**EXHIBIT 10.1****OPTIONAL ADVANCE DEMAND NOTE****FIRST NIAGARA BANK**Buffalo, New York June 15, 2007**1. DEFINITIONS**. For purposes of this Note:a. “Borrower” means MINRAD INC., a Delaware corporation having an office at 50 Cobham Drive,Orchard Park, New York 14127.b. “Breakage Costs” means all resulting loss or expense incurred by Lender, including, withoutlimitation, any loss or expense incurred in obtaining, liquidating or reemploying deposits fromthird parties. A statement as to the amount of such loss or expense, prepared in good faith and inreasonable detail by Lender and submitted by Lender to Borrower, shall be conclusive and bindingfor all purposes absent manifest error in computation.c. “Business Day” means any day of the year of which banking institutions in Lockport, New Yorkare not authorized or required by law or other governmental action to be closed in New York Stateand, to the extent the LIBOR Rate is applicable, on which dealings are carried out in the Londoninterbank market.d. “Collateral” means any collateral, subordination, guaranty, endorsement or other security orassurance of payment, whether now existing or hereafter arising or accruing, that now or hereaftersecures the payment of or is otherwise applicable to the Outstanding Principal Account or anyinterest or other amount payable pursuant to this Note and remaining unpaid.e. “Credit” means a line of credit made available by Lender to Borrower in the maximum principalamount equal to the Limiting Principal Amount.f. “Demand” means any demand by Lender for the payment of the Outstanding Principal Amount.g. “Interest Period” means the thirty (30), sixty (60) or ninety (90) day period selected byBorrower for which the LIBOR Rate is in effect for a LIBOR Loan.h. “Lender” means FIRST NIAGARA BANK, a federally chartered financial institution having its chiefexecutive office at 6950 South Transit Road, P.O. Box 514, Lockport, New York 14095-0514.i. “Letter of Credit” means, individually, and “Letters of Credit” means, collectively, letters ofcredit issued, from time to time by Lender, pursuant to the Letter of Credit Limit.
21

 
j. “Letter of Credit Limit” means TWO HUNDRED FIFTY THOUSAND AND 00/100 ($250,000.00).k. “LIBOR Interest Determination Date” means a Business Day that is three (3) Business Days priorto the commencement of each Interest Period.l. “LIBOR Loan” means any portion of this Note bearing interest, from time to time, based upon theLIBOR Rate plus the LIBOR Margin.m. “LIBOR Margin” means three percent (3.0%).n. “LIBOR Rate” means the rate of interest per annum determined by Lender applicable to anyInterest Period, equal to the average rate per annum which the offices of various leading bankslocated in London, England offer for deposits in U.S. Dollars in the London Interbank EurodollarMarket at approximately 11:00 a.m. (London time) on a LIBOR Interest Determination Date in anamount equal to the amount or the applicable advance or LIBOR Loan on the applicable LIBOR InterestDetermination Date.o. “Limiting Principal Amount” means FIVE MILLION AND 00/100 DOLLARS ($5,000,000.00), inclusive ofthe aggregate stated amount of all issued and outstanding Letters of Credit.p. “Loan” means any loan by Lender pursuant to the Credit, to include but not be limited torequest for issuance of a Letter of Credit.q. “Loan Request” means any oral (including, but not limited to, telephonic), written or other(including, but not limited to, facsimile) request for a Loan.r. “Outstanding Principal Amount” means the outstanding principal amount of this Note.s. “Prime Rate” means, for any day, the rate then in effect on such day and designated by Lenderas its prime rate of interest.t. “Prime Loan” means any portion of this Note bearing interest from time to time based upon thePrime Rate.u. “Rate Election Notice” means a written notice in the form attached as Schedule A, fullycompleted and signed on behalf of Borrower.v. “Rate Option” means, so long as such option is available to Borrower, the choice of interestrates in accordance with Section 3. a. (ii) of this Note.w. “Reserve Percentage” means that percentage which is specified three (3) Business Days before thefirst day of the month by the Board of Governors of the Federal Reserve System (or any successor)or any other governmental or quasi-governmental authority with jurisdiction over Lender fordetermining the maximum reserve requirement (including, but not limited to, any basic,supplemental, marginal, or emergency reserve requirement) for Lender with respect to liabilities orassets constituting or including (among other liabilities) “Eurocurrency liabilities”
22

 
(as defined in Regulation D of the Board of Governors of the Federal Reserve System) applicablehereto.**2. PAYMENT; PREPAYMENT.**For value received, Borrower promises to pay to the order of Lender inlawful money of the United States and immediately available funds at any of the banking offices ofLender:a. Upon Demand by Lender, the Outstanding Principal Amount.b. Payments of interest only, to be due and payable on the first day of each month, calculated onthe basis of a 360-day year for the actual number of days each year (365 or 366, as applicable), onthe Outstanding Principal Amount from and including the date of this Note to but not including thedate the Outstanding Principal Amount is paid in full at a rate per year that:     (i) on each day before any Demand, shall be the rate in effect such day equal to (x) forPrime Loans, the Prime Rate, or (y) for LIBOR Loans, the LIBOR Rate plus the LIBOR Margin,     (ii) on each day after any Demand, shall be the total of (x) two percent (2%) and (y) therate in effect such date as the Prime Rate (provided, however, that (I) in no event shall suchinterest be payable at a rate in excess of the maximum rate permitted by applicable law and (II)solely to the extent necessary to result in such interest not being payable at a rate in excessof such maximum rate, any amount that would be treated as part of such interest under a finaljudicial interpretation of applicable law shall be deemed to have been a mistake andautomatically canceled, and, if received by Lender, shall be refunded to Borrower, it being theintention of Lender and Borrower that such interest not be payable at a rate in excess of suchmaximum rate), and     (iii) if the Prime Rate or LIBOR Rate becomes unavailable, shall be the rate of anotherindex that is selected by Lender in its sole discretion and has a historical movementsubstantially similar to that of such index and would have resulted in a rate substantiallysimilar to the rate of such index at the time such index becomes available.c. If any of the Outstanding Principal Amount or any interest or other amount payable pursuant tothis Note is not paid by the eleventh (11th) day after the date it becomes due, whetherpursuant to any Demand or otherwise, a late charge of 6% thereof.d. Each cost and expense (including, but not limited to, the reasonable fees and disbursements ofcounsel, whether retained for advice, litigation or any other purpose) incurred by Lender inendeavoring to (i) collect any of the Outstanding Principal Amount or any interest or other amountpayable pursuant to this Note, (ii) preserve or exercise any right or remedy of Lender pursuant tothis Note or (iii) preserve or exercise any right or remedy of Lender to enforce or realize uponany Collateral.Borrower shall have the option before any Demand of paying the Outstanding Principal Amount toLender in full or part at any time and from time to time without premium or penalty, except aslater provided.
23

 
Borrower shall not at any time permit, and Lender shall not at any time be obligated to permit, theOutstanding Principal Amount to exceed the Limiting Principal Amount.**3. LOAN REQUESTS; APPLICABLE INTEREST RATE; RATE SELECTION(S); RATE CONVERSION(S).**a. **Loan Requests**.     (i) On not less than one (1) nor more than five (5) Business Days’ notice, Borrower mayfrom time to time deliver to Lender a Loan Request, each Loan Request for a LIBOR Loan to be ina minimum amount of One Hundred Thousand Dollars ($100,000.00) and integral multiples of OneThousand Dollars ($1,000.00).     (ii) Each Loan Request shall be irrevocable and shall specify (w) the amount requested asthe principal amount of such Loan; (x) the Business Day of Lender on which such Loan isrequested to be made; (y) whether the requested Loan is to be a Prime Loan or a LIBOR Loan, (z)if the requested Loan is to be a LIBOR Loan, the applicable Interest Period, and, with respect aLoan for a Letter of Credit such additional information and supporting detail as Lender mayrequest.     (iii) The decision whether to honor such Loan Request and make such Loan shall be in thesole discretion of Lender. Lender may treat as made by Borrower and rely upon, and Borrowershall be bound by, any Loan Request that Lender in good faith believes to be valid and to havebeen made in the name or on behalf of Borrower by any agent or representative of Borrower, andLender shall not incur any liability to Borrower or any other person as a direct or indirectresult of honoring such Loan Request and making such Loan.b. **Rate Absent LIBOR Rate Election**. Unless, in accordance with this Note, Borrower has selectedthe LIBOR Rate with respect to a portion of this Note, such portion of this Note shall be deemed tobe a Prime Loan, and such Prime Loan shall continue in effect until the earlier of when the LIBORRate and Interest Period are available and properly selected, or until this Note is paid in full.c. **Rate Conversion Election**. Borrower may elect to (i) convert any portion of a Prime Loan to aLIBOR Loan, (ii) convert a LIBOR Loan to a Prime Loan, or (iii) continue any LIBOR Loan or PrimeLoan as a new loan of the same type provided, however, LIBOR Loans may only be converted on theexpiration date of the applicable Interest Period. Borrower’s option shall be elected by providinga fully completed Rate Election Notice to Lender by 11:00 a.m. eastern United States at least three(3) Business Days prior to the effective date of the requested rate change. Any such Rate ElectionNotice electing the LIBOR Rate shall be irrevocable.d. **Restrictions on availability of LIBOR Rate; Implementation of Prime-based Rate; SupplementalCharges**.     (i) If Lender determines (which determination shall be conclusive and binding uponBorrower, absent manifest error) (A) that dollar deposits in an amount approximately equal
24

 
to advances outstanding hereunder are not generally available at such time in the Londoninterbank market for deposits in dollars, (B) that the rate at which such deposits are beingoffered will not adequately and fairly reflect the cost to Lender of maintaining a LIBOR Rate onthe advances outstanding hereunder due to circumstances affecting the London interbank marketgenerally, (C) that reasonable means do not exist for ascertaining a LIBOR Rate, or (D) that aLIBOR Rate would be in excess of the maximum interest rate which Borrower may by law pay, then,in any such event, Lender shall so notify Borrower and all portions of Loans bearing interest ata LIBOR Rate that are so affected shall, as of the date of such notification with respect to anevent described in clause (B) or (D) above, or as of the expiration of the month with respect toan event described in clause (A) or (C) above, bear interest at the Prime Rate until such timeas the situations described in this subsection d. (i) are no longer in effect.     (ii) If, because of the introduction of or any change in, or because of any judicial,administrative, or other governmental interpretation of, any law or regulation, it becomesunlawful for Lender to make, fund, or maintain any advance at a LIBOR Rate, then (A) Lendershall notify Borrower that Lender is no longer able to maintain the interest rate at a LIBORRate, (B) the interest rate for any portion of the Loans for which the interest rate is then theLIBOR Rate plus the LIBOR Margin shall automatically be converted to the Prime Rate, and (C)Borrower shall pay to Lender the amount of Breakage Costs incurred in connection with suchconversion. Except as otherwise provided in this Note, the applicable interest rate shallremain at the Prime Rate until such time as the situation described herein is no longer ineffect and Borrower elects to convert the Prime Loan to a LIBOR Loan.     (iii) If, because of the introduction of or any change in, or because of any judicial,administrative, or other governmental interpretation of, any law or regulation, there shall beany increase in the cost to Lender of making, funding, maintaining, or allocating capital to anyLoan bearing interest at a LIBOR Rate, including a change in the Reserve Percentage, thenBorrower shall, from time to time upon demand by Lender, pay to Lender additional amountssufficient to compensate Lender for such increased cost.e. **Breakage Costs.**If Borrower repays any advance bearing interest at the LIBOR Rate plus theLIBOR Margin prior to the end of the Interest Period, Borrower shall reimburse Lender on demand forthe Breakage Costs. Calculation of the Breakage Costs shall be made as though Lender shall haveactually funded the relevant Loan through deposits or other funds acquired from third parties forsuch purpose; provided, however, that Lender may fund any Loan bearing interest at the LIBOR Rateplus the LIBOR Margin in any manner it sees fit and the foregoing assumption shall be utilized onlyfor purposes of calculation of amounts payable under this subsection. Lender will be entitled tothe Breakage Costs regardless of whether the prepayment is voluntary or involuntary (includingdemand or acceleration of this Note upon Borrower’s default).**4. RIGHT TO MODIFY, RESTRICT, SUSPEND OR TERMINATE**. The Credit is available subject to Lender’scontinuing review and right of modification, restriction, suspension or termination at any time forany reason in the sole discretion of Lender. No modification, restriction, suspension ortermination of the Credit shall affect Borrower’s obligation to repay the principal amount of eachLoan, Borrower’s obligation to pay interest on the outstanding principal
25

 
amount of each Loan or any other obligation of Borrower to Lender pursuant to this Note orotherwise.**5. SCHEDULE OF ADVANCES OR LOAN ACCOUNT**. There shall be payable as principal pursuant to this Noteonly so much of the Limiting Principal Amount as shall have been advanced by Lender as a Loan orLoans and is outstanding. Lender shall set forth on its account records (including, but notlimited to, any computerized records) annotations evidencing (a) the date and principal amount ofeach Loan, (b) the date and amount of each payment applied to the Outstanding Principal Amount and(c) the Outstanding Principal Amount after each Loan and each such payment. Each such annotationshall, in the absence of manifest error, be conclusive and binding upon Borrower. No failure byLender to make and no error by Lender in making any annotation on such attached schedule or anysuch similar schedule or loan account shall affect Borrower’s obligation to repay the principalamount of each Loan, Borrower’s obligation to pay interest on the outstanding principal amount ofeach Loan or any other obligation of Borrower to Lender pursuant to this Note or otherwise.**6. PURPOSE OF LOANS.**Borrower shall not obtain any Loan for any purpose other than for workingcapital and issuance of Letters of Credit, the latter not to exceed, in the aggregate, the Letterof Credit Limit.**7. Letter of Credit Fee.**Issuance of each Letter of Credit shall require the payment of anissuance fee of 1% of the stated amount thereof, together with such other customary fees as Lenderthen charges for letters of credit.**8. FINANCIAL INFORMATION.**Borrower shall provide, in form, detail and content satisfactory toLender, the following:a. Within 120 days after the end of each fiscal year of Minrad International, Inc.(“International”), a copy of its annual report filed under Section 13 or 15(d) of the SecuritiesExchange Act of 1934, as amended (the “Exchange Act”) (10K), which shall reflect consolidated datafor International, Borrower and all other subsidiaries of International;b. Within 45 days after the end of each fiscal quarter of International, a copy of International’speriodic report filed under Section 13 or 15(d) of the Exchange Act filings for such quarter, whichshall reflect consolidated data for International, Borrower and all other subsidiaries ofInternational;c. Upon Lender’s request, a then-current accounts receivable aging report for Borrower andInternational in reasonable detail; andd. Such other financial and other information relating to the Collateral, Borrower or to anyguarantor of the Credit as Lender may reasonably request from time to time.Borrower shall pay a late charge of $100 for failure to furnish each described item by the datespecified plus an additional late charge of $100 each month thereafter until such item is soprovided.
26

 
**9. AMOUNTS IMMEDIATELY DUE.**The Outstanding Principal Amount and all interest and other amountspayable pursuant to this Note and remaining unpaid shall, without any notice, demand, presentmentor protest of any kind (each of which is knowingly, voluntarily, intentionally and irrevocablywaived by Borrower), automatically become immediately due if Borrower commences or there iscommenced against Borrower any bankruptcy or insolvency proceeding.**10. GOVERNING LAW.**This Note shall be governed by and construed, interpreted and enforced inaccordance with the law of the State of New York and the federal law of the United States withoutregard to the law of any other jurisdiction.**11. WAIVER OF TRIAL BY JURY AND CLAIMS TO CERTAIN DAMAGES.**BORROWER KNOWINGLY, VOLUNTARILY,INTENTIONALLY AND IRREVOCABLY WAIVES EACH RIGHT BORROWER MAY HAVE TO A TRIAL BY JURY WITH RESPECTTO, AND EACH RIGHT TO ASSERT ANY CLAIM FOR DAMAGES (INCLUDING, BUT NOT LIMITED TO, PUNITIVEDAMAGES) IN ADDITION TO ACTUAL DAMAGES IN, ANY ACTION OR OTHER LEGAL PROCEEDING, WHETHER BASED ONANY CONTRACT OR NEGLIGENT, INTENTIONAL OR OTHER TORT OR OTHERWISE, ARISING OUT OF OR OTHERWISERELATING TO (a) THE CREDIT, ANY LOAN OR COLLATERAL, THIS NOTE OR ANY OTHER WRITING HERETOFORE ORHEREAFTER EXECUTED IN CONNECTION WITH THE CREDIT OR ANY LOAN OR COLLATERAL, (b) ANY TRANSACTIONARISING OUT OF OR OTHERWISE RELATING TO THE CREDIT, ANY LOAN OR COLLATERAL, THIS NOTE OR ANY SUCHOTHER WRITING OR (c) ANY NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT OF THE CREDIT, ANYLOAN OR COLLATERAL, THIS NOTE OR ANY SUCH OTHER WRITING.      MINRAD INC.