Document:

Exhibit 10.39

BioDrain
Medical, Inc.

2915 Commers Drive, Suite 900

Eagan, Minnesota 55121 

 

 

August 21, 2012

 

Sent via email to: caruwe@comcast.net

 

Mr. Chad A. Ruwe

5220 Oaklawn Avenue

Edina, MN 55424

 

Dear Mr. Ruwe (“Ruwe”):

 

I am writing to set forth the terms of your
separation with BioDrain Medical, Inc. (the “Company”) as an employee and the conditions pursuant to which you
will release the Company from any and all claims that you have or may have against the Company or any of its affiliates (collectively,
the “Separation and Release”). In exchange for such Separation and Release, you shall be entitled to:

 

		(i)	common stock of the Company (par value $.01) (the “Common Stock”) equivalent in value to $175,000.00, in
settlement of the total amount of past due wages, paid time off, severance and other payments owed to Ruwe by the Company, including
but not limited to any amounts owed to Ruwe by the Company under the terms of that certain Employment Agreement between Ruwe and
the Company dated as of June 16, 2008 (the “Employment Agreement”),

		(ii)	amendment of the warrant issued to Ruwe by the Company dated July 2, 2008 (as amended subsequently to extend the expiration
date of the warrant to July 2, 2012, the “2008 Warrant”) for the purchase of 571,429 shares of Common Stock
tied to Ruwe’s initial $200,000.00 investment in the Company: (A) extending the expiration date by two years, to July 2,
2014 and (B) allowing complete exercise of the 2008 Warrant regardless of Ruwe’s equity ownership in the Company,

		(iii)	additional warrants to purchase 200,000 shares of Common Stock as additional consideration for settlement of the claims hereunder,
and

		(iv)	exchange 700,000 options expiring December 7, 2012 for a warrant for the purchase of 700,000 shares of Common Stock at $0.15
per share with an expiration of June 29, 2017.

 

You understand and acknowledge that you
are no longer an employee of the Company. Further, you understand and acknowledge that those certain warrant(s) to purchase 50,000
shares of Common Stock issued to you by the Company in 2009 reflecting your $25,000 April 14, 2009 investment in the Company have
expired as of the Effective Date (defined below) and you hereby release the Company, pursuant to Section 2 below, from any obligation
under such warrant(s) and any related agreements.

 

    	 

    	 

    

 

Chad A. Ruwe

August 21, 2012

 

In consideration for the issuance of Common
Stock and other promises and covenants made in this letter agreement, including without limitation in the paragraphs set forth
immediately above (the “Agreement”), the sufficiency of which consideration is acknowledged by both parties
hereto, you and the Company agree as follows:

 

1.              Issuance of Shares. In partial consideration for
your execution and delivery of this Agreement on or prior to August 21, 2012 (the “Effective Date”), the Company
agrees to, on or promptly after the Effective Date issue to Ruwe 1,166,667 shares of Common Stock, representing the agreed-upon
payment of $175,000.00 at a valuation of $0.15/share. Such shares shall be issued in your name, in one or more certificates, which
will be mailed to: Chad A. Ruwe, 5220 Oaklawn Avenue, Edina, MN 55424 on, or within thirty (30) days after, the Effective Date.

 

2.              Amendments to 2008 Warrant. The 2008 Warrant is
hereby amended as follows:

 

 (i)Section 12(g) is hereby amended and restated
as follows:

 

“‘Expiration Date’ means July
2, 2014”’

 

 (ii)Section 1(f) is hereby deleted in its entirety.

 

3.              Additional Warrants. The Company agrees to, on
or promptly after the Effective Date, grants to Ruwe an additional warrant to purchase an additional 200,000 shares of Common Stock
as additional consideration hereunder. The warrant will be in the form of the 2008 Warrant, as amended hereunder, except that (i)
the Exercise Price, as set forth in Section 1(c) of the warrant, will be $0.15/share, subject to subsequent adjustment under the
terms of the warrant, and (ii) the Expiration Date as set forth in Section 12(g) shall be June 29, 2017. This additional warrant
shall be issued in Ruwe’s name, which will be mailed to: Chad A. Ruwe, 5220 Oaklawn Avenue, Edina, MN 55424 on, or within
thirty (30) days after, the Effective Date.

 

The Company agrees to, on or promptly after the Effective Date,
grant to Ruwe an additional warrant to purchase an additional 700,000 shares of Common Stock as a direct replacement of the 700,000
options expiring on December 7, 2012. The warrant will be in the form of the 2008 Warrant, as amended hereunder, except that (i)
the Exercise Price, as set forth in Section 1(c) of the warrant, will be $0.15/share, subject to subsequent adjustment under the
terms of the warrant, and (ii) the Expiration Date as set forth in Section 12(g) shall be June 29, 2017. Similarly, Company allows
complete exercise of the warrant for 700,000 shares regardless of Ruwe’s equity ownership in the Company. This additional
warrant shall be issued in Ruwe’s name, which will be mailed to: Chad A. Ruwe, 5220 Oaklawn Avenue, Edina, MN 55424 on, or
within thirty (30) days after, the Effective Date

 

    	 

    	 

    

 

Chad A. Ruwe

August 21, 2012

 

4.              Waiver and Release. As of the Effective Date, you
and each of your affiliates, successors, assigns, beneficiaries, insurers, indemnitors, trustees, agents and representatives, hereby
releases and forever discharges the Company, and each of its respective officers, directors, shareholders, affiliates, predecessors,
successors, assigns, insurers, indemnitors, attorneys, employees, agents and representatives (collectively, the “Released
Parties”) of and from any and all past, present and future claims, demands, liabilities, judgments, and causes of action,
at law or in equity, known or unknown, asserted or unasserted, liquidated or unliquidated, absolute or contingent, accrued or not
accrued, which you ever had, presently have, might have in the future, claim to have, or claim to have had against any of the Released
Parties whatsoever at any time from the beginning of time to and including the Effective Date; provided, however, that the
foregoing shall not release or waive a breach of this Agreement.

 

5.              Mutual Non-Disparagement. You agree not to disparage
the Company, or its products, services, or employees. You will not make any statements about Separation and Release discussions
or terms with the Company that portrays or characterize this resolution in any manner other than that this Agreement is concluded
to your satisfaction, and you will not make any statements that contradict that this is a no-fault Separation and Release. In return,
the Company’s management team will not disparage you.

 

6.              Survival of Certain Terms. You understand and acknowledge
that certain provisions of the Employment Agreement extend beyond the termination of the Employment Agreement and shall continue
in full force and effect after the execution of this Agreement including, without limitation, the Non-Compete and Intellectual
Property provisions set forth in Sections 6 and 7, respectively, of the Employment Agreement.

 

7.              Entire Agreement. This Agreement contains the entire
understanding of the parties with respect to the subject matter hereof and supersedes all prior agreements, either oral or written,
including without limitation that certain proposal submitted by you to the Company on or about April 24, 2012 and any and all attendant
correspondence. This Agreement may not be amended except by a writing signed by each of the parties hereto.

 

8.              Confidentiality. Neither party hereto will disclose
to any other individual or entity any information whatsoever about this Agreement including without limitation information relating
to or arising from the negotiation, preparation and execution of this Agreement, except to the extent that disclosure may be required
by law or in order to directly perform under this Agreement.

 

9.              Restricted Shares. By signing below, you represent
and warrant that you are acquiring the shares and additional warrants described in Sections 1 and 3, and any shares received upon
exercise of such additional warrants (together, the “Securities”) for your own account for long-term investment
and not as a nominee or agent and not with the view to, or for resale in connection with, any distribution in violation of federal
or state securities laws and that you have made no agreement with any other person or entity regarding any of the Securities. You
further represent and agree that the Securities are restricted securities and if you later desire to transfer the Securities, you
shall not do so without first obtaining (i) an opinion of counsel satisfactory to the Company that such proposed disposition or
transfer may be made lawfully without the registration of such Securities pursuant to the Securities Act of 1933 (as amended, the
“Securities Act”) and applicable state laws or (ii) registration of such Shares (it being expressly understood
that the Company shall not have any obligations to register the Securities) (collectively, the “Securities Restrictions”).
The stock certificates and warrant representing the Securities will each bear a restrictive legend setting forth the Securities
Restrictions.

 

    	 

    	 

    

 

Chad A. Ruwe

August 21, 2012

 

10.              Governing Law; Venue. This Agreement shall be
governed by the laws of the State of Minnesota, without regard to its conflicts-of-law provisions. The venue for any action hereunder
shall be in the State of Minnesota, whether or not such venue is or subsequently becomes inconvenient, and the parties consent
to the jurisdiction of the state and federal courts of the State of Minnesota.

 

11.              Counterparts. This Agreement may be executed by
the parties in counterparts, all of which, when taken together, shall constitute a fully executed version of this Agreement. This
Agreement, or a counterpart, thereof, may be executed and delivered by telecopier, facsimile or any other electronic transmission,
including, without limitation, a scanned version in .pdf format, and the telecopier, facsimile or any other electronic transmission
of a signature to another party or parties (or to their respective legal representatives) shall be of the same force and effect
as the delivery of an original signature.

 

Signature Page Follows

  

	Agreed to and accepted this	 	 	
        Very truly yours, 
	 
	 	 	 	 	 
	21st day of August, 2012	 	 	BioDrain Medical, Inc.	 
	 	 	 	 	 
	/s/ Chad A. Ruwe	 	 	/s/ Bob Myers	 
	Chad A. Ruwe, individually	 	 	By: Bob Myers	 
	 	 	 	Its: Chief Financial OfficerExhibit
10.40

 

SETTLEMENT
AGREEMENT AND MUTUAL GENERAL RELEASE

 

This Settlement Agreement
and Release (“Agreement”), effective as of ________________________, 2012, is entered into by and between BioDrain
Medical, Inc., a Minnesota Corporation (“BioDrain”), and all persons and entities claiming by or through BioDrain,
on the one hand, and Kevin Davidson (“Davidson”), and all persons and entities claiming by or through Davidson, on
the other hand. BioDrain and Davidson collectively are referred herein as “Settling Parties” or, singularly, as “Settling
Party,” as appropriate from the context.

 

Recitals

 

WHEREAS:

 

A. In or about April
2012, a dispute arose between the Settling Parties regarding what, if any, amount was owed by one Settling Party to the other arising
from Davidson’s employment with BioDrain (the “Dispute”);

 

B. As part of the Dispute,
Davidson alleges that he is entitled to reimbursement for back-wages and unused vacation time, and severance pay;

 

C. As part of the Dispute,
BioDrain alleges that it is entitled to reimbursement of over-payment of wages to Davidson and the return of BioDrain property;

 

D. Settling Parties
now wish to settle the Dispute and any other pending disputes, known or unknown, between them, without any admission or acknowledgment
of liability by any Settling Party.

 

NOW, THEREFORE, the
Settling Parties hereby agree as follows:

 

Terms, Covenants and Releases

 

1.          Consideration.
In partial consideration for Davidson’s general release herein and Davidson’s agreements in Section 8 hereof relating
to confidentiality, noncompetition and nonsolicitation, BioDrain shall, not later than seven (7) calendar days after the revocation
periods have expired pursuant to Section 5 hereof:

 

1.1.          Issue
and deliver to Davidson four (4) warrants (collectively, the “Warrant”), each substantially in the form attached hereto
as Exhibit A to purchase 200,000 shares of BioDrain’s Common Stock (for a total of 800,000 shares of BioDrain’s
Common Stock, in the aggregate), $0.01 par value per share (the “Common Stock”), at an initial exercise price of $0.10
per share of Common Stock. BioDrain shall deliver the Warrant to Davidson at the office of BioDrain on a date and at a time reasonably
and mutually agreed upon by the Settling Parties (but not more than seven (7) calendar days after the revocation periods expired
pursuant to Section 5 hereof) or at such other time and place as the Settling Parties may agree; and

 

    	 

    	 

    

 

1.2.          Transfer
and convey all right, title and interest in and to the laptop computer currently owned by BioDrain, which was used by Davidson
throughout his employment at BioDrain.

 

If, for any reason whatsoever, the Settling
Parties have not met for the purpose of delivering the Warrant to Davidson within seven (7) calendar days after the revocation
periods pursuant to Section 5 hereof have expired, BioDrain shall promptly, upon written request from Davidson or his counsel,
mail the Warrant to Davidson at an address specified by Davidson, certified U.S. mail, return receipt requested.

 

2.          Investment
Representation. Davisdon acknowledges that the Warrant is not being registered under the Securities Act of 1933, as amended
(the “Act”), based, in part, on reliance that the issuance of the Warrant is exempt from registering under Section
4(2) of the Act as not involving any public offering. Davidson further acknowledges that BioDrain’s reliance on such exemption
is predicated, in part, on the following representations made by Davidson to BioDrain:

 

2.1.          Davidson
is aquiring the Warrant solely for his own account, for investment purposes only, and not with an intent to sell, or for resale
in connection with any distribution of all or any portion of the Warrant within the meaning of the Act;

 

2.2.          Davidson
(i) is experienced in evaluating and investing in companies such as BioDrain, (ii) has a preexisting business relationship with
BioDrain, (iii) has reviewed (A) a copy of BioDrain’s Annual Report on Form 10-K for the year ended December 31, 2011 and
(B) all other reports filed by BioDrain with the Securities and Exchange Commission under the Securities Exchange Act of 1934 and
amended, since December 31, 2011 (the “Disclosure Package”) and (iv) has had an opportunity to ask questions of and
receive answers from BioDrain concerning the terms of the purchase of the Warrant hereunder and has been given access to all books,
records and other information of BioDrain which Davidson has desired to review and analyze in connection with Davidson’s
acquisition of the Warrant hereunder necessary to verify the accuracy of the information contained in the Disclosure Package;

 

2.3.          Davidson
(i) has no need for immediate liquidity in this investment, (ii) has the ability to bear the economic risk of this investment and
(iii) can afford a complete loss of his investment;

 

2.4.          Davidson
(i) understands that the Warrant, and the shares of the Common Stock for which the Warrant is exercisable, are characterized as
“restricted securities” under the federal securities laws since such securities are being acquired from BioDrain in
a transaction not involving a public offering and that, under such laws and applicable regulations, such securities may be resold
without registration under the Act only in certain limited circumstances and (ii) represents that he is familiar with Rule 144
promulgated under the Act, as presently in effect, and understands the resale limitations imposed thereby and by the Act; and

 

    	 

    	 

    

 

2.5.          At
no time was any oral representation made to Davidson relating to the purchase of the Warrant by BioDrain or its representatives,
or was Davidson presented with or solicited by any leaflet, public or promotional material, newspaper or magazine article, radio
or television advertisement or any other form of general advertisement relating to the purchase of the Warrant.

 

3.          Limitations
on Disposition.

 

3.1.          Transfers.
Davidson agrees not to transfer the shares of Common Stock issuable upon Davidson’s exercise of the Warrant (the “Warrant
Shares”), except in accordance with the express terms of this Section 3 and unless the proposed transferee (a) is not a direct
or indirect competitor of BioDrain and (b) agrees with BioDrain in writing to be bound by the terms and conditions of Section 3
of this Agreement. Any attempted transfer in violation of this Section 3 shall be void and of no effect.

 

3.2.          Compliance
with Securities Law. Without in any way limiting the representations set forth above, Davidson further agrees not to make any
disposition of all or any portion of the Warrant Shares, except in compliance with applicable state securities laws and unless
and until:

 

3.2.1.          there
is then in effect a registration statement under the Act covering such proposed disposition and such disposition is made in accordance
with such registration statement;

 

3.2.2.          such
disposition is made in accordance with Rule 144 promulgated under the Act; or

 

3.2.3.          Davidson
shall have (i) notified BioDrain of the proposed disposition, (ii) furnished BioDrain with a statement of the circumstances surrounding
the proposed disposition and (iii) if requested by BioDrain, Davidson shall have furnished BioDrain with an opinion of counsel,
acceptable to BioDrain, to the effect that such disposition will not require registration under the Act and will be in compliance
with applicable state securities laws.

 

3.3.          Stock
Certificate Legend. Davdison understands and acknowledges that each certificate evidencing the Warrant Shares (or evidencing
any other securities issued with respect thereto pursuant to any stock split, stock dividend, merger or other form of reorganization
or recapitalization) shall bear, in addition to any other legends which may be required by applicable state securities law, the
following legend:

 

THE SECURITIES REPRESENTED HEREBY
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“ACT”), NOR HAVE THEY BEEN REGISTERED OR QUALIFIED
UNDER THE SECURITIES LAWS OF ANY STATE. NO TRANSFER OF SUCH SECURITIES WILL BE PERMITTED UNLESS A REGISTRATION STATEMENT UNDER
THE AC IS IN EFFECT AS TO SUCH SECURITIES, THE TRANSFER IS MADE IN ACCORDANCE WITH RULE 144 PROMULGATED UNDER THE ACT, OR, IN THE
OPINION OF COUNSEL, REGISTRATION UNDER THE ACT IS UNNECESSARY IN ORDER FOR SUCH TRANSFER TO COMPLY WITH THE ACT AND WITH APPLICABLE
STATE SECURITIES LAWS.

 

    	 

    	 

    

 

4.          Mutual
General Releases. Effective after the revocation periods have expired pursuant to Section 5 hereof:

 

4.1.          Subject
to Subsection 4.3 of this Section, BioDrain, Atlantic Partners Alliance LLC, SOK Partners LLC, Joshua Kornberg, and Dr. Samuel
Herschkowitz, for and on behalf of themselves and their respective past, present, future and former directors, officers, shareholders,
members, owners, affiliates, assigns, associates, partners, licensees, employees, insurers, attorneys, and all persons or entities
claiming or acting by, through, or in concert with them or any of them (the “BioDrain Releasors”), shall, and do, hereby,
collectively and individually, release and forever discharge Davidson, and each of Davidson’s past, present, and future partners,
associates, spouses, insurers, and attorneys, and all persons or entities claiming or acting by, through, or in concert with them,
of and from any and all actions, causes of action, claims for relief, suits, obligations, debts, liens, contracts, promises, liabilities,
injuries to person or property, claims, predicate acts, demands, damages, losses, costs, attorneys fees, or expenses, fixed or
contingent, direct or indirect, in law or in equity, whether or not they arise out of or are related to the Dispute (“Claims”).
The BioDrain Releasors acknowledge and agree that this release is a general and unconditional release and that the BioDrain Releasors
do not reserve any rights whatsoever against Davidson or the other released parties enumerated above, except to the extent those
rights are created expressly by this Agreement.

 

4.2.          Subject
to Subsection 4.3 of this Section, Davidson, for and on behalf of Davidson and Davidson’s past, present, and future partners,
associates, spouses, insurers, or attorneys, and all persons or entities claiming or acting by, through, or in concert with them,
shall, and do, hereby, collectively and individually, release and forever discharge BioDrain, Atlantic Partners Alliance LLC, SOK
Partners LLC, Joshua Kornberg, and Dr. Samuel Herschkowitz, and each of their respective present, future and former directors,
officers, shareholders, affiliates, assigns, associates, partners, licensees, employees, insurers, attorneys, and all persons or
entities claiming or acting by, through, or in concert with them or any of them, of and from any and all Claims, whether or not
they arise out of or are related to the Dispute. Further, Davidson is releasing all claims related to his employment with BioDrain
including: all claims for discrimination and retaliation under any applicable federal, state, or local law, including, for example,
rights and claims of discrimination and retaliation under the Minnesota Human Rights Act (“MHRA”), the St. Paul Human
Rights Ordinance (“SPHRO”), the Minneapolis Civil Rights Ordinance (“MCRO”), the Age Discrimination in
Employment Act (“ADEA”), the Older Workers Benefits Protection Act (“OWBPA”); the Americans with Disabilities
Act, and Title VII of the Civil Rights Act of 1964 (“Title VII”); any claim for: breach of contract; wrongful termination;
illegal termination; constructive discharge; termination in violation of public policy; breach of an implied contract; promissory
estoppel; defamation; invasion of privacy; fraud; retaliation; and infliction of emotional distress; .all claims for any other
unlawful employment practices arising out of or relating to Davidson’s employment or Davidson’s separation from employment;
and all claims for any other form of employment compensation not provided in this Agreement (“Employment Claims”).
Davidson acknowledges and agrees that Davidson’s release is a general and unconditional release and that Davidson does not
reserve any rights whatsoever against BioDrain or the other released parties enumerated above, except to the extent those rights
are created expressly by this Agreement. This Agreement does not prohibit Davidson from filing an administrative complaint, or
an administrative charge of discrimination with, or cooperating or participating in an investigation or proceeding conducted by,
the Equal Employment Opportunity Commission or other federal, local or state regulatory or law enforcement agency. If Davidson
has filed or files a charge or complaint, Davidson agrees that the consideration that Davidson is receiving in this Agreement completely
satisfies any and all claims in connection with such charge or complaint, and that Davidson is not entitled to any other monetary
relief of any kind with respect to the Claims and Employment Claims that Davidson has waived in this Agreement.

 

    	 

    	 

    

 

4.3.          The
foregoing releases in Subsections 4.1 and 4.2 of this Section shall not release or discharge any claims for relief based upon or
arising out of a breach by any Settling Party of any of the obligations undertaken in or made
under this Agreement. Nothing in this Agreement shall be deemed to release any claims for relief by any Settling Party that arise
out of this Agreement, including, but not limited to, any claims for non-performance or breach of any Settling Party of any of
the terms and conditions contained in this Agreement.

 

5.          Rights
to Counsel, Consider, Revoke, and Rescind

 

5.1.          Davidson
understands that BioDrain hereby advises Davidson to consult with an attorney prior to signing this Agreement and recommends that
Davidson do so.

 

5.2.          Davidson
understands that Davidson has twenty-one (21) days to consider this Agreement, including Davidson’s waiver of rights and
claims of age discrimination and retaliation under the ADEA and the OWBPA.

 

5.3.          Davidson
has seven (7) days after Davidson signs the Agreement to revoke the Agreement.

 

5.4.          Nothing
in this Agreement prevents or precludes Davidson from challenging or seeking a decision in good faith about the validity of this
waiver under the ADEA, nor does it impose any advance conditions, penalties, costs or attorneys’ fees for doing so, unless
specifically authorized by federal law.

 

    	 

    	 

    

 

5.5.          Davidson
also understands that Davidson has the right to rescind Davidson’s release of discrimination and retaliation claims under
the MHRA within fifteen (15) calendar days after the date on which Davidson signs this Agreement. The 7-day and 15-day rescission
periods will run at the same time. Davidson may revoke this Agreement during the 7-day or 15-day period after Davidson signs it
by putting the rescission in writing and delivering it to BioDrain in care of Bob Myers, by hand or by mail. If Davidson mails
the rescission, it must be: postmarked within the applicable seven (7) or fifteen (15) calendar day period; addressed to Bob Myers,
BioDrain Corporation, 2915 Commers Drive, Suite 900, Eagan, Minnesota 55121; and sent by certified mail, return receipt requested.

 

This Agreement shall
not be effective until the revocation periods have expired. Davidson understands that if Davidson exercises Davidson’s rights
to revoke or rescind as provided above, this Agreement will be null and void.

 

6.          Risk
of Discovery of New Facts. 

 

6.1.          Each
Settling Party assumes the full risk of discovery of new or more complete understanding of any fact or law pertaining to the Claims
or Employment Claims that, if presently known, would have affected this Agreement,
the decision of that Settling Party to enter into this Agreement, or that Settling Party’s execution of the Agreement. Each
Settling Party understands that there is a risk that after the execution of this Agreement, facts different from, or in addition
to, those facts now known, or believed to be true, may be discovered. Notwithstanding this, each Settling Party freely and knowingly
enters into this Agreement.

 

6.2.          It
is the intent of each Settling Party to this Agreement to release all Claims and Employment Claims that such Settling Party has
against the other Settling Party, whether such Claims and Employment Claims are known or unknown, with the sole exception of claims
arising from this Agreement.

 

6.3.          Each
Settling Party hereby acknowledges that there is a risk that, subsequent to the execution of this Agreement, such Settling Party
may discover, incur or suffer from Claims or Employment Claims, which were unknown or unanticipated at the time this Agreement
was executed. Each Settling Party acknowledges that such Settling Party is assuming the risk of such unanticipated Claims and Employment
Claims, and agrees that this Agreement applies thereto.

 

7.          Costs
and Fees. The Settling Parties shall bear their own fees and/or costs in connection with the Dispute and this Agreement.

 

8.          Agreements
of Davidson Relating to Confidentiality, Noncompetition and Nonsolicitation. Davidson also hereby agrees as follows:

 

8.1.          As
used in this Agreement, “Confidential Information” includes, without limitation, all patterns, compilations, programs,
and know how; designs, processes or formulae; software; market or sales information or plans, devices, methods, concepts, techniques,
processes, source codes, data capture innovations, algorithms, user interface designs and database designs relating to the Company’s
products, services, systems or business; information acquired or compiled by the Company concerning actual or potential clients/customers,
suppliers and business partners, including their identities, financial information concerning their actual or prospective business
operations, identity and quantity of services and/or products provided by the Company, and any unpublished written materials furnished
by or about them to the Company; and information concerning the Company’s ownership, management, financial condition, financial
operations, business activities or practices, sales activities, marketing activities or plans, research and development, pricing
practices, legal matters, and strategic business plans. Notwithstanding the foregoing, Confidential Information does not include
information in the public domain or generally known in the industry (unless due to breach of Davidson’s duties under Section
8.2) or readily ascertainable from publicly available sources. 

 

    	 

    	 

    

 

8.2.          Davidson
understands and agrees that his prior employment has created a relationship of confidence and trust between him and the Company
with respect to all Confidential Information. At all times, Davidson will keep in confidence and trust all such Confidential Information,
and will not use or disclose any such Confidential Information without the written consent of the Company, except as may be required
by law or legal process. Davidson agrees to take reasonable security measures to prevent accidental or unauthorized disclosure
of Confidential Information.

 

8.3.          Except
as explicitly provided in this Agreement, Davidson has returned and has not retained any documents, records, data, apparatus, equipment
or other physical property, whether or not pertaining to Confidential Information, which were furnished to Davidson by the Company
or were produced by Davidson in connection with his employment.

 

8.4.          Until
April 23, 2013, Davidson (i) will not, directly or indirectly, whether as owner, partner, shareholder, consultant, agent, employee,
co-venturer or otherwise, engage, participate, assist or invest in any Competing Business (as hereinafter defined); (ii) will not
directly or indirectly employ, attempt to employ, recruit or otherwise solicit, induce or influence any person to leave employment
with the Company; and (iii) will not solicit, contact, sell to, provide services to, work with, or attempt to divert, take away
or induce clients or prospective clients of the Company with whom Davidson worked, solicited, marketed, or obtained confidential
information about during his employment with the Company, regarding services or products that are competitive with any of the Company’s
services or products. For purposes of this Agreement, the term “Competing Business” shall mean a business conducted
anywhere in the United States which is competitive with the Company in regard to the business of developing, marketing, manufacturing,
licensing and selling medical devices dedicated to fluid management in medical environments (including operating rooms, emergency
rooms, day surgery centers, patient rooms and ambulances) which devices are similar to, perform the same function(s) as or could
be used as a reasonable replacement or substitute for the device(s)/product(s) of the Company (which were in existence or being
developed by the Company during Davidson’s employment with the Company). Notwithstanding the foregoing, Davidson may own
up to one percent (1%) of the outstanding stock of a publicly held corporation which constitutes or is affiliated with a Competing
Business, and nothing herein shall preclude Davidson from performing work for or providing services to a person, company or other
entity (not primarily engaged in a Competing Business) which among his/her or its businesses includes a division, section, sub-part,
subsidiary or affiliated entity engaged in a Competing Business provided that Davidson is not directly or indirectly involved in
any of the aspects, businesses, divisions, sections, sub-parts, subsidiaries or affiliated entities of such person, company or
entity which is/are engaged in a Competing Business. The Company is providing Davidson with adequate and valuable consideration
to compensate Davidson for the reasonable restrictions on his competitive activities contained within this Agreement. Davidson
hereby acknowledges the consideration and that the consideration constitutes adequate and sufficient consideration for the restrictive
covenants in this Agreement. Davidson agrees that the restrictions set forth in this Agreement are reasonable considering Davidson’s
former position. If any of the above restrictions are deemed by a court of competent jurisdiction to be unreasonable in duration
or in geographical scope, it will be considered modified and valid for such duration and geographical scope as the court determines
to be reasonable under the circumstances. The duration of the above restrictions will be extended beyond April 23, 2013 for a period
equal to the duration of any breach or default of such covenant by Davidson. Davidson has an affirmative obligation to inform any
prospective employer and/or actual employer of his post-employment obligations contained within this Agreement including his non-competition
and non-solicitation obligations. Davidson understands that the restrictions set forth in this Section 8.4 are intended to protect
the Company’s interests including, but not limited to, its Confidential Information, established and potential employment
relationships, customer and prospective customer relationships, supplier relationships, and goodwill. Davidson agrees that such
restrictions are reasonable and appropriate for this purpose.

 

    	 

    	 

    

 

8.5.          Davidson
agrees that it could be difficult to measure any damages caused to the Company which might result from any breach by him of the
promises set forth in this Section 8, and that in any event money damages could be an inadequate remedy for any such breach. Accordingly,
Davidson agrees that if he breaches, or proposes to breach, any portion of this Section 8, the Company shall be entitled, in addition
to all other remedies that it may have, to seek an injunction or other appropriate equitable relief to restrain any such breach.

 

9.          No
Reliance on Representations Not Set Forth in this Agreement; Independent Judgment; Representations and Warranties; and Binding
Effect of this Agreement.

 

9.1.          Each
Settling Party acknowledges that at no time has any individual or entity made any representations, promises, or statements (whether
oral or written) regarding the meaning, scope, benefits or obligations arising from this Agreement, except as set forth in this
Agreement. Each Settling Party warrants and represents that it has not been induced to enter into this Agreement on the basis of
any other representations, promises, or statements (whether oral or written) made by any Settling Party at any time, except representations
set forth in this Agreement.

 

9.2.          Each
Settling Party declares and represents that such Settling Party has made such investigation of the facts relating to the matters
addressed in this Agreement, as that Settling Party deems necessary. Each Settling Party further represents and warrants that in
executing this Agreement that Settling Party is relying solely on such Settling Party’s own judgment, belief, and knowledge
and upon the advice and recommendation of that Settling Party’s counsel concerning the nature, extent, and duration of such
Settling Party’s rights and obligations deriving from this Agreement.

 

    	 

    	 

    

 

9.3.          Settling
Party hereby represents and warrants that such Settling Party now holds all right, title to, and interest in any Claim or Employment
Claim released by such Settling Party hereunder, and that such Settling Party has not assigned or otherwise transferred any right,
title or interest in its Claims or Employment Claims released herein. Each Settling Party hereby covenants that it shall not assign
or otherwise transfer any right, title, or interest in any Claims or Employment Claims released herein. Each Settling Party further
represents and warrants that, with the exception of claims in the Dispute, such Settling Party is unaware of any other claims or
lawsuits arising out of the facts that are the subject of the Dispute or that are described in the Recitals.

 

9.4.          This
Agreement and each provision thereof shall be binding upon, and inure to the benefit of, each Settling Party and such Settling
Party’s respective executors, administrators, representatives, successors, agents, and assigns.

 

10.         Authorization
and Cooperation. Each Settling Party hereby represents and warrants that such Settling Party has the requisite power and
authority, and each has taken all actions necessary, including obtaining the approval of BioDrain’s board of directors (in
the case of BioDrain), to execute and deliver this Agreement, to consummate the transactions contemplated hereby and to perform
each of that Settling Party’s obligations hereunder, and no other proceedings on such Settling Party’s part are necessary
to authorize this Agreement. If any additional acts are required to consummate the transactions contemplated hereby and/or to perform
any Settling Party’s obligations hereunder, each Settling Party covenants in good faith promptly to perform such additional
acts, and to execute and deliver any documents that may be reasonably necessary to give effect to the terms of this Agreement.

 

11.         Governing
Law/Venue. The Agreement shall be construed and governed in accordance with the laws of the State of Minnesota, without
regard to its rules regarding conflicts of laws, and of the United States of America. Any action or proceeding brought by any Settling
Party to enforce this Agreement must be brought, heard and decided only in the County of Dakota, Minnesota, and the Settling Parties
hereby waive any objections they may otherwise have to personal jurisdiction or venue in said courts. In the event of a dispute
hereunder, the prevailing party shall be entitled to an award of reasonable attorney’s fees and costs.

 

12.         Interpretation.
The Agreement shall be interpreted simply and fairly and not strictly in favor of or against any Settling Party. To this end, the
Settling Parties agree that the terms of the Agreement are deemed to be the product of an arm’s length negotiation and to
have been jointly drafted.

 

13.         Time
of the Essence. Time is of the essence for all provisions of this Agreement.

 

    	 

    	 

    

 

14.         Modification.
Any amendment, supplement or modification of any term or condition of the Agreement must be in writing and signed by the Settling
Party or Settling Parties to be bound and charged.

 

15.         Headings.
The Agreement uses headings for convenience and ready reference only. Such headings are not part of the terms hereof, and are not
to be used or construed to define, limit, extend, modify or otherwise alter the terms and scope of this Agreement.

 

16.         Execution
in Counterparts.   The Agreement may be executed and delivered
in counterparts by the Settling Parties which, when taken together, shall constitute one and the same instrument and this Agreement,
when executed by all of the Settling Parties, shall be binding on each of the Settling Parties, even though each may have executed
separate counterparts of this Agreement. Facsimile signatures shall be deemed as effective as original signatures for all purposes,
but originals shall be provided by each Settling Party to the other Settling Parties.

 

17.         Entire
Agreement. This Agreement constitutes the entire agreement between the Settling Parties pertaining to the Dispute, is fully
integrated, and supersedes all prior and contemporaneous oral and written agreements, negotiations, representations, understandings,
and discussions of the Settling Parties pertaining to the Dispute. In entering the Agreement, no Settling Party is relying upon
any promises, warranties, representations, facts, definitions, or inducements not specifically set forth in the Agreement.

 

PLEASE
READ THIS DOCUMENT CAREFULLY. IT CONTAINS A GENERAL RELEASE OF CLAIMS AND EMPLOYMENT CLAIMS KNOWN AND UNKNOWN.

IN WITNESS WHEREOF,
the Settling Parties have executed and delivered this Agreement consisting of nine (9) pages, not inlcluding any attachments.

 

THE UNDERSIGNED HAVE
EACH READ THE FOREGOING AGREEMENT AND AGREE TO ITS TERMS AND CONDITIONS.

 

[SIGNATURES ON FOLLOWING PAGE]

 

[REMAINDER OF PAGE INTENTIONALLY LEFT
BLANK]

 

    	 

    	 

    

 

	Dated: October 9, 2012	BioDrain Medical, Inc..	 
	 	 	 
	 	Signed:  	/s/ Joshua Kornberg	 
	 	By: Joshua Kornberg	 
	 	Its: Chief Executive Officer	 
	 	 	 
	Dated: October 9, 2012	Atlantic Partners Alliance LLC	 
	 	 	 
	 	Signed:	/s/ Samuel Herschkowitz	 
	 	By: Samuel Herschkowitz	 
	 	Its: Managing Partner	 
	 	 	 
	Dated: October 9, 2012	SOK Partners LLC	 
	 	 	 
	 	Signed:	/s/ Samuel Herschkowitz	 
	 	By: Samuel Herschkowitz	 
	 	Its: Managing Partner	 
	 	 	 
	Dated: October 9, 2012	Joshua Kornberg	 
	 	 	 
	 	Signed:	/s/ Joshua Kornberg	 
	 	 	 
	Dated: October 9, 2012	Dr. Samuel Herschkowitz	 
	 	 	 
	 	Signed:	/s/ Samuel Herschkowitz	 
	 	 	 
	Dated: September 14, 2012	Kevin Davidson	 
	 	 	 
	 	Signed:_	/s/ Kevin Davidson

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