Document:

Exhibit 10.2

Exhibit 10.2

EMPLOYMENT AGREEMENT

               
THIS AGREEMENT is made as of the 29th day of March, 2004 by and between
Minrad Inc., a Delaware corporation, with an office at 847 Main Street, Buffalo,
NY 14203 (the "Corporation") and John McNeirney residing permanently in the
Atlanta, Georgia area (the "Executive"). 

               
Introductory Statement. The Executive has been employed as Senior
Vice President and Chief Technical Officer of the Corporation for many years.
During the course of his employment, the Executive has become experienced in the
business of the Corporation, including its trade secrets, customers, market
areas, sources of supply and manner of doing business. In addition, the growth
and success of the business of the Corporation and the development of a market
for the Corporation's products have been due in large part to the services and
unique talents of the Executive. Therefore, the Corporation desires to continue
to employ the Executive as Vice President and Chief Technical Officer of the
Corporation, and the Executive desires to accept continued employment, upon the
terms and conditions contained in this Agreement.

               
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained in this Agreement the parties agree as follows: 

               
1.0 Effective Date; Term of Employment.

	 	(a)	The Executive and the Corporation are parties
    to an Employment Agreement dated on or about August 1, 2001 (the "Existing
    Agreement") and agree that the terms and conditions of the Existing
    Agreement shall continue in full force and effect until September 30, 2004.
    This Agreement shall come into effect on October 1, 2004 (the "Effective
    Date").
	 	 	 
	 	(b)	Subject to the terms and conditions set forth
    in this Agreement, the Corporation shall employ the Executive as Vice
    President and Chief Technical Officer of the Corporation for the period
    beginning on the Effective Date and continuing until September 30, 2005.

               
2.0 Duties. Subject to the terms and conditions set forth
in this Agreement, the Executive shall serve as Vice President and Chief
Technical Officer of the Corporation, and shall perform such duties and
discharge such responsibilities as the Chief Executive of the Corporation shall
from time to time reasonably direct while recognizing the executive nature and
scope of the Executive's employment, and subject also at all times to the
control of the Board of Directors. Subject to the yearly election of officers of
the Corporation by the Board of Directors in the exercise of its judgment, it is
contemplated that the Executive will continue to be elected to the position of
Vice President.

               
The Executive shall perform his duties and discharge his responsibilities in a
faithful manner and to the best of his ability. Unless otherwise agreed upon by
the Corporation and the Executive, the Executive shall devote substantially all
of his business time and attention to the performance of the duties called for
by this Agreement. The Executive shall not serve as a director or manager of any
other business corporation or entity (other than FAI) without the prior written
consent of the Board of Directors of the Corporation.

               
The Corporation reserves the right of its Board of Directors and President to
assign from time to time to the Executive additional duties and responsibilities
and to delegate to other Executives of the Corporation duties and
responsibilities normally discharged by the Executive. All such assignments and
delegations of duties and responsibilities shall be made by the Chief Executive
Officer and the Board of Directors of the Corporation in good faith and shall
not materially affect the general executive character of the work to be
performed by the Executive. 

               
3.0 Compensation. So long as the Executive is employed by
the Corporation: 

               
3.1 The Executive shall receive an annual base salary of not less than
$114,500 payable bi-weekly. The Executive's annual base salary shall be
increased to $130,000 upon his successfully completing all of the following
objectives: (a) the recruitment of a Director of Advanced Development who is
hired by the Corporation; (b) the Corporation's first converted sale of a Sabre
Source product; and (c) the Corporation's completion of an ANDA filing for
sevoflurance with the U.S. FDA.

               
3.2 The Executive shall be entitled to an annual bonus for each fiscal
year of the Corporation during which the Executive is employed and, subject to
Articles 6.0, 7.0 and 7.1-7.5 hereof, any part thereof, determined as follows:

	 	(a)	The Corporation's gross profit after
    distribution expenses will be determined for each fiscal year as herein
    provided (the "Net Profit Amount"); and
	 	 	 
	 	(b)	The Executive shall be entitled to one-half of
    one percent (0.5%) of the portion of the Net Profit Amount for each fiscal
    year (the "Bonus Year") up to the amount of the Net Profit Amount for the
    prior year plus one percent (1%) of the amount by which the Net
    Profit Amount for each Bonus Year exceeds the Net Profit Amount for the
    prior year;

provided, however, that the maximum amount of any bonus that can be earned
under this Section 3.2 is $240,000. The bonus is to be payable on an annual
basis, based on the Corporation's audited financial statements.

               
3.3 If the Corporation shall deduct or withhold from all payments made to
the Executive pursuant to this Agreement all amounts which may be required to be
deducted or withheld under any applicable law now in effect or which may become
effective during the term of this Agreement (including but not limited to Social
Security contributions and income tax withholdings). 

               
3.4 The Executive shall be entitled to participate in the qualified
retirement plan or plans, if any, adopted by the Board of Directors of the
Corporation for the executive officers of the Corporation as such plan or plans
may be amended from time to time. 

               
3.5 The Executive shall receive the various other fringe benefits, if
any, provided for the executive officers of the Corporation that may be
authorized from time to time by the Board of Directors of the Corporation in its
sole discretion. 

               
3.6 The Executive may be entitled to receive increases in compensation.
The determination of the amount of such increases in compensation, if any, and
the time and method of payment of such increases shall be vested in the sole
discretion of the Board of Directors of the Corporation. 

               
4.0 Vacations. The Executive shall be entitled to take
three (3) weeks of vacation per year on a non-cumulative basis. 

               
5.0 Reimbursement for Expenses. The Corporation shall
reimburse the Executive for expenses which the Executive may from time to time
reasonably incur on behalf of and at the request of the Corporation in the
performance of his responsibilities and duties under this Agreement, provided
that the Executive shall be required to account to the Corporation for such
expenses in the manner prescribed by the Corporation.

               
6.0 Termination of Employment by Reason of Death. If the
Executive shall die during the term of this Agreement, this Agreement shall
terminate automatically as of the date of his death, and the Corporation shall
pay to the Executive's legal representatives the sum of the salary which would
otherwise be payable to the Executive up to the end of the month in which his
death occurs plus (a) the prorated portion of any bonus payable under Section
3.2, or otherwise approved by the board of directors of the Corporation, for the
fiscal year in which termination occurs and not yet paid (determined by
multiplying the bonus for the fiscal year in which termination occurs by a
fraction, the numerator of which is the number of whole or partial months in
such fiscal year during which this Agreement was in effect and the denominator
of which is twelve (12), and (b) all other benefits and reimbursable expenses
accrued and owing to the Executive with respect to his employment prior to such
termination (the amounts provided for in clauses (a) and (b) being the "Accrued
Obligations"). 

               
7.0 Termination of Employment by Reason of Disability. If
the Executive shall become temporarily disabled during the term of this
Agreement, all of the Executive's rights under this Agreement shall continue
until such time as the Executive either returns to work or is deemed
"permanently disabled" (as hereinafter defined in Section 7.2). 

               
7.1 If the Executive shall be deemed permanently disabled, the
Executive's employment shall automatically terminate at the end of permanent
disability. Upon such termination, the Corporation shall pay the Executive (or
his legal representatives) the sum of any unpaid salary plus any Accrued
Obligations. During the period of permanent disability the Executive's shall be
entitled to receive any benefits payable under the Corporation's disability
insurance program.

               
7.2 The Executive shall be deemed permanently disabled for purposes of
this Agreement if:

	 	(a)	in the opinion of the Board of Directors, the
    Executive is unable to render full-time service to the Corporation pursuant
    to the terms of this Agreement for six consecutive months; or 
	 	 	 
	 	(b)	in the opinion of the Board of Directors, the
    Executive is unable to render full-time service to the Corporation pursuant
    to the terms of this Agreement for nine months out of any twelve consecutive
    month period; or
	 	 	 
	 	(c)	in the opinion of the Corporation's Medical
    Director or, if there is no Medical Director at such time, a physician
    mutually selected by the Corporation and the Executive or selected in
    accordance with the provisions of this Section 7.2, the Executive is
    permanently unable to render full-time service to the Corporation under this
    Agreement. 

               
If the Corporation and the Executive are unable to mutually agree upon the
selection of a physician under "(c)" above within 30 days of either party
requesting the other to so agree, each party shall select a physician and the
two physicians so selected shall promptly select a third physician who shall
make such determination. 

               
7.3 Termination of Employment for Cause. The Corporation
may immediately terminate the Executive's employment in the event that the
Executive shall do or cause to be done any act which constitutes "cause" (as
hereinafter defined) for termination. For purposes of this Agreement, cause
shall be deemed to mean a material breach by the Executive of this Agreement,
gross negligence or willful misconduct in the performance of his duties,
dishonesty to the Corporation (conviction of a crime in any court which could
have the effect of causing the termination or suspension of any license which
the Corporation holds), conviction of a felony or excessive absenteeism not
related to disability. If the Executive's employment is terminated by the
Corporation for cause, the Corporation's only obligation shall be to pay the
Executive his salary under Article 3.0 of this Agreement plus any reimbursable
expenses that have not been paid as of the date of such termination. Nothing
contained in this Article 7.0 shall in any way waive, restrict or prejudice the
Corporation's rights and remedies in equity and at law against the Executive
with respect to the matter for which the Executive's employment under this
Agreement is terminated for cause. 

               
7.4 Termination Without Cause. The Corporation may
terminate the Executive without cause. If the Executive's employment is
terminated by the Corporation without cause, the Corporation shall pay the
Executive the sum of (a) his salary for the remainder of the term of this
Agreement, plus (b) any Accrued Obligations.

               
7.5 Nonrenewal. If the Executive's employment is not
continued after the term provided for in Section 1(b), all obligations of the
Corporation to the Executive shall terminate except for the payment of any
unpaid salary and Accrued Obligations and such other obligations as are mandated
by applicable law.

               
8.0 Confidentiality. During the course of his employment as
an executive officer of the Corporation, the Executive has had and will have
access to and will gain knowledge with respect to all of the lines of business
of the Corporation, including product information, information concerning
customers, brokers, suppliers and other valuable information relating to the
development, manufacture, storage, shipment, marketing and sale of products of
the Corporation ("Confidential Information"). The parties also agree that
covenants by the Executive not to make unauthorized disclosures of the
Confidential Information and not to use the Confidential Information after the
termination of the Executive's employment with the Corporation in a business in
competition with that of the Corporation are essential to the growth and
stability of the business of the Corporation. Accordingly, Executive agrees
that, except as required by his duties under this Agreement, he or she shall not
use or disclose to anyone at anytime during or after the term of this Agreement
any Confidential Information obtained by him or her in the course of his
employment with the Corporation. 

               
9.0 Non-Competition.

               
9.1 During the term of this Agreement and for a period of 12 months after
the date of the termination of this Agreement, the Executive agrees that he
shall not directly or indirectly, for his own account or as agent, officer,
director, trustee, consultant or shareholder of any corporation or a member of
any firm or otherwise, anywhere in the United States engage or attempt to engage
in any business activity which is the same as, substantially similar to or
directly competitive with (a) the type of business of the Corporation in
designing, developing and producing products intended to minimize radiation
exposure and enhance surgical accuracy in fluoroscopically assisted medical
procedures, (b) the Corporation's generic inhalation pharmaceutical business
involving enflurane, isoflurane or sevoflurane or related products and/or (c)
the Corporation's conscious sedation business.

               
9.2 During the term of this Agreement and for a period of 12 months from
the date of termination of this Agreement, the Executive agrees that he or she
shall not, directly or indirectly, for his own account or as agent, employee,
officer, director, trustee, consultant or shareholder of any corporation, or
member of any firm or otherwise, employ or solicit the employment of any
employee of the Corporation. 

               
9.3 It is acknowledged and agreed by the Corporation that the Executive's
ownership of shares of a company which competes with the business of the
Corporation shall not violate this Article 9.0 unless (a) the Executive also
participates in the management of such company as an officer, director or
consultant or (b) the Executive owns a controlling interest in such company.

               
9.4 The Executive acknowledges and agrees that the foregoing territorial
and time limitations and restrictive covenants are reasonable and properly
required for the adequate protection of the business and affairs of the
Corporation, and in the event any such territorial or time limitation is found
to be unreasonable by a court of competent jurisdiction, the Executive agrees
and submits to the reduction of either said territorial or time limitation or
both, to such an area or period as the court may determine to be reasonable. 

               
10.0 Rights to Discoveries. 

               
10.1 Subject to Section 10.2 hereof, the Executive agrees that all ideas,
inventions, trademarks and other developments or improvements conceived,
developed or acquired by the Executive, whether or not during working hours, at
the premises of the Corporation or elsewhere, alone or with others, that are
within the scope of the Corporation's business operations or that relate to any
work or projects of the Corporation shall be the sole and exclusive property of
the Corporation. The Executive agrees to disclose promptly and fully to the
Corporation all such ideas, inventions, trademarks or other developments and, at
the request of the Corporation, the Executive shall submit to the Corporation a
full written report thereof regardless of whether the request for a written
report is made after the termination of this Agreement. The Executive agrees
that during the term of this Agreement and for 6 months thereafter, upon the
request of the Corporation and at its expense, he shall execute and deliver any
and all applications, assignments and other instruments which the Corporation
shall deem necessary or advisable to transfer to and vest in the Corporation the
Executive's entire right, title and interest in and to all such ideas,
inventions, trademarks or other developments and to apply for and to obtain
patents or copyrights for any such patentable or copyrightable ideas,
inventions, trademarks and other developments. 

               
10.2 Notwithstanding the provisions of Sections 6.0, 7.1 through 7.5 and
10.1, the Executive shall have the rights under the Corporation's Patent and
Invention Policy, including but not limited to the rights to any royalty payable
thereunder.

               
11.0 Insurance. The Executive agrees that the Corporation,
in its sole discretion, may apply for insurance coverage to be owned by it and
for its benefit covering the Executive in any amounts deemed advisable by the
Corporation, and the Executive waives any right, title or interest therein. The
Executive agrees to submit to all required examinations and to execute, assign
and deliver all applications and other documents necessary to effectuate such
insurance coverage. 

               
The Executive shall have the right to purchase from the Corporation, within 30
days after termination of this Agreement, all such policies of insurance
covering him or her, at a price equal to the cash value of such policies, plus
the unearned portion of any premiums, on the date of such termination. For
purposes of this Article 11.0, "cash value" shall mean the net cash amount,
after adjustment for credits and debits, at which such policies could be
surrendered by the Corporation on the date of such termination. Upon receipt of
the purchase price, the Corporation shall deliver such policies to the Executive
and shall execute all necessary instruments of transfer. The Executive shall
have no further rights in any such policies not so purchased within such 30-day
period.

               
12.0 Notices. All notices and other communications given
pursuant to this Agreement shall be deemed to have been properly given or
delivered if mailed, by certified mail, postage prepaid, addressed to the
appropriate party, at the address for such party set forth at the beginning of
this Agreement. Any party may from time to time designate by written notice
given pursuant to this Article 12.0 any other address or party to which any such
notice or communication or copies thereof shall be sent.

               
13.0 Equitable Relief. The Executive acknowledges that the
Corporation will suffer damages incapable of ascertainment in the event that any
of the provisions of Article 8.0, 9.0 or 10.0 hereof are breached and that the
Corporation will be irreparably damaged in the event that the provisions of
Articles 8.0, 9.0 and 10.0 are not enforced. Therefore, should any dispute arise
with respect to the breach or threatened breach of Articles 8.0, 9.0 or 10.0 of
this Agreement, the Executive agrees and consents, that in addition to any and
all other remedies available to the Corporation, an injunction or restraining
order or other equitable relief may be issued or ordered by a court of competent
jurisdiction restraining any breach or threatened breach of Articles 8.0, 9.0 or
10.0 of this Agreement. The Executive agrees not to urge in any such action that
an adequate remedy exists at law. All expenses, including, without limitation,
attorney's fees and expenses incurred in connection with any legal proceeding
arising as a result of a breach or threatened breach of Articles 8.0, 9.0 or
10.0 of this Agreement shall be borne by the losing party to the fullest extent
permitted by law and the losing party hereby agrees to indemnify and hold the
other party harmless from and against all such expenses. 

               
14.0 Miscellaneous. This Agreement shall be governed by the
internal domestic laws of the State of New York without reference to conflict of
laws principles. This Agreement shall be binding upon and inure to the benefit
of the legal representatives, successors and assigns of the parties hereto
(provided, however, that the Executive shall not have the right to assign this
Agreement in view of its personal nature). All headings and subheadings are for
convenience only and are not of substantive effect. This Agreement constitutes
the entire agreement between the parties hereto with respect to the subject
matter hereof and supersedes all prior negotiations, understandings and writings
(or any part thereof) whether oral or written between the parties hereto
relating to the subject matter hereof. There are no oral agreements in
connection with this Agreement. Neither this Agreement nor any provision of this
Agreement may be waived, modified or amended orally or by any course of conduct
but only by an agreement in writing duly executed by both of the parties hereto.
If any article, section, portion, subsection or subportion of this Agreement
shall be determined to be unenforceable or invalid, then such article, section,
portion, subsection or subportion shall be modified in the letter and spirit of
this Agreement to the extent permitted by applicable law so as to be rendered
valid and any such determination shall not affect the remainder of this
Agreement, which shall be and remain binding and effective as against all
parties hereto.

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

	 	/s/
    John McNeirney
	 	John McNeirney (Executive)
	 	 
	 	MINRAD INC.
	 	 
	 	By	/s/ William H.
    Burns, Jr.Exhibit 10.3

LEASE AGREEMENT

 

        THIS LEASE is made and
entered into as of the 13th day of December 2001 by and between 847 MAIN
STREET, LLC having offices at 4 Centre Drive, Orchard Park, New York 14127
(hereinafter referred to as "Landlord"); and, MINRAD, INC. having offices
at 847 Main Street, Buffalo, New York 14203 (hereinafter referred to as
"Tenant").

WITNESSETH:

        WHEREAS, Landlord is the
equitable owner of certain land and a building located at 847 Main Street,
Buffalo, New York (hereinafter referred to as the "Building");

        WHEREAS, Tenant desires to
take and hire from Landlord and Landlord desires to demise and lease to Tenant a
portion of the Building together with the improvements located thereon subject
to the terms and conditions hereinafter stated:

        NOW, THEREFORE, in
consideration of the foregoing premises and of the covenants and agreements
hereinafter set forth, the Landlord and Tenant do hereby covenant and agree as
follows:

        1.     
Demised Property. Landlord does hereby demise and lease to Tenant, its
successors and assigns, and Tenant does hereby take and hire from Landlord, the
floor space located on the first floor of the Building aggregating 17,480 square
feet of office (and warehouse), space all as set forth on the floor plan
attached hereto as Exhibit A and made a part hereof and all the improvements
located thereon and all easements, rights of way and other appurtenances
(hereinafter referred to as the "Leased Premises").

        2.     
Warranty of Title. Landlord warrants to Tenant that it has a good and
legal right to execute and deliver this Lease and to grant and convey to Tenant
the leasehold estate herein provided for the term, at the property, and upon the
conditions herein set forth without any consents or approvals, other than the
Erie County Industrial Development Agency (the "ECIDA"). The Landlord also
warrants and agrees to defend the title to the Building and the Leased Premises
and covenants that Tenant, so long as it shall not be in default hereunder,
shall peaceably and quietly have, hold, and enjoy the Leased Premises for the
full term.

        3.     
Warranty of Compliance. Landlord hereby warrants and represents to
Tenant that on the Commencement Date, (as defined herein), the Building shall be
in full compliance with all material laws, ordinances, codes and regulations of
the Governmental Authorities (as hereinafter defined) and insurance rating
bureaus having jurisdiction (including, without

Page 1 of 18

limitation, zoning and building codes) and shall not violate the rights of
any third parties. As used in this Lease the term "Governmental Authorities"
shall mean the United States, State of New York and any political subdivision
thereof, and any agency, department, commission, board, bureau or
instrumentality of any of them.

        4.     
Term. The initial term of this Lease shall be five (5) years commencing
on and including December 13, 2001. Tenant shall have the option to extend this
Lease, at a base rental for the entire extension term of a five (5%) increase
per square foot, for one (1) period of five (5) years. The option to extend this
Lease for such period shall be exercised in writing by Tenant not later than
ninety (90) days prior to the expiration of the initial term. In the event the
option is exercised, all references herein to the lease term, other terms of the
lease, occupancy hereunder and like words shall be deemed to refer to the term
of the lease as so extended and no new lease agreement need be executed and
delivered to evidence the lease agreement between Landlord and Tenant.

        5.     
Fixed Rent. The fixed rent which shall be paid by Tenant during the
initial term of this Lease shall be $11.10 per square foot or an aggregate of
$193,980 per annum, payable at the rate of $16,165.00 per month with a "Late
Charge" of 1.5% per month if the monthly rent is not received by the 10th day
from the due date thereof. Notwithstanding the foregoing, no fixed rent shall be
due or owing for the period from December 13, 2001 through and including
December 31, 2001. The term "Lease Year" is defined to mean the twelve (12)
calendar month period commencing on January 1, 2002 and each twelve (12)
calendar month period thereafter. All rent payable hereunder shall be payable in
advance in monthly installments to Landlord at its address hereinabove set
forth, or to such other party or at such other place as the Landlord may from
time to time in writing designate.

        6.     
Deposit. Last months rent - due on or before January 15, 2002. Should
the Tenant cause what constitutes an "Event of Default" as per Article 26(a)(i)
of this Lease Agreement due to non-payment of base rent only, then the Tenant
will automatically forfeit its deposit to the Landlord as compensation for the
deposit amount. For any other "Event of Default", Landlord may apply deposit to
cure defaults. Unused portion must be returned within 10 days of lease
termination. For the purpose of this Lease, all deposit monies will be treated
as pre-paid rent and no interest will be paid to Tenant.

        7.     
Landlord Representations: Landlord represents and warrants that

               
A.     The Leased Premises are zoned for Tenant's intended
uses thereof.

               
B.     The Building and the Leased Premises are currently in
compliance with all applicable laws, rules, statutes, codes, rules, regulations,
and the like, including, without limitation, the Americans with Disabilities Act
of 1990, as amended.

Page 2 of 18

               
C.     Landlord is the lessee of the Building.

               
D.     Landlord has the full right, power and authority to
lease the Leased Premises to Tenant as provided in this Lease without any need
for obtaining any consents or approvals from any party, including without
limitation, any mortgagee's or other entities, other than the ECIDA.

               
E.     This Lease and all documents to be executed pursuant
hereto by Landlord are binding upon and enforceable against Landlord in
accordance with their respective terms.

               
F.     The transaction contemplated hereby will not result
in a breach of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement, or other agreement to which Landlord or the Building is
subject or by which Landlord or the Building is bound.

        8.     
Condition of Premises. Landlord agrees that the Leased Premises shall be
connected to the electric and gas lines serving the Building and to the water
and sewer system serving said municipality. Land warrants that when possession
of the Leased Premises shall have been delivered to Tenant, the electrical,
plumbing, heating, ventilation, air conditioning systems and related fixtures of
such system in the building shall be adequate for the Leased Premises and the
use thereof by Tenant, as herein provided, and in good working order and
condition, normal wear and tear excepted. Tenant acknowledges that it will be
responsible for its proportionate share, in the ratio that total square footage
of floor space in the Leased Premises bears to the total square footage of floor
space in the Building, deemed for the purpose of this Lease to be Fifty One
(51%) percent, of all repairs, required subsequent to the expiration of the
one-year warranty period, to such electrical, plumbing, heating, ventilation,
air conditioning systems and related fixtures of such systems, and all necessary
maintenance, repairs, alterations and replacements to such systems and related
fixtures, irrespective of the cost thereof for common spaces. Tenant will also
be responsible for any repairs or replacement of windows and electrical,
plumbing, heating, ventilation, air conditioning systems and related fixtures of
such systems which are for the sole benefit of the Leased Premises, unless such
repairs or replacements are caused by the negligence of the Landlord or its
agents or employees. It is understood that the foregoing relates to repairs and
maintenance, not replacement of entire HVAC systems. Tenant shall also be
responsible for cleaning and maintaining the Leased Premises, including the
redecorating of any interior surfaces and the installation of any replacement
floor coverings, which Tenant desires. Landlord will be responsible for all
repairs to the structure including the roof of the Building, irrespective of the
cost thereof.

        9.     
Utilities. Tenant shall be responsible for paying for all charges for
gas, electricity, water, sewerage, trash disposal, and telephone or other
communications services used, rented or supplied to Tenant upon, on or in
connection with the Leased Premises, and shall indemnify Landlord against any
liability or damages on such account. Charges for electricity 

Page 3 of 18

and light shall be separately metered and assessed. Charges for gas, water
and sewerage and the cost of utilities for heat, ventilation and air
conditioning system shall be allocated to Tenant based upon Tenant's
proportionate share of such charges in the ratio that total square footage of
floor space in the Leased Premises bears to the total square footage of floor
space in the Building, deemed for the purposes of this lease to be Fifty One
(51%) percent.

        10.     
Common Area Use and Maintenance.

                   
(a)     For purposes of this Lease, the term "Common Areas",
if any, shall mean the floor space of the Building to be used as hallways or
entrances by all Tenants of the Building, their employees, agents and customers;
the Board Room; the kitchen area; and all entrances to any vestibules of the
Building. Landlord may not unreasonably reduce or diminish the Common Areas. If
another Tenant leases any portion of the warehouse, Landlord must install a
curtain wall to separate Tenant's space.

                   
(b)     Landlord grants Tenant a nonexclusive easement to
use the Common Areas, if any, and to permit Tenant's customers, employees,
invitees, agents and contractors to use the Common Areas. This easement may be
exercised in common with the other occupants of the Building and their
respective customers, employees and invitees.

                   
(c)     Landlord further agrees to provide, operate, repair,
replace and maintain during the term of this Lease and any extensions thereof,
all of the Common Areas, if any, and maintain lighting facilities sufficient to
provide reasonably adequate and continuous lighting throughout all Common Areas;
to keep the Common Areas free of obstruction, clear of debris and in a clean
condition for the entire term of this Lease and any extension thereof; to keep
all entrances to the Building secure from any entry from the outside of such
building after 6:00 p.m. each day; and to provide and maintain at each public
entrance, if any, to the Building a directory of the Tenants therein and their
locations. The Landlord shall keep all Common Areas lighted during normal office
hours. Tenant shall have twenty-four hour, seven day a week access to Premises
and Common Area.

        11.     
Parking Lot Use, Landscaping and Maintenance. Landlord will at all times
during the term of this Lease (i) permit free parking by Tenant, its customers,
employees, invitees, agents and contractors in a designated area in the parking
lot sufficient to contain Thirty seven (37) automobiles, located adjacent to or
near the Building, (ii) maintain adequate illumination of the parking area
during all twilight and night hours, (iii) maintain and keep the parking area in
good condition with a hard-top surface pavement with adequate striping,
(iv) maintain and keep the parking area in an orderly and clean manner,
including the removal of snow and ice and any trash, rubbish or debris which
accumulates on and around such area, (v) maintain and keep the lawn mowed and
maintain landscaping, if any.

Page 4 of 18

        12.     
Operating Costs. Tenant agrees to pay as additional rent during the term
of this Lease upon receipt of written notice, together with copies of paid
bills, from Landlord, Tenant's proportionate share in the ratio that total
square footage of floor space in the Leased Premises bears to the total square
footage of floor space in the Building, deemed for the purposes of this Lease to
be Fifty One (51%) percent, of the following operating costs relating to the
Building: utilities as specified in Section 9 hereof, not charged directly to
Tenant; fire and liability insurance premiums as specified in Sections 17 & 18,
repair and maintenance of the parking lot and sidewalks as specified in Section
11; real property taxes and assessments as specified in Section 14; and all
cleaning and maintenance of the Common Areas, as specified in Section 10.

        13.     
Exclusions from Operating Costs: The following items shall be excluded
from Operating Costs, notwithstanding anything to the contrary contained in the
Lease:

                   
(i)     any expense to the extent to which Landlord is
compensated by insurance or by any manufacturer's warranty;

                   
(ii)     any executive salary above the grade of
superintendent or Building Manager;

                   
(iii)     costs of leasehold improvements made by Landlord
in the Leased Premises or in other space in the Building leased to Tenant or
other tenants;

                   
(iv)     any particular charge or expense (rather than a
category of charge or expense) which is specifically payable by Tenant or
another tenant in the Building;

                   
(v)     brokerage commissions;

                   
(vi)     mortgage principal and interest and financing
charges which are secured by a mortgage or other encumbrance against the title
to the Building;

                   
(vii)     depreciation and amortization of Landlord's
initial acquisition and construction costs for the Building and Landlord's
initial acquisition and construction costs for any future capital additions;

                   
(viii)     legal fees of Landlord incurred in connection
with the leasing of space in the Building, or incurred in connection with any
disputes with tenants or other occupants of space in the Building, or in
connection with the enforcement of any leases of space in the Building, or
incurred in connection with refinancing indebtedness secured by the Building or
incurred in connection with the sale of the Landlord's interest in the Building;

                   
(ix)     advertising and marketing expenses;

Page 5 of 18

                   
(x)     costs (including permit, license and inspection
fees) incurred in renovating or otherwise improving, decorating, painting or
altering demised space (other than the common areas) for the exclusive use of
less than all of the tenants of the Building;

                   
(xi)     interest and penalties payable by reason of
Landlord's failure to make timely payment of real estate taxes, unless Landlord
is contesting such real estate taxes;

                   
(xii)     property management fees paid to affiliates of
Landlord, but only to the extent such fees are in excess of competitive market
rates paid to other property managers of similar buildings;

                   
(xiii)     any amount paid for products or services to a
person or entity related to or affiliated with Landlord or Property Manager, or
any of their respective partners or principals which is in excess of the fair
market value of such services and products;

                   
(xiv)     the cost of services provided exclusively to a
single tenant of the Building;

                   
(xv)     the costs of services provided to any single tenant
which are in excess of the level of services typically provided to tenants of
comparable office building in Buffalo, New York;

                   
(xvi)     Landlord's general overhead expenses not related
specifically to the Building;

                   
(xvii)     costs of remedying any latent structural defects
in the original construction of the Building;

                   
(xviii)     the costs of investigating and remediating any
environmental contamination, and all costs of defending, challenging and
complying with any governmental orders requiring the remediation of any
environmental contamination;

                   
(xix)     the costs of bringing those aspects of the
Building which Landlord is responsible for the repair of pursuant to this Lease
into compliance with all applicable laws;

                   
(xx)     alterations and improvements made by reason of any
applicable laws or requirement of any governmental or quasi-governmental
authority, insurance body or Landlord's insurer or any mortgagee;

                   
(xxi)     the costs of making any repairs of alterations
which Landlord is directed to make by notice from applicable governmental
authority; and

Page 6 of 18

                   
(xxii)     the costs of any structural repairs, alterations,
improvements or replacements, except to the extent amortized over the maximum
useful life thereof.

        14.     
Taxes and Obligations. Tenant shall be responsible to pay all applicable
taxes on its trade fixtures and equipment. Landlord shall make all payments
required to be made under the terms of any payment in lieu of tax arrangement
and shall pay all applicable taxes, assessments (whether general or special) and
other obligations which are or may become a lien on or levied against the
Building and the Leased Premises as they may become due and payable during the
term of Tenant's occupancy.

        Landlord, shall submit said notice
and paid tax bills to Tenant within six (6) months after payment of such taxes
by Landlord, and Tenant shall reimburse Landlord therefor within thirty (30)
days after submission for Tenant's proportionate share of Fifty-One (51%)
percent.

        15.     
Exclusions from Real Estate Taxes: The following items shall be excluded
from the real estate taxes which Tenant is responsible for reimbursing Landlord,
set forth in Section 14 of the Lease, notwithstanding anything to the contrary
contained in the Lease:

                   
(i)     any corporation, franchise, income, estate, gift and
inheritance taxes or charges imposed on rent or other similar taxes, charges or
impositions which may be levied or assessed against Landlord, the fee owner, or
their successor in title, or any real estate taxes or increases thereof
resulting from a reassessment of all or any part of the Building as a result of
the sale thereof or the construction of any improvements or additions thereon,
other than improvements or additions constructed by or for the Tenant;

        16.     
Relocation.

                   
a)     Landlord may elect, in its sole and absolute
discretion, at any time during the term of this Lease, to relocate Tenant to
premises (the "Relocation Premises") which, unless otherwise agreed to by and
between the Parties (i) constitute a comparable class II Facility, (ii) are not
more or less than 10% of the size of the Leased Premises, (iii) contain
warehouse, office, and storage space, conference rooms, wet chemistry lab,
electronics lab with special flooring and controlled dust environment (Class
100,000 facility) machine shop, loading docks, parking areas and other common
facilities fit-out similarly to the Leased Premises (in terms of floor plan,
materials and style), and (v) are located within the City of Buffalo, the Towns
of Orchard Park, East Aurora, or Boston, New York. Within sixty (60) days of
receipt of Landlord's notice of such election ("Landlord's Relocation Notice"),
Tenant may either accept or reject the proposed relocation (the "Proposed
Relocation"). Tenant will be deemed to have rejected the Proposed Relocation if
Tenant fails to notify Landlord of its election within such sixty (60) days.

Page 7 of 18

               
b)     If Tenant accepts the Proposed Relocation, Landlord
and Tenant will promptly negotiate the terms and conditions of, and enter into,
a lease of the Relocation Premises, which terms and conditions will be
substantially similar to the terms and conditions of this Lease. The
commencement of the new lease will be no less than sixty days following the date
of Tenant's acceptance of the Proposed Relocation. Landlord will bear all costs
and expenses in relocating Tenant from the Leased Premises to the Relocation
Premises and in improving the Relocation Premises to enable Tenant to conduct
its business therein and as otherwise required by this Lease.

               
c)     If Tenant rejects the Proposed Relocation, then
either party may, within ninety days of Landlord's Relocation Notice, terminate
this Lease, effective ninety days later, without penalty or payment to or from
one party to the other, except as otherwise provided for herein and except for
the satisfaction of the lease obligations up to the date of termination.

               
d)     The terms of this Section 16 will not apply to any
proposed relocation(s) to premises not constituting Relocation Premises, as set
forth above.

        17.     
Fire Insurance. Landlord, at all times during the initial and extended
terms hereof shall procure and keep in force, insurance on the Building
including the Leased Premises, insuring the same against loss or damage by fire
and such other hazards, casualties and contingencies as are customarily included
under policies of fire insurance with extended coverage. The fire insurance
shall be such amount as shall comply with the applicable co-insurance clause of
such insurance policy but not less than full replacement cost of the insured
property. Such insurance shall further contain an agreement by the insurance
company that the policy or policies will not be canceled or the coverage changed
without thirty (30) days prior written notice to Landlord. Landlord covenants
that it will notify Tenant of any cancellation notice promptly upon receipt of
such notice. Landlord covenants that Tenant shall not be liable for damage to or
destruction of the Leased Premises by any fire or other casualty from any cause
whatsoever and Landlord shall obtain and maintain in effect, a waiver of
subrogation in favor of Tenant from its fire and casualty insurer, a copy of
which shall be delivered to Tenant. Tenant, at all times during the initial and
extended term hereof, at its sole cost and expense, shall procure and keep in
force, insurance on Tenant's property, insuring the same against loss or damage
by theft, fire or such other hazards, casualties and contingencies as are
customarily included under policies of fire and theft insurance with extended
coverage. Tenant covenants that Landlord shall not be liable for damage to or
destruction of Tenant's property by fire or other casualty from any cause
whatsoever and Tenant shall obtain and maintain if effect, a waiver of
subrogation in favor of Landlord from its fire and casualty insurer, a copy of
which shall be delivered to Landlord. Tenant will not do or suffer to be done,
or keep or suffer to be kept, anything in, upon or about the Leased Premises
which will contravene Landlord's hazards or which will prevent Landlord from
procuring such policies in companies acceptable to Landlord.

        18.     
Liability Insurance. 

Page 8 of 18

               
(a)     Tenant shall defend Landlord against, and shall be
responsible for, and shall save Landlord harmless from and against, any and all
claims for damages or persons or property resulting from or rising out of
Tenant's occupancy of the Leased Premises throughout the term of this Lease.
Tenant, at all times during the term hereof, at its sole cost and expense, shall
procure, or cause to be procured, and keep in force comprehensive liability
insurance, including personal injury and property damage, insuring against all
claims and liability arising out of the use or occupancy of the Leased Premises
by Tenant, with limits of liability of not less than Two Million Dollars
($2,000,000.00). The policy or policies of insurance shall be in standard form
and shall name Landlord therein as an additional insured, together with Tenant,
and shall be issued by insurers acceptable to Landlord. Premiums for all
policies of insurance herein referred to and all renewals thereof shall be paid
by Tenant on or before the beginning date of the next annual policy or renewal
period and, if so required, certificates thereof shall be furnished to Landlord
by Tenant promptly upon the issuance of each such policy or renewal thereof.

               
(b)     Landlord, at all times during the term hereof, shall
procure or cause to be procured, and keep in force comprehensive liability
insurance, including personal injury and property damage, covering the parking
area, the Common Areas and all other public areas in and around the Building
with limits of liability of not less than Two Million Dollars ($2,000,000.00).
The policy or policies of insurance shall be standard form and shall name Tenant
therein as an additional insured, together with Landlord, and shall be issued by
insurers acceptable to Tenant. Premiums for all policies of insurance herein
referred to and all renewals thereof shall be paid by Landlord on or before the
beginning date of the next annual policy or renewal period and, if so requested,
certificates thereof shall be furnished to Tenant by Landlord promptly upon the
issuance of each such policy or renewal thereof.

        19.     
Signs and Advertising. Upon the prior written consent and approval of
Landlord, which approval shall not be unreasonably withheld, Tenant may erect
such signs on or about the Leased Premises or the improvements thereof as shall
conform to applicable governmental ordinances.

        20.     
Ordinances. In the event any public authority shall require correction
of violations of any statute, ordinance, regulation, or building code,
corrections shall be made by Landlord at Landlord's expense except as to such
violations arising from any alterations or additions made by Tenant, in which
event Tenant's violations shall be corrected by Tenant at Tenant's expense.
Tenant shall comply with all statutes, ordinances and regulations of government
authorities now in effect or hereafter enacted relating to any alterations or
improvements made by it, keeping the Leased Premises in an orderly condition,
for conducting Tenant's business thereon.

        21.     
Subletting and Assigning. 

Page 9 of 18

               
(a)     Tenant may not (except as hereinafter stipulated)
assign this Lease and/or sublet the Leased Premises, or any part thereof,
without in each instance obtaining the written permission of Landlord, which
permission shall not be unreasonably withheld. Tenant may, without Landlord's
permission, assign this lease and/or sublet the Leased Premises, or any part
thereof, to an affiliated, subsidiary, reorganized corporation or any
organization which acquires a majority of the shares or assets of the Tenant, a
successor entity or the parent or parents of Tenant for any purpose permitted
hereunder, provided, however, that written notice of such assignment or sublease
shall be given to the Landlord. No assignment or subletting shall relieve Tenant
of the obligations imposed upon it by the terms of this Lease.

               
(b)     Landlord reserves the right to transfer and/or
assign this Lease at any time while this Lease is in effect. Tenant will be
provided with written notice that such an assignment has occurred. Upon such
transfer, the Landlord, will have no further obligation or liability to the
Tenant.

        22.     
Destruction of Building by Fire or Other Casualty. In the event of a
partial destruction of the Leased Premises, whether by fire, unavoidable
casualty, act of God, or otherwise, the Landlord shall forthwith repair the
same, provided such repairs can be made within one hundred eighty (180) days;
said partial destruction shall in no way annul or void this Lease, except that
Tenant shall be entitled to a proportionate reduction of rent from the time of
the casualty until such repairs are fully completed, such proportionate
reduction to be based upon the extent to which the damage and making of such
repairs shall interfere with the business carried on by Tenant in the Leased
Premises; if the Leased Premises are totally destroyed or rendered substantially
untenantable by any fire, unavoidable casualty, act of God or otherwise, and
thereby rendered unfit for use, then and in that event, this Lease shall
terminate and the Tenant shall be relieved of any further rental payments
provided for herein from the date of such destruction.

        23.     
Environmental. Notwithstanding any other provision of this Lease or any
addendum to the contrary, Landlord shall hold Tenant harmless and shall defend
and indemnify Tenant, its subsidiaries and their respective officers and
employees, except due to Tenant's own act, fault or negligence, from and against
any liability, claim, expense, cause of action, fines, judgments, settlements,
remediation costs, penalties, losses or damages whatsoever of any kind or nature
(including reasonable attorney's fees) resulting or arising from (1) the
presence or suspected presence, in the Building, of any hazardous or toxic
wastes, substances or emissions, (2) any violation of any federal, state or
local Law governing underground storage tanks, PCB's, asbestos or hazardous
substances on or in the Building or on the Building, and (3) any injury,
including death, to any person or property damage resulting therefrom.
Environmental conditions shall include, without limitation, regulated, hazardous
or toxic wastes, substances or emissions. This Paragraph shall survive the
expiration or termination of this Lease.

Page 10 of 18

        24.     
Alterations. Tenant shall not make any structural improvements or
additions costing in excess of $5,000.00 in each instance in or to the Leased
Premises without the prior written consent and approval of Landlord. Such
consent not to be unreasonably withheld. Tenant may make any other improvements
or additions without Landlord's consent.

        25.     
Use and Occupancy. Tenant, at all times during the term of this Lease,
shall have sole and exclusive control and right of use and occupancy of the
Leased Premise and all improvements thereon, including the right to restrict
access to the Leased Premises for security purposes. Landlord, or its
representatives, shall have the right, however, to enter the Leased Premises, at
any reasonable time, after reasonable notice, for the purpose of inspection of
the Leased Premises or performing any work which Landlord elects to undertake or
is required to perform under the provisions of this Lease. Tenant shall use the
Leased Premises solely for the purpose of development and sale of medical
devices and for lawful uses related thereto and for no other purpose without the
prior written consent of Landlord; but Tenant shall not use or occupy or permit
the Leased Premises to be used or occupied, nor do or permit anything to be done
on the Leased Premises, which is unlawful or which shall make void or voidable
the appropriate insurance then contemplated by this Lease to be in force, or
which will constitute a public or private nuisance.

        26.     
Events of Default/Remedies & Damages/Waiver.

               
(a)     The following shall constitute Events of Default:

                       
(1)     In the event Tenant shall be in default in the
payment of any rent, additional rent or charges required to be paid by Tenant (a
"Payment") to Landlord under this lease and Tenant fails to pay any such payment
within three (3) days of its due date.

                       
(2)     In the event Tenant shall be in default in the
performance of any other covenants, terms, conditions, provisions, rules and
regulations of this Lease excepting those items listed in the above section (a)
above (a "Non-Monetary Default") and if such Non-Monetary Default is not cured
within twenty (20) days after written notice thereof given by Landlord,
excepting such Non-Monetary Default that cannot be cured completely within such
twenty (20) day period providing Tenant, within such twenty (20) day period, has
promptly commenced to proceed with diligence and in good faith to remedy such
Non-Monetary Default.

                       
(3)     Subject to Section 365 of the Bankruptcy Reform Act
of 1978 as amended, in the event of the filing of a petition proposing the
adjudication of Tenant as a bankrupt or insolvent or the reorganization of
Tenant or an arrangement by Tenant with its creditors, whether pursuant to the
Federal Bankruptcy Act or any similar federal or state proceeding and such
action is not dismissed within sixty (60) days after the date of its filing.

Page 11 of 18

               
(b)     Remedies and Damages

                       
(i)     If any Event of Default occurs, Landlord may, at its
option and in addition to any and all other rights or remedies provided Landlord
in this Lease or at law or equity, immediately, or at any time thereafter, and
without demand or notice (except as provided herein:

                               
(a)     without waiving the Event of Default, apply all or
part of the security deposit, if any, to cure the Event of Default and Tenant
shall on demand restore the security deposit to its original amount;

                               
(b)     without waiving such Event of Default, apply thereto
any overpayment of rents to curing the Event of Default in lieu of refunding or
crediting the same to Tenant;

                               
(c)     if the Event of Default pertains to work or other
obligations (other than the payment of rent or additional rent) to be performed
by Tenant, without waiving such Event of Default, enter upon the Leased Premises
and perform such work or other obligation, or cause such work or other
obligation to be performed, for the account of Tenant; and Tenant shall on
demand pay to Landlord the cost of performing such work or other obligation plus
five percent (5%) thereof as administrative costs;

                               
(d)     Landlord, without giving Tenant any notice and
without affording Tenant an additional opportunity to cure the default, may
terminate this Lease.

                       
(ii)     Notwithstanding any termination of this Lease or
termination of Tenant's rights to possession, Tenant shall pay and be liable for
(on the days originally fixed herein for the payment thereof) the several
installments of rent and additional rent as and when due, as if this lease had
not been terminated and as if Landlord had not entered and whether the Leased
Premises are relet or remain vacant in whole or in part, but in the event the
Leased Premises is relet by Landlord, Tenant shall be entitled to a credit in
the net sum of rent and additional rent received by the Landlord in reletting
after deduction of all expenses (other than fit out or remodeling) incurred in
reletting the Leased Premises, and in collecting such rents and additional rent.

                       
(iii)     In the event of a reletting, Landlord may apply
the rent therefrom first to the payment of Landlord's reasonable expenses
including but not limited to attorney's fees incurred, reasonable expense of
reletting, repairs, brokerage fees, subdividing and then to the payment of rent
and all other sums due from Tenant hereunder, and Tenant shall remain liable for
any deficiency.

            (c)    
Waiver of Rights of Redemption.

Page 12 of 18

                           
Tenant hereby expressly waives any and all rights of redemption granted by or
under any present or future laws in the event of Tenant's being evicted or
dispossessed for any cause, or in the event of Landlord's obtaining possession
of the Leased Premises by reason of the violation, by Tenant, of any of the
covenants or conditions of this Lease, or otherwise.

        27.     
Waiver. Failure of either party to insist upon strict performance of any
covenant or condition of this Lease in any one or more instances shall not be
construed as a waiver for the future of any such covenant or condition, but the
same shall be and remain in full force and effect. It is further specifically
agreed that in the event that at any time, or from time to time during the term,
a default shall exist under any of the provisions of this Lease, the payment by
Tenant to Landlord or the acceptance or receipt by Landlord from Tenant of any
one or more installments of rent while such default exists, shall not constitute
a waiver of such default and shall not alter, limit, or otherwise adversely
affect any of the rights of the Landlord or Tenant with respect to such default
including the right to terminate this Lease, and acceptance of such rental by
Landlord after termination shall not be deemed an election by Landlord waiving
such termination. No payment by Tenant or receipt by Landlord of a lesser amount
than the monthly rent herein stipulated shall be deemed to be other than on
account of the earliest stipulated rent, nor shall any endorsement or statement
of any check or any letter accompanying any check or payment, as rent be deemed
an accord and satisfaction, and Landlord may accept such check or payment
without prejudice to Landlord's right to recover the balance of such rent or
pursue any other remedy provided in this Lease.

        28.     
Condemnation. In the event during the term of this Lease or any
extension thereof, the entire Leased Premises are acquired by the exercise of
the power of eminent domain, or so much thereof as shall render the same not
reasonably suitable to Tenant's uses, this Lease shall terminate at the time
possession must be surrendered, and the Tenant shall be relieved of all future
rental payments provided for herein. Tenant shall not share in any condemnation
award, but may recover for its relocation costs, if any such costs are awarded.

        29.     
Subordination. This Lease shall be subject and subordinate at all times
to the lien of any mortgage or deed of trust which may now be or hereafter may
be made a lien on the Leased Premises by Landlord or its assigns. Although no
instrument or act on the part of Tenant shall be necessary to effectuate such
subordination, Tenant will, nevertheless, execute such further instruments
subordinating the Lease to the lien of any such mortgage or deed of trust as may
be reasonably required by the lender, provided, however, and notwithstanding
anything herein contained to the contrary, that as long as the said Tenant, its
successors and assigns, shall fully perform the covenants and conditions
contained herein, including the payment of all rentals hereunder, it shall have
the right to peaceably occupy and possess the Leased Premises under this Lease
without interruption or disturbance by the purchaser at a foreclosure sale.

Page 13 of 18

        30.     
Holding Over. Landlord shall give Tenant at least thirty (30) days prior
written notice if Landlord shall expect or demand that Tenant vacate the Leased
Premises upon the expiration of this Lease or any renewal thereof.

        If Tennant should continue to
occupy the Leased Premises without having exercised its option to renew (if any)
or without an Agreement in writing as to the terms of such continued possession,
then such additional tenancy shall be on a month-to-month basis at 150% of the
previous existing rental and under the same terms and conditions as provided in
this Lease or the renewal thereof. In case of such continued possession, the
month-to-month tenancy thereby may be canceled at the end of any calendar month
by not less than thirty (30) days prior written notice from either party.

        31.     
Notices. Any notice to Landlord provided for herein shall be deemed to
have been served only when such notice in writing addressed to Landlord, or to
the party to whom rent was last paid, has been deposited in a regular receptacle
of the U.S. Postal Service by registered or certified mail, addressed to the
address hereinabove set forth. Any notice to Tenant as provided for herein shall
be deemed to have been served only when such notice in writing has been
deposited in a regular receptacle of the U.S. Postal Service by registered or
certified mail addressed to Tenant at the Leased Premises.

        32.     
Captions. The captions appearing at the beginning of each of the
sections of this Lease are for reference only and are not to be considered a
part of this Lease.

        33.     
Binding. This Lease shall inure to the benefit of and be binding upon
the heirs, devisees, executors, administrators, successors and assigns of the
parties hereto.

        34.     
Modification. This Lease constitutes the whole agreement between the
parties. There are no terms, obligations, covenants, or conditions other than
contained herein. No modification or variation hereof shall be deemed valid
unless evidenced by an agreement in writing and signed by the duly authorized
representatives of the respective parties.

        35.     
Recording. Tenant may in its discretion cause a memorandum of this Lease
to be recorded in the Office of the Clerk of Erie County, State of New York.
Landlord will, upon request, execute and deliver such a memorandum, upon
request.

        36.     
Quiet Enjoyment. Landlord covenants that for so long as Tenant is not in
default hereunder, Tenant shall quietly enjoy the Leased Premises.

        37.     
Situs. This Lease Agreement shall be governed by the laws of the State
of New York as the same may exist during the term hereof.

Page 14 of 18

        38.     
ECIDA Required Provisions. The following provisions are required by the
Erie County Industrial Development Agency to be included in all subleases, and
are agreed to by Landlord and Tenant:

               
(a)     The Premises have been or will be acquired by the
Erie County Industrial Development Agency (the "Agency") and will be leased by
the Agency to 847 Main Street, LLC (the "Sublessor") pursuant to a lease
agreement dated as of July 1, 1997 (the "Agency Lease Agreement")

               
(b)     The Subleasee (hereinabove previously referred to as
"Tenant") shall operate the Leased Premises as defined in New York State
Industrial Development Agency Act (Title 1 of Article 18-A of the General
Municipal Law), as amended, and Chapter 293 of the 1970 Laws of New York, as
amended.

               
(c)     The Subleasee shall furnish to the Agency, upon
request, such information as the Agency shall reasonably request regarding the
Leased Premises and employment by the Subleasee (past, present, and future) at
the Leased Premises.

               
(d)     Neither the Subleasee, nor any interest therein,
shall be assigned, modified or amended without the prior written consent of the
Agency, as set forth in the Agency Lease Agreement. Any of the foregoing
notwithstanding, to the extent the Subleasee is permitted to sub-sublease the
demised premises or assign its interest in the Sublease without the prior
written consent of the Subleasor, no consent of the Agency shall be required
provided that any sub-sublease or assignment is to, Agency ownership of the
Premises.

               
(e)     The Subleasee and Subleasor represent, warrant and
covenant that facilities or property that are primarily used in making retail
sales to customers who personally visit such facilities constitute less than
on-third of the total cost of the project, as that term is defined in the Agency
Lease Agreement. For purposes of this paragraph 8, retail sales shall mean: (i)
sales by a registered vendor under Article 28 of the Tax Law of the State of New
York primarily engaged in the retail sale of tangible personal property, as
defined in Section 1101 (b) (4) (I) of the Tax Law of the State of New York; or
(ii) sales of a service to such customers.

               
(f)     Except as is otherwise provided by collective
bargaining contracts or agreements, new employment opportunities created by the
Subleasee at the Premises shall be listed by the Subleasee with the New York
State Department of Labor Community Services Division, and with the
administrative entity of the service delivery area created by the Federal Job
Training Partnership Act (P.L. NO. 97-300) in which the Premises are located.
Except as is otherwise provided by collective bargaining contracts or
agreements, the Subleasee agrees, where practicable, to first consider persons
eligible to participate in the Federal Job Training Partnership (P.L. NO.
97-300) programs who shall be referred by administrative entities of 

Page 15 of 18

service delivery areas created pursuant to such act or by the Community
Services Division of the New York State Department of Labor for such new
employment opportunities.

[Remainder of page intentionally left blank. Next page is the
signature page.]

Page 16 of 18

        IN WITNESS WHEREOF,
Landlord and Tenant have each caused this Lease Agreement to be executed and
delivered, all as of the day and year first above written.

	Landlord 

    847 MAIN STREET, LLC

    By: /s/ Peter Krog                                                
    

          Its authorized officer
	Tenant 

    MINRAD, INC.

    By: /s/ John McNeirney                                        
    

           Its authorized officer

Page 17 of 18

Exhibit A

Floor Plan

 

Page 18 of 18

 

 

Amendment No. 1 To
Lease Agreement Dated December 13, 2001 between

847 MAIN STREET, LLC
("Landlord"),

and

MINRAD, INC.
("Tenant").

Effective As Of
January 1, 2004

Background

        Landlord and Tenant are parties to
a lawsuit pending in the County Court of the State of New York, County of Erie,
entitled 847 Main Street, LLC v. MINRAD, Inc. Index No. I2003-11308 (the
"Litigation"). The Litigation resulted from a dispute between Landlord and
Tenant principally concerning Tenant's failure to pay certain fixed rents,
additional rents and late charges. In order to settle the Litigation, the
parties are entering into this Amendment No. 1 to the Lease Agreement dated
December 13, 2001 (the "Lease").

Amendment

        Now, therefore, in
consideration of the mutual covenants hereinafter set forth, the parties agree
as follows:

A.     The Lease is hereby amended to substitute the
following for Section 5 in its entirety:

        5.     
Fixed Rent. The fixed rent which shall be paid by Tenant during the
initial term of this Lease shall be $11.10 per square foot or an aggregate of
$193,980 per annum, payable in six (6) bi-monthly installments at the rate of
$32,330.00 with a "Late Charge" of 1.5% per month if the rent is not received by
the 7th day from the due date thereof. The term "Lease Year" is
defined to mean the twelve (12) calendar month period commencing on January 1,
2002 and each twelve (12) calendar month period thereafter. All rents are
payable in bi-monthly installments of $32,330.00 which bi-monthly installments
shall be paid by Tenant to Landlord one (1) month in advance at Landlord's
address hereinabove set forth, or to such other party or at such other place as
the Landlord may from time to time in writing designate. Therefore, rent
payments are due as follows:

	Amount	Period	Date Due
	$32,330.00	January & February	December 1
	$32,330.00	March & April	February 1
	$32,330.00	May & June	April 1
	$32,330.00	July & August	June 1
	$32,330.00	September & October	August 1
	$32,330.00	November & December	October 1

B.     The Lease is hereby amended to substitute the
following for Section 26 in its entirety:

        26.     
Events of Default / Remedies & Damages / Waiver.

               
(a)     The following shall constitute Events of Default:

                       
(1)     In the event Tenant shall be in default in the
payment of any fixed rent, additional rent or charges required to be paid by
Tenant (a "Payment") to Landlord under this Lease.

                       
(2)     In the event Tenant shall be in default in the
performance of any other covenants, terms, conditions, provisions, rules and
regulations of this Lease excepting those items listed in the above section (a)
above (a "Non-Monetary Default") and if such Non-Monetary Default is not cured
within twenty (20) days after written notice thereof given by Landlord,
excepting such Non-Monetary Default that cannot be cured completely within such
twenty (20) day period providing Tenant, within such twenty (20) day period, has
promptly commenced to proceed with diligence and in good faith to remedy such
Non-Monetary Default.

                       
(3)     Subject to Section 365 of the Bankruptcy Reform Act
of 1978 as amended, in the event of the filing of a petition proposing the
adjudication of Tenant as a bankrupt or insolvent or the reorganization of
Tenant or an arrangement by Tenant with its creditors, whether pursuant to the
Federal Bankruptcy Act or any similar federal or state proceeding and such
action is not dismissed within sixty (60) days after the date of its filing.

        (b)     
Remedies and Damages

                   
(i)     If any Event of Default occurs, Landlord
individually and/or by and through its agent (Duke, Holzman, Yaeger & Photiadis
LLP) may, at its option and in addition to any and all other rights or remedies
provided Landlord in this Lease or at law or equity, immediately, or at any time
thereafter, and without demand or notice (except as provided herein):

                       
(a)     without waiving the Event of Default, apply all or
part of the security deposit, if any, to cure the Event of Default and Tenant
shall on demand restore the security deposit to its original amount;

                       
(b)     without waiving such Event of Default, apply thereto
any overpayment of rents to curing the Event of Default in lieu of refunding or
crediting the same to Tenant;

                       
(c)     if the Event of Default pertains to work or other
obligations (other than the payment of rent or additional rent) to be performed
by Tenant, without waiving such Event of Default, enter upon the Leased Premises
and perform such work or other obligation, or cause such work or other
obligation to be performed, for the account of Tenant; and Tenant shall on
demand pay to Landlord the cost of performing such work or other obligation plus
five percent (5%) thereof as administrative costs;

                       
(d)     issue a written notice declaring Tenant in monetary
default for nonpayment of fixed rent, additional rent and/or late charges and
providing Tenant with seven (7) days from the issuance of said written notice to
cure all monetary default(s). In the event all monetary defaults are not cured
within the seven (7) day cure period, Landlord may 

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issue a written notice stating that the term of this Lease will expire on a
date at least five (5) days thereafter, in which case the term of this Lease
shall automatically expire on the date so fixed in such notice as fully and
completely as if it were the date herein definitely fixed for the expiration of
the term, and all right, title and interest of the Tenant hereunder shall
thereupon cease and expire, and the Tenant shall thereupon quit and surrender
the Leased Premises to Landlord, it being the intention of the parties hereto to
create hereby a conditional limitation.

                           
(ii)     Notwithstanding any termination of this Lease or
termination of Tenant's rights to possession, Tenant shall pay and be liable for
(on the days fixed herein for the payment thereof) the several installments of
rent and additional rent as and when due, as if this Lease had not been
terminated and as if Landlord had not entered and whether the Leased Premises
are relet or remain vacant in whole or in part, but in the event the Leased
Premises are relet by Landlord, Tenant shall be entitled to a credit in the net
sum of rent and additional rent received by the Landlord in reletting after
deduction of all expenses (other than fit out or remodeling) incurred in
reletting the Leased Premises, and in collecting such rents and additional rent.

                           
(iii)     In the event of a reletting, Landlord may apply
the rent therefrom first to the payment of Landlord's reasonable expenses
including but not limited to attorney's fees incurred, reasonable expense of
reletting, repairs, brokerage fees, subdividing and then to the payment of rent
and all other sums due from Tenant hereunder, and Tenant shall remain liable for
any deficiency.

               
(c)     Waiver of Rights of Redemption.

                       
Tenant hereby expressly waives any and all rights of redemption granted by or
under any present or future laws in the event of Tenant's being evicted or
dispossessed for any cause, or in the event of Landlord's obtaining possession
of the Leased Premises by reason of the violation, by Tenant, of any of the
covenants or conditions of this Lease, or otherwise.

C.     The Lease is hereby amended to substitute the
following for Section 30 in its entirety:

        30.     
Holding Over. Landlord shall give Tenant at least thirty (30) days prior
written notice if Landlord shall expect or demand that Tenant vacate the Leased
Premises upon the expiration of the term of this Lease or any renewal thereof,
except under circumstances wherein Landlord terminates the Lease pursuant
paragraph 26 of this Lease in which case the thirty (30) day notice provided for
under this paragraph 30 shall not be required.

        If Tenant should continue to
occupy the Leased Premises without having exercised its option to renew (if any)
or without an Agreement in writing as to the terms of such continued possession,
then such additional tenancy shall be on a month-to-month basis at 150% of the
previous existing rental and under the same terms and conditions as provided in
this Lease or the renewal thereof. In case of such continued possession, the
month-to-month tenancy thereby may be canceled at the end of any calendar month
by not less than thirty (30) days prior written notice from either party.

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D.     The Lease is hereby amended to substitute the
following for Section 31 in its entirety:

        31.     
Notices. Any notice to Landlord provided for herein shall be deemed to
have been served only when such notice in writing addressed to Landlord, or to
the party to whom rent was last paid, has been deposited in a regular receptacle
of the U.S. Postal Service by registered or certified mail, addressed to the
address hereinabove set forth. Any notice to Tenant as provided for herein, may
be issued by Landlord and/or its agent (Duke, Holzman, Yaeger & Photiadis LLP)
and shall be deemed to have been served only when such notice in writing has
been deposited in a regular receptacle of the U.S. Postal Service by registered
or certified mail addressed to Tenant at the Leased Premises.

E.     The Lease is hereby amended to add the following
as Section 39 in its entirety:

        39.     
Legal Fees. Tenant agrees to pay all fees, including reasonable
attorney's fees and court costs, incurred by Landlord in connection with the
enforcement of any provision of this Lease, including those incurred in
connection with any summary proceeding seeking the removal of Tenant from the
Leased Premises.

F.     Simultaneously with the execution of this
Amendment, Tenant shall deliver to Landlord certified funds totaling $77,000.00
($54,156.35 of which are currently being held in escrow) representing (i) the
fixed rents due and owing to date, (ii) the additional rents due and owing to
date, (iii) the late charges due and owing to date, and (iv) Landlord's legal
fees incurred as a result of Tenant's defaults. Because this document is being
executed subsequent to December 1, 2003, the parties agree that the bi-monthly
fixed rent payment in the amount of $32,330.00 covering the period of
January-February 2004 will be due and payable on January 1, 2003. All bi-monthly
fixed rent payments thereafter will be made in accordance Section 5 of the Lease
Amendment as provided herein.

G.     The parties hereby ratify, adopt and confirm that
the Lease (as amended hereby) continues in full force and effect.

        IN WITNESS WHEREOF, this Amendment
has been executed by the parties as of the date set forth above even though, for
the convenience of the parties, it may be executed by either or both of them on
some other date or dates.

	December 11, 2003	847 MAIN STREET, LLC
	 	
	 	By: ____/s/_Peter Krog_______________
	 	 	Peter Krog, Managing Member
	 	 	 
	 	 	MINRAD, INC.
	 	
	 	By: ____/s/ Kirk Kamsler_____________
	 	 	Kirk Kamsler
	 	 	Vice President, Commercial Development

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