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Exhibit 10.25  

 
 

VIASYS HEALTHCARE INC.
  EMPLOYMENT AGREEMENT    
    

        THIS AGREEMENT, is made and entered into as of June 9, 2003, by and among Viasys Healthcare Inc., a Delaware corporation (together with its
successors and assigns permitted under this Agreement, the "Company") and William Murray (the "Executive"). 

W
I T N E S S E T H: 

        WHEREAS,
the Company and the Executive desire to enter into an employment agreement as set forth herein to embody the terms and provisions of the Executive's employment (the
"Agreement"); 

        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 repeated failure to comply with the reasonable directives of the relevant senior officers; 

        (ii)   the
Executive's conviction of committing a felony which is materially and demonstrably injurious to the Company; or 

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

        (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) 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: 

	(A)
	any
acquisition by the Company, or

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

        (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 (A) who was a member of 

 

the
Board on the date of the execution of this Agreement or (B) 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 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 (B) 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 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 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"); or 

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

        (f)    "Code"
means the Internal Revenue Code of 1986, as amended. 

        (g)   "Disability"
or "disabled" means a disability which results in the Executive's entitlement to long-term disability benefits under the Company's applicable
long-term disability plan. 

        (h)   "Effective
Date" means July 7, 2003. 

        (i)    "Notice
of Termination" means a written notice from one party to the other party hereto given in accordance with Section 24, 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 Company to
set forth any fact or circumstance that contributes to a showing of Cause shall not waive any right of the Company hereunder or preclude the Company from asserting any such fact or circumstance in
enforcing its rights hereunder. 

        (j)    "Stock"
means the common stock, $0.01 par value per share, of the Company. 

        (k)   "Termination
Date" means, with respect to any termination of the Executive's employment hereunder, the effective date of such termination pursuant to Section 10. 

2.     TERM OF EMPLOYMENT.  

        This Agreement, and all rights and obligations of the parties hereunder, shall take effect upon the Effective Date and shall continue until the date that is two
years from the Effective Date (the "Term"). If the Company elects not to extend the Term of the Agreement on terms and conditions substantially similar to those set forth in this Agreement, the
Company shall provide the Executive with written notice at least six months prior to the end of the then current term. 

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3.     POSITION, DUTIES AND RESPONSIBILITIES.  

        (a)   Commencing
on the Effective Date, the Executive is employed as Group President, Respiratory Technology 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 CEO or the Executive's direct supervisor from time to time
deem appropriate. 

        (b)   During
the Term of Employment, 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. 

        (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 this Section 3. 

4.     BASE SALARY.  

        The Executive shall be paid an annualized base salary, payable in accordance with the regular payroll practices of the Company, of $300,000, which amount may be
increased from time to time in the discretion of the Board. 

5.     ANNUAL CASH INCENTIVE AWARD.  

        During the Employment Term, the Executive shall participate in (a) the Viasys Healthcare Inc. Management Incentive Plan with a target bonus of 50% ,
or such other amount as may be determined by Board or the appropriate committee or individual and (b) any other incentive programs established by the Company for its senior level executives
generally. 

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. 

7.     PERQUISITES.  

        During the Term of Employment, 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 earlier to occur of the following events: 

        (a)   death
of the Executive; 

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        (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(g); 

        (c)   the
day the Executive receives a Notice of Termination for Cause from the Company.

        (d)   the
30th day following receipt by the Executive of a Notice of Termination Without Cause from the Company; and 

        (e)   the
31st day following receipt by the Company of a Notice of Termination of Employment from the Executive. 

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
provisions of Section 5 (the "Pro-Rated Annual Bonus"), which shall be payable when incentive awards are normally paid to comparable executives; and 

        (iii)  Each
outstanding option granted under an equity compensation plan maintained by the Company to purchase shares of stock of the Company shall become immediately
exercisable, and thereafter, shall remain exercisable until the first anniversary of Termination Date. 

        (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)  The
Pro-Rated Annual Bonus, payable when incentive awards are normally paid to comparable executives; and 

        (iv)  Each
outstanding option granted under an equity compensation plan maintained by the Company to purchase shares of stock of the Company shall become immediately
exercisable, and thereafter, shall remain exercisable until the first anniversary of Termination Date. 

        (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)   The
Executive shall not be entitled to any benefits, severance or other compensation; and 

        (iii)  Any
portion of an outstanding option granted under an equity compensation plan maintained by the Company to purchase shares of stock of the Company that has previously
become exercisable shall remain exercisable for a period of 90 days after the Termination Date. Any portion of an outstanding option granted under an equity compensation plan maintained by the
Company that is not exercisable as of the Termination Date shall immediately terminate. 

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        (d)   TERMINATION
BY THE EXECUTIVE. In the event of a termination of employment by the Executive on his own initiative, other than due to (A) death,
(B) Disability, (C) the expiration of the then current Term of Employment, or (D) a notice from one party to the other of its intent not to extend the Employment Term 

        (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)   The
Executive shall not be entitled to any benefits, severance or other compensation; and 

        (iii)  Any
portion of an outstanding option granted under an equity compensation plan maintained by the Company to purchase shares of stock of the Company that has previously
become exercisable shall remain exercisable for a period of 90 days after the Termination Date. Any portion of an outstanding option granted under an equity compensation plan maintained by the
Company that is not exercisable as of the Termination Date shall immediately terminate. 

        (e)   TERMINATION
WITHOUT CAUSE. In the event of a termination of the Executive's employment by the Company, other than due to (A) death, (B) Disability,
(C) Cause, (D) a notice from one party to the other of its intent not to extend the Employment Term, 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)   The
Pro-Rated Annual Bonus, payable when incentive awards are normally paid to comparable executives; 

        (iii)  An
amount equal to the sum of (A) the Executive's then current Base Salary and (B) the most recent cash incentive paid or the target bonus available
under the VIASYS Management Incentive Plan then in existence, whichever is higher, payable in a lump sum within ninety (90) days of the Termination Date; and 

        (iv)  Each
outstanding option granted under an equity compensation plan maintained by the Company to purchase shares of stock of the Company shall become immediately
exercisable, and thereafter, shall remain exercisable until the first anniversary of Termination Date. 

        (f)    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 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. In addition, unless indicated otherwise in this Agreement, the treatment of any options granted to the
Executive in the case of any of the foregoing terminations, shall be governed by the terms of the VIASYS Equity Incentive Plan or other relevant equity compensation plan or any associated stock option
agreement. 

        (g)   TERMINATION
FOLLOWING A CHANGE IN CONTROL. Notwithstanding anything to the contrary in this Agreement, in the event the Executive's employment with the Company is
terminated within twelve (12) months following a Change in Control, the Executive shall be entitled to benefits equal to the greater of: (i) the benefits due and payable to him under the
change of control plan sponsored by the Company, if any, (the "Change of Control Plan"), or (ii) the benefits due and payable to him under Section 10 of this Employment Agreement as a
result of such termination. In furtherance thereof, it is the parties' understanding that in the event of a termination under such circumstances, the Executive shall only be entitled to receive
benefits payable under either the Change of Control Plan or this Employment Agreement (but not both). 

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        (h)   NATURE
OF PAYMENTS. Any amounts due under this Section 11 are in the nature of severance payments considered to be reasonable by the Company and are not in the
nature of a penalty. 

        (i)    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 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. 

11.   CONFIDENTIALITY & ASSIGNMENT OF INVENTIONS.  

        (a)   The
Executive shall execute and deliver to the Company on the Effective Date the Company's standard employee Confidentiality and Assignment of Inventions Agreement,
substantially in the form attached hereto as EXHIBIT A. 

        (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. 

12.   NON-COMPETITION; NON-SOLICITATION.  

        (a)   The
Executive acknowledges (i) that in the course of his employment with the Company he will become familiar with trade secrets and customer lists of, and other
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 Term of Employment and for a period of one year following his termination of employment for any reason 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 12, 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 12(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, hire or cause to be hired
any employee of or advisor or consultant to the Company or any of its Affiliates for any purpose or in any capacity whatsoever, or (ii) in connection with any business to which
Section 12(b) applies, call on, service, solicit or otherwise do business with any customer of the Company or any of its Affiliates; provided, however, that the restriction contained in
clause (i) of this Section 12(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. 

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        (d)   Nothing
in this Section 12 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 or 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. 

13.   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
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 13 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. 

14.   RESOLUTION OF DISPUTES.  

        Subject to the provisions of Section 13 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 each case 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. 

15.   EXPENSES.  

        (a)   Subject
to the provisions of Sections 13 and 14, in the event any party hereto (for the purposes of this Section 15, 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 such judicial adjudication or arbitration, including, without limitation, reasonable attorney's fees, but only if the Aggrieved Party prevails in such proceeding. 

16.   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 

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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. 

17.   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. 

18.   ENTIRE AGREEMENT.  

        This Agreement and Exhibits A & B 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. 

19.   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. 

20.   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. 

21.   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. 

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22.   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. 

23.   GOVERNING LAW/JURISDICTION.  

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

24.   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
	

Copy to:	
 	

	

If to Executive:	
 	

William Murray

25.   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. 

26.   COUNTERPARTS.  

        This Agreement may be executed in counterparts. 

[Remainder
of Page Intentionally Left Blank] 

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

	 	 	VIASYS HEALTHCARE INC.
	

 	
 	
By:	

 
	

 	
 	

/s/  Randy Thurman      

	

 	
 	

Name:	

Randy Thurman
	 	 	Title:	Chief Executive Officer
	

 	
 	

/s/  William Murray      
 William Murray

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VIASYS HEALTHCARE INC. EMPLOYMENT AGREEMENT<Page>

                                                                     Exhibit 4.7

NO. M-1

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY TO THE
EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.

                      WARRANT TO PURCHASE 1,724,257 SHARES
                               OF COMMON STOCK OF
                              DECODE GENETICS, INC.
                           (VOID AFTER 26 MARCH, 2009)

       This certifies that Merck & Co., Inc. or its permitted assigns (the
"Holder"), for value received, is entitled to purchase from deCODE genetics,
Inc., a Delaware corporation (the "Company"), a maximum of 1,724,257 fully paid
and nonassessable shares of the Company's Common Stock ("Common Stock") for cash
at a price of $29.00 per share (the "Stock Purchase Price") at any time or from
time to time up to and including 5:00 p.m. (Greenwich Mean Time) at the times
and upon the terms described herein, upon delivery to the Company, FAO Corporate
Counsel, at its principal office (or at such other location as the Company may
advise the Holder in writing) of the Form of Subscription attached hereto duly
filled in and signed and, if applicable, upon payment in cash or by check of the
aggregate Stock Purchase Price for the number of shares for which this Warrant
is being exercised determined in accordance with the provisions hereof.

       This Warrant is subject to the following terms and conditions:

       1.     EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR SHARES. This
Warrant shall be exercisable at the option of the Holder as to 344,851 shares
for a period of 30 days commencing on the first, second, third, fourth and fifth
anniversaries hereof (each an "Exercise Period."). Any portion of this Warrant
that is not exercised during an applicable Exercise Period shall expire and be
of no further force or effect. For purposes of illustration, this Warrant shall
be exercisable as to 344,851 shares on the first anniversary hereof. The Warrant
shall expire with respect to any portion of such 344,851 shares as to which the
Warrant is not exercised within 30 days after such first anniversary. Following
the exercise or expiration of any part of this Warrant, this Warrant shall
represent a warrant for the purchase of the balance of the shares purchasable
hereunder and no new warrant shall be issued for such balance in lieu of this
Warrant. The Company agrees that the shares of Common Stock purchased under this
Warrant shall be and are deemed to be issued to the Holder hereof as the record
owner of such shares as of the close of business on the date on which the
executed Form of Subscription shall have been delivered and payment made for
such shares. Certificates for the shares of Common Stock so purchased, together
with any other securities or property to which the Holder hereof is entitled
upon such exercise, shall be delivered to the Holder hereof by the Company at
the Company's expense within a reasonable time after the rights represented by
this Warrant have been so exercised. Each stock certificate so delivered shall
be in such denominations of Common Stock as may be requested by the Holder
hereof and shall be registered in the name of such Holder.

                                        1
<Page>

       2.     SHARES TO BE FULLY PAID; RESERVATION OF SHARES. The Company
covenants and agrees that all shares of Common Stock which may be issued upon
the exercise of the rights represented by this Warrant will, upon issuance, be
duly authorized, validly issued, fully paid and nonassessable and free from all
preemptive rights of any shareholder and free of all taxes, liens and charges
with respect to the issue thereof. The Company further covenants and agrees
that, during the period within which the rights represented by this Warrant may
be exercised, the Company will at all times have authorized and reserved, for
the purpose of issue or transfer upon exercise of the rights evidenced by this
Warrant, a sufficient number of shares of authorized but unissued Common Stock,
or other securities and property, when and as required to provide for the
exercise of the rights represented by this Warrant. The Company will take all
such action as may be necessary to assure that such shares of Common Stock may
be issued as provided herein without violation of any applicable law or
regulation, or of any requirements of any domestic securities exchange upon
which the Common Stock may be listed; provided, however, that the Company shall
not be required to effect a registration under any securities laws with respect
to such exercise except as otherwise required by an agreement between the
Company and the Holder.

       3.     ADJUSTMENT OF STOCK PURCHASE PRICE AND NUMBER OF SHARES. The Stock
Purchase Price and the number of shares purchasable upon the exercise of this
Warrant shall be subject to adjustment from time to time upon the occurrence of
certain events described in this Section 3. Upon each adjustment of the Stock
Purchase Price, the Holder of this Warrant shall thereafter be entitled to
purchase, at the Stock Purchase Price resulting from such adjustment, the number
of shares obtained by multiplying the Stock Purchase Price in effect immediately
prior to such adjustment by the number of shares purchasable pursuant hereto
immediately prior to such adjustment, and dividing the product thereof by the
Stock Purchase Price resulting from such adjustment.

              3.1    SUBDIVISION OR COMBINATION OF STOCK. In case the Company
shall at any time subdivide its outstanding shares of Common Stock into a
greater number of shares, the Stock Purchase Price in effect immediately prior
to such subdivision shall be proportionately reduced, and conversely, in case
the outstanding shares of Common Stock of the Company shall be combined into a
smaller number of shares, the Stock Purchase Price in effect immediately prior
to such combination shall be proportionately increased.

              3.2    REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR
SALE. If any recapitalization, reclassification or reorganization of the capital
stock of the Company, or any consolidation or merger of the Company with another
corporation, or the sale of all or substantially all of its assets or other
transaction shall be effected in such a way that holders of Common Stock shall
be entitled to receive stock, securities, or other assets or property (an
"Organic Change"), then, as a condition of such Organic Change, lawful and
adequate provisions shall be made by the Company whereby the Holder hereof shall
thereafter have the right to purchase and receive (in lieu of the shares of the
Common Stock of the Company immediately theretofore purchasable and receivable
upon the exercise of the rights represented hereby) such shares of stock,
securities or other assets or property as may be issued or payable with respect
to or in exchange for a number of outstanding shares of such Common Stock equal
to the number of shares of such stock immediately theretofore purchasable and
receivable upon the exercise of the rights represented hereby; In the event of
any Organic Change, appropriate provision shall be made by the Company with
respect to the rights and interests of the Holder of this Warrant to the end
that the provisions hereof (including, without limitation, provisions for
adjustments of the Stock Purchase Price and of the number of shares purchasable
and receivable upon the exercise of this Warrant) shall thereafter be
applicable, in relation to any shares of stock, securities or assets thereafter
deliverable upon the exercise hereof. The Company will not effect any such
consolidation, merger or sale unless, prior to the consummation thereof, the
successor corporation (if other than the Company) resulting from such
consolidation or the corporation purchasing such assets shall assume the
obligation to deliver to such

                                        2
<Page>

Holder such shares of stock, securities or assets as, in accordance with the
foregoing provisions, such Holder may be entitled to purchase.

              3.3    CERTAIN EVENTS. If any change in the outstanding Common
Stock of the Company or any other event occurs as to which the other provisions
of this Section 3 are not strictly applicable or if strictly applicable would
not fairly protect the purchase rights of the Holder of the Warrant in
accordance with such provisions, then the Board of Directors of the Company
shall make an adjustment in the number and class of shares available under the
Warrant, the Stock Purchase Price or the application of such provisions, so as
to protect such purchase rights as aforesaid. The adjustment shall be such as
will give the Holder of the Warrant upon exercise for the same aggregate Stock
Purchase Price the total number, class and kind of shares as he would have owned
had the Warrant been exercised prior to the event and had he continued to hold
such shares until after the event requiring adjustment.

              3.4    NOTICES OF CHANGE.

                     (a)    Immediately upon any adjustment in the number or
class or shares subject to this Warrant and of the Stock Purchase Price, the
Company shall give written notice thereof to the Holder, setting forth in
reasonable detail and certifying the calculation of such adjustment.

                     (b)    The Company shall give written notice to the Holder
at least 10 business days prior to the date on which the Company closes its
books or takes a record for determining rights to receive any dividends or
distributions.

                     (c)    The Company shall also give written notice to the
Holder at least 30 business days prior to the date on which an Organic Change
shall take place.

       4.     ISSUE TAX. The issuance of certificates for shares of Common Stock
upon the exercise of the Warrant shall be made without charge to the Holder of
the Warrant for any issue tax (other than any applicable income taxes) in
respect thereof, provided, however, that the Company shall not be required to
pay any tax which may be payable in respect of any transfer involved in the
issuance and delivery of any certificate in a name other than that of the then
Holder of the Warrant being exercised.

       5.     CLOSING OF BOOKS. The Company will at no time close its transfer
books against the transfer of any warrant or of any shares of Common Stock
issued or issuable upon the exercise of any warrant in any manner which
interferes with the timely exercise of this Warrant.

       6.     NO VOTING OR DIVIDEND RIGHTS; LIMITATION OF LIABILITY. Nothing
contained in this Warrant shall be construed as conferring upon the Holder
hereof the right to vote or to consent or to receive notice as a shareholder of
the Company or any other matters or any rights whatsoever as a shareholder of
the Company. No dividends or interest shall be payable or accrued in respect of
this Warrant or the interest represented hereby or the shares purchasable
hereunder until, and only to the extent that, this Warrant shall have been
exercised. No provisions hereof, in the absence of affirmative action by the
Holder to purchase shares of Common Stock, and no mere enumeration herein of the
rights or privileges of the Holder hereof, shall give rise to any liability of
such Holder for the Stock Purchase Price or as a shareholder of the Company,
whether such liability is asserted by the Company or by its creditors.

       7.     TRANSFER. This Warrant may not be sold, assigned or otherwise
transferred voluntarily by the Holder, other than to a successor of the Holder
or an Affiliate (as defined in the License and Research

                                        3
<Page>

Collaboration Agreement between Holder and deCODE genetics, ehf. dated 23
February 2004), without the consent of the Company. The Company shall register
upon its books any permitted transfer of this Warrant, upon surrender of same to
the Company with a written instrument of transfer duly executed by the
registered Holder. Upon any such registration of a permitted transfer, a new
Warrant shall be issued to the transferee and the surrendered Warrant shall be
canceled by the Company.

       8.     MODIFICATION AND WAIVER. This Warrant and any provision hereof may
be changed, discharged or terminated only by an instrument in writing signed by
the party against which enforcement of the same is sought.

       9.     NOTICES. Any notice, request or other document required or
permitted to be given or delivered to the Holder hereof or the Company shall be
deemed to have been given when delivered personally or sent by facsimile or
certified mail, postage prepaid, to each such Holder at its address as shown on
the books of the Company or to the Company at the address indicated therefore in
the first paragraph of this Warrant or such other address as either may from
time to time provide to the other.

       10.    BINDING EFFECT ON SUCCESSORS. This Warrant shall be binding upon
any corporation succeeding the Company by merger, consolidation or acquisition
of all or substantially all of the Company's assets. All of the covenants and
agreements of the Company shall inure to the benefit of the successors and
permitted assigns of the Holder hereof, and the word "Holder" as used herein
shall be deemed to include such successors and permitted assigns, provided that
any transfer of this Warrant is made in accordance with the requirements hereof.

       11.    DESCRIPTIVE HEADINGS AND GOVERNING LAW. The description headings
of the several sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. This Warrant
shall be construed and enforced in accordance with, and the rights of the
parties shall be governed by, the laws of the State of New Jersey.

       12.    LOST WARRANTS. The Company represents and warrants to the Holder
hereof that upon receipt of evidence reasonably satisfactory to the Company of
the loss, theft, destruction, or mutilation of this Warrant and, in the case of
any such loss, theft or destruction, upon receipt of an indemnity reasonably
satisfactory to the Company, or in the case of any such mutilation upon
surrender and cancellation of such Warrant, the Company, at its expense, will
make and deliver a new Warrant, of like tenor, in lieu of the lost, stolen,
destroyed or mutilated Warrant.

       13.    FRACTIONAL SHARES. No fractional shares shall be issued upon
exercise of this Warrant. The Company shall, in lieu of issuing any fractional
share, pay the Holder entitled to such fraction a sum in cash equal to such
fraction multiplied by the then effective Stock Purchase Price.

                      [THIS SPACE INTENTIONALLY LEFT BLANK]

                                        4
<Page>

       IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its officer, thereunto duly authorized this 25 day of February,
2004.

                                                     DECODE GENETICS, INC.
                                                     a Delaware corporation

                                                    By: /s/ Kari Stefansson
                                                        -------------------
                                                        Kari Stefansson
                                                        President and CEO

                                        5
<Page>

                                    EXHIBIT A

                                SUBSCRIPTION FORM

                                                Date:

deCODE genetics, Inc.
Sturlugata 8
101 Reykjavik
Iceland

Attn:  Corporate Counsel

Ladies and Gentlemen:

       The undersigned hereby elects to exercise the warrant issued to it by
deCODE genetics, Inc. (the "Company") and dated ______________, Warrant No.
______, (the "Warrant") and to purchase thereunder ___________ shares of the
Common Stock of the Company (the "Shares") at a purchase price of ______________
per Share or an aggregate purchase price of $________________ (the "Purchase
Price").

       Pursuant to the terms of the Warrant the undersigned has delivered the
Purchase Price herewith in full in cash or by certified check or wire transfer.
The undersigned also makes the representations set forth on the attached Exhibit
B of the Warrant.

                                         Very truly yours,

                                         By:

                                         Title:

                                        6
<Page>

                                    EXHIBIT B

                            INVESTMENT REPRESENTATION

THIS AGREEMENT MUST BE COMPLETED, SIGNED AND RETURNED TO DECODE GENETICS, INC.
ALONG WITH THE SUBSCRIPTION FORM BEFORE THE COMMON STOCK ISSUABLE UPON EXERCISE
OF THE WARRANT DATED _______________ WILL BE ISSUED.

                                                Date:

deCODE genetics, Inc.

Attn:  President

Ladies and Gentlemen:

       The undersigned, __________________________ ("Purchaser"), intends to
acquire up to __________ shares of the Common Stock (the "Common Stock") of
deCODE genetics, Inc. (the "Company") from the Company pursuant to the exercise
or conversion of a certain Warrant to purchase Common Stock held by Purchaser.
The Common Stock will be issued to Purchaser in a transaction not involving a
public offering and pursuant to an exemption from registration under the
Securities Act of 1933, as amended (the "Securities Act") and applicable state
securities laws. In connection with such purchase and in order to comply with
the exemptions from registration relied upon by the Company, Purchaser
represents, warrants and agrees as follows:

       Purchaser is acquiring the Common Stock for its own account, to hold for
investment, and Purchaser shall not make any sale, transfer or other disposition
of the Common Stock in violation of the Securities Act or the General Rules and
Regulations promulgated thereunder by the Securities and Exchange Commission
(the "SEC") or in violation of any applicable state securities law.

       Purchaser has been advised that the Common Stock has not been registered
under the Securities Act or state securities laws on the ground that this
transaction is exempt from registration, and that reliance by the Company on
such exemptions is predicated in part on Purchaser's representations set forth
in this letter.

       Purchaser has been informed that under the Securities Act, the Common
Stock must be held indefinitely unless it is registered under the Securities Act
or unless an exemption from such registration (such as Rule 144) is available
with respect to any proposed transfer or disposition by Purchaser of the Common
Stock. Purchaser further agrees that the Company may refuse to permit Purchaser
to sell, transfer or dispose of the Common Stock (except as permitted under Rule
144) unless there is in effect a registration statement under the Securities Act
and any applicable state securities laws covering such transfer, or unless
Purchaser furnishes an opinion of counsel reasonably satisfactory to counsel for
the Company, to the effect that such registration is not required.

                                        7
<Page>

       Purchaser also understands and agrees that there will be placed on the
certificate(s) for the Common Stock, or any substitutions therefor, a legend
stating in substance:

       "The shares represented by this certificate have not been
       registered under the Securities Act of 1933, as amended (the
       "Securities Act"), or any state securities laws. These shares
       have been acquired for investment and may not be sold or
       otherwise transferred in the absence of an effective registration
       statement for these shares under the Securities Act and
       applicable state securities laws, or an opinion of counsel
       satisfactory to the Company that registration is not required and
       that an applicable exemption is available."

       Purchaser has carefully read this letter and has discussed its
requirements and other applicable limitations upon Purchaser's resale of the
Common Stock with Purchaser's counsel.

                                         Very truly yours,

                                         By:

                                         Title:

                                        8

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