TECHNOLOGY ACQUISITION CORP
EXHIBIT 10.1 - EMPLOYMENT AGREEMENT
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<TYPE>EX-10.1
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<FILENAME>exhibit10_1.htm
<DESCRIPTION>EXHIBIT 10.1 - EMPLOYMENT AGREEMENT
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<b>
<p ALIGN="right">Exhibit 10.1</p>
<p ALIGN="CENTER">EMPLOYMENT AGREEMENT</p>
<p ALIGN="JUSTIFY">THIS AGREEMENT</b> is made as of the 1st day of March, 2004
by and between Minrad Inc., a Delaware corporation, with an office at 847 Main
Street, Buffalo, NY 14203 (the &quot;Corporation&quot;) and William H. Burns, Jr. residing
at 69 Forest Road, Orchard Park, NY 14127 (the &quot;Executive&quot;). </p>
<u><b>
<p ALIGN="JUSTIFY">Introductory Statement</b></u>. The Executive has been
employed as President of the Corporation and also served as a Director of
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. Therefore, the Corporation desires to continue to employ the Executive
as President of the Corporation, and elect the executive as a member of the
Board of Directors, and the Executive desires to accept continued employment,
upon the terms and conditions contained in this Agreement.</p>
<b>
<p ALIGN="JUSTIFY">NOW, THEREFORE,</b> in consideration of the mutual covenants
and agreements contained in this Agreement the parties agree as follows: </p>
<font FACE="(normal text)">
<p ALIGN="JUSTIFY">1.0 </font><u><b>Term of Employment</b></u>. Subject to the
terms and conditions set forth in this Agreement, the Corporation shall employ
the Executive as President and Chief Executive Officer of the Corporation for
the period beginning on the date of this Agreement and continuing until April
30, 2007 or until earlier terminated as provided in this Agreement.</p>
<font FACE="(normal text)">
<p ALIGN="JUSTIFY">2.0 </font><u><b>Duties</b></u>. Subject to the terms and
conditions set forth in this Agreement, the Executive shall serve as Chief
Executive Officer of the Corporation and as President, until such time the Board
of Directors shall appoint a President, who shall report to the Chief Executive
Officer, be in full charge of the operation of its business and affairs, subject
to the provisions of the by-laws of the Corporation in respect of the duties and
responsibilities assigned by the Board of Directors to the Chief Executive
Officer, and subject also at all times to the control of the Board of Directors.
The Executive shall perform such duties and discharge such responsibilities as
are commensurate with his position, and as the Board of Directors shall from
time to time reasonably direct executive nature and scope of the Executive's
employment. </p>
<p ALIGN="JUSTIFY">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 without the
prior written consent of the Board of Directors of the Corporation. </p>
<p ALIGN="JUSTIFY">The Board of Directors of the Corporation reserves the right
from time to time to assign to the Executive additional duties and
responsibilities and to delegate to other executives of the Corporation duties
and responsibilities normally discharged by the Executive subject to the
Executive's supervision as Chief Executive Officer. </p>
<font FACE="(normal text)">
<p ALIGN="JUSTIFY">3.0 </font><u><b>Compensation</b></u>. So long as the
Executive is employed by the Corporation:</p>
<font FACE="(normal text)">
<p ALIGN="JUSTIFY">3.1 </font>The Executive shall receive an annual base salary
of $200,000 payable bi-weekly</p>
<font FACE="(normal text)">
<p ALIGN="JUSTIFY">3.2 </font>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:</p>
<font FACE="(normal text)">
<p ALIGN="JUSTIFY">(a) </font>The Corporation's gross profit after distribution
expenses will be determined for each fiscal year as herein provided (the &quot;Net
Profit Amount&quot;); and</p>
<p ALIGN="JUSTIFY">The Executive shall be entitled to one percent (1%) of the
portion of the Net Profit Amount for each fiscal year (the &quot;Bonus Year&quot;) up to
the amount of the Net Profit Amount for the prior year <u>plus</u> two and
one-half percent (2.5%) 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 $400,000. The bonus is to be payable on an annual basis, based on the
Corporation's audited financial statements. Such bonus shall be paid as soon as
practicable after the Corporation's audited financial statements have been
completed.</p>
<font FACE="(normal text)">
<p ALIGN="JUSTIFY">3.3 </font>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). </p>
<font FACE="(normal text)">
<p ALIGN="JUSTIFY">3.4 </font>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. </p>
<font FACE="(normal text)">
<p ALIGN="JUSTIFY">3.5 </font>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. Without limiting the foregoing, the
Corporation shall pay or reimburse the Executive for the dues of one country
club in Western New York.</p>
<font FACE="(normal text)">
<p ALIGN="JUSTIFY">3.6 </font>The Executive may be entitled to receive increases
in compensation. The determination of the amount of such bonus and 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.</p>
<p ALIGN="JUSTIFY">3.7 <u><b>Vacations.</b></u> The Executive shall be entitled
to take four (4) weeks of vacation per year on a non-cumulative basis. </p>
<font FACE="(normal text)">
<p ALIGN="JUSTIFY">4.0 </font><u><b>Stock Options.</b></u> The Executive shall
be granted stock options to purchase commons stock of the Corporation (&quot;New
Options&quot;) that, when added to the Executive's currently vested options, shall
result in the Executive having options to purchase a total 3% of the
Corporation's common stock (shares of stock or stock equivalents) as provided
for below. Such New Options shall vest at the rate of 1/36 per month for each
month that Executive is employed according to the terms and conditions of this
Employment Agreement. Accordingly, the Corporation shall (i) grant 285,000
options subject to the vesting provided for above and (ii) grant 180,000 options
provided that, by December 31, 2004, the Company shall have sold $2.7 Million in
equity after November 1, 2004 and, further provided that if the company sells
less than $2.7 Million in new equity in such period, 180,000 options shall be
reduced proportionately.</p>
<p ALIGN="JUSTIFY">The Executive shall also be eligible for stock options
equivalent to an additional 2% of the Corporation's issued shares of common
stock as provided for on Enclosure 1 (&quot;Additional Options&quot;), subject to the
achievement of milestones recommended by the Compensation Committee of the
Board. Such milestones are defined in Enclosure 1. The milestones must be
achieved during the term of this Employment Agreement. Upon agreement by the
Compensation Committee of the Board that achievement has been reached, the
Additional Options shall be awarded and shall be fully vested. For purposes of
defining issued shares of common stock, etc., such calculation shall be based on
the Company's 2004 financing target resulting in a capitalization of 42 million
shares of stock.</p>
<p ALIGN="JUSTIFY">Strike prices and exercise periods for the Executive's New
Options and any Additional Options shall be consistent with awards made
according to the administration of the Corporation's incentive stock option
plan. </p>
<p ALIGN="JUSTIFY">Issuance of the options shall be in accordance with all
applicable securities laws and the other terms and conditions of a Stock Option
Agreement form to be adopted by the Company's Board of Directors at the time of
the first vesting under this provision.</p>
<p ALIGN="JUSTIFY"></p>
<p ALIGN="JUSTIFY">Notwithstanding any language in this Agreement to the
contrary, in any event where there is a transaction which results in a merger of
the Company into another Company such that it is not the surviving entity or a
transaction in which there is a change of control of the Company such that there
is a new single majority share-holder, all of the options available under
Section 4.0 of this Agreement shall immediately vest in Executive and be
available for exercise by Executive.</p>
<p ALIGN="JUSTIFY"></p>
<font FACE="(normal text)">
<p ALIGN="JUSTIFY">5.0 </font><u><b>Reimbursement for Expenses</b></u>. 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.</p>
<font FACE="(normal text)">
<p ALIGN="JUSTIFY">6.0 </font><u><b>Termination of Employment by Reason of Death</b></u>.
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) a 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 &quot;Accrued
Obligations&quot;). All vested stock options shall be transferred to the Executive's
legal representatives.</p>
<font FACE="(normal text)">
<p ALIGN="JUSTIFY">7.0 </font><u><b>Termination of Employment by Reason of
Disability</b></u>. 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 &quot;permanently disabled&quot; (as hereinafter defined in Section 7.2). </p>
<font FACE="(normal text)">
<p ALIGN="JUSTIFY">7.1 </font>If the Executive shall be deemed permanently
disabled, the Executive's employment shall automatically terminate at the end of
the month in which it is determined that the Executive has a permanent
disability. Upon such termination, the Corporation shall pay the Executive (or
his legal representatives) as if the Executive were terminated by Reason of
Death. During the period of permanent disability the Executive shall be entitled
to receive any benefits payable under the Corporation's disability insurance
program.</p>
<font FACE="(normal text)">
<p ALIGN="JUSTIFY">7.2 </font>The Executive shall be deemed permanently disabled
for purposes of this Agreement if:</p>
<font FACE="(normal text)">
<p ALIGN="JUSTIFY">(a) </font>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 </p>
<font FACE="(normal text)">
<p ALIGN="JUSTIFY">(b) </font>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</p>
<font FACE="(normal text)">
<p ALIGN="JUSTIFY">(c) </font>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. </p>
<p ALIGN="JUSTIFY">If the Corporation and the Executive are unable to mutually
agree upon the selection of a physician under &quot;(c)&quot; 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. </p>
<font FACE="(normal text)">
<p ALIGN="JUSTIFY">7.3 </font><u><b>Termination of Employment for Cause</b></u>.
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
&quot;cause&quot; (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. All vested but unexercised and unvested stock
options shall be voided and returned to the Corporation. </p>
<font FACE="(normal text)">
<p ALIGN="JUSTIFY">7.4 </font><b><u>Termination Without Cause</u>.</b> 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 or one year, whichever is shorter, plus (b) any Accrued
Obligations. The non-milestone stock options shall be automatically vested.</p>
<font FACE="(normal text)">
<p ALIGN="JUSTIFY">7.5 </font><u><b>Accrued Obligations</b></u>. All Accrued
Obligations to be paid under this Article 7.0 shall be payable within 30 days
after they are determinable.</p>
<font FACE="(normal text)">
<p ALIGN="JUSTIFY">8.0 </font><u><b>Confidentiality</b></u>. 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 (&quot;Confidential Information&quot;). 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. </p>
<font FACE="(normal text)">
<p ALIGN="JUSTIFY">9.0 </font><u><b>Non-Competition</b></u>.</p>
<font FACE="(normal text)">
<p ALIGN="JUSTIFY">9.1 </font>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.</p>
<font FACE="(normal text)">
<p ALIGN="JUSTIFY">9.2 </font>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. </p>
<font FACE="(normal text)">
<p ALIGN="JUSTIFY">9.3 </font>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.</p>
<font FACE="(normal text)">
<p ALIGN="JUSTIFY">9.4 </font>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. </p>
<font FACE="(normal text)">
<p ALIGN="JUSTIFY">10.0 </font><u><b>Rights to Discoveries</b></u>.</p>
<font FACE="(normal text)">
<p ALIGN="JUSTIFY">10.1 </font>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 (&quot;Inventions&quot;) shall
be the sole and exclusive property of the Corporation. The Executive agrees to
disclose promptly and fully to the Corporation all such 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 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. </p>
<p>10.2 The Corporation and the Executive agree that notwithstanding the
provisions of Section 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, with respect to Inventions conceived,
developed or acquired prior to the date of this Agreement but not with respect
to any Inventions that were conceived, developed or acquired by the Executive
both (a) after the date of this Agreement and (b) while Executive was Chief
Executive Officer of the Company.</p>
<font FACE="(normal text)">
<p ALIGN="JUSTIFY">11.0 </font><u><b>Insurance</b></u>. 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. </p>
<p ALIGN="JUSTIFY">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, &quot;cash value&quot; 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.</p>
<font FACE="(normal text)">
<p ALIGN="JUSTIFY">12.0 </font><u><b>Notices</b></u>. 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.</p>
<font FACE="(normal text)">
<p ALIGN="JUSTIFY">13.0 </font><u><b>Equitable Relief</b></u>. 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. </p>
<font FACE="(normal text)">
<p ALIGN="JUSTIFY">14.0 </font><u><b>Miscellaneous</b></u>. 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.</p>
<font FACE="(normal text)">
<p ALIGN="JUSTIFY">15.0 </font><b><u>Arbitration.</u> </b>The Executive and the
Corporation agree that, except as contemplated by Article 13.0 for any action or
proceeding to enforce Articles 8.0, 9.0 and 10.0 hereof, any dispute or
controversy arising out of, relating to, or in connection with this Agreement or
the termination thereof, or the interpretation, validity, construction,
performance, breach, or termination thereof, shall be settled by expedited,
binding arbitration to be held in Buffalo, New York in accordance with the
National Rules for the Resolution of Employment Disputes then in effect of the
American Arbitration Association (the &quot;Rules&quot;). The arbitrator may grant
injunctions or other relief in such dispute or controversy. The decision of the
arbitrator shall be final, conclusive and binding on the parties to the
arbitration. Judgment may be entered on the arbitrator's decision in any court
having jurisdiction.</p>
<p ALIGN="JUSTIFY">The arbitrator(s) shall apply New York law to the merits of
any dispute or claim, without reference to rules of conflicts of law. The
arbitration proceedings shall be governed by federal arbitration law and by the
Rules, without reference to state arbitration law.</p>
<p ALIGN="JUSTIFY"></p>
<p ALIGN="JUSTIFY">THE EXECUTIVE HAS READ AND UNDERSTANDS THIS SECTION, WHICH
DISCUSSES ARBITRATION. EXECUTIVE UNDERSTANDS THAT BY SIGNING THIS AGREEMENT,
EXECUTIVE IS AGREEING TO SUBMIT ANY CLAIMS ARISING OUT OF, RELATING TO, OR IN
CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION,
PERFORMANCE, BREACH OF TERMINATION THEREOF, TO BINDING ARBITRATION, AND THAT
THIS ARBITRATION CLAUSE CONSTITUTES A WAIVER OF EXECUTIVE'S RIGHT TO A JURY
TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING OT ALL ASPECTS OF
THE EMPLOYER/EMPLOYEE RELATIONSHIP, INCLUDING BUT NOT LIMITED TO, STATUTORY
DISCRIMINATION CLAIMS.</p>
<p ALIGN="JUSTIFY"></p>
<p ALIGN="CENTER">[SIGNATURE PAGE FOLLOWS]</p>
<p ALIGN="JUSTIFY"></p>
<p ALIGN="JUSTIFY">&nbsp;</p>
<b>
<p ALIGN="JUSTIFY">IN WITNESS WHEREOF</b>, the parties hereto have duly executed
this Agreement as of the date first above written. </p>
<p ALIGN="JUSTIFY"></p>
<table border="0" width="607" id="AutoNumber1" cellspacing="0" cellpadding="0">
  <tr>
    <td width="317">&nbsp;</td>
    <td width="280" colspan="2" style="border-bottom: 1px solid #000000">/s/
    William H. Burns, Jr.</td>
  </tr>
  <tr>
    <td width="317">&nbsp;</td>
    <td width="280" colspan="2">
    <p ALIGN="JUSTIFY">William H. Burns, Jr. (Executive)</td>
  </tr>
  <tr>
    <td width="317">&nbsp;</td>
    <td width="280" colspan="2">
    <p ALIGN="JUSTIFY"></td>
  </tr>
  <tr>
    <td width="317">&nbsp;</td>
    <td width="280" colspan="2">
    <p ALIGN="JUSTIFY">&nbsp;</td>
  </tr>
  <tr>
    <td width="317">&nbsp;</td>
    <td width="280" colspan="2">
    <p ALIGN="JUSTIFY">MINRAD INC.</td>
  </tr>
  <tr>
    <td width="317">&nbsp;</td>
    <td width="280" colspan="2">
    <p ALIGN="JUSTIFY"></td>
  </tr>
  <tr>
    <td width="317">&nbsp;</td>
    <td width="25">By</td>
    <td width="256" style="border-bottom: 1px solid #000000">/s/ Donald Farley</td>
  </tr>
  <tr>
    <td width="317">&nbsp;</td>
    <td width="25">&nbsp;</td>
    <td width="256">
    <p ALIGN="JUSTIFY">Donald Farley, Director and</td>
  </tr>
  <tr>
    <td width="317">&nbsp;</td>
    <td width="25">&nbsp;</td>
    <td width="256">
    <p ALIGN="JUSTIFY">Chairman of Compensation Committee</td>
  </tr>
</table>
<b><P style=PAGE-BREAK-BEFORE:always>
<p ALIGN="CENTER">Enclosure 1</p>
<u>
<p ALIGN="CENTER">William Burns Employment Agreement<br>
Stock Option Incentives</p>
<p ALIGN="CENTER"></p>
</u></b>
<table CELLSPACING="0" BORDER="0" CELLPADDING="0" WIDTH="672">
  <tr>
    <td WIDTH="181" VALIGN="TOP" colspan="2">&nbsp;</td>
    <td WIDTH="201" VALIGN="TOP"><u><b>
    <p ALIGN="CENTER">Ratio</b></u></td>
    <td WIDTH="128" VALIGN="TOP" COLSPAN="2"><u><b>
    <p ALIGN="CENTER">Capitalization</b></u></td>
    <td WIDTH="162" VALIGN="TOP"><u><b>
    <p ALIGN="CENTER">Max Option</b></u></td>
  </tr>
  <tr>
    <td WIDTH="181" VALIGN="TOP" colspan="2">&nbsp;</td>
    <td WIDTH="201" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="128" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="162" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="181" VALIGN="TOP" colspan="2"><b>Total Value</b></td>
    <td WIDTH="201" VALIGN="TOP">2%</td>
    <td WIDTH="128" VALIGN="TOP" COLSPAN="2">
    <p ALIGN="CENTER">42,250,000</td>
    <td WIDTH="162" VALIGN="TOP">
    <p ALIGN="CENTER">845,000</td>
  </tr>
  <tr>
    <td WIDTH="181" VALIGN="TOP" colspan="2">&nbsp;</td>
    <td WIDTH="201" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="128" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="162" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="181" VALIGN="TOP" colspan="2">&nbsp;</td>
    <td WIDTH="201" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="128" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="162" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="181" VALIGN="TOP" colspan="2">&nbsp;</td>
    <td WIDTH="201" VALIGN="TOP"><u><b>Milestone</b></u></td>
    <td WIDTH="128" VALIGN="TOP" COLSPAN="2"><u><b>
    <p ALIGN="CENTER">Value</b></u></td>
    <td WIDTH="162" VALIGN="TOP"><u><b>
    <p ALIGN="CENTER">Amount of Shares Awarded</b></u></td>
  </tr>
  <tr>
    <td WIDTH="181" VALIGN="TOP" colspan="2">&nbsp;</td>
    <td WIDTH="201" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="128" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="162" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="181" VALIGN="TOP" colspan="2"><b>Quarterly Revenue</b></td>
    <td WIDTH="201" VALIGN="TOP">$ 5 Million</td>
    <td WIDTH="128" VALIGN="TOP" COLSPAN="2">
    <p ALIGN="CENTER">10%</td>
    <td WIDTH="162" VALIGN="TOP">
    <p ALIGN="CENTER">84,500</td>
  </tr>
  <tr>
    <td WIDTH="181" VALIGN="TOP" colspan="2">&nbsp;</td>
    <td WIDTH="201" VALIGN="TOP">$10 Million</td>
    <td WIDTH="128" VALIGN="TOP" COLSPAN="2">
    <p ALIGN="CENTER">15%</td>
    <td WIDTH="162" VALIGN="TOP">
    <p ALIGN="CENTER">126,750</td>
  </tr>
  <tr>
    <td WIDTH="181" VALIGN="TOP" colspan="2">&nbsp;</td>
    <td WIDTH="201" VALIGN="TOP">$15 Million</td>
    <td WIDTH="128" VALIGN="TOP" COLSPAN="2"><u>
    <p ALIGN="CENTER">25%</u></td>
    <td WIDTH="162" VALIGN="TOP"><u>
    <p ALIGN="CENTER">211,250</u></td>
  </tr>
  <tr>
    <td WIDTH="91" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="90" VALIGN="TOP"><b>Total</b></td>
    <td WIDTH="201" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="128" VALIGN="TOP" COLSPAN="2"><b>
    <p ALIGN="CENTER">50%</b></td>
    <td WIDTH="162" VALIGN="TOP"><b>
    <p ALIGN="CENTER">422,500</b></td>
  </tr>
  <tr>
    <td WIDTH="181" VALIGN="TOP" colspan="2">&nbsp;</td>
    <td WIDTH="201" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="128" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="162" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="181" VALIGN="TOP" colspan="2"><b>Projected Milestones</b></td>
    <td WIDTH="201" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="128" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="162" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="181" VALIGN="TOP" colspan="2">&nbsp;</td>
    <td WIDTH="201" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="128" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="162" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="181" VALIGN="TOP" colspan="2"><b>SabreSource</b></td>
    <td WIDTH="201" VALIGN="TOP" COLSPAN="2">500 US Placements Achieved</td>
    <td WIDTH="128" VALIGN="TOP" align="center">25%</td>
    <td WIDTH="162" VALIGN="TOP">
    <p ALIGN="CENTER">211,250</td>
  </tr>
  <tr>
    <td WIDTH="181" VALIGN="TOP" colspan="2"><b>Conscious Sedation</b></td>
    <td WIDTH="201" VALIGN="TOP" COLSPAN="2">NDA Application Accepted for Review
    by the US FDA</td>
    <td WIDTH="128" VALIGN="TOP" align="center">25%</td>
    <td WIDTH="162" VALIGN="TOP">
    <p ALIGN="CENTER">211,250</td>
  </tr>
  <tr>
    <td WIDTH="181" VALIGN="TOP" colspan="2">&nbsp;</td>
    <td WIDTH="201" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="128" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="162" VALIGN="TOP"><u>
    <p ALIGN="CENTER">422,500</u></td>
  </tr>
  <tr>
    <td WIDTH="91" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="291" VALIGN="TOP" colspan="2"><b>Maximum Total Award</b></td>
    <td WIDTH="128" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="162" VALIGN="TOP"><b>
    <p ALIGN="CENTER">845,000</b></td>
  </tr>
</table>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p>&nbsp;</p>
<u>
<p>Note</u> - Failure of Company to achieve 42 million shares of equity by
12/31/04, shall result in appropriate reduction of shares awarded for milestone
options.</p>

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