Exhibit 4.5


 


GUARANTY

(Continuing Debt -
Limited)


 


DATE AND PARTIES. The date of this Guaranty is February 28, 2006. The parties and their
addresses are:


 


LENDER:


CROWN BANK

6600 France Avenue South Ste 125

Edina, Minnesota 55435

Telephone: (9521 285-5800


 


BORROWER:


PROUROCARE MEDICAL INC

a Nevada Corporation
ONE CARLSON PARKWAY SUITE 124
PLYMOUTH, Minnesota 55447


 


GUARANTOR:


PHILLIPS W SMITH
7501 N IRONWOOD DR

PARADISE VALLEY, Arizona 85253


 


1.     DEFINITIONS. As used in this Guaranty, the terms have the
following meanings:


 


A.     Pronouns. The pronouns “I”, “me” and “my” refer to all
persons or entities signing this Guaranty, individually and together. “You” and
“your” refer to the Lender.


B.     Note. “Note” refers to the document that evidences
the Borrower’s indebtedness, and any extensions, renewals, modifications and
substitutions of the Note.


C.     Property. “Property” means any property, real, personal
or intangible, that secures performance of the obligations of the Note, Debt,
or this Guaranty.


 


2.     SPECIFIC AND FUTURE DEBT GUARANTY. For good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, and to induce you, at
your option, to make loans or engage in any other transactions with the
Borrower from time to time, I absolutely and unconditionally agree to all terms
of and guaranty to you the payment and performance of each and every Debt, of
every type, purpose and description that the Borrower either individually,
among all or a portion of themselves, or with others, may now or at any time in
the future owe you, including, but not limited to the following described Debts
(including without limitation, all principal, accrued interest, attorneys’ fees
and collection costs, when allowed by law, that may become due from the
Borrower to you in collecting and enforcing the Debt and all other agreements
with respect to the Borrower,


 


A promissory note or other agreement, No. 4060307,
dated February 28, 2006, from PROUROCARE MEDICAL INC (Borrower) to you, in the
amount of $1,000,000.00.


 


In addition, Debt refers to debts, liabilities, and
obligations of the Borrower (including, but not limited to, amounts agreed to
be paid under the terms of any notes or agreements securing the payment of any
debt, loan, liability or obligation, overdrafts, letters of credit, guaranties,
advances for taxes, insurance, repairs and storage, and all extensions,
renewals, refinancings and modifications of these debts) whether now existing
or created or incurred in the future, due or to become due, or absolute or
contingent, including obligations and duties arising from the terms of all
documents prepared or submitted for the transaction such as applications,
security agreements, disclosures, and the Note,


 


My liability will not exceed $600,000.00 of the
principal amount outstanding at default, plus accrued interest, attorneys’ fees
and collection costs, when allowed by law, and all other costs, fees and
expenses agreed to be paid under all agreements evidencing the Debt and
securing the payment of the Debt. You may, without notice, apply this Guaranty
to such Debt of the Borrower as you may select from time to time.


 


3.     EXTENSIONS. I consent to all renewals, extensions,
modifications and substitutions of the Debt which may be made by you upon such
terms and conditions as you may see fit from time to time without further
notice to me and without limitation as to the number of renewals, extensions,
modifications or substitutions.


 


A.     Future Advances. I waive notice of and consent to any and all future advances made to the
Borrower by you.


 


4.     UNCONDITIONAL LIABILITY. I am unconditionally liable under this
Guaranty, regardless of whether or not you pursue any of your remedies against
the Borrower, against any other maker, surety, guarantor or endorser of the
Debt or against any Property. You may sue me alone, or anyone else who is
obligated on this Guaranty, or any number of us together, to collect the Debt.
My liability is not conditioned on the signing of this Guaranty by any other
person and further is not subject to any condition not expressly set forth in
this Guaranty or any instrument executed in connection with the Debt. My
obligation to pay according to the terms of this Guaranty shall not be affected
by the illegality, invalidity or unenforceability of any notes or agreements
evidencing the Debt, the violation of any applicable usury laws, forgery, or
any other circumstances which make the indebtedness unenforceable against the
Borrower. I will remain obligated to pay on this Guaranty even if any other
person who is obligated to pay the Debt, including the Borrower, has such
obligation discharged in bankruptcy, foreclosure, or otherwise discharged by
law.


 


5.     BANKRUPTCY. If a bankruptcy petition should at any time
be filed by or against the Borrower, the maturity of the Debt, so far as my
liability is concerned, shall be accelerated and the Debt shall be immediately
payable by me. I acknowledge and agree that this Guaranty, and the Debt secured
hereby, will remain in full force and effect at all times, notwithstanding any
action or undertakings by, or against, you or against any Property, in
connection with any obligation in any proceeding in the United States
Bankruptcy Courts. Such action or undertaking includes, without limitation,
valuation of Property, election of remedies or imposition of secured or
unsecured claim status upon claims by you, pursuant to the United States
Bankruptcy Code, as amended. In the event that any payment of principal or
interest received and paid by any other guarantor, borrower, surety, endorser
or co-maker is deemed, by final order of a court of competent jurisdiction, to
have been a voidable preference under the bankruptcy or insolvency laws of the
United States or otherwise, then my obligation will remain as an obligation to
you end will not be considered as having been extinguished.


 


6.     REVOCATION. I agree that this is an absolute and
unconditional Guaranty. I agree that this Guaranty will remain binding on me,
whether or not there are any Debts outstanding, until you have actually
received written notice of my revocation or written notice of my death or
incompetence. Notice of revocation or notice of my death or incompetence will
not affect my obligations under this Guaranty with respect to any Debts
incurred by or for which you have made a commitment to Borrower before you
actually receive such notice, and all renewals, extensions, refinancings, and
modifications of such Debts. I agree that if any other person signing this
Guaranty provides a notice of revocation to you, I will still be obligated
under this Guaranty until I provide such a notice of revocation to you. If any
other person signing this Guaranty dies or is declared incompetent, such fact
will not affect my obligations under this Guaranty.


 


7.     PROPERTY. I agree that any Property may be assigned,
exchanged, released in whole or in part or substituted without notice to me and
without defeating, discharging or diminishing my liability. My obligation is
absolute and your failure to perfect any security interest or any act or omission
by you which impairs the Property will not relieve me or my liability under
this Guaranty. You are under no duty to preserve or protect any Property until
you are in actual or constructive possession. For purposes of this paragraph,
you will only be in “actual” possession when you have physical, immediate and
exclusive control over the Property and have accepted such control in writing.
Further, you will only be deemed to be in “constructive” possession when you
have both the power and intent to exercise control over the Property.


 


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


 


A.     Payments. I
fall 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, Borrower, or any cosigner,
endorser, surety or guarantor of this Guaranty or any Debt,


C.     Death or Incompetency I die or am declared legally incompetent.


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


E.     Other
Documents.
A default occurs under the
terms of any other document relating to the Debt.


 

















 


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.    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 Guaranty or
that the prospect for payment or performance of the Debt is impaired for any
reason.


 


9.     WAIVERS AND CONSENT. To the extent not prohibited by law, I waive
protest, presentment for payment, demand, notice of acceleration, notice of
intent to accelerate and notice of dishonor.


 


A.    Additional Waivers. In addition, to the extent permitted by law, I
consent to certain actions you may take, and generally waive defenses that may
be available based on these actions or based on the status of a party to the
Debt or this Guaranty.


 


(1)    You may renew or extend payments on the Debt,
regardless of the number of such renewals or extensions.


(2)    You may release any Borrower, endorser,
guarantor, surety, accommodation maker or any other co-signer.


(3)    You may release, substitute or impair any
Property.


(4)    You, or any institution participating in the
Debt, may invoke your right of set-off.


(5)    You may enter into any sales, repurchases or
participations of the Debt to any person in any amounts and I waive notice of
such sales, repurchases or participations.


(6)    I agree that the Borrower is authorized to
modify the terms of the Debt or any instrument securing, guarantying or
relating to the Debt.


(7)    You may undertake a valuation of any Property
in connection with any proceedings under the United States Bankruptcy Code
concerning the Borrower or me, regardless of any such valuation, or actual
amounts received by you arising from the sale of such Property.


(8)    I agree to consent to any waiver granted the
Borrower, and agree that any delay or lack of diligence in the enforcement of
the Debt, or any failure to file a claim or otherwise protect any of the Debt,
in no way affects or impairs my liability.


(9)    I agree to waive reliance on any
anti-deficiency statutes, through subrogation or otherwise, and such Statutes
in no way affect or impair my liability. In addition, until the obligations of
the Borrower to Lender have been paid in full, I waive any right of
subrogation, contribution, reimbursement, indemnification, exoneration, and any
other right I may have to enforce any remedy which you now have or in the
future may have against the Borrower or another guarantor or as to any
Property.


 


Any Guarantor who is an “insider,”
as contemplated by the United States Bankruptcy Code, 11 U.S.C. 101, as
amended, makes these waivers permanently. (An insider includes, among others, a
director, officer, partner, or other person in control of the Borrower, a
person or an entity that is a copartner with the Borrower, an entity in which
the Borrower is a general partner, director, officer or other person in control
or a close relative of any of these other persons). Any Guarantor who is not an
insider makes these waivers until all Debt is fully repaid.


 


B.    No Waiver By Lender. Your course of dealing, or your forbearance
from, or delay in, the exercise of any of your rights, remedies, privileges or
right to insist upon my strict performance of any provisions contained in the
Debt instruments, shall not be construed as a waiver by you, unless any such
waiver is in writing and is signed by you.


C.    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.


 


10.  REMEDIES. After the Borrower or 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 any part of the amount
owing by the terms of this Guaranty immediately due.


B.    Sources. You may use any and all remedies you have
under state or federal law or in any documents relating to the Debt.


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


D.    Payments Made on the Borrower’s
Behalf. Amounts advanced on the Borrower’s behalf will be
immediately due and may be added to the balance owing under the Debt.


E.     Termination. You may terminate my right to obtain advances
and may refuse to make any further extensions of credit.


F.     Attachment. You may attach or garnish my wages or
earnings.


G.    Set-Off. You may use the right of set-off. This means
you may set-off any amount due and payable under the terms of this Guaranty
against any right I have to receive money from you.


 


My right to receive money
from you includes any deposit or share account balance I have with you; any
money owed to me on an item presented to you or in your possession for
collection or exchange; and any repurchase agreement or other non-deposit
obligation. “Any amount due and payable under the terms of this Guaranty’ means
the total amount to which you are entitled to demand payment under the terms of
this Guaranty at the time you set-off.


 


Subject to any other written
contract, if my right to receive money from you is also owned by someone who
has not agreed to pay the Debt, your right of set-off will apply to my interest
in the obligation and to any other amounts I could withdraw on my sole request
or endorsement.


 


Your right of set-off does
not apply to an account or other obligation where my rights arise only in a
representative capacity. It also does not apply to any Individual Retirement
Account or other tax-deferred retirement account.


 


You will not be liable for
the dishonor of any check when the dishonor occurs because you set-off against
any of my accounts. I agree to hold you harmless from any such claims arising
as a result of your exercise of your right of set-off.


 


H. Waiver. Except as otherwise required by law, 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.


 


11.  COLLECTION EXPENSES AND ATTORNEYS’
FEES. On or after Default, to
the extent permitted by law, I agree to pay all expenses of collection,
enforcement or protection of your rights and remedies under this Guaranty or
any other document relating to the Debt. To the extent permitted by law,
expenses include, but are not limited to, reasonable attorneys’ fees, court
costs and other legal expenses. All fees and expenses will be secured by the
Property I have granted to you, if any. In addition, to the extent permitted by
the United States Bankruptcy Code, I agree to pay the reasonable attorneys’
fees incurred by you to protect your rights and interests in connection with
any bankruptcy proceedings initiated by or against me.


 


12.  WARRANTIES AND REPRESENTATIONS. I have the right and authority to enter into
this Guaranty. The execution and delivery of this Guaranty will not violate any
agreement governing me or to which I am a party, In addition, I represent and
warrant that this Guaranty was entered into at the request of the Borrower, and
that I am satisfied regarding the Borrower’s financial condition and existing
indebtedness, authority to borrow and the use and intended use of all Debt
proceeds. I further represent and warrant that I have not relied on any
representations or omissions from you or any information provided by you respecting
the Borrower, the Borrower’s financial condition and existing indebtedness, the
Borrower’s authority to borrow or the Borrower’s use and intended use of all
Debt proceeds.


 


13.  RELIANCE. I acknowledge that you are relying on this
Guaranty in extending credit to the Borrower, and I have signed this Guaranty
to induce you to extend such credit, I represent and Warrant to you that I have
a direct and substantial economic interest in the Borrower and expect to derive
substantial benefits from any loans and financial accommodations resulting in
the creation of indebtedness guarantied hereby. I agree to rely exclusively on
the right to revoke this Guaranty prospectively as to future transactions in
the manner as previously described in this Guaranty if at any time, in my
opinion, the benefits then being received by me in connection with this
Guaranty are not sufficient to warrant the continuance of this Guaranty. You
may rely conclusively on a continuing warranty that I continue to be benefited
by this Guaranty and you will have no duty to inquire into or confirm the
receipt of any such benefits, and this Guaranty will be effective and
enforceable by you without regard to the receipt, nature or value of any such
benefits.


 


 

















 


14.  APPLICABLE LAW. This Guaranty 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.


 


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


 


16.  ASSIGNMENT. If you assign any of the Debts, you may
assign all or any part of this Guaranty without notice to me or my consent, and
this Guaranty 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
Guaranty as to any of the Debts that are not assigned. This Guaranty 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 Debts and
shall be binding upon and enforceable against me and my personal
representatives, successors, heirs and assigns.


 


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 Guaranty.


 


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 Guarantor will be deemed to be
notice to all Guarantors. 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 Guaranty and to confirm your lien status on any
Property. Time is of the essence.


 


19.  CREDIT INFORMATION. I agree that from time to time you may obtain
credit information about me from others, including other lenders and credit
reporting agencies, and report to others (such as a credit reporting agency)
your credit experience with me. I agree that you will not be liable for any
claim arising from the use of information provided to you by others or for
providing such information to others.


 


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


 


 


GUARANTOR:


 


	
   

  	
  /s/ Phillips W Smith

  	
   

  
	
   

  	
  PHILLIPS W SMITH

  
	
   

  	
   

  
	
   

  	
  Individually