EXHIBIT 10.6                                                       MINRAD INC.

APPENDIX I: PATENTS AND INVENTIONS POLICY

        (a) Purpose 

               (1) MINRAD, Inc. (the "Company") recognizes that inventions of value to theCompany will be made by persons working with and for the Company (Associates).It is the policy of the Company to encourage such Associates and inventions. 

        (b) Ownership 

               (1) Ownership of inventions made by Associates shall be as set forth in theAssignment Agreement between the Company and the Associate. 

               (2) Where any question is raised as to ownership of an invention the mattershall be referred to the Patents and Inventions Policy Board (hereinafter the"Board"). Such Board shall make a careful investigation of the nature of theinvention and of the circumstances under which it was made and shall transmitits findings and conclusions to the Board of Directors of the Company. If theBoard determines that the invention is not the property of the Company, and theBoard of Directors of the Company concurs in such determination, the Companywill assert no claim to the invention or to any patent obtained thereon. 

        (c) With respect to any inventionobtained by or through the Company or assigned to or as directed by it inaccordance with the foregoing provisions, the Company, in recognition of themeritorious services of the inventor and in consideration of the inventor'sagreement that the invention shall belong to the Company, will make provisionentitling the inventor and the inventor's heirs or legatees to a nonassignableshare in any proceeds from the management and licensing of such invention to atotal of one (1) percent of the gross royalty received by the Company: 

               (1) during the five (5) year period beginning with the date of the first writtendisclosure of said invention to the Company, if no patent issues thereon; or,

               (2) the unexpired term of a patent issued thereon. 

        In the case of joint inventorship,the inventors shall: advise the Board, in writing, how they have agreed todivide the aforesaid one (1) percent share of the gross royalty received by theCompany; confirm that the Company may rely upon such advice in making paymentsthereof to the joint inventors; and, confirm that there are no liens outstandingagainst their respective interests therein. 

        The Company may make suitablearrangements with non-profit patent management agencies for the purpose ofobtaining service and advice with respect to the patentability of inventions,the obtaining of patents thereon and the management and licensing of inventions.Such arrangements may provide for division of the net income from any inventionafter payment of the inventor's share between the management agency and theCompany. 

 

 

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        (d) The Company, acting with theadvice of the Board may determine not to file a patent application in the caseof any specific invention or not to continue development efforts. The Company'sdecision shall be arrived at within a period not to exceed six months from thedate of the inventor's properly executed first statement of disclosure ofinvention to the Company. In every instance in which the Company determines notto file a patent application or not to continue development efforts, or fails toelect to do so within six months from the date of submission of said disclosurestatement, the Company's rights to the invention shall be released to theinventor, who may then file for a patent and may undertake further developmentof said invention, reserving to the Company: 

               (1) the right of first refusal to market said invention; and 

               (2) a royalty equal to 1 % of the net proceeds to the inventor from saidinvention. 

In every instance in which the Company determines to file a patentapplication or continue efforts at development, the inventor may, at anysubsequent time, request the Board to recommend such release. For purposes ofthis provision, the term "net proceeds" shall mean earnings to the inventor fromsaid invention over and beyond reasonable costs incurred in the process ofpatent application and management. 

        (e) In all cases, any person isentitled to request an exception or waiver to the provisions of this Patents andInventions Policy. The person requesting an exception or waiver shall have theright to appear, accompanied by representatives of the person's choice, beforethe Board for consideration of the request for an exception or waiver. The Boardshall prepare a report of its findings and advisory recommendation to thePresident for review. The decision of the President on the findings andrecommendations of the Board shall be final. 

        (f) The Board of Directors, basedon the advice of the President, shall establish and appoint a Patents andInventions Policy Board (the "Board") and designate the chair thereof inaccordance with the following: 

                   1. The Board shall have three (3) members. 

                   2. The Board shall have full powers of organization. 

                   3. The members of the Board shall serve without extra compensation and at thepleasure of the Board of Directors of the Company. The normal term ofappointment shall be for three (3) years. 

                   4. The Board shall meet at least once annually.

                   5. The Board shall advise the Board of Directors of the Company 

 

 

 

 

 

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(i) guidelines and procedures for the implementation of these policies; 

                       (ii) exceptions to these policies in unusual circumstances; 

                       (iii) determining the extent of the Company's interest in inventions; 

                       (iv) such other matters as the Board of Directors of the Company deemsappropriate. 

                   6. The Board shall undertake annual review of these policies and advise thePresident and the Board of Directors with respect thereto. 

                   7. The Board shall maintain current information concerning patent and inventionactivities within the Company, disseminate information to the appropriatemanagement personnel concerning such activities, and encourage general awarenessof and interest concerning patents within the Company. 

                   8. The Board, through the President, shall report to the Board of Directors ofthe Company concerning its activities and recommendations. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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