AMENDED AND RESTATED NOTE PURCHASE AGREEMENT


 


This Amended
and Restated Note Purchase Agreement (the “Agreement”) is made and entered into as of December
20, 2011 by and among BioDrain Medical, Inc., a Minnesota corporation (the “Company”), and Dr. Samuel
Herschkowitz or his designees (the “Purchaser”).


 


WHEREAS, the Company currently requires
funds to help finance its operations as it pursues its next round of equity financing;


 


WHEREAS, the Purchaser is willing to advance
funds to the Company in exchange for the issuance to the Purchaser of a promissory note evidencing the Company’s obligation
to repay the Purchaser’s loan of the advanced funds, together with the issuance to the Purchaser of certain equity in the
Company, all as provided in this Agreement;


 


WHEREAS, the Purchaser and the Company entered
into a Note Purchase Agreement, dated as of December 20, 2011 (the “Original Agreement”), pursuant to
which, among other things, the Company issued to the Purchaser a Promissory Note in the original principal amount of $225,000;


 


WHEREAS, the Purchaser intends to advance
the additional amount of $15,000 to the Company and may, in his discretion, make other advances in the future; and


 


WHEREAS, the Company and the Purchaser desire
to amend and restate the Original Agreement.


 


NOW THEREFORE, the parties hereby agree
as follows:


 


Article
I


 


PURCHASE, SALE AND TERMS OF NOTE


 


1.01     The Note. The Company
has authorized the issuance and sale to the Purchaser of the Company’s Promissory Note in the original principal amount of
$225,000. The Promissory Note shall be in the form set forth as Exhibit A hereto and is herein referred to as the “Note”,
which term shall also include any notes delivered in exchange or replacement therefor. As and when the Purchaser may advance additional
funds to the Company, the principal amount of the Note shall be increased by the amount of any such advance, and the Company shall,
simultaneously with such advance and against surrender by the Purchaser to the Company of the prior version of the Note, deliver
to the Purchaser an executed replacement Note in the form set forth as Exhibit A hereto but reflecting the increased principal
amount of the Note (a “Replacement Note”).


 



    	 



    	 



    

 


1.02     Purchase and Sale of Note.
The Company agrees to issue and sell to the Purchaser, and, subject to and in reliance upon the representations, warranties, covenants,
terms and conditions of this Agreement, and the Purchaser agrees to purchase the Note. Such purchase and sale shall take place
at a closing (the “Closing”) to be held at the offices of Goodwin Procter LLP, 620 Eighth Avenue, New
York, New York, on the date hereof at 12:00 p.m., New York City time, or at such other time or place as may be mutually
agreed upon by the Company and the Purchaser. Subject to Section 5.11, at the Closing, the Purchaser will deliver to the Company
as payment in full for the Note the amount of $202,500 (representing the principal amount of the Note less a prepayment of interest
thereon at a rate of 20% per annum accrued during the six (6) months following the Closing regardless of any pre-payment), by (i) a
check payable to the Company’s order, (ii) wire transfer of funds to the Company, or (iii) any combination of the
foregoing. At the Closing, the Company will issue and deliver to the Purchaser the duly executed Note in the principal amount of
$225,000.


 


1.03     No Usury. This Agreement
and the Note issued pursuant to the terms of this Agreement are hereby expressly limited so that in no event whatsoever, whether
by reason of deferment or advancement of loan proceeds, acceleration of maturity of the loan evidenced hereby, or otherwise, shall
the amount paid or agreed to be paid to the Purchaser hereunder for the loan, use, forbearance or detention of money exceed the
maximum interest rate permitted by the laws of the State of New York. If at any time the performance of any provision hereof or
the Note involves a payment exceeding the limit of the price that may be validly charged for the loan, use, forbearance or detention
of money under applicable law, then automatically and retroactively, ipso facto, the agreed upon interest rate as set forth in
the Note shall be reduced to such limit, it being the specific intent of the Company and the Purchaser that all payments under
this Agreement or the Note are to be credited first to interest as permitted by law, but not in excess of (i) the agreed rate
of interest set forth in the Note, or (ii) that permitted by law, whichever is the lesser, and the balance toward the reduction
of principal. The provisions of this paragraph shall never be superseded or waived and shall control every other provision of this
Agreement and the Note.


 


1.04     Issuance of Bonus Equity.
(a) Not later than thirty (30) days after the Closing, the Company shall file with the Securities and Exchange Commission (the
“SEC”) a registration statement (the “S-1”) with respect to, and cause to be
declared effective the registration under the Securities Act of 1933, as amended (the “Securities Act”),
a number of shares of the Company’s Common Stock, par value $0.01 per share (the “Common Stock”),
not less than would be required to issue the Equity Bonus, the shares issuable in payment of the Board Meeting Fees and the Additional
Bonus should be Company opt for a partial repayment of the principal amount of the Note pursuant to Section 5.13 (the date of such
registration being the “Effective Date”). The Effective Date shall be not later than March 15, 2012.
Not later than the Effective Date, the Company shall issue to the Purchaser, or as the Purchaser shall direct, all of the shares
comprising the Equity Bonus and, if applicable, the Additional Bonus, which shares shall be registered under the Securities Act
and eligible for sale, subject to compliance by the holder with applicable prospectus delivery requirements. “Equity
Bonus” means a number of shares of Common Stock with an aggregate Market Value of not less than $225,000. “Market
Value” means either (i) the average of the three (3) lowest closing prices of the Common Stock published by Bloomberg
L.P. for the forty-five (45) trading days preceding the Closing (the “Average Trading Price”) or (ii)
$0.15 (fifteen cents), whichever is lower. The Purchaser shall have no obligation to provide any additional consideration to the
Company for the issuance of the Equity Bonus. The Company shall authorize and reserve sufficient shares of the Company’s
capital stock to be issued upon the issuance of the Equity Bonus and any Board Meeting Fees. As of the date hereof, the Market
Value was $0.15 per share and the number of shares of Common Stock required to be included in the Equity Bonus is not less than
1,500,000 shares of Common Stock (not including any Board Meeting Fees).


 



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(b)     As and when any additional funds may
be advanced to the Company by the Purchaser hereunder, the Equity Bonus shall be increased by a number of shares of Common Stock
with an aggregate Market Value not less than the amount of each such advance. Promptly but in no event not later than five (5)
Business Days following any advance of additional funds hereunder to the Company by the Purchaser, the Company shall issue to the
Purchaser stock certificates evidencing the shares of Common Stock reflecting the related increase in the Equity Bonus, and all
of such shares shall be free and clear of all liens, pledges or encumbrances. The Company shall include the shares of Common Stock
reflecting any increase in the Equity Bonus in any registration of Common Stock under the Securities Act that occurs after the
date upon which such shares are required to be issued to the Purchaser.


 


Article
II


 


CONDITIONS TO PURCHASER’S OBLIGATIONS


 


The obligation of the Purchaser to purchase
and pay for the Note at the Closing is subject to the fulfillment or waiver, on or before the Closing, of each of the following
conditions:


 


2.01     Representations and Warranties.
Each of the representations and warranties of the Company set forth in Article III hereof shall be true in all material respects
on the date of the Closing.


 


2.02     Performance by the Company.
The Company shall have performed and complied with all agreements, obligations and conditions contained in this Agreement that
are required to be performed or complied with by it on or before each Closing and shall have obtained all approvals, consents and
qualifications necessary to complete the purchase and sale described herein.


 


2.03     Seniority of Obligations
Under Note. The Company shall have delivered to Purchaser either (i) evidence satisfactory to Purchaser in its sole discretion
that all debts of the Company have been repaid and that all related liens, encumbrances or other security interests of any nature
have been discharged and released, in each case except for the obligations under the promissory notes in the aggregate principal
amount of not more than $150,000 attached hereto as Exhibit B (the “Permitted Notes”) or (ii) executed
subordination agreements in form and substance satisfactory to Purchaser in its sole discretion from all holders of any indebtedness
of the Company other than the holder of the Permitted Notes.


 


2.04     Delivery of Note.
The Company shall have executed and delivered to the Purchaser the Note, in the form attached hereto as Exhibit A, evidencing the
Company’s indebtedness in the principal amount of $225,000.


 



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Article
III


 


REPRESENTATIONS AND WARRANTIES OF THE COMPANY


The Company represents and warrants to the
Purchaser as follows, each of which representation and warranty is true and correct as of the date hereof and as of the date of
the Closing:


 


3.01     Organization, Qualifications
and Corporate Power. The Company is a corporation duly incorporated, validly existing and in good standing under the laws of
the State of Minnesota and is duly licensed or qualified to transact business as a foreign corporation and is in good standing
in each jurisdiction in which the nature of the business transacted by it or the character of the properties owned or leased by
it requires such licensing or qualification, except where the failure to be so licensed or qualified would not have a Material
Adverse Effect (as defined below) on the business or assets of the Company. “Material
Adverse Effect” shall mean any event, change, violation, inaccuracy, circumstance or effect that is, individually
or in the aggregate, materially adverse to the condition (financial or otherwise), capitalization, properties, employees, assets
(including intangible assets), business, operations or results of operations of the Company. The Company has the corporate power
and authority to own and hold its properties and to carry on its business as now conducted and as presently proposed to be conducted,
to execute, deliver and perform this Agreement and to issue, sell and deliver the Note. The Company does not own any equity interest,
directly or indirectly, in any other entity, has never owned any such equity interest, and has never operated as a subsidiary or
division of another entity.


 


3.02     Authorization of Agreements,
Etc. The execution and delivery by the Company of this Agreement and the performance by the Company of its obligations hereunder
and the issuance, sale and delivery of the Note have been duly authorized by all requisite corporate action and will not violate
any provision of law, any order of any court or other agency of government, the Certificate of Incorporation of the Company, as
amended, or the Bylaws of the Company, as amended, or will not result in a violation of any provision of any indenture, agreement
or other instrument to which the Company, or any of its properties or assets is bound, or conflict with, result in a material breach
of or constitute (with due notice or lapse of time or both) a default under any such indenture, agreement or other instrument,
or result in the creation or imposition of any lien, charge, restriction, encumbrance, or, to the Company’s knowledge, claim
of any nature whatsoever upon any of the properties or assets of the Company, the result of any of which would have a material
adverse effect on the business of the Company.


 


3.03     Validity. This Agreement
has been duly executed and delivered by the Company and constitutes the legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms. The Note, when executed and delivered in accordance with this Agreement, will
constitute the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with its terms.
The Note and the shares comprising the Equity Bonus and the Board Meeting Fee, when issued, sold and delivered in accordance with
the terms of this Agreement, will be duly and validly issued, fully paid and nonassessable.


 



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3.04     Litigation. There
is no action, suit, claim, proceeding or investigation pending or, to the Company’s knowledge, threatened against or affecting
the Company or any of its properties, at law or in equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or foreign. The Company is not a party or subject to
the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality. There is
no action or suit by the Company pending, threatened or contemplated against others.


 


3.05     Material Adverse Effect.
Since December 31, 2010, there has occurred no Material Adverse Effect.


 


3.06     Complete Disclosure.
As of the Closing, the Company has made available to the Purchaser all the information that the Purchaser has requested in making
his decision to acquire the Note. To the Company’s knowledge, neither this Agreement nor any other documents or certificates
furnished or to be furnished in connection herewith, when taken as a whole, contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements contained herein or therein not misleading in light of
the circumstances under which they were made. The Company does not represent or warrant that it will achieve any financial projections
provided to the Purchaser and represents only that such projections were made in good faith.


 


3.07     SEC Filings; Financial
Statements. The Company has filed all forms, reports and documents required to be filed by it with the SEC (the “Company
SEC Reports”). The Company SEC Reports (i) were prepared in accordance with either the requirements of the Securities
Act or the Securities Exchange Act of 1934, as amended, as the case may be, and the rules and regulations promulgated thereunder,
and (ii) did not, at the time they were filed, or, if amended, as of the date of such amendment, contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not misleading. Each of the financial statements (including,
in each case, any notes thereto) contained in the Company SEC Reports are correct in all material respects, present fairly the
financial condition and operating results of the Company as of the date(s) and during the period(s) indicated therein, and have
been prepared in accordance with United States generally accepted accounting principles (“GAAP”) applied
on a consistent basis throughout the period indicated. Except as set forth in the most recent financial statements contained in
the Company SEC Reports, the Company does not have any material liability (whether accrued, contingent or otherwise) other than
liabilities not of the type required by GAAP to be reflected or reserved on a balance sheet prepared in accordance with GAAP.


 


3.08     Collateral. The Company
is the sole legal and beneficial owner of the Collateral and has the right to pledge, sell, assign or transfer the same. This Agreement
creates a valid security interest in favor of the Purchaser in the Collateral and, when properly perfected by filing, shall constitute
a valid and perfected, first priority security interest in the Collateral, free and clear of all liens or encumbrances of any kind.


 



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Article
IV


 


COVENANTS


 


4.01     Advisor to the Board.
Commencing on the date hereof and effective so long as any amount payable under the Note remains outstanding, the Purchaser or
his designee is hereby appointed as a special advisor (the “Board Advisor”) to the Board of Directors
of the Company (the “Board”), and the Board Advisor shall be invited (upon not less than ten (10) Business
Days’ notice) to, but shall not be required to attend, all meetings of the Board. Upon the Purchaser’s request, the
Company shall cause the Board Advisor to be appointed to the Board. The Board Advisor shall also be entitled to invite one (1)
additional person to attend Board meetings. The Company shall promptly reimburse the reasonable travel expenses of the Board Advisor
incurred in connection with the Board Advisor’s attendance at meetings of the Board. The Company shall pay to the Purchaser
a fee of $3,500 for the Board Advisor’s attendance at each such meeting of the Board (each, a “Board Meeting
Fee”). The Board Meeting Fee shall be payable, at the Purchaser’s election in its sole discretion, either in
cash or in shares of Common Stock valued at Market Value (which, for the avoidance of doubt, shall be the lower of the Average
Trading Price or $0.15), or in a combination thereof. Any shares comprising the Board Meeting Fee shall be (i) issued to Purchaser
or its designee simultaneously with the issuance of the Equity Bonus, or, if the shares comprising the Equity Bonus have already
been issued, within three (3) Business Days of the applicable Board meeting, and (ii) free and clear of all liens, pledges or encumbrances,
registered under the Securities Act, and freely tradeable without restriction. Any Board Meeting Fee payable wholly or partly in
cash shall be paid to Purchaser or its designee within three (3) Business Days following the applicable Board meeting. Shares issuable
as Board Meeting Fees may be issued, if necessary and with both parties’ agreement, under a registration statement in Form
S-8 under the Securities Act and the regulations promulgated thereunder.


 


4.02     Penalty Shares. Promptly
following the execution of this Agreement but in no event more than five (5) Business Days after the date hereof, the Company will
deliver to the Purchaser a stock certificate evidencing a number of shares of Common Stock having an aggregate Market Value of
not less than $1,125,000 (the “Penalty Shares”), which number, as of the date hereof, is not less than
7,500,000 shares of Common Stock, together with a stock transfer power executed in blank by the Company. In the event there occurs
any Event of Default (as defined in the Note), the Penalty Shares shall be transferred, conveyed and assigned to the Purchaser
and good, valid and unencumbered title to the Penalty Shares shall vest in the Purchaser. The Company shall then, at its expense,
obtain and deliver to the Purchaser a legal opinion from legal counsel reasonably acceptable to the Purchaser confirming that (i)
if the S-1 is then effective, the Penalty Shares are registered under the Securities Act and may be sold upon compliance with the
prospectus delivery requirements of the Securities Act and (ii) any legends upon the stock certificates evidencing the Penalty
Shares may be removed upon a sale by the holder in compliance with such prospectus delivery requirements. Upon the Purchaser’s
request, the Company will instruct the Company’s transfer agent to re-issue in the Purchaser’s name the stock certificate
evidencing the Penalty Shares. Notwithstanding any other provision of this Agreement or the Note, any transfer, assignment and
conveyance of the Penalty Shares to the Purchaser shall not reduce the indebtedness of the Company under the Note or in any other
respect affect the Purchaser’s rights or remedies under the Note or this Agreement.


 



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4.03     Security. (a)     As
security for its obligations to the Purchaser under the Note, the Company hereby grants to the Purchaser a continuing security
interest in, and a right to set off against, any and all right, title and interest of the Company in and to (i) all letters patent
of the United States or any other country and all reissues and extensions thereof, (ii) all applications for letters patent of
the United States or any other country and all divisions, continuations and continuations-in-part thereof, in each case whether
now owned or existing or owned, acquired or arising hereafter, (the assets described in the foregoing clauses (i) and (ii) being
collectively the “Patents”), (iii) any agreement, whether written or oral, providing for the grant by
the Company of any right to manufacture, use or sell any invention covered by a Patent (the “Patent Licenses”),
(iv) any proceeds of any of the Patents or Patent Licenses (the “Proceeds”) and (v) any accounts receivable
of the Company (such accounts receivable, together with the Proceeds, the Patents and Patent Licenses, being the “Collateral”).
The Company shall not sell, transfer, assign or encumber in any manner any of the Patents or Patent Licenses without the prior
written consent of the Purchaser.


 


(b)     The Company shall execute and deliver
to the Purchaser such agreements, assignments or instruments (including affidavits, notices, reaffirmations and amendments and
restatements of existing documents) and do all such things, in each case as the Purchaser may reasonably deem necessary or appropriate,
to assure to the Purchaser its security interests hereunder, including (i) such instruments as the Purchaser may from time to time
reasonably request in order to perfect and maintain the security interests granted hereunder in accordance with the Uniform Commercial
Code in effect from time to time in the State of New York or the applicable jurisdiction with respect to any applicable Collateral
(the “UCC”) and (ii) with respect to the Patents, a Notice of Grant of Security Interest in Patents for
filing with the United States Patent and Trademark Office.


 


(c)     In addition to the rights and remedies
hereunder and under the Note, the Purchaser may, in compliance with Sections 9-620 and 9-621 of the UCC or otherwise complying
with the requirements of applicable law of the relevant jurisdiction, accept or retain the Collateral in satisfaction of the Secured
Obligations. Unless and until the Purchaser shall have provided such notices, however, the Purchaser shall not be deemed to have
retained any Collateral in satisfaction of any Secured Obligations for any reason. In the event that the proceeds of any sale,
collection or realization of the Collateral are insufficient to pay all amounts to which the Purchaser is legally entitled, the
Company shall be liable for the deficiency, together with interest, together with the costs of collection and the fees, charges
and disbursements of counsel.


 


4.04     Use of Proceeds; Access
to Information. The proceeds of the purchase of the Note by the Purchaser shall be used by the Company to allow the Company
to fund ongoing research and development activities and current liabilities. Not less than $20,000 of such proceeds shall be used
by the Company in the three (3) months following the Closing for the creation of a new business plan and power point presentation
as well as public relations and investor relations activities to raise public awareness about the Company and its stock listing.
The creation of such business plan and power point presentation will be overseen by Joshua Kornberg, who will serve as an independent
contractor and will invoice the Company for his services. The Company shall promptly provide to the Purchaser a detailed memorandum
setting forth the use of proceeds from the purchase of the Note for the period ending May 30, 2012. Not less than five (5) Business
Days prior to the first day of each month, the Company shall deliver to the Purchaser a detailed budget (the “Budget”),
and in the event the Company’s expenditures in any month exceed the projections in the Budget relating to such month by more
than 20%, the Company shall promptly (but in any event within five (5) Business Days of such deviation) report such deviation to
the Purchaser.


 



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Article
V


 


MISCELLANEOUS


 


5.01     No Waiver; Cumulative
Remedies. No failure or delay on the part of any party to this Agreement in exercising any right, power or remedy hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, power or remedy preclude any other
or further exercise thereof or the exercise of any other right, power or remedy hereunder. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.


 


5.02     Amendments, Waivers
and Consents. Any provision in this Agreement to the contrary notwithstanding, changes in or additions to this Agreement or the
Note may be made, and compliance with any covenant or provision herein or therein set forth may be omitted or waived, if the Company
shall obtain consent thereto in writing from the Purchaser.


 


5.03     Addresses for Notices,
etc. Any notice required or permitted hereunder shall be given in writing and shall be conclusively deemed effectively given
upon personal delivery or delivery by courier, or after transmission if sent by confirmed facsimile transmission, in each case
addressed as set forth below each party’s name on the signature page of this Agreement, or at such other address as the Company
or the Purchaser may designate by advance written notice to the other party hereto.


 


5.04     Binding Effect; Assignment.
The terms and conditions of this Agreement shall be binding upon and inure to the benefit of the Company and the Purchasers and
their respective heirs, successors and assigns. The Company shall not assign this Agreement without the prior written consent of
the Purchaser. The Purchaser may, at any time, assign this Agreement to any of his affiliates without the consent of the Company.


 


5.05     Headings; Interpretation.
In this Agreement, (i) the meaning of defined terms shall be equally applicable to both the singular and plural forms of the
terms defined; (ii) the captions and headings are used only for convenience and are not to be considered in construing or
interpreting this Agreement and (iii) the words “including,” “includes” and “include” shall
be deemed to be followed by the words “without limitation”. All references in this Agreement to sections, paragraphs,
exhibits and schedules shall, unless otherwise provided, refer to sections and paragraphs hereof and exhibits and schedules attached
hereto, all of which exhibits and schedules are incorporated herein by this reference. “Business Day”
means a weekday on which banks are open for general banking business in New York City, New York.


 



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5.06     No Finder’s Fees.
Each party represents that it neither is nor will be obligated for any finder’s or broker’s fee or commission in connection
with the transactions contemplated by this Agreement. The Purchaser agrees to indemnify and to hold harmless the Company from any
liability for any commission or compensation in the nature of a finder’s or broker’s fee (and any asserted liability)
for which the Purchaser is responsible. The Company agrees to indemnify and hold harmless the Purchaser from any liability for
any commission or compensation in the nature of a finder’s or broker’s fee (and any asserted liability) for which the
Company or any of its officers, employees or representatives is responsible.


 


5.07     Survival of Representations
and Warranties. All representations and warranties made in this Agreement or the Note or any other instrument or document delivered
in connection herewith or therewith, shall survive the execution and delivery hereof or thereof, and the Closing, and shall in
no way be affected by any investigation of the subject matter thereof made by or on behalf of the Purchaser or the Company, as
the case may be.


 


5.08     Prior Agreements.
This Agreement constitutes the entire agreement between the parties and supersedes any other prior understandings or agreements
concerning the subject matter hereof.


 


5.09     Severability. The
invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision.


 


5.10     Governing Law. This
Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.


 


5.11     Payment of Fees. All
reasonable and documented expenses, including legal fees and out of pocket expenses of counsel for the Purchaser, related to the
financing to which this Agreement and the Note relate, incurred by the Purchaser, up to an aggregate maximum amount of $6,500 (which
amount may, at the Purchaser’s discretion, be withheld from the amount required to be paid to the Company pursuant to Section
2.01), shall be promptly paid by the Company. The Company shall bear and be responsible for all legal and filing fees and other
expenses associated with the S-1 and the issuance of the Equity Bonus.


 


5.12     Counterpart; Facsimile
Signatures. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all
of which taken together shall constitute one and the same instrument, and any of the parties hereto may execute this Agreement
by signing any such counterpart. This Agreement may be executed and delivered by facsimile, or by e-mail in portable document format
(.pdf) and delivery of the signature page by such method will be deemed to have the same effect as if the original signature had
been delivered to the other parties.


 


5.13     Pre-Payment. As provided
in the Note, all amounts outstanding thereunder shall become due and payable if there occurs any Financing (as defined in the Note)
prior to June 20, 2012. However, under such circumstances, the Company may, at its option, immediately repay $150,000 of the principal
amount under the Note and defer the repayment of the remaining $75,000 of principal thereunder until June 20, 2012, provided
that additional shares of Common Stock (the “Additional Bonus”) be promptly issued to the Purchaser in
an amount equal to 10% of the Equity Bonus, as the Equity Bonus may be increased after the date hereof (approximately but not less
than 150,000 shares assuming a price of $0.15 per share and that the Equity Bonus consisted of 1,500,000 shares of Common Stock
or more since the number of shares included in the Board Meeting Fees, if any, are yet to be determined pending the number of Board
meetings attended).


 



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5.14     Entire Agreement.
This Agreement, together with the exhibit hereto and the Note, constitute the entire agreement and understanding of the parties
with respect to the subject matter hereof and supersede any and all prior negotiations, correspondence, agreements, understandings
duties or obligations between the parties with respect to the subject matter hereof.


 


5.15     Further Assurances.
From and after the date of this Agreement, the Company and the Purchaser shall execute and deliver such instruments, documents
or other writings as may be reasonably necessary or desirable to confirm and carry out and to effectuate fully the intent and purposes
of this Agreement.


 


5.16     Amendment and Restatement
of Original Agreement. The Original Agreement is hereby amended and restated in its entirety upon the terms and conditions
set forth herein. Except as otherwise expressly set forth in this Agreement, all agreements, covenants and representations shall
be effective as of December 20, 2011. Notwithstanding the foregoing and any other provision of this Agreement or the Note, neither
the amendment and restatement of this Agreement nor any provision hereof shall be deemed to constitute a waiver by the Purchaser
of any of its rights or remedies hereunder or under the Note, or otherwise impair such rights or remedies, including, without limitation,
with respect to any Event of Default (as defined under the Note).


 


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IN WITNESS WHEREOF, the parties hereto have
executed this Agreement on the day, month and year first above written.


 


	 	BIODRAIN MEDICAL, INC.
	 	 
		By:	 
	 	 	  Name
	 	 	  Title
	 	 
	 	Address:
	 	 
	 	 
	 	Dr. Samuel Herschkowitz
	 	 
	 	Address:


 



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EXHIBIT A


 


Form of Note


 


CONVERTIBLE PROMISSORY NOTE


 


THIS CONVERTIBLE PROMISSORY NOTE HAS NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. NEITHER THIS CONVERTIBLE PROMISSORY NOTE NOR ANY SECURITIES ISSUABLE UPON THE
CONVERSION HEREOF MAY BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM.


 


	$225,000	DECEMBER 20, 2011


 


Subject to the terms and conditions of this
Note, for value received, BIODRAIN MEDICAL, INC., a Minnesota corporation (the “Borrower”),
hereby promises to pay to Dr. Samuel Herschkowitz (the “Lender”), the principal sum of Two Hundred Twenty-Five
Thousand Dollars ($225,000) (the “Principal Amount”), together with interest thereon accruing
on and from the date hereof until the entire Balance is paid, at an annual rate (subject to Section 6 below) equal to twenty
percent (20.0%). Interest shall be calculated based on a 365-day year, compounded annually, but in no event shall the
rate of interest exceed the maximum rate, if any, allowable under applicable law. “Balance” means, at
the applicable time, the sum of all then outstanding principal of this Note, all then accrued but unpaid interest and all other
amounts then accrued but unpaid under this Note.


 


This promissory note (the “Note”)
is issued by the Borrower pursuant to that certain Note Purchase Agreement dated as of the date hereof (the “Purchase
Agreement”), entered into between the Borrower and the Lender, and is subject to, and Borrower and Lender shall be
bound by, all the terms, conditions and provisions of the Purchase Agreement. This Note shall become due and payable on the earliest
of (i) June 20, 2012, (ii) the date that is six (6) months following the date of the Closing (as defined in the Purchase Agreement)
and (iii) thirty (30) days following the completion by the Borrower, in one transaction or in a series of related transactions,
of a financing from a party other than SOK Partners, LLC or its affiliates, involving gross proceeds to the Borrower of $399,000
or more, regardless of whether such financing involves debt or equity or any other form, or any combination thereof (such financing
being a “Financing” and such earliest date being the “Maturity Date”). Capitalized
terms used herein but not defined herein shall have the meanings ascribed to them in the Purchase Agreement.


 


The following is a statement of the rights
of Lender and the terms and conditions to which this Note is subject and to which the Lender, by acceptance of this Note, agrees:


 



    	 



    	 



    

 


1.          Payment.
The principal amount of this Note, all accrued and unpaid interest and all other amounts accrued under this Note shall, on the
Maturity Date, be payable in cash. No interest shall be payable other than as set forth in the preceding sentence. All payments
on account of principal and interest shall be made in lawful money of the United States of America at the principal office of the
Lender, or such other place as the holder hereof may from time to time designate in writing to the Borrower.


 


2.          Prepayment.
Borrower may prepay this Note in whole or in part before it becomes due but in the event this Note is prepaid in whole prior to
the Maturity Date, Borrower shall be required to prepay interest on the entire principal amount of this Note through the Maturity
Date.


 


3.          Application
of Payments. All payments will be applied first to the repayment of accrued fees and expenses under this Note,
then to accrued interest until all then outstanding accrued interest has been paid in full, and then to the repayment
of principal until all principal has been paid in full. If after all applications of such payments have been made as provided in
this paragraph, then the remaining amount of such payments that are in either case in excess of the aggregate Balance shall be
returned to Borrower.


 


4.          Transfer
and Exchange. The holder of this Note may, prior to the Maturity Date, surrender such Note at the principal office of the Borrower
for transfer or exchange. Within a reasonable time after notice to the Borrower from such holder of its intention to make such
exchange and without expense to such holder, except for any transfer or similar tax which may be imposed on the transfer or exchange,
the Borrower shall issue in exchange therefor another note or notes for the same aggregate principal amount as the unpaid principal
amount of the Note so surrendered, having the same maturity and rate of interest, containing the same provisions and subject to
the same terms and conditions as the Note so surrendered. Each new Note shall be made payable to such person or persons, or transferees,
as the holder of such surrendered Note may designate, and such transfer or exchange shall be made in such a manner that no gain
or loss of principal or interest shall result therefrom. The Borrower may elect not to permit a transfer of the Note if it has
not obtained reasonably satisfactory assurance that such transfer: (a) is exempt from the registration requirements of, or
covered by an effective registration statement under, the Securities Act of 1933, as amended, and the rules and regulations thereunder
and (b) is in compliance with all applicable state securities laws, including without limitation receipt of an opinion of
counsel, which opinion shall be reasonably satisfactory to the Borrower.


 


5.          New
Note. Upon receipt of evidence reasonably satisfactory to the Borrower of the loss, theft, destruction or mutilation of the
Note, the Borrower will issue a new Note, of like tenor and amount and dated the date to which interest has been paid, in lieu
of such lost, stolen, destroyed or mutilated Note, and in such event the Lender agrees to indemnify and hold harmless the Borrower
in respect of any such lost, stolen, destroyed or mutilated Note.


 


6.          Right
to Convert. Subject to and upon compliance with the provisions of Section 7, the Purchaser shall have the right, at its option,
at any time and from time to time, so long as any amount remains payable under this Note, to convert all or any part of the outstanding
principal amount or accrued interest hereunder (the “Outstanding Amount”) into shares of Common Stock
at a conversion price per share equal to 6.5 cents per share, as such amount may be adjusted pursuant to Section 9 below (the “Conversion
Price”).


 



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7.          Mechanics
of Conversion. In order to exercise the conversion privilege described in Section 6, the Purchaser shall surrender the Note
to the Borrower on any Business Day during normal business hours at the address of the Borrower set forth on the signature page
hereof, accompanied by a written notice (the “Conversion Notice”) stating that the Purchaser elects to
convert all or part of the Outstanding Amount, specifying the portion of the Outstanding Amount which the Purchaser desires to
convert, and setting forth the name or names in which the certificate or certificates for shares of Common Stock to be issued upon
such conversion shall be issued. No fractional shares shall be issued on any conversion hereunder. As promptly as practicable but
in no event later than five (5) Business Days after the receipt of the Conversion Notice and the surrender to the Borrower of the
Note, the Borrower shall issue and deliver to the Purchaser a certificate or certificates for the number of shares of Common Stock
issuable upon such conversion, together with, if less than the total Outstanding Amount is then being converted, a new promissory
note, dated the original issue date hereof, in the form of Exhibit A to the Purchase Agreement but reflecting a principal amount
equal to the principal amount of the Outstanding Amount that has not been so converted. Such conversion shall be deemed to have
been effected at the close of business on the date on which the Borrower receives the Conversion Notice, and the person or persons
in whose name or names any certificate or certificates for shares of Common Stock shall be issuable upon such conversion shall
be deemed to have become the holder or holders or record of the shares of Common Stock represented thereby on such date.


 


8.          Reservation
of Shares. The Borrower shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock
the full number of shares of Common Stock which shall be issuable at any time and from time to time upon the exercise of the conversion
rights pursuant to Section 6.


 


9.          Adjustments
for Reorganizations, Mergers, Consolidations or Sales of Assets; Dilutive Issues. (a) If at any time there is a recapitalization,
stock split or reorganization of the Borrower, or a merger or consolidation of the Borrower with or into another corporation, or
a sale of all or substantially all of the Borrower’s properties and assets to any other person, then, as a condition precedent
to such recapitalization, stock split, reorganization, merger, consolidation or sale, the Borrower shall ensure that provision
is made to the effect that, following such transaction, the Purchaser shall be entitled to receive upon conversion of any portion
of the Outstanding Amount, the number of shares of stock or other securities or property of the Borrower, or of the successor corporation
resulting from such recapitalization, stock split, reorganization, merger, consolidation or sale, which a holder of the number
of shares of Common Stock into which this Note was convertible immediately prior to such transaction (determined in accordance
with Section 6) would have been entitled to receive on such recapitalization, stock split, reorganization, merger, consolidation
or sale. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 9 with respect
to the rights of the Purchaser after the recapitalization, stock split, reorganization, merger, consolidation or sale to the end
that the provisions of this Section 9 (including adjustment of the number of shares of Common Stock issuable upon conversion of
this Note) shall be applicable after that event and be as nearly equivalent to the provisions hereof as may be practicable.


 



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(b)          If,
at any time following the date hereof, the Borrower issues additional shares of Common Stock (or any security convertible into
Common Stock) without consideration or for a consideration per share less than the Conversion Price in effect immediately prior
to such issuance, then the Conversion Price shall be reduced, concurrently with such issuance, to a price (calculated to the nearest
one-hundredth of a cent) determined in accordance with the following formula:


 


CP2=CP1*(A+B)  ̧
(A+C).


 


For purposes of the foregoing formula, the following definitions
shall apply:


 


(i)          “CP2”
means the Conversion Price in effect immediately after such issuance;


 


(ii)         “CP1”
means the Conversion Price in effect immediately prior to such issuance;


 


(iii)        “A”
means the number of shares of Common Stock issued and outstanding immediately prior to such issuance;


 


(iv)        “B”
means the number of shares of Common Stock that would have been issued if the additional shares of Common Stock issued in such
issuance had been issued at a price per share equal to CP1 (determined by dividing the aggregate consideration received
by the Borrower in respect of such issue by CP1); and


 


(v)         “C”
means the number of additional shares of Common Stock issued in such issuance.


 


10.         No
impairment. The Borrower will not, by amendment of its Articles of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action avoid the observance or performance
or any of the terms to be observed or performed hereunder by the Borrower, but at all times and in good faith will assist in the
carrying out of all of the provisions of this Note and in the taking of all such actions as may be necessary or appropriate in
order to protect the conversion rights of the Purchaser against impairment.


 


11.         Events
of Default. Each of the following shall constitute an “Event of Default” hereunder:


 


(a)          The
Borrower shall fail to pay any principal, interest or other amount payable hereunder on the applicable due date and such failure
continues for five (5) days;


 



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(b)          The
Borrower shall (1) voluntarily terminate operations or apply for or consent to the appointment of, or the taking of possession
by, a receiver, custodian, trustee or liquidator of the Borrower or of all or a substantial part of the assets of the Borrower,
(2) admit in writing its inability, to pay debts as the debts become due, (3) make a general assignment for the benefit of its
creditors, (4) commence a voluntary case under the Federal Bankruptcy Code (as now or hereafter in effect), (5) file a petition
seeking to take advantage of any other law relating to bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment
of debts, (6) fail to controvert in a timely and appropriate manner, or acquiesce in writing to, any petition filed against it
in an involuntary case under the Federal Bankruptcy Code or applicable state bankruptcy laws or (7) take any corporate action for
the purpose of effecting any of the foregoing;


 


(c)          Without
the Borrower’s application, approval or consent, a proceeding shall be commenced, in any court of competent jurisdiction,
seeking in respect of the Borrower the liquidation, reorganization, dissolution, winding-up, or composition or readjustment of
debt, the appointment of a trustee, receiver, liquidator or the like relief in respect of the Borrower or all or any substantial
part of the assets of the Borrower, or other like relief in respect of the Borrower under any law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts; and, if the proceeding is being contested in good faith by the
Borrower, the same shall continue undismissed, or unstayed and in effect for any period of ninety (90) consecutive days, or an
order for relief against the Borrower shall be entered in any case under the Federal Bankruptcy Code or applicable bankruptcy laws;


 


(d)          The
Borrower shall violate, or be in default under, any material agreement, instrument or other document relating to any indebtedness
for money borrowed, and such default persists beyond any applicable cure period;


 


(e)          The
Borrower’s representations and warranties contained in the Note Purchase Agreement shall prove to have not been true in any
material respect when made


 


(f)          The
Borrower shall be in material breach of any of covenant or agreement contained in the Note Purchase Agreement; or


 


(g)          The
Borrower’s expenditures in any month shall exceed by more than twenty percent (20%) the projections in the Budget (as defined
in the Note Purchase Agreement) relating to such month, and the Lender shall not have agreed in writing to such deviation within
five (5) days of having been advised of such deviation by the Borrower.


 


If any Event of Default shall occur, then,
(i) at any time thereafter while such Event of Default is continuing, the Lender by written notice to the Borrower (the “Default
Notice”) may declare the entire unpaid principal amount of this Note, together with all accrued and unpaid interest
thereon, to be due and payable immediately and (ii) the rate of interest accruing on the Balance shall increase to twenty-four
percent (24.0%).


 


12.         Mandatory
Conversion. If any principal or accrued interest under this Note remains outstanding on the date the Borrower completes a Qualified
Transaction (as defined below), then the Outstanding Amount under this Note shall be converted into shares of Common Stock at the
Conversion Price (as may be adjusted pursuant to Section 9) in effect immediately prior to the Qualified Transaction being consummated.
For purposes of this Note, “Qualified Transaction” means a merger, reorganization or similar transaction
involving the Borrower, whether or not the Borrower is the surviving entity, if, as a result of such transaction, the surviving
entity has available $399,000 or more in additional cash and cash equivalents, as compared to the cash and cash equivalents of
the Borrower immediately prior to the consummation of such transaction.


 



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13.         Governing
Law. This Note shall be governed by and construed in accordance with the laws of the State of New York.


 


14.         Collection
Expenses. The Borrower further agrees, subject only to any limitation imposed by applicable law, to pay all expenses, including
reasonable attorneys’ fees, incurred by the holder of this Note in endeavoring to collect any amounts payable hereunder which
are not paid when due.


 


15.         Amendment.
Any provision of this Note, except for the principal amount of this Note and the interest rate in connection therewith, may be
amended or waived with the written consent of Borrower and the Lender.


 


16.         Waiver.
Borrower hereby waives presentment, protest, demand for payment, notice of dishonor, and any and all other notices or demands in
connection with the deliver, acceptance, performance, default, or enforcement of this Note.


 


17.         Severability.
The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision.


 


18.         Addresses
for Notices, etc. Any notice required or permitted hereunder shall be given in writing and shall be conclusively deemed effectively
given upon personal delivery or delivery by courier, or on the first business day after transmission if sent by confirmed facsimile
transmission, in each case addressed (i) if to Borrower, as set forth below the Borrower’s name on the signature page of
this Note, and (ii) if to Lender, at Lender’s address as set forth below Lender’s name on the signature page of this
Note, or at such other address as the Borrower or Lender may designate by advance written notice to the other parties hereto.


 


19.         Headings;
Interpretation. In this Note, (i) the meaning of defined terms shall be equally applicable to both the singular and plural
forms of the terms defined; (ii) the captions and headings are used only for convenience and are not to be considered in construing
or interpreting this Note and (iii) the words “including,” “includes” and “include” shall be
deemed to be followed by the words “without limitation”. All references in this Note to sections, paragraphs, exhibits
and schedules shall, unless otherwise provided, refer to sections and paragraphs hereof and exhibits and schedules attached hereto,
all of which exhibits and schedules are incorporated herein by this reference.


 


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IN WITNESS WHEREOF, the undersigned has
caused this instrument to be executed by its duly authorized officers as of the date first above written.


 





	BORROWER:	BIODRAIN MEDICAL, INC.
	 	 
	 	By:	/s/Kevin Davidson
	 	Name: Kevin Davidson
	 	Title: CEO







 





	 	Address:	2060 Centre Pointe Boulevard
	 	 	Mendota Heights, MN 5520







 


Acknowledged and agreed by Lender:


 


By: /s/Samuel Herschkowitz


Name: Dr. Samuel Herschkowitz


 


	Address:	122 Willow Street	 
	 	Brooklyn, NY 11201	 


 



    	 



    	 



    

 


EXHIBIT B


 


Permitted Notes