Exhibit 10.23 to Biodrain Medical, Inc. Form S-1



Exhibit 10.23 


	
 

	
 


	
 

	
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 31 day of August,
2005 (the Agreement Date”) by and between BioDrain Medical, Inc., a Minnesota
corporation (“Company”) and Medical Advisory Board member Mary Wolls Gorman
(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, end 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 1994, 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


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               (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 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 be or she could
have exercised an Warrant under the proceding and 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 administrations 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 tern 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 agreegate member 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 form time to time may amend or modify Agreement; provided, however, that no
amendment, modification, or termination of this Agreement may in any manner
adversity 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,


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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
herien. The term “Look 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.


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 on the records of the
Company, which as of the date of this Agreement it as follows:


	
 

	
 


	
 

	
Mary Wells
 Gorman


	
 

	
5890 Boulder
 Bridge Lane


	
 

	
Greenwood, MN 55331





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


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               (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 to 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 effect the meaning hereof. 


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


                    (a)
it and Warrantee have taken all actions required to register such Shares under
the Securities Act, or to perfect an exemption them 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 registrations 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 COUNCEL
 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, such of the parties hereto has executed this Stock Option
Agreement, in the case of the Corporation by its duly authorized, officer, at
of the date and year within above.


	
 

	
 

	
 

	
 

	
 


	 


	
OPTIONAL

	
 

	
 

	
BIODRAIN MEDICAL, INC.,


	
 

	
 

	
 

	
 

	
a Minnesota
 corporation


	
 

	
 

	
 

	
 

	
 


	
 

	


	
 

	
By:

	



	
 

	 

	
 

	
 

	 


	
 

	
Mary
 Wells Gormon

	
 

	
 

	
Lawrence
 W. Gadbaw


	
 

	
 

	
 

	
Its:

	
President
 & CEO





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