Unassociated Document


    
 

    EXHIBIT
10.37

     

      Page 1 of
6




    August
11, 2008


    


    EMPLOYMENT
AGREEMENT

    


    This
Agreement made and entered into effective the 11th of August 2008 by and between
David Dauwalter, an individual residing at 2686 Nightingale Court, Chaska,
Minnesota 55318 (“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 Director of
Sales and Marketing 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 promises and of the mutual covenants and agreements
contained herein, the parties hereby agree as follows:

    


    
      	
               
      

            	
              1.

            	
              Employment.  Upon
      execution of an investment in the Company secured by the Employee of
      $200,000, the Company agrees to employ the Employee for a period of one
      (1) year from the date of this Agreement: unless Employee violates the
      terms set forth in Paragraph 6: Termination by the Company for Cause or
      the Employee voluntarily resigns.  The term is automatically
      renewable annually except by action of the President or the Board of
      Directors.

            


    

    


    
      	
               
      

            	
              2.

            	
              Duties. The Employee
      will hold the title of Director of Sales and Marketing and shall report to
      the President & CEO of the Company.  The general scope of
      the Employee’s duties shall include but not be limited to responsible for
      developing and implementing the overall market strategy and tactical plans
      to grow sales revenue and account penetration supporting the overall
      business strategy.  Sales channel identification and
      establishment are key priorities including the advancement of the Company
      website and development of Company marketing
      collateral.   The incumbent will be decisive, driven,
      hands-on and results-oriented.   Market segmentation,
      positioning, branding, and business development will be additional
      responsibilities for the incumbent.  The Director of Marketing
      and Sales will play a significant role in establishing and managing beta
      sites for the Company’s product(s).  Additionally, the incumbent
      will drive securing initial purchase orders and obtaining initial sales
      and sustaining growth in revenues from the Company’s
      product(s).

            


    

    


    The
Employee’s duties may be modified from time to time by mutual agreement between
the Employee and the President & CEO as they deem to be in the best interest
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.

            


    

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
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              4.

            	
              Compensation.

            


    

    


    
      	
               
      

            	
              a.

            	
              Base Salary. $70,000 per
      year.  Initial payment will be monthly and will be according to
      the Company’s salary schedule.  Employee will have an informal
      performance review in six (6) months and will receive annual salary
      reviews and potential increases, based on Employee’s
      performance.

            


    

    


    
      	
               
      

            	
              b.

            	
              Commission. The Employee
      will receive sales commission of 4% of sales that Employee directly
      managed. Commission to be paid on a monthly
  basis.

            


    

    


    
      	
               
      

            	
              c.

            	
              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.

            


    

    


    
      	
               
      

            	
              d.

            	
              Stock
      Options.  The Employee will receive total stock options
      to purchase 50,000 shares of the Company’s common stock at $.35 per
      share.  This will be governed by a Company Stock Option Plan
      (“Plan”) to be established by the Company in a timely manner upon hiring
      of the Employee.  The options will vest as
      follows:  10,000 shares upon execution of this Agreement, to be
      issued to Employee upon establishment of the Plan; the balance (40,000) in
      achievement of mutually agreed upon, specific milestones to be identified
      within thirty (30) days of execution of
  Agreement.

            


    

    


    The total
of these options, assuming all milestones are achieved, will be 50,000, as
described above.

    


    
      
        	
              	
                5.

              	
                    Additional
      Benefits.

              


      

    

    


    
      	
               
      

            	
              a.

            	
              Automobile.  The
      Company shall reimburse the Employee for deductible automobile mileage
      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 cell phones, and business meetings,
  etc.

            


    

    


    
      	
               
      

            	
              c.

            	
              Benefits.  The
      Employee will be eligible for the Company’s benefits package effective on
      or about September 1, 2008.

            


    

    


    
      	
               
      

            	
              d.

            	
              Vacation.  The
      Employee will receive a minimum of two (2) weeks vacation per
      year.

            


    

    


    
      	
               
      

            	
              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.

            	
              Non-Compete.   Throughout
      the period of Employee’s employment with the Company, and thereafter for a
      period of one (1) year, Employee shall not, for any reason whatsoever,
      directly or indirectly, plan, organize, advise, own, manage, operate,
      control, be employed by, participate in or be connected in any manner with
      the ownership, management, operation or control of any business of the
      following type: the development, marketing and sales of medical devises
      dedicated or designed to safely manage and dispose of contaminated fluids
      generated in the operating room and other similar medical
      locations.  For purposes of this Agreement, indirect competition
      shall be deemed to include any activity by Employee in aid of a competing
      Business, including but not limited to, being a partner, shareholder,
      officer, director, member, owner, manager, governor, agent, employee,
      advisor, consultant or independent contractor of any competing
      Business.  Company is aware of Employee’s relationship with
      Clean Door Systems, and, as long as this relationship does not interfere
      with Employee fully performing his duties for the Company, and there is no
      direct competition for Company customers or with the Company, Company
      agrees to permit the continued
relationship.

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    
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              7.

            	
              Intellectual
      Property.    Employee agrees that all right,
      title and interest of every kind and nature whatsoever, whether now known
      or unknown, in and to any “Intellectual Property,” defined to include, but
      not be limited to, any patent rights, trademarks, copyrights, ideas,
      creations and properties invented, created, written, developed, furnished,
      produced or disclosed by Employee in the course of rendering his/her
      services to Company (both before the execution of this Agreement and
      thereafter) shall, as between the parties, be and remain the sole and
      exclusive property of Company for any and all purposes and uses
      whatsoever, and Employee shall have no right, title or interest of any
      kind or nature therein or thereto, or in and to any results and proceeds
      there from.  Employee agrees to assign, and hereby expressly and
      irrevocably assigns, to Company all worldwide rights, title and interest,
      in perpetuity, in respect of any and all rights Employee may have or
      acquire in the Intellectual Property.  The assignment of the rights
      as above shall not lapse if Company has not exercised its rights under the
      assignment for any period of time or in any jurisdiction or
      territory.  Pursuant to Section 181.78 of the Minnesota
      Statutes, the preceding sentence does not apply to an invention for which
      no equipment, supplies, facility or trade secret information of Company
      was used and which was developed entirely on the Employee's own time,
      and (1) which does not relate (a) directly to the business of Company
      or (b) to Company's actual or demonstrably anticipated research or
      development, or (2) which does not result from any work performed
      by Employee for Company.  To the extent any of the
      rights, title, and interest in and to the Intellectual Property cannot be
      assigned to Company (and to the extent any of Employee’s retained
      rights under Section 181.78 were incorporated by Employee (directly or
      indirectly) in any of Company's past, current or future products or
      services), Employee hereby grants to Company an exclusive,
      royalty-free, transferable, perpetual, irrevocable, unrestricted,
      worldwide license (with rights to sublicense through one or more tiers of
      sublicensees) to such non-assignable (or non-assigned)
      rights.  To the extent any rights, title and interest in and to
      Intellectual Property rights can be neither assigned nor so licensed by
      Employee to Company, Employee hereby irrevocably waives and agrees
      never to assert such non-assignable and non-licensable rights, title and
      interest against Company, any of Company's successors in
      interest, and the customers and licensees of either.  Further,
      Employee agrees to waive, and hereby waives, any "moral rights" Employee
      may have or may obtain in the Intellectual Property.  Employee
      further agrees to assist Company in every proper way to apply for,
      obtain, perfect and enforce rights in the Intellectual Property in any and
      all countries, and to that end Employee will execute all documents for use
      in applying for, obtaining and perfecting such rights and enforcing same,
      as Company may desire, together with any assignments thereof
      to Company or persons designated by it.  Employee
      appoints Company as its attorney in fact to execute any documents
      necessary to achieve such results.  To the maximum extent
      possible, Company shall be shown in all documentation as the owner of
      all rights in the Intellectual
Property

            


    

    


    
      	
               
      

            	
              8.

            	
              Termination by Company for
      Cause. The Company may terminate Employee’s employment for “cause”
      at any time during the Term.  For purposes of this section 8.,
      the term “cause” shall mean any of the
  following:

            


    

    


    
      	
               
      

            	
              o

            	
              The
      material non-compliance by the Employee with written instructions,
      directions or regulations of the Board of Directors applicable to
      Employee, the breach by Employee of any material term of this Agreement,
      or the unsatisfactory performance by Employee of Employee’s duties,
      obligations, work and production standards, and the failure of Employee to
      correct such non-compliance, breach or unsatisfactory performance within
      thirty (30) days after receipt by Employee of written notice of the same
      by the Company;

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
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              o

            	
              Any
      willful or grossly negligent act by the Employee having the effect of
      injuring in a material way the Company as determined by the affirmative
      vote of the majority of the members of the Board of Directors (excluding
      Employee);

            


    

    


    
      	
               
      

            	
              o

            	
              The
      commission by the Employee of fraud or a criminal act that adversely
      affects the business of the Company;
or,

            


    

    


    
      	
               
      

            	
              o

            	
              The
      determination by an affirmative vote of the majority of the members of the
      Board of Directors (excluding Employee), after a reasonable and good faith
      investigation by the Company following a written allegation by another
      employee of the Company, that Employee engaged in some form of harassment
      or other improper conduct prohibited by law, unless such actions were
      specifically directed by the Board.

            


    

    
 

    In the
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 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 Employee shall be
determined in accordance with and be governed by the Shareholder Agreement and
the Company’s Stock Option Plan as well as taking into account the completion
(or non-completion) of the aforementioned milestones.  Only options
that have vested as a result of completed milestones shall be eligible for
ownership by Employee.

    


    
      
        	
              	
                9.

              	
                Termination by Company without
      Cause.  In the event the Employee’s employment is
      terminated by the Company without cause, as “cause” is defined in section
      8 hereof, Employee shall be entitled to receive from the Company as
      severance pay in an amount equal to three (3) months of Employee’s Base
      Salary then in effect at the time of termination, payable in three (3)
      equal monthly installments, commencing on the first day of the month
      following termination and continuing on the same day of each month
      thereafter until paid in full.  The Employee shall
      receive bonus payment on a pro-rata basis for the portion of the fiscal
      year at termination.  The consideration provided in this section
      is conditioned upon the Employee’s return to the Company of any and all
      property belonging to the Company in Employee’s possession or control and
      Employee’s disclosure to the Company of any information known to Employee
      and necessary for the Company to access any computer software or programs
      of the Company controlled by Employee.   In lieu of a
      Shareholders Agreement all non-vested stock options shall immediately be
      vested.

              


      

    

    


    
      	
            	
              10.

            	
              Termination by Employee for
      Good Reason.  Employee may terminate his employment at
      any time during the Term for good reason.  For purposes of this
      Agreement, “good reason” shall mean (i) any material breach by the Company
      of this Agreement that is not cured by the Company within thirty (30) days
      after receipt of written notice from Employee of such material breach,
      (ii) any material diminution or adverse (to Employee) change in the
      duties, responsibilities, rights, privileges or the reporting
      relationships, which were applicable to and enjoyed by the Employee at the
      time of such diminution of change, without the consent of the Employee,
      except as a result of the termination of Employee’s employment by the
      Company as provided in section 8. hereof, or (iii) any requirement from
      the Board of Directors that the Employee must relocate his office outside
      the Twin Cities metropolitan area. In the event of a termination by
      Employee of his employment as provided in this section 10, Employee shall
      be entitled to severance pay and benefits as provided in section 9
      hereof.

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Page 5 of 6

     

    
      	
            	
              11.

            	
              Termination by
      Employee.   Employee may terminate employment at any
      time during the Term for any reason with one (1) month
      notice.  Employee agrees to aid in transition and exit from the
      Company causing no harm or hardship during such
      transition.  Employee is bound by Paragraph 6 of this
      Agreement.  Employee is not eligible for salary continuation or
      bonus or additional stock option vesting if he voluntarily resigns for
      reasons other than “good reason” as defined in section
  10.

            


    

    


    
      	
            	
              12.

            	
              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.  All non-vested
      stock options, whether milestone has been achieved or not, shall become
      vested with the completion of the
sale.

            


    

    


    
      	
            	
              13.

            	
              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.

            


    

    


    
      	
            	
              14.

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

            


    

    


    
      	
            	
              15.

            	
              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:  Kevin R.
Davidson President & CEO

    16771 Ironwood Circle

    Lakeville, MN 55044

    


    
      	
            	
              Employee: 

            	
              David
      Dauwalter

            


    

    2686 Nightingale Court

    Chaska, MN 55318

    


    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.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
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                16.

              	
                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.

              


      

    

    


    
      
        	
              	
                17.

              	
                Parties and
      Interest.  This Agreement is personal to Executive, and
      Executive may not delegate his duties or assign his rights
      hereunder.  This Agreement shall inure to the benefit of, and be
      binding upon, the parties hereto and their respective heirs, legal
      representatives, successors and permitted
  assigns.

              


      

    

    


    
      
        	
              	
                18.

              	
                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.

              


      

    

    


    
      
        	
              	
                19.

              	
                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.

              


      

    

    


    
      
        	
              	
                20.

              	
                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.

              


      

    

    


    
      
        	
              	
                21.

              	
                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.

              


      

    

    


    
      
        	
              	
                22.

              	
                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.

              


      

    

    


    
      
        	
              	
                23.

              	
                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.

              


      

    

    


    
      
        	
              	
                24.

              	
                Confidential.  Company
      and Employee agree to keep the terms and conditions of this Agreement
      confidential during the terms of the Agreement and for one (1) years after
      termination of Agreement.

              


      

    

    


    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: /s/ Kevin R.
Davidson

            Kevin
R. Davidson, President & CEO

    


    By: /s/ David
Dauwalter

            David
Dauwalter, Employee