PROMISSORY NOTE


 


	
        Principal

        $500,000.00
	
        Loan Date

        02-15-2013
	
        Maturity

        02-15-2014
	
        Loan No

        4060026
	
        Call/Coll

        610
	Account	
        Officer

        KRH
	Initials


 


References in the boxes
above are for Lender's use only and do not limit the applicability of this document to any particular loan or item.


Any item above containing"'
•• " has been omitted due to text length limitations.


___________________________________________________________________________________________________________


 





	Borrower:  	PROUROCARE MEDICAL. INC 	Lender: 	Crown Bank
		6440 FLYING CLOUD DR #101 	 	Edina Office
		EDEN PRAIRIE. MN 55344	 	6600 France Avenue South Suite 125
	 	 	 	Edina. MN 55435







 






 


Principal
Amount: $500,000.00Date of Note: February 15, 2013


 


PROMISE TO PAY. PROUROCARE
MEDICAL. INC ("Borrower”) promises to pay to Crown Bank ("Lender”), or order. in lawful money of the United
States of America, the principal amount of Five Hundred Thousand & 00/100 Dollars ($500.000.00) together with interest
on the unpaid principal balance from February 15. 2013, until paid in full.


 


PAYMENT. Borrower will
pay this loan in full immediately upon Lender's demand. If no demand is made, subject to any payment changes resulting from changes
in the Index. Borrower will pay this loan in accordance with the following payment schedule:


 


11 INTEREST
ONLY PAYMENTS BEGINNING MARCH 15. 2013 AND CONTINUING AT MONTHLY TIME INTERVALS THEREAFTER. A PRINCIPAL PAYMENT IN THE AMOUNT OF
$50.000.00 IS DUE AND PAYABLE JANUARY 15. 2014. A FINAL PAYMENT OF ANY UNPAID PRINCIPAL PLUS ACCRUED INTEREST IS DUE AND PAYABLE
FEBRUARY 15, 2014.


 


Unless otherwise agreed
or required by applicable law, payments will be applied first to any accrued unpaid interest; then to principal; then to any late
charges; and then to any unpaid collection costs. Borrower will pay Lender at Lender's address shown above or at such other place
as Lender may designate in writing.


 


VARIABLE INTEREST RATE.
The interest rate on this Note is subject to change from time to time based on changes in an index which is Lender's Prime Rate
(the "Index"'). This is the rate Lender charges, or would charge, on 90-day unsecured loans to the most creditworthy
corporate customers. This rate may or may not be the lowest rate available from Lender at any given time. Lender will tell Borrower
the current Index rate upon Borrower's request. The interest rate change will not occur more often than each day. Borrower understands
that Lender may make loans based on other rates as well. The Index currently is 3.250% per annum. Interest on the unpaid
principal balance of this Note will be calculated as described in the "INTEREST CALCULATION METHOD" paragraph using a
rate of 1.000 percentage point over the Index, rounded up to the nearest 0.001 percent, adjusted if necessary for any minimum and
maximum rate limitations described below, resulting in an initial rate of 6.000% per annum based on a year of 360 days. NOTICE:
Under no circumstances will the interest rate on this Note be less than 6.000% per annum or more than the maximum rate allowed
by applicable law. Whenever increases occur in the interest rate, Lender, at its option, may do one or more of the following: (A)
increase Borrower's payments to ensure Borrower's loan will payoff by its original final maturity date. (B) increase Borrower's
payments to cover accruing interest. (C) increase the number of Borrower's payments, and (D) continue Borrower's payments at the
same amount and increase Borrower's final payment.


 


INTEREST CALCULATION
METHOD. Interest on this Note is computed on a 365/360 basis; that is, by applying the ratio of the interest rate over a
year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance
is outstanding. All interest payable under this Note is computed using this method. This calculation method results in a higher
effective interest rate than the numeric interest rate stated in this Note.


 


PREPAYMENT.  Borrower
may pay without penalty all or a portion of the amount owed earlier than it is due. Early payments will not, unless agreed to by
Lender in writing, relieve Borrower of Borrower's obligation to continue to make payments under the payment schedule. Rather, early
payments will reduce the principal balance due and may result in Borrower's making fewer payments. Borrower agrees not to send
Lender payments marked "paid in full", "without recourse", or similar language. If Borrower sends such a payment,
Lender may accept it without losing any of Lender's rights under this Note, and Borrower will remain obligated to pay any further
amount owed to Lender. All written communications concerning disputed amounts, including any check or other payment instrument
that indicates that the payment constitutes "payment in full" of the amount owed or that is tendered with other conditions
or limitations or as full satisfaction of a disputed amount must be mailed or delivered to: Crown Bank, Edina Office. 6600 France
Avenue South Suite 125 Edina. MN 55435.


 


LATE CHARGE. If
a payment is 11 days or more late. Borrower will be charged 5.000% of the unpaid portion of the regularly scheduled payment.


 


INTEREST AFTER DEFAULT.
Upon default, including failure to pay upon final maturity, the interest rate on this Note shall be increased by adding an additional
2.000 percentage point margin ("Default Rate Margin"). The Default Rate Margin shall also apply to each succeeding interest
rate change that would have applied had there been no default. However, in no event will the interest rate exceed the maximum interest
rate limitations under applicable law.


 


DEFAULT. Each of
the following shall constitute an event of default ("Event of Default") under this Note:


 


Payment Default.
Borrower fails to make any payment when due under this Note.


 


Other Defaults.
Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Note or in any
of the related documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement
between Lender and Borrower.


 


False Statements.
Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower's behalf under this Note or the
related documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false
or misleading at any time thereafter.


 


Insolvency.
The dissolution or termination of Borrower's existence as a going business, the insolvency of Borrower, the appointment of a receiver
for any part of Borrower's property. any assignment for the benefit of creditors, any type of creditor workout, or the commencement
of any proceeding under any bankruptcy or insolvency laws by or against Borrower.


 


Creditor or
Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method by any creditor of Borrower or by any governmental agency against any collateral securing the
loan. This includes a garnishment of any of Borrower's accounts, including deposit accounts, with Lender. However, this Event
of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which
is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture
proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined
by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute. 






    	 



    	 



    

 


PROMISSORY NOTE


 





	Loan No: 4060026 	 (Continued) 	Page 2







 





 









Events
Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the indebtedness or any Guarantor
dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any guaranty of the indebtedness evidenced
by this Note. 


 


Change In Ownership.
Any change in ownership of twenty-five percent (25%) or more of the common stock of Borrower.


 


Adverse
Change. A material adverse change occurs in Borrower's financial condition, or
Lender believes the prospect of payment or performance of this Note is impaired. 


 


Insecurity.
Lender in good faith believes itself insecure. 


 


LENDER'S
RIGHTS. Upon default,
Lender may declare the entire unpaid principal balance under this Note and all accrued unpaid
interest immediately due, and then Borrower will pay that
amount.


 


ATTORNEYS'
FEES; EXPENSES. Lender may hire or pay someone else to help collect this
Note if Borrower does not pay. Borrower will pay Lender that amount. This
includes, subject to any limits under applicable law, Lender's reasonable attorneys' fees
and Lender's legal expenses, whether or not there is a lawsuit, including reasonable attorneys' fees, expenses for bankruptcy proceedings
(including efforts to modify or vacate any automatic stay or injunction), and appeals. If
not prohibited by applicable law, Borrower also will pay
any court costs, in addition to all other sums provided by law.


 


GOVERNING
LAW. This Note will be governed by federal law applicable
to Lender and, to the extent not preempted by federal law, the laws of the State of Minnesota without regard to its conflicts of
law provisions. This Note has been accepted by Lender in the State of Minnesota.


 


CHOICE OF VENUE.
If there is a lawsuit, Borrower agrees upon Lender's request to submit to the jurisdiction of the courts of Hennepin County, State
of Minnesota.


 


RIGHT OF
SETOFF. To the extent permitted by applicable law,
Lender reserves a right of setoff in all Borrower's accounts with Lender (whether checking, savings,
or some other account). This includes all accounts Borrower holds jointly with someone else
and all accounts Borrower may open in the future. However,
this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law.
Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff
all sums owing on the indebtedness against any and all such accounts, and,
at Lender's option, to administratively freeze all such
accounts to allow Lender to protect Lender's charge and setoff rights provided in
this paragraph.


 


COLLATERAL.
Borrower acknowledges this Note is secured by AN EXISTING SECURITY AGREEMENT DATED 10/10/2007 AND GUARANTEED BY 2 EXISTING GUARANTIES
BOTH DATED 06/28/2010.



 


CORPORATE
TAX RETURN. BORROWER WILL PROVIDE AN ANNUAL CORPORATE TAX RETURN WITHIN 120 DAYS OF YEAR END.



 


YEAR END
STATEMENT. BORROWER WILL PROVIDE AN ANNUAL FINANCIAL STATEMENT WITHIN 120 DAYS OF YEAR END.



 


PERSONAL
FINANCIAL STATEMENT. GUARANTOR WILL PROVIDE AN ANNUAL PERSONAL FINANCIAL STATEMENT WITHIN 30 DAYS OF YEAR END.


 


PERSONAL TAX RETURN.
GUARANTOR WILL PROVIDE AN ANNUAL PERSONAL TAX RETURN WITHIN 120 DAYS OF YEAR END


 


SUCCESSOR
INTERESTS. The terms of this Note shall be binding upon Borrower, and upon Borrower's heirs, personal representatives, successors
and assigns, and shall inure to the benefit of Lender and its successors and assigns.


 


GENERAL
PROVISIONS. This
Note is payable on demand. The inclusion of specific default provisions or rights of Lender shall not preclude Lender's
right to declare payment of this Note on its demand. If
any part of this Note cannot be enforced, this fact will
not affect the rest of the Note. Lender may delay or forgo
enforcing any of its rights or remedies
under this Note without losing them. In addition,
Lender shall have all the rights and remedies provided in the related documents or available
at law, in equity, or otherwise. Except as may be prohibited
by applicable law, all of Lender's rights and remedies shall be cumulative and may be exercised singularly or concurrently.
Election by Lender to pursue any remedy shall not exclude pursuit of any other remedy, and
an election to make expenditures or to take action to perform an obligation
of Borrower shall not affect Lender's right to declare a default and to exercise its rights and remedies.
Borrower and any other person who signs, guarantees
or endorses this Note, to the extent allowed by law, waive presentment, demand for payment, and notice of dishonor. Upon any change
in the terms of this Note, and unless otherwise expressly stated in writing, no party who signs this Note, whether as maker, guarantor,
accommodation maker or endorser, shall be released from liability. All such parties agree that Lender may renew or extend (repeatedly
and for any length of time) this loan or release any party or guarantor or collateral; or impair, fail to realize upon or perfect
Lender's security interest in the collateral; and take
any other action deemed necessary by Lender without the consent of or notice to anyone. All such parties also agree that Lender
may modify this loan without the consent of or notice to anyone other than the party with whom the modification is made. The obligations
under this Note are joint and several.


 


SECTION DISCLOSURE.
To the extent not preempted by federal law, this loan is made under Minnesota Statutes, Section 47.59.





 


PRIOR TO
SIGNING THIS NOTE. BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS.
BORROWER AGREES TO THE TERMS OF THE NOTE.


 


BORROWER ACKNOWLEDGES
RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.


 


BORROWER:


 


By: /s/Richard B Thon





 


RICHARD THON, Chief Financial Officer of--





PROUROCARE MEDICAL, INC