Exhibit 10.11 to Biodrain Medical, Inc. Form S-1





Exhibit 10.11 






CONSULTING
AGREEMENT


This Consulting Agreement (the “Agreement”) is entered
into, effective as of
June _____, 2008 (the “Effective Date”), by and among BioDrain Medical, Inc., a Minnesota
corporation, having an address at 699 Minnetonka Highlands Lane, Orono, MN,
55356-9728 (hereinafter “BioDrain”) on the one hand, and, on the other hand, Marshall C. Ryan (hereinafter
“Ryan”), individually, and Mid-State Stainless, Inc., (hereinafter “Mid-State”), a Wisconsin
corporation,
having an address at 330 West Benson Avenue, P.O. Box 228, Grantsburg, WI 54840
(Ryan and Mid-State are hereinafter collectively referred to as “Consultant”).
BioDrain and Consultant may be referred to in this Agreement, individually, as
a “Party”, and jointly, as “Parties.”


RECITALS


          WHEREAS, BioDrain desires to retain Consultant, and
Consultant desires to be so retained, to consult with and assist BioDrain in
developing and commercializing an apparatus for the disposal of liquid surgical
waste.


          NOW, THEREFORE, in furtherance of the above
recitals and subject to the terms and conditions set forth herein, the Parties
agree as follows:


1. Definitions.
In this Agreement, the terms defined parenthetically elsewhere and the
following terms shall have the meanings there or here supplied. Terms may be
used in the singular or the plural.


	
 

	
 


	
 

	
1.1. Change in Control.
 “Change in Control” as used herein shall mean an occurrence after the
 Effective Date of this Agreement, where any one person or entity (other than
 the current officers and directors of BioDrain and their affiliates) becomes
 the owner of fifty percent (50%) or more of the combined voting power of
 BioDrain’s outstanding securities ordinarily having the right to vote at
 elections of directors, not including shares issuable pursuant to options,
 warrants, convertible debt or similar instruments.


	
 

	
 


	
 

	
1.2 Customer.
 “Customer” as used herein shall mean any individual or entity other than a
 Party.


	
 

	
 


	
 

	
1.3. Developments.
 “Developments” as used herein shall mean any invention, discovery, concept,
 improvement, innovation, or idea, whether or not patentable and whether or
 not reduced to practice, of Consultant (whether alone or jointly with
 BioDrain personnel) that relies upon or builds upon the disclosure or
 teachings of the Patents or that otherwise relates to the Technology.


	
 

	
 


	
 

	
1.4. IP Rights.
 “IP Rights” as used herein shall mean all patents, copyrights, trade secrets,
 trademarks, service marks, trade dress, mask works, and all other
 intellectual property or proprietary rights of every kind or nature, however
 designated, throughout the world, including all rights to file for
 applications therefore with any governmental agencies and to receive
 registrations, renewals, reissues and/or reexaminations thereon, together with all world wide rights to
 income, royalties, damages and payments due or 





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payable with respect
 thereto, and to all causes of action (either in law or in equity) associated
 therewith, including all rights to sue, counterclaim, and recover for
 infringement thereof.


	
 

	
 


	
 

	
1.5. Net Sales.
 “Net Sales” as used herein shall mean the total invoiced amount of any
 Product Sold to Customers by BioDrain and/or its licensees, less all
 discounts and allowances actually shown on the invoice, and less any bona
 fide returns actually made or allowed as supported by credit memoranda
 actually issued to Customers, and excluding all shipping charges, duties,
 sales taxes and excise taxes.


	
 

	
 


	
 

	
1.6. Patents.
 “Patents” as used herein shall mean United States Patent Application No. 10/524,086
 having a filing date of February 9, 2005 and entitled “Method and Apparatus
 For Disposing of Liquid Surgical Waste For Protection of Healthcare Workers”
 and European Patent No. EP1539580 issued April 4, 2007 entitled “Method and
 Apparatus For Disposing of Liquid Surgical Waste For Protection of Healthcare
 Workers” and any patents or patent applications of the United States, foreign
 country or international patent authority which relate or claim priority
 thereto, including, but not limited, to all
 continuations, continuations-in-part, divisionals, reexaminations and
 reissues thereof.


	
 

	
 


	
 

	
1.7. Products.
 “Products” as used herein shall mean all current and all future commercial
 embodiments of any device within the scope of any claims of the Patents.


	
 

	
 


	
 

	
1.8.
 Services.
 “Services” as used herein shall have the meaning as ascribed in Section 2.


	
 

	
 


	
 

	
1.9. Sold or Sale.
 “Sold” or “Sale” as used herein shall mean the date when a Customer is
 invoiced for the Products.


	
 

	
 


	
 

	
1.10. Technology.
 “Technology” as used herein shall mean the collection and/or disposal of
 liquid surgical waste.


	
 

	
 


	
 

	
1.11. Term.
 “Term” as used herein shall mean the period commencing on the Effective Date
 and ending when there are no Patents which remain in force anywhere in the
 world, unless sooner terminated pursuant to Section 7 (Termination). 


	
 

	
 


	
 

	
1.12. Work Product.
 “Work Product” shall mean any work of authorship (within the purview of the
 copyright laws of the United States of America), any invention, discovery,
 concept, improvement, innovation, or idea, (whether or not patentable,
 whether or not put into writing, and whether or not put into practice),
 whether conceived, produced or developed solely by efforts of Consultant or
 jointly with BioDrain personnel, in connection with Consultant’s performance
 of the Services, including, but not limited to, all data, files, records,
 reports, compilations, methods, processes, procedures, systems, operations,
 techniques, formulas, designs, drawings, diagrams, models, samples, flow
 charts, algorithms, data, plans, lists, contracts, and computer programs,
 including any source code, object code, enhancements and modifications, all
 databases, all files, including input and output materials, all documentation
 related to such computer programs, databases and files, all media upon which
 any such computer program, database, files and documentation are located
 (including tapes, disks and other storage 





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devices) and all related material used by, developed
 for, or paid for by Consultant in connection with the performance of the
 Services.


	
 

	
 

	
 


	
2. 

	
Obligations of Consultant 


	
 

	
 


	
 

	
2.1 Duties of Consultant.
 During the Term, Consultant will assist BioDrain in developing Products,
 serve as an advisor on current and future Products, assist BioDrain in securing
 any government or regulatory approvals or certifications, and upon request by
 BioDrain, respond to questions about the Products from third parties
 (collectively, the “Services”). All requests for such Services shall be made
 in writing by BioDrain. Consultant shall provide competent, professional
 services, using its own appropriate independent skill and judgment, and the
 manner and means that appears best suitable to it to perform the Services.
 Consultant shall, at all times, use best efforts to provide the Services.
 Consultant shall choose its own place and time of performance of work.


	
 

	
 


	
 

	
2.2 Other Obligations.
 In the performance of the Services, Consultant:








	
 

	
 


	
 

	
(a) shall conduct all of its business in a
 businesslike and professional manner. 


	
 

	
 


	
 

	
(b) shall not, without BioDrain’s prior written
 approval, make representations, warranties or guarantees concerning the
 Products.


	
 

	
 


	
 

	
(c) shall abide by BioDrain’s policies as provided
 by BioDrain in writing.








	
 

	
 


	
 

	
2.3 Non-Competition.
 Consultant shall not, at any time during the Term, on its own behalf, or on
 behalf of any person, directly or indirectly, in any capacity whatsoever,
 including, without limitation, as an employer, employee, principal, agent,
 joint venturer, partner, shareholder or other equity holder, independent
 contractor, licensor, licensee, franchisor, franchisee, distributor,
 consultant, supplier, trustee or by, through or in connection with any
 person, carry on or be engaged in or have any financial or other interest in
 or be otherwise commercially involved in any endeavor, activity or business
 that is in direct or indirect competition with the Products or the commercial
 activities of BioDrain.


	
 

	
 


	
 

	
2.4 Compliance with Laws and
 Standards. Consultant shall perform its obligations under
 this Agreement in compliance with all applicable laws.


	
 

	
 


	
 

	
2.5 Disclosure of Developments.
 Consultant shall promptly disclose in writing to BioDrain any and all
 Developments during the Term and for a period of one (1) year thereafter.
 Additionally, within thirty (30) days of the Effective Date, Consultant shall
 deliver to BioDrain a copy of any and all drawings and technical information
 within the possession or control of Consultant together with any other
 information which would be helpful to BioDrain in the understanding of the
 Technology, including any information relevant to the manufacture or use of
 devices based on the Technology.





3. Compensation.



	
 

	
 


	
 

	
3.1 R & D Payment.
 Biodrain shall pay to Consultant a one time payment of One 





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Hundred Thousand Dollars ($100,000) as full
 compensation for all research and development fees and costs incurred by
 Consultant toward the development of the Technology (the “R&D Payment”).
 The R&D Payment shall be due and payable within twelve (12) months of the
 Effective Date. Notwithstanding the foregoing, if the current round of
 financing for BioDrain (to be completed no later than August 31, 2008)
 results in gross proceeds of at least 1.5 Million Dollars ($1,500,000),
 BioDrain shall pay to Consultant at least Fifty Thousand Dollars ($50,000) of
 the R&D Payment, within five (5) business days of receipt of the $1.5
 Million in financing.


	
 

	
 


	
 

	
3.2 IP Payment.
 Upon execution of this Agreement, and subject to Consultant executing the
 assignment agreement related to the Patents for recordation with the United
 States Patent and Trademark Office, BioDrain shall pay to Consultant Seventy
 Five Thousand Dollars ($75,000) for such assignment of ownership of the
 Patents and all other Developments.


	
 

	
 


	
 

	
3.3 Consulting Fees.
 As full compensation for the performance of the Services requested by
 BioDrain pursuant to Section 2.1, the sufficiency of which is hereby
 acknowledged, BioDrain shall pay to Consultant a rate of Ninety Five Dollars
 per hour ($95/hour). Consultant shall invoice BioDrain monthly for the
 Services rendered during the previous month. The invoice shall identify the
 number of hours worked in that month by Consultant in the performance of the
 Services. The invoices shall be due and payable by BioDrain within thirty
 (30) days of the invoice date.


	
 

	
 


	
 

	
3.4 On-Going Royalties.
 Subject to Section 3.6, BioDrain shall pay to Consultant, throughout the
 Term, a royalty of four percent (4%) of the Net Sales of each Product Sold.
 BioDrain shall render to Consultant on a calendar quarterly basis, within
 fifteen (15) days after the end of each calendar quarter during which the
 Products are Sold, a written statement of the royalties due to Consultant
 with respect to such Sold Products. Such statement shall be accompanied by a
 remittance of the royalty amount shown to be due. Consultant shall have the
 right, upon reasonable request, to review those records of BioDrain necessary
 to verify the royalties paid. Any such audit will be conducted at
 Consultant’s expense and at such times and in such a manner as to not
 unreasonably interfere with BioDrain’s normal operations. If a deficiency is
 shown by such audit, BioDrain shall immediately pay that deficiency.


	
 

	
 


	
 

	
3.5 Stock-Purchase Warrant.
 For a period up to and including the fifth (5th) year anniversary of the
 Effective Date, Consultant is entitled to subscribe for and purchase up to
 One Hundred Fifty Thousand (150,000) shares of BioDrain common stock at a
 price of Thirty-Five Cents ($0.35) per share.


	
 

	
 


	
 

	
3.6 Minimum Royalties.
 If there is a Change in Control within the time periods set forth in Section
 3.6.1, 3.6.2 or 3.6.3 below, the respective minimum royalty payments shall be
 owed as follows:








	
 

	
 


	
 

	
3.6.1 Change In Control Within 12
 Months of the First Sale. If there is a Change in Control
 up to and including the first twelve (12) month period after the first Sale
 of any Products, Consultant shall be paid a minimum of Two Million 





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Dollars ($2,000,000) in royalties (the “$2MM Minimum
 Royalty Payment”) payable in increments of Five Thousand Dollars ($5,000) per
 calendar month throughout the remainder of the Term. If the $2MM Minimum
 Royalty Payment is not met by the end of the Term, the remaining unpaid
 balance of the $2MM Minimum Royalty Payment shall be due and payable in one
 lump sum within thirty (30) days of the end of the Term.


	
 

	
 


	
 

	
3.6.2 Change In Control Between 12
 - 24 Months of the First Sale. If there is a Change in
 Control after the first twelve (12) month period but up to and including the
 first twenty four (24) month period after the first Sale of any Products,
 Consultant shall be paid a minimum of One Million Dollars ($1,000,000) in
 royalties (the “$1MM Minimum Royalty Payment”) payable in increments of Five
 Thousand Dollars ($5,000) per calendar month throughout the remainder of the
 Term. If the $1MM Minimum Royalty Payment is not met by the end of the Term,
 the remaining unpaid balance of the $1MM Minimum Royalty Payment shall be due
 and payable in one lump sum within thirty (30) days of the end of the Term.


	
 

	
 


	
 

	
3.6.3 Between 24 - 36 Months of the
 First Sale. If there is a Change in Control of BioDrain
 after the first twenty four (24) month period but up to and including the
 first thirty six (36) month period after the first Sale of any Products,
 Consultant shall be paid a minimum of Five Hundred Thousand Dollars
 ($500,000) in royalties (the “$500M Minimum Royalty Payment”) payable in
 increments of Five Thousand Dollars ($5,000) per calendar month throughout
 the remainder of the Term. If the $500M Minimum Royalty Payment is not met by
 the end of the Term, the remaining unpaid balance of the $500M Minimum
 Royalty Payment shall be due and payable in one lump sum within thirty (30)
 days of the end of the Term.





4. Ownership
of Developments. All Developments shall be the sole and
exclusive property of BioDrain, and all rights, title and interest in and to
such Developments including any and all IP Rights therein, are hereby expressly
assigned automatically to BioDrain without further consideration. Consultant will, at BioDrain’s request and expense,
execute any documents that BioDrain deems necessary or appropriate to perfect,
protect, enforce, register, or transfer ownership of the Developments including
any and all IP Rights therein to BioDrain. BioDrain may, in its sole discretion
and without Consultant’s prior approval, transfer, sell, assign, or license the
Developments and any and all IP Rights therein to any third party.


5. Confidentiality.


	
 

	
 


	
 

	
5.1. Non-Use and Non-Disclosure by
 Consultant. Consultant acknowledges and agrees that by
 entering into this Agreement it is entering into a relationship of trust and
 confidence with BioDrain. Consultant will not use or disclose to any third
 party any non-public information about BioDrain or any of BioDrain’s products,
 customers, or clients, learned as a result of this Agreement or in the course
 of performing any of the Services. During the Term, Consultant will maintain
 all Work Product strictly confidential and will 





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not disclose any such Work Product to any third
 party, in whole or in part, without first obtaining BioDrain’s prior written
 consent. 


	
 

	
 


	
 

	
5.2 Return of information,
 documents and things. At any time upon BioDrain’s request
 and in any event, upon termination of this Agreement pursuant to Sections 7,
 Consultant will deliver to BioDrain all originals and copies of all Work
 Product in Consultant’s possession or control.


	
 

	
 


	
 

	
5.3. Injunctive Relief.
 Consultant acknowledges and agrees that it would be difficult to fully
 compensate BioDrain for damages resulting from the breach or threatened
 breach of Section 5.1 and, accordingly, that BioDrain will be entitled to
 temporary and permanent injunctive relief, including temporary restraining
 orders, preliminary injunctions and permanent injunctions, to enforce
 Sections 5.1 and 5.2. This Section 5.3 will not, diminish BioDrain’s right to
 claim and recover damages, attorneys fees or costs incurred to enforce this
 Section 5.3 or for breach or threatened breach of Sections 5.1 and/or 5.2.


	
 

	
 


	
 

	
5.4 Disclosure Required by Law.
 Notwithstanding anything to the contrary in this Agreement, the Consultant
 may disclose such information otherwise precluded under Sections 5.1 and 5.2
 to the extent required to be disclosed pursuant to a judicial or
 administrative process, provided that Consultant provides prompt written
 notice to BioDrain and allows BioDrain a reasonable time to oppose the
 judicial order or administrative process.





6.
Specific Enforcement. The Parties acknowledge and agree that
if a Party hereto should breach or fail to perform any of such Party’s
obligations under this Agreement, the other Party would suffer irreparable
damage. Accordingly, it is expressly understood and agreed to by the Parties
that, except for termination pursuant to Section 7.1 (Immediate Termination),
the only remedy available against a Party for breach of any term or condition
or for failure to perform any of its obligation under this Agreement, is the
specific enforcement of such terms, conditions or obligations against such
breaching Party and that the non-breaching Party shall be entitled, upon
application to a court of competent jurisdiction, to specific performance of
the terms of this Agreement.


	
 

	
 

	
 


	
7. Termination.


	
 

	
 


	
 

	
7.1 Immediate Termination for
 Breach of Sections 2.3, 2.5 or 5. BioDrain may terminate
 this Agreement immediately upon written notice to Consultant if it is found
 by a court of competent jurisdiction that Consultant has breached Section 2.3
 (Non-Compete), Section 2.5 (Disclosure of Developments) or Section 5 (Confidentiality).


	
 


	
 

	
7.2 Effect of Termination.
 The Parties understand and agree that, except for the obligations that
 survive termination of this Agreement pursuant to Section 7.3 below,
 termination of this Agreement will forever discharge and excuse completion of
 or performance of any liability or obligation herein undertaken or occurring
 prior to the effective date of such termination.





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7.3 Survival.
 In the event this Agreement is terminated pursuant to Section 7.1, the
 provisions of Sections 2.3, 2.5, 4, 5, 6, 7.2, 7.3 and 8 of this Agreement
 will survive such termination.


	
 

	
 


	
8. Miscellaneous.


	
 

	
 


	
 

	
8.1 Modification.
 No alteration, amendment, waiver, cancellation or any other change in any
 term or condition of this Agreement shall be valid or binding on either Party
 unless the same shall have been mutually assented to in writing by both
 Parties.


	
 

	
 


	
 

	
8.2 Severability.
 If any provision of this Agreement is held to be unenforceable for any
 reason, such provision shall be reformed only to the extent necessary to make
 it enforceable, and such holding shall not impair the validity, legality or
 enforceability of the remaining provisions.


	
 

	
 


	
 

	
8.3 Waiver. The
 failure of any Party to enforce at any time the provisions of this Agreement,
 or the failure to require at any time performance by any other Party of any
 of the provisions of this Agreement, shall in no way constitute a present or
 future waiver of such provisions, nor in any way affect the ability of any
 Party to enforce each and every such provision thereafter. No waiver shall be
 binding unless in writing and signed by the Party waiving the breach.


	
 

	
 


	
 

	
8.4 Effect of Headings.
 This Agreement shall be construed without reference to headings. Headings to
 sections and paragraphs are to facilitate reference only and do not form a
 part of this Agreement.


	
 

	
 


	
 

	
8.5 Assignability.
 The duties and obligations under this Agreement are personal to Consultant
 and may not be assigned or delegated by Consultant without the express
 written consent of BioDrain. Any prohibited assignment or delegation will be
 null and void. BioDrain may assign this Agreement and its rights and
 obligations under this Agreement upon written notice to Consultant. This
 Agreement will be binding upon and will inure to the benefit of the Parties
 and their respective, permitted successors and assigns. 


	
 

	
 


	
 

	
8.6 Relationship.
 The Parties are separate and independent legal entities. Nothing contained in
 this Agreement should be deemed to constitute either Party being an agent,
 representative, partner, joint venturer or employee of the other Party for
 any purpose. Neither Party has the authority to bind the other or to incur
 any liability on behalf of the other, nor to direct the employees of the
 other.


	
 

	
 


	
 

	
8.7 Notices. For
 purposes of all notices and other communications required or permitted to be
 given hereunder, the addresses of the Parties will be as identified above.
 All notices will be in writing and will be deemed to have been duly given if
 sent by facsimile, the receipt of which is confirmed by transmittal receipt,
 or by a nationally recognized courier, addressed to the Parties at their
 addresses set forth above. Any Party may change the address to which
 subsequent notices are to be sent by written notice to the other Party as
 provided herein.





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8.8 Counterparts.
 This Agreement may be executed in multiple counterparts, with each such
 counterpart deemed to be an original instrument. Counterparts of this
 Agreement may also be exchanged via electronic facsimile machines, and any
 electronic facsimile of any Party’s signature shall be deemed to be an
 original signature for all purposes.


	
 

	
 


	
 

	
8.9 Governing Law; Venue and
 Jurisdiction. This Agreement shall be governed by the laws
 of the state of Minnesota. For the purpose of resolving conflicts related to
 or arising out of this Agreement, the Parties expressly agree that venue
 shall be exclusively in the state of Minnesota, county of Hennepin. The
 Parties hereby consent to the exclusive jurisdiction of the federal and state
 courts of the state of Minnesota, county of Hennepin, and expressly waive any
 objection to personal jurisdiction, improper venue and/or convenience of such
 forums.


	
 

	
 


	
 

	
8.10 Integration.
 Except for the Manufacturing Agreement having an effective date of May 4,
 2006 and the Supply Agreement having an effective date of December 13, 2006,
 upon execution of this Agreement, all other prior agreements between the
 Parties are hereby null and void, such that this Agreement shall constitute
 the exclusive and entire agreement between the Parties with respect to the
 Patents, the Technology and their relationship and business dealings, and as
 of its date shall supersede all prior or contemporaneous agreements, letters,
 negotiations, representations and proposals, written or oral, relating
 thereto. The Parties hereby acknowledge and agree that promptly after
 execution of this Agreement, the above referenced Manufacturing Agreement and
 Supply Agreement will be redrafted or otherwise restated or amended with
 mutually agreeable terms and conditions.





BY EXECUTING THIS AGREEMENT, EACH PARTY ACKNOWLEDGES
THAT IT HAS READ AND UNDERSTANDS THIS AGREEMENT AND AGREES TO BE BOUND BY ITS
TERMS AND PROVISIONS.


BioDrain, Inc.

	
 

	
 


	
Signature: 

	
            /s/ Kevin R. Davidson


	
 

	 








	
 

	
 


	
Name: 

	
                  President and Chief Executive Officer


	
 

	 








	
 

	
 


	
Title: 

	
 


	
 

	 








	
 

	
 


	
Date: 

	
 


	
 

	 







	
 

	
 


	
Consultant, Marshall C. Ryan, individually


	
 

	
 


	
Signature 

	
            /s/ Marshall C. Ryan


	
 

	 








	
 

	
 


	
Date: 

	
 


	
 

	 








	
 

	
 


	
Consultant, Mid-State Stainless, Inc.


	
 


	
Signature: 

	
 


	
 

	 








	
 

	
 


	
Name: 

	
                  Marshall C. Ryan


	
 

	 








	
 

	
 


	
Title: 

	
 


	
 

	 








	
 

	
 


	
Date:

	
 


	
 

	 









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