Document:

Exhibit 4.1

 

THE WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF
THIS WARRANT (COLLECTIVELY, THE “SECURITIES”) HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY
STATE SECURITIES OR BLUE SKY LAWS (“BLUE SKY LAWS”). NO TRANSFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THIS WARRANT OR THE
SECURITIES OR ANY INTEREST THEREIN MAY BE MADE EXCEPT (A) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND ANY APPLICABLE
BLUE SKY LAWS OR (B) IF THE COMPANY HAS BEEN FURNISHED WITH BOTH AN OPINION OF
COUNSEL FOR THE HOLDER, WHICH OPINION AND COUNSEL SHALL BE SATISFACTORY TO THE
COMPANY, TO THE EFFECT THAT NO REGISTRATION IS REQUIRED BECAUSE OF THE
AVAILABILITY OF AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND
APPLICABLE BLUE SKY LAWS, AND ASSURANCES THAT THE TRANSFER, SALE, ASSIGNMENT,
PLEDGE, HYPOTHECATION OR OTHER DISPOSITION WILL BE MADE ONLY IN COMPLIANCE WITH
THE CONDITIONS OF ANY SUCH REGISTRATION OR EXEMPTION.

 

WARRANT

FOR

SHARES OF
COMMON STOCK

OF

PROUROCARE
MEDICAL INC.

 

	
  Warrant No. 33

  	
   

  	
  Plymouth, Minnesota

  
	
   

  	
   

  	
  June 1, 2006

  

 

FOR VALUE RECEIVED, Roman Pauly
and Maryjo Pauly, or their successors or assigns (“Holder”),
is entitled to subscribe for and purchase from ProUroCare Medical Inc., a Nevada
corporation (the “Company”), up to Thirty -Seven Thousand (37,500) fully paid and non-assessable shares of the Company’s
common stock, $.00001 par value per share (the “Common Stock”), at the
price of $0.50 per share, subject to adjustments as noted in section 3 below
(the “Warrant Exercise Price”).

 

This warrant may be exercised by Holder at any time or
from time to time on or prior to the fifth anniversary of the date hereof.

 

This warrant is subject to the following provisions,
terms and conditions:

 

1.                                       Exercise
of Warrant. The rights represented by this warrant may be exercised by the
Holder, in whole or in part, by written notice of exercise delivered to the
Company at least three days prior to the intended date of exercise and by the
surrender of this warrant (properly endorsed if required) at the principal
office of the Company and, except in connection with a Cashless Exercise (as
defined below), upon payment to it by cash, certified check or bank draft of
the purchase price for such shares. The shares so purchased shall be deemed to
be issued as of the close of business on the date on which this warrant has
been exercised by its surrender and, except in connection with a Cashless
Exercise, payment to the Company of the Warrant Exercise Price. Certificates
for the shares of stock so purchased, bearing the restrictive legend set forth
in Section 5 of this warrant, shall be delivered to the Holder within 15 days
after the rights represented by this

 

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warrant shall have been so exercised, and, unless this
warrant has expired, a new warrant representing the number of shares, if any,
with respect to which this warrant has not been exercised shall also be
delivered to the Holder within such time. No fractional shares shall be issued
upon the exercise of this warrant.

 

At the option of the Holder, payment of the Warrant
Exercise Price may be made through a net exercise without payment of the
Warrant Exercise Price in cash by the Holder providing notice to the Company of
the Holder’s election to receive a number of shares of Common Stock in a
cashless exercise (a “Cashless Exercise”). Upon receipt of a notice of
Cashless Exercise, the Company shall deliver to the Holder (without cash
payment by the Holder of any Warrant Exercise Price) that number of shares of
Common Stock that is equal to the quotient obtained by dividing (x) the value
of the portion of the warrant being exercised on the date that the warrant
shall have been surrendered (determined by subtracting the aggregate Warrant
Exercise Price for the number of shares of Common Stock as to which the warrant
is being exercised from the aggregate Fair Market Value (as hereinafter
defined) of such number of shares of Common Stock), by (y) the Fair Market
Value of one share of Common Stock. A notice of Cashless Exercise shall state
the number of shares of Common Stock as to which the warrant is being exercised.
“Fair Market Value” for purposes of this Section shall mean the average
of the Common Stock closing prices reported by the principal exchange on which
the Common Stock is traded, or the last sale prices as reported by the National
Association of Securities Dealers, Inc. Automated Quotation System (“Nasdaq”)
National Market, SmallCap Market, or Over-the-Counter Bulletin Board (OTCBB),
as the case may be, for the ten (10) business days immediately preceding the
date that the warrant shall have been surrendered or, in the event no public
market shall exist for the Common Stock at the time of such cashless exercise,
Fair Market Value shall mean the fair market value of the Common Stock as the
same shall be determined in the good faith discretion of the Company’s Board of
Directors, after full consideration of all factors then deemed relevant by such
Board of Directors in establishing such value, including by way of illustration
and not limitation, the per share purchase price of the most recent sale of
shares of Common Stock by the Company after the date hereof, as evidenced by
the vote of a majority of the directors then in office. Following a Cashless
Exercise, the warrant shall be canceled in all respects with regard to
(a) the number of shares of Common Stock issued in accordance with the
cashless exercise plus (b) the number of shares of Common Stock
used as consideration for the Cashless Exercise.

 

2.                                       Certain
Covenants of the Company. The Company covenants and agrees that all shares
that may be issued upon the exercise of the rights represented by this warrant
shall, upon issuance, be duly authorized and issued, fully paid and
non-assessable shares. The Company further covenants and agrees that during the
period within which the rights represented by this warrant may be exercised,
the Company will at all times have authorized, and reserved for the purpose of
issue or transfer upon exercise of the subscription rights evidenced by this
warrant, a sufficient number of shares of Common Stock to provide for the
exercise of the rights represented by this warrant.

 

3.                                       Adjustment
of Exercise Price and Number of Shares. The number of shares the Holder may
purchase and the Warrant Exercise Price shall be subject to adjustment from
time to time as hereinafter provided in this section 3.

 

A-2

 

(a)                                  Stock
Dividend, Stock Split or Stock Combination. If the Company at any time
divides the outstanding shares of its Common Stock into a greater number of
shares (whether pursuant to a stock split, stock dividend or otherwise), and conversely,
if the outstanding shares of its Common Stock are combined into a smaller
number of shares, the Warrant Exercise Price in effect immediately prior to
such division or combination shall be proportionately adjusted to reflect the
reduction or increase in the value of each such Common Stock.

 

(b)                                 Effect
of Reorganization, Reclassification or Merger. If any capital
reorganization or reclassification of the capital stock of the Company, or
consolidation or merger of the Company with another corporation, or the sale of
all or substantially all of its assets to another corporation shall be effected
in such a way that holders of the Common Stock shall be entitled to receive
stock, securities or assets with respect to or in exchange for such Common
Stock, then, as a condition of such reorganization, reclassification,
consolidation, merger or sale, the Holder shall have the right to purchase and
receive upon the basis and upon the terms and conditions specified in this
warrant and in lieu of the shares of the Common Stock immediately theretofore
purchasable and receivable upon the exercise of the rights represented hereby,
such shares of stock, other securities or assets as would have been issued or
delivered to the Holder if it had exercised this warrant and had received such
shares of Common Stock prior to such reorganization, reclassification,
consolidation, merger or sale.

 

(c)                                  Notice
of Adjustment. Upon any adjustment of the Warrant Exercise Price, the
Company shall give written notice thereof, by first class mail, postage
prepaid, addressed to the registered Holder of this warrant at the address of
such Holder as shown on the books of the Company, which notice shall state the
Warrant Exercise Price resulting from such adjustment and the increase or decrease,
if any, in the number of shares purchasable at such price upon the exercise of
this warrant, setting forth in reasonable detail the method of calculation and
the facts upon which such calculation is based.

 

4.                                       No
rights as Shareholder. This warrant shall not entitle the Holder to any
voting rights or other rights as a shareholder of the Company.

 

5.                                       Application
of Restrictions of Transfer.

 

(a)                                  No
transfer of this warrant may be completed unless and until (i) the Company has
received an opinion of counsel for the Company that such securities may be sold
pursuant to an exemption from registration under the Securities Act of 1933, as
amended (the “Securities Act”), or (ii) a registration statement
relating to this warrant has been filed by the Company and declared effective
by the Commission. Subject to the foregoing, this warrant and all rights
hereunder are transferable, in whole or in part, at the principal office of the
Company by the Holder in person or by duly authorized attorney, upon surrender
of this warrant properly endorsed to any person or entity who represents in
writing that he/she/it is acquiring the warrant for investment and without any
view to the sale or other distribution thereof. Each Holder of this warrant, by
taking or holding the same, consents and agrees that the bearer of this
warrant, when endorsed, may be treated by the Company and all other persons
dealing with this warrant as the absolute owner hereof for any purpose and as
the person entitled to exercise the rights represented by this warrant or
perform the obligations required hereby, or to the transfer hereof on the books
of the Company, any

 

A-3

 

notice to the
contrary notwithstanding; but until such transfer on such books, the Company
may treat the registered owner hereof as the owner for all purposes.

 

(b)                                 In
no event shall the Holder(s) sell any shares of Common Stock that are issued
upon the exercise of the rights represented by this warrant within 180 days
following the effective date of an initial public offering of the Common Stock
of the Company.

 

(c)                                  Each
certificate for shares issued upon the exercise of the rights represented by
this warrant shall bear a legend as follows unless, in the opinion of counsel
to the Company, such legend is not required in order to ensure compliance with
the Securities Act:

 

“THESE SHARES HAVE
BEEN PURCHASED FOR INVESTMENT WITHIN THE MEANING OF THE SECURITIES ACT OF 1933,
AS AMENDED (THE “ACT”), AND APPLICABLE STATE SECURITIES LAWS, AND THEY MAY NOT
BE SOLD, OFFERED FOR SALE, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE STATE SECURITIES
LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION TO THE EFFECT
THAT THE PROPOSED TRANSACTION WITH BE EXEMPT FROM REGISTRATION. IN ADDITION, IN
NO EVENT MAY THE SECURITIES REPRESENTED BY THIS CERTIFICATE BE PUBLICLY SOLD,
TRANSFERRED, ASSIGNED, OFFERED, PLEDGED OR OTHERWISE DISTRIBUTED FOR VALUE
WITHIN 180 DAYS FOLLOWING THE EFFECTIVE DATE OF THE INITIAL PUBLIC OFFERING OF
COMMON STOCK BY THE COMPANY.”

 

6.                                       Piggyback
Registration.

 

(a)                                  If,
at any time commencing from the date hereof and expiring four (4) years
thereafter, the Company proposes to register any of its securities under the
Securities Act of 1933, as amended (the “Act”) (other than in connection with a
merger or pursuant to Form S-8, S-4 or other comparable registration statement)
it will give written notice by registered mail, at least thirty (30) days prior
to the filing of each such registration statement, to the Holder and to all
other Holders of its intention to do so. If the Holder or other Holders notify
the Company within twenty (20) days after receipt of any such notice of its or
their desire to include any such Securities in such proposed registration
statement, the Company shall afford each of the Underwriter and such Holders
the opportunity to have any such Securities registered under such registration
statement. In the event any underwriter underwriting the sale of securities
registered by such registration statement shall limit the number of securities
includable in such registration by shareholders of the Company, the number of
such securities shall be allocated pro rata among the Holders and the holders
of other securities entitled to piggyback registration rights.

 

(b)                                 Notwithstanding
the provisions of this Section 6, the Company shall have the right at any time
after it shall have given written notice pursuant to this Section (irrespective

 

A-4

 

of whether a written request for inclusion of any such securities shall
have been made) to elect not to file any such proposed registration statement,
or to withdraw the same after the filing but prior to the effective date
thereof.

 

(c)                                  Notwithstanding
anything contained herein to the contrary, the registration rights granted to
each Holder by this Section 6 shall automatically terminate on, and be of no
further force or effect from and after, the date on which such Holder can sell
all of the Securities held by such Holder without registration pursuant to Rule
144(k) promulgated under the Securities Act of 1933, as amended (or similar
exception from registration).

 

7.                                       Governing
Law.  This Warrant shall be governed
by and construed in accordance with the laws of the State of Minnesota without
regard to its conflicts-of-law provisions.

 

8.                                       Amendments
and Waivers.  The provisions of this
Warrant may not be amended, modified or supplemented, and waiver or consents to
departures from the provisions hereof may not be given, unless the Company
agrees in writing and has obtained the written consent of the Holder.

 

9.                                       Successors
and Assigns.  All the terms and
conditions of this Warrant shall be binding upon and inure to the benefit of
the permitted successors and assigns of the Company and the Holder.

 

10.                                 Headings
and References.  The headings of this
Warrant are for convenience only and shall not affect the interpretation of
this Warrant. Unless the context indicates otherwise, all references herein to
Sections are references to Sections of this Warrant.

 

11.                                 Notices. All notices or communications hereunder,
except as herein otherwise specifically provided, shall be in writing. Notices
sent to the Holder shall be mailed, hand delivered or faxed and confirmed to
the Holder at his, her or its address set forth in the Company’s records. Notices
sent to the Company shall be mailed, hand delivered or faxed and confirmed to
ProUroCare Medical Inc., One Carlson Parkway, Suite 124, Plymouth, Minnesota
55447, or to such other address as the Company or the Holder shall notify the
other as provided in this Section.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the Company has caused this
warrant to be signed and delivered by its duly authorized officer.

 

 

	
  Dated: June 1, 2006.

  	
   

  
	
   

  	
   

  
	
   

  	
  PROUROCARE MEDICAL INC.:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Maurice R. Taylor II

  	
   

  
	
   

  	
  Name:

  	
  Maurice R. Taylor II

  
	
   

  	
  Title:

  	
  Chairman and CEO

  

 

A-6

 

WARRANT EXERCISE (CASH/CHECK)

 

(To be signed only
upon exercise of warrant for cash/check)

 

The undersigned, the holder of the foregoing warrant,
hereby irrevocably elects to exercise the purchase right represented by such
warrant for, and to purchase thereunder,                       
of the shares of Common Stock of ProUroCare Medical Inc. to which such warrant
relates and herewith makes payment of $                       
therefor in cash or by check and requests that the certificates for such shares
be issued in the name of, and be delivered to                                                         ,
whose address is set forth below the signature of the undersigned.

 

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
  (Signature)

  
	
   

  	
   

  

 

WARRANT EXERCISE (CASHLESS)

 

(To be signed only
upon a Cashless Exercise of warrant)

 

The undersigned, the holder of the foregoing warrant,
hereby irrevocably elects to exercise the purchase right represented by such
warrant for                       
of the shares of Common Stock of ProUroCare Medical Inc. to which such warrant
relates pursuant to a Cashless Exercise, and requests that certificates for                       
shares be issued in the name of, and be delivered to                                                                    ,
whose address is set forth below the signature of the undersigned.

 

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
  (Signature)

  
	
   

  	
   

  

 

INSTRUCTIONS FOR
REGISTRATION OF SECURITIES

 

	
  Name and Address:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (please typewrite or print in block letters)

  

 

A-7

 

WARRANT ASSIGNMENT

 

(To be signed only
upon transfer of warrant)

 

FOR VALUE RECEIVED,
                                                                                   hereby
sells, assigns and transfers unto:

 

	
  Name and Address:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (please typewrite or print in block letters)

  

 

the right to purchase                     
shares of Common Stock as represented by this warrant to the extent of                        
shares of Common Stock and as to which such right is exercisable and does
hereby irrevocably constitute and appoint                                                
attorney, to transfer the same on the books of the Company with full power of
substitution in the premises.

 

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
  (Signature)

  

 

A-8Exhibit 10.1

 

PROMISSORY NOTE

 

RECITATIONS:

 

	
  Date:

  	
  June 1, 2006

  
	
   

  	
   

  
	
  Borrower:

  	
  ProUroCare Medical Inc.

  
	
   

  	
   

  
	
  Borrower’s Address:

  	
  One Carlson Parkway, Suite
  124

  
	
   

  	
  Plymouth, MN  55447

  
	
   

  	
   

  
	
  Lender:

  	
  Roman Pauly

  
	
   

  	
   

  
	
  Lender’s Address:

  	
  10295 Meade Lane

  Eden Prairie, MN  55347

  
	
   

  	
   

  
	
  Principal Amount:

  	
  75,000 USD

  
	
   

  	
   

  
	
  Term:

  	
  90 days

  
	
   

  	
   

  
	
  Interest Rate:

  	
  Prime rate

  

 

PROMISE TO
PAY.  ProUroCare Inc. (“borrower”)
promises to pay to Roman Pauly (“Lender”) in lawful money of the United States
of America, the principal amount of Seventy-Five Thousand & 00/100 Dollars
($75,000.00), together with interest at the Prime rate on the unpaid principal
balance from June 1, 2006, until paid in full.

 

INTEREST
RATE.  Interest shall
accrue on the unpaid principal based on a 365/360 basis;  that is, by applying the ratio of the annual
interest rate over a year of 360 days, multiplied by the outstanding principal
balance, multiplied by the actual number of days outstanding.

 

PAYMENT
TERMS.  This
Note is due and payable on August 30, 2006. 
Borrower will pay Lender at Lender’s address shown above or at such
other place as Lender may designate in writing.

 

ACCELERATION OF REPAYMENT.  If
Borrower closes on a round of financing with gross proceeds greater than or
equal to $1,000,000, the remaining principal balance and accrued interest
thereon shall become due and payable within 15 days of such closing.

 

BORROWER’S
PRE-PAYMENT RIGHT. 
Borrower reserves the right to prepay this Note in whole or in part, prior to
maturity, without penalty.

 

SEVERABILITY.  If any provision of this Note or the
application thereof shall, for any reason and to any extent, be invalid or
unenforceable, neither the remainder of this Note nor the application of the
provision to other persons, entities or circumstances shall be affected
thereby, but instead shall be enforced to the maximum extent permitted by law.

 

BINDING
EFFECT.  The
covenants, obligations and conditions herein contained shall be binding on and
inure to the benefit of the heirs, legal representatives, and assigns of the
parties hereto.

 

1

 

DESCRIPTIVE
HEADINGS.  The
descriptive headings used herein are for convenience of reference only and they
are not intended to have any effect whatsoever in determining the rights or
obligations under this Note.

 

GOVERNING
LAW.  This Note
shall be governed, construed and interpreted by, through and under the Laws of
the State of Minnesota, USA.

 

Borrower is responsible for all obligations
represented by this Note.

 

Both parties hereby agree to the terms of
this agreement as stated above.

 

 

EXECUTED this 1st day of June, 2006.

 

	
  ProUroCare
  Medical Inc.

  	
  Roman
  Pauly

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Maurice R. Taylor II

  	
   

  	
  /w/ Roman Pauly

  	
   

  
	
  Maurice
  R. Taylor II

  	
  Roman
  Pauly

  
	
  Chairman
  & CEO

  	
   

  
				

 

2

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