Exhibit 10.6
OPTION AGREEMENT
THIS
OPTION AGREEMENT (the
“Option Agreement”) is made and entered into effective
as of June 5, 2008, by and between BioDrain Medical, Inc., a
Minnesota corporation (“the Company”) and Kevin R.
Davidson (“Davidson”), an individual residing in the
state of Minnesota.
W
I T N E S S E T H
WHEREAS,
the Company and Davidson are parties to an Employment Agreement
dated October 4, 2006 (the “Agreement”); and
WHEREAS,
under the Agreement, the Company may be required to issue shares of
common stock of the Company to Davidson; and
WHEREAS,
the parties desire to modify the Agreement to provide that the
Company will issue options to acquire common stock of the Company
in place of common stock of the Company.
NOW,
THEREFORE, in consideration of the foregoing premises and for other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company hereby grants to
Davidson an option to purchase common stock of the Company upon the
terms and conditions set forth herein to which the Company and
Davidson hereby agree:
1.)
Grant of Option . The Company hereby grants to Davidson an
Option (the “Option”) effective as of the date hereof
(the “Date of Grant”) to purchase an aggregate of
543,292 shares of common stock of the Company (the “Options
Shares”) upon the terms and conditions set forth herein and
subject to any adjustments pursuant to the provisions of Section 7.
Such Option is a “non-qualified” stock option under the
Internal Revenue Code.
2.)
Option Price . Subject to any adjustments pursuant to the
provisions of Section 7, the exercise price of the Option Shares
(“the Option Price”) is one cent ($.01) per Option
Share. The Option Price, if and when paid, shall be deemed to be a
capital contribution to the Company by Davidson.
3.)
Vesting; Term of Option . Except as otherwise provided in
this Agreement, the Option shall be fully vested immediately and
shall be exercisable by Davidson until June 5, 2018.
4.)
Manner of Exercise . Subject to the terms and conditions of
this Agreement, Davidson may exercise the Option by providing
written notice to the Company which:
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(a) States that the Option is
being exercised and sets forth the number of Option Shares with
respect to which the Option is being exercised (the Option may be
exercised in increments of 10,000 shares or, if fewer, all
remaining Shares); and
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(b) Represents that it is being
exercised by Davidson for his own account; and
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(c) Is signed by Davidson;
and
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(d) Is accompanied by payment of
the exercise price.
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Notice which is deficient in any
particular manner shall not constitute an exercise of the
Option.
5.)
Status as Shareholder: Delivery of Certificate . Upon close
of business on the date of exercise, Davidson shall be a
shareholder of the Company without regard to whether a certificate
representing the Option Shares shall have issued. Within fifteen
(15) business days after exercise, the Company shall deliver a
certificate evidencing the Option Shares to Davidson.
6.)
Payment of Exercise Price . Upon exercise, and as a
condition to exercise, Davidson shall pay the Option Price for the
Option Shares being purchased by delivery of cash, check, bank
draft, or money order made payable to the Company in an amount
equal to the aggregate exercise price or in any other manner
acceptable to the Company.
7.)
Adjustments for Changes in Shares . The number of Option
Shares issuable upon the exercise of all or a portion of the Option
shall be subject to adjustment from time to time upon the happening
of the following events:
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(a) In case the Company shall
subdivide its outstanding shares into a greater number of shares or
declare a dividend or distribution payable in shares, the number of
shares issuable hereunder shall be proportionately increased and
the Option Price shall be proportionately decreased. Conversely, in
case the outstanding shares shall be combined into a smaller number
of shares, the number of shares issuable hereunder shall be
proportionately decreased and the Option Price shall be
proportionately increased. Upon occurrence of each such event, the
Chief Financial Officer or President of the Company shall prepare a
certificate of calculation of such adjustment and deliver a copy of
such calculation to Davidson.
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(b) If any capital reorganization
or reclassification of the shares of the Company or consolidation
or merger of the Company with another corporation or a limited
liability company shall be effected in such a way that holders of
shares shall become entitled to receive stock, securities, or other
assets with respect to or in exchange for such shares, then the
Optionee shall have the right to purchase and receive upon the
terms and conditions specified in the Option, and in lieu of the
shares immediately theretofore purchasable and receivable upon the
exercise of this Option, such substituted property as would have
been issued or delivered to the Optionee with respect to or in
exchange for the Option Shares as would have been issued or
delivered to the Optionee if he had exercised the Option and had
received, upon exercise of the Option, the Option Shares
immediately prior to such reorganization, reclassification,
consolidation, merger, or sale.
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8.)
Postponement of Exercise . Notwithstanding anything herein
to the contrary, the Company shall have the right to delay any
exercise for a period of up to one hundred eighty (180) days for
the purpose of ensuring the availability of an exemption under
applicable securities law for the issuance of the Option Shares to
the Optionee in light of other transactions by the
2.
Company in its securities. If the
Company elects to delay any such exercise, the Company shall inform
the Optionee, in writing, of such delay and the term of such delay.
Any such delay shall not lead to any change in the Option Price or
the terms of the Option and shall not extend the term of any Option
unless such delay would extend past the expiration date of such
Option. In such
