Exhibit 10.2 to Biodrain Medical, Inc. Form S-1



Exhibit 10.2 


EMPLOYMENT AGREEMENT


This
Agreement, made and entered into effective the 18th day of October,
2006, by and between Gerald D. Rice, an individual residing at 6413 Josephine
Avenue, Edina, MN 55439 (“Employee”), and BioDrain Medical Incorporated, 699
Minnetonka Highlands Lane, Orono, MN 55356-9728, a Minnesota corporation
(“Company”).


          WITNESSETH:


          WHEREAS, the Company desires to employ the
Employee to render services for the Company as its Chief Financial Officer
(CFO) and Secretary on the terms and conditions hereinafter set forth, and the
Employee desires to be employed by the Company on such terms and conditions;


          NOW,
THEREFORE, in
consideration of the premises and of the mutual covenants and agreements
contained herein, the parties hereby agree as follows:


	
 

	
 

	
 


	
 

	
1.

	
Employment. The Company agrees to employ the
 Employee for a period of four (4) years from the date of this Agreement
 unless Employee violates the terms set forth in Paragraph 7: Termination for
 Cause or the Employee voluntarily resigns. The term is automatically
 renewable annually except by action of the Board of Directors.


	
 

	
 

	
 


	
 

	
2.

	
Duties. The Employee will hold the title of
 CFO and Secretary and shall report to the President of the Company. The
 general, scope of the Employee’s duties shall include:








	
 

	
 

	
 


	
 

	
a.

	
Exhibit A


	
 

	
 

	
 


	
 

	
The
 Employee’s duties may be modified from time to time by the President and/or
 Board of Directors as they deem to be in the best interest of the Company,
 provided that the Employee’s duties shall be commensurate with those of a
 senior executive of the Company.








	
 

	
 

	
 

	
 


	
 

	
3.

	
 

	
Extent of Services.
 The Employee shall devote his full attention, energy and skills to the
 business of the Company and use his best efforts to fully and competently
 perform the duties of his office.


	
 

	
 

	
 

	
 


	
 

	
4.

	
Compensation.








	
 

	
 

	
 


	
 

	
•

	
Base Salary. $110,000 per year Initial payment will be
monthly and will be according to the Company’s salary schedule, which will
begin as funds become available, but not later than when cumulative new
funding has reached a minimum of $250,000. Annual reviews will determine
future salary and bonus amounts, as a part of Company compensation
procedures. 


	
 

	
 

	
 


	
 

	
•

	
Bonus. The Employee will be eligible for participation
in the Company’s bonus plan when completed and approved by the Board of
Directors and the Compensation Committee. 








	
 

	
 

	
 


	
 

	
b.

	
Executive Compensation. The Employee will be eligible for
 executive compensation such as stock, stock options, deferred compensation,
 life insurance, etc., as approved by the





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Board of
 Directors and the Compensation Committee when such executive compensation
 plan is completed.








	
 

	
 

	
 


	
 

	
5.

	
Additional Benefits.








	
 

	
 

	
 


	
 

	
a.

	
Automobile. The Company shall reimburse the
 Employee for deductible automobile mileage or auto allowance according to its
 Expense Reporting Procedures.


	
 

	
 

	
 


	
 

	
b.

	
Business Expense.
 The Company will reimburse the Employee for all reasonable, deductible and
 substantiated business expenses per its Expense Reporting Procedures. This
 includes, but is not limited to such, expenses, as telephone, cell phone,
 home office, business meetings, etc.


	
 

	
 

	
 


	
 

	
c.

	
Benefits. The Employee will be eligible for
 the Company’s benefits package and executive benefits listed in Paragraph
 4.c. which will be implemented as funds become available and upon development
 and approval by the Compensation Committee.


	
 

	
 

	
 


	
 

	
d.

	
Vacation. The Employee will receive a minimum
 of three weeks’ vacation per year or as per the executive vacation plan when
 written, whichever is greater.


	
 

	
 

	
 


	
 

	
e.

	
Education. The Company will support the
 Employee in his pursuit of continuing education provided sufficient cash
 flows support tuition reimbursement and he meets the conditions and terms of
 the tuition reimbursement guidelines as outlined in the Employee Manual when
 written








	
 

	
 

	
 


	
 

	
6.

	
Board of Directors Membership. The Employee will continue his
 membership on the Board of Directors of the Company.


	
 

	
 

	
 


	
 

	
7.

	
Termination for Cause; Voluntary
 Resignation. The Company may terminate this Agreement for “cause” as defined hereinafter
 at any time during the term of the Employee’s employment, and the Employee
 may voluntarily resign from his employment with the Company at any time. For
 this purpose, the term “cause” shall mean any of the following:








	
 

	
 

	
 


	
 

	
a.

	
the
 continued noncompliance by the Employee with the Company’s directors’ written
 instructions, directives or regulations, after fifteen (15) days’ written
 notice of such noncompliance from the Company; a breach by the Employee of
 any material term of this Agreement, which breach is not cured within seven
 (7) days of written notice thereof from the Company; unsatisfactory
 performance of employment duties, obligations and work and production
 standards that is not corrected within thirty (30) days after written notice
 of such unsatisfactory performance from the Company, or such longer period as
 specified in such notice;


	
 

	
 

	
 


	
 

	
b.

	
malfeasance,
 misfeasance, or nonfeasance by the Employee in the course of his employment;


	
 

	
 

	
 


	
 

	
c.

	
fraud or a
 criminal act committed by the Employee, provided such criminal act adversely
 affects the business of the Company;


	
 

	
 

	
 


	
 

	
d.

	
any breach
 of the Employee of his fiduciary obligations to the Company or any act or
 omission of the Employee constituting a breach of his obligations contained
 in the





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Confidentiality
 and Non-Competition Agreement attached hereto as Exhibit B and incorporated
 herein as reference; and;








	
 

	
 

	
 


	
 

	
 

	
e. the Employee’s
 voluntary resignation at any time.


	
 


	
 

	
 

	
In die event
 of a termination for cause, as defined herein, the Employee shall only be
 entitled to receive payment of base salary, adjusted pro-rata to the date of
 such termination, subject to offset, and to the extent permitted, for any
 amounts then owed, to the Company by the Employee. The Employee shall have
 absolutely no right to receive or retain any other payment or compensation
 whatsoever under this Agreement, regardless of the term of the employment
 then elapsed. The Employee’s rights and obligations regarding stock options
 and shares of the Company’s common stock owned by the Employee shall be
 determined in accordance with and be governed by the Shareholder Agreement
 and the Company’s Stock Option Plan.


	
 

	
 

	
 


	
 

	
8.

	
Termination without Cause.
 In the event that the Employee’s employment is terminated by the Company
 without cause, as cause defined in Section 7 hereof, the Employee shall be
 entitled to receive from the Company an amount equal to twelve (12) months of
 the Employee’s annual base salary for the year of termination, payable in
 equal installments divided among the Company’s standard payroll periods over
 six (6) months following that in which termination occurs. The consideration
 provided in this Section is conditioned, upon the Employee’s return to the
 Company in good condition any and all property owned by or belonging to the
 Company and the Employee’s disclosure to the Company of any passwords or
 procedures necessary for the Company’s access to any computer software or
 computer programs. This consideration provided in this Section is further
 conditioned on the Employee’s continued complete adherence to the terms of
 the Employee’s Confidentiality and Non-competition Agreement for two years
 from the date of termination. All payments made hereunder will be subject to
 all required withholding and reporting. The Employee’s rights and obligations
 regarding any shares of the Company’s common stock owned by the Employee
 shall be determined in accordance with and be governed by the Shareholder
 Agreement


	
 

	
 

	
 


	
 

	
9.

	
Termination for Good Reason. Employee may terminate this Agreement
 for Good Reason. The Employee may also terminate the Agreement hereunder
 without Good Reason by giving a Notice of Termination during the year
 immediately following a Change in Control of more than 40% of the Company’s
 outstanding stock (a “Special Termination”), with the exception of stock
 issued by the Company, provided that, with the exception of dilution,
 Employee is adversely affected by such Change in Control. Upon a Good Reason
 termination or a Special Termination, the Executive shall become entitled to
 the payments and benefits provided in Paragraph 8 hereof in accordance with
 the terms of such Paragraph..


	
 

	
 

	
 


	
 

	
10.

	
Death.Upon the death or disability of the
 Employee, bonus and other related benefits will be paid pro-rata for the
 current year.


	
 

	
 

	
 


	
 

	
11.

	
Sale, Reorganization or Transfer of
 Ownership. In
 the event the Company is sold, or if majority ownership of the Company should
 pass from the existing majority shareholders, the terms of this Agreement
 shall remain in force. Terms of all executive employment agreements will
 identify the specifics for sale, reorganization or transfer of ownership, to
 be approved by the Compensation Committee.


	
 

	
 

	
 


	
 

	
12.

	
Insolvency or Cessation of Business. In the event the Company becomes
 insolvent or ceases business due to lack of funds, this Agreement is
 immediately null and void and the terms and conditions are rendered
 non-enforceable, specifically those clauses associated with non-disclosure
 and non-competition.





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13.

	
Governing Law. This agreement will be governed by
 and construed in accordance with the laws of the State of Minnesota.


	
 

	
 

	
 


	
 

	
14.

	
Notices. Any
 notice or other communication required or permitted hereunder shall be in
 writing and shall be deemed to have been given, when received, if delivered
 by hand or by telegram, or three (3) working days after deposited, if placed
 in the mails for delivery by certified mail, return receipt requested,
 postage prepaid and addressed to the appropriate party at the following
 address:








	
 

	
 

	
 


	
 

	
Company:

	
BioDrain
 Medical Inc.


	
 

	
 

	
Attention:
 Lawrence W. Gadbaw, Chairman


	
 

	
 

	
699
 Minnetonka Highlands Lane


	
 

	
 

	
Orono, MN
 55356-9728


	
 

	
 

	
 


	
 

	
Employee:

	
Gerald D.
 Rice


	
 

	
 

	
6413
 Josephine Avenue


	
 

	
 

	
Edina, MN
 55439








	
 

	
 

	
 


	
 

	
 

	
Addresses
 may be changed by written notice given pursuant to this Section; however any
 such notice shall not be effective, if mailed, until three (3) working days
 after depositing in the mails or when actually received, whichever occurs
 first.


	
 

	
 

	
 


	
 

	
15.

	
Other Agreements. This
 Agreement contains the entire agreement between the parties concerning terms
 of employment and supersedes at the effective date hereof any other
 agreement, written or oral.


	
 

	
 

	
 


	
 

	
16.

	
Modification and Waiver. A
 waiver by either party of a breach of any provision of this Agreement shall
 not operate as or be construed as a waiver of any subsequent breach thereof.


	
 

	
 

	
 


	
 

	
17.

	
Binding Effect, Assigns, Successors, Etc. This Agreement shall be binding
 upon the parties hereto and their respective heirs, representatives,
 successors and assigns, and shall continue in full force unless and until
 terminated by the mutual agreement of all parties hereto.


	
 

	
 

	
 


	
 

	
18.

	
Savings Clause. If any provision, portion or aspect
 of this Agreement is determined to be void, or voidable by any legislative,
 judicial or administrative action as properly applied to this Agreement then
 this Agreement, shall be construed to so limit such provision, portion or
 aspect thereof to render same enforceable to the greatest extent permitted by
 or in the relevant jurisdiction.


	
 

	
 

	
 


	
 

	
19.

	
Headings. The
 headings of this Agreement are intended solely for convenience and reference,
 and shall give no effect in the construction or interpretation of this
 Agreement.


	
 

	
 

	
 


	
 

	
20.

	
Survival. Employee understands and agrees
 that portions of the provisions of this Agreement extend, beyond termination
 of the Employee’s employment and shall continue in full force and effect
 after such termination of employment or termination of this Agreement.


	
 

	
 

	
 


	
 

	
21.

	
Execution. This
 Agreement may be executed in two (2) or more counterparts, and each such
 counterpart deemed an original. Original signatures on copies of the
 Agreement transmitted by facsimile will be deemed originals for all purposes
 hereunder.





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


	
 

	
 

	
 


	
 

	
BioDrain
 Medical Incorporated


	
 

	
 


	
 

	
By:

	



	
 

	
 

	 


	
 

	
 

	
Lawrence W. Gadbaw, Chairman


	
 

	
 


	
 

	
By:

	



	
 

	
 

	 


	
 

	
 

	
Gerald D. Rice, Employee





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