##### 



EXHIBIT 10.16
   INVESTMENT AGREEMENT
   MINRAD INC.
  MINRAD INTERNATIONAL, INC.
   LAMINAR DIRECT CAPITAL L.P.
  THE OTHER LENDERS PARTY HERETO
   $15,000,000 Senior Secured Notes due February 8, 2011
Warrants for 3,208,427 Common Shares




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##### 



TABLE OF CONTENTS
 Section
    
    PageARTICLE I. DEFINITIONS AND ACCOUNTING TERMS
    
    
    11.01 Defined Terms
    
    
    11.02 Other Interpretive Provisions
    
    
    171.03 Accounting Terms
    
    
    171.04 Rounding
    
    
    181.05 References to Agreements and Laws
    
    
    181.06 Times of Day
    
    
    18ARTICLE II. NOTES AND WARRANTS
    
    
    182.01 Authorization and Issuance of the Notes and Warrants
    
    
    18ARTICLE III. PURCHASE AND SALE
    
    
    183.01 Purchase and Sale of the Notes and Warrants; Closing
    
    
    18ARTICLE IV. TERMS OF NOTES
    
    
    194.01 Loans
    
    
    194.02 [Reserved]
    
    
    194.03 Repayment of Principal
    
    
    194.04 Payments of Interest
    
    
    194.05 Mandatory Prepayments of the Notes
    
    
    214.06 Optional Prepayments of the Notes
    
    
    224.07 Mandatory Offer to Prepay upon a Change of Control
    
    
    224.08 Direct Payment
    
    
    234.09 Taxes
    
    
    234.10 Fees
    
    
    24ARTICLE V. CONDITIONS PRECEDENT TO CLOSING
    
    
    245.01 Conditions To Closing
    
    
    24ARTICLE VI. REPRESENTATIONS AND WARRANTIES
    
    
    296.01 Existence, Qualification and Power; Compliance with Laws
    
    
    296.02 Authorization; No Contravention
    
    
    296.03 Governmental Authorization; Other Consents
    
    
    296.04 Binding Effect
    
    
    296.05 Financial Statements; No Material Adverse Effect
    
    
    306.06 Litigation
    
    
    306.07 No Default
    
    
    306.08 Ownership of Property; Liens
    
    
    316.09 Environmental Compliance
    
    
    316.10 Insurance
    
    
    316.11 Taxes
    
    
    316.12 ERISA Compliance
    
    
    316.13 Subsidiaries; Authorized and Issued Equity Interests
    
    
    326.14 Margin Regulations; Investment Company Act
    
    
    326.15 Disclosure
    
    
    336.16 Compliance with Laws
    
    
    336.17 Intellectual Property; Licenses, Etc.
    
    
    336.18 Experience
    
    
    336.19 Solvency
    
    
    346.20 Compliance with Securities Laws
    
    
    346.21 Deposit Accounts
    
    
    34
 i




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Section
    
    Page6.22 Business Locations
    
    
    346.23 Material Agreements
    
    
    346.24 Transactions with Affiliates
    
    
    346.25 Parent Holding Company
    
    
    356.26 Registration Statement
    
    
    356.27 SEC Reports: Financial Statements
    
    
    356.28 Internal Accounting Controls
    
    
    366.29 Private Placement
    
    
    366.30 Principal Market; Approvals
    
    
    366.31 Listing and Maintenance Requirements
    
    
    376.32 Application of Takeover Protections
    
    
    376.33 Acknowledgment Regarding Laminars Purchase of Warrants
    
    
    376.34 No General Solicitation or Advertising in Regard to this Transaction
    
    
    37ARTICLE VIA. REPRESENTATIONS AND WARRANTIES OF THE LENDERS
    
    
    38ARTICLE VII. AFFIRMATIVE COVENANTS
    
    
    387.01 Financial Statements
    
    
    387.02 Certificates; Other Information
    
    
    397.03 Notices
    
    
    407.04 Payment of Obligations
    
    
    417.05
Preservation of Existence; Conduct of Business, Etc.
    
    
    417.06 Maintenance of Properties
    
    
    417.07 Maintenance of Insurance
    
    
    427.08 Compliance with Laws
    
    
    427.09 Books and Records
    
    
    427.10 Inspection Rights; Field Audit
    
    
    427.11 Use of Proceeds
    
    
    437.12 Additional Subsidiaries
    
    
    437.13 Environmental Matters
    
    
    447.14 Further Assurances
    
    
    447.15 Remarketing Cooperation
    
    
    447.16 Pledged Assets; IP Subsidiary; Material Agreements
    
    
    447.17 Board Observation Rights
    
    
    467.18 Post-Closing Actions
    
    
    46ARTICLE VIII. NEGATIVE AND FINANCIAL COVENANTS
    
    
    478.01 Liens
    
    
    478.02 Investments
    
    
    488.03 Indebtedness
    
    
    488.04 Fundamental Changes
    
    
    498.05 Dispositions
    
    
    498.06 Restricted Payments
    
    
    508.07 Change in Nature of Business
    
    
    508.08 Transactions with Affiliates
    
    
    508.09 Burdensome Agreements
    
    
    508.10 Use of Proceeds
    
    
    518.11 ERISA Compliance
    
    
    518.12 Sales and Leasebacks
    
    
    518.13 Sale or Discount of Receivables
    
    
    518.14 Environmental Matters
    
    
    518.15 Subsidiaries
    
    
    518.16
Financial Covenants
    
    
    51
 ii




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Section
    
    Page8.17 Deposit and Securities Accounts
    
    
    548.18 Limitations on Affiliate Ownership of Obligations
    
    
    548.19 Modifications of Pennsylvania Loans
    
    
    548.20 Prepayment of Other Indebtedness
    
    
    548.21 Changes to Organizational Documents
    
    
    548.22 Changes in Fiscal Year
    
    
    548.23 IP Subsidiary
    
    
    558.24 Parent
    
    
    55ARTICLE IX. EVENTS OF DEFAULT AND REMEDIES
    
    
    559.01 Events of Default
    
    
    559.02 Remedies Upon Event of Default
    
    
    579.03 Other Remedies; Application of Funds
    
    
    589.04 Rescission of Acceleration
    
    
    58ARTICLE X. MISCELLANEOUS
    
    
    5910.01 Entire Agreement
    
    
    5910.02 Reimbursement of Expenses
    
    
    5910.03 Survival of Agreements and Representations and Warranties
    
    
    5910.04 No Waiver
    
    
    6010.05 Binding Effect; Participations
    
    
    6010.06 Initial Holder
    
    
    6010.07 Cumulative Powers
    
    
    6010.08 Loss of Securities; Reissue of Securities in Lesser Denominations
    
    
    6010.09 Communications
    
    
    6110.10 Form, Registration, Transfer and Exchange of Notes; Lost Notes
    
    
    6110.11 Confidentiality; Public Announcements
    
    
    6410.12 Governing Law
    
    
    6510.13 Headings
    
    
    6510.14 Multiple Originals
    
    
    6510.15 Amendment or Waiver
    
    
    6510.16 Waiver of Jury Trial
    
    
    6510.17 Consent to Jurisdiction and Service of Process
    
    
    6610.18 Indemnification; Damage Waiver
    
    
    6610.19 Regulatory Requirements
    
    
    6710.20 USA Patriot-Act Notice
    
    
    67ARTICLE XI. AGENCY PROVISIONS
    
    
    6811.01 Appointment
    
    
    6811.02 Delegation of Duties
    
    
    6811.03 Exculpatory Provisions
    
    
    6811.04 Reliance by Agent
    
    
    6911.05 Notices of Default
    
    
    6911.06 Non-Reliance on the Agent and Other Lenders
    
    
    6911.07 Indemnification
    
    
    7011.08 The Agent in Its Individual Capacity
    
    
    7011.09 Resignation of the Agent; Successor Agent
    
    
    7011.10 Reimbursement by Lenders
    
    
    71ARTICLE XII GUARANTY
    
    
    7112.01 The Guaranty
    
    
    7112.02 Obligations Unconditional
    
    
    7112.03 Reinstatement
    
    
    7212.04 Certain Additional Waivers
    
    
    72
 iii




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Section
    
    Page12.05 Remedies
    
    
    7312.06 Rights of Contribution
    
    
    7312.07 Guarantee of Payment; Continuing Guarantee
    
    
    74
 iv




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##### 



EXHIBITS AND SCHEDULES
 SCHEDULES
 1.01
    
    Transaction Expenses3.01
    
    Issue Price of Notes and Warrants; Allocation6.05
    
    Material Indebtedness6.06
    
    Material Litigation6.07
    
    No Default6.11
    
    Taxes6.13
    
    Subsidiaries; Equity Interests; Investments6.17
    
    IP Rights6.21
    
    Existing Deposit and Securities Accounts6.22
    
    Business Locations6.23
    
    Material Agreements6.24
    
    Affiliate Transactions8.01
    
    Permitted Liens10.09

    Addresses of Loan Parties and Lenders
 EXHIBITS
 A
    
    Form of NoteB
    
    Form of WarrantC
    
    Form of Security and Pledge AgreementD
    
    Form of Secretarys CertificateE
    
    Form of Officers Closing CertificateF
    
    Form of Compliance CertificateG
    
    Form of Solvency CertificateH
    
    Form of Financial Condition Certificate
 v




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##### 



CREDIT
INVESTMENT
AGREEMENT
 THIS INVESTMENT AGREEMENT Agreement MINRAD INC. Company MINRAD INTERNATIONAL,
INC. Parent Guarantors LAMINAR DIRECT CAPITAL L.P. Article XI Agent Lenders Lender
 STATEMENT OF PURPOSE
   AGREEMENT
  ARTICLE I.  DEFINITIONS AND ACCOUNTING TERMS
 1.01 Defined Terms.
  Accrual Rate Section 4.04(b)
 Additional Cash Amount Section 4.04(c)
 Additional Interest Amount Section 4.04(c)
 Agent
 Affiliate Control Controlling Controlled
 1




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##### 



Agreement
 Approved Bank
 Approved Fund Section 10.10
 Assignment and Assumption Section 10.10
 Attorney Costs
 Attributable Indebtedness
 Business Day
 Cash Equivalents
 provided
 Approved Bank
   2




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##### 



Cash Pay Period Section 4.04(b)
 Cash Pay Rate Section 4.04(b)
 Change of Control
     Change of Control Offer Section 4.07(a)
 Change of Control Payment Section 4.07(a)
 Change of Control Payment Date Section 4.07(a)
 Closing Section 3.01(b)
 Closing Date Section 3.01(b)
 Code
 3




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##### 



Collateral
 Collateral Documents
 Company
 Compliance Certificate Exhibit F
 Consolidated Balance Sheet
 Consolidated Capital Expenditures
 Consolidated Current Assets provided
 Consolidated Current Liabilities
 Consolidated EBITDA plus Schedule 1.01 minus provided however Section 8.16
 4




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##### 



Consolidated Excess Cash Flow minus
 Consolidated Funded Indebtedness
 Consolidated Net Income provided however
 Consolidated Net Working Capital minus plus
 5




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##### 



Consolidated Net Worth plus minus
 Consolidated Scheduled Funded Debt Payments
 Consolidated Total Leverage Ratio
 Consolidated Total Revenues provided however Section 8.16
 Contractual Obligation
 Control
 Debtor Relief Laws
 Default
 Default Rate Section 4.04(d)
 Deposit Account
 6




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##### 



Deposit Account Control Agreements
 Disposition Dispose
 Dollar $
 Domestic Subsidiary
 Eligible Assignee Section 10.10
 Environmental Laws
 Equity Documents
 Equity Interests
 ERISA
 ERISA Affiliate
 ERISA Event
 7




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##### 



Event of Default Section 9.01
 Exchange Act
 Extraordinary Receipt provided however Section 4.05(b)
 Fiscal Quarter
 Fiscal Year
 Foreign Subsidiary
 FRB
 Fully Satisfied
 Fund Section 10.10
 GAAP
 Governmental Approvals
 8




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##### 



Governmental Authority
 Guarantee provided
 Guarantors Section 7.12 Guarantor
 Indebtedness
      9




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##### 



provided
     Indemnified Party Section 10.18
 Insolvency Proceeding
 Interest Payment Date Section 4.04(b)
 Investment
 Involuntary Disposition
 IP Rights Section 6.17
 IRS
 Laminar
 10




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##### 



Laws
 Lender Lenders
 Lien
 Loan Documents
 Loan Parties
 Losses Section 10.18
 Material Adverse Effect
 Material Asset Disposition Section 8.05
 Maturity Date
 Minrad EU
 Moodys
 Mortgage
 Mortgage Documents
 11




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##### 



Multiemployer Plan
 Net Cash Proceeds
    Note Notes Section 2.01
 Obligations
 Organization Documents
 12




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##### 



Other Taxes Section 4.09(b)
 Participant Section 10.10
 Patriot Act Section 10.20
 PBGC
 Pension Plan
 Pennsylvania Loans
 Permitted Indebtedness Section 8.03
 Permitted Liens Section 8.01
 Person
 PIK Amount Section 4.04(c)
 Plan
 Principal Section 4.03
 Principal Market
 Property
 13




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##### 



Redemption Price plus
 Period
    
    Redemption Price PercentageClosing Date through February 7, 2009
    
    
    105
    %February 8, 2009 through February 7, 2010
    
    
    103
    %February 8, 2010 and thereafter
    
    
    100
    %
 Refinance
 Register Section 10.10
 Registration Rights Agreement
 Registration Statement
 Regulatory Requirement Section 10.19
 Related Parties
 Replacement Note Section 10.10
 Reportable Event
 Required Lenders
 Responsible Officer
 Restricted Payment
 14




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##### 



S&P
 SEC
 SEC Reports Section 6.27
 Securities Account
 Securities Act
 Security and Pledge Agreement Exhibit C
 Shareholder Approval
 Solvent Solvency
 Source Article VIA
 Subordinated Indebtedness
 Subsidiary
 15




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##### 



Swap Contract Master Agreement
 Swap Termination Value
 Synthetic Lease Obligation
 Taxes Section 4.09(a)
 Threshold Amount
 Transfer
 Transferee Section 10.10
 UCC
 Unfunded Pension Liability
 United States U.S.
 Warrant Warrants
 16




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##### 



1.02 Other Interpretive Provisions.
   herein hereto hereof hereunder
  including
 documents
 knowledge known
 from from and including to until to but excluding through to and
including
  1.03 Accounting Terms.
  provided that
 17




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##### 



1.04 Rounding.
  1.05 References to Agreements and Laws.
  1.06 Times of Day.
  ARTICLE II.  NOTES AND WARRANTS
 2.01 Authorization and Issuance of the Notes and Warrants.
 Notes Article IV Exhibit A Exhibit
B
 ARTICLE III.  PURCHASE AND SALE
 3.01 Purchase and Sale of the Notes and Warrants; Closing.
 Schedule 3.01
 Closing Closing Date
 18




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##### 



Schedule 3.01
 Schedule 3.01 Schedule
3.01
 Section 7.01(b)
 ARTICLE IV.  TERMS OF NOTES
 4.01 Loans.
 Section 3.01
 4.02 [Reserved].
 4.03 Repayment of Principal.
 Principal
 4.04 Payments of Interest.
 Interest Payments Interest
Payment Date Sections 4.04(b) 4.04(d)
 19




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##### 



Accrual Rates and Cash Pay Rates
 Section 4.04(d) Accrual
Rate
 Section 4.04(d) Cash Pay Period Cash Pay Rate
 PIK Amounts; Optional Cash Payments Section 4.04(d) Additional Cash Amount PIK Amount ) Additional Interest
Amount provided Section 4.04(c)
 Default Rate; Payment of Default Interest plus Default Rate Section 8.16 Section 4.04(b Section 4.04(c provided however
 Calculation of Interest
 Savings Clause
 20




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##### 



4.05 Mandatory Prepayments of the Notes.
 Material Asset Dispositions Section 4.05(e)
 Extraordinary Receipts/Asset Dispositions/Involuntary Dispositions provided however Section 8.05(c)
 Debt and Equity Proceeds Section 4.05(e) provided
 Consolidated Excess Cash Flow Sections 4.05(e) 4.05(f) provided however Sections
4.05(e) 4.05(f)
 Prepayment Section 4.05(a) (b) (c) (d)
 21




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##### 



plus plus
 Application of Payments Section
4.05
 4.06 Optional Prepayments of the Notes.
 provided however Section 4.06 Section 4.06 Section 4.06
 4.07 Mandatory Offer to Prepay upon a Change of Control.
 Change of Control Offer Change of Control
Payment plus Change of Control Payment Date Section 9.01
 22




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##### 



Section 4.07
 4.08 Direct Payment.
 Schedule 3.01 Schedule 3.01
 4.09 Taxes.
 Taxes additional
amount Section 4.09
 Other
Taxes
  23




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##### 



4.10 Fees.
  ARTICLE V.  CONDITIONS PRECEDENT TO CLOSING
 5.01 Conditions To Closing.
  Loan Documents, Certificates and Opinions
 Loan Documents
 Notes Schedule 3.01
 Secretarys Certificates Exhibit D
 24




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##### 



Officers Closing Certificate Exhibit E Section 5.01
 Opinions of Counsel
  Financial Matters
 Financial Statements
 25




---



##### 



Financial Forecasts Projections
 Financial Condition Certificate Exhibit H
 Solvency Certificate Exhibit G
 Fees and Expenses plus
 Indebtedness
 Other Financial Information and Other Documents
 No Injunction, Etc
 26




---



##### 



Collateral Matters
         Section 7.07
 Priority of Liens
 Miscellaneous
 Governmental and Third Party Approvals
 27




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##### 



Corporate Structure and Capitalization of Parent pro forma Schedule 6.13
 Other Documents
 Approval of Laminars Investment Committee
 Completion of Due Diligence
 Receipt of Updated Environmental Report
 Permits
 Representations and Warranties Article VI Article VI
 28




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##### 



Defaults or Events of Default
 ARTICLE VI.  REPRESENTATIONS AND WARRANTIES
  6.01 Existence, Qualification and Power; Compliance with Laws.
  6.02 Authorization; No Contravention.
  6.03 Governmental Authorization; Other Consents.
  6.04 Binding Effect.
  29




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##### 



6.05 Financial Statements; No Material Adverse Effect.
 Sections 5.01 7.01 Schedule 6.05
   Section 5.01(b)(ii)
 6.06 Litigation.
 Schedule 6.06
 6.07 No Default.
 Schedule 6.07
 30




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##### 



6.08 Ownership of Property; Liens.
  6.09 Environmental Compliance.
  6.10 Insurance.
  6.11 Taxes.
 Schedule 6.11
 6.12 ERISA Compliance.
   31




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##### 



6.13 Subsidiaries; Authorized and Issued Equity Interests.
 Schedule 6.13 Schedule 6.13 Section 8.01(a)
 Schedule 6.13 Schedule 6.13 Schedule 6.13 Schedule 6.13
 6.14 Margin Regulations; Investment Company Act.
  32




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##### 



6.15 Disclosure.
 provided
 6.16 Compliance with Laws.
  6.17 Intellectual Property; Licenses, Etc.
 IP Rights Schedule 6.17 Schedule
6.17
 6.18 Experience.
  33




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##### 



6.19 Solvency.
  6.20 Compliance with Securities Laws.
 Article VIA
 6.21 Deposit Accounts.
 Schedule 6.21
 6.22 Business Locations.
 Schedule 6.22 Schedule 6.22 Schedule 6.22
 6.23 Material Agreements.
 Schedule 6.23 Material Agreement
 6.24 Transactions with Affiliates.
 Schedule 6.24 Schedule 6.24 Schedule 6.24
 34




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##### 



6.25 Parent Holding Company.
  6.26 Registration Statement.
    6.27 SEC Reports: Financial Statements.
 SEC Reports
 35




---



##### 



6.28 Internal Accounting Controls.
 Evaluation
Date
 6.29 Private Placement.
 Article VIA
 6.30 Principal Market; Approvals.
  36




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##### 



6.31 Listing and Maintenance Requirements.
  6.32 Application of Takeover Protections.
  6.33 Acknowledgment Regarding Laminars Purchase of Warrants.
  6.34 No General Solicitation or Advertising in Regard to this Transaction.
  37




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##### 



ARTICLE VIA.  REPRESENTATIONS AND WARRANTIES OF THE LENDERS
  provided however
   provided however
  ARTICLE VII.  AFFIRMATIVE COVENANTS
  7.01 Financial Statements.
  Annual Financial Statements
 38




---



##### 



Quarterly Financial Statements
 Monthly Financial Statements
 Section 7.01(a) (b) (c) provided
 7.02 Certificates; Other Information.
  Sections 7.01(a) (b) (c)
 39




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##### 



7.03 Notices.
      Section 7.03(a)
 40




---



##### 



7.04 Payment of Obligations.
 Section 8.01
 7.05 Preservation of Existence; Conduct of Business, Etc.
 Section 8.04
   7.06 Maintenance of Properties.
    41




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##### 



7.07 Maintenance of Insurance.
  Section
4.03(b)
 7.08 Compliance with Laws.
  7.09 Books and Records.
   7.10 Inspection Rights; Field Audit.
 provided however
 42




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##### 



7.11 Use of Proceeds.
  7.12 Additional Subsidiaries.
 Section 5.01(a) provided however
 43




---



##### 



7.13 Environmental Matters.
 Establishment of Procedures
 Notice of Action
 7.14 Further Assurances.
  7.15 Remarketing Cooperation.
 pro forma
 7.16 Pledged Assets; IP Subsidiary; Material Agreements.
 Equity Interests
 44




---



##### 



Other Assets Section 5.01(d) Section 7.16 Section 7.16(b) Section 7.16(b)
 IP Subsidiary IP
Subsidiary Section 7.12
 Material Agreements Section 6.23
 45




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##### 



7.17 Board Observation Rights.
 Observer
   7.18 Post-Closing Actions.
  46




---



##### 



ARTICLE VIII.  NEGATIVE AND FINANCIAL COVENANTS
  8.01 Liens.
 Permitted
Liens
  Schedule 8.01
     47




---



##### 



Schedule B-2
 Section 9.01(h)
 Section 8.03(e) provided
 Section 8.02
 8.02 Investments.
     Section 8.03
  Schedule 6.13
 8.03 Indebtedness.
   Schedule 6.05
  48




---



##### 



provided
 Section 8.01(i) provided however
  8.04 Fundamental Changes.
    8.05 Dispositions.
    Section 4.05(b)
 49




---



##### 



provided
 Section 8.04
 provided however
 8.06 Restricted Payments.
    8.07 Change in Nature of Business.
  8.08 Transactions with Affiliates.
 Section 8.06
 8.09 Burdensome Agreements.
 provided however Section 8.03(e)
 50




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##### 



8.10 Use of Proceeds.
  8.11 ERISA Compliance.
  8.12 Sales and Leasebacks.
 Section 8.05
 8.13 Sale or Discount of Receivables.
  8.14 Environmental Matters.
  8.15 Subsidiaries.
 Section 7.12
 8.16 Financial Covenants.
 Minimum Consolidated Net Worth
 51




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##### 



Minimum ConsolidatedFiscal Quarter Ending
    
    Net WorthMarch 31, 2008
    
    $21,705,000June 30, 2008
    
    $23,219,000September 30, 2008
    
    $24,023,000December 31, 2008
    
    $26,024,000March 31, 2009
    
    $26,609,000June 30, 2009
    
    $30,656,000September 30, 2009
    
    $34,857,000December 31, 2009
    
    $40,523,000March 31, 2010
    
    $45,000,000June 30, 2010
    
    $45,000,000September 30, 2010
    
    $45,000,000December 31, 2010 and thereafter
    
    $45,000,000
 Minimum Consolidated Total Revenues
 MinimumConsolidatedFiscal Quarter Ending
    
    Total RevenuesMarch 31, 2008
    
    $38,674,000June 30, 2008
    
    $43,370,000September 30, 2008
    
    $44,671,000December 31, 2008
    
    $46,211,000March 31, 2009
    
    $48,982,000June 30, 2009
    
    $51,488,000September 30, 2009
    
    $56,162,000December 31, 2009
    
    $59,168,000March 31, 2010
    
    $70,000,000June 30, 2010
    
    $70,000,000September 30, 2010
    
    $70,000,000December 31, 2010 and thereafter
    
    $70,000,000
 Minimum Consolidated EBITDA
 MinimumConsolidatedFiscal Quarter Ending
    
    EBITDAMarch 31, 2008
    
    $8,967,000June 30, 2008
    
    $8,006,000September 30, 2008
    
    $6,816,000December 31, 2008
    
    $7,381,000March 31, 2009
    
    $5,858,000
 52




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##### 



MinimumConsolidatedFiscal Quarter Ending
    
    EBITDAJune 30, 2009
    
    $7,702,000September 30, 2009
    
    $10,493,000December 31, 2009
    
    $12,676,000March 31, 2010
    
    $17,500,000June 30, 2010
    
    $17,500,000September 30, 2010
    
    $17,500,000December 31, 2010 and thereafter
    
    $17,500,000
 Maximum Consolidated Total Leverage Ratio
 Maximum ConsolidatedFiscal Quarter Ending
    

Total Leverage RatioMarch 31, 2008
    
    1.70:1.00June 30, 2008
    
    2.60:1.00September 30, 2008
    
    2.50:1.00December 31, 2008
    
    2.20:1.00March 31, 2009
    
    2.70:1.00June 30, 2009
    
    1.40:1.00September 30, 2009
    
    1.00:1.00December 31, 2009
    
    0.50:1.00March 31, 2010
    
    0.50:1.00June 30, 2010
    
    0.50:1.00September 30, 2010
    
    0.50:1.00December 31, 2010 and thereafter
    
    0.50:1.00
 Minimum Consolidated Net Working Capital
 MinimumConsolidatedPeriod Ending
    

Net Working CapitalMarch 31, 2008
    
    $13,600,000June 30, 2008
    
    $19,000,000September 30, 2008
    
    $19,000,000December 31, 2008
    
    $20,000,000March 31, 2009
    
    $18,500,000June 30, 2009
    
    $16,000,000September 30, 2009
    
    $19,000,000December 31, 2009
    
    $19,500,000March 31, 2010
    
    $20,000,000June 30, 2010
    
    $20,000,000September 30, 2010
    
    $20,000,000December 31, 2010 and thereafter
    
    $20,000,000
 53




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##### 



Maximum Consolidated Capital Expenditures
 MaximumConsolidatedFiscal Year Ended
    
    Capital ExpendituresDecember 31, 2008
    
    $
    4,000,000December 31, 2009
    
    $
    8,500,000December 31, 2010
    
    $
    7,500,000December 31, 2011*
    
    $
    1,000,000
 
 *
    
    Only applicable for the portion of 2011 prior to the Maturity Date 8.17 Deposit and Securities Accounts.
  8.18 Limitations on Affiliate Ownership of Obligations.
  8.19 Modifications of Pennsylvania Loans.
  8.20 Prepayment of Other Indebtedness.
 Section 8.05
 8.21 Changes to Organizational Documents.
  8.22 Changes in Fiscal Year.
  54




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8.23 IP Subsidiary.
  8.24 Parent.
  ARTICLE IX.  EVENTS OF DEFAULT AND REMEDIES
 9.01 Events of Default.
 Event of Default
 Non-Payment
 Specific Covenants Sections 7.05 7.07(a) 7.11 7.16 7.17 Article VIII Sections
7.01 7.02 7.03(b) (c) (d) 7.07(b)
 Other Defaults
 Representations and Warranties
 55




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Cross-Default
  Insolvency Proceedings, Etc.
 Inability to Pay Debts; Attachment
 Judgments
 56




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Invalidity of Loan Documents
 ERISA
 Destruction of Collateral
 Subordinated Debt Documentation
 Change of Control Section 4.07 Section 4.07
 9.02 Remedies Upon Event of Default.
 Section 9.01(f Section 9.01(g) Section 9.01(a)
 57




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Section 9.02
 9.03 Other Remedies; Application of Funds
 9.01(a) (f) (g)
 first second third fourth last
 9.04 Rescission of Acceleration.
 Section 9.02 Section 9.01(e)(ii)
   58




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provided
 ARTICLE X.  MISCELLANEOUS
  10.01 Entire Agreement.
  10.02 Reimbursement of Expenses.
  10.03 Survival of Agreements and Representations and Warranties.
  59




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10.04 No Waiver.
  10.05 Binding Effect; Participations.
  10.06 Initial Holder.
  10.07 Cumulative Powers.
  10.08 Loss of Securities; Reissue of Securities in Lesser Denominations.
     60




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10.09 Communications.
 Schedule 10.09 Section 10.09
 10.10 Form, Registration, Transfer and Exchange of Notes; Lost Notes.
  provided
   Assignment and Assumption
 61




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Replacement Note
 Register
 Participant provided
  provided
  62




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Eligible Assignee
 Fund
 Approved Fund
    OID
  63




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10.11 Confidentiality; Public Announcements.
 provided however provided however
 Section 7.17
 provided however provided further
 64




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10.12 Governing Law.
  10.13 Headings.
  10.14 Multiple Originals.
  10.15 Amendment or Waiver.
 provided however Section 10.15 Article XI provided Section 8.03 pari passu Section 10.15
 10.16 Waiver of Jury Trial.
  65




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10.17 Consent to Jurisdiction and Service of Process.
 SCHEDULE 10.09
 10.18 Indemnification; Damage Waiver.
 Indemnified Party Losses
 66




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provided however provided however
  10.19 Regulatory Requirements.
 Regulatory Requirement
 10.20 USA Patriot-Act Notice.
  67




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Patriot Act
 ARTICLE XI.  AGENCY PROVISIONS
 11.01 Appointment.
  11.02 Delegation of Duties.
  11.03 Exculpatory Provisions.
  68




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11.04 Reliance by Agent.
  11.05 Notices of Default.
 provided except
 11.06 Non-Reliance on the Agent and Other Lenders.
  69




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##### 



11.07 Indemnification.
 provided Section 11.07
 11.08 The Agent in Its Individual Capacity.
  11.09 Resignation of the Agent; Successor Agent.
 Section 11.09
 70




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11.10 Reimbursement by Lenders.
 Section 10.02 Section 10.18 provided Section 11.10
 ARTICLE XII  GUARANTY
 12.01 The Guaranty.
   12.02 Obligations Unconditional.
 Section 12.01 Section 12.02 Article XII
 71




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12.03 Reinstatement.
 Article XII
 12.04 Certain Additional Waivers.
 Section 12.02 Section 12.06
 72




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##### 



12.05 Remedies.
 Section 9.02 Section 9.02 Section 12.01 Section 12.01
 12.06 Rights of Contribution.
 Section 12.06 Section 12.06 Section 12.06 provided however provided however
 73




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##### 



Article XII Section
12.06 Section 10.15
 12.07 Guarantee of Payment; Continuing Guarantee.
 Article XII
 IN WITNESS WHEREOF,
 COMPANY:
    
    MINRAD INC.
a Delaware corporationBy:Name:Title:GUARANTOR:
    
    MINRAD INTERNATIONAL, INC.
a Delaware corporationBy:Name:Title:
 74




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##### 



AGENT/LENDER:
    LAMINAR DIRECT CAPITAL L.P.,
as Agent and as a LenderBy:Robert LaddAuthorized Signatory 75




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##### 



SCHEDULE 3.01
 PURCHASE AND SALE OF NOTES AND WARRANTS
 Principal
    
    
    
    
    
    
    
    
    
    Total Notes andName in which to
    
    Amount
    
    Issue Price
    
    Issue Price
    
    Warrants
    
    PaymentName of Lender
    
    Register Notes
    
    of Notes
    
    for Notes
    
    for Warrants
    
    Purchase Price
    
    Wire InstructionsLaminar Direct
Capital L.P.
    
    Laminar Direct
Capital L.P.
    
    $
    15,000,000
    
    
    $
    12,568,141
    
    
    $
    2,431,859
    
    
    $15,000,000.00
    
    VIA WIRE TRANSFER TO:
HSBC Bank USA
ABA #: 021001088
Credit: Laminar
Direct Capital L.P.
Acct # : 639722598
Reference: Minrad Inc.
 76




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SCHEDULE 10.09
 ADDRESSES OF THE LOAN PARTIES AND LENDERS
 ADDRESS OF THE LOAN PARTIES :
 
 with a copy to
 
 ADDRESS OF LENDER AND AGENT :
 th nd
 
 
 with a copy to
 
 77