Document:

EXHIBIT 10.4

Exhibit 10.4

MARSHALL & ILSLEY CORPORATION

2005 EXECUTIVE DEFERRED COMPENSATION PLAN

ARTICLE I

Establishment of Plan and Purpose

1.01.  Establishment of Plan.  Marshall & Ilsley Corporation has established the 2005 Marshall & Ilsley Executive Deferred Compensation Plan, effective as of December 16, 2004 (the “Plan”).

1.02.  Purpose of Plan.  The Plan shall permit a select group of senior management and highly compensated employees to enhance the security of themselves and their beneficiaries following the termination of their employment with the Companies (as defined herein) by deferring until that time a portion of the compensation which may otherwise be payable to them at an earlier date (including the deferral of receipt of restricted stock).  By allowing key management employees to participate in the Plan, the Company expects the Plan to benefit it in attracting and retaining the most capable individuals to fill its executive positions in the Companies.

The parties intend that the arrangements described herein be unfunded for purposes of Title I in the Employee Retirement Income Security Act as amended from time to time.

ARTICLE II

Definitions and Construction

As used herein, the following words shall have the following meanings:

2.01.  Definitions.

(a)

Accounts. The accounts (including the sub-accounts) maintained for each Participant pursuant to Article V, below.

(b)

Administrator.  The person or persons selected pursuant to Article VIII below to control and manage the operation and administration of the Plan.

(c)

Beneficiaries.  Those persons designated by a Participant to receive benefits hereunder or, failing such a designation, the spouse or, if none, the Estate of a Participant.

(d)

Change of Control.  Change of Control shall have the same meaning as in the Marshall & Ilsley Corporation 2003 Executive Stock Option and Restricted Stock Plan.

(e)

Code.  The Internal Revenue Code of 1986, as amended.

(f)

Committee.  The Compensation and Human Resources Committee of the Board of Directors of the Company.

(g)

Common Stock.  The authorized and issued or unissued $1.00 par value common stock of the Company.

(h)

Companies.  Marshall & Ilsley Corporation and any subsidiary thereof now or hereinafter created.

(i)

Company.  Marshall & Ilsley Corporation, a Wisconsin corporation, or a successor thereof.

(j)

Company Contributions.  The amount contributed or credited by the Company to the account of the Participant pursuant to Section 4.05 hereof.

(k)

Compensation.  The total of the Participant’s base salary, commissions, bonuses, and incentive pay which shall include amounts deferred by the Participant under this Plan or any other employee benefit plan of the Company.  In all cases, Compensation shall include only compensation paid while an employee is a Participant in the Plan.  Compensation shall not include any severance or salary continuation payments.

(l)

Distribution Election.  The election by a Participant, from time to time, to choose the method of distribution of his deferrals, and any deemed investment increases or decreases attributable thereto.  The methods of distribution contained in the forms of Distribution Election can be changed from time to time at the discretion of the Administrator.  The forms of Distribution Election for deferrals made in 2005 are attached hereto as Exhibit D.

(m)

Disability.  A Participant shall be considered to be suffering from a Disability if the Participant is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Participant’s employer.

(n)

Employee.  An employee of any one or more of the Companies.

(o)

Employment.  Employment with any one or more of the Companies.

(p)

Fair Market Value.  The closing sale price of the Common Stock on the New York Stock Exchange as reported in the Midwest Edition of the Wall Street Journal for the applicable date; provided that, if no sales of Common Stock were made on said exchange on that date, “Fair Market Value” shall mean the closing sale price of the Common Stock as reported for the next succeeding day on which sales of Common Stock are made on said exchange, or, failing any such sales, such other market price as the Committee may determine in conformity with pertinent law and regulations of the Treasury Department.

(q)

Investment Election.  The form filed by the Participant from time to time, substantially in the form of Exhibit A hereto, which designates the Participant’s investment choices.

(r)

Net Shares.  Net Shares means the difference between the number of shares of Common Stock subject to a stock option for which an election has been made pursuant to Section 4.02 hereof, and the number of shares of Common Stock delivered, directly or by attestation, to satisfy the stock option exercise price.  The value of the Common Stock for purposes of determining the number of Net Shares shall be Fair Market Value.

(s)

Participants.  Such senior management and highly compensated Employees whom the Administrator has identified as eligible to defer Compensation hereunder and who elect to participate by deferring Compensation.

(t)

Plan.  The Marshall & Ilsley Corporation 205 Executive Deferred Compensation Plan, as stated herein and as amended from time to time.

(u)

Plan Year.  The period beginning on January 1, 2005 and ending on December 31, 2005, and each 12-month period ending on each subsequent December 31.

(v)

Restricted Shares.  An award of stock under a plan of the Company, which may contain transferability or forfeiture provisions (including a requirement of future services), all as set forth in an award agreement.

(w)

Restricted Units.  Units held in a Participant’s Account B which are received upon surrender of Restricted Shares and have the same transferability or forfeiture provisions (including the requirement of future services) as the Restricted Shares surrendered in exchange therefor.  Each Restricted Unit represents one share of Common Stock.

(x)

Retirement.  As to each Participant, the termination of his employment on or after attaining age 55, other than by reason of death or Disability, with at least 10 years of Service.

(y)

Service.  As to each Participant, the period during which he has been employed by one or more of the Companies, including such period of time that he was employed by a predecessor in interest to one of the Companies.

(z)

Unforeseeable Emergency.  An Unforeseeable Emergency means a severe financial hardship to a Participant resulting from an illness or accident of the Participant, the Participant’s spouse or a dependent (as defined in Section 152(a) of the Code) of the Participant,  loss of the Participant’s property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.

2.02.  Construction.   The laws of the State of Wisconsin, as amended from time to time, without giving effect to their conflict of laws provisions, shall govern the construction and application of this Agreement, unless Employee Retirement Income Security Act  (“ERISA”) supersedes Wisconsin law.  Words used in the masculine gender shall include the feminine and words used in the singular shall include the plural, as appropriate.  The words “hereof,” “herein,” “hereunder” and other similar compounds of the word “here” shall refer to the entire Agreement, not to a particular section.  All references to statutory sections shall include the section so identified as amended from time to time or any other statute of similar import.  If any provisions of the Internal Revenue Code, ERISA or other statutes or regulations render any provisions of this Plan unenforceable, such provision shall be of no force and effect only to the minimum extent required by such law.  

ARTICLE III

Eligibility

3.01.  Conditions of Eligibility.  The Administrator shall, from time to time, specify the senior management and highly compensated Employees eligible to participate herein.  Eligibility to participate in the Plan for one Plan Year does not guarantee eligibility for a subsequent Plan Year.

3.02.  Commencement of Participation.  An individual identified as eligible to participate in the Plan for that Plan Year shall commence participation, by either (a) electing a deferral of Compensation, (b) electing a deferral of Net Shares, or (c) surrendering Restricted Shares for Restricted Units, on the applicable form provided by the Administrator, in accordance with the procedures established by this Plan and the Administrator.

3.03.  Termination of Participation.  An individual’s right to (a) defer Compensation, (b) defer Net Shares (including exercise of the associated option) or (c) surrender Restricted Shares for Restricted Units hereunder shall cease as of the earlier of the (i) the termination of his Employment or (ii) failure of the Administrator to designate him as an Employee eligible to participate herein.

3.04.

Deferrals of Net Shares.  Notwithstanding the foregoing, no Participant shall be entitled to defer Net Shares hereunder until the Administrator determines that a deferral of Net Shares is permissible under Section 409A of the Code without penalty, and determines whether the bases on which such deferral is permissible are administratively practicable and consistent with the purposes of the Plan.  Any provisions of the Plan which govern Net Shares shall not apply to Participants until the Administrator determines to allow such deferrals.

ARTICLE IV

Deferrals and Company Contributions

4.01.  Amount and Manner of Deferral of Compensation.  A Participant must sign and return the Deferral Election, substantially in the form of Exhibit B hereto, to the Company, no later than the date specified by the Company, indicating the amount of the Participant’s salary or other Compensation for such Plan Year which he elects to defer hereunder, which election shall become irrevocable immediately upon commencement of such Plan Year.  A Participant may defer (i) any portion not to exceed eighty percent (80%) of his base salary or (ii) up to 100% of his incentive or (iii) both, provided, however, that (a) the Participant may not defer less than $5,000 in a Plan Year and (b) the Participant’s deferral election for a Plan Year shall relate to Compensation earned by him during such Plan Year whether or not paid during that Plan Year.

If a Participant elects to defer a portion of his salary, the Company shall reduce the Participant’s regular salary by an equal amount in each pay period during the Plan Year of deferral.  If a Participant elects to defer all or a portion of his incentive, the Company shall reduce each such Compensation payment by the percentage or dollar amount elected by the Participant.

4.02.  Amount and Manner of Deferral of Net Shares.  A Participant must sign and return an Election to Defer Stock Option Gains, substantially in the form provided to Participants, to the Company, no later than the date specified by the Company, containing the information requested, which election shall become irrevocable immediately upon return to the Company.

4.03.  Amount and Manner of Deferral of Restricted Stock Units.  A Participant must return a Restricted Stock Unit Agreement, substantially in the form of Exhibit C hereto, to the Company, no later than the date specified by the Company, containing the information requested, which agreement shall become irrevocable immediately upon return to the Company.

4.04.  Cessation of Deferral.  In the event of an Unforeseeable Emergency, a Participant may request in writing that deferrals of Compensation elected by that Participant hereunder cease for the then current Plan Year.  If the Administrator determines that such an Unforeseeable Emergency exists, and that the cessation of the deferrals is consistent with the requirements of Section 409A of the Code, the deferrals of Compensation for such Plan Year shall cease as to the Participant.  If the Administrator determines that no such emergency exists, the deferrals shall continue as originally elected.  If a Participant, consistent with this paragraph, ceases deferrals in a Plan Year, the Participant may not resume deferrals of Compensation hereunder (if otherwise eligible therefore) until the second Plan Year following the Plan Year in which such cessation occurred.

4.05. Other Contributions.  In the event that deferrals made by a Participant pursuant to this Plan cause a reduction in the contributions by the Company for the benefit of that Participant to any other qualified or nonqualified retirement plan maintained by the Company, and such reduction is not contributed or credited to any other nonqualified retirement plan, the Company shall credit to the Participant’s account under this Plan an amount equal to such net reductions in benefits.  If, as a result of limitations contained in Sections 401(a)(17) and/or 415 of the Code, or as a result of amounts deferred under the Plan, the contributions made to the profit sharing component of the retirement program of the Company on behalf of a person eligible to participate in the Plan are reduced, the Company shall credit an amount equal to such reduction to an account established for such person (the “SERP Account”).  The SERP Account shall be a separate bookkeeping account and shall vest once the person has five years of vesting service as determined under the profit sharing component of the retirement program of the Company, taking into account service prior to the date hereof.  Aside from the vesting requirement, the SERP Account shall be treated for all purposes of the Plan in the same manner as the Participant’s Account A, including division into sub-accounts consistent with the Distribution Election made for the Plan Year to which the Company contribution relates.  In addition, to the extent any amounts owing to a Participant under any incentive compensation plan are in excess of amounts which would be deductible by the Company under Section 162(m) of the Internal Revenue Code of 1986, as amended, and the Committee requires that such excess amounts be deferred, such amounts shall be credited to the relevant sub-account of Participant's Account A or Account B, as provided below in Section 5.01, consistent with the Distribution Election for such Plan Year.

ARTICLE V

Accounts and Sub-Accounts

5.01.  Establishment of Accounts; Sub-Accounts.  Only for the purpose of measuring payments due Participants hereunder, the Company shall maintain on behalf of each Participant two Accounts:  Account A and Account B, which shall each be divided into four sub-accounts reflecting the four distribution options available for cash and Common Stock distributions as set forth in the Distribution Election.  If the Company increases the number of distribution options available, the number of sub-accounts shall likewise be increased.  All amounts deferred pursuant to Sections 4.01 and 4.05 shall be credited to the relevant sub-accounts of Account A, which shall be denominated in cash.  All amounts deferred pursuant to Sections 4.02 and 4.03 shall be credited to the relevant sub-accounts of Account B, which shall be denominated in shares of Common Stock.

5.02.  Nature of Accounts; Sub-Accounts.  The Accounts and sub-accounts hereunder, and assets, if any, acquired by the Company to measure a Participant’s benefits hereunder, shall not constitute or be treated for any reason as a trust for, property of or a security interest for the benefit of, a Participant, his Beneficiaries or any other person.  Participant and the Company acknowledge that the Plan constitutes a promise by the Company to pay benefits to the Participants or their Beneficiaries, that Participants’ rights hereunder (by electing to defer Compensation, Net Shares or Restricted Units hereunder) are limited to those of general unsecured creditors of the Company and that the establishment of the Plan, acquisition of assets to measure Participant’s benefits hereunder or deferral of all or any portion of a Participants’ Compensation, Net Shares or Restricted Units hereunder does not prevent any property of the Company from being subject to the right of all the Company’s creditors.  The Company shall contribute all contributions hereunder to a trust created by the Company which will conform in all material respects to the terms of the Internal Revenue Service’s model trust, as described in Revenue Procedure 92-64, or any successor thereto.

5.03.  Maintenance of Account A.

a.

Accounts shall be reconciled on a quarterly basis.  The Company shall increase the relevant sub-account of Account A of each Participant by (i) the amount, if any, of his Compensation deferred during any calendar quarter based on the Distribution Election for such Plan Year, (ii) the amount, if any, contributed by the Company pursuant to Section 4.05 hereof during such Plan Year and (iii) any income or gains resulting as if the sub-account, computed in accordance with subsection b, below, were invested pursuant to the timely-filed Investment Election in effect for such quarter and decrease each Participant’s sub-account by (iv) any withdrawals or distributions from the relevant sub-account of Account A during any calendar quarter and (v) any losses resulting as if the sub-account, computed in accordance with subsection b, below, were invested pursuant to the timely-filed Investment Election in effect for such calendar quarter.

b.

For purposes of computing the investment return on any sub-account of Account A for any quarter, the principal balance as of the first day of the relevant quarter shall equal the balance as of the end of the preceding quarter, increased by 50% of the Participant’s and the Company’s contributions, if any, made to the relevant sub-account of Account A during the quarter pursuant to Sections 4.01 and 4.05 hereof, and decreased by any distributions made to the Participant or his Beneficiaries from the relevant sub-account during the quarter.

5.04.  Maintenance of Account B.

a.

Accounts shall be reconciled on a quarterly basis.  The Company shall increase the relevant sub-account of Account B of each Participant by (i) the amount, if any, of the Net Shares deferred upon the exercise of a nonstatutory stock option by the Participant, (ii) the amount, if any, of the Restricted Units deferred by the Participant (Net Shares and Restricted Units being hereafter referred to as “Credited Shares”), and (iii) to the extent Credited Shares are held on the record date for any dividend, a number of additional Credited Shares resulting from the reinvestment of dividends on a common investment date, which will typically be any of the first five business days after the payment of the dividend, determined in the sole discretion of an independent brokerage agent.  Dividends shall be assigned to the sub-account which contains the shares of Common Stock generating the applicable dividends.  The Company shall decrease each Participant’s sub-account of Account B by (iv) any withdrawals or distributions from the such sub-account of Account B during any calendar quarter and (v) any Restricted Units which fail to vest because the Participant forfeits the Restricted Units.  Consistent with the treatment of Restricted Stock, any dividends credited as regards Restricted Units shall not be forfeited, even if the Participant later forfeits the Restricted Units.  In the event of any distribution with respect to Common Stock other than a cash dividend, stock split, stock dividend or similar transaction, the relevant sub-account of the Participant’s Account B shall be credited with a number of additional shares or other consideration as determined by the Committee in its sole discretion.  In the event of a Change of Control, a the relevant sub-account of a Participant’s Account B shall be credited with the same amount and type of consideration which a shareholder of the Company would have received holding the same number of shares of Common Stock as are held in the relevant sub-account of a Participant’s Account B at the time of the payment of the consideration.  If there is a shareholder election as to the type of consideration received in a Change of Control, the relevant sub-accounts of a Participant’s Account B will be credited with consideration assuming that the Participant elected the maximum amount of stock which is available to electing shareholders, adjusted for any proration required because of over-subscription.

5.05.  Investment Elections for Account A.

a.

A Participant may file an Investment Election setting forth his investment preferences used to value his Account A.  The initial investment options available to Participants are (i) the Moody’s A Long-Term Corporate Bond Rate (the “fixed rate investment option”) adjusted annually to equal the average yield for the month of September of the previous year and (ii) the total return of the Standard & Poor’s 500 Index for the applicable quarter.  All investment elections must be in increments of 10%.  If a Participant does not file an Investment Election, the Account shall be deemed to be invested in the fixed rate investment option.  The Participant may change his investment preferences as of January 1 or July 1 in any year by delivering to the Company a new Investment Election at least 15 days prior to such effective date.

b.

A Participant’s Account shall reflect only the performance of such investment indices and the Participant shall have no property right or security interest in the actual investment performance of any assets invested by the Company to provide for the payment of benefits under this Plan.  

c.

Upon a Change of Control, the Company, the Administrator or any successor thereto, may not change the investment choices available to Participants hereunder without the consent of a majority of the holders of Account balances under the Plan.

5.06.  Change of Accounts.  Once amounts have been allocated to the relevant sub-accounts of Account A or Account B, these amounts must remain in the referenced sub-accounts Account A or B until such amounts are distributed to the Participant pursuant to Article VII hereof.

ARTICLE VI

Vesting

Subject to the rights of the Company’s creditors as set forth in Section 5.01 above, the Account of a Participant, including all earnings accrued thereto, shall at all times be fully vested.  Notwithstanding the foregoing, Restricted Units will not become vested until all forfeiture provisions (including the requirement of future services) have been met.  If such forfeiture provisions are not met, the Restricted Units shall be forfeited and shall be subtracted from the applicable Account.

ARTICLE VII

Distributions

7.01.  Distributions After Termination of Employment.  Except as otherwise expressly provided herein, all distributions of the Accounts shall be made in accordance with the Distribution Elections which relate to deferrals made for each Plan Year.  A Participant may make separate Deferral Elections for the sub-accounts of Account A and Account B.  Distributions from the sub-accounts of Account A shall be in cash and distributions from the sub-accounts of Account B shall be in Common Stock.

Distribution Elections are irrevocable, and may not be modified, unless allowed under . Section 409A of the Code, any guidance promulgated thereunder, or any successor thereto.  If a Participant does not timely file a Form of Distribution Election, he will be deemed to have elected payment in a lump sum option set forth in the Form of Distribution Election.  If a Participant files only one Distribution Election for any Plan Year, it will be deemed to cover both Account A and Account B, unless the Participant otherwise designates.

7.02.  Upon Death.

a.

Upon a Participant’s death, any balance remaining in his Accounts shall be paid by the Company in accordance with his Distribution Elections except that such payments shall be made to the Beneficiary or Beneficiaries specified by the Participant or, if none, to his surviving spouse or, if none, to his Estate.  Each Participant may designate a Beneficiary or Beneficiaries to receive the unpaid balance of his Accounts upon his death and may revoke or modify such designation at any time and from time to time by submitting to the Administrator a Beneficiary Designation substantially in the form attached hereto as Exhibit C.

b.

If a Participant’s death occurs prior to the payment of any amounts to him hereunder, other than payments for Unforeseeable Emergencies, the Participant’s Beneficiaries shall receive payments in accordance with Section 7.01 hereof.

c.

If a Participant designates multiple Beneficiaries as either primary or contingent Beneficiaries, and one of the Beneficiaries has predeceased the Participant, the deceased Beneficiary’s share shall go to the Beneficiary’s Estate.  For example, if a Participant designates his spouse as the sole primary beneficiary and his three children as equal contingent beneficiaries, and if the spouse and one child predecease the Participant, the two children would each get one-third of the distributions from the Accounts and the predeceased child’s one-third share would go to his Estate.  The spouse’s Estate would be entitled to nothing.

d.

If a Beneficiary survives a Participant but dies prior to receipt of the entire amount in the Accounts due him, the Company shall make payments to the Estate of the Beneficiary in accordance with the Distribution Elections.  For example, if the Participant’s spouse is his primary Beneficiary and his three children are his contingent Beneficiaries, and if the spouse survives the Participant such that she is receiving distributions pursuant to the terms of this Plan, but dies prior to the receipt of all distributions to which she is entitled, any remaining distributions shall be paid to the spouse’s Estate and not to the contingent beneficiaries.

7.03.  Emergencies.  In the event of an Unforeseeable Emergency either before or after the commencement of payments hereunder, a Participant or Beneficiary may request in writing that all or any portion of the benefits due him under the Accounts be paid prior to the normal time for payment of such amount.  The Administrator shall, in its reasonable judgment, determine whether there is an Unforeseeable Emergency, and is so, shall distribute amounts which do not exceed the amounts necessary to satisfy such emergency, plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution.  In determining the amounts, the Administrator shall take into account the extent to which such hardship is or may be relieved through reimbursement or compensation by insurance or otherwise, or by liquidation of the Participant’s assets (to the extent the liquidation of such assets would not itself cause severe financial hardship).  The Administrator shall use its reasonable discretion to determine when the payments shall be made and shall immediately reduce the balance in the recipient’s Accounts by the amount of such payment.

7.04.  Upon a Change of Control.  Notwithstanding anything contained herein or in the Distribution Elections, a Participant’s Accounts shall be distributed in a lump sum after the termination of the Participant’s employment, but only if such termination of employment occurs when, or within a year after, a Change of Control takes place.  Such distributions shall be made no later than forty-five days after termination of employment, unless the requirements of Section 409A of the Code would mandate a later distribution date to avoid penalty, in which case the distributions will be made at such later date.  Notwithstanding the foregoing, if the deductibility of such amounts by the Company would be limited by Section 162(m) of the Code, such distribution shall occur on the first business day of the calendar year after the calendar year in which the Participant’s employment terminated, or such later time when the limitations of Section 162(m) would no longer apply.

ARTICLE VIII

Administration of the Plan

8.01.  Appointment of Separate Administrator.  The Committee shall, in writing, appoint a separate Administrator.  Any person including, but not limited to, an Employee, shall be eligible to serve as Administrator.  Two or more persons may form a committee to serve as Administrator.  Persons serving as Administrator may resign by written notice to the Committee and the Committee may appoint or remove such persons.  An Administrator consisting of more than one person shall act by a majority of its members at the time in office.  An Administrator consisting of more than one person may authorize any one or more of its members to execute any document or documents on behalf of the Administrator, in which event the Administrator shall notify the Committee of the member or members so designated.  The Committee shall accept and rely upon any document executed by such member or members as written revocation of such designation.  No person serving as Administrator shall vote or decide upon any matter relating solely to himself or solely to any of his rights or benefits pursuant to the Plan.

8.02.  Powers and Duties.  The Administrator shall administer the Plan in accordance with its terms.  The Administrator shall have full and complete authority and control with respect to Plan operations and administration unless the Administrator allocates and delegates such authority or control pursuant to the procedures stated in subsection b. or c. below.  Any decisions of the Administrator or its delegate shall be final and binding upon all persons dealing with the Plan or claiming any benefit under the Plan.  The Administrator shall have all powers which are necessary to manage and control Plan operations and administration including, but not limited to, the following:

a.

To employ such accountants, counsel or other persons as it deems necessary or desirable in connection with Plan administration.  The Company shall bear the costs of such services and other administrative expenses.

b.

To designate in writing persons other than the Administrator to perform any of its powers and duties hereunder.

c.

The discretionary authority to construe and interpret the Plan, including the power to construe disputed provisions.  

d.

To resolve all questions arising in the administration, interpretation and application of the Plan including, but not limited to, questions as to the eligibility or the right of any person to a benefit.

e.

To adopt such rules, regulations, forms and procedures from time to time as it deems advisable and appropriate in the proper administration of the Plan.

f.

To prescribe procedures to be followed by any person in applying for distributions pursuant to the Plan and to designate the forms or documents, evidence and such other information as the Administrator may reasonably deem necessary, desirable or convenient to support an application for such distribution.

8.03.  Records and Notices.  The Administrator shall maintain all books of accounts, records and other data as may be necessary for proper plan administration.

8.04.  Compensation and Expenses.  The expenses incurred by the Administrator in the proper administration of the Plan shall be paid by the Company.  An Administrator who is an Employee shall not receive any additional fee or compensation for services rendered as an Administrator.

8.05.  Limitation of Authority.  The Administrator shall not add to, subtract from or modify any of the terms of the Plan, change or add to any benefits prescribed by the Plan, or waive or fail to apply any Plan requirement for benefit eligibility.

8.06  Claims Procedures.  A Participant shall be entitled to make a request for any benefits to which the Participant believes he or she may be entitled.  Any such request must be made in writing, and it should be made to the Company.

A request for benefits will be considered a claim, and it will be subject to a full and fair review.  If a Participant’s claim is wholly or partially denied, the Company shall furnish the Participant or the Participant’s beneficiary (the “Claimant”) or the Claimant’s authorized representative with a written or electronic notice of the denial within a reasonable period of time (generally, 90 days after the Company receives the claim or 180 days, if the Company determines that special circumstances require an extension of time for processing the claim and furnishes written notice of the extension to the Claimant or the Claimant’s authorized representative before the initial 90-day period ends), which sets forth, in an understandable manner, the following information:

a.

The specific reason(s) for the denial of the claim;

b.

Reference to the specific provisions of the Plan on which the denial is based;

c.

A description of any additional material or information necessary for the Claimant to perfect the claim and an explanation of why that material or information is necessary; and

d.

A description of the review procedures and the time limits applicable to those procedures, including a statement of the Claimant’s right to bring a civil action under ERISA Section 502(a) following a denial on review.

The Company’s written extension notice must indicate the special circumstances requiring an extension of time for processing the claim and the date by which the Company expects to render its decision on the claim.

The Claimant or the Claimant’s authorized representative may appeal the Company’s decision denying the claim within 60 days after the Claimant or the Claimant’s authorized representative receives the notice denying the claim.  The Claimant or the Claimant’s authorized representative may submit to the Company written comments, documents, records and other information relating to the claim.  The Claimant or the Claimant’s authorized representative shall be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claim.  The Company’s review of the claim and of its denial of the claim shall take into account all comments, documents, records and other information submitted by the Claimant or the Claimant’s authorized representative relating to the claim, without regard to whether these materials were submitted or considered during the initial decision on the claim.

The Company’s decision on the appeal of a denied claim shall be made within a reasonable period of time (generally 60 days after the Company receives the claim or 120 days if the Company determines that special circumstances require an extension of time for processing the claim and furnishes written notice of the extension to the Claimant or the Claimant’s authorized representative before the initial 60-day period ends indicating the special circumstances requiring extension of time and the date by which the Company expects to render its decision on the claim).  The Company will furnish the Claimant or the Claimant’s authorized representative with written or electronic notice of its decision on appeal.  In the case of a decision on appeal upholding the Company’s initial denial of the claim, the Company’s notice of its decision on appeal shall set forth, in an understandable manner, the following information:

a.

The specific reason(s) for the decision on appeal; 

b.

Reference to the specific provisions in the Plan on which the decision on appeal is based; 

c.

A statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claim for benefits; and

d.

A statement describing any voluntary appeal procedures (including voluntary arbitration or any other form of dispute resolution) offered and the Claimant’s right to obtain information sufficient to make an informed judgment about whether to submit a benefit dispute to the voluntary level of appeal, and a statement of the Claimant’s right to bring an action under ERISA Section 502(a).

ARTICLE IX

General Provisions

9.01.  Assignment and Rights of Participant.  No Participant or Beneficiary may sell, assign, transfer encumber or otherwise dispose of the right to receive payments hereunder.  A Participant’s rights to benefit payments under the Plan are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment by creditors of a Participant or a Beneficiary.  No Participant or any other person shall have any interest in any fund or in any specific asset or assets of the Company by reason of any amounts credited to any Account hereunder, nor any right to exercise any of the rights or privileges of a stockholder with respect to any securities hypothetically credited to a Participant’s Account B under the Plan, nor any right to receive any distributions under the Plan except as and to the extent expressly provided in the Plan.

9.02.  Employment Not Guaranteed by Plan.  The establishment of this Plan and the designation of an Employee as a Participant, shall not give any Participant the right to continued Employment or limit the right of the Company to dismiss or impose penalties upon the Participant or modify the terms of Employment of any Participant.

9.03.  Termination and Amendment.  The Board of Directors of the Company may at any time terminate, suspend, alter or amend this Plan so long as such actions do not contravene the requirements of Section 409A of the Code.  No Participant or any other person shall have any right, title, interest or claim against the Company, its directors, officers or employees for any amounts, except that (i) the Participant shall be fully vested in his Accounts hereunder as of the date on which the Plan is terminated or suspended, except as to any unvested Restricted Units, (ii) no amendment shall eliminate the crediting of an investment return on the sub-accounts of Account A prior to the complete distribution thereof or provide for a distribution method which accelerates the timing of distributions hereunder without the consent of a Participant and (iii) subsequent to a Change of Control, unless a majority of the holders of Account balances agree to the contrary, the Company or the Administrator may not alter (a) the choice of investments in the Investment Election as in effect immediately before the Change of Control and (b) the payout options contained in the Distribution Elections as in effect immediately before the Change of Control.  Notwithstanding the foregoing, the Board of Directors of the Company may make any amendment necessary in order to avoid penalties under Section 409A of the Code, even if such amendments are detrimental to Participants.

9.04.  Notice.  Any and all notices, designations or reports provided for herein shall be in writing and delivered personally or by certified mail, return receipt requested, addressed, in the case of the Company to the Corporate Secretary at 770 North Water Street, Milwaukee, Wisconsin  53202 and, in the case of a Participant or Beneficiary, to his home address as shown on the records of the Company.  The addresses referenced herein may be changed by a notice delivered in accordance with the requirement of this Section 9.04.

9.05.  Limitation on Liability.  In no event shall the Company, Administrator or any employee, officer or director of the Company incur any liability for any act or failure to act unless such act or failure to act constitutes a lack of good faith, willful misconduct or gross negligence with respect to the Plan or the trust established in connection with the Plan.

9.06.  Indemnification.  The Company shall indemnify the Administrator and any employee, officer or director of the Company against all liabilities arising by reason of any act or failure to act unless such act or failure to act is due to such person’s own gross negligence or willful misconduct or lack of good faith in the performance of his duties to the Plan or the trust established pursuant to the Plan.  Such indemnification shall include, but not be limited to, expenses reasonably incurred in the defense of any claim, including reasonable attorney and legal fees, and amounts paid in any settlement or compromise; provided, however, that indemnification shall not occur to the extent that it is not permitted by applicable law.  Indemnification shall not be deemed the exclusive remedy of any person entitled to indemnification pursuant to this section.  The indemnification provided hereunder shall continue as to a person who has ceased acting as a director, officer, member, agent or employee of the Administrator or as an officer, director or employee of the Company and such person’s rights shall inure to the benefit of his heirs and representatives.

9.07.  Headings.  All articles and section headings in this Plan are intended merely for convenience and shall in no way be deemed to modify or supplement the actual terms and provisions stated thereunder.

9.08.  Severability.  Any provision of this Plan prohibited by law shall be ineffective to the extent of any such prohibition, without invalidating the remaining provisions hereof.  The illegal or invalid provisions shall be fully severable and this Plan shall be construed and enforced as if the illegal or invalid provisions had never been inserted in this Plan.Exhibit 4.1

Exhibit 4.1

MINRAD INTERNATIONAL, INC.

WARRANT AGREEMENT

        THIS WARRANT AGREEMENT (this "Agreement") is made and entered
into as of December 15, 2004, between and among Minrad International, Inc., a
Nevada corporation (the "Company"), Minrad Inc., a Delaware corporation
("Minrad"), Cagan McAfee Capital Partners, LLC ("CMCP") and Chadbourn
Securities, Inc. ("Chadbourn").

R E C I T A L S

        WHEREAS, Minrad and CMCP are parties to a letter agreement
dated December 1, 2003 relating to assistance by CMCP and its affiliates
including Chadbourn in helping Minrad obtain up to $7.7 million of equity
funding (the "Letter Agreement"); and 

        WHEREAS, paragraph 2(c) of the Letter Agreement provides that
Minrad will grant investment warrants to CMCP or its affiliates including
Chadbourn to purchase a number of its shares equal to 10% of the number of
shares sold in the equity funding at the same per share purchase prices as the
shares sold in the equity funding; and 

        WHEREAS, Minrad acquired control of the Company on the date
of this Agreement through a reverse merger of Minrad and a wholly owned
subsidiary of the Company; and 

        WHEREAS, pending the merger, the parties agreed that under
the Letter Agreement equity funding raised by Chadbourn for the Company would be
treated on the same basis as equity funding for Minrad; and 

        WHEREAS, as of the date of this Agreement Chadbourn has
assisted Minrad in placing 3,201,084 shares at $1.25 per share, and Chadbourn
has assisted the Company in placing 585,257 shares at $1.75 per share; and

        WHEREAS, in consideration of paragraph 2(c) of the Letter
Agreement the Company now proposes to issue to Chadbourn or its permitted
designees warrants (the "Warrants") to purchase (a) 320,108 shares of the
Company's common stock, par value $.01 par value ( the "Common Stock") at a
purchase price of $1.25 per share, and (b) 58,526 shares of Common Stock at a
purchase price of $1.75 per share;

        NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereto agree as follows:

A G R E E M E N T

        1.   
Warrant Certificates. The warrant certificates to
be delivered pursuant to this Agreement (the "Warrant Certificates") shall be in
the forms set forth in Exhibit A or Exhibit B attached hereto and
made a part hereof, with such appropriate insertions, omissions, substitutions
and other variations as are required or permitted by this Warrant Agreement.

        2.     Right to Exercise Warrants. Each Warrant may be
exercised from the date of this Agreement until 11:59 P.M. (Eastern Standard
Time) on the date that is seven (7) years after the date of this Agreement (the
"Expiration Date"). Each Warrant not exercised on or before the Expiration Date
shall expire. Each Warrant shall entitle its holder to purchase from the Company
the number of shares of common stock indicated in the Warrant (each such share
being an "Exercise Share) at the per share exercise price set forth on the
warrant certificate, subject to adjustment as set forth below (the "Exercise
Price").

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        The Company shall not be required to issue fractional shares
of Common Stock upon the exercise of the Warrants or to deliver Warrant
Certificates which evidence fractional shares of capital stock. In the event
that a fraction of an Exercise Share would, except for the provisions of this
paragraph 2, be issuable upon the exercise of a Warrant, the Company shall pay
to the holder exercising the Warrant an amount in cash equal to such fraction
multiplied by the current market value of the Exercise Share. For purposes of
this paragraph 2, the current market value shall be determined as follows:

            (a)     if the Shares are traded in the over-the-counter market
and not on any national securities exchange and not in the NASDAQ Reporting
System, the average of the mean between the last bid and asked prices per share,
as reported by the National Quotation Bureau, Inc., or an equivalent generally
accepted reporting service, for the last business day prior to the date on which
the Warrant is exercised, or, if not so reported, the average of the closing bid
and asked prices for a Share as furnished to the Company by any member of the
National Association of Securities Dealers, Inc., selected by the Company for
that purpose.

            (b)     if the Shares are listed or traded on a national
securities exchange or in the NASDAQ Reporting System, the closing price on the
principal national securities exchange on which they are so listed or traded or
in the NASDAQ Reporting System, as the case may be, on the last business day
prior to the date of the exercise of the Warrant. The closing price referred to
in this Clause (b) shall be the last reported sales price or, in case no such
reported sale takes place on such day, the average of the reported closing bid
and asked prices, in either case on the national securities exchange on which
the Shares are then listed on in the NASDAQ Reporting System; or

            (c)     if no such closing price or closing bid and asked prices
are available, as determined in any reasonable manner as may be prescribed by
the Board of Directors of the Company.

        3.     Mutilated or Missing Warrant Certificates. In case
any of the Warrant Certificates shall be mutilated, lost, stolen or destroyed
prior to the Expiration Date, the Company shall issue and deliver, in exchange
and substitution for and upon cancellation of the mutilated Warrant Certificate,
or in lieu of and in substitution for the Warrant Certificate lost, stolen or
destroyed, a new Warrant Certificate of like tenor and representing an
equivalent right or interest.

        4.     Reservation of Shares. The Company will at all
times reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued Common Stock, or its authorized and
issued Common Stock held in its treasury, for the purpose of enabling it to
satisfy its obligation to issue Exercise Shares upon exercise of Warrants, the
full number of Exercise Shares deliverable upon the exercise of all outstanding
Warrants.

        The Company covenants that, upon payment of the applicable
exercise price by the holder, all Exercise Shares issued upon exercise of
Warrants will be validly issued, fully paid and non-assessable shares of Common
Stock.

        5.     Rights of Holder. The holder of a Warrant will not,
by virtue of anything contained in this Warrant Agreement or otherwise, prior to
exercise of the Warrant, be entitled to any right whatsoever, either in law or
equity, of a stockholder of the Company, including without limitation, the right
to receive dividends or to vote or to consent or to receive notice as a
stockholder in respect of the meetings of stockholders or the election of
directors of the Company of any other matter.

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        6.     Certificates to Bear Legend. The Warrants and the
certificate or certificates therefore shall bear the following legend by which
each holder shall be bound:

    
    
      
        
          
            
    "THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED
    UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED
    OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER
    SUCH ACT OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL, REASONABLY
    SATISFACTORY TO THE CORPORATION AND ITS COUNSEL, THAT SUCH REGISTRATION IS
    NOT REQUIRED."

            

          

        

      

    

  

                The Exercise Shares and the certificate or certificates
evidencing any such Exercise Shares shall bear the following legend:

        
        
          
            
              
                
        "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
        REGISTERED UNDER THE SECURITIES ACT OF 1933. THE SHARES MAY NOT BE SOLD
        OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF
        COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION THAT AN EXEMPTION
        FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE."

                

              

            

          

        

      
    
  

        Certificates for Warrants or Exercise Shares, as the case may
be, without such legend shall be issued if the Warrants or Exercise Shares are
sold pursuant to an effective registration statement under the Act or if the
Company has received an opinion from counsel reasonably satisfactory to counsel
for the Company that the legend is no longer required under the Act.

        7.     Adjustment of Number of Shares and Class of Capital
Stock Purchasable. The number of Exercise Shares and class of capital stock
purchasable under each Warrant are subject to adjustment from time to time as
set forth in this Section 7.

                (a)     Adjustment for Change in Capital Stock. If the
Company:

	 	(i)	pays a dividend or makes a
    distribution on its Common Stock, in each case, in shares of its Common
    Stock;
	 	 	 
	 	
    (ii)
	
    subdivides its outstanding shares of Common Stock into a
    greater number of shares;

	 	 	 

3 of 16

	 	
    (iii)
	
    combines its outstanding shares of Common Stock into a
    smaller number of shares; or

	 	 	 
	 	
    (iv)
	
    makes a distribution on its Common Stock in shares of its
    capital stock other than Common Stock.

then the number and classes of Exercise Shares purchasable upon exercise of
each Warrant in effect immediately prior to such action shall be adjusted so
that the holder of any Warrant thereafter exercised may receive the number and
classes of shares of capital stock of the Company which such holder would have
owned immediately following such action if such holder had exercised the Warrant
immediately prior to such action.

        For a dividend or distribution the adjustment shall become
effective immediately after the record date for the dividend or distribution.
For a subdivision, combination or reclassification, the adjustment shall become
effective immediately after the effective date of the subdivision, combination
or reclassification.

        If after an adjustment the holder of a Warrant upon exercise
of it may receive shares of two or more classes of capital stock of the Company,
the Board of Directors of the Company shall in good faith determine the
allocation of the adjusted Exercise Price between or among the classes of
capital stock. After such allocation, that portion of the Exercise Price
applicable to each share of each such class of capital stock shall thereafter be
subject to adjustment on terms comparable to those applicable to the Exercise
Shares in this Agreement. Notwithstanding the allocation of the Exercise Price
between or among shares of capital stock as provided by this Section 7(a), a
Warrant may only be exercised in full by payment of the entire Exercise Price in
effect at the time of such exercise.

                (b)     Consolidation, Merger or Sale of the Company. If
the Company is a party to a consolidation, merger or transfer of assets which
reclassifies or changes its outstanding Common Stock, the successor corporation
(or corporation controlling the successor corporation or the Company, as the
case may be) shall by operation of law assume the Company's obligations under
this Agreement. Upon consummation of such transaction, the Warrants shall
automatically become exercisable for the kind and amount of securities, cash or
other assets which the holder of a Warrant would have owned immediately after
the consolidation, merger or transfer if the holder had exercised the Warrant
immediately before the effective date of such transaction. As a condition to the
consummation of such transaction, the Company shall arrange for the person or
entity obligated to issue securities or deliver cash or other assets upon
exercise of the Warrant to, concurrently with the consummation of such
transaction, assume the Company's obligations hereunder by executing an
instrument so providing and further providing for adjustments which shall be as
nearly equivalent as may be practical to the adjustments provided for in this
Section 7.

        8.     Successors. All the covenants and provisions of
this Agreement by or for the benefit of the Company or Chadbourn shall bind and
inure to the benefit of their respective successor and assigns hereunder.

        9.     Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all proposes be
deemed to be an original, and such counterparts shall together constitute by one
and the same instrument.

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        10.     Notices. All notices or other communications under this Agreement
shall be in writing and shall be deemed to have been given if delivered by hand
or mailed by certified mail, postage prepaid, return receipt requested,
addressed as follows: if to the Company: Minrad Inc., 847 Main Street, Buffalo,
NY 14203, Attn: President, and to Chadbourn or a holder of
a Warrant: at the address of Chadbourn or the holder appearing on the books of
the Company or the Company's transfer agent, if any.

        Either the Company, Chadbourn or the holder of a Warrant may
from time to time change the address to which notices to it are to be mailed
hereunder by notice in accordance with the provisions of this Paragraph 10.

        11.     Supplements and Amendments. The Company may from
time to time supplement or amend this Agreement without the approval of any
holder of Warrants in order to cure any ambiguity or to be correct or supplement
any provision contained herein which may be defective or inconsistent with any
other provision, or to make any other provisions in regard to matters or
questions herein arising hereunder which the Company may deem necessary or
desirable and which shall not materially adversely affect the interest of the
holder.

        12.     Severability. If for any reason any provision,
paragraph or term of this Agreement is held to be invalid or unenforceable, all
other valid provisions herein shall remain in full force and effect and all
terms, provisions and paragraphs of this Agreement shall be deemed to be
severable.

        13.     Governing Law and Venue. This Agreement shall be
deemed to be a contract made under the laws of the State of Nevada and for all
purposes shall be governed and construed in accordance with the laws of said
State. Any proceeding arising under this Agreement shall be instituted in the
State of Nevada. 

        14.     Headings. Paragraphs and subparagraph headings,
used herein are included herein for convenience of reference only and shall not
affect the construction of this Agreement 

5 of 16

nor constitute a part of this Agreement for any other purpose.

        IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, as of the date and year first above written. 

	
    COMPANY:

    

    MINRAD INTERNATIONAL, INC.

    
    

     

    By: _________________________________

    Name: _______________________________ 

    

     

    
    MINRAD INC.

    

     

    
    By:___________________________

    Name: ________________________ 

    	 	
    CHADBOURN

    

    CHADBOURN SECURITIES, INC.

    
    

     

    By: __________________________

    Name:________________________

    Tax ID: _______________________

    

    CMCP: 

    
    CAGAN MCAFEE CAPITAL PARTNERS, LLC.

    
    

    By: _________________________________

    Name: _______________________________ 

    

6 of 16

 

Exhibit A

THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT
OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE
CORPORATION AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.

 

WARRANT TO PURCHASE SHARES

OF COMMON STOCK OF

MINRAD INTERNATIONAL, INC

 

	Initial Number of Shares: 
    	______________
	Initial Exercise Price: 
    	$1.25 per share
	Date of Grant: 	 	December 15, 2004
	Expiration Date: 	 	December 15, 2011

 

THIS CERTIFIES THAT, ______________________, or any person or entity to whom
the interest in this Warrant is lawfully transferred ("Holder") is entitled to
purchase the above number (as adjusted pursuant to Section 4 hereof) of fully
paid and non-assessable shares of the Common Stock (the "Shares") of Minrad
International, Inc., a Nevada corporation (the "Company), having an Exercise
Price as set forth above, subject to the provisions and upon the terms and
conditions set forth herein and in the Warrant Agreement between the Company and
Cagan McAfee Capital Partners, LLC, dated December 15, 2004 (the "Warrant
Agreement"). The exercise price, as adjusted from time to time as provided
herein, is referred to as the "Exercise Price."

        1.     Term. The purchase right represented by this Warrant is
exercisable, in whole or in part, at any time commencing on the Date of Grant
and ending on the Expiration Date, after which time the Warrant shall be void.

        2.    Method of Exercise; Payment; Issuance of New Warrant. Subject to
Section 1 hereof, the right to purchase Shares represented by this Warrant may
be exercised by Holder, in whole or in part, for the total number of Shares
remaining available for exercise by the surrender of this Warrant (with the
notice of exercise form attached hereto as Exhibit A duly executed) at the
principal office of the Company and by the payment to the Company, by check made
payable to the Company drawn on a United States bank and for United States
funds, or by delivery to the Company of evidence of cancellation of indebtedness
of the Company to such Holder, of an amount equal to the then applicable
Exercise Price per share multiplied by the number of Shares then being purchased
or by net exercise pursuant to Section 6 hereof. In the event of any exercise of
the purchase right represented by this Warrant, certificates for the Shares so
purchased shall be promptly delivered to Holder and, unless this Warrant has
been fully exercised or has expired, a new Warrant representing the portion of
the Shares, if any, with respect to which this Warrant shall not then have been
exercised shall also be promptly delivered to Holder.

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        3.     Exercise Price. The Exercise Price at which this Warrant may be
exercised shall be the Exercise Price, as adjusted from time to time pursuant to
Section 4 hereof.

        4.     Reclassification, Reorganization, Consolidation or Merger. In the
case of any reclassification of the Shares, or any reorganization, consolidation
or merger of the Company with or into another corporation (other than a merger
or reorganization with respect to which the Company is the continuing
corporation and which does not result in any reclassification of the Shares),
the Company, or such successor corporation, as the case may be, shall execute a
new warrant providing that the Holder shall have the right to exercise such new
warrant and upon such exercise to receive, in lieu of each Share theretofore
issuable upon exercise of this Warrant, the number and kind of securities, money
and property receivable upon such reclassification, reorganization,
consolidation or merger by a holder of Shares for each Share. Such new warrant
shall provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 4 including, without
limitation, adjustments to the Exercise Price and to the number of Shares
issuable upon exercise of this Warrant. The provisions of this Section 4 shall
similarly apply to successive reclassifications, reorganizations, consolidations
or mergers.

        5.     Transferability and Negotiability of Warrant. This Warrant may not
be transferred or assigned in whole or in part without compliance with
applicable federal and state securities laws by the transferor and the
transferee (including, without limitation, the delivery of investment
representation letters and legal opinions reasonably satisfactory to the
Company, if reasonably requested by the Company). Subject to the provisions of
this Section 5, title to this Warrant may be transferred in the same manner as a
negotiable instrument transferable by endorsement and delivery.

        6.     Net Exercise. In lieu of exercising this Warrant for cash, the
Holder may elect to exchange this Warrant for Shares equal to the value of this
Warrant by surrender of this Warrant, together with notice of such election, at
the principal office of the Company, in which event the Company shall issue to
the holder a number of Shares computed using the following formula:

X = Y (A-B)

            A

          
        
      
    
  

        Where :

                X= the number of Shares to be issued to the holder.

                Y= the number of Shares purchasable under this Warrant.

                A= value per share of one Share determined in accordance with Section 2 of
the Warrant Agreement.

                B= the Exercise Price (as adjusted).

        7.     Investment Intent; Accredited Investor. Holder
represents and warrants to the Company that Holder is acquiring this Warrants
for investment purposes and with no present intention of distributing or
reselling the Warrants or any of the Shares issueable upon exercise of the
Warrant.. Holder represents that it is an "accredited investor" within the
meaning of Rule 501 of Regulation D under the Securities Act (the "Act") and has
executed and delivered the Investment Representation Statement that accompanies
this Agreement.

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        8.     Miscellaneous. The Company covenants that it will at all times
reserve and keep available, solely for the purpose of issue upon the exercise
hereof, a sufficient number of Shares to permit the exercise hereof in full.
Such Shares, when issued in compliance with the provisions of this Warrant and
the Company's Certificate of Incorporation, will be duly authorized, validly
issued, fully paid and non-assessable. No Holder of this Warrant, as such,
shall, prior to the exercise of this Warrant, be entitled to vote or receive
dividends or be deemed to be a stockholder of the Company for any purpose, nor
shall anything contained in this Warrant be construed to confer upon Holder, as
such, any rights of a stockholder of the Company or any right to vote, give or
withhold consent to any corporate action, receive notice of meetings, receive
dividends or subscription rights, or otherwise. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant and, in the case of any such loss, theft or
destruction, upon delivery of an indemnity agreement reasonably satisfactory in
form and amount to the Company or, in the case of any such mutilation, upon
surrender and cancellation of such Warrant, the Company at its expense will
execute and deliver, in lieu thereof, a new Warrant of like date and tenor. The
terms and provisions of this Warrant shall inure to the benefit of, and be
binding upon, the Company and the Holder hereof and their respective successors
and assigns. This Warrant shall be governed by and construed under the laws of
the State of Nevada.

Holder:                                                                 Company:

________________________________                 MINRAD INTERNATIONAL, INC.

                                                                                 
a Nevada Corporation

 

By: _____________________________                 By: _____________________________

Name: ___________________________                 Name: ___________________________

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NOTICE OF EXERCISE

TO: MINRAD INTERNATIONAL, INC.

        1.     The undersigned hereby elects to purchase _________ shares of the Common
Stock of MINRAD INTERNATIONAL, INC. pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price of such shares in
full, together with all applicable transfer taxes, if any.

        2.     The undersigned hereby elects to purchase __________ shares of the Common
Stock of MINRAD INTERNATIONAL, INC. pursuant to the terms of the attached
Warrant on a net exercise basis in accordance with Section 6.

        3.     Please issue a certificate or certificates representing said shares of the
Common Stock in the name of the undersigned or in such other name as is
specified below:

 

	 	

    Name:________________________________
	 	
	 	

    Tax ID:___________________
	 	 
	 	

    Address:________________________________
	 	

    ________________________________
	 	

    ________________________________
	 	

    ________________________________
	 	

    ________________________________
	 	 
	 	 
	 	 
	 	 
	 	

    Signed:__________________________________
	 	 
	 	 
	 	
	 	

    Date:___________________

10 of 16

 

 

INVESTMENT REPRESENTATION STATEMENT

 

PURCHASER  : ____________________________________

COMPANY  : MINRAD INTERNATIONAL, INC.

        
        SECURITY  : COMMON STOCK

AMOUNT  : ____________________________________

DATE : ____________________________________

        In connection with the purchase of the above-listed Securities, I, the
Purchaser, represent to the Company the following:

        (a)     I am aware of the Company's business affairs and financial condition, and
have acquired sufficient information about the Company to reach an informed and
knowledgeable decision to acquire the Securities. I am purchasing these
Securities for my own account for investment purposes only and not with a view
to, or for the resale in connection with, any "distribution" thereof for
purposes of the Securities Act of 1933, as amended ("Securities Act").

        (b)     I understand that the Securities have not been registered under the
Securities Act in reliance upon a specific exemption therefrom, which exemption
depends upon, among other things, the bona fide nature of my investment intent
as expressed herein.

        (c)     I further understand that the Securities must be held indefinitely unless
subsequently registered under the Securities Act or unless an exemption from
registration is otherwise available. In addition, I understand that the
certificate evidencing the Securities will be imprinted with a legend which
prohibits the transfer of the Securities unless they are registered or such
registration is not required in the opinion of counsel for the Purchaser
satisfactory to the Company or receipt of a no-action letter from the Securities
and Exchange Commission.

        (d)     I am aware of the provisions of Rule 144, promulgated under the
Securities Act, which, in substance, permits limited public resale of
"restricted securities" acquired, directly or indirectly, from the issuer
thereof (or from an affiliate of such issuer), in a non-public offering subject
to the satisfaction of certain conditions, if applicable, including, among other
things: the availability of certain public information about the Company; the
resale occurring not less than one year after the party has purchased and paid
for the securities to be sold; the sale being made through a broker in an
unsolicited "broker's transaction" or in transactions directly with a market
maker (as said term is defined under the Securities Exchange Act of 1934, as
amended); and the amount of securities being sold during any three month period
not exceeding the specified limitations stated therein.

        (e)     I further understand that at the time I wish to sell the Securities there
may be no public market upon which to make such a sale, and that, even if such a
public market then exists, the Company may not be satisfying the current public
information requirements of Rule 144, and that, in such event, I may be
precluded from selling the Securities under Rule 144 even if the one-year
minimum holding period had been satisfied.

        (f)     I further understand that in the event all of the requirements of
Rule 144 are not satisfied, registration under the Securities Act, compliance
with Regulation A, or some other registration exemption will be required; and
that, notwithstanding the fact that Rule 144 is not exclusive, the Staff of the
SEC has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rule 144 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk.

 

Date: ________________, 2004         ________________________________

                                                                    Purchaser

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Exhibit B

THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT
OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE
CORPORATION AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.

 

WARRANT TO PURCHASE SHARES

OF COMMON STOCK OF

MINRAD INTERNATIONAL, INC

 

Initial Number of Shares:         ______________

Initial Exercise Price:                 $1.75 per share

Date of Grant:                             December 15, 2004

Expiration Date:                         December 15, 2011

 

THIS CERTIFIES THAT, ______________________, or any person or entity to whom
the interest in this Warrant is lawfully transferred ("Holder") is entitled to
purchase the above number (as adjusted pursuant to Section 4 hereof) of fully
paid and non-assessable shares of the Common Stock (the "Shares") of Minrad
International, Inc., a Nevada corporation (the "Company), having an Exercise
Price as set forth above, subject to the provisions and upon the terms and
conditions set forth herein and in the Warrant Agreement between the Company and
Cagan McAfee Capital Partners, LLC, dated December 15, 2004 (the "Warrant
Agreement"). The exercise price, as adjusted from time to time as provided
herein, is referred to as the "Exercise Price."

        1.     Term. The purchase right represented by this Warrant is
exercisable, in whole or in part, at any time commencing on the Date of Grant
and ending on the Expiration Date, after which time the Warrant shall be void.

        2.     Method of Exercise; Payment; Issuance of New Warrant. Subject to
Section 1 hereof, the right to purchase Shares represented by this Warrant may
be exercised by Holder, in whole or in part, for the total number of Shares
remaining available for exercise by the surrender of this Warrant (with the
notice of exercise form attached hereto as Exhibit A duly executed) at the
principal office of the Company and by the payment to the Company, by check made
payable to the Company drawn on a United States bank and for United States
funds, or by delivery to the Company of evidence of cancellation of indebtedness
of the Company to such Holder, of an amount equal to the then applicable
Exercise Price per share multiplied by the number of Shares then being purchased
or by net exercise pursuant to Section 6 hereof. In the event of any exercise of
the purchase right represented by this Warrant, certificates for the Shares so
purchased shall be promptly delivered to Holder and, unless this Warrant has
been fully exercised or has expired, a new Warrant representing the portion of
the Shares, if any, with respect to which this Warrant shall not then have been
exercised shall also be promptly delivered to Holder.

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        3.     Exercise Price. The Exercise Price at which this Warrant may be
exercised shall be the Exercise Price, as adjusted from time to time pursuant to
Section 4 hereof.

        4. Reclassification, Reorganization, Consolidation or Merger. In the
case of any reclassification of the Shares, or any reorganization, consolidation
or merger of the Company with or into another corporation (other than a merger
or reorganization with respect to which the Company is the continuing
corporation and which does not result in any reclassification of the Shares),
the Company, or such successor corporation, as the case may be, shall execute a
new warrant providing that the Holder shall have the right to exercise such new
warrant and upon such exercise to receive, in lieu of each Share theretofore
issuable upon exercise of this Warrant, the number and kind of securities, money
and property receivable upon such reclassification, reorganization,
consolidation or merger by a holder of Shares for each Share. Such new warrant
shall provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 4 including, without
limitation, adjustments to the Exercise Price and to the number of Shares
issuable upon exercise of this Warrant. The provisions of this Section 4 shall
similarly apply to successive reclassifications, reorganizations, consolidations
or mergers.

        5.     Transferability and Negotiability of Warrant. This Warrant may not
be transferred or assigned in whole or in part without compliance with
applicable federal and state securities laws by the transferor and the
transferee (including, without limitation, the delivery of investment
representation letters and legal opinions reasonably satisfactory to the
Company, if reasonably requested by the Company). Subject to the provisions of
this Section 5, title to this Warrant may be transferred in the same manner as a
negotiable instrument transferable by endorsement and delivery.

        6.     Net Exercise. In lieu of exercising this Warrant for cash, the
Holder may elect to exchange this Warrant for Shares equal to the value of this
Warrant by surrender of this Warrant, together with notice of such election, at
the principal office of the Company, in which event the Company shall issue to
the holder a number of Shares computed using the following formula:

X = Y (A-B)

            A

          
        
      
    
  

    Where :

            X= the number of Shares to be issued to the holder.

            Y= the number of Shares purchasable under this Warrant.

            A= value per share of one Share determined in accordance with Section 2 of
the Warrant Agreement.

            B= the Exercise Price (as adjusted).

 

        7.     Investment Intent; Accredited Investor. Holder
represents and warrants to the Company that Holder is acquiring this Warrants
for investment purposes and with no present intention of distributing or
reselling the Warrants or any of the Shares issueable upon exercise of the
Warrant.. Holder represents that it is an "accredited investor" within the
meaning of Rule 501 of Regulation D under the Securities Act (the "Act") and has
executed and delivered the Investment Representation Statement that accompanies
this Agreement.

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        8.     Miscellaneous. The Company covenants that it will at all times
reserve and keep available, solely for the purpose of issue upon the exercise
hereof, a sufficient number of Shares to permit the exercise hereof in full.
Such Shares, when issued in compliance with the provisions of this Warrant and
the Company's Certificate of Incorporation, will be duly authorized, validly
issued, fully paid and non-assessable. No Holder of this Warrant, as such,
shall, prior to the exercise of this Warrant, be entitled to vote or receive
dividends or be deemed to be a stockholder of the Company for any purpose, nor
shall anything contained in this Warrant be construed to confer upon Holder, as
such, any rights of a stockholder of the Company or any right to vote, give or
withhold consent to any corporate action, receive notice of meetings, receive
dividends or subscription rights, or otherwise. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant and, in the case of any such loss, theft or
destruction, upon delivery of an indemnity agreement reasonably satisfactory in
form and amount to the Company or, in the case of any such mutilation, upon
surrender and cancellation of such Warrant, the Company at its expense will
execute and deliver, in lieu thereof, a new Warrant of like date and tenor. The
terms and provisions of this Warrant shall inure to the benefit of, and be
binding upon, the Company and the Holder hereof and their respective successors
and assigns. This Warrant shall be governed by and construed under the laws of
the State of Nevada.

Holder:                                                         Company:

________________________________     MINRAD
INTERNATIONAL, INC.

                                                                     
a Nevada Corporation

 

By: _____________________________     By: _____________________________

Name: ___________________________     Name: ___________________________

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NOTICE OF EXERCISE

TO: MINRAD INTERNATIONAL, INC.

    1.     The undersigned hereby elects to purchase _________ shares of the Common
Stock of MINRAD INTERNATIONAL, INC. pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price of such shares in
full, together with all applicable transfer taxes, if any.

    2.     The undersigned hereby elects to purchase __________ shares of the Common
Stock of MINRAD INTERNATIONAL, INC. pursuant to the terms of the attached
Warrant on a net exercise basis in accordance with Section 6.

    3.     Please issue a certificate or certificates representing said shares of the
Common Stock in the name of the undersigned or in such other name as is
specified below:

 

	 	

    Name:________________________________
	 	
	 	

    Tax ID:___________________
	 	

    Address:________________________________
	 	

    ________________________________
	 	

    ________________________________
	 	

    ________________________________
	 	

    ________________________________
	 	 
	 	 
	 	 
	 	 
	 	

    Signed:__________________________________
	 	 
	 	 
	 	
	 	

    Date:___________________

 

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INVESTMENT REPRESENTATION STATEMENT

PURCHASER  : ____________________________________

COMPANY  : MINRAD INTERNATIONAL, INC.

        
        SECURITY  : COMMON STOCK

AMOUNT  : ____________________________________

DATE : ____________________________________

        In connection with the purchase of the above-listed Securities, I, the
Purchaser, represent to the Company the following:

        (a)     I am aware of the Company's business affairs and financial condition, and
have acquired sufficient information about the Company to reach an informed and
knowledgeable decision to acquire the Securities. I am purchasing these
Securities for my own account for investment purposes only and not with a view
to, or for the resale in connection with, any "distribution" thereof for
purposes of the Securities Act of 1933, as amended ("Securities Act").

        (b)     I understand that the Securities have not been registered under the
Securities Act in reliance upon a specific exemption therefrom, which exemption
depends upon, among other things, the bona fide nature of my investment intent
as expressed herein.

        (c)     I further understand that the Securities must be held indefinitely unless
subsequently registered under the Securities Act or unless an exemption from
registration is otherwise available. In addition, I understand that the
certificate evidencing the Securities will be imprinted with a legend which
prohibits the transfer of the Securities unless they are registered or such
registration is not required in the opinion of counsel for the Purchaser
satisfactory to the Company or receipt of a no-action letter from the Securities
and Exchange Commission.

        (d)     I am aware of the provisions of Rule 144, promulgated under the
Securities Act, which, in substance, permits limited public resale of
"restricted securities" acquired, directly or indirectly, from the issuer
thereof (or from an affiliate of such issuer), in a non-public offering subject
to the satisfaction of certain conditions, if applicable, including, among other
things: the availability of certain public information about the Company; the
resale occurring not less than one year after the party has purchased and paid
for the securities to be sold; the sale being made through a broker in an
unsolicited "broker's transaction" or in transactions directly with a market
maker (as said term is defined under the Securities Exchange Act of 1934, as
amended); and the amount of securities being sold during any three month period
not exceeding the specified limitations stated therein.

        (e)     I further understand that at the time I wish to sell the Securities there
may be no public market upon which to make such a sale, and that, even if such a
public market then exists, the Company may not be satisfying the current public
information requirements of Rule 144, and that, in such event, I may be
precluded from selling the Securities under Rule 144 even if the one-year
minimum holding period had been satisfied.

        (f)     I further understand that in the event all of the requirements of
Rule 144 are not satisfied, registration under the Securities Act, compliance
with Regulation A, or some other registration exemption will be required; and
that, notwithstanding the fact that Rule 144 is not exclusive, the Staff of the
SEC has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rule 144 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk.

 

Date: ________________, 2004         ________________________________

                                                                   Purchaser

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