Exhibit 10.47


 


SECURITY
AGREEMENT


 


DATE AND PARTIES.  This Security
Agreement (Agreement) is made effective as of September 23, 2009.  The parties and their addresses are:


 


SECURED PARTY:


 


Bruce A. Johnson

1220 Karth Lake
Dr.

Arden Hills, MN 55112


 


DEBTOR:


 


PROUROCARE
INC

a Minnesota Corporation

6440 Flying Cloud Dr., STE 101

Eden Prairie, MN  55344


 


The
pronouns “you” and “your” refer to the Secured Party.  The pronouns “we,” “us” and “our” refer to
each person or entity signing this Agreement as Debtor and agreeing to give the
Property described in this Agreement as security for the Secured Debt.


 


1.     SECURED DEBT.  The
term “Secured Debt” includes and this Agreement will secure each of the
following:


 


A.  Specific
Debts.  The following debts and all extensions,
renewals, refinancings, modifications and replacements.  A guaranty provided by you for a promissory
note dated as of the date hereof, from us to Central Bank, in the amount of $100,000.00.


 


2.     SECURITY
INTEREST.  To secure the
payment and performance of the Secured Debt, we give you a security interest in
all of the Property that we own or have sufficient rights in which to transfer
an interest, now or in the future, wherever the Property is or will be located,
and all proceeds and products from the Property (including, but not limited to,
all parts, accessories, repairs, replacements, improvements, and accessions to
the Property).  “Property” is all the
collateral given as security for our existing Crown Bank loan and described in
this Agreement, and includes all obligations that support the payment or
performance of the Property.  “Proceeds”
includes anything acquired upon the sale, lease, license, exchange, or other
disposition of the Property; any rights and claims arising from the Property;
and any collections and distributions on account of the Property.


 


.  We represent that we own or have rights in
all of the Property.  The Property has
been pledged as collateral to secure loans at Crown Bank.  It has also been pledged as collateral on a
loan with the Phillips W. Smith Family Trust (Smith Trust) and a loan with Jack
B. Petersen (Petersen).  Your claim to
the Property is equal to the claim of the Smith Trust and Petersen and other
secured creditors who have a security interest in the Property similar to
yours, and ahead of the claims of any other creditor, except for Crown Bank,
its successors or assigns or any replacement senior secured lender (the “Senior
Secured Lender”), or as otherwise disclosed in writing to you prior to any
advance on the Secured Debt.


 


3.     PROPERTY DESCRIPTION. 
The Property is described as follows:


 


A.  Inventory. 
All inventory which we hold for ultimate sale or lease, or which has
been or will be supplied under contracts of service, or which are raw
materials, work in process, or materials used or consumed in our business.


 


B.  Accounts
and Other Rights to Payment.  All rights we
have now or in the future to payments including, but not limited to, payment
for property or services sold, leased, rented, licensed, or assigned, whether
or not we have earned such payment by performance.  This includes any rights and interests
(including all liens and security interests) which we may have by law or
agreement against any Account Debtor or obligor of ours.


 


C.  General
Intangibles.  All general intangibles including, but not
limited to, tax refunds, applications for patents, patents, licenses, copyrights,
trademarks, trade secrets, good will, trade names, customer lists, permits and
franchises, payment intangibles, computer programs and all supporting
information provided in connection with a transaction relating to computer
programs, and the right to use our name.


 


D.  Equipment. 
All equipment including, but not limited to, all machinery, vehicles,
furniture, fixtures, manufacturing equipment, shop equipment, office and
recordkeeping equipment, and parts and tools. 
All equipment described in a list or schedule which we give to you will
also be included in the Property, but such a list is not necessary for a valid
security interest in our equipment.


 


4.     WARRANTIES AND REPRESENTATIONS.  We make to you the following warranties and
representations which will continue as long as this Agreement is in effect:


 

















 


A.  Power. 
We are duly organized, and validly existing and in good standing in all
jurisdictions in which we operate, we have the power and authority to enter
into this transaction and to carry on our business or activity as it is now
being conducted and, as applicable, am qualified to do so in each jurisdiction
in which we operate.


 


B.  Authority. 
The execution, delivery and performance of this Agreement and the
obligation evidenced by this Agreement are within our powers, have been duly
authorized, have received all necessary governmental approval, will not violate
any provision of law, or order of court or governmental agency, and will not
violate any agreement to which we are a party or to which we are or any of our
property is subject.


 


C.  Name
and Location.  Our name indicated in the DATE AND PARTIES
section is our exact legal name.  We are
an entity organized and registered under the laws of Minnesota.  We will provide verification of registration
and location upon your request.  We will
provide you with at least 30 days notice prior to any change in our name,
address, or state of organization or registration.


 


D.  Ownership
of Property.  We represent that we own all of the
Property.  The Property has been pledged
as collateral to secure loans at Crown Bank. 
It has also been pledged as collateral on a loan with the Smith Trust
and a loan with Petersen.  Your claim to
the Property is equal to the claim of the Smith Trust and Petersen and other
secured creditors who have a security interest in the Property similar to
yours, and ahead of the claims of any other creditor, except for Crown Bank,
its successors or assigns or any replacement senior secured lender (the “Senior
Secured Lender”), or as otherwise disclosed in writing to you prior to any
advance on the Secured Debt.  We represent
that we are the original owner of the Property and, if we are not, that we have
provided you with a list of prior owners of the Property.


 


5.     DUTIES TOWARD
PROPERTY.


 


A.  Protection
of Secured Party’s Interest.  We will
defend the Property against any other claim other than the lien in favor of the
Senior Secured Lender and other secured creditors who have a security interest
in the Property similar to yours.  We agree
to do whatever you reasonably require to protect your security interest and to
keep your claim in the Property ahead of the claims of other creditors other
than the lien in favor of The Senior Secured Lender and equal to the claim of
other secured creditors who have a security interest in the Property similar to
yours.  We will not do anything to harm
your position.


 


We will keep books,
records and accounts about the Property and our business in general.  We will let you examine these and make copies
at any reasonable time.  We will prepare
any reasonable report or accounting you request which deals with the Property.


 


B.  Use,
Location, and Protection of the Property.  We will keep
the Property in our possession and in good repair.  We will use it only for commercial
purposes.  We will not cause or permit
waste to the Property.


 


Until the Secured Debt is
fully paid and this Agreement is terminated, we will not grant a security
interest having priority over your security interest in any of the Property
without your prior written consent other than the lien in favor of the Senior
Secured Lender.  We will pay all taxes
and assessments levied or assessed against us or the Property and provide
timely proof of payment of these taxes and assessments upon request.


 


C.  Selling,
Leasing or Encumbering the Property.  We will not
sell, offer to sell, lease, or otherwise transfer or encumber the Property
without your prior written permission, except for Inventory sold in the
ordinary course of business at fair market value, or at a minimum price
established between you and us and except for the lien in favor of the Senior
Secured Lender and liens in favor of other secured creditors who have a
security interest in the Property similar to yours.  If we are in default under this Note, we may
not sell the Inventory portion of the Property even in the ordinary course of
business.  Any disposition of the Property
contrary to this Note will violate your rights. 
Your permission to sell the Property may be reasonably withheld without
regard to the creditworthiness of any buyer or transferee.  We will not permit the Property to be the
subject of any court order affecting our rights to the Property in any action
by anyone other than you.


 


6.     COLLECTION RIGHTS OF THE SECURED PARTY.  Account Debtor means the person who is
obligated on an account, chattel paper, or general intangible.  We authorize you to notify our Account
Debtors of your security interest and to deal with the Account Debtors’
obligations at your discretion.  You may
enforce the obligations of an Account Debtor, exercising any of our rights with
respect to the Account Debtors’ obligations to make payment or otherwise render
performance to us, including the enforcement of any security interest that
secures such obligations.  You may apply
proceeds received from the Account Debtors to the Secured Debt or you may
release such proceeds to us.


 


We specifically
and irrevocably authorize you to exercise any of the following powers at our
expense, without limitation, until the Secured Debt are paid in full:


 


A.  demand payment and enforce collection
from any Account Debtor or Obligor by suit or otherwise,


 


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B.  enforce any security interest, lien or
encumbrance given to secure the payment or performance of any Account Debtor or
any obligation constituting Property.


 


C.  file proofs of claim or similar documents
in the event of bankruptcy, insolvency or death of any person obligated as an
Account Debtor.


 


D.  compromise, release, extend, or exchange
any indebtedness of an Account Debtor.


 


E.  take control of any proceeds of the
Account Debtors obligations and any returned or repossessed goods.


 


F.  endorse all payments by any Account
Debtor which may come into your possession as payable to us.


 


G.  deal in all respects as the holder and
owner of the Account Debtors’ obligations.


 


7.     AUTHORITY TO PERFORM. 
We authorize you to do anything you deem reasonably necessary to protect
the Property, and perfect and continue your security interest in the
Property.  If we fail to perform any of our
duties under this Agreement, you are authorized to perform the duties or cause
them to be performed.


 


These
authorizations include, but are not limited to, permission to:


 


A.  pay and discharge taxes, liens, security
interests or other encumbrances at any time levied or placed on the Property.


 


B.  pay any rents or other charges under any
lease affecting the Property.


 


C.  order and pay for the repair, maintenance
and preservation of the Property.


 


D.  file any financing statements on our
behalf and pay for filing and recording fees pertaining to the Property.


 


E.  place a note on any chattel paper
indicating your interest in the Property.


 


F.  take any action you feel necessary to
realize on the Property, including performing any part of a contract or
endorsing it in our name.


 


G.  handle any suits or other proceedings
involving the Property in our name.


 


H.  prepare, file, and sign our name to any
necessary reports or accountings.


 


I.  make an entry on our books and records
showing the existence of this Agreement


 


J.  notify any Account Debtor of your
interest in the Property and tell the Account Debtor to make payments to you or
someone else you name.


 


If you
perform for us, you will use reasonable care. 
If you exercise the care and follow the procedures that you generally
apply to the collection of obligations owed to you, you will be deemed to be
using reasonable care.  Reasonable care
will not include:  any steps necessary to
preserve rights against prior parties; the duty to send notices, perform services
or take any other action in connection with the management of the Property; or
the duty to protect, preserve or maintain any security interest given to others
by us or other parties.  Your
authorization to perform for us will not create an obligation to perform and
your failure to perform will not preclude you from exercising any other rights
under the law or this Agreement.  All
cash and non-cash proceeds of the Property may be applied by you only upon your
actual receipt of cash proceeds against such of the Secured Debt, matured or
unmatured, as you determine in your sole discretion.


 


If you
come into actual or constructive possession of the Property, you will preserve
and protect the Property.  For purposes
of this paragraph, you will be in actual possession of the Property only when
you have physical, immediate and exclusive control over the Property and you
have affirmatively accepted that control. 
You will be in constructive possession of the Property only when you
have both the power and the intent to exercise control over the Property.


 


8.     DEFAULT.  We will be
in default if any of the following occur:


 


A.  Payments.  We fail to make a
payment in full when due, and fail to make such payment within five (5) days’
of your giving us notice of such failure to make the payment.


 


B.  Default of Secured Debt.  We default under
the terms of any other debt collateralized by the Property.


 


C.  Insolvency or Bankruptcy.  The death,
dissolution or insolvency of appointment of a receiver by or on behalf of,
application of any debtor relief law, the assignment for the benefit of
creditors by or on behalf of, the voluntary or involuntary termination of 


 


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existence
by, or the commencement of any proceeding under any present or future federal
or state insolvency, bankruptcy, reorganization, composition or debtor relief
law by or against us.


 


D.  Business Termination.  We merge, dissolve,
reorganize, end our business or existence.


 


E.  Failure to Perform.
 We fail to perform any condition or to keep
any promise or covenant of this Note and fail to cure this lack of performance
within fifteen (15) days of your giving us notice thereof.


 


F.  Misrepresentation.  We make any verbal or written statement or provide any
financial information that is untrue, inaccurate, or conceals a material fact
at the time it is made or provided.


 


G.  Judgment.  We fail to satisfy
or appeal any judgment against us.


 


H.  Forfeiture.  The Property is
used in a manner or for a purpose that threatens confiscation by a legal
authority.


 


I.  Name Change.  We change our name
or assume an additional name without notifying you before making such a change.


 


9.     REMEDIES.  After we default,
and after you give any legally required notice and opportunity to cure the
default, you may at your option do any one or more of the following.


 


A.  Acceleration. 
You may make all or any part of the amount owing by the terms of the Secured
Debt immediately due.


 


B.  Sources. 
You may use any and all remedies you have under State or federal law or
in any Loan Document.


 


C.  Assembly
of Property.  You may require us to gather the Property and
make it available to you in a reasonable fashion.


 


D.  Repossession. 
You may repossess the Property so long as the repossession does not
involve a breach of the peace.  You may
sell, lease or otherwise dispose of the Property as provided by law.  You may apply what you receive from the
disposition of the Property to your expenses, your attorneys fees and legal
expenses (where not prohibited by law), and any debt we owe you.  If what you receive from the disposition of
the Property does not satisfy the debt, we will be liable for the deficiency
(where permitted by law).  In some cases,
you may keep the Property to satisfy the debt.


 


Where a notice is required, we agree that ten
days prior written notice sent by first class mail to our address listed in
this Agreement will be reasonable notice to us under the Minnesota Uniform
Commercial Code.  If the Property is
perishable or threatens to decline speedily in value, you may, without notice
to us, dispose of any or all of the Property in a commercially reasonable
manner at our expense following any commercially reasonable preparation or
processing.


 


If any items not otherwise subject to this
Agreement are contained in the Property when you take possession, you may hold
these items for us at our risk and you will not be liable for taking possession
of them.


 


E.  Use
and Operation.  You may enter upon our premises and take
possession of all or any part of our property for the purpose of preserving the
Property or its value, so long as you do not breach the peace.  You may use and operate our property for the
length of time you feel is necessary to protect your interest, all without
payment or compensation to us.


 


F.  Waiver. 
By choosing any one or more of these remedies you do not give up your
right to use any other remedy, you do not waive a default if you choose not to
use a remedy.  By electing not to use any
remedy, you do not waive your right to later consider the event a default and
to use any remedies if the default continues or occurs again.


 


10.  WAIVER OF CLAIMS.  We waive
all claims for loss or damage caused by your acts or omissions where you acted
reasonably and in good faith.


 


11.  PERFECTION OF SECURITY INTEREST AND COSTS.  We authorize you to file a financing
statement covering the Property.  We will
comply with, facilitate, and otherwise assist you in connection with obtaining
perfection or control over the Property for purposes of perfecting your
security interest under the Uniform Commercial Code.  We agree to pay all taxes, fees and costs you
pay or incur in connection with preparing, filing or recording any financing
statements or other security interest filings on the Property.  We agree to pay all actual costs of
terminating your security interest.


 


12.  APPLICABLE LAW.  This
Agreement is governed by the laws of Minnesota, the United States of America,
and to the extent required, by the laws of the jurisdiction where the Property
is located, except to the extent such state laws are preempted by federal law.  In the event of a dispute, the exclusive
forum, venue end place of jurisdiction will be in Minnesota, unless otherwise
required by law,


 


13.  SUCCESSORS.  If you
assign any of the Secured Debt, you may assign all or any part of this
Agreement without notice to us or our consent, and this Agreement will inure to
the benefit of your assignee to the extent of such assignment.  You will continue to have the unimpaired
right to enforce this Agreement as to any of the Secured Debt that are not
assigned.  This Agreement shall inure to
the 


 


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benefit of and be enforceable by you and your
successors and assigns and any other person to whom you may grant an interest
in the Secured Debt and shall be binding upon and enforceable against us and our
successors and assigns.


 


14.  AMENDMENT, INTEGRATION AND SEVERABILITY.  This Agreement may not be amended or modified
by oral agreement.  No amendment or
modification of this Agreement is effective unless made in writing and executed
by you and us.  This Agreement is the
complete and final expression of the understanding between you and us.  If any provision of this Agreement is
unenforceable, then the unenforceable provision will be severed and the
remaining provisions will still be enforceable.


 


15.  INTERPRETATION. 
Whenever used, the singular includes the plural and the plural includes
the singular.  The section headings are
for convenience only and are not to be used to interpret or define the terms of
this Agreement.


 


16.  NOTICE, FINANCIAL REPORTS AND ADDITIONAL DOCUMENTS.  Unless otherwise required by law, any notice
will be given by delivering it or mailing it by first class mail to the
appropriate party’s address listed in the DATE AND PARTIES section, or to any
other address designated in writing.  We will
inform you in writing of any change in our name, address or other application
information.  We will provide you any
financial statement or information you request. 
All financial statements and information we give you will be correct and
complete.  We agree to sign, deliver, and
file any additional documents or certifications that you may consider necessary
to perfect, continue, and preserve our obligations under this Agreement and to
confirm your lien status on any Property. 
Time is of the essence.


 


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SIGNATURES.  By signing,
we agree to the terms contained in this Agreement.  We also acknowledge receipt of a copy of this
Agreement.


 


DEBTOR:


 


PROUROCARE, INC.


 


 


	
  By:

  	
  /s/ Richard C. Carlson

  	
   

  	
  Date:

  	
  9/23/09

  
	
   

  	
  Its: 

  	
           CEO

  	
   

  	
   

  	
   

  
						



 


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