Exhibit 4.10


 


SECURITY
AGREEMENT


 


DATE AND PARTIES. The date of this Security Agreement
(Agreement) is February 28, 2006. The parties and their addresses are:


 


SECURED
PARTY:


CROWN BANK


6600 France Avenue South Ste 125

Edina, Minnesota 55435


 


DEBTOR:


PRO URO CARE
MEDICAL, INC


a Minnesota Corporation

ONE CARLSON PARKWAY #125
PLYMOUTH, Minnesota 55447


 


The pronouns “you” and “your” refer to the Secured
Party. The pronouns “I,” “me” and “my” 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 Debts.


 


1.     SECURED DEBTS. The term “Secured Debts” 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 promissory note or
other agreement, No. 4060307, dated February 28, 2006, from me to you, in the
amount of $1,000,000.00.


B.  All Debts. All present and future debts from me to you,
even if this Agreement is not specifically referenced, the future debts are
also secured by other collateral, or if the future debt is unrelated to or of a
different type than this debt. If more than one person signs this Agreement,
each agrees that it will secure debts incurred either individually or with
others who may not sign this Agreement. Nothing in this Agreement constitutes a
commitment to make additional or future loans or advances. Any such commitment
must be in writing.


 


This Agreement will not
secure any debt for which you fall to give any required notice of the right of
rescission. This Agreement will not secure any debt for which a non-possessory,
non-purchase money security interest is created in “household goods” in
connection with a “consumer loan,” as those terms are defined by federal law
governing unfair and deceptive credit practices.


 


C.  Sums Advanced. All sums advanced and expenses incurred by you under the terms of this
Agreement


 


Loan Documents refer to all the documents
executed in connection with the Secured Debts,


 


2.     SECURITY INTEREST. To secure the payment and performance of the
Secured Debts, I give you a security interest in all of the Property described
in this Agreement that I 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 the Secured
Debts 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.


 


This Agreement remains in effect until terminated in
writing, even if the Secured Debts are paid and you are no longer obligated to
advance funds to me under any loan or credit agreement.


 


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


 


A.  Inventory. All inventory which I 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 my
business.


B.  Accounts and Other Rights to
Payment. All rights I 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 I have
earned such payment by performance. This includes any rights and interests
(including all liens and security interests) which I may have by law or
agreement against any Account Debtor or obligor of mine.


C.  General Intangibles. All general intangibles including, but not limited to, tax refunds,
applications for patents, patents, 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 my name.


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


 


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


 


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


B.  Authority. The execution, delivery and performance of
this Agreement and the obligation evidenced by this Agreement are within my
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 I am a party
or to which I am or any of my property is subject.


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


D.  Business Name. Other than previously disclosed in writing to
you I have not changed my name or principal place of business within the last
10 years and have not used any other trade or fictitious name. Without your
prior written consent, I do not and will not use any other name and will
preserve my existing name, trade names end franchises.


E.   Ownership of Property. I represent that I own all of the Property.
Your claim to the Property is ahead of the claims of any other creditor, except
as disclosed in writing to you prior to any advance on the Secured Debts. I
represent that I am the original owner of the Property and, if I am not, that I
have provided you with a list of prior owners of the Property.


 


5.     DUTIES TOWARD PROPERTY.


 


A.   Protection at Secured Party’s Interest. I will defend the Property against any other
claim. I agree to do whatever you require to protect your security interest and
to keep your claim in the Property ahead of the claims of other creditors. I
will not do anything to harm your position.


 


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


 


B.   Use, Location, and Protection of the Property. I
will keep the Property in my possession and in good repair. I will use it only
for commercial purposes. I will not change this specified use without your
prior written consent. You have the right of reasonable access to inspect the
Property and I will immediately inform you of any loss or damage to the
Property. I will not cause or permit waste to the Property.


 


I will keep the Property at my address listed in the
DATE AND PARTIES section unless we agree I may keep it at another location. If
the Property is to be used in other states, I will give you a list of those
states. The location of the Property is given to aid in the identification of
the Property. It does not in any way limit the scope of the security interest


 

















 


granted to you. I will notify you in writing and
obtain your prior written consent to any change in location of any of the
Property. I will not use the Property in violation of any law. I will notify
you in writing prior to any change in my address, name or, if an organization,
any change in my identity or structure,


 


Until the Secured Debts are fully paid and this
Agreement is terminated, I will not grant a security interest in any of the
Property without your prior written consent, I will pay all taxes and
assessments levied or assessed against me or the Property and provide timely
proof of payment of these taxes and assessments upon request.


 


C.   Selling, Leasing or Encumbering the Property. I
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 me. If I am in default under this Agreement, I may
not sell the Inventory portion of the Property even in the ordinary course of
business. Any disposition of the Property contrary to this Agreement will
violate your rights. Your permission to sell the Property may be reasonably
withheld without regard to the creditworthiness of any buyer or transferee. I
will not permit the Property to be the subject of any court order affecting my
rights to the Property in any action by anyone other than you. If the Property
includes chattel paper or instruments, either as original collateral or as
proceeds of the Property, I will note your security interest on the face of the
chattel paper or instruments.


 


D.   Additional Duties Specific to Accounts. I will not settle any Account for less than
its full value without your written permission. Until you tell me otherwise, I
will collect all Accounts in the ordinary course of business, I will not
dispose of the Accounts by assignment without your prior written consent. I
will keep the proceeds from all the Accounts and any goods which are returned
to me or which I take back. I will not commingle them with any of my other
property. I will deliver the Accounts to you at your request. If you ask me to
pay you the full price on any returned items or items retaken by me, I will do
so. I will make no material change in the terms of any Account, and I will give
you any statements, reports, certificates, lists of Account Debtors (showing
names, addresses and amounts owing), invoices applicable to each Account, and
other date in any way pertaining to the Accounts as you may request.


 


6.     INSURANCE. I agree to keep the Property insured against
the risks reasonably associated with the Property. I will maintain this
insurance in the amounts you require. This insurance will last until the
Property is released from this Agreement. I may choose the insurance company,
subject to your approval, which will not be unreasonably withheld.


 


I will have the insurance company name you as loss
payee on any insurance policy. I will give you and the insurance company
immediate notice of any loss. You may apply the insurance proceeds toward what
is owed on the Secured Debts. You may require added security as a condition of
permitting any insurance proceeds to be used to repair or replace the Property.


 


If you acquire the Property in damaged condition, my
right to any insurance policies and proceeds will pass to you to the extent of
the Secured Debts.


 


I will immediately notify you of cancellation or
termination of insurance. If I fail to keep the Property insured, you may
obtain insurance to protect your interest in the Property and I will pay for
the insurance on your demand. You may demand that I pay for the insurance all
at once, or you may add the insurance premiums to the balance of the Secured
Debts and charge interest on it at the rate that applies to the Secured Debts.
This insurance may include coverages not originally required of me, may be
written by a company other than one I would choose, and may be written at a
higher rate than I could obtain if I purchased the insurance. I acknowledge and
agree that you or one or your affiliates may receive commissions on the
purchase of this insurance.


 


7.     COLLECTION RIGHTS OF THE SECURED
PARTY. Account Debtor means
the person who is obligated on an account, chattel paper, or general
intangible. I authorize you to notify my 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 my
rights with respect to the Account Debtors’ obligations to make payment or
otherwise render performance to me, including the enforcement of any security
interest that secures such obligations. You may apply proceeds received from
the Account Debtors to the Secured Debts or you may release such proceeds to
me.


 


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


 


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


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 me.


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


 


8.     AUTHORITY TO PERFORM. I authorize you to do anything you deem
reasonably necessary to protect the Property, and perfect and continue your
security interest in the Property. If I fail to perform any of my duties under
this Agreement or any other Loan Document, 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 my 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
my name.


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


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


I.    make an entry on my 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 me, 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 me or other parties. Your authorization to perform for me
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 Debts, 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.


 


9.     DEFAULT. I will be in default if any of the following
occur:


 


A.     Payments. I fail to make a payment in full when due.


B.     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
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 me, Obligor, or any co-signer, endorser, surety or
guarantor of this Agreement or any other obligations Obligor has with you.


C.     Business Termination. I merge, dissolve, reorganize, end my business
or existence, or a partner or majority owner dies or is declared legally
incompetent.


D.     Failure to Perform. I
fail to perform any condition or to keep any promise or covenant of this
Agreement.


E.      Other Documents. A
default occurs under the terms of any other Loan Document.


F.      Other Agreements. I
am in default on any other debt or agreement I have with you.


G.     Misrepresentation. I
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.


H.     Judgment. I fail to
satisfy or appeal any judgment against me.


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


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


K.     Property Transfer. I
transfer all or a substantial part of my money or property.


L.     Property Value. You
determine in good faith that the value of the Property has declined or is
impaired.


M.     Material Change. Without first notifying you, there is a
material change in my business, including ownership, management, and financial
conditions.


N.     Insecurity. You determine in good faith that a material adverse change has occurred
in my financial condition from the conditions set forth in my most recent
financial statement before the date of this Agreement or that the prospect for
payment or performance of the Secured Debts is impaired for any reason.


 


10.  DUE
ON SALE OR ENCUMBRANCE. You
may, at your option, declare the entire balance of this Agreement to be
immediately due and payable upon the creation of, or contract for the creation
of, any lien, encumbrance, transfer or sale of all or any part of the Property.
This right is subject to the restrictions imposed by federal law 112 C.F.R.
591), as applicable. However, if I am in default under this Agreement, I may
not sell the inventory portion of the Property even in the ordinary course of
business.


 


11.  REMEDIES. After I 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 arty part of the amount
owing by the terms of the Secured Debts immediately due.


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


C.    Insurance Benefits. You may make a claim for any and all insurance
benefits or refunds that may be available on my default.


D.    Payments Made On My Behalf. Amounts advanced on my behalf will be
immediately due and may be added to the Secured Debts.


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


F.    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 I owe you.
If what you receive from the disposition of the Property does not satisfy the
debt, I 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, I
agree that ten days prior written notice sent by first class mail to my address
listed in this Agreement will be reasonable notice to me under the Minnesota
Uniform Commercial Code. If the Property is perishable or threatens to decline
speedily in value, you may, without notice to me, dispose of any or all of the
Property in a commercially reasonable manner at my 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 me at my risk and you will not be
liable for taking possession of them.


 


G.    Use and Operation. You may enter upon my premises and take
possession of all or any part of my 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 my property for the length of time you feel is necessary to protect
your interest, all without payment or compensation to me.


H.    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.


 


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


 


13.  PERFECTION OF SECURITY INTEREST AND COSTS. I authorize you to file a financing statement
covering the Property. I 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. I 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. I agree to pay all actual costs of
terminating your security interest.


 


14.  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,


 


15.  JOINT AND INDIVIDUAL LIABILITY AND SUCCESSORS. Each Debtor’s obligations under this Agreement
are independent of the obligations of any other Debtor. You may sue each Debtor
individually or together with any other Debtor. You may release any part of the
Property and I will still be obligated under this Agreement for the remaining
Property. Debtor agrees that you and any party to this Agreement may extend,
modify or make any change in the terms of this Agreement or any evidence of
debt without Debtor’s consent. Such a change will not release Debtor from the
terms of this Agreement. If you assign any of the Secured Debts, you may assign
all or any part of this Agreement without notice to me or my 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 Debts that are not assigned. This Agreement
shall inure to the 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
Debts and shall be binding upon and enforceable against me and my personal
representatives, successors, heirs and assigns.


 


16.  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
me. This Agreement and the other Loan Documents are the complete and final
expression of the understanding between you and me. If any provision of this
Agreement is unenforceable, then the unenforceable provision will be severed
and the remaining provisions will still be enforceable.


 


17.  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.


 


18.  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. Notice to
one Debtor will be deemed to be notice to all Debtors. I will inform you in
writing of any change in my name, address or other application information. I
will provide you any financial statement or information you request. All
financial statements and information I give you will be correct and complete. I
agree to sign, deliver, and file any additional documents or certifications
that you may consider necessary to perfect, continue, and preserve my
obligations under this Agreement and to confirm your lien status on any
Property. Time is of the essence.


 


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


 


 


DEBTOR:


 


	
   

  	
  PROUROCARE,
  INC.

  
	
   

  	
   

  
	
   

  	
  By- 

  	
  /s/Maurice
  R. Taylor II

  	
   

  
	
   

  	
  MAURICE R. TAYLOR II, CEO