Exhibit 10.2
SECURITY AGREEMENT
DATE AND PARTIES. The date of this
Security Agreement (Agreement) is June 12, 2009. The parties
and their addresses are:
SECURED PARTY:
CROWN BANK
6600 France Avenue South Ste
125
Edina, MN 55435
DEBTOR:
PROUROCARE MEDICAL INC.
a Nevada Corporation
6440 FLYING CLOUD DR #101
EDEN PRAIRIE, MN 55344
The pronouns “you” and
“your” refer to the Secured Party. The pronouns
“I,” “me” and “my” refer to
each person or entity signing this Agreement as Debtor and agreeing
to give the Property described in this Agreement as security for
the Secured Debts.
Where the owner of the Property is
different from the obligor or guarantor whose obligation this
Agreement secures, “Debtor” refers to each person or
entity who is an owner of the Property and “Obligor” or
“Guarantor,” as applicable, refer to such parties as
designated in the SECURED DEBTS section.
1. SECURED DEBTS. The term
“Secured Debts” includes and this Agreement will secure
each of the following:
A. Specific Debts. The following
debts and all extensions, renewals, refinancings, modifications and
replacements. A promissory note or other agreement,
No. 4090817, dated June 12, 2009, from PROUROCARE MEDICAL
INC. and PRO URO CARE, INC. (Obligor) to you, in the amount of
$100,000.00.
B. All Debts. All present and future
debts from Obligor to you, even if this 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 Agreement,
each agrees that it will secure debts incurred either individually
or with others who may not sign this Agreement. Nothing in this
Agreement constitutes a commitment to make additional or future
loans or advances. Any such commitment must be in
writing.
This Agreement will not secure any
debt for which you fail to give any required notice of the right of
rescission. This 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. In addition, this Agreement
will not secure any other debt if, as a result, the other debt
would become subject to Section 670 of the John Warner
National Defense Authorization Act for Fiscal Year 2007.
C. Sums Advanced. All sums advanced
and expenses incurred by you under the terms of this
Agreement.
Loan Documents refer to all the
documents executed in connection with the Secured Debts.
2. 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 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 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 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.
3. PROPERTY DESCRIPTION. The
Property is described as follows:
A. 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.
B. 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.
C. 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.
D. Equipment. All equipment
including, but not limited to, all machinery, vehicles, furniture,
fixtures, manufacturing equipment, farm machinery and equipment,
shop equipment, office and record keeping equipment, and parts and
tools. All equipment described in a list or schedule which I give
to you will also be included in the Property, but such a list is
not necessary for a valid security interest in my
equipment.
4. WARRANTIES AND REPRESENTATIONS. I
make to you the following warranties and representations which will
continue as long as this Agreement is in effect:
A. Power. I am duly organized, and
validly existing and in good standing in all jurisdictions in which
I operate. I have the power and authority to enter into this
transaction and to carryon 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 Agreement and the obligation
evidenced by this Agreement are within my powers, have been duly
authorized, have received all necessary governmental approval, will
not violate any provision of law, or order of court or governmental
agency, and will not violate any agreement to which I am a party or
to which I am or any of my property is subject.
C. Name and 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 Minnesota.
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.
D. 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.
E. 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.
5. DUTIES TOWARD
PROPERTY.
A. 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.
B. 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 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.
C. 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 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 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.
D. 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
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