Exhibit 4.6


 


THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, OR APPLICABLE STATE SECURITIES LAW. THESE SECURITIES
HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ASSIGNED OR OTHERWISE DISPOSED OF, AND NO
TRANSFER OF THE SECURITIES WILL BE MADE BY THE COMPANY OR ITS TRANSFER AGENT,
IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL ACCEPTABLE TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.


 


PROUROCARE MEDICAL INC.


 


10% UNSECURED CONVERTIBLE
SUBORDINATED DEBENTURE


 


	
  Principal: $200,000.00

  	
  February 17, 2006

  
	
  Debenture Number— D-001

  	
  Plymouth, Minnesota

  



 


For Value Received, the undersigned, ProUroCare
Medical Inc.,
organized and validly existing under the laws of the State of Nevada, whose
mailing address is One Carlson Parkway, Suite 124, Plymouth, Minnesota 55447,
and its successors and assigns (the “Maker”),
hereby unconditionally promises to pay to the order of James L. Davis, a resident of the State of Nevada, having a mailing
address of 2204 Hot Oak Ridge Street, Las Vegas, Nevada 89134 and his/her
successors and assigns (the “Holder”),
at such place as may be designated from time to time by the Holder, the
principal sum of $200,000.00, the original principal balance hereof, together
with all accrued and unpaid interest thereon in accordance with the terms of
this 10% Unsecured Convertible Subordinated Debenture (this “Debenture”).


 


The parties acknowledge that this Debenture is being issued as one in a
series of Debentures in connection with a $2,000,000 private placement of
Debentures (subject to possible increase in the sole discretion of the Maker
without notice) conducted by the Maker (the “Placement”).
The Debentures issued in the Placement are being issued pursuant to the Holders’
personal guarantees providing credit enhancement to and support for up to a
$6,000,000 senior credit facility of Maker (the “Senior
Credit Facility”). This Debenture and all other Debentures
issued in the Placement have identical terms and provisions (except for the
specific sums at issue) and are due and payable in full in thirty six (36)
months from issuance and delivery. This Debenture is being issued pursuant to
and is subject to the terms and provisions of a Subscription and Representation
Agreement between the Maker and Holder (the “Subscription
Agreement”). The provisions of the Holder’s Subscription
Agreement are incorporated herein by reference with the same force and effect
as if fully set forth herein.


 

















 


Acceptance of
this Debenture by the Holder shall be deemed agreement by the Holder of the
terms included or incorporated in this Debenture. All payments under this
Debenture shall be made in U.S. dollars and by check mailed by the Maker to the
address of the Holder set forth above.


 


1. Interest
Payment; Maturity; Subordination.


 


(a)          Stated Rate and Accrued Interest; Interest Paid Monthly. This Debenture shall
accrue interest on the outstanding principal balance at an annual rate of 10%
until paid in full, or otherwise converted into Maker’s common stock, as
permitted or required hereunder. All interest due hereon shall be paid to
Holder monthly and on the first business day of each calendar month hereunder.


 


(b)         Maturity Date. The entire principal amount of this Debenture shall be due and
payable in full at 5:00 p.m. in the Central Time Zone on February 16, 2009,
unless otherwise previously converted into Maker’s common stock in accordance
herewith. (the “Maturity Date”).


 


(c)          Subordination By Holder. The Holder, by acceptance of
this Debenture, covenants and agrees that the payment of principal and interest
under this Debenture is hereby expressly subordinated to any and all existing
Maker Senior Debt (as defined below). The Holder acknowledges and agrees that
all Debentures, loan agreements and other documents and instruments related to
Senior Debt (the “Senior Debt Documents”) may limit the actions that may be
taken by the Holder hereunder and, in such event, the Holder agrees to take
only such action and to such extent as may then be allowed by the Senior Debt
Documents. “Senior Debt” shall mean all principal of (and premium of, if any)
and unpaid interest on all indebtedness of the Maker created, incurred,
assumed, or guaranteed by the Maker, or for which the Maker is otherwise
directly or indirectly liable, for money borrowed: (i) from any banks, finance
companies, trust companies, pension trusts, insurance companies, or other
financial institutions unless the instrument under which such debt is created, incurred,
assumed or guaranteed by the Maker expressly provide that such debt is not
senior or superior in right of payment to this Debenture; and (ii) from any
other third parties where any of the instruments under which such other third
party debt is created, incurred, assumed or guaranteed by the Maker expressly
provides that such debt is senior or superior in right of payment to this
Debenture.


 


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Upon (i) the maturity of
Senior Debt, including by acceleration or otherwise, or (ii) any distribution
of the assets of the Maker upon dissolution, winding up, liquidation or
reorganization of the Maker, the holders of such Senior Debt are entitled to
receive payment in full before the Holder of this Debenture is entitled to
receive any payment. With the exception of the foregoing, this Debenture shall
rank equally with the Maker’s other unsecured debt (including, without
limitation, all other Debentures) to the extent such other unsecured debt, by
its express terms, is not superior in right of payment to this Debenture with
respect to receiving payments or other distributions.


 


2.               Compliance with Securities Laws
and Other Transfer Restrictions.


 


(a)          Investment Intent. The Holder of this Debenture, by acceptance hereof, agrees, represents
and warrants that this Debenture is being acquired for investment purposes,
that the Holder has no present intention to resell or otherwise dispose of all
or any part of this Debenture.


 


(b)         Transfer. In the event the Holder of this Debenture desires to transfer this
Debenture, the Holder shall provide the Maker with a Form of Assignment, in the
form attached hereto describing the manner of such transfer, and an opinion of
counsel ( acceptable to the Maker and its counsel) that the proposed transfer
may be effected without registration or qualification under applicable
securities laws, whereupon such Holder shall be entitled to transfer this
Debenture in accordance with the notice delivered by such Holder to the Maker. If,
in the opinion of the counsel referred to in this Subsection, the proposed
transfer or disposition described in the written notice given may not be
effected without registration or qualification of this Debenture, the Maker
shall give written notice thereof to the Holder hereof, and such Holder will
limit his/her activities in respect to such proposed transfer or disposition
as, in the opinion of such counsel, are permitted by law. 


 


(c)          Restrictive Legend. The Maker shall place one or more restrictive legends on the
Debenture, which legends set forth the restrictions contained herein, and may
further place a “stop transfer” restriction in the Maker’s books and records
with respect to the Debenture. The restrictions set forth in this Debenture
shall be binding upon any holder, donee, assignee or transferee of the
Debenture.


 


3

















 


3.               No Rights as Shareholder. This Debenture shall
not entitle the Holder to any right to vote or receive distributions or any
other rights as a shareholder or owner of the Maker, unless and until any
portion of this Debenture is converted into the Maker’s common stock, as
permitted or required herein.


 


4.               Events of Default. The occurrence of any one or
more of the following events (whether such occurrence shall be voluntary or
involuntary or occur or be effected by operation of law or otherwise) shall
constitute an event of default hereunder:


 


(a)          if the Maker fails to pay when due any monthly interest payment due
hereunder, or any other amount payable to Holder under the terms of this
Debenture, and such failure to pay is not cured by Maker within 45 calendar
days after written notice thereof is delivered by Holder to Maker;


 


(b)         if the Maker makes an assignment for the benefit of creditors;


 


(c)          if any order, judgment, or decree is entered adjudicating the Maker
bankrupt; or


 


(d)         if the Maker petitions or applies to any tribunal for the appointment
of a trustee or receiver or commences any proceeding under any bankruptcy,
reorganization, insolvency, dissolution or liquidation law of any jurisdiction.


 


5.               Unsecured
Maker Debenture. Holder acknowledges and agrees that the
indebtedness represented by this Debenture is unsecured, and thus, is not
secured by any assets or properties of Maker, or subject to any credit
enhancement or guaranty of any type.


 


6.                  Conversion of Indebtedness into
Maker’s Common Stock;  “Piggy-Back” and
Demand Registration Rights for Common Stock Acquired Upon Conversion.


 


(a)Conversion
of Indebtedness into Maker’s Common Stock. While this indebtedness in favor
of Holder remains outstanding, Holder shall be entitled to convert, at Holders’
sole option, the entire principal balance of this Debenture, or any part
hereof, into Maker’s common stock at a price of $.50 per share. However, if
Maker’s existing Senior Debt Facility is not repaid, and Holder’s guarantee not
released by August 31, 2007 (or subsequently, by October 31, 2007), then, in
such instances, the conversion ratio set forth above shall be immediately be
modified and altered on


 


4

















 


such dates, such that the
principal balance of this Debenture, or any part hereof, shall be convertible
into Maker’s common stock at a price of $.40 per share, and subsequently, $.30
per share, respectively. Holder shall provide Maker and its counsel with ten
(10)  business days advance written
notice of Holder’s intent to convert all, or any part, of this Debenture in
accordance with this section. In connection with such conversion, Maker shall remit
and pay to Holder all accrued and unpaid interest due hereon. All common stock
of Maker so acquired by Holder in accordance with such conversion shall be
entitled to “piggy back” and/or demand registration rights described below.


 


(b)         Piggy-back Registration Rights. If, at any time prior to payment
in full of this Debenture, or any conversion hereof, Maker proposes to claim an
exemption under Section 3(b) of the Securities Act of 1933, as amended (the “Act”),
for a public Placement of any of its securities, or seeks to register any of
its securities under the Act (except by registration statement on a form that
does not permit the inclusion of shares by its security holders), Maker will
provide written notice of its intentions to Holders. Upon written request of
each such Holder given within 10 business days after receipt of such notice,
Maker shall use its best efforts to cause all common shares acquired by the
Holder’s conversion of indebtedness to equity hereunder to be included in such
proposed notification or registration statement, subject to approval by Maker’s
then-existing broker-dealer or underwriter. The Holder’s written request shall
specify the number of shares of Maker’s common stock intended to be sold or
disposed of by the Holder, and describe the nature of any proposed sale or
other disposition thereof. All notification or registration expenses shall be
borne by Maker.


 


(c)          Demand Registration Rights. If, at any time prior to payment
in full of this Debenture, or any conversion hereof, Holders of at least 60% or
more of the value of the Debentures issued in the Placement elect to convert
their Debentures into Maker’s common stock and demand registration of their
shares for resale, Maker shall use its reasonable efforts to register the shares
and to cause such registration to become effective within 90 calendar days of
such demand.


 


(d)         One Registration. Upon completing a registration of the Maker’s common stock pursuant to
paragraph (b) or (c) of this Section, the Maker shall have no further
obligation to register shares hereunder. If a Holder does not elect to
participate in such registration, he shall have no future right to demand a
registration of his/her shares or participate in another registration through
piggy-back rights.


 


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7.                  Mandatory
Conversion by Maker. Upon
20 day calendar notice by Maker upon retirement and payment in full of Maker’s
Senior Debt Facility with its senior lender, Maker shall then henceforth, in
its sole discretion, have the right and ability to call the Debentures and
either pay such Debentures in full or require their immediate conversion into
Maker’s common stock.


 


8.                  Miscellaneous.


 


(a) Wavier. No waiver
hereunder or amendment of this Debenture shall be effective unless it is in
writing and signed by the Maker, Holder and all the Holders of the Debentures
issued pursuant to this Placement. The acceptance by the Holder of any payment
hereunder that is less than payment in full of all amounts due and payable at
the time of such payment shall not constitute a waiver of the right to exercise
any of the options hereunder at that time or at any subsequent time.


 


(b) Right to Grant
Extension. Except as provided in Section 1 of this Debenture, Maker hereby
agrees that the Holder has the right (but not the obligation) to grant any
extension of time for payment of any indebtedness evidenced by this Debenture.


 


(c) Successors. The
terms and provisions hereof shall inure to the benefit of, and be binding upon,
the respective successors and assigns of the Maker and Holder. This Debenture
shall be governed by and construed and enforced in accordance with the laws of
the State of Minnesota without giving effect to such state’s choice of law
principles.


 


(d) No Recourse. No
recourse for the payment of the principal of or any interest on this Debenture,
or for any claim based hereon or otherwise in respect hereof, and no recourse
under or upon any obligation, covenant or agreement of the Maker in any
Debenture, or because of the creation of any indebtedness represented thereby,
shall be against any organizer, member, officer, director, shareholder, or
manager as such, past, present or future, of the Maker or of any successor
entity either directly or through the Maker or any successor entity, whether by
virtue of any constitution, statute or rule of law or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issue hereof, expressly waived
and released.


 


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(e)          Replacement. Upon receipt by the Maker of evidence reasonably satisfactory to it
and its counsel, of the loss, theft, destruction or mutilation of this
Debenture, and in case of loss, theft or destruction, of indemnity or security
reasonably satisfactory to it, and upon reimbursement to the Maker of all legal
and out of pocket expenses incidental thereto, and upon surrender and
cancellation of this Debenture, if mutilated, the Maker will make and deliver a
new Debenture of like tenor and dated as of the initial Debenture, in lieu of
this Debenture.


 


(f)            Integration. This Debenture embodies
the entire agreement and understanding between the parties relating to the
subject matter hereof and supersedes all prior oral or written agreements and
understandings relating to such subject matter.


 


(g)         Governing Law. This Debenture shall be
construed and interpreted pursuant to and in accordance with the laws of the
State of Minnesota.


 


(h)         Binding Effect. This Debenture shall be
binding upon, and inure to the benefit of, the parties hereto and their
respective heirs, executors, administrators, successors, and assigns.


 


(i)             Notices.
All notices or other communications required or permitted hereunder shall be in
writing. A written notice or other communication shall be deemed to have been
sufficiently given: (i) if delivered by hand, when such notice is received from
the notifying party; (ii) if transmitted by facsimile or timely delivered to a
reputable express courier, on the next business day following the day so
transmitted or delivered; or (iii) if delivered by mail, on the fifth day
following the date such notice or other communication is deposited in the U.S.
Mail for delivery by certified or registered mail addressed to the other party,
or when actually received, whichever occurs earlier. All notices required or
permitted to be given to Maker hereunder, to be deemed appropriately and timely
given, shall also be simultaneously given to Maker’s counsel: Thomas J. Puff,
Esq., Venture Law Resources, PLLC, 8400 Normandale Lake Blvd., Suite 920,
Bloomington, Minnesota 55437.


 


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IN WITNESS WHEREOF, the Maker has caused this
Debenture to be executed by its authorized representative, who certifies that
he has all necessary authority on behalf of the Maker to execute this Debenture
and bind the Maker to the terms hereof.


 


 


	
   

  	
  PROUROCARE MEDICAL INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   /s/ Maurice
  Taylor

  	
   

  
	
   

  	
   

  	
  Maurice Taylor

  
	
   

  	
   

  	
   

  
	
   

  	
  Its: 

  	
  CEO

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Attested:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/Thomas J. Puff

  	
   

  	
   

  
	
  Thomas J. Puff, Esq.

  	
   

  
	
  Corporate Secretary

  	
   

  
						



 


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