive. If the Parties cannot
agree on a medical doctor for such purpose, each Party shall select one medical
doctor and such doctors will jointly select a third medical doctor who shall be
the approved medical doctor for such purpose.

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(i)            “Equity Grant” means any
compensatory grant of Stock, options with respect to Stock, restricted Stock,
Stock appreciation rights or any other compensatory grant (whether or not such
grant is payable in stock) the value of which is determined with reference to
Stock valuation.

(j)            “Good Reason” means,

(i)            other than in connection with a
Change in Control, the occurrence, without the Executive’s written consent, of
any of the events or circumstances set forth in clauses (A) through (E) below:

(A)                              the
failure of the Company to provide Executive with aggregate compensation (Base
Salary and long-term and short-term incentive compensation) or aggregate
benefits that are at least equal (in terms of benefit levels and reward
opportunities) to those provided by the Company to Executive immediately before
the change; provided, however, that a change in the compensation or benefits
for all executives of the Company, in which Executive is treated similarly as
all other executives of a comparable responsibility level, shall not constitute
Good Reason under this Agreement;

(B)                                the
failure to elect or reelect the Executive to the position of Executive Vice
President and Group President, Respiratory Care of the Company, or the removal
of the Executive from such position (other than due to a termination of his
employment for Cause, without Cause, or as a result of Disability, death or the
Executive’s resignation without Good Reason);

(C)                                a
significant change in the Executive’s duties or responsibilities (including
reporting responsibilities) that is inconsistent with the Executive’s
experience, training and skills and represents a substantial diminution of the
Executive’s position and responsibilities in effect immediately prior thereto;

(D)                               a
change in the reporting structure so that the Executive reports to a person
other than the Chairman, the Chief Executive Officer, the President or the
Chief Operating Officer of the Company; or

(E)                                 the
relocation of the offices of the Company at which Executive is principally
located to a location that is more than fifty (50) miles from the location of
such offices immediately prior to the relocation, or the Company’s requiring the
Executive to be based anywhere other than such offices, except for required
travel on the Company’s business to an extent substantially consistent with the
Executive’s business travel obligations at the date of this Agreement.

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(ii)           in connection with a Change in
Control, the occurrence, without the Executive’s written consent, of any of the
events or circumstances set forth in clauses (A) through (G) below.  Notwithstanding the occurrence of any such
event or circumstance, such occurrence shall not be deemed to constitute Good
Reason if, prior to the Termination Date specified in the Notice of Termination
given by the Executive in respect thereof, such event or circumstance has been
fully corrected and the Executive has been reasonably compensated for any
losses or damages resulting therefrom (provided that such right of correction
by the Company shall only apply to the first Notice of Termination for Good
Reason given by the Executive).  The
Executive’s right to terminate his employment for Good Reason under this
subsection (ii) shall not be affected by the Executive’s incapacity due to
physical or mental illness.

(A)                              The
assignment to the Executive of duties inconsistent in any material respect with
the Executive’s position (including status, offices, the title of Executive
Vice President and Group President, Respiratory Care of the Company and
reporting requirements), authority or responsibilities in effect immediately
prior to the earliest to occur of (1) the Change in Control Date, (2) the date
of the execution by the Company of the initial written agreement or instrument
providing for the Change in Control or (3) the date of the adoption by the
Board of Directors of a resolution providing for the Change in Control (with
the earliest to occur of such dates referred to herein as the “Measurement Date”)
or a material diminution in such position, authority or responsibilities;

(B)                                a
reduction in the Executive’s aggregate compensation (base salary and long-term
and short-term cash incentive compensation) or aggregate benefits as in effect
on the Measurement Date or as the same was or may be increased thereafter from
time to time;

(C)                                the
failure by the Company to (i) continue in effect any material compensation or
benefit plan or program (including without limitation any life insurance,
medical, health, dental and accident or disability plan and any vacation or
automobile program or policy) (a “Benefit Plan”) in which the Executive
participates or which is applicable to the Executive immediately prior to the
Measurement Date, unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with respect to such plan or
program, (ii) continue the Executive’s participation therein (or in such
substitute or alternative plan) on a basis not materially less favorable than
the basis existing immediately prior to the Measurement Date, (iii) award cash
bonuses to the Executive in amounts and in a manner substantially consistent
with past practice in light of the Company’s financial performance or (iv)
continue to provide any material fringe benefit enjoyed by Executive
immediately prior to the Measurement Date;

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(D)                               the
relocation of the offices of the Company at which Executive is principally
located to a location that is more than fifty (50) miles from the location of
such offices immediately prior to the relocation, or the Company’s requiring
the Executive to be based anywhere other than such offices, except for required
travel on the Company’s business to an extent substantially consistent with the
Executive’s business travel obligations prior to the Change of Control;

(E)                                 the
failure of the Company to obtain the agreement from any successor to the
Company to assume and agree to perform this Agreement;

(F)                                 a
purported termination of the Executive’s employment which is not effected
pursuant to a Notice of Termination satisfying the requirements of Section
1(k); or

(G)                                any
failure of the Company to pay or provide to the Executive any portion of the
Executive’s compensation or benefits then due under any Benefit Plan within
seven days of the date of receipt by the Company of notice that such
compensation or benefits are due, or any material breach by the Company of this
Agreement or any employment agreement with the Executive.

(k)            “Notice of Termination” means a
written notice from one party to the other party hereto given in accordance
with Section 27, terminating the Executive’s employment hereunder.  Any Notice of Termination shall (i) indicate
the specific termination provision hereunder relied on by the party giving such
notice and (ii) to the extent applicable, set forth in reasonable detail the
facts and circumstances providing a basis for termination of the Executive’s
employment under the provision so indicated. 
The failure by the Executive or the Company to set forth any fact or
circumstance that contributes to a showing of Good Reason or Cause shall not
waive any right of the Executive or the Company, respectively, hereunder or
preclude the Executive or the Company, respectively, from asserting any such
fact or circumstance in enforcing his or its respective rights hereunder.  Any Notice of Termination for (x) Cause given
by the Company must be given within ninety (90) days from the Company becoming
aware of the events or circumstances that constitute Cause and (y) Good Reason
given by the Executive must be given within thirty (30) days from the Executive
becoming aware of the events and circumstances that constitute Good Reason.

(l)            “Stock” means the common stock,
$0.01 par value per share, of the Company.

(m)          “Termination Date” means, with respect
to any termination of the Executive’s employment hereunder, the effective date
of such termination pursuant to Section 9.

2.                                       EMPLOYMENT
TERM.

The Executive’s employment under the Restated
Agreement commenced on May 26, 2006 and continued until the Restatement
Effective Date, on which date the terms of this restated 

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Agreement became
effective.  This restated Agreement shall
have an initial two-year term commencing on the Restatement Effective Date (the
“Initial Employment Term”).  In addition,
the term of this Agreement shall automatically renew for periods of two years
(each an “Extension Term”) unless either party gives written notice to the
other party, at least ninety (90) days prior to the end of the Initial
Employment Term or at least ninety (90) days prior to the end of the relevant
Extension Term, that the Agreement shall not be further extended. The period
commencing on the Restatement Effective Date and ending on the date on which
the term of the Executive’s employment under the Agreement shall terminate is
hereinafter referred to as the “Employment Term.”

3.                                       POSITION,
DUTIES AND RESPONSIBILITIES.

(a)           The
Executive is currently employed as the Executive Vice President and Group
President, Respiratory Care of the Company and the Executive has been assigned
and shall be assigned such duties and responsibilities as are reasonably
consistent with such positions and such other duties and responsibilities as
the Board from time to time deems appropriate.

(b)           During the Employment Term, the
Executive shall devote his entire business time, attention and energies to the
business and interest of the Company in performing his duties and
responsibilities under this Agreement, and, to that end, the Executive shall
not serve on the board of directors of other corporations or entities without
the prior approval of the Board in each case; provided that such positions do
not materially interfere with the proper performance of the Executive’s duties
and responsibilities as set forth in Section 3.

(c)           Notwithstanding anything contained in
Section 3(b) to the contrary, nothing herein shall
preclude the Executive from (i) serving on the boards of directors of a
reasonable number of trade associations and/or charitable organizations, (ii)
engaging in charitable activities and community affairs, and (iii) managing his
personal investments and affairs, provided, that such activities do not
materially interfere with the proper performance of his duties and
responsibilities as set forth in Section 3.

(d)           The Executive, in carrying out his
duties and responsibilities under this Agreement, shall report directly to the
Chairman, the Chief Executive Officer, the President or the Chief Operating
Officer of the Company, as determined by the Board.

4.                                       BASE
SALARY.

The Executive shall be paid an annualized base salary,
payable in accordance with the regular payroll practices of the Company, of
$330,000, effective as of March 1, 2006, which amount may be increased from
time to time in the discretion of the Board; provided, however, that once such
amount is increased, it may not be decreased except in the case of a decrease
in compensation of all executives of the Company, in which the Executive is
treated similarly as all other executives of a comparable responsibility level.

5.                                       ANNUAL
CASH INCENTIVE AWARD.

During the Employment Term, the
Executive shall be entitled to participate in all long-term and short-term
incentive programs established by the Company for its senior level 

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executives
generally, including, without limitation, the VIASYS Healthcare Inc. Management
Incentive Plan.  Specifically, the
Executive shall be entitled to participate in the annual cash incentive program
of the Company.  Under such program, the
Executive shall be eligible to receive an annual bonus targeted at 50% of the
Executive’s annual base pay, or such higher percentage as the Board may, in its
discretion, determine.  The Board shall
also have similar discretion to determine any Pro-Rated Annual Bonus pursuant
to Section 10(a)(ii), 10(b)(iii), 10(d)(ii) and 10(g)(ii).  The target bonus shall be subject to certain
conditions, including without limitation multipliers, that are consistent with
the annual bonus plan applicable to other senior executives of the Company.

6.                                       EMPLOYEE
BENEFIT PROGRAMS.

During the Employment Term, the Executive shall be
entitled to participate in all employee pension and welfare benefit plans and
programs made available to the Company’s senior level executives or to its
employees generally, as such plans or programs may be in effect from time to
time, including, without limitation, pension, profit sharing, savings and other
retirement plans or programs, medical, dental, hospitalization, short-term and
long-term disability and life insurance plans, accidental death and
dismemberment protection, travel accident insurance, and any other pension or
retirement plans or programs and any other employee welfare benefit plans or
programs that may be sponsored by the Company from time to time, including
without limitation any plans that supplement the above-listed types of plans or
programs, whether funded or unfunded. 
The Executive shall be entitled to vacation and sick leave in accordance
with the Company’s vacation, holiday and other pay for time not worked policies
on a basis no less favorable than that which is authorized for the Company’s
senior-level executives.

7.                                       PERQUISITES.

During the Employment Term, the Executive shall be
entitled to participate in all of the Company’s executive perquisites in
accordance with the terms and conditions of such arrangements as are in effect
from time to time for the Company’s senior-level executives.

8.                                       REIMBURSEMENT
OF BUSINESS AND OTHER EXPENSES.

The Executive is authorized to incur reasonable
expenses in carrying out his duties and responsibilities under this Agreement,
and the Company shall promptly reimburse him for such expenses, subject to
documentation in accordance with the Company’s policy.

9.                                       TERMINATION
OF EMPLOYMENT.

The Executive’s employment hereunder shall terminate
effective immediately upon the earliest to occur of the following events:

(a)           death of the Executive;

(b)           receipt by either party of a Notice
of Termination for Disability from the other party, but in any event not until
the Executive is determined to be disabled in accordance with Section 1(h);

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(c)           the 31st day following receipt by the
Executive of the Notice of Termination for Cause from the Company indicating
that a majority of the outside directors of the Board has made a good faith
determination that the Executive has engaged in conduct that constitutes Cause;
provided, that (i) if such action or failure to act is curable, the Executive
fails to correct the action or failure to act that constitutes the grounds for
Cause in a manner reasonably satisfactory to the Board within the thirty (30)
day period following receipt by the Executive of the Notice of Termination for
Cause; and (ii) the Executive together with his counsel, shall have had an
opportunity to be heard by the Board regarding the conduct in question.  Immediately upon receipt by the Executive of
a Notice of Termination for Cause from the Company, the Executive shall take a
mandatory paid leave of absence from the Company for such thirty (30) day period;
provided, however, that the leave of absence shall terminate within two (2)
days of the cure if such cure is effected prior to the end of the thirty-day
period;

(d)           the 31st day following receipt by the
Company of a Notice of Termination for Good Reason from the Executive if the
Company fails to cure within the thirty (30) day period following the Company’s
receipt of such written notice;

(e)           the 31st day following receipt by the
Executive of a Notice of Termination Without Cause from the Company;

(f)            the 31st day following receipt by
the Company of a Notice of Termination Without Good Reason from the Executive;
and

(g)           the last day of the Employment Term
following expiration of the Employment Term without renewal by the Company.

10.                                 RIGHTS
AND REMEDIES UPON TERMINATION OF EMPLOYMENT.

(a)           TERMINATION DUE TO
DEATH.  In the event that the Executive’s
employment is terminated due to his death, his estate or his beneficiaries, as
the case may be, shall be entitled to the following benefits:

(i)            the Executive’s then current Base
Salary through the Termination Date, which shall be payable in a lump sum
within thirty (30) days of the Termination Date;

(ii)           an annual cash incentive bonus award
for the year in which the termination occurs, pro-rated through the Termination
Date, determined in accordance with the annual bonus plan and the provisions of
Section 5, which award, if and to the extent so determined to be owed, shall be
payable when long-term and short-term incentive awards, as applicable, are
normally paid to comparable executives (the “Pro-Rated Annual Bonus”); and

(iii)          each Equity Grant held by the
Executive, whether or not issued under this Employment Agreement, that has not
vested prior to that date shall immediately vest (and all relevant vesting restrictions
shall lapse) and to the extent subject to an exercise period, shall remain
exercisable until one year following the Termination Date (but in no event
beyond the end of each such Grant’s otherwise applicable exercise period).

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(b)           TERMINATION DUE TO DISABILITY.  In the event that the Executive’s employment
is terminated by either party due to his Disability, he shall be entitled to
the following benefits:

(i)            disability benefits in accordance
with the long-term disability (“LTD”) program then in effect for comparable
executives of the Company;

(ii)           the Executive’s then current Base
Salary through the end of the LTD elimination period, which shall be payable in
a lump sum within thirty (30) days of the Termination Date;

(iii)          a Pro-Rated Annual Bonus;

(iv)          each Equity Grant held by the
Executive, whether or not issued under this Employment Agreement, that has not
vested prior to that date shall immediately vest (and all relevant vesting
restrictions shall lapse) and to the extent subject to an exercise period,
shall remain exercisable until one year following the Termination Date (but in
no event beyond the end of each such Grant’s otherwise applicable exercise period); and

(v)           continued participation at the
Company’s expense in all Benefit Plans provided to the Executive and the
Executive’s family on the Termination Date for a period of eighteen (18) months
following the Termination Date; provided, however, that if the Executive
becomes reemployed with another employer and is eligible to receive a particular
type of benefit (e.g., health insurance benefits) from such employer on terms
at least as favorable to the Executive and his family as those being provided
by the Company, then the Company shall no longer be required to provide that
particular benefit to the Executive and his family.

(c)           TERMINATION BY THE COMPANY FOR
CAUSE.  In the event that the Company
terminates the Executive’s employment for Cause:

(i)            the Executive shall be entitled to
receive his current Base Salary through the Termination Date, which shall be
payable in a lump sum within thirty (30) days of the Termination Date;

(ii)           each Equity Grant held by the
Executive, whether or not issued under this Employment Agreement, (A)  that has not vested prior to that date shall
immediately cease to vest and shall be forfeited to the Company and cancelled,
and (B)  that has vested prior to or on
the Termination Date, to the extent subject to an exercise period, shall remain
exercisable for ninety (90) days following the Termination Date (but in no
event beyond the end of each such Grant’s otherwise applicable exercise
period); and

(iii)          the Executive shall not be entitled to
any benefits, severance or other compensation.

(d)           TERMINATION FOR GOOD REASON.  In the event the Executive’s employment is
terminated by the Executive for Good Reason other than in connection with a 

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Change in Control
pursuant to Section 10(i), the Executive shall be entitled to the following
benefits:

(i)            the Executive’s then current Base
Salary through the Termination Date, which shall be payable in a lump sum
within thirty (30) days of the Termination Date;

(ii)           a Pro-Rated Annual Bonus;

(iii)          an amount equal to 150% of the sum of
(i) the Executive’s then current Base Salary and (ii) the most recent short
term and long term cash incentive award paid or awarded to the Executive
pursuant to Section 5, payable in a lump sum within ninety (90) days of the
Termination Date;

(iv)          each Equity Grant held by the
Executive, whether or not issued under this Employment Agreement, that has not
vested prior to that date shall immediately vest (and all relevant vesting
restrictions shall lapse) and to the extent subject to an exercise period,
shall remain exercisable until one year following the Termination Date or such
shorter period of time necessary to ensure that the Equity Award does not
become subject to the provisions of Code section 409A (but in no event beyond
the end of each such Grant’s otherwise applicable exercise period); and

(v)           continued participation at the
Company’s expense in all Benefit Plans provided to the Executive and the
Executive’s family on the Termination Date for a period of eighteen (18) months
following the Termination Date; provided, however, that if the Executive
becomes reemployed with another employer and is eligible to receive a
particular type of benefit (e.g., health insurance benefits) from such employer
on terms at least as favorable to the Executive and his family as those being
provided by the Company, then the Company shall no longer be required to
provide that particular benefit to the Executive and his family.

(e)           TERMINATION
WITHOUT GOOD REASON.  In the event of a
termination of employment by the Executive on his own initiative, other than
due to (A) death, (B) Disability, (C) Good Reason,
(D) the expiration of the then current Employment Term, (E) a notice from the
Company to the Executive of its intent not to extend the Employment Term; or
(F) in connection with a Change in Control:

(i)            the Executive shall be entitled to
receive his current Base Salary through the Termination Date, which shall be
payable in a lump sum within thirty (30) days of the Termination Date;

(ii)           each Equity Grant held by the
Executive, whether or not issued under this Employment Agreement, (A) that has
not vested prior to that date shall immediately cease to vest and shall be
forfeited to the Company and cancelled, and (B) that has vested prior to the
Termination Date, to the extent subject to an exercise period, shall remain
exercisable until three months following the Termination Date (but in no event
beyond the end of each such Grant’s otherwise applicable exercise period); and

 

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(iii)          the Executive shall not be entitled to
any benefits, severance or other compensation.

(f)            TERMINATION WITHOUT CAUSE.  A termination of the Executive’s employment
by the Company, other than due to (A) death, (B) Disability, (C) Cause, (D) the
expiration of the then current Employment Term, (E) a notice from one party to
the other of its intent not to extend the Employment Term or (F) in connection
with a Change in Control,  shall have the
same consequences as provided in Section 10(d) for a termination of the
Executive’s employment by the Executive for Good Reason.

(g)           EXPIRATION OF EMPLOYMENT TERM.  In the event that Executive’s employment with
the Company ceases due to expiration of the Employment Term as a result of the
Company’s notification to the Executive of the non-renewal of the Employment
Term, the Executive shall be entitled to:

(i)            his current Base Salary through the
Termination Date, which shall be payable in a lump sum within thirty (30) days
of the Termination Date;

(ii)           a Pro-Rated Annual Bonus;

(iii)          a severance payment equal to 50% of
his then current Base Salary payable in twelve (12) equal monthly installments
commencing with the calendar month immediately following the calendar month in
which he separates from the service of the Company; and

(iv)          continued participation at the Company’s
expense in all Benefit Plans provided to the Executive and the Executive’s
family on the Termination Date for a period of twelve (12) months following the
Termination Date; provided, however, that if the Executive becomes reemployed
with another employer and is eligible to receive a particular type of benefit
(e.g., health insurance benefits) from such employer on terms at least as
favorable to the Executive and his family as those being provided by the Company,
then the Company shall no longer be required to provide that particular benefit
to the Executive and his family.

(h)           OTHER TERMINATION BENEFITS.  In the case of any of the foregoing
terminations, to the extent not previously paid or provided or otherwise
contrary to the terms and conditions of this Agreement, the Executive or his
estate or beneficiaries, as the case may be, shall also be entitled to the
balance of any incentive awards due the Executive but not yet paid (including
without limitation awards due for performance periods that have been completed,
but have not yet been paid), any expense reimbursements due the Executive, and
other benefits, if any, in accordance with applicable plans or programs of or
contracts or agreements of the Executive with the Company.

(i)            TERMINATION IN CONNECTION WITH A
CHANGE IN CONTROL.  Notwithstanding
anything to the contrary in this Agreement, in the event that (A) a Change of
Control occurs; and (B) the Executive’s employment with the Company is
terminated by the Company without Cause or by the Executive with Good Reason,
in each case within eighteen (18) months following a Change in Control, the
Executive shall be entitled to the following 

 12
 

 

 

payments and benefits, with any cash payments to be
made in a lump sum within thirty (30) days following the Termination Date:

(i)            the sum of (A) the Executive’s Base
Salary through the Termination Date, (B) the product of (x) the annual bonus
paid or payable (including without limitation any bonus or portion thereof which
has been earned but deferred) for the most recently completed fiscal year and
(y) a fraction, the numerator of which is the number of days in the current
fiscal year through the Termination Date, and the denominator of which is 365
and (C) the amount of any compensation previously deferred by the Executive
(together with any accrued interest or earnings thereon) and any accrued
vacation pay, in each case to the extent not previously paid (the sum of the
amounts described in clauses (A), (B), and (C) shall be hereinafter referred to
as the “Accrued Obligations”);

(ii)           an amount equal to (A) one and
one-half (1.5) multiplied by (B) the sum of (x) the Executive’s highest annual
base salary in any twelve-month period (on a rolling basis) during the
five-year period prior to the Change in Control Date and (y) the Executive’s
highest annual bonus in any twelve-month period (on a rolling basis) during the
five-year period prior to the Change in Control Date;

(iii)          for eighteen months after the
Termination Date, or such longer period as may be provided by the terms of the
appropriate plan, program, practice or policy, the Company shall continue to
provide benefits to the Executive and the Executive’s family at least equal to
those which would have been provided to them if the Executive’s employment had
not been terminated, in accordance with the applicable Benefit Plans in effect
on the Measurement Date or, if more favorable to the Executive and his family,
in effect generally at any time thereafter with respect to other peer
executives of the Company and its affiliated companies; provided, however, that
if the Executive becomes reemployed with another employer and is eligible to
receive a particular type of benefit (e.g., health insurance benefits) from
such employer on terms at least as favorable to the Executive and his family as
those being provided by the Company, then the Company shall no longer be
required to provide that particular benefit to the Executive and his family;
and

(iv)          to the extent not previously paid or
provided, the Company shall timely pay or provide to the Executive any other
amounts or benefits required to be paid or provided or which the Executive is
eligible to receive following the Executive’s termination of employment under
any plan, program, policy, practice, contract or agreement of the Company and
its affiliated companies.

For purposes of determining eligibility (but not the time of
commencement of benefits) of the Executive for retiree benefits to which the
Executive is entitled, the Executive shall be considered to have remained
employed by the Company until three years after the Termination Date.

(j)            OUTPLACEMENT SERVICES.  In the event that the Executive’s employment
is terminated in accordance with Section 10 without Cause or for Good Reason,
the Company shall provide outplacement services through one or more outside
firms of the Executive’s choosing up 

 13
 

 

 

to an aggregate of $20,000, with such services to
extend until the earlier of (i) twelve (12) months following the Termination
Date or (ii) the date on which the Executive secures full time employment, or,
at the Executive’s election, the Company shall pay the Executive $20,000 in
cash in lieu of such coverage with such payment to be made within thirty (30)
days of the Termination Date.

(k)           NATURE OF PAYMENTS.  Any amounts due under this Section 10 are in the nature of severance payments considered to be
reasonable by the Company and are not in the nature of a penalty.

(l)            NO MITIGATION; NO OFFSET.  The Executive shall not be required to
mitigate the amount of any payment or benefit provided in this Section 10 by seeking other employment or otherwise.  Further, except as provided in this Section
10, the amount of any payment or benefits provided for in this Section 10 shall
not be reduced by any compensation earned by the Executive as a result of
employment by another employer or be offset by any amount claimed to be owed by
the Executive to the Company.

(m)          RELEASE.  To the fullest extent permitted by applicable
law, the Company’s obligation to pay or provide any benefits to the Executive
under this Agreement shall be subject to the requirement that he execute (and
not breach or rescind) a comprehensive release in favor of the Company, its
officers, directors and related parties, with such release to be in such form
as the Company may determine as of the Termination Date.

(n)           CODE
SECTION 409A.  Notwithstanding any
provision to the contrary in this Agreement, in the event any payment or
payments to which the Executive becomes entitled under this Agreement in
connection with his termination of employment constitute deferred compensation
subject to Code Section 409A, then such payment or payments shall not be made
or commence until the earlier of (i) the expiration of the six (6)-month period
measured from the date of the Executive’s “separation from service” (as such
term is at the time defined in Treasury Regulations under Code Section 409A)
with the Company or (ii) the date of the Executive’s death following such
separation from service; provided however, that such deferral shall only be
effected to the extent required to avoid adverse tax treatment to the
Executive, including (without limitation) the additional twenty percent (20%)
tax for which the Executive would otherwise be liable in the absence of such
deferral.  During any period payment or
payments to the Executive are deferred pursuant to the foregoing, the Executive
shall be entitled to interest on the deferred payment or payments at a per annum
rate equal to the highest rate of interest applicable to six (6)-month money
market accounts offered by the following institutions:  Citibank N.A., Wells Fargo Bank, N.A. or Bank
of America, on the date of such “separation from service.”  Upon the expiration of the applicable
deferral period, any payments which would have otherwise been made during that
period (whether in a single sum or in installments) in the absence of this
paragraph shall be paid to the Executive or his beneficiary in one lump sum,
and all remaining payments shall be made in accordance with their normal
payment schedule hereunder.

(o)           TAXES.

(i)            In
the event that the Company undergoes a Change in Ownership or Control (as
defined below), and in connection with such event or thereafter, the 

 14
 

 

 

Executive
becomes eligible to receive Contingent Compensation Payments (as defined below)
the Company shall, as soon as administratively feasible after the Executive
becomes so eligible determine and notify the Executive (with reasonable detail
regarding the basis for its determinations) (i) which of the payments or
benefits due the Executive in connection with or following such Change in
Control constitute Contingent Compensation Payments, (ii) the amount, if any,
of the excise tax (the “Excise Tax”) payable pursuant to Section 4999 of the
Code, by the Executive with respect to such Contingent Compensation Payment and
(iii) the amount of the “Gross-Up Payment” (as defined below) due to the
Executive with respect to such Contingent Compensation Payment.  Within thirty (30) days after delivery of
such notice to the Executive, the Executive shall deliver a response to the
Company (the “Executive Response”) stating either (A) that he agrees with the
Company’s determination pursuant to the preceding sentence or (B) that he
disagrees with such determination, in which case he shall indicate which
payment and/or benefits should be characterized as a Contingent Compensation
Payment, the amount of the Excise Tax with respect to such Contingent
Compensation Payment and the amount of the Gross-Up Payment due to the
Executive with respect to such Contingent Compensation Payment.  If the Executive states in the Executive
Response that he agrees with the Company’s determination, the Company shall
make the Gross-Up Payment to the Executive within three (3) business days
following delivery to the Company of the Executive Response.  If the Executive states in the Executive
Response that he disagrees with the Company’s determination, then, for a period
of fifteen (15) days following delivery of the Executive Response, the
Executive and the Company shall use good faith efforts to resolve such
dispute.  If such dispute is not resolved
within such fifteen (15)-day period, such dispute shall be settled exclusively
by arbitration in Philadelphia, Pennsylvania, in accordance with the rules of
the American Arbitration Association then in effect.  Judgment may be entered on the arbitrator’s
award in any court having jurisdiction. 
The Company shall, within three (3) business days following delivery to
the Company of the Executive response, make to the Executive those Gross-Up
Payments as to which there is no dispute between the Company and the Executive
regarding whether they should be made. 
The balance of the Gross-Up Payments shall be made within three (3)
business days following the resolution of such dispute.  The amount of any payments to be made to the
Executive following the resolution of such dispute shall be increased by the
amount of the accrued interest thereon computed at the prime rate announced
from time to time by The Wall Street Journal compounded monthly from the
date that such payments originally were due. 
In the event that the Executive fails to deliver an Executive Response
on or before the required date, the Company’s initial determination shall be final.

(ii)           For
purposes of this Section 10(o), the following terms shall have the following
respective meanings:

(A)                              “Change
in Ownership or Control” shall mean a change in the ownership or effective
control of the Company or in the ownership of a substantial portion of the
assets of the Company determined in accordance with Section 280G(b)(2) of the
Code.

 15
 

 

 

(B)                                “Contingent
Compensation Payment” shall mean any payment (or benefit) in the nature of
compensation that is made or supplied to a “disqualified individual” (as
defined in Code Section 280G(c)) and that is contingent (within the meaning of
Code Section 280G(b)(2)(A)(i)) on a Change in Ownership or Control of the
Company.

(C)                                “Gross-Up
Payment” shall mean an amount equal to the sum of (i) the amount of the Excise
Tax payable with respect to a Contingent Compensation Payment and (ii) the
amount necessary to pay all additional taxes imposed on (or economically borne
by) the Executive (including the Excise Taxes, state and federal income taxes
and all applicable withholding taxes) attributable to the receipt of such
Gross-Up Payment.  For purposes of the
preceding sentence, all taxes attributable to the receipt of the Gross-Up
Payment shall be computed assuming the application of the maximum tax rates
provided by law.

11.                                 TREATMENT
OF EQUITY GRANTS UPON CHANGE IN CONTROL.

In the event of the occurrence of a Change in Control,
each Equity Grant held by the Executive, whether or not issued under this
Employment Agreement, that has not vested prior to the date of such occurrence
shall immediately vest (and all relevant vesting restrictions shall lapse) and
to the extent subject to an exercise period, shall remain exercisable until the
termination date specified in Section 10 of this Agreement; provided, however,
that (i) the accelerated vesting described in this Section 11 shall not be
contingent on the termination of the Executive’s employment with the Company;
and (ii) if, pursuant to the terms of the relevant Company equity compensation
plan or of the relevant Equity Grant instrument, a longer exercise period than
the period provided for in Section 10 is applicable, then such longer exercise
period shall control.

12.                                 CONFIDENTIALITY
& ASSIGNMENT OF INVENTIONS.

(a)           The Executive has
previously executed and delivered to the Company the Company’s standard
employee Confidential Information and Invention Assignment Agreement, and
acknowledges that he continues to be bound by that Agreement.

(b)           Upon the termination of the Executive’s
employment, the Executive (or in the event of his death, the Executive’s
personal representative) shall promptly surrender to the Company the original
and all copies of any materials containing confidential information of the
Company which are then in the Executive’s possession or control; provided,
however, that the Executive shall not be required to surrender his rolodexes,
personal diaries and other items of a personal nature.

13.                                 NON-COMPETITION;
NON-SOLICITATION.

(a)           The Executive acknowledges (i) that
in the course of his employment with the Company he has and will become
familiar with trade secrets and customer lists of, and other 

 16
 

 

 

confidential information concerning, the Company and
its Affiliates, customers, and clients and (ii) that his services will be of
special, unique and extraordinary value to the Company.

(b)           The Executive agrees that, during the
Employment Term and for a period of one year following his termination of
employment for any reason (the “Non-Competition Period”), he shall not in any
manner, directly or indirectly, through any person, firm, corporation or
enterprise, alone or as a member of a partnership or as an officer, director,
stockholder, investor or employee of or advisor or consultant to any person,
firm, corporation or enterprise or otherwise, engage or be engaged, or assist
any other person, firm, corporation or enterprise in engaging or being engaged
(collectively, the “Restricted Activity”), in any Competitive Activity (as
defined below). For the purposes of this Section 13, a “Competitive Activity” shall
mean unless otherwise determined by the Board a business that (i) is being
conducted by the Company or any Affiliate at the time in question and (ii) was
being conducted, or was under active consideration to be conducted, by the
Company or any Affiliate, at the date of the termination of the Executive’s
employment.  It is agreed and understood
that the prohibitions provided for in this Section 13(b) shall not restrict the
Executive from engaging in Restricted Activity for any subsidiary, division or
Affiliate or unit of a company (collectively a “Related Entity”) if that
Related Entity is not engaged in a Competitive Activity, irrespective of
whether some other Related Entity of that company engages in what would
otherwise be considered to be a Competitive Activity (as long as Executive does
not engage in Restricted Activity for such other Related Entity).

(c)           The Executive further agrees that
during the Non-Competition Period he shall not (i) in any manner, directly or
indirectly, solicit or recruit (or attempt to solicit or recruit) any employee
of or advisor or consultant to the Company or its Affiliates to terminate such
person’s employment or advisor or consultant relationship with the Company or
its Affiliates, work for a person other than the Company or its Affiliates,
work as an independent contractor, or engage in any activity that would cause
any such employee, advisor or consultant to violate any agreement with the
Company or its Affiliates, or (ii) in connection with any business to which Section
13(b) applies, call on, service, solicit or otherwise do business with any
customer of the Company or any of its Affiliates whom the Executive solicited
or did business with on behalf of the Company or its Affiliates, or with whom
the Executive otherwise became acquainted as a result of the Executive’s
employment with the Company or its Affiliates; provided, however, that the
restriction contained in clause (ii) of this Section 13(c) shall not apply to,
or interfere with, the proper performance by the Executive of his duties and
responsibilities under Section 3 of this Agreement.

(d)           Nothing in this Section 13 shall
prohibit the Executive from being a passive owner of not more than two percent
(2%) of the outstanding common stock, capital stock and equity of any firm,
corporation or enterprise so long as the Executive has no active participation
in the management of business of such firm, corporation or enterprise.

(e)           If the restrictions stated herein are
found by a court to be unreasonable, the parties hereto agree that the maximum
period, scope or geographical area reasonable under such circumstances shall be
substituted for the stated period, scope or area and that the court shall
revise the restrictions contained herein to cover the maximum period, scope and
area permitted by law.

 17
 

 

 

(f)            The post-termination restrictions of
Section 13(b) will not apply and will not be enforced by the Company with
respect to post-termination competitive activity by the Executive that occurs
in California.

(g)           The post-termination restrictions of
Section 13(c)(ii) will not apply and will not be enforced by the Company with
respect to post-termination solicitation of customers that occurs in California
and does not involve the Executive’s use of trade secrets or Confidential
Information of the Company or its Affiliates.

14.                                 REMEDIES.

Each of the parties to
this Agreement shall be entitled to enforce its rights under this Agreement
specifically, to recover damages and costs (including without limitation
reasonable attorney’s fees) caused by any breach of any provision of this
Agreement and to exercise all other rights existing in its favor.  The parties hereto agree and
acknowledge that money damages would not be an adequate remedy for any breach
of the provisions of this Agreement and that any party may in its sole
discretion apply to any court of law or equity of competent jurisdiction
(without posting any bond or deposit) for specific performance and/or other
injunctive relief in order to enforce or prevent any violations of the
provisions of this Agreement.  Nothing in
this Section 14 is intended to prevent the parties from raising any and all
defenses with respect to the necessity for, and scope of, such injunctive or
equitable relief.

15.                                 NON-DISPARAGEMENT

The Executive agrees not to
disparage the name, business reputation or business practices of the Company or
any of its respective subsidiaries or affiliates, or their (or their
subsidiaries’ or affiliates’) officers, employees and directors and the Company
agrees not to disparage the name or business reputation of the Executive.  If either party fails to comply with this
provision, the other party shall have the right to respond truthfully to such
disparaging statements, notwithstanding the terms of this Section 15.

16.                                 RESOLUTION
OF DISPUTES.

Subject to the provisions of Section 14 regarding
specific performance and/or injunctive relief, any disputes arising under or in
connection with this Agreement shall be resolved by binding arbitration, to be
held in Philadelphia, Pennsylvania, in accordance with the rules and procedures
of the American Arbitration Association. 
Judgment upon the award rendered by the arbitrator(s) may be entered in
any court having jurisdiction thereof.

17.                                 EXPENSES.

Subject to the provisions
of Section 14, in the event any party hereto (for the purposes of this Section
17, the “Aggrieved Party”) seeks a judicial adjudication of, or an award in
arbitration to enforce, the Aggrieved Party’s rights under, or to recover
damages for the breach of, this Agreement, the Aggrieved Party shall be
entitled to recover from the other party or parties, as the case may be, and
shall be indemnified by the other party or parties, as the case may be,
against, any and all costs actually and reasonably incurred by the Aggrieved
Party in 

 18
 

 

 

such judicial adjudication or arbitration, including, without
limitation, reasonable attorney’s fees, but only if the Aggrieved Party
prevails in such proceeding.

18.                                 LIABILITY
INSURANCE.

The Company agrees to obtain, continue and maintain a
directors’ and officers’ liability insurance policy covering the Executive to
the extent the Company provides such coverage for its other comparable
executives.

19.                                 ASSIGNABILITY;
BINDING NATURE.

This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors, heirs (in the case of the Executive) and assigns.  Rights or obligations of the Company under
this Agreement may be assigned or transferred by the Company pursuant to a
merger or consolidation in which the Company is not the continuing entity, or
the sale or liquidation of all or substantially all of the assets of the
Company, provided that the assignee or transferee is the successor to all or
substantially all of the assets of the Company and such assignee or transferee
assumes the liabilities, obligations and duties of the Company, as contained in
this Agreement, either contractually or as a matter of law.  The Company further agrees that, in the event
of a sale of assets or liquidation as described in the preceding sentence, it
shall take whatever action it reasonably can in order to cause such assignee or
transferee to expressly assume the liabilities, obligations and duties of the
Company hereunder.  No rights or
obligations of the Executive under this Agreement may be assigned or
transferred by the Executive other than his rights to compensation and
benefits, which may be transferred only by will or operation of law.

20.                                 REPRESENTATIONS
AND WARRANTIES.

(a)           The Company represents and warrants
that it has all requisite corporate power and authority to enter into this
Agreement and that the performance by the Company of its obligations under this
Agreement will not violate any agreement to which it is a party.

(b)           The Executive represents that the
execution of this Agreement by the Executive and the performance by him of his
obligations hereunder will not violate any agreement to which he is a party.

(c)           The Executive hereby represents and
warrants that he is not bound by the terms of any agreement with any previous
employer or other party to refrain from competing, directly or indirectly, with
the business of such previous employer or any other party.  The Executive further represents and warrants
that Executive’s performance of all the terms of this Agreement and as an
employee of the Company does not and will not breach any agreement to keep in
confidence proprietary information, knowledge or data acquired by the Executive
in confidence or in trust prior to Executive’s employment with the
Company.  The Executive will not disclose
to the Company or induce the Company to use any confidential or proprietary
information or material belonging to any previous employer or others.  The Executive will not hereafter grant anyone
any rights inconsistent with the terms of this Agreement.

 19
 

 

 

21.                                 ENTIRE
AGREEMENT.

This Agreement and the Exhibits attached hereto and
incorporated herein by reference contain the entire understanding and agreement
between the parties concerning the subject matter hereof and thereof and supersede
all prior agreements, understandings, discussions, negotiations and
undertakings, whether written or oral, between the parties with respect
thereto.  This is an integrated document.

22.                                 AMENDMENT
OR WAIVER.

No provision in this Agreement may be amended unless
such amendment is agreed to in writing and signed by the Executive and an
authorized officer of the Company, other than the Executive.  No waiver by either party of any breach by
the other party of any condition or provision contained in this Agreement to be
performed by such other party shall be deemed a waiver of a similar or
dissimilar condition or provision at the same or any prior or subsequent
time.  Any such waiver must be in writing
and signed by the Executive or an authorized officer of the Company, other than
the Executive, as the case may be.

23.                                 SEVERABILITY.

In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason, in
whole or in part, the remaining provisions of this Agreement shall be
unaffected thereby and shall remain in full force and effect to the fullest
extent permitted by law so as to achieve the purposes of this Agreement.

24.                                 SURVIVORSHIP.

Except as otherwise expressly set forth in this
Agreement, the respective rights and obligations of the parties hereunder shall
survive any termination of the Executive’s employment.  This Agreement itself (as distinguished from
the Executive’s employment) may not be terminated by either party without the
written consent of the other party.  In
the event of a Change in Control, the Company shall require any successor to
the Company or any acquiror of all or substantially all the Company’s assets to
assume and honor the Agreement.

25.                                 REFERENCES.

In the event of the Executive’s death or a judicial
determination of his incompetence, reference in this Agreement to the Executive
shall be deemed, where appropriate, to refer to his beneficiary, estate or
other legal representative.

26.                                 GOVERNING
LAW/JURISDICTION.

This Agreement shall be governed in accordance with
the laws of the Commonwealth of Pennsylvania without reference to principles of
conflict of laws.

 20
 

 

 

27.                                 NOTICES.

All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed given when (a)
delivered personally, (b) sent by certified or registered mail, postage
prepaid, return receipt requested or (c) delivered by overnight courier
(provided that a written acknowledgment of receipt is obtained by the overnight
courier) to the party concerned at the address indicated below or to such
changed address as such party may subsequently give such notice of:

	
  If to the Company:

  	
   

  	
  VIASYS Healthcare Inc.

  227 Washington Street, Suite 200

  Conshohocken, PA 19428

  Attn: Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
  Copy to:

  	
   

  	
  VIASYS Healthcare Inc.

  227 Washington Street, Suite 200

  Conshohocken, PA 19428

  Attn: Corporate Vice President, Human Resources

  
	
   

  	
   

  	
   

  
	
  If to Executive:

  	
   

  	
  The last known address of the Executive, as 

  provided to the Company by the Executive

  

 

28.                                 HEADINGS.

The headings of the sections contained in this
Agreement are for convenience only and shall not be deemed to control or affect
the meaning or construction of any provision of this Agreement.

29.                                 COUNTERPARTS.

This Agreement may be executed in counterparts.

[Remainder of Page
Intentionally Left Blank]

 21
 

 

 

IN WITNESS
WHEREOF, the undersigned have executed this Agreement as of the restatement set
forth above.

 

	
  

  	
  VIASYS
  HEALTHCARE INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  /s/  Randy H. Thurman

  
	
   

  	
   

  	
  Name: Randy H.
  Thurman

  
	
   

  	
   

  	
  Title: Chairman,
  President and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/  Edward Pulwer

  
	
   

  	
   

  	
  Edward Pulwer

  

 

 22Exhibit 10.1

 

INTERIM MANAGEMENT AGREEMENT

This Interim Management Agreement (the “Agreement”) is dated as of September 20,
2006 by and between Crdentia Corp., a Delaware corporation (“Crdentia”), and iVOW, Inc., a Delaware
corporation (the “Company”).

WHEREAS, Crdentia and the Company are parties to that
certain Agreement and Plan of Merger and Reorganization dated of even date
herewith (the “Merger Agreement”),
which describes the terms of the proposed acquisition of the Company by
Crdentia (the “Acquisition”).

WHEREAS, the Parties desire to transfer the direction
and control of the operations of the Company to Crdentia as of the Effective
Date (as that term is defined below) on an interim basis subject to the final
approval of the Acquisition by the stockholders of the Company and the closing
of the Acquisition in accordance with the terms of the Merger Agreement.

WHEREAS, Crdentia and the Company desire to enter into
this Agreement with the purpose and intent of memorializing their agreements
regarding the terms and conditions for the transfer of direction and control of
the operations of the Company to Crdentia on an interim basis, and the related
transactions described herein.

NOW, THEREFORE, in consideration of the premises and
the mutual covenants of the parties set forth herein, and of other good and
valuable consideration, the receipt and adequacy of which each party hereby
acknowledges, the parties hereto agree as follows:

1.             Transfer of Company Operations.  The operation and control of the Company shall
be transferred from the Company to Crdentia in accordance with this Agreement
as of midnight (Pacific Standard Time) on September 20, 2006 (the “Effective Date”).

2.             Representations
and Warranties of Company.  The
Company hereby covenants, represents and warrants as follows:

(a)           The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.

(b)           The Company has full legal power and
authority to enter into and deliver this Agreement and perform the transactions
contemplated herein.

(c)           All consents, approvals, resolutions,
authorizations, actions or orders required of the Company for the
authorization, execution and delivery of, and for the consummation of the
transactions contemplated by, this Agreement have been obtained, except if and
to the extent that the approval of the stockholders of the Company is required.

(d)           This Agreement when executed and
delivered will constitute the Company’s legal, valid and binding obligation
enforceable in accordance with its terms.

(e)           The execution and delivery of this
Agreement, and the fulfillment of and compliance with the terms and provisions
hereof, do not conflict with or violate any judicial or administrative order,
award, judgment or decree applicable to the Company, or violate or conflict

 1
 

 

with any of the terms,
conditions or provisions of the Company’s Certificate of Incorporation, Bylaws
or other organizational documents, or any contract between the Company and any
third person or entity (whether with or without notice or passage of time).

(f)            The Company has sole and complete
ownership or lawful control over the property and facilities used by the
Company in its operations.

(g)           The Company has operated its property
and facilities, and as of the commencement of this Agreement will be, in
substantial compliance with all applicable federal, state and local laws, rules
and regulations any violation of which could have a material adverse impact on
its business, or its operations, financial condition or business prospects.

(h)           The Company shall have sole and
absolute responsibility for and shall pay when and as due, any and all income
taxes imposed on the Company.

3.             Representations
and Warranties of Crdentia.  Crdentia
hereby covenants, represents and warrants as follows:

(a)           Crdentia is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.

(b)           Crdentia has full legal power and
authority to enter into and deliver this Agreement and perform the transactions
contemplated herein.

(c)           All consents, approvals, resolutions,
authorizations, actions or orders required of Crdentia for the authorization,
execution and delivery of, and for the consummation of the transactions
contemplated by, this Agreement have been obtained.

(d)           This Agreement when executed and
delivered will constitute Crdentia’s legal, valid and binding obligation
enforceable in accordance with its terms.

(e)           The execution and delivery of this
Agreement, and the fulfillment of and compliance with the terms and provisions
hereof, do not conflict with or violate any judicial or administrative order,
award, judgment or decree applicable to Crdentia, or violate or conflict with
any of the terms, conditions or provisions of Crdentia’s Certificate of Incorporation,
Bylaws or other organizational documents, or any contract between Crdentia and
any third person or entity (whether with or without notice or passage of time).

4.             Management
of Company by Crdentia.

(a)           Authority of Crdentia.  Subject to the covenants, conditions and
restrictions set forth in this Agreement, and subject to existing contractual
obligations of the Company, Crdentia shall have and the Company hereby
delegates to Crdentia, sole and exclusive responsibility, authority and
discretion to (x) conduct, manage, direct and control all aspects of the
business and operations of the Company, and (y) utilize the Company’s cash
and working capital to defray any and all expenses of both Crdentia and the
Company.  Without limiting the generality
of the foregoing, Crdentia shall have the following authority and
responsibilities:

 2
 

 

(i)            to conduct, manage, direct and
control all aspects of the business and operations of the Company, in the
exercise of Crdentia’s good faith business judgment, consistent with applicable
laws;

(ii)           to administer the Company’s contracts
with customers, service providers and other vendors or purchasers of services
or supplies, including the authority and responsibility to negotiate, enter
into, maintain and amend, any or all of such contracts;

(iii)          to supervise the billing for the
Company services and collect accounts receivable of the Company relating to the
business and operations of the Company; and

(iv)          to rely on information, opinions,
reports or statements, including financial statements and other financial data
and records, prepared or presented to Crdentia by the Company, its officers,
agents or employees, at any time prior to or during the term of this Agreement.

(b)           Non-Assignment of Agreements.  Nothing in this Agreement is intended to be
or shall be construed to constitute an assignment by the Company of any
agreement or contractual obligation, whether express or implied, that exists
between the Company and any other person or entity.  Similarly, nothing in this Agreement is
intended to be or shall be construed to constitute an assumption by Crdentia of
any agreement or contractual obligation, whether express or implied, that
exists between the Company and any other person or entity.

(c)           Limitation of Liabilities.  Crdentia makes no warranties, express or
implied, as to the results of operation of the Company, any actions that will
or will not be taken by Crdentia in the operation of the Company, any services
or supplies that will or will not be provided by the Company, any customers or
clients that will or will not be retained or acquired by the Company or any net
book value, net worth, liquidation value or any other value of the Company or
any of its assets upon termination of this Agreement.  In no event will Crdentia be liable to the
Company, or any person or entity engaged by or under contract with Company, for
any losses, liabilities or damages, including, without limitation, any lost
profits, lost savings or other incidental, special or consequential damages, incurred
by the Company, its agents or employees, as a result of Crdentia’s operation of
the Company in the exercise of Crdentia’s good faith business judgment or
Crdentia’s use of the Company’s cash and working capital pursuant to
Section 4(a) above, even if Crdentia has been advised of the possibility
of such damages, except for any such damages or liability caused by the
unlawful conduct or gross negligence, of Crdentia, or its agents and
employees.  In no event will Crdentia be
liable to the Company for, or be obligated to return, any funds used by
Crdentia to defray Crdentia’s or the Company’s expenses pursuant to
Section 4(a) above.

(d)           Insurance.  Throughout the term of this Agreement,
Crdentia shall provide and maintain comprehensive general liability, workers
compensation and professional liability insurance for all employees of Crdentia
(but not the Company employees), with such limits as the Parties agree are
commercially reasonable.

(e)           Events Excusing Performance.  Crdentia shall not be liable to the Company
for failure to perform any of the services required herein in the event of any
strike,

 3
 

 

lock-out, calamity, act
of God, failure of supplier, or other event over which Crdentia has no control,
for so long as such event continues, and for a reasonable period of time
thereafter.

(f)            No Limitation on Other Projects.  Nothing contained in this Agreement shall
preclude, limit or otherwise affect the right of Crdentia to engage in, or
possess interests in, other business ventures of every kind and description.

5.             Obligations
of Company.

(a)           Exclusive Manager.  During the term of this Agreement and except
as otherwise provided herein, the Company engages Crdentia to act as the sole
and exclusive manager and administrator of its business and operations.  Crdentia is expressly authorized by the
Company to perform its services hereunder in whatever manner it deems
appropriate to meet the day-to-day requirements of the operations of the
Company, in accordance with standards established by Crdentia, including, without
limitation, performance of some business functions at other locations.  The Company further agrees that during the
term of this Agreement, the Company shall not, without the prior written
consent of Crdentia, contract for or otherwise purchase or provide any of the
management, administrative or other services provided by Crdentia to the
Company hereunder.

(b)           Insurance.  During the term of this Agreement, the
Company agrees to obtain and maintain commercial general liability insurance
covering its operations, and fire and extended casualty insurance covering its
offices and property, upon such terms and with such coverages as the parties
agree is commercially reasonable.

(c)           Cooperation and Further Assurances.  The Company agrees to cooperate with Crdentia,
and to execute such other documents and take such other actions as may be
reasonably necessary or desirable, in connection with the efficient management
of the day-to-day operations of the Company by Crdentia.

(d)           Access to Facilities.  During the term of this Agreement, Crdentia
shall have the right to enter and use all the Company offices and facilities at
all times necessary, in the discretion of Crdentia, to perform its duties under
this Agreement, including, without limitation, the right for Crdentia
employees, contractors and agents, and any equipment, inventory or other
supplies or documents owned or leased by Crdentia, to be in such offices and
facilities.

(e)           Access to Records.  During the term of this Agreement, Crdentia,
and its respective designees, shall have the right during the Company’s normal
business hours and upon reasonable prior notice, to inspect, copy and make
extracts from, the Company’s books of account and records, and the Company’s
books of account and records relating to the operations of the Company and
maintained by Company during the period from and including the Effective Date
through and including the termination date of this Agreement, including,
specifically but without limitation, records of billings, collections, expenses
and disbursements, records of meetings of the Company’s stockholders, board of
directors and any and all committees thereof, and records of agreements,
instruments, judgments orders and other written obligations of the Company that
materially affect Crdentia’s rights or the performance of its duties hereunder.

 4
 

 

(f)            Adverse Actions.  Except as otherwise permitted in this
Agreement, the Company agrees not to take any action or implement any decision
that would have a material adverse effect on Crdentia’s authority and
discretion to conduct, manage, direct and control all aspects of the business
and operations of the Company, unless the Company obtains the prior written
approval of Crdentia to such action or decision.

(g)           Events Excusing Performance.  The Company shall not be liable to Crdentia
for failure to perform any of the services required herein in the event of any
strike, lock -out, calamity, act of God, failure of supplier, or other event
over which the Company has no control, for so long as such event continues, and
for a reasonable period of time thereafter.

6.             Term
and Termination.

(a)           Term of Agreement.  The term of this Agreement shall commence as
of the Effective Date, and shall extend until the closing of the Acquisition in
accordance with the Merger Agreement, unless earlier terminated pursuant to the
terms of Section 6(b) or Section 6(c) below, or pursuant to mutual
agreement of the parties or any other provision of this Agreement.

(b)           Termination
by Company.  The Company may
terminate this Agreement under the following circumstances:

(i)            the commencement of any voluntary
proceeding by Crdentia under any reorganization arrangement, readjustment,
moratorium law or statute, including, without limitation, the United States
Bankruptcy Code or any successor federal statute, or if any involuntary
proceeding under any reorganization arrangement, readjustment, moratorium law
or statute, including, without limitation, the United States Bankruptcy Code or
any successor federal statute, is commenced against Crdentia, or if Crdentia
makes, negotiates or commences negotiations for partial or complete assignment
of its assets for the benefit of creditors, pursuant to statutory or common
law;

(ii)           Crdentia suffers an appointment of a
receiver, custodian, examiner or a trustee for any of its property or assets;

(iii)          the termination, liquidation or
dissolution of Crdentia;

(iv)          in the event that Crdentia shall
default in the performance of any material duty or obligation imposed upon it
by this Agreement and such default shall continue for a period of
thirty (30) days after written notice thereof has been given to Crdentia
by the Company; or

(v)           upon the termination of the Merger
Agreement in accordance with its terms.

 5
 

 

(c)           Termination
by Crdentia.  Crdentia may terminate
this Agreement under the following circumstances:

(i)            the commencement of any voluntary
proceeding by the Company under any reorganization arrangement, readjustment,
moratorium law or statute, including, without limitation, the United States Bankruptcy
Code or any successor federal statute, or if any involuntary proceeding under
any reorganization arrangement, readjustment, moratorium law or statute,
including, without limitation, the United States Bankruptcy Code or any
successor federal statute, is commenced against the Company, or if the Company
makes, negotiates or commences negotiations for partial or complete assignment
of its assets for the benefit of creditors, pursuant to statutory or common
law;

(ii)           the Company suffers an appointment of
a receiver, custodian, examiner or a trustee for any of its property or assets;

(iii)          the termination, liquidation or
dissolution of the Company, except any such action that causes a third party to
expressly assume the obligations and succeed to the interests of the Company
hereunder;

(iv)          in the event the Company shall default
in the performance of any material duty or obligation imposed upon it by this
Agreement and such default shall continue for a period of thirty (30) days
after written notice thereof has been given to the Company; or

(v)           upon the termination of the Merger
Agreement in accordance with its terms.

7.             General Provisions.

(a)           Independent Relationship.  The parties to this Agreement shall be and
remain independent legal entities, without obligation to each other or to any
third person or entity, except as may be expressly set forth in this
Agreement.  The parties do not intend
this Agreement, or any aspect of the operation of the Company, to form a partnership,
joint venture or any other form of legal association under any applicable
law.  The parties to this Agreement do
not intend to be partners to one another, or partners as to any third person or
entity not a party to this Agreement. 
Except as otherwise expressly set forth in this Agreement, or as
otherwise may be required by applicable law, no party shall be held to be a
fiduciary or trustee, or to have any fiduciary obligation, to any other party.

(b)           Assignment.  Neither party shall have the right to assign
its rights and delegate its duties hereunder without the prior consent of the
other party.

(c)           Entire Agreement; Modification.  There are no other agreements or
understandings, written or oral, between the parties regarding the subject
matter of this Agreement, other than as set forth herein.  All exhibits referred to in this Agreement
are intended to and shall be incorporated into this Agreement by reference and
shall be deemed to be a part of this Agreement. 
This Agreement shall not be modified or amended except by a written
document executed by both parties.  Each
written modification shall be attached hereto.

 6
 

 

(d)           Notices.  All notices required, desired or permitted to
be given under this Agreement shall be in writing and shall be deemed to have
been duly made and given when given in person, by facsimile, by nationally
recognized overnight courier or when sent by United States mail, postage
prepaid, registered or certified mail, return receipt requested, or by
overnight delivery addressed as follows:

	
  If to Crdentia:

  	
  Crdentia Corp.

  
	
   

  	
  Attention:
  James D. Durham

  
	
   

  	
  5001 LBJ Freeway

  
	
   

  	
  Suite 850

  
	
   

  	
  Dallas, Texas
  75244

  
	
   

  	
   

  
	
  With a copy to:

  	
  Morrison & Foerster LLP

  
	
   

  	
  Attention:
  Steven G. Rowles

  
	
   

  	
  12531 High Bluff
  Drive, Suite 100

  
	
   

  	
  San Diego,
  California 92130

  
	
   

  	
   

  
	
  If to the
  Company:

  	
  iVOW, Inc.

  
	
   

  	
  11455 El Camino
  Real, Suite 140

  
	
   

  	
  San Diego,
  California 92130

  

 

Any such notice sent by United States mail shall be
deemed to have been given forty-eight (48) hours after posting (if
addressed and prepaid as set forth above) and notices which are personally
delivered or by facsimile or delivered by overnight delivery shall be deemed to
have been given when delivered.  Each
party may change the address to which its notices are to be delivered
hereunder, by giving notice as hereinabove provided.

(e)           Binding on Successors.  This Agreement shall be binding upon the
parties, and the parties’ respective successors, assigns, heirs and
beneficiaries.

(f)            Waiver of Provisions.  Any waiver of any term or provision hereof
must be made in writing, and signed by the parties hereto.  Any such waiver shall not be construed as a
waiver of any other term or provision hereof, not expressly provided for a
written waiver signed by the parties.

(g)           Governing Law.  This Agreement is to be construed in accordance
with and governed by the internal laws of the State of Delaware 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 Delaware to
the rights and duties of the parties. In addition, each of the parties hereto
(a) irrevocably and unconditionally consents to submit itself to the
jurisdiction of the Court of Chancery of the State of Delaware in the event any
dispute arises out of this Agreement or the transactions contemplated by this
Agreement, (b) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court, (c)
agrees that it will not bring any action relating to this Agreement or the
transactions contemplated by this Agreement in any court other than the Court
of Chancery of the State of Delaware, and each of the parties irrevocably
waives the right to trial by jury, (d) waives, to the fullest extent permitted
by law, the defense of an inconvenient forum to the maintenance of such

 7
 

 

action on the Court of
Chancery of the State of Delaware, and (e) each of the parties irrevocably
consents to service of process by first class certified mail, return receipt
requested, postage prepaid, to the address at which such party is to receive
notice.

(h)           Severability.  The provisions of this Agreement shall be
deemed severable and if any provision hereof shall be held invalid, illegal or
unenforceable for any reason, the remainder of this Agreement shall be and
remain effective and binding upon the parties.

(i)            Attorneys’ Fees.  If legal action is commenced by either party
to enforce or defend its rights under this Agreement, or to interpret or
enforce this Agreement, the prevailing party in such action shall be entitled
to recover its costs and reasonable attorneys’ fees from the other party, in
addition to any other relief granted.

(j)            Time of the Essence.  Time is hereby expressly declared to be of
the essence in this Agreement.

(k)           Confidentiality.  Except for disclosure to its attorneys and
consultants, or as necessary for the conduct of its business, neither party
shall disclose to any third party (other than the Company) any provision of
this Agreement, or any financial or other information regarding the other party
obtained by disclosing party, regardless of when obtained, without the prior
written consent of the other party.  The
confidentiality and non-disclosure provisions of the Term Sheet shall remain in
full force and effect.

(l)            Remedies Cumulative.  No remedy set forth in this Agreement or
otherwise conferred upon or reserved to any party by law, shall be considered
exclusive of any other remedy available to such party.

(m)          Language Construction.  The language in all parts of this Agreement
shall be construed, in all cases, according to its fair meaning, and not for or
against either party.

(n)           Counterparts; Facsimile.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement may be
executed by facsimile (with originals to follow by United States mail), and
such facsimile shall be conclusive evidence of the consent and ratification of
the signatories hereto.

[Remainder of Page Intentionally Left Blank]

 8
 

 

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

	
  Crdentia

  	
  CRDENTIA CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James D. Durham

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
  Company

  	
  iVOW, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John Lyon

  	
   

  
	
   

  	
   

  	
  Name: John Lyon

  
	
   

  	
   

  	
  Title: Chairman
  of the Board

  
					

 

 

[SIGNATURE PAGE TO
INTERIM MANAGEMENT AGREEMENT]

 9

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