**Exhibit 10.35**

 
| **NOTE AMOUNT** | ** ** | **INDEX (w/Margin)** | ** **                            | **RATE** | ** ** | **MATURITY DATE** | ** ** | **LOAN PURPOSE** | ** ** |
|----------------------|------------|---------------------------|---------------------------------------|----------|------------|------------------------|------------|-----------------------|------------|
| $                    | 600,000    |                      | Wall Street Journal Prime plus 1.000% |     | 8.750      | %                      | 02/28/09   |                  | Commercial |   |
|                      |            |                           |                                       |          |            |                        |            |                       |            |  |

 

**PROMISSORY NOTE**(Commercial- Term)

 

**EFFECTIVE DATE AND PARTIES.**This PromissoryNote (Note) is made effective as of October 15, 2007.  The parties and their addresses are:

 

**LENDER:**

**PHILLIPSW. SMITH FAMILY TRUST**

**Phillips W. Smith, Trustee**

7501 North Ironwood Drive

Paradise Valley, AZ 85253

 

**BORROWER:**

**PROUROCAREMEDICAL INC**

**aNevada Corporation**

ONE CARLSON PARKWAY SUITE124

PLYMOUTH, Minnesota 66447

 

# **1.****                                      DEFINITIONS**.  As used in this Note, the terms have thefollowing meanings:

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## **A.****                                    Pronouns**.  The pronouns “we,’ ‘us,’ and “our” refer toeach Borrower signing this Note, individually and together.  “You” and “Your” refer to the Lender.

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## **B.****                                    Note**.  Note refers to this document, and anyextensions, renewals, modifications and substitutions of this Note.

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## **C.****                                    Loan**.  Loan refers to this transaction generally,including obligations and duties arising from the terms of all documentsprepared or submitted for this transaction such as applications, securityagreements, disclosures or notes, and this Note.

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## **D.****                                    Loan Documents**.  Loan Documents refer to all the documentsexecuted as a part of or in connection with the Loan.

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## **E.****                                      Property**.  Property is any property, real, personal orintangible, that secures our performance of the obligations of this Loan.

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## **F.****                                      Percent**.  Rates and rate change limitations areexpressed as annualized percentages.

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# **2.****                                      PROMISE TO PAY**.  For value received, we promise to pay you oryour 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 themaximum total principal balance of $600,000 (Principal), plus interest from thedate of disbursement, on the unpaid outstanding Principal balance until thisNote is paid in full.

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# **3.****                                      INTEREST**.  Interest will accrue on the unpaid Principalbalance of this Note at the rate of 8.750 percent (Interest Rate) until October 31,2007, after which time it may change as described in the Variable Ratesubsection.

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## **A.****                                    Interest After Default**.  If you declare a default under the terms ofthis Loan, including for failure to pay in full at maturity, you may increasethe Interest Rate payable on the outstanding Principal balance of this Noteuntil such default is cured.  In suchevent, interest will accrue on the outstanding Principal balance at theInterest Rate in effect from time to time under the terms of this Loan, untilpaid in full.

 

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

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

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## **D.****                                    Accrual**.  Interest accrues using an Actual/360 dayscounting method.

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## **E.****                                      Variable Rate**.  The Interest Rate may change during the termof this transaction.

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### **(1)****                                **Index.  Beginning with the first Change Date, theInterest Rate will be based on the following index:  the base rate on corporate loans posted by atleast 75% of the nation’s 30 largest banks known as the Wall Street JournalPrime Rate.  The Current Index is themost recent index figure available on each Change Date.

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### **(2)****                                **ChangeDate.  Each date on which the InterestRate may change is called a Change Date. The Interest Rate may change November 1, 2007 and daily thereafter,

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### **(3)****                                **CalculationOf Change.  On each Change Date you willcalculate the Interest Rate, which will be the Current Index plus 1.000percent.  The result of this calculationwill be rounded up to the nearest .001 percent. Subject to any limitations, this will be the Interest Rate until thenext Change Date.  The new Interest Ratewill become effective on each Change Date. The Interest Rate and other charges on this Note will never exceed thehighest rate or charge allowed by law for this Note.

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### **(4)****                                **Limitations.  The Interest Rate changes are subject to thefollowing limitations:

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#### **(a)****                                 **Lifetime.  The Interest Rate will never be less than6.500 percent.

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### **(5)****                                **EffectOf Variable Rate.  A change in theInterest Rate will have the following effect on the payments:  The amount of scheduled payments and theamount of the final payment will change.

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# **4.****                                      REMEDIAL CHARGES**.  In addition to interest or other financecharges, we agree that we will pay these additional fees based on our methodand pattern of payment.  Additionalremedial charges may be described elsewhere in this Note.

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## **A.****                                    Late Charge**.  If a payment is more than 10 days late, we willbe charged 5.000 percent of the Unpaid Portion of Payment.  We will pay this late charge promptly butonly once for each late payment.

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# **5.****                                      PAYMENT**.  We agree to pay this Note on demand, but ifno demand is made, we agree to pay this Note in installments of accruedinterest beginning October 31, 2007, and then on the 31st day of eachmonth thereafter.  We agree to pay theentire unpaid Principal and any accrued but unpaid interest on February 28,2009.

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Payments will be rounded up to the nearest $.01.  With the final payment we also agree to payany additional fees or charges owing and the amount of any advances you havemade to others on our behalf.  Paymentsscheduled to be paid on the 29th, 30th or 31st day of a month that contains nosuch day will, instead, be made on the last day of such month.

 

Each payment we make on this Note will be applied first to interestthat is due then to principal that is due, and finally to any charges that we oweother than principal and interest.  Ifyou and we agree to a different application of payments, we will describe ouragreement on this Note.  You may changehow payments are applied in your sole discretion without notice to us.  The actual amount of our final payment willdepend on our payment record.

 

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# **6.****                                      PREPAYMENT**.  We may prepay this Loan in full or in part atany time.  Any partial prepayment willnot excuse any later scheduled payments until we pay in full.

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# **7.****                                      LOAN PURPOSE**.  The purpose of this Loan is REPAYMENT OFEXISTING CROWN BANK OBLIGATION.

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# **8.****                                      SECURITY**.  This Loan is secured by separate securityinstruments prepared together with this Note as follows:

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| **Document  Name**                         | ** ** | **Parties  to Document** |
|--------------------------------------------|------------|--------------------------|
|                                       |       |                     |
| Security Agreement. PROUROCARE MEDICAL INC |       | PROUROCARE MEDICAL INC   |

 

# **9.****                                      DEFAULT**.  You may demand payment in full if any of thefollowing occur:

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## **A.****                                    Payments**.  We fail to make a payment in full when due,and fail to make such payment within three (3) days’ of your giving usnotice of such failure to make the payment.

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## **B.****                                    Insolvency or Bankruptcy**.  The death, dissolution or insolvency ofappointment of a receiver by or on behalf of, application of any debtor relieflaw, the assignment for the benefit of creditors by or on behalf of, thevoluntary or involuntary termination of existence by, or the commencement ofany proceeding under any present or future federal or state insolvency,bankruptcy, reorganization, composition or debtor relief law by or against us.

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## **C.****                                    Business Termination**.  We merge, dissolve, reorganize, end ourbusiness or existence.

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## **D.****                                    Failure to Perform**.  We fail to perform any condition or to keepany promise or covenant of this Note and fail to cure this lack of performancewithin fifteen (15) days of your giving us notice of thereof.

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## **E.****                                      Other Documents**.  A default occurs under the terms of any otherLoan Document.

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## **F.****                                      Misrepresentation**.  We make any verbal or written statement orprovide any financial information that is untrue, inaccurate, or conceals amaterial fact at the time it is made or provided.

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## **G.****                                    Judgment**.  We fail to satisfy or appeal any judgmentagainst us.

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## **H.****                                    Forfeiture**.  The Property is used in a manner or for apurpose that threatens confiscation by a legal authority.

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## **I.****                                         Name Change**.  We change our name or assume an additional namewithout notifying you before making such a change.

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# **10.****                               DUE ON SALE OR ENCUMBRANCE**.  You may, at your option, declare the entirebalance of this Note to be immediately due and payable upon the creation of, orcontract for the creation of, any lien, encumbrance, transfer or sale of all orany part of the Property.  This right issubject to the restrictions imposed by federal law 112 C.F.R. 5911, asapplicable.  However, if we are indefault under this Agreement, we may not sell the inventory portion of theProperty even in the ordinary course of business.

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# **11.****                               WAIVERS AND CONSENT**.  To the extent not prohibited by law, we waiveprotest, presentment for payment, demand, notice of acceleration, notice ofintent to accelerate and notice of dishonor.

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## **A.****                                    Additional Waivers By Borrower**.  In addition, we, to the extent permitted bylaw, consent to certain actions you may take, and generally waive defenses thatmay be available based on these actions or based on the status of a party tothis Note.

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### **(1)****                                **Youmay renew or extend payments on this Note, regardless of the number of suchrenewals or extensions.

 

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### **(2)****                                **Youmay release, substitute or impair any Property securing this Note.

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### **(3)****                                **Youmay invoke your right of set-off.

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### **(4)****                                **Youmay enter into any sales, repurchases or participations of this Note to anyperson in any amounts and we waive notice of such sales, repurchases orparticipations.

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## **B.****                                    No Waiver By Lender**.  Your course of dealing, or your forbearancefrom, or delay in, the exercise of any of your rights, remedies, privileges orright to insist upon our strict performance of any provisions contained in thisNote, 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.

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# **12.****                               REMEDIES**.  After we default, and after you give anylegally required notice and opportunity to cure the default, you may at youroption do any one or more of the following,

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## **A.****                                    Acceleration**.  You may make all or any part of the amountowing by the terms of this Note immediately due.

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## **B.****                                    Sources**.  You may use any and all remedies you haveunder state or federal law or in any Loan Document.

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## **C.****                                    Set-Off**.  You may use the right of set-off.  This means you may set-off any amount due andpayable under the terms of this Note against any right we have to receive moneyfrom you.

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## **D.****                                    Waiver**.  Except as otherwise required by law, bychoosing any one or more of these remedies you do not give up your right to useany other remedy.  You do not waive adefault if you choose not to use a remedy. By electing not to use any remedy, you do not waive your right to laterconsider the event a default and to use any remedies if the default continuesor occurs again.

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# **13.****                               COLLECTION EXPENSES AND ATTORNEYS’ FEES**.  On or after Default, to the extent permittedby law, we agree to pay all expenses of collection, enforcement or protectionof 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.  All fees and expenses will be secured by theProperty we have granted to you, if any. In addition, to the extent permitted by the United States BankruptcyCode, we agree to pay the reasonable attorneys’ fees incurred by you to protectyour rights and interests in connection with any bankruptcy proceedingsinitiated by or against us,

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# **14.****                               WARRANTIES AND REPRESENTATIONS**.  We make to you the following Warranties andrepresentations which will continue as long as this Note is in effect:

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## **A.****                                    Power**.  We are duly organized, and validly existingand in good standing in all jurisdictions in which we operate.  We have the power and authority to enter intothis transaction and to carry on our business or activity as it is now beingconducted and, as applicable, am qualified to do so in each jurisdiction inwhich we operate.

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## **B.****                                    Authority**.  The execution, delivery and performance ofthis Note and the obligation evidenced by this Note are within our powers, havebeen duly authorized, have received all necessary governmental approval, willnot violate any provision of law, or order of court or governmental agency, andwill not violate any agreement to which we are a party or to which we are orany of our Property is subject.

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# **15.****                               APPLICABLE LAW**.  This Note is governed by the laws ofMinnesota, the United States of America, and to the extent required, by thelaws of the jurisdiction where the Property is located, except to the extentsuch state laws are preempted by federal law. In the event of a dispute, the exclusive forum, venue and place ofjurisdiction will be in Minnesota, unless otherwise required by law.

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# **16.****                               SUCCESSORS**.  This Note shall inure to the benefit of and beenforceable by you and your successors and assigns and shall be binding uponand enforceable against us and our successors and assigns.

 

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# **17.****                               AMENDMENT, INTEGRATION AND SEVERABILITY**.  This Note may not be amended or modified byoral agreement.  No amendment ormodification of this Note is effective unless made in writing and executed byyou and us.  This Note and the other LoanDocuments are the complete and final expression of the agreement.  If any provision of this Note isunenforceable, then the unenforceable provision will be severed and theremaining provisions will still be enforceable.

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# **18.****                               INTERPRETATION**.  Whenever used, the singular includes theplural and the plural includes the singular. The section headings are for convenience only and are not to be used tointerpret or define the terms of this Note.

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# **19.****                               NOTICE, FINANCIAL REPORTS AND ADDITIONALDOCUMENTS**.  Unless otherwiserequired by law, any notice will be given by delivering it or mailing it byfirst class mail to the appropriate party’s address listed in the DATE ANDPARTIES section, or to any other address designated in writing.  We will inform you in writing of any changein our name, address or other application information.  We will provide you any financial statementor information you request.  Allfinancial statements and information we give you will be correct and complete.  We agree to sign, deliver, and file anyadditional documents or certifications that you may consider necessary toperfect, continue, and preserve our obligations under this Loan and to confirmyour lien status on any Property.  Timeis of the essence.

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# **20.****                               CREDIT INFORMATION**.  We agree to supply you with whateverinformation you reasonably request.  Youwill make requests for this information without undue frequency, and will giveus reasonable time in which to supply the information.

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# **21.****                               ERRORS AND OMISSIONS**.  We agree, if requested by you, to fullycooperate in the correction, if necessary, in the reasonable discretion of youof any and all loan closing documents so that all documents accurately describethe loan between you and us.  We agree toassume all costs including by way of illustration and not limitation, actualexpenses, legal fees and marketing losses for failing to reasonably comply withyour requests within thirty (30) days.

 

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# **22.****                               SIGNATURES**.  By signing, we agree to the terms containedin this Note.  We also acknowledgereceipt of a copy of this Note.

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**BORROWER:**

 
| PROUROCARE MEDICAL INC |                     |   |     |
|------------------------|--------------------------|--------|----------|
|                   |                     |   |     |
| By                     | /s/  Richard C. Carlson  |   | 10/31/07 |
|                   | Richard  C. Carlson      |   | Date     |
|                   |                     |   |     |
| Its:                   | Chief  Executive Officer |   |     |
|                        |                          |        |          |  |  |  |  |  |

 

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