Exhibit 4.1


 


	
  LOAN NUMBER

  	
   

  	
  LOAN
  NAME

  	
   

  	
  ACCT.
  NUMBER

  	
   

  	
  NOTE
  DATE

  	
   

  	
  INITIALS

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4060307

  	
   

  	
  PROUROCARE MEDICAL INC

  	
   

  	
   

  	
   

  	
  02/28/06

  	
   

  	
  KRH

  



 


	
  NOTE AMOUNT

  	
   

  	
  INDEX
  (w/Margin)

  	
   

  	
  RATE

  	
   

  	
  MATURITY
  DATE

  	
   

  	
  LOAN
  PURPOSE

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  $

  	
  1,000,000.00

  	
   

  	
  Wall Street Journal Prime
  plus 1.000%

  	
   

  	
  8.250

  	
  %

  	
  02/29/08

  	
   

  	
  Commercial

  
										



 


Creditor Use Only


 


PROMISSORY NOTE
(Commercial - Draw)


 


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


 


LENDER:


CROWN BANK
6600 France Avenue South Ste 125
Edina, Minnesota 55435
Telephone:  (8521 285-5800


 


BORROWER:


PROUROCARE
MEDICAL INC

a Nevada Corporation
ONE CARLSON PARKWAY SUITE 124
PLYMOUTH, Minnesota 66447


 


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


 


A.  Pronouns. The pronouns “I,’ ‘me,’ and “my”
refer to each Borrower signing this Note, individually and together. “You” and “Your”
refer to the Lender.


B.  Note. Note
refers to this document, and any extensions, renewals, modifications and
substitutions of this Note.


C.  Loan. Loan refers
to this transaction generally, including obligations and duties arising from
the terms of all documents prepared or submitted for this transaction such as
applications, security agreements, disclosures or notes, and this Note.


D.  Loan Documents. Loan Documents refer to all the documents
executed as a part of or in connection with the Loan.


E.   Property. Property is any property, real, personal or
intangible, that secures my performance of the obligations of this Loan.


F.   Percent. Rates and rate change limitations are expressed as
annualized percentages.


 


2.     PROMISE TO PAY. For value received,
I promise to pay you or your order, at your address, or at such other
location as you may designate, amounts advanced from time to time under the
terms of this Note up to the maximum total principal balance of $1,000,000.00 (Principal), plus interest from the date of
disbursement, on the unpaid outstanding Principal balance until this Note is
paid in full and Lender has no further obligations to make advances to you
under this Loan.


 


3.     ADVANCES. Advances under this Note are made according to
the following terms and conditions.


 


A.  Requests for Advances. My
requests are a warranty that I am in compliance with all the Loan Documents.
When required by you for a particular method of advance, my requests for an
advance must specify the requested amount and the date and be accompanied with
any agreements, documents, and instruments that you require for the Loan. Any
payment by you of any check, share draft or other charge may, at your option,
constitute an advance on the Loan to me. All advances will be made in United
States dollars. I will indemnify you and hold you harmless for your reliance on
any request for advances that you reasonably believe to be genuine. To the
extent permitted by law, I will indemnify you and hold you harmless when the
person making any request represents that I authorized this person to request
an advance even when this person is unauthorized or this person’s signature is
not genuine.


 


I or anyone I authorize to
act on my behalf may request advances by the following methods.


 


(1) I make a request in person.


(2) I make a request by phone.


(3) I make a request by mail.


 


B.      Advance Limitations. In addition to any other Loan conditions, requests for, and access to,
advances are subject to the following limitations.


 


(1)  Discretionary
Advances. You will make all Loan advances at your sole discretion.


(2)  Advance
Amount. Subject to the terms and conditions contained in this Note, advances
will be made in exactly the amount I request.


(3)  Disbursement
of Advances. On my fulfillment of this Note’s terms and conditions, you will
disburse the advance in any manner as you and I agree.


(4)  Credit
Limit. I understand that you will not ordinarily grant a request for an advance
that would cause the unpaid principal of my Loan to be greater than the
Principal limit. You may, at your option, grant such a request without
obligating yourselves to do so in the future. I will pay any over advances in
addition to my regularly scheduled payments. I will repay any over advance by
repaying you in full within 10 days after the overdraft occurs.


(5)  Records.
Your records will be conclusive evidence as to the amount of advances, the Loan’s
unpaid principal balances and the accrued interest.


 


4.     INTEREST.
Interest will accrue on the unpaid Principal balance of this Note at the rate
of 8.500 percent (Interest Rate) until March 1, 2006, after which time it may change as described in the Variable Rate subsection.


 


A.  Interest After Default. If you declare a default under the
terms of this Loan, including for failure to pay in full at maturity, you may
increase the Interest Rate payable on the outstanding Principal balance of this
Note. In such event, interest will accrue on the outstanding Principal balance
at the Interest Rate in effect from time to time under the terms of this Loan,
until paid in full.


B.  Maximum Interest Amount. Any amount assessed or collected as
interest under the terms of this Note will be limited to the maximum lawful
amount of interest allowed by state or federal law, whichever is greater.
Amounts collected in excess of the maximum lawful amount will be applied first
to the unpaid Principal balance. Any remainder will be refunded to me.


C.  Statutory Authority. The amount assessed or collected on this Note
is authorized by the Minnesota usury laws under Minn. Stat. 47.59.


D.  Accrual. Interest accrues using an Actual/360 days
counting method.


E.  Variable Rate. The Interest Rate may change during the term
of this transaction.


 


(1)  Index. Beginning with the first Change Date, the Interest Rate will be
based on the following index: the base rate on corporate loans posted by at
least 75% of the nation’s 30 largest banks known as the Wall Street Journal
Prime Rate.


The Current Index is the most
recent index figure available on each Change Date. You do not guaranty by
selecting this Index, or the margin, that the Interest Rate on this Note will
be the same rate you charge on any other loans or class of loans you make to me
or other borrowers. If this Index is no longer available, you will substitute a
similar Index, You will give me notice of your choice.


(2)  Change Date. Each date on which the Interest Rate may change is called a
Change Date. The Interest Rate may change March 1, 2006 and daily thereafter,


 

















 


(3)  Calculation Of Change. On each Change Date you will calculate the
Interest Rate, which will be the Current Index plus 1.000 percent. The result
of this calculation will be rounded up to the nearest .001 percent. Subject to
any limitations, this will be the Interest Rate until the next Change Date. The
new Interest Rate will become effective on each Change Date. The Interest Rate
and other charges on this Note will never exceed the highest rate or charge
allowed by law for this Note.


(4)  Limitations. The Interest Rate changes are
subject to the following limitations:


 


(a)  Lifetime. The Interest Rate will never be less than 6.500 percent.


 


(5)  Effect Of Variable Rate. A change in the Interest Rate will have the
following effect on the payments: The amount of scheduled payments and the
amount of the final payment will change.


 


5.     REMEDIAL CHARGES. In addition to interest or other finance charges, I agree that I will
pay these additional fees based on my method and pattern of payment. Additional
remedial charges may be described elsewhere in this Note.


 


A.  Late Charge. If a payment is more than 10 days late, I
will be charged 5.000 percent of the Unpaid Portion of Payment. I will pay this
late charge promptly but only once for each late payment. This amount may then
increase so as to always be the highest amount allowed by law under Minnesota
Statutes 47.59.


 


6.              PAYMENT. I agree to pay this Note on demand, but if
no demand is made, I agree to pay this Note in installments of accrued interest
beginning March 31, 2006, and then on the 11th day of each month thereafter. I
agree to pay the entire unpaid Principal and any accrued but unpaid interest on
February 29, 2008.


 


Payments will be rounded up
to the nearest $01. With the final payment I also agree to pay any additional
fees or charges owing and the amount of any advances you have made to others on
my behalf. Payments scheduled to be paid on the 29th, 30th or 31st day of a
month that contains no such day will, instead, be made on the last day of such
month.


 


Each payment I make on this
Note will be applied first to interest that is due then to principal that is
due, and finally to any charges that I owe other than principal and interest. If
you and I agree to a different application of payments, we will describe our
agreement on this Note. You may change how payments are applied in your sole
discretion without notice to me. The actual amount of my final payment will
depend on my payment record.


 


7.     PREPAYMENT. I may prepay this Loan in full or in part at any time. Any partial
prepayment will not excuse any later scheduled payments until I pay in full.


 


8.     LOAN PURPOSE. The purpose of this Loan is WORKING CAPITAL.


 


9.     ADDITIONAL
TERMS. THIS NOTE POSSESSES A
DRAW FEATURE.


 


10.  SECURITY. This Loan is secured by separate security
instruments prepared together with this Note as follows:


 


	
  Document Name

  	
   

  	
  Parties to Document

  
	
   

  	
   

  	
   

  
	
  Security Agreement.
  PROUROCARE MEDICAL INC

  	
   

  	
  PROUROCARE MEDICAL INC

  



 


11.  DEFAULT. I
understand that you may demand payment anytime at your discretion. For example,
you may demand payment in full 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 or any co-signer, endorser,
surety or guarantor of this Note or any other obligations I have 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 Note.


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 Note or that the prospect for payment or performance of the Loan is
impaired for any reason.


 


12.  DUE ON SALE OR ENCUMBRANCE. You may, at your option, declare the entire balance of this Note 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.
5911, 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.


 


13.  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 By Borrower. In addition, I, and any party to this Note and
Loan, to the extent permitted by law, 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 this Note.


 


(1)  You may renew or extend payments on this Note, 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 securing this Note.


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


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


(6)  I agree that any of us signing this Note as a Borrower is authorized to
modify the terms of this Note or any instrument securing. guarantying or
relating to this Note.


(7)  I agree that you may inform any party who guarantees this Loan of any Loan
accommodations, renewals, extensions, modifications, substitutions or future
advances.


 


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 this Note, or any other Loan
Document, shall not be construed as a waiver by you, unless any such waiver is
in writing and is signed by you.


 


14.  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 any part of the amount
owing by the terms of this Note 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 balance owing under the terms of this
Note, and accrue interest at the highest post-maturity interest rate.


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


F.  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 Note 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 Note means the total amount to
which you are entitled to demand payment under the terms of this Note 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 this Note, your right of setoff 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.


 


G.  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.


 


15.  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 Note or any other Loan Document. Expenses
include, but are not limited to, attorneys’ fees, court costs and other legal
expenses. If not paid immediately, these expenses will bear interest from the
data of payment until paid in full at the highest interest in effect as
provided in the terms of this Note. 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,


 


16.  COMMISSIONS.
I understand and agree that you (or your affiliate) will earn commissions or
fees on any insurance products, and may earn such fees on other services that I
buy through you or your affiliate.


 


17.  WARRANTIES AND
REPRESENTATIONS. I make to
you the following Warranties and representations which will continue as long as this
Note 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 Note and the obligation evidenced by this Note 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 Place of Business. 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 and franchises.


 


18.  INSURANCE. I agree to obtain the insurance described in
this Loan Agreement.


 


A.  Property Insurance. I will insure or retain insurance coverage on
the Property and abide by the insurance requirements of any security instrument
securing this Loan.


B.  Insurance
Warranties. I agree to
purchase any insurance coverages that are required, in the amounts you require,
as described in this or any other documents I sign for this Loan. I will
provide you with continuing proof of coverage. I will buy or provide insurance
from a firm licensed to do business in the State where the Property is located.
If I buy or provide the insurance from someone other than you, the firm will be
reasonably acceptable to you. I will have the insurance company name you as loss payee on any insurance policy.
You will apply the insurance proceeds toward what I owe you on the outstanding
balance. I agree that if the insurance proceeds do not cover the amounts I
still owe you, I will pay the difference. I will keep the insurance until all debts
secured by this agreement are paid. If I want to buy the insurance from you, I
have signed a separate statement agreeing to this purchase.


 


19.  APPLICABLE LAW. This Note 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 and place of jurisdiction will be in Minnesota, unless
otherwise required by law.


 


20.  JOINT AND INDIVIDUAL LIABILITY AND SUCCESSORS.
My obligation to pay
the Loan is independent of the obligation of any other person who has also
agreed to pay it. You may sue me alone, or anyone else who is obligated on the
Loan, or any number of us together, to collect the Loan. Extending the Loan or
new obligations under the Loan, will not affect my duty under the Loan and I
will still be obligated to pay the Loan. This Note shall inure to the benefit
of and be enforceable by you and your successors and assigns and shall be
binding upon and enforceable against me and my personal representatives,
successors, heirs and assigns.


 


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


 


22.  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 Note.


 


23.  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 Borrower will be deemed to be notice to all Borrowers. 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 Loan and to confirm your lien status on any Property.
Time is of the essence.


 


24.  CREDIT INFORMATION. I agree to supply you with whatever information you
reasonably request. You will make requests for this information without undue
frequency, and will give me reasonable time in which to supply the information.


 


25.  ERRORS AND OMISSIONS. I agree, if
requested by you, to fully cooperate
in the correction, if necessary, in the reasonable discretion of you of any and
all loan closing documents so that all documents accurately describe the loan
between you and me. I agree to assume all costs including by way of
illustration and not limitation, actual expenses, legal fees and marketing losses for failing to reasonably
comply with your requests within thirty (30)
days.


 


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


 


 


BORROWER:


 


	
   

  	
  PROUROCARE MEDICAL INC

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ Maurice R Taylor II

  	
   

  
	
   

  	
  MAURICR
  R> TAYLOR, CEO