Document:

Exhibit 10.39

 

	
  LOAN NUMBER

  	
   

  	
  LOAN NAME

  	
   

  	
  ACCT. NUMBER

  	
   

  	
  AGREEMENT DATE

  	
   

  	
  INITIALS

  	
   

  
	
  4060026

  	
   

  	
  PROUROCARE MEDICAL, INC

  	
   

  	
   

  	
   

  	
  10/10/07

  	
   

  	
  KRH

  	
   

  

 

	
  NOTE AMOUNT

  	
   

  	
  INDEX (w/Margin)

  	
   

  	
  RATE

  	
   

  	
  MATURITY DATE

  	
   

  	
  LOAN PURPOSE

  	
   

  
	
  $

  	
  1,200,000.00

  	
   

  	
  Wall Street
  Journal Prime plus 1.000%

  	
   

  	
  6.750

  	
  %

  	
  02/28/09

  	
   

  	
  Commercial

  	
   

  
											

 

Creditor
Use Only

 

COMMERCIAL LOAN AND SECURITY AGREEMENT

Single
Advance Loan

 

DATE
AND PARTIES. The date of this Commercial Loan Agreement (Agreement) is October 10,
2007. The parties and their addresses are as follows:

 

LENDER:

	
  CROWN BANK

  
	
  6600 France Avenue South Ste 125

  
	
  Edina, Minnesota 55435

  

 

BORROWER:

	
  PROUROCARE MEDICAL. INC

  
	
  a Nevada Corporation

  
	
  5500 WAYZATA BLVD SUITE 310

  
	
  GOLDEN VALLEY, Minnesota 55416

  

 

1.    DEFINITIONS. For the purposes of this
Agreement, the following terms have the following meanings.

 

A. Accounting Terms. In this Agreement, any accounting terms that
are not specifically defined will have their customary meanings under generally
accepted accounting principles.

 

B. Insiders. Insiders include those defined as insiders by the
United States Bankruptcy Code, as amended; or to the extent left undefined,
include without limitation any officer, employee, stockholder or member,
director, partner, or any immediate family member of any of the foregoing, or
any person or entity which, directly or indirectly, controls, is controlled by
or is under common control with me.

 

C. Loan. The Loan refers to this transaction generally, including
obligations and duties arising from the terms of all documents prepared or
submitted for this transaction.

 

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

 

E. Pronouns. The pronouns “I”, “me” and “my” refer to every
Borrower signing this Agreement, individually or together. “You” and “your”
refers to the Loan’s lender.

 

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

 

2.    SINGLE ADVANCE. In accordance with the terms
of this Agreement and other Loan Documents, you will provide me with a term
note in the amount of $1,200,000.00 (Principal). I will receive the funds from
this Loan in one advance. No additional advances are contemplated, except those
made to protect and preserve your interests as provided in this Agreement or
other Loan Documents.

 

3.    MATURITY DATE. I agree to fully repay the Loan
by February 28, 2009.

 

4.    SECURITY AGREEMENT.

 

A. Secured Debts. This Security Agreement will secure the following
debts (Secured Debts), together with all extensions, renewals, refinancings,
modifications and replacements of the Secured Debts:

 

(1) Sums Advanced. All sums advanced and expenses incurred by you
under the terms of this Loan Agreement.

 

(2) All Debts. All present and future debts of all Borrowers owing
to you, even if this Security Agreement is not specifically referenced, the
future debts are also secured by other collateral, or if the future debt is
unrelated to or of a different type than this debt. If more than one person
signs this Security Agreement, each agrees that it will secure debts incurred
either individually or with others who may not sign this Security Agreement.
Nothing in this Security Agreement constitutes a commitment to make additional
or future loans or advances. Any such commitment must be in writing.

 

This Security Agreement will not secure any debt for which you fail to
give any required notice of the right of rescission. This Security Agreement
will not secure any debt for which a non-possessory, non-purchase money
security interest is created in “household goods” in connection with a “consumer
loan,” as those terms are defined by federal law governing unfair and deceptive
credit practices.

 

B. Security Interest. To secure the payment and performance of the
Secured Debts, I give you a security interest in all of the Property described
in this Security Agreement that I own or have sufficient rights in which to
transfer an interest, now or in the future, wherever the Property is or will be
located, and all proceeds and products from the Property (including, but not
limited to, all parts, accessories, repairs, replacements, improvements, and
accessions to the Property). Property is all the collateral given as security
for the Secured Debts and described in this Security Agreement, and includes
all obligations that support the payment or performance of the Property, “Proceeds”
includes anything acquired upon the sale, lease, license, exchange, or other
disposition of the Property; any rights and claims arising from the Property;
and any collections and distributions on account of the Property,

 

This Security Agreement remains in effect until terminated in writing,
even if the Secured Debts are paid and you are no longer obligated to advance
funds to me under any loan or credit agreement.

 

C. Property Description. The Property is described as follows:

 

(1) Inventory. All inventory which I hold for ultimate sale or
lease, or which has been or will be supplied under contracts of service, or
which are raw materials, work In process, or materials used or consumed in my
business.

 

(2) Accounts and Other Rights to Payment. All rights I have now or
in the future to payments including, but not limited to, payment for property
or services sold, leased, rented, licensed, or assigned, whether or not I have
earned such payment by performance. This includes any rights and interests (including
all liens and security interests) which I may have by law or agreement against
any Account Debtor or obligor of mine.

 

(3) General Intangibles. All general intangibles including, but not
limited to. tax refunds, applications for patents, patents, copyrights,
trademarks, trade secrets, good will, trade names, customer lists, permits and
franchises, payment intangibles, computer programs and all supporting
information provided in connection with a transaction relating to computer
programs, and the right to use my name.

 

(4) Equipment. All equipment including, but not limited to. all
machinery, vehicles, furniture, fixtures, manufacturing equipment, farm
machinery and equipment, shop equipment, office and recordkeeping equipment,
and parts and tools. All equipment described In a list or schedule which I give
will also be included in the Property, but such a list is not necessary for a
valid security interest in my equipment.

 

D. Duties Toward Property.

 

(1)        Protection of Secured
Party’s Interest. I will defend the Property against any other claim. I agree
to do whatever you require to protect your security interest and to keep your
claim in the Property ahead of the claims of other creditors, I will not do
anything to harm your position.

 

I will keep books, records and accounts about the Property and my
business in general. I will let you examine these and make copies at any
reasonable time. I will prepare any report or accounting you request which
deals with the Property.

 

(2)        Use, Location, and
Protection of the Property. I will keep the Property in my possession and in
good repair. I will use it only for commercial purposes. I will not change this
specified use without your prior written consent. You have the right of
reasonable access to inspect the Property and I will immediately inform you of
any loss or damage to the Property. I will not cause or permit waste to the
Property.

 

I will keep the Property at my address listed in the DATE AND PARTIES
section unless we agree I may keep it at another location. If the Property is
to be used in other states, I will give you a list of those states. The
location of the Property is given to aid in the identification of the Property.
It does not in any way limit the scope of the security interest granted to you.
I will notify you in writing and obtain your prior written consent to any
change in location of any of the Property. I will not use the Property in
violation of any law. I will notify you in writing prior to any change in my
address, name or, if an organization, any change in my identity or structure.

 

Until the Secured Debts are fully paid and this Security Agreement is
terminated, I will not grant a security interest in any of the Property without
your prior written consent. I will pay all taxes and assessments levied or
assessed against me or the Property and provide timely proof of payment of
these taxes and assessments upon request.

 

(3)        Selling, Leasing or
Encumbering the Property. I will not sell, offer to sell, lease, or otherwise
transfer or encumber the Property without your prior written permission, except
for Inventory sold in the ordinary course of business at fair market value, or
at a minimum price established between you and me. If I am in default under
this Security Agreement, I may not sell the Inventory portion of the Property
even in the ordinary course of business. Any

 

 

disposition of the Property contrary to this Security Agreement will violate
your rights. Your permission to sell the Property may be reasonably withheld
without regard to the creditworthiness of any buyer or transferee. I will not
permit the Property to be the subject of any court order affecting my rights to
the Property in any action by anyone other than you. If the Property includes
chattel paper or instruments, either as original collateral or as proceeds of
the Property, I will note your security interest on the face of the chattel
paper or instruments.

 

(4)        Additional Duties
Specific to Accounts. I will not settle any Account for less than its full
value without your written permission. Until you tell me otherwise, I will
collect all Accounts in the ordinary course of business. I will not dispose of
the Accounts by assignment without your prior Written consent, I will keep the
proceeds from all the Accounts and any goods which are returned to me or which
I take back, I will not commingle them with any of my other property. I will
deliver the Accounts to you at your request. If you ask me to pay you the full
price on any returned items or items retaken by me, I will do so. I will make
no material change in the terms of any Account, and I will give you any
statements, reports, certificates, lists of Account Debtors (showing names,
addresses and amounts owing), invoices applicable to each Account, and other
data in any way pertaining to the Accounts as you may request.

 

E. Collection Rights Of The Secured Party. Account Debtor means the
person who is obligated on an account, chattel paper, or general intangible. I
authorize you to notify my Account Debtors of your security interest and to
deal with the Account Debtors’ obligations at your discretion. You may enforce
the obligations of an Account Debtor, exercising any of my rights with respect
to the Account Debtors’ obligations to make payment or otherwise render
performance to me, including the enforcement of any security interest that
secures such obligations. You may apply proceeds received from the Account
Debtors to the Secured Debts or you may release such proceeds to me.

 

I specifically and irrevocably authorize you to exercise any of the
following powers at my expense, without limitation, until the Secured Debts are
paid in full:

 

(1) demand payment and enforce collection from any Account Debtor
or Obligor by suit or otherwise.

 

(2) enforce any security interest, lien or encumbrance given to
secure the payment or performance of any Account Debtor or any obligation
constituting Property.

 

(3) file proofs of claim or similar documents in the event of
bankruptcy, insolvency or death of any person obligated as an Account Debtor.

 

(4) compromise, release, extend, or exchange any indebtedness of an
Account Debtor.

 

(5) take control of any proceeds of the Account Debtors’ obligations
and any returned or repossessed goods,

 

(6) endorse all payments by any Account Debtor Which may come into
your possession as payable to me,

 

(7) deal in all respects as the holder and owner of the Account
Debtors’ obligations.

 

F. Authority To Perform. I authorize you to do anything you deem
reasonably necessary to protect the Property, and perfect and continue your
security interest in the Property. If I fail to perform any of my duties under
this Security Agreement or any other security interest, you are authorized to
perform the duties or cause them to be performed.

 

These authorizations include, but are not limited to. permission to:

 

(1) pay and discharge taxes, liens, security interests or other
encumbrances at any time levied or placed on the Property.

 

(2) pay any rents or other charges under any lease affecting the
Property.

 

(3) order and pay for the repair, maintenance and preservation of
the Property.

 

(4) file any financing statements on my behalf and pay for filing
and recording fees pertaining to the Property.

 

(5) place a note on any chattel paper indicating your interest in
the Property.

 

(6) take any action you feel necessary to realize on the Property,
including performing any part of a contract or endorsing it in my name.

 

(7) handle any suits or other proceedings involving the Property in
my name.

 

(8) prepare, file, and sign my name to any necessary reports or
accountings.

 

(9) make an entry on my books and records showing the existence of
this Agreement.

 

(10) notify any Account Debtor of your interest in the Property and
tell the Account Debtor to make payments to you or someone else you name.

 

If you perform for me, you will use reasonable care. If you exercise the
care and follow the procedures that you generally apply to the collection of
obligations owed to you, you will be deemed to be using reasonable care.
Reasonable care will not include: any steps necessary to preserve rights
against prior parties; the duty to send notices, perform services or take any
other action in connection with the management of the Property; or the duty to
protect, preserve or maintain any security interest given to others by me or
other parties. Your authorization to perform for me will not create an
obligation to perform and your failure to perform will not preclude you from
exercising any other rights under the law or this Security Agreement. All cash
and non-cash proceeds of the Property may be applied by you only upon your
actual receipt of cash proceeds against such of the Secured Debts, matured or
unmatured, as you determine in your sole discretion.

 

If you come into actual or constructive possession of the Property, you
will preserve and protect the Property. For purposes of this paragraph, you
will be in actual possession of the Property only when you have physical,
immediate and exclusive control over the Property and you have affirmatively
accepted that control. You will be in constructive possession of the Property
only when you have both the power and the intent to exercise control over the
Property.

 

G. Name and Location. My name indicated in the DATE AND PARTIES section
is my exact legal name. I am an entity organized and registered under the laws
of Nevada. I will provide verification of registration and location upon your
request. I will provide you with at least 30 days notice prior to any change in
my name, address, or state of organization or registration.

 

H. Perfection of Security Interest. I authorize you to file a financing
statement covering the Property. I will comply with, facilitate, and otherwise
assist you in connection with obtaining perfection or control over the Property
for purposes of perfecting your security interest under the Uniform Commercial
Code. I agree to pay all actual costs of terminating your security interest.

 

5.
WARRANTIES AND REPRESENTATIONS. I make to you the following warranties and
representations which will continue as long as this Loan is in effect, except
when this Agreement provides otherwise.

 

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 Loan and
the obligation evidenced by the 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. Business Name. 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.

 

D. Ownership of Property. I represent that I own all of the Property.
Your claim to the Property is ahead of the claims of any other creditor, except
as disclosed in writing to you prior to any advance on the Secured Debts. I
represent that I am the original owner of the Property and, if I am not, that I
have provided you with a list of prior owners of the Property.

 

E. Hazardous Substances. Except as I previously disclosed in writing and
you acknowledge in writing, no Hazardous Substance, underground tanks, private
dumps or open wells are currently located at, on, in, under or about the
Property.

 

F. Use of Property. After diligent inquiry, I do not know or have reason
to know that any Hazardous Substance has been discharged, leached or disposed
of, in violation of any Environmental Law, from the property onto, over or into
any other property, or from any other property onto, over or into the property.

 

G. Environmental Laws. I have no knowledge or reason to believe that
there is any pending or threatened investigation, claim, judgment or order,
violation, lien, or other notice under any Environmental Law that concerns me
or the property. The property and any activities on the property are in full
compliance with all Environmental Law.

 

H. Loan Purpose. The purpose of this Loan is WORKING CAPITAL.

 

I. No Other Liens. I own or lease all property that I need to conduct my
business and activities. I have good and marketable title to all property that
I own or lease. All of my Property is free and clear of all liens, security
interests, encumbrances and other adverse claims and interests, except those to
you or those you consent to in writing.

 

J. Compliance With Laws. I am not violating any laws, regulations,
rules, orders, judgments or decrees applicable to me or my property, except for
those which I am challenging in good faith through proper proceedings after
providing adequate reserves to fully pay the claim and its challenge should I
lose.

 

K. Legal Dispute. There are no pending or threatened lawsuits,
arbitrations or other proceedings against me or my property that singly or
together may materially and adversely affect my property, operations, financial
condition, or business.

 

L. Adverse Agreements. I am not a party to, nor am I bound by, any
agreement that is now or is likely to become materially adverse to my business.
Property or operations.

 

M. Other Claims. There are no outstanding claims or rights that would
conflict with the execution, delivery or performance by me of the terms and
conditions of this Agreement or the other Loan Documents. No outstanding claims
or rights exist that may result in a lien on the Property, the Property’s
proceeds and the proceeds of proceeds, except liens that were disclosed to and
agreed to by you in writing.

 

N. Solvency. I am able to pay my debts as they mature, my assets exceed
my liabilities and I have sufficient capital for my current and planned
business and other activities. I will not become insolvent by the execution or
performance of this Loan.

 

6.
FINANCIAL STATEMENTS. I will prepare and maintain my financial records using
consistently applied generally accepted accounting principles then in effect, I
will provide you with financial information in a form that you accept and under
the following terms.

 

 

A. Certification. I represent and warrant that any financial statements
that I provide you fairly represents my financial condition for the stated
periods, is current, complete, true and accurate in all material respects,
includes all of my direct or contingent liabilities and there has been no
material adverse change in my financial condition, operations or business since
the date the financial information was prepared.

 

B. Frequency. In addition to the financial statements provided to you
prior to closing, I will provide you with current financial statements on an
annual basis, or as otherwise requested by you, until I have performed all of
my obligations under the Loan and you terminate the Loan in writing.

 

C. SEC Reports. I will provide you with true and correct copies of all
reports, notices or statements that I provide to the Securities end Exchange
Commission, any securities exchange or my stockholders, owners, or the holders
of any material indebtedness as soon as available or at least within days after
issuance.

 

D. Requested Information. I will provide you with any other information
about my operations, financial affairs and condition within days after your
request.

 

7. COVENANTS.
Until the Loan and all related debts, liabilities and obligations are paid and
discharged, I will comply with the following terms, unless you waive compliance
in writing.

 

A. Participation. I consent to you participating or syndicating
the Loan and sharing any information that you decide is necessary about me and
the Loan with the other participants or syndicators.

 

B. Inspection. Following your written request, I will immediately pay
for all one-time and recurring out-of-pocket costs that are related to the
inspection of my records, business or Property that secures the Loan. Upon
reasonable notice, I will permit you or your agents to enter any of my premises
and any location where my Property is located during regular business hours to
do the following.

 

(1) You may inspect, audit, check, review and obtain copies from my
books, records, journals, orders, receipts, and any correspondence and other
business related data.

 

(2) You may discuss my affairs, finances and business with any one
who provides you with evidence that they are a creditor of mine, the
sufficiency of which will be subject to your sole discretion.

 

(3) You may inspect my Property, audit for the u8e and disposition of the
Property’s proceeds and proceeds of proceeds; or do whatever you decide is
necessary to preserve and protect the Property and your interest in the
Property.

 

After prior notice to me, you may discuss my financial condition and
business operations with my independent accountants, if any, or my chief
financial officer and I may be present during these discussions. As long as the
Loan is outstanding, I will direct all of my accountants and auditors to permit
you to examine my records in their possession and to make copies of these
records. You will use your best efforts to maintain the confidentiality of the
information you or your agents obtain, except you may provide your regulator,
if any, with required information about my financial condition, operation and
business or that of my parent, subsidiaries or affiliates.

 

C. Business Requirements. I
will preserve and maintain my present existence and good standing in the
jurisdiction where I am organized and all of my rights, privileges and
franchises. I will do all that is needed or required to continue my business or
activities as presently conducted, by obtaining licenses, permits and bonds
everywhere I engage in business or activities or own, lease or locate my
property. I will obtain your prior written consent before I cease my business
or before I engage in any new line of business that is materially different
from my present business.

 

D. Compliance with Laws. I
will not violate any laws, regulations, rules, orders, judgments or decrees
applicable to me or my Property, except for those which I challenge in good
faith through proper proceedings after providing adequate reserves to fully pay
the claim and its appeal should I lose. Laws include without limitation the
Federal Fair Labor Standards Act requirements for producing goods, the federal
Employee Retirement Income Security Act of 1974’s requirements for the
establishment, funding and management of qualified deferred compensation plans
for employees, health and safety laws, environmental laws, tax laws, licensing
and permit laws. On your request, I will provide you with written evidence that
I have fully and timely paid my taxes, assessments and other governmental
charges levied or imposed on me, my income or profits and my property. Taxes
include without limitation sales taxes, use taxes, personal property taxes,
documentary stamp taxes, recordation taxes, franchise taxes, income taxes,
withholding taxes, FICA taxes and unemployment taxes, I will adequately provide
for the payment of these taxes, assessments and other charges that have accrued
but are not yet due and payable.

 

E. New Organizations. I will obtain your written consent and any
necessary changes to the Loan Documents before I organize or participate in the
organization of any entity, merge into or consolidate with any one, permit any
one else to merge into me, acquire all or substantially all of the assets of
any one else or otherwise materially change my legal structure, management,
ownership or financial condition.

 

F. Dealings with Insiders. I will not purchase, acquire or lease any
property or services from, or sell, provide or lease any property or services
to, or permit any outstanding loans or credit extensions to, or otherwise deal
with, any Insiders except as required under contracts existing at the time I
applied for the Loan and approved by you or as this Agreement otherwise
permits. I will not change or breach these contracts existing at Loan
application so as to cause an acceleration of or an increase in any payments
due,

 

G. Other Debts. I will pay when due any and all other debts owed or
guaranteed by me and will faithfully perform, or comply with all the conditions
and obligations imposed on me concerning the debt or guaranty,

 

H. Other Liabilities. I will not incur, assume or permit any debt
evidenced by notes, bonds or similar obligations, except: debt in existence on
the date of this Agreement and fully disclosed to you; debt subordinated in
payment to you on conditions and terms acceptable to you; accounts payable
incurred in the ordinary course of my business and paid under customary trade
terms or contested in good faith with reserves satisfactory to you.

 

I. Notice to You. I will promptly notify you of any material
change in my financial condition, of the occurrence of a default under the
terms of this Agreement or any other Loan Document, or a default by me under
any agreement between me and any third party which materially and adversely
affects my property, operations, financial condition or business.

 

J. Certification of No Default. On your request, my chief financial officer or my
independent accountant will provide you with a written certification that to
the best of their knowledge no event of default exists under the terms of this
Agreement or the other Loan Documents, and that there exists no other action,
condition or event which with the giving of notice or lapse of time or both
would constitute a default. As requested, my chief financial officer or my
independent accountant will also provide you with computations demonstrating
compliance with any financial covenants and ratios contained in this Agreement.
If an action, condition or event of default does exist, the certificate must
accurately and fully disclose the extent and nature of this action, condition
or event and state what must be done to correct it,

 

K. Use of Loan Proceeds. I will not permit the loan proceeds to be used
to purchase, carry, reduce, or retire any loan originally incurred to purchase
or carry any margin stock or otherwise cause the Loan to violate Federal
Reserve Board Regulations U or X, or
Section 8 of the Securities and Exchange Act of 1934 and its regulations,
as amended.

 

L. Dispose of No Assets. Without your prior written consent or as the
Loan Documents permit, I will not sell, lease, assign, transfer, dispose of or
otherwise distribute all or substantially all of my assets to any person other
than in the ordinary course of business for the assets’ depreciated book value
or more.

 

M. No Other Liens. I will not create, permit or suffer any lien
or encumbrance upon any of my properties for or by anyone, other than you,
except for:

 

nonconsensual liens imposed by law arising out of the ordinary course of
business on obligations that are not overdue or which I am contesting in good
faith after making appropriate reserves; valid purchase money security
interests on personal property; or any other liens specifically agreed to by
you in writing,

 

N. Guaranties. I will not guaranty or become liable in any way as surety, endorser (other
than as endorser of negotiable instruments in the ordinary course of business)
or accommodation endorser or otherwise for the debt or obligations of any other
person or entity, except to you or as you otherwise specifically agree in
writing.

 

0. No Default under Other Agreements. I will not allow to occur, or to continue
unremedied, any act, event or condition which constitutes a default , or which,
with the passage of time or giving of notice, or both, would constitute a
default under any agreement, document, instrument or undertaking to which I am
a party or by which I may be bound.

 

P. Legal Disputes. I will promptly notify you in writing of any
threatened or pending lawsuit, arbitration or other proceeding against me or
any of my property, not identified in my financial statements, or that singly
or together with other proceedings may materially and adversely affect my
property, operations, financial condition or business. I will use my best
efforts to bring about a favorable and speedy result of any of these lawsuits,
arbitrations or other proceedings.

 

Q. Other Notices. I will immediately provide you with any information
that may materially and adversely affect my ability to perform this Agreement
and of its anticipated effect.

 

R. No Change in Capital. I will not release, redeem, retire, purchase or
otherwise acquire, directly or indirectly, any of my capital stock or other
equity security or partnership interest, or make any change in my capital
structure, except to the extent required by any agreements signed prior to this
Agreement and disclosed to you or with your prior written consent,

 

S. Loan Obligations. I will make full and timely payment of all
principal and interest obligations. and comply with the other terms and
agreements contained in this Agreement and in the other Loan Documents,

 

T. Insurance, I will obtain and maintain insurance with insurers, in
amounts and coverages that era acceptable to you and customary with industry
practice. This may include without limitation insurance policies for public
liability, fire, hazard and extended risk, workers compensation, and, at your
request, business interruption and/or rent loss insurance. I will keep the
Property insured against the risks reasonably associated with the Property.
This insurance will last until the Property is released from this Agreement. I
may choose the insurance company, subject to your approval, which will not be
unreasonably withheld. At your request, I will deliver to you certified copies
of all of these insurance policies, binders or certificates, I will obtain and
maintain a mortgagee or lender lost payee endorsement for you when these
endorsements are available, I will immediately notify you of cancellation or
termination of insurance, I will require all insurance policies to provide you
with at least 10 days prior written notice to you of cancellation or
modification, I consent to you using or disclosing information relative to any
contract of insurance required by the Loan for the purpose of replacing this
Insurance, I also authorize my insurer and you to exchange all relevant
information related to any contract of insurance required by any document
executed as pert of this Loan.

 

You may apply the insurance proceeds toward which is owned on the
Secured Debts, You may require added security as a condition of permitting any
insurance proceeds to be used to repair or replace the Property.

 

If you acquire the Property in damaged condition, my right to any
insurance policies and proceeds will pass to you to the extent of the Secured
Debts,

 

If I fail to keep the Property insured, you may obtain insurance to
protect your interest in the Property and I will pay for the insurance on your
demand. Your may demand that I pay for the insurance all at once, or you may
add the insurance premiums to the balance of the Secured Debts and charge
interest on it at

 

 

the rate that applies to the Secured Debts. This insurance may include
coverages not originally required of me, may be written by a company other than
one would choose, and may be written at a higher rate than I could obtain if I
purchased the insurance. I acknowledge and agree that you or one of your
affiliates may receive commissions on the purchase of this insurance.

 

U. Property Maintenance. I will keep all tangible and intangible
property that I consider necessary or useful in my business in good working
condition by making all needed repairs, replacements and improvements and by
making all rental, lease or other payments due on this property.

 

V. Property Loss. I will immediately notify you, and the insurance
company when appropriate, of any material casualty, loss or depreciation to the
Property or to my other property that affects my business.

 

W. Accounts Receivable Collection. I will collect and otherwise enforce
all of my unpaid Accounts Receivable at my cost and expense, until you end my
authority to do so, which you may do at any time to protect your best
interests. I will not sell, assign or otherwise dispose of any Accounts
Receivable without your written consent. I will not commingle the Accounts
Receivable proceeds with any of my other property.

 

X. Reserves. You may set aside and reserve Loan proceeds for Loan
interest, fees and expenses, taxes, end insurance. I grant you a security
interest in the reserves.

 

No interest will accrue on any reserve Loan proceeds. Disbursement of
reserves is disbursement of the Loan’s proceeds, At my request, you will
disburse the reserves for the purpose they were set aside for, as long as I am
not in default under this Agreement. You may directly pay these reserved items,
reimburse me for payments I made, or reduce the reserves and increase the Loan
proceeds available for disbursement.

 

Y. Additional Taxes. I will pay all filing and recording costs and fees,
including any recordation, documentary or transfer taxes or stamps, that are
required to be paid with respect to this Loan and any Loan Documents.

 

Z. Additional Covenants. CROWN BANK WILL REQUIRE THE BORROWER TO
MAINTAIN A MINIMUM 4 MONTH FUNDED INTEREST RESERVE AT CROWN BANK UNTIL CLOSING
OF SECONDARY OFFERING. AT THAT TIME, THE INTEREST RESERVE WILL BE FUNDED TO
EQUAL REMAINING INTEREST DUE ON LOAN THROUGH MATURITY AND INTEREST PAYMENTS MAY BE
DRAWN FROM THE ACCOUNT.  THE TERMAS AND
CONDITIONS OF THIS COMMERCIAL LOAN AND SECURITY AGREEMENT DATED OCTOBER 10,
2007 SHALL NOT BE EFFECTIUVE UNTIL THE 4-MONTH INTEREST RESERVE IS FUNDED.

 

8.
DEFAULT. I will be in default 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” C... 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 Agreement 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 Agreement.

 

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

 

9. REMEDIES.
After I 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 the Loan immediately due, If I am a debtor in a bankruptcy petition or
in an application filed under section 5(a)(3) of the Securities Investor
Protection Act, the Loan is automatically accelerated and immediately due and
payable without notice or demand upon filing of the petition or application,

 

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 the
Loan, and accrue interest at the highest post-maturity interest rate.

 

E. 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 the Loan 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
the Loan” means the total amount to which you are entitled to demand payment
under the terms of the Loan at the time you set-off.

 

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

 

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

 

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

 

F. Assembly of Property. You may require me to gather the Property and
make it available to you in a reasonable fashion.

 

G. Repossession. You may repossess the Property so long as the repossession
does not involve a breach of the peace. You may sell, lease or otherwise
dispose of the Property as provided by law, You may apply what you receive from
the disposition of the Property to your expenses, your attorneys’ fees and
legal expenses (where not prohibited by law), and any debt I owe you. If what
you receive from the disposition of the Property does not satisfy the debt, I
will be liable for the deficiency (where permitted by law). In some cases, you
may keep the Property to satisfy the debt.

 

Where a notice is required, I agree that ten days prior written notice
sent by first class mail to my address listed in this Loan Agreement will be
reasonable notice to me under the Minnesota Uniform Commercial Code. If the
Property is perishable or threatens to decline speedily in value, you may,
without notice to me, dispose of any or all of the Property in a commercially
reasonable manner at my expense following any commercially reasonable
preparation or processing. If any items not otherwise subject to this Loan
Agreement are contained in the Property when you take possession, you may hold
these items for me at my risk and you will not be liable for taking possession
of them.

 

H. Use and Operation. You may enter upon my premises and take possession
of all or any part of my property for the purpose of preserving the Property or
its value, so long as you do not breach the peace. You may use and operate my
property for the length of time you feel is necessary to protect your interest,
all without payment or compensation to me.

 

I. 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,

 

10.
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 Agreement 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 date of payment until paid in full at the highest
interest in effect as provided in the terms of this Loan. 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.

 

11.
APPLICABLE LAW. This Agreement 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.

 

12.
JOINT AND INDIVIDUAL LIABILITY AND SUCCESSORS. My obligation to pay the Loan is
independent of the obligation of any other parson 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. You may assign all or part of your rights
or duties under this Agreement or the Loan Documents without my consent. If you
assign this Agreement, all of my covenants, agreements, representations end
warranties contained in this Agreement or the Loan Documents will benefit your
successors and assigns. I may not assign this Agreement or any of my rights
under it without your prior written consent. The duties of the Loan will bind
my successors and assigns.

 

13.
AMENDMENT. INTEGRATION AND SEVERABILITY. This Agreement may not be amended or
modified by oral agreement. No amendment or modification of this Agreement is
effective unless made in writing and executed by you and me. This Agreement and
the other Loan Documents are the complete and final expression

 

 

of
the understanding between you and me. If any provision of this Agreement is
unenforceable, then the unenforceable provision will be severed and the
remaining provisions will still be enforceable.

 

14.
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 Agreement.

 

15.
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.

 

16.
SIGNATURES. By signing, I agree to the terms contained in this Agreement. I
also acknowledge receipt of a copy of this Agreement.

 

 

	
  BORROWER:

  
	
  PROURCARE MEDICAL INC.

  
	
   

  
	
  /s / RICK CARLSON

  	
   

  
	
  RICK
  CARLSON. CEOExhibit 10.40

 

GUARANTY

(Continuing Debt - Unlimited)

 

DATE
AND PARTIES. The date of this Guaranty is October 10, 2007. The parties
and their addresses are:

 

LENDER:

CROWN BANK

6600 France Avenue South Ste 125

Edina, Minnesota 55435

Telephone: (952) 285-5800

 

BORROWER:

PROUROCARE MEDICAL. INC

a Nevada Corporation

5500 WAYZATA BLVD SUITE 310

GOLDEN VALLEY, Minnesota 55416

 

GUARANTOR:

BRUCE R CULVER

1856 DAWN MEADOW ST

WESTLAK E VILLAGE, California 91362

 

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

 

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

 

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

 

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

 

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

 

A
promissory note or other agreement, No. 4060307, dated October 10,
2007, from PROUROCARE MEDICAL, INC (Borrower) to you, in the amount of $400,000.00.

 

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

 

You
may, without notice, apply this Guaranty to such Debt of the Borrower as you
may select from time to time.

 

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

 

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

 

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

 

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

 

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

 

7.   SECURITY. This Guaranty is secured by Property described in these security
instruments or agreements: ASSIGNMENT OF INVESTMENT PROPERTY/SECURITIES DATED
OCTOBER 10, 2007.

 

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

 

9.   DEFAULT. I will be in default 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, Borrower, or any cosigner, endorser, surety or guarantor of this Guaranty
  or any Debt. 

  
	
   

  
	
  C.

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

  
	
   

  	
   

  
	
  D.

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

  
	
   

  	
   

  
	
  E.

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

  
	
   

  	
   

  
	
  F.

  	
  Other Agreements. I am in
  default on any other debt or agreement I have with you.

  
	
   

  	
   

  
	
  G 

  	
  Misrepresentation. I make
  any verbal or written statement or provide any financial information that is
  untrue, inaccurate, or 

  
	
  conceals a material fact at
  the time it is made or provided.

  
	
   

  	
   

  
	
  H.

  	
  Judgment. I fail to satisfy
  or appeal any judgment against me.

  
	
   

  	
   

  
	
  I.

  	
  Forfeiture. The Property is
  used in a manner or for a purpose that threatens confiscation by a legal
  authority.

  
	
   

  	
   

  
	
  J. 

  	
  Name Change. I change my
  name or assume an additional name without notifying you before making such a
  change.

  
	
   

  	
   

  
	
  K.

  	
  Property Transfer. I
  transfer all or a substantial part of my money or property.

  
	
   

  	
   

  
	
  L.

  	
  Property Value. You
  determine in good faith that the value of the Property has declined or is
  impaired.

  
	
   

  	
   

  
	
  M.

  	
  Insecurity. You determine
  in good faith that a material adverse change has occurred in my financial
  condition from the 

  
	
  conditions set forth in my
  most recent financial statement before the date of this Guaranty or that the
  prospect for payment or performance of the Debt is impaired for any reason.

  

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

C. Waiver of Claims. I waive all claims for loss or damage caused by
your acts or omissions where you acted reasonably and in good faith.

 

11.
REMEDIES. After the Borrower or) default, you may at your option do any one or
more of the following.

 

A. Acceleration. You may make all or any part of the amount owing by the
terms of this Guaranty immediately due.

 

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

 

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

 

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

 

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

 

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 Guaranty against any right I have to receive money from you.

 

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

 

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

 

Your right of set-off does not apply to en 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.

 

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

 

13.
WARRANTIES AND REPRESENTATIONS. I have the right and authority to enter into
this Guaranty. The execution anc4 delivery of this Guaranty will not violate
any agreement governing me or to which I am a party.

 

In
addition, I represent and warrant that this Guaranty was entered into at the
request of the Borrower, and that I am satisfied regarding the Borrower’s
financial condition and existing indebtedness, authority to borrow and the use
and intended use of all Debt proceeds. I further represent and warrant that I
have not relied on any representations or omissions from you or any information
provided by you respecting the Borrower, the Borrower’s financial condition and
existing indebtedness, the Borrower’s authority to borrow or the Borrower’s use
and intended use of all Debt proceeds.

 

14.
RELIANCE. I acknowledge that you are relying on this Guaranty in extending
credit to the Borrower, and I have signed this Guaranty to induce you to extend
such credit. I represent and warrant to you that I have a direct and
substantial economic interest in the Borrower and expect to derive substantial
benefits from any loans and financial accommodations resulting in the creation
of indebtedness guarantied hereby. I agree to rely exclusively on the right to
revoke this Guaranty prospectively as to future transactions in the manner as
previously described in this Guaranty if at any time, in my opinion, the
benefits then being received by me in connection with this Guaranty are not
sufficient to warrant the continuance of this Guaranty. You may rely
conclusively on a continuing warranty that I continue to be benefited by this Guaranty
and you will have no duty to inquire into or confirm the receipt of any such
benefits, and this Guaranty will be effective and enforceable by you without
regard to the receipt, nature or value of any such benefits.

 

15.
APPLICABLE LAW, This Guaranty is governed by the laws of Minnesota, the United
States of America, and to the extent required, by the laws of the jurisdiction
where the Property is located, except to the extent such state laws are
preempted by federal law.

 

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

 

17. ASSIGNMENT. If you assign any of the Debts, you may assign
all or any part of this Guaranty without notice to me or my consent, and this
Guaranty will inure to the benefit of your assignee to the extent of such
assignment. You will continue to have the unimpaired right to enforce this
Guaranty as to any of the Debts that are not assigned. This Guaranty shall
inure to the benefit of and be enforceable by you and your successors and
assigns and any other person to whom you may grant an interest in the Debts and
shall be binding upon and enforceable against me and my personal
representatives, successors, heirs and assigns.

 

18.
INTERPRETATION. Whenever used, the singular includes the plural and the plural
includes the singular. The Section headings are for convenience only and
are not to be used to interpret or define the terms of this Guaranty.

 

19.
NOTICE. FINANCIAL REPORTS AND ADDITIONAL DOCUMENTS. Unless otherwise required
by law, any notice will be given by delivering it or mailing it by first class
mail to the appropriate party’s address listed in the DATE AND PARTIES section,
or to any other address designated in writing. Notice to one Guarantor will be
deemed to be notice to all Guarantors. I will inform you in writing of any
change in my name, address or other application information, I will provide you
any financial statement or information you request. All financial statements
and information I give you will be correct and complete. I agree to sign,
deliver, and file any additional documents or certifications that you may
consider necessary to perfect, continue, and preserve my obligations under this
Guaranty and to confirm your lien status on any Property. Time is of the
essence,

 

20.
CREDIT INFORMATION. I agree that from time to time you may obtain credit
information about me from others, including other lenders and credit reporting
agencies, and report to others (such as a credit reporting agency) your credit
experience with me. I agree that you will not be liable for any claim arising
from the use of information provided to you by others or for providing such
information to others.

 

21.
SIGNATURES. By signing, I agree to the terms contained in this Guaranty. I also
acknowledge receipt of a copy of this Guaranty.

 

 

	
  GUARANTOR:

  
	
   

  
	
  /s/ BRUCE R CULVER

  	
   

  
	
  Individually

  
	
  BRUCE R CULVER

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