Document:

Exhibit
10.46

 

THIS NOTE AND THE
SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE PROVISIONS OF ANY APPLICABLE
STATE SECURITIES LAWS.  THIS NOTE AND THE
SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

 

CONVERTIBLE PROMISSORY
NOTE

 

	
  $142,500.00

  	
   

  	
  Promissory Note
  No.      

  
	
   

  	
   

  	
  [                          ,
  2007]

  

 

FOR VALUE RECEIVED, ProUroCare Medical Inc., a Nevada
corporation (the “Company”), hereby promises to pay to James Davis (“Holder”), the principal sum of One Hundred
Forty-Two Thousand and Five Hundred DOLLARS ($142,500.00), together with
interest as provided for herein, in lawful currency of the United States of
America.  This Convertible Promissory
Note (this “Note”) shall bear interest at a rate of 10% per annum.

 

This Note is issued pursuant to, and is entitled to
the benefits of the provisions of that certain Unit Purchase Agreement, dated
as of December 27, 2007,
(the “Unit Purchase Agreement”), between the Company and the
Holder.  Capitalized terms used herein
and not otherwise defined herein shall have the meanings ascribed to them in
the Unit Purchase Agreement.

 

SECTION 1

Terms

 

Section 1.1 
Interest Rate.  The Company
agrees that interest shall accrue on the outstanding principal amount of this
Note from the date of this Note until the principal and interest have been
converted in accordance with the provisions hereof or paid in full, with
interest accruing at a fixed rate per annum equal to ten percent (10.0%).  Such interest shall be computed on the basis
of actual days elapsed and a year of 360 days.

 

Section 1.2 
Annual Interest Payment. 
Subject to the earlier conversion of this Note, the interest accrued on
this Note from the date of this Note through the December 27, 2008 shall
be payable to the Holder in cash on December 27, 2008.  At the option of the Holder, such accrued
interest, in whole or in part, may be converted into that number of fully paid
and nonassessable shares of the Company’s common stock, $0.00001 par value (the
“Common Stock”) as is obtained by dividing (A) the amount of such
accrued interest by (B) the closing price of the Common Stock on December 27,
2008.

 

Section 1.3 
Conversion Date.  On June 27,
2009 (the “Maturity Date”), the entire outstanding principal amount of
this Note shall automatically convert into that number of fully 

 

 

paid and nonassessable shares of Common Stock as is obtained by
dividing (A) the entire outstanding principal amount of this Note by (B) $0.005
(the “Conversion Price”).  All or
any portion of the accrued but unpaid interest on the Note shall, at the option
of the Holder, be (i) converted into that number of fully paid and
nonassessable shares of Common Stock as is obtained by dividing (A) such
accrued but unpaid interest by (B) the Conversion Price or (ii) paid
to the Holder in cash.

 

Section 1.4 
Conversion Upon a Public Offering.  In the event that a Public Offering is
completed before the Maturity Date, without any act by the Company or the
Holder hereof, at the effective date of such Public Offering, the entire
outstanding principal amount of this Note, together with all interest accrued
thereon (such principal and accrued interest, the “Outstanding Balance”)
shall be automatically converted into that number and type of equity securities
issued by the Company in a Public Offering as is obtained by dividing (A) the
Outstanding Balance by (B) the product of (i) the Offering Price and (ii) 0.50.  For purposes of this Note, (i) “Public
Offering” shall mean an underwritten public offering of equity securities
of the Company and (ii) “Offering Price” shall mean the per share
or other unit price at which equity securities of the Company are offered in
the Public Offering.

 

Section 1.5 
Optional Prepayment. 
Subject to the Holder’s right to have all interest accrued from the date
of this Note through the December 27, 2008 converted into Common Stock in
accordance with Section 1.2 hereof, beginning on December 27, 2008,
the Company may, at its option, without premium or penalty, upon five (5) days
prior written notice to the Holder, repay the unpaid principal amount of this
Note, at any time in whole or from time to time in part, together with interest
accrued thereon to the date of prepayment. 
Any such prepayment shall be applied first to the payment of accrued
interest and then to repayment of principal. 
Upon any partial prepayment of the unpaid principal amount of this Note,
the Holder shall make notation on this Note of the portion of the principal so
prepaid.

 

Section 1.6 
Subordination.  This Note
shall be subordinated in all respects (including right of payment) to all other
indebtedness of the Company, now existing or hereafter owing, to banks and
other such financial institutions.

 

Section 1.6  No Fractional Shares or Scrips.  No fractional shares or scrip representing
fractional shares shall be issued upon the conversion of this Note.  In lieu of issuing such fractional shares,
the Company shall pay all of the cash value of any fractional interest to
Holder.

 

Section 1.7  No Impairment.  Without limiting or altering the provisions
or obligations of the Company under this Note or the Unit Purchase Agreement,
the Company shall not avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed by it pursuant to this Note and
the Unit Purchase Agreement and shall at all times in good faith assist in the
observance or performance of any of the terms to be observed or performed by it
pursuant to this Note and the Unit Purchase Agreement.

 

Section 1.8  Issuance of Shares.  Holder acknowledges that the Company currently has insufficient
authorized shares of Common Stock to permit the conversion of this Note in
accordance with Section 1.3 hereof.

 

2

 

Section 1.9  Release of Obligations.  Upon conversion or prepayment of this Note,
the Company shall be forever released from all its obligations and liabilities
under this Note.

 

Section 1.10  Adjustment.

 

(a)                                  Adjustments for Dividends and
Distributions.  In the event the Company at any time or from
time to time after the date hereof shall make, issue, or fix a record date for
the determination of holders of capital stock entitled to receive a dividend or
other distribution (including a stock split or subdivision) payable in
securities of the Company, then and in such event provisions shall be made so
that the Holder shall receive, upon conversion of this Note, in addition to the
number of shares of Common Stock receivable thereupon, the amount of securities
of the Company that the Holder would have received had this Note been converted
into Common Stock on the date of such event and had the Holder thereafter,
during the period from the date of such event to and including the conversion
date, retained such securities receivable by the Holder as aforesaid during
such period, giving application to all adjustments called for during such
period under this Note with respect to the rights of the Holder under the Note.

 

(b)                                 Adjustment for Reclassifications,
Exchanges, or Substitutions.  If the Common
Stock issuable upon the conversion of this Note shall be changed into the same
or different number of shares of any class or classes of capital stock, whether
by capital reorganization, reclassification, or otherwise (other than a
subdivision or combination of shares or stock dividend, or a reorganization,
merger, consolidation, or sale of assets provided for elsewhere), then and in
each such event the Holder shall have the right thereafter to convert this Note
into the kind and amount of shares of capital stock and other securities and
property receivable upon such reorganization, reclassification, or other
change, by holders of the number of shares of Common Stock into which this Note
might have been converted immediately prior to such reorganization, reclassification
or change, all subject to further adjustment as provided herein.

 

(c)                                  Reorganization; Mergers; Consolidations;
Sales of Assets.  If at any time or from time to time there
shall be a capital reorganization of the Common Stock issuable on conversion of
this Note (other than a subdivision, combination, reclassification, or exchange
of shares provided for elsewhere) or a merger or consolidation of the Company
with or into another corporation, or the sale of all or substantially all of
the Company’s properties and assets to any other entity, then, as a part of
such reorganization, merger, consolidation, or sale, provision shall be made so
that the Holder shall thereafter be entitled to receive upon conversion of this
Note, the number of shares of capital stock or other securities or property of
the Company, or of the successor corporation resulting from such merger or
consolidation or sale, to which a holder of Common Stock deliverable upon
conversion would have been entitled on such capital reorganization, merger,
consolidation, or sale. In any such case, appropriate adjustment shall be made
in the application of the provisions of this Note with respect to the rights of
the Holder after the reorganization, merger, consolidation, or sale to the end
that the 

 

3

 

provisions of this Note
shall be applicable after the event as nearly equivalent as may be practicable.

 

(d)                                 Adjustment for Stock Splits and
Combinations.  If the Company at any time or from time to time
effects a subdivision of the outstanding capital stock, the Conversion Price
then in effect immediately before that subdivision shall be proportionately
decreased, and conversely, if the Company at any time or from time to time
combines the outstanding shares of capital stock, the Conversion Price then in
effect immediately before the combination shall be proportionately increased.
Any adjustment under this subsection (d) shall become effective at the
close of business on the date the subdivision or combination becomes effective.

 

(e)                                  Effects of Reverse Stock Split.  Notwithstanding any of the foregoing, the
price at which this Note converts under Section 1.4 hereof in the event of
a Public Offering shall not be adjusted under this Section 1.10 for the Company’s
Reverse Stock Split.  For purposes of
this Note, “Reverse Stock Split” shall mean the ten-for-one reverse split of the Company’s Common
Stock effective prior to the effectiveness of a
Public Offering.  For example, after the Reverse Stock Split,
the Outstanding Balance shall still be automatically converted into that number and
type of equity securities issued by the Company in a Public Offering as is
obtained by dividing (A) the Outstanding Balance by (B) the product
of (i) the Offering Price and (ii) 0.50.

 

Section 1.11  Lock-Up.  In addition to any restrictions on transfer
under applicable law, the Holder acknowledges and agrees that this Note and the
equity securities issued or issuable upon conversion of this Note may not be
sold, offered for sale, pledged or otherwise transferred or disposed of prior
to the expiration of a period of one-year beginning on the effective date of
the Public Offering.

 

SECTION 2

Events of Default

 

Section 2.1  Events of
Default.   The Outstanding Balance of
this Note shall become due and payable without any action on the part of the
Holder thereof upon the happening of any of the following events (each, an “Event
of Default”):

 

(a)                                  the Company shall generally not pay its
debts as such debts become due, or shall admit in writing its inability to pay
its debts generally, or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against the Company
seeking to adjudicate it bankrupt or insolvent, or seeking liquidation, winding
up, reorganization, arrangement, adjustment, custodianship, protection, or
relief of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, custodian trustee, or other similar
official for it or for any substantial part of its property; or

 

4

 

(b)                                 the Company shall default in the due
performance or observance of any expressed or implied covenant, agreement or
provision of this Note or the Unit Purchase Agreement and such default shall
have continued uncured for a period of thirty (30) days after written notice
thereof to the Company from the Holder.

 

Section 2.2  Suits for Enforcement.  In case any one or more Events of Default
shall have occurred and be continuing, unless such Events of Default shall have
been waived in the manner provided in Section 3.5, the Holder may proceed
to protect and enforce his rights under this Section 2.2 by suit in equity
or action at law.  It is agreed that in the event the Holder
prevails in such action, the Holder shall be entitled to receive all reasonable
fees, costs and expenses incurred, including without limitation such reasonable
fees and expenses of attorneys (whether or not litigation is commenced) and
reasonable fees, costs and expenses of appeals.

 

SECTION 3

Miscellaneous

 

Section 3.1     Lost,
Stolen or Mutilated Notes.  Upon
receipt of evidence satisfactory to the Company of the loss, theft, destruction
or mutilation of this Note, and in case of any such loss, theft or destruction,
upon delivery of any customary indemnity agreement reasonably satisfactory to
the Company, or in any case of any such mutilation, upon surrender and
cancellation of this Note, the Company at its expense will issue and deliver a
new Note of like tenor in an amount equal to the amount of such lost, stolen or
mutilated Note and any such lost, stolen or destroyed Note shall thereupon
become void.

 

Section 3.2     Benefit
of Note.  This Note shall be binding
upon, and shall inure to the benefit of and be enforceable by, Holder and his
successors and assigns.  All of the
covenants and the agreements contained in this Note by or on behalf of the
Company are binding on the Company’s successors and assigns, whether by
consolidation, merger, transfer or license of all or substantially all of the
property of the Company.

 

Section 3.3     Costs
of Collection.  The Company hereby
waives presentment for payment, notice of dishonor, protest and notice of
protest and, following an Event of Default, the Company shall pay all of Holder’s
costs of collecting or attempting to collect any amount due hereunder,
including but not limited to, all reasonable attorneys’ fees and legal
expenses.

 

Section 3.4  Notices.  All notices required under this Note shall be
deemed to have been given or made for all purposes (i) upon personal
delivery, (ii) upon confirmation receipt that the communication was
successfully sent to the applicable number if sent by facsimile; (iii) one
day after being sent, when sent by professional overnight courier service, or (iv) five
days after posting when sent by registered or certified mail.  Notices to the Company shall be sent to the
principal office of the Company (or at such other place as the Company shall
notify the Holder hereof in writing). 
Notices to the Holder shall be sent to the address of the Holder set
forth in Schedule A to the Unit Purchase Agreement (or at such other
place as the Holder shall notify the Company hereof in writing).

 

Section 3.5  Amendment; Waiver.  Any term of this Note may be amended, changed
or modified, and the observance of any term of this Note may be waived (either
generally or in a 

 

5

 

particular instance and
either retroactively or prospectively), with the written consent of the Company
and the Holder.

 

Section 3.6  Governing Law and Construction.  This Note shall be construed in accordance
with and governed by the laws of the State of Minnesota, without regard to the
principles of conflicts of law.  Whenever
possible, each provision of this Note and any other statement, instrument or
transaction contemplated hereby and valid under such applicable law, but, if
any provision of this Note or any other statement, instrument or transaction
contemplated hereby or relating hereto shall be held to be prohibited or
invalid under such applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Note or any
other statement, instrument or transaction contemplated hereby or relating
hereto.  In the event of any conflict
with, between or among the provisions of this Note or the Unit Purchase
Agreement, the Unit Purchase Agreement shall govern.

 

IN WITNESS WHEREOF, the Company has executed this Note as
of the date first above written.

 

 

	
   

  	
  PROUROCARE MEDICAL INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard B. Thon

  
	
   

  	
   

  	
  Name:

  	
  Richard B. Thon

  
	
   

  	
   

  	
  Title:

  	
  CFO

  

 

6Exhibit 10.47

 

FORM OF NOTE

 

THIS
NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE
PROVISIONS OF ANY APPLICABLE STATE SECURITIES LAWS.  THIS NOTE AND THE SECURITIES ISSUABLE UPON
CONVERSION HEREOF MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED
OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

 

CONVERTIBLE PROMISSORY
NOTE

 

	
  $                

  	
  Promissory Note No.     

  [                          ,
  2008]

  

 

FOR VALUE RECEIVED, ProUroCare Medical Inc., a Nevada
corporation (the “Company”), hereby promises to pay to                                   
(“Holder”), the principal sum of           
DOLLARS ($          ),
together with interest as provided for herein, in lawful currency of the United
States of America.  This Convertible
Promissory Note (this “Note”) shall bear interest at a rate of 10% per
annum.

 

This Note is issued pursuant to, and is entitled to
the benefits of the provisions of that certain Unit Purchase Agreement, dated
as of                         ,
2008, (the “Unit Purchase Agreement”), between the Company, the Holder
and the other parties thereto.  Capitalized terms used herein and not
otherwise defined herein shall have the meaning ascribed to them in the Unit
Purchase Agreement.

 

SECTION 1

Terms

 

Section 1.1 
Interest Rate.  The Company
agrees that interest shall accrue on the outstanding principal amount of this
Note from the date of this Note until the principal and interest have been
converted in accordance with the provisions hereof or paid in full, with
interest accruing at a fixed rate per annum equal to ten percent (10.0%).  Such interest shall be computed on the basis
of actual days elapsed and a year of 360 days.

 

Section 1.2 
Annual Interest Payment. 
Subject to the earlier conversion of this Note, the interest accrued on
this Note from the date of this Note through the [one-year
anniversary of the date of the Unit Purchase Agreement] shall be
payable to the Holder in cash on [such one-year
anniversary].  At the option
of the Holder, such accrued interest, in whole or in part, may be converted
into that number of fully paid and nonassessable shares of the Company’s common
stock, $0.00001 par value (the “Common Stock”) as is obtained by
dividing (A) the amount of such accrued interest by (B) the closing
price of the Common Stock on [the one-year anniversary
of the date of the Unit Purchase Agreement].

 

 

Section 1.3 
Conversion Date.  On [the eighteen-month anniversary of the date of the Unit Purchase
Agreement] (the “Maturity Date”), the entire outstanding
principal amount of this Note shall automatically convert into that number of
fully paid and nonassessable shares of Common Stock as is obtained by dividing (A) the
entire outstanding principal amount of this Note by (B) $0.005 (the “Conversion
Price”).  All or any portion of the
accrued but unpaid interest on the Note shall, at the option of the Holder, be (i) converted
into that number of fully paid and nonassessable shares of Common Stock as is
obtained by dividing (A) such accrued but unpaid interest by (B) the
Conversion Price or (ii) paid to the Holder in cash.

 

Section 1.4 
Conversion Upon a Public Offering.  In the event that a Public Offering is
completed before the Maturity Date, without any act by the Company or the
Holder hereof, at the effective date of such Public Offering, the entire
outstanding principal amount of this Note, together with all interest accrued
thereon (such principal and accrued interest, the “Outstanding Balance”)
shall be automatically converted into that number and type of equity securities
issued by the Company in a Public Offering as is obtained by dividing (A) the
Outstanding Balance by (B) the product of (i) the Offering Price and (ii) 0.70.  For purposes of this Note, (i) “Public
Offering” shall mean an underwritten public offering of equity securities
of the Company and (ii) “Offering Price” shall mean the per share
or other unit price at which equity securities of the Company are offered in
the Public Offering.

 

Section 1.5 
Optional Prepayment. 
Subject to the Holder’s right to have all interest accrued from the date
of this Note through the [the one-year anniversary
of the date of the Unit Purchase Agreement] converted into Common
Stock in accordance with Section 1.2 hereof, beginning on [the one-year anniversary of the date of the Unit Purchase Agreement],
the Company may, at its option, without premium or penalty, upon five (5) days
prior written notice to the Holder, repay the unpaid principal amount of this
Note, at any time in whole or from time to time in part, together with interest
accrued thereon to the date of prepayment. 
The Company shall prepay such principal and interest to the Holders of
all outstanding Notes on a pro rata basis. 
Any such prepayment shall be applied first to the payment of accrued
interest and then to repayment of principal. 
Upon any partial prepayment of the unpaid principal amount of this Note,
the Holder shall make notation on this Note of the portion of the principal so
prepaid.

 

Section 1.6 
Subordination.  This Note
shall be subordinated in all respects (including right of payment) to all other
indebtedness of the Company, now existing or hereafter owing, to banks and
other such financial institutions.

 

Section 1.6 
No Fractional Shares or Scrips. 
No fractional shares or scrip representing fractional shares shall be
issued upon the conversion of this Note. 
In lieu of issuing such fractional shares, the Company shall pay all of
the cash value of any fractional interest to Holder.

 

Section 1.7 
No Impairment.  Without
limiting or altering the provisions or obligations of the Company under this
Note or the Unit Purchase Agreement, the Company shall not avoid or seek to
avoid the observance or performance of any of the terms to be observed or
performed by it pursuant to this Note and the Unit Purchase Agreement and shall
at all times in good faith assist in the observance or performance of any of
the terms to be observed or performed by it pursuant to this Note and the Unit
Purchase Agreement.

 

2

 

Section 1.8 
Issuance of Shares.  Holder acknowledges that the Company currently
has insufficient authorized shares of Common Stock to permit the conversion of
this Note and all of the other similar notes sold pursuant to the Unit Purchase
Agreement in accordance with Section 1.3 hereof.

 

Section 1.9 
Release of Obligations. 
Upon conversion or prepayment of this Note, the Company shall be forever
released from all its obligations and liabilities under this Note.

 

Section 1.10 
Adjustment.

 

(a)                                  Adjustments
for Dividends and Distributions.  In
the event the Company at any time or from time to time after the date hereof
shall make, issue, or fix a record date for the determination of holders of
capital stock entitled to receive a dividend or other distribution (including a
stock split or subdivision) payable in securities of the Company, then and in
such event provisions shall be made so that the Holder shall receive, upon
conversion of this Note, in addition to the number of shares of Common Stock
receivable thereupon, the amount of securities of the Company that the Holder
would have received had this Note been converted into Common Stock on the date
of such event and had the Holder thereafter, during the period from the date of
such event to and including the conversion date, retained such securities
receivable by the Holder as aforesaid during such period, giving application to
all adjustments called for during such period under this Note with respect to
the rights of the Holder under the Note.

 

(b)                                 Adjustment
for Reclassifications, Exchanges, or Substitutions.  If the Common Stock issuable upon the
conversion of this Note shall be changed into the same or different number of
shares of any class or classes of capital stock, whether by capital
reorganization, reclassification, or otherwise (other than a subdivision or
combination of shares or stock dividend, or a reorganization, merger,
consolidation, or sale of assets provided for elsewhere), then and in each such
event the Holder shall have the right thereafter to convert this Note into the
kind and amount of shares of capital stock and other securities and property
receivable upon such reorganization, reclassification, or other change, by
holders of the number of shares of Common Stock into which this Note might have
been converted immediately prior to such reorganization, reclassification or
change, all subject to further adjustment as provided herein.

 

(c)                                  Reorganization;
Mergers; Consolidations; Sales of Assets. 
If at any time or from time to time there shall be a capital
reorganization of the Common Stock issuable on conversion of this Note (other
than a subdivision, combination, reclassification, or exchange of shares
provided for elsewhere) or a merger or consolidation of the Company with or
into another corporation, or the sale of all or substantially all of the
Company’s properties and assets to any other entity, then, as a part of such
reorganization, merger, consolidation, or sale, provision shall be made so that
the Holder shall thereafter be entitled to receive upon conversion of this
Note, the number of shares of capital stock or other securities or property of
the Company, or of the successor corporation resulting from such 

 

3

 

merger or consolidation
or sale, to which a holder of Common Stock deliverable upon conversion would
have been entitled on such capital reorganization, merger, consolidation, or
sale. In any such case, appropriate adjustment shall be made in the application
of the provisions of this Note with respect to the rights of the Holder after
the reorganization, merger, consolidation, or sale to the end that the
provisions of this Note shall be applicable after the event as nearly
equivalent as may be practicable.

 

(d)                                 Adjustment
for Stock Splits and Combinations. 
If the Company at any time or from time to time effects a subdivision of
the outstanding capital stock, the Conversion Price then in effect immediately
before that subdivision shall be proportionately decreased, and conversely, if
the Company at any time or from time to time combines the outstanding shares of
capital stock, the Conversion Price then in effect immediately before the
combination shall be proportionately increased. Any adjustment under this
subsection (d) shall become effective at the close of business on the date
the subdivision or combination becomes effective.

 

(e)                                  Effects of Reverse Stock Split. 
Notwithstanding any of the foregoing, the price at which this Note
converts under Section 1.4 hereof in the event of a Public Offering shall
not be adjusted under this Section 1.10 for the Company’s Reverse Stock
Split.  For purposes of this Note, “Reverse
Stock Split” shall mean the ten-for-one reverse split of the Company’s
Common Stock effective prior to the effectiveness of a Public Offering.  For example, after the Reverse Stock Split,
the Outstanding Balance shall still be automatically converted
into that number and type of equity securities issued by the Company in a
Public Offering as is obtained by dividing (A) the Outstanding Balance by (B) the
product of (i) the Offering Price and (ii) 0.70.

 

SECTION 2

Events of Default

 

Section 2.1  Events of Default.   The Outstanding Balance of this Note shall
become due and payable without any action on the part of the Holder thereof
upon the happening of any of the following events (each, an “Event of
Default”):

 

(a)                                  the
Company shall generally not pay its debts as such debts become due, or shall
admit in writing its inability to pay its debts generally, or shall make a
general assignment for the benefit of creditors; or any proceeding shall be
instituted by or against the Company seeking to adjudicate it bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, custodianship, protection, or relief of it or its debts under any
law relating to bankruptcy, insolvency or reorganization or relief of debtors,
or seeking the entry of an order for relief or the appointment of a receiver,
custodian trustee, or other similar official for it or for any substantial part
of its property; or

 

(b)                                 the
Company shall default in the due performance or observance of any expressed or
implied covenant, agreement or provision of this Note or the Unit Purchase 

 

4

 

Agreement and such
default shall have continued uncured for a period of thirty (30) days after
written notice thereof to the Company from the Holder of any outstanding Note.

 

Section 2.2 
Suits for Enforcement.  In
case any one or more Events of Default shall have occurred and be continuing,
unless such Events of Default shall have been waived in the manner provided in Section 3.5,
the Majority Purchasers may proceed to protect and enforce their rights under
this Section 2.2 by suit in equity or action at law.  It is
agreed that in the event the Holders prevail in such action, such Holders shall
be entitled to receive all reasonable fees, costs and expenses incurred,
including without limitation such reasonable fees and expenses of attorneys
(whether or not litigation is commenced) and reasonable fees, costs and
expenses of appeals.

 

SECTION 3

Miscellaneous

 

Section 3.1 
Lost, Stolen or Mutilated Notes. 
Upon receipt of evidence satisfactory to the Company of the loss, theft,
destruction or mutilation of this Note, and in case of any such loss, theft or
destruction, upon delivery of any customary indemnity agreement reasonably
satisfactory to the Company, or in any case of any such mutilation, upon
surrender and cancellation of this Note, the Company at its expense will issue
and deliver a new Note of like tenor in an amount equal to the amount of such
lost, stolen or mutilated Note and any such lost, stolen or destroyed Note
shall thereupon become void.

 

Section 3.2 
Benefit of Note.  This Note
shall be binding upon, and shall inure to the benefit of and be enforceable by,
Holder and its successors and assigns. 
All of the covenants and the agreements contained in this Note by or on
behalf of the Company are binding on the Company’s successors and assigns,
whether by consolidation, merger, transfer or license of all or substantially
all of the property of the Company.

 

Section 3.3 
Costs of Collection.  The
Company hereby waives presentment for payment, notice of dishonor, protest and
notice of protest and, following an Event of Default, the Company shall pay all
of Holder’s costs of collecting or attempting to collect any amount due
hereunder, including but not limited to, all reasonable attorneys’ fees and
legal expenses.

 

Section 3.4 
Notices.  All notices
required under this Note shall be deemed to have been given or made for all
purposes (i) upon personal delivery, (ii) upon confirmation receipt
that the communication was successfully sent to the applicable number if sent
by facsimile; (iii) one day after being sent, when sent by professional
overnight courier service, or (iv) five days after posting when sent by
registered or certified mail.  Notices to
the Company shall be sent to the principal office of the Company (or at such
other place as the Company shall notify the Holder hereof in writing).  Notices to the Holder shall be sent to the
address of the Holder set forth in Schedule A to the Unit Purchase
Agreement (or at such other place as the Holder shall notify the Company hereof
in writing).

 

Section 3.5 
Amendment; Waiver.  Any
term of this Note may be amended, changed or modified, and the observance of
any term of this Note may be waived (either generally or in a particular
instance and either retroactively or prospectively), with the written consent
of the 

 

5

 

Company
and the Purchasers holding a majority of the outstanding aggregate principal
amount of the Notes issued pursuant to the Unit Purchase Agreement (the “Majority
Purchasers”); provided, however, that no amendment, change,
modification or waiver respecting this Note may be made by the Majority
Purchasers without the consent of the Holder unless a comparable amendment,
change, modification or waiver is made respecting all of the Notes issued
pursuant to the Unit Purchase Agreement. 
Any amendment, change, modification or waiver to this Note shall apply
equally and be binding upon all of the Notes issued pursuant to the Unit
Purchase Agreement.  Except as otherwise
provided in this Note, this Note may not be discharged, nor shall the principal
amount or interest be amended, changed or modified, without the written consent
of the Company and the Holder of this Note. This Section 3.5 may not be
amended, changed or modified, except by a writing signed by the Company and all
of the Purchasers that are a party to the Unit Purchase Agreement.

 

Section 3.6 
Governing Law and Construction. 
This Note shall be construed in accordance with and governed by the laws
of the State of Minnesota, without regard to the principles of conflicts of
law.  Whenever possible, each provision of
this Note and any other statement, instrument or transaction contemplated
hereby and valid under such applicable law, but, if any provision of this Note
or any other statement, instrument or transaction contemplated hereby or
relating hereto shall be held to be prohibited or invalid under such applicable
law, such provision shall be ineffective only to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Note or any other statement, instrument or
transaction contemplated hereby or relating hereto.  In the event of any conflict with, between or
among the provisions of this Note or the Unit Purchase Agreement, the Unit
Purchase Agreement shall govern.

 

IN WITNESS WHEREOF,
the Company has executed this Note as of the date first above written.

 

 

	
   

  	
  PROUROCARE MEDICAL INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

6

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