Exhibit 10.26 to Biodrain Medical, Inc. Form S-1



Exhibit 10.26 


	
 

	
 


	
 

	
THE SECURITIES REPRESENTED HEREBY 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 AN OPINION OF COUNSEL, SATISFACTORY TO THE CORPORATION AND
 ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.





BioDrain
Medical, Inc.


MEDICAL
ADVISORY BOARD WARRANT
AGREEMENT


          This
Advisory Board Warrant Agreement is made and entered as of the 7th day of
December, 2006 (the Agreement Date”) by and between BioDrain Medical, Inc., a
Minnesota corporation (“Company”) and Medical Advisory Board member Karen
A. Ventura (the “Warrantee”) as consideration for Board membership.


1. Warrant
Grant. The Company hereby grants
to the Warrantee a warrant (the “Warrant”) to purchase 5,000 shares (“Warrant
Shares”, with each being a “Warrant Share”) of its $0.01 par value common stock
(“Share”), under the terms and conditions set forth below.


2. Nonstatutory
Option. The Warrant is granted to
purchase up to the number of shares of authorized but unissued common stock of
the Company specified in Section 1 (the “Shares”). The Warrant will expire, and
all rights to exercise it will terminate on the earliest of: (a) the date
provided below in Sections 8 and 9, and (b) the Expiration Date.


3. Exercise
Price. The exercise price of each
Warrant Share of the Company as of any exercise date is $1.00 per Share.


4. Period
of Exercise. The Warrant will expire at 5:00 p.m. on the fifth
anniversary of the Agreement Date (“the Expiration Date”).


5. Vesting
of Options. Warrantee will have the right to exercise the Warrant
in accordance with the following schedule:


          (a)
The Shares subject to Warrant will vest in 90 days from the Agreement Date.


6. Transferability.
The Warrant is not transferable except by will or the laws of descent and
distribution and may be exercised during the lifetime of the Warrantee only by
the Warrantee, and if exercised following the Warrantee’s death, by the
Warrantee’s legal representative upon presenting evidence of authority to act
on behalf of the Warrantee’s estate acceptable to the Company.


7. Change
in Control. If the Company enters into a binding agreement during
the time that Warrantee is a Medical Advisory Board member of the Company that
results in a change in control (as defined in the following sentence), then
100% of the Shares will vest. For purposes of this Warrant Agreement, “change
in control” means that:


          (a)
any individual, partnership, firm, corporation, association, trust,
unincorporated organization or other entity or person, or any syndicate or
group deemed to be a person under Section 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), is or becomes the “beneficial owner”
(as defined in Rule 13d-3 of the General Rules and Regulations under the
Exchange Act), directly or indirectly, of securities of the Corporation
representing fifty percent (50%) or more of the combined voting power of the
Company’s then outstanding securities entitled to vote in the election of
directors of the Company; or


          (b)
there occurs a reorganization, merger, consolidation or other corporate
transaction involving the Company (“Transaction”), in each case, with respect
to which the stockholders of the Company immediately prior to such Transaction
do not, immediately after the Transaction, own more than fifty 


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percent (50%) of the combined voting power of the
Company or other corporation resulting from such Transaction; or


          (c)
all or substantially all of the assets of the Company are sold, liquidated or
distributed.


8. Warrant
Lapse. The Warrant will lapse and
becomes unexercisable in full on the earliest of the following events:


          (a)
three (3) months following the Warrantee’s death, as provided below in Section
9;


          (b)
the date otherwise provided below in Section 9, unless the Board of Directors
otherwise extends such period before the applicable expiration date.


9. Medical
Advisory Board Resignation.
If Warrantee ceases to be a Medical Advisory Board member for any reason other
than that described in this Section 9, Warrantee will have the right, subject
to the other provisions of this Agreement, to exercise the Warrant for up to
ninety (90) days following the date of termination, but only to the extent that
on the date of termination the Warrantee’s right to exercise such Warrant had
vested, and at the end of such period the Warrant will expire, and all rights
to exercise it will terminate.


          (a)
If Warrantee dies while a Medical Advisory Board member, or after ceasing to be
a Medical Advisory Board member but during the period while he or she could
have exercised an Warrant under the preceding sub-Sections, the Warrant granted
to the Warrantee may be exercised, to the extent it has vested at the time of
death at any time within ninety (90) days after the Warrantee’s death, by the
executors or administrators of his or her estate or by any person or persons
who acquire the Warrant by will or the laws of descent and distribution, but
not beyond the otherwise applicable term of the Warrant.


10. Adjustment
in Capitalization. If there is any change in the outstanding
common stock of the Company by reason of a stock dividend or split,
recapitalization, reclassification, or other similar capital change, the
aggregate number of Warrant Shares subject to the Warrant will be appropriately
adjusted by the Company, as directed by the Board of Directors of the Company
whose determination is final and conclusive, except that fractional Shares will
be rounded to the nearest whole Share. In any such case, the number and kind of
Shares that are subject to the Warrant and the Warrant exercise price per Share
will be proportionately adjusted without any change in the aggregate Warrant
price to be paid upon exercise of the Warrant.


11. Amendment,
Modification and Termination
of Agreement. The Board of Directors of the Company may at any
time terminate, and from time to time may amend or modify Agreement; provided,
however, that no amendment, modification, or termination of this Agreement may
in any manner adversely affect the Warrant without the consent of the
Warrantee.


12. Lock up Period.
The Warrantee understands that the Company at a future date may file a
registration or offering statement (the “Registration Statement”) with the
Securities and Exchange Commission to facilitate an initial public offering of
its securities. The Warrantee agrees, for the benefit of the Company, that
should such an initial public offering be made and should the managing
underwriter of such offering require, the Warrantee will not, without the prior
written consent of the Company and such underwriter, during the Lock Up Period
as defined herein: (i) sell, transfer or otherwise dispose of, or agree to
sell, transfer or otherwise dispose of any Shares beneficially held by the
Warrantee during the Lock Up Period; (ii) sell, transfer or otherwise dispose
of, or agree to sell, transfer or otherwise dispose of any options, rights or
warrants to purchase any Shares beneficially held by the Warrantee during the
Lock Up Period; or (iii) sell or grant, or agree to sell or grant, options,
rights or warrants with respect to any Shares. The foregoing does not prohibit
gifts to donees or transfers by will or the laws of descent to heirs or
beneficiaries provided that such donees, heirs and beneficiaries are bound by
the restrictions set forth herein. The term “Lock Up Period” means the lesser
of (a) 180 days or (b) the period during which Company officers and directors
are restricted by the managing underwriter from effecting any sales or
transfers of the Company’s common stock. The Lock Up Period will commence on
the effective of the Registration Statement.


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13. Securities
Matters.


          (1)
Registration. If the Company deems
it necessary or desirable to register or qualify the Warrant or any Shares with
respect to which the Warrant has been granted or exercised under the Securities
Act of 1933, as amended, or any other applicable statute or regulation, the Warrantee
will cooperate with the Company and take such action as is necessary to permit
registration or qualification of the Warrant or the Shares. The foregoing
notwithstanding, the Company has no obligation to register the Warrant or any
Shares.


          (2)
Investment Intent. Unless the Company has determined
that the following representation is unnecessary, each person exercising any
portion of the Warrant will be required, as a condition to the issuance of
Shares pursuant to exercise of the Warrant, to make a representation in writing
(a) that he or she is acquiring the Shares for his or her own account for
investment and not with a view to, or for sale in connection with, the
distribution of any part thereof, (b) that before any transfer in connection
with the resale of the Shares, he or she will obtain the written opinion of
counsel for the Company, or other counsel acceptable to the Company, that the
Shares may be transferred. The Company may also place a stop transfer order
with its transfer agent with respect to the Shares and require that
certificates representing the Shares contain legends reflecting the foregoing.


14. Miscellaneous.


          (1)
Requirements of Law.
The granting of the Warrant and the issuance of Shares are subject to all applicable
laws, rules and regulations, and to such approvals by any governmental agencies
or national securities exchanges as may be required.


          (2)
Choice of Law and Venue.
This Agreement is made under and must be governed by the laws of the State of Minnesota,
and each of the parties hereto consents to venue any suit or action under or
with regard to this Agreement in an appropriate court with jurisdiction in
Hennepin County, Minnesota.


          (3)
Notices. All notices, requests and
other communications from either party to the other hereunder must be given in
writing and will be deemed to have been duly given if personally delivered, or
sent by first class, certified mail, return receipt requested, postage prepaid,
to the party may at the address as provided below, or to such other address as
such party may hereafter designate by written notice to the other party:


                    (a)
If the Company, to the address of its then principal office; and


                    (b)
If to the Warrantee, to the residence address last shown in the records of the
Company, which as of the date of this Agreement is as follows:


	
 

	
 


	
 

	
Karen A. Ventura


	
 

	
824 Trotters Ridge


	
 

	
Eagan, MN 55123





          (4)
No obligation to Exercise. The granting of the Warrant
imposes no obligation upon the holder thereof to exercise the Warrant.


          (5)
Amendments; Final Agreement.
This Agreement contains the complete and final understanding of the parties
with respect to the subject matter hereof and supersedes all prior understanding
and statements, written and oral. This Agreement may not be amended except in a
written instrument signed by the party against whom enforcement is sought.


          (6)
Headings. Headings and captions
used in this Agreement are for convenience and do not affect the meaning
hereof.


15. Share
Issuance. The Company will not be
under any obligation to issue any Shares upon the exercise of this Warrant
unless and until the Company has determined that:


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          (a)
it and Warrantee have taken all actions required to register such Shares under
the Securities Act, or to perfect an exemption from the registration
requirements thereof;


          (b)
any applicable listing requirement of any stock exchange on which such Shares
are listed has been satisfied; and


          (c)
all other applicable provisions of state and federal law have been satisfied.


16. Tax Effect. Warrantee acknowledges that the tax
effect of the exercise of this Warrant and the sale of the underlying Shares is
complicated, that Warrantee has consulted with his or her own professional
advisor which respect to all tax matters relating to this Warrant and the
exercise and sale of the Shares and has not relied on any assurances or
representations of the Company as to such matters.


17. The Shares have not been registered and,
therefore, they may not be sold, pledged, hypothecated, or otherwise
transferred unless they are registered under the Securities Act of 1933, as
amended, and applicable state securities laws or an exemption from such registration
is available.


18. Stock
Legend. A legend will be placed on
any certificate evidencing the Shares in substantially the following form:


	
 

	
 


	
 

	
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
 NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
 STATE SECURITIES LAWS OF ANY STATE. WITHOUT SUCH REGISTRATION, SUCH
 SECURITIES MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED
 AT ANY TIME WHATSOEVER, EXCEPT UPON DELIVERY TO THE COMPANY OF AN OPINION OF
 COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED FOR
 SUCH TRANSFER AND/OR THE SUBMISSION TO THE COMPANY OF SUCH OTHER EVIDENCE AS
 MAY BE SATISFACTORY TO THE COMPANY TO THE EFFECT THAT ANY SUCH TRANSFER WILL
 NOT BE IN VIOLATION OF THE SECURITIES ACT OF 1933, AS AMENDED, AND/OR
 APPLICABLE STATE SECURITIES LAWS AND/OR ANY RULE OR REGULATION PROMULGATED
 THEREUNDER.





          IN
WITNESS WHEREOF, each of the parties hereto has executed this Stock Option
Agreement, in the case of the Corporation by its duly authorized officer, as of
the date and year written above.


	
 

	
 

	
 

	
 


	 


	
OPTIONEE

	
 

	
BIODRAIN MEDICAL, INC.,


	
 

	
 

	
a Minnesota corporation


	
 

	
 

	
 

	
 


	


	
 

	
By:

	



	 

	
 

	
 

	 


	
Karen A. Ventura

	
 

	
 

	
Kevin R. Davidson


	
 

	
 

	
Its:

	
President & CEO





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