Exhibit 10.10 to Electromed, Inc. Form S1



Exhibit 10.10


ENVIRONMENTAL
AND ADA INDEMNIFICATION AGREEMENT


          This
ENVIRONMENTAL AND ADA INDEMNIFICATION AGREEMENT (this “Agreement,” which term
shall include any amendment, modification, supplement, extension, renewal,
replacement, or restatement hereof)is made as of December 9, 2009, by
ELECTROMED, INC., a corporation organized under the laws of the State of
Minnesota (“Mortgagor”), in favor of U.S. BANK NATIONAL ASSOCIATION, a national
banking association (“Lender”).


RECITALS


          A.          Lender
and Mortgagor have entered into that certain Credit Agreement of even date
herewith (the “Credit Agreement,” which term shall include any amendment,
modification, supplement, extension, renewal, replacement, or restatement
thereof), pursuant to which Lender has agreed to extend certain credit
accommodations to Mortgagor, which are secured in part by a Mortgage, Security
Agreement, Assignment of Leases and Rents and Fixture Financing Statement of
even date herewith (the “Mortgage,” which term shall include any amendment,
modification, supplement, extension, renewal, replacement, or restatement
thereof) pertaining to certain land described in the Mortgage and improvements
thereon (collectively the “Property”) owned by Mortgagor and located in Scott
County, Minnesota.


          B.          Lender
has refused to extend the credit accommodations to Mortgagor unless this
Agreement is executed and delivered by Mortgagor.


          NOW,
THEREFORE, in consideration of Lender’s agreement to extend certain credit
accommodations to Mortgagor, Mortgagor hereby warrants and represents to, and
covenants and agrees with, Lender as follows:


          1.
          Definitions.
As used in this Agreement, the following terms shall have the following
meanings:


	
  

 	
  

 
	
  

 	
 (a)          “Accessibility
 Regulation” means a Law relating to accessibility of facilities or properties
 for disabled, handicapped and/or physically challenged persons, including,
 without limitation, the Americans With Disabilities Act of 1991, as amended.

 
	
  

 	
  

 
	
  

 	
 (b)          “Environmental
 Regulation” means a Law relating to the environment and/or to human health or
 safety, or governing, regulating or pertaining to the generation, treatment,
 storage, handling, transportation, use or disposal of any Hazardous
 Substance.

 
	
  

 	
  

 
	
  

 	
 (c)          “Hazardous
 Substance” means any substance or material defined in or governed or
 regulated by any Environmental Regulation as a dangerous, toxic or hazardous
 pollutant, contaminant, chemical, waste, material or substance, and also
 expressly includes urea-formaldehyde, polychlorinated biphenyls, dioxin,
 radon, lead-based paint, asbestos, asbestos containing materials, nuclear
 fuel or waste, radioactive materials, explosives, carcinogens and petroleum
 products, including but not limited to crude oil or any fraction thereof,
 natural gas, natural gas liquids, gasoline and synthetic gas, and any other
 waste, material, substance, pollutant or contaminant the presence of which
 on, in,

 













	
  

 	
  

 
	
  

 	
 about or under the Property would subject the
 owner or operator thereof to any damages, penalties, fines or liabilities
 under any applicable Environmental Regulation.

 
	
  

 	
  

 
	
  

 	
 (d)        “Law” means any federal, state or local law,
 statute, code, ordinance, rule, regulation or requirement.

 



          Other
capitalized terms used in this Agreement but not defined herein shall have the
meanings assigned to such terms in the Credit Agreement.


          2.          Warranties
and Representations. Mortgagor warrants and represents to Lender that to
Mortgagor’s knowledge, and except as otherwise described in documents
identified on Exhibit A attached hereto: 


	
  

 	
  

 
	
  

 	
 (a)        There
 is not located on, in, about or under the Property any Hazardous Substances
 except for Hazardous Substances of the type ordinarily used, stored or
 manufactured in connection with the operation of the Property as it is
 presently operated, and such existing Hazardous Substances have been and are
 used, stored and manufactured in compliance with all Environmental
 Regulations. The Property is operated as manufacturing facility.

 
	
  

 	
  

 
	
  

 	
 (b)        The
 Property is not presently used, and has not in the past been used, as a
 landfill, dump, disposal facility or gasoline station, or for industrial,
 manufacturing or military purposes, or for the storage, generation, production,
 manufacture, processing, treatment, disposal, handling, transportation or
 deposit of any Hazardous Substances.

 
	
  

 	
  

 
	
  

 	
 (c)        There
 has not in the past been, and no present threat now exists of, a spill,
 discharge, emission or release of a Hazardous Substance in, upon, under, over
 or from the Property or from any other property which would have an impact on
 the Property.

 
	
  

 	
  

 
	
  

 	
 (d)        The
 Property is in compliance with, and there are no past or present
 investigations, administrative proceedings, litigation, regulatory hearings
 or other actions completed, proposed, threatened or pending, alleging
 noncompliance with or violation of, any Environmental Regulations respecting
 the Property, or relating to any required environmental permits covering the
 Property.

 
	
  

 	
  

 
	
  

 	
 (e)        Mortgagor
 has disclosed to Lender all reports and investigations commissioned by or in
 the possession or control of Mortgagor and relating to Hazardous Substances
 and the Property.

 
	
  

 	
  

 
	
  

 	
 (f)        There
are not now, nor have there ever been, any above ground or underground
storage tanks located in or under the Property. All storage tanks identified
on Exhibit A have been registered and/or permitted as required by
Environmental Regulations, and evidence of such registration and/or permitting
has been given to Lender. There are no wells on or under the Property. 

 



          3.          Covenants
and Agreements. Mortgagor covenants and agrees as follows:


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 (a)        Except
 for substances normally used for maintenance or operation of the Property
 which are used, stored and disposed of in accordance with all applicable
 Environmental Regulations, Mortgagor shall not, nor shall it permit others
 to, place, store, locate, generate, produce, create, process, treat, handle,
 transport, incorporate, discharge, emit, spill, release, deposit or dispose
 of any Hazardous Substance in, upon, under, over or from the Property.
 Mortgagor shall cause all Hazardous Substances found on or under the
 Property, which are not permitted under the foregoing sentence, to be
 properly removed therefrom and properly disposed of at Mortgagor’s cost and
 expense. Mortgagor shall not install or permit to be installed any
 underground storage tank on or under the Property. Mortgagor shall give
 written notice to Lender prior to a change in the operations on the Property.

 
	
  

 	
  

 
	
  

 	
 (b)        In
 the event that (i) Lender reasonably believes that a violation of an
 Environmental Regulation may have occurred in connection with the Property;
 (ii) Lender receives notice from Mortgagor or otherwise has knowledge that an
 event described in subparagraph 3(d) has occurred; (iii) Lender reasonably
 believes that a representation or warranty of Mortgagor in Paragraph 2 was
 untrue in any material respect when made or has become untrue in any material
 respect; (iv) Lender receives notice from Mortgagor or otherwise has
 knowledge of a change in operations on the Property and Lender reasonably
 believes that the new operations may entail the presence of more or different
 Hazardous Substances on the Property; or (v) Lender reasonably believes that
 Hazardous Substances are present on the Property which were not previously
 known by Lender to be present on the Property; then, in any such event,
 Mortgagor shall at its cost obtain and deliver to Lender an environmental
 review, audit, assessment and/or report relating to the Property or shall
 have any previously delivered materials updated and/or amplified, by an
 engineer or scientist selected by Mortgagor and acceptable to Lender; if
 Mortgagor fails to do so within forty-five (45) days after such request is
 made, Lender shall have the right to do so, in which event Mortgagor shall
 reimburse Lender for the cost incurred by Lender in doing so within ten (10)
 days following demand therefor by Lender.

 
	
  

 	
  

 
	
  

 	
 (c)        Mortgagor
 shall comply with all Accessibility Regulations which are applicable to the
 Property. In the event that (i) Lender reasonably believes that a material
 violation of an Accessibility Regulation may have occurred in connection with
 the Property; or (ii) Lender receives notice from Mortgagor or otherwise has
 knowledge that an event described in subparagraph 3(d) and pertaining to
 Accessibility Regulations has occurred; then, in any such event, Mortgagor
 shall at its cost obtain and deliver to Lender an Accessibility Regulation
 compliance report relating to the Property or shall have any previously
 delivered materials updated and/or amplified, by a qualified consultant
 selected by Mortgagor and acceptable to Lender; if Mortgagor fails to do so within
 forty- five (45) days after such request is made, Lender shall have the right
 to do so, in which event Mortgagor shall reimburse Lender for the cost
 incurred by Lender in doing so within ten (10) days following demand therefor
 by Lender.

 
	
  

 	
  

 
	
  

 	
 (d)        Mortgagor
 shall, promptly after obtaining actual knowledge thereof, give notice to
 Lender of: (i) any activity in violation of any applicable Environmental
 Regulations relating to the Property, (ii) any governmental or regulatory
 actions instituted or

 


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 threatened under any Environmental Regulations or
 any Accessibility Regulations affecting the Property, (iii) all claims made
 or threatened by any third party against the Mortgagor or the Property
 relating to any Hazardous Substance or a violation of any Environmental
 Regulations or any Accessibility Regulations, (iv) discovery by Mortgagor of
 any occurrence or condition on or under the Property or on or under any real
 property adjoining or in the vicinity of the Property which could subject
 Mortgagor, Lender or the Property to a claim under any Environmental
 Regulations or Accessibility Regulations. Any such notice shall include
 copies of any written materials received by Mortgagor.

 
	
  

 	
  

 
	
  

 	
 (e)        Any
 investigation or any remedial or corrective action taken with respect to the
 Property shall be done under the supervision of a qualified consultant,
 engineer, or scientist acceptable to Lender who shall, at Mortgagor’s cost
 and at the completion of such investigation or action, provide a written report
 of such investigation or action to Lender. Mortgagor shall also provide
 Lender with a copy of any interim reports prepared in connection with any
 such investigation or action.

 
	
  

 	
  

 
	
  

 	
 (f)        If
 the Property has, or is suspected to have, asbestos or asbestos containing
 materials (“ACM”) which, due to its condition or location or due to any
 planned building renovation or demolition, is recommended to be abated by
 repair, encapsulation, removal or other action, Mortgagor shall promptly
 carry out the recommended abatement action. If the recommended abatement
 includes removal of ACM, Mortgagor shall cause the same to be removed and
 disposed of offsite by a licensed and experienced asbestos removal
 contractor, all in accordance with Environmental Regulations. Upon completion
 of the recommended abatement action, Mortgagor shall deliver to Lender a
 certificate, signed by an officer of Mortgagor and the consultant overseeing
 the abatement action, certifying to Lender that the work has been completed
 in compliance with all applicable laws, ordinances, codes and regulations
 (including without limitation those regarding notification, removal and
 disposal) and that no airborne fibers beyond permissible exposure limits
 remain on site. Mortgagor shall develop and implement an Operations and
 Maintenance Program (as contemplated by Environmental Protection Agency
 guidance document entitled “Managing Asbestos In Place; A Building Owner’s
 Guide to Operations and Maintenance Programs for Asbestos-Containing
 Materials”) for managing in place any ACM at or in the Property. Mortgagor
 shall deliver a complete copy of such Operations and Maintenance Program to
 Lender and certify to Lender that such Program has been implemented.

 
	
  

 	
  

 
	
  

 	
 (g)        After
 an Event of Default (as defined in the Credit Agreement), Lender shall have
 the right, after ten (10) days’ prior written notice to Mortgagor, to have an
 environmental review, audit, assessment, testing program and/or report with
 respect to the Property performed or prepared by an environmental engineering
 firm selected by Lender. Mortgagor shall reimburse Lender for the cost
 incurred for each such action within ten (10) days following demand therefor
 by Lender.

 



          4.          Indemnity.
Mortgagor shall indemnify Lender, any participant of Lender, its and their
directors, officers, employees, agents, contractors, licensees, invitees, and
the respective heirs, legal representatives, successors and assigns of all such
persons and parties (hereinafter


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collectively referred to as “Indemnified Parties”)
against, shall hold the Indemnified Parties harmless from, and shall reimburse
the Indemnified Parties for, any and all loss, damage, liability, cost and
expense directly or indirectly incurred by the Indemnified Parties, including
reasonable attorneys’ and consultants’ fees, resulting from: (a) the presence
or discovery of any Hazardous Substance in, upon, under or over, or emanating
from, the Property, whether or not Mortgagor is responsible therefor, and
whether or not it was placed, located, deposited or released by Mortgagor;
and/or (b) any violation of any Environmental Regulation or any Accessibility
Regulation. Mortgagor agrees that the Indemnified Parties shall have no
responsibility for, and Mortgagor hereby releases the Indemnified Parties from
responsibility for, damage or injury to human health, property, the environment
or natural resources caused by Hazardous Substances and for abatement,
clean-up, detoxification, removal or disposal of, or otherwise with respect to,
Hazardous Substances. The indemnity contained in this paragraph 4 shall be
deemed continuing for the benefit of the Indemnified Parties, including any
purchaser at a foreclosure or other sale under the Mortgage, any transferee of
the title from Lender, and any subsequent owner of the Property, and shall
survive the satisfaction or release of the Mortgage, any foreclosure of or
other sale under the Mortgage and/or any acquisition of title to the Property
or any part thereof by Lender, or anyone claiming by, through or under Lender,
by deed in lieu of foreclosure or otherwise, and also shall survive the
repayment or any other satisfaction of the Obligations. Notwithstanding the
foregoing, the indemnity contained in this paragraph 4 shall not apply with
respect to any loss, damage, liability, cost or expense which Mortgagor proves
by a preponderance of the evidence was caused solely by or resulted solely from
any act or omission of any Person (as defined in the Credit Agreement), other
than the Mortgagor or an agent, employee, invitee or contractor of the
Mortgagor, which occurred after Lender or anyone claiming by, through or under
Lender acquired title to the Property by foreclosure of the Mortgage or deed in
lieu of foreclosure or otherwise and control of the Property. Any amounts
covered by the foregoing indemnification shall bear interest from the date
incurred at the default rate set forth in the Credit Agreement), and shall be
payable on demand. Mortgagor agrees that its obligations under this Agreement
are separate from, independent of, and in addition to its obligations under the
Mortgage and other documents which secure the Obligations.


          5.          Liability.
The liability of Mortgagor under this Agreement shall not be subject to any
limitations on liability set forth in the Mortgage or any other document
evidencing or securing the Obligations. Without limitation, the obligations and
liability of Mortgagor under this Agreement shall in no way be waived,
released, discharged, reduced, mitigated or otherwise affected by Lender’s
extending credit accommodations with knowledge of the matters described in
documents identified on Exhibit A attached hereto, or of the presence of any
Hazardous Substance on, in, about or under the Property or any property adjoining
or in the vicinity of the Property, or of any violation of any Environmental
Regulation or any Accessibility Regulation or any condition or state of facts
or circumstances which with notice or lapse of time or both might ripen into
such a violation, or by any neglect, delay or forbearance of Lender in
demanding, requiring or enforcing payment or performance of the obligations and
liability of Mortgagor hereunder, or by the receivership, bankruptcy,
insolvency or dissolution of Mortgagor or any affiliate thereof. No action or
proceeding brought or instituted under this Agreement, and no recovery made as
a result thereof, shall be a bar or a defense to any further action or
proceeding under any other agreement. Mortgagor shall pay all reasonable
out-of-pocket expenses incurred by the Lender and the other Indemnified
Parties, including the reasonable fees, charges and disbursements of outside
counsel for the Lender (determined on the basis of such counsel’s


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generally applicable rates, which may be higher than
the rates such counsel charges the Lender in certain matters) and/or the
allocated costs of in-house counsel incurred from time to time, in connection
with the enforcement of the Indemnified Parties’ rights under this Agreement,
including those incurred in any case, action, proceeding or claim under the
Federal Bankruptcy Code or any successor statute.


          6.          Notices.
Any notice or other communication to any party in connection with this
Agreement shall be in writing and shall be sent in accordance with the
provisions of the Mortgage.


          7.          Governing
Law and Construction. The validity, construction and enforceability of this
Agreement shall be governed by the laws of the State of Minnesota, without
giving effect to conflict of laws or principles thereof, but giving effect to
federal laws of the United States applicable to national banks. Whenever
possible, each provision of this Agreement and any other statement, instrument
or transaction contemplated hereby or relating hereto, shall be interpreted in
such manner as to be effective and valid under such applicable law, but, if any
provision of this Agreement or any other statement, instrument or transaction
contemplated hereby or relating hereto shall be held to be prohibited or
invalid under such applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement or
any other statement, instrument or transaction contemplated hereby or relating
hereto.


          8.          Consent to Jurisdiction. At the option of Lender, this Agreement may be enforced in any
Federal Court or Minnesota State Court sitting in Minneapolis or St. Paul,
Minnesota; and Mortgagor consents to the jurisdiction and venue of any such
Court and waives any argument that venue in such forums is not convenient. In
the event Mortgagor commences any action in another jurisdiction or venue under
any tort or contract theory arising directly or indirectly from the
relationship created by this Agreement, Lender at its option shall be entitled
to have the case transferred to one of the jurisdictions and venues
above-described, or if such transfer cannot be accomplished under applicable
law, to have such case dismissed without prejudice. 


          9.          Waiver
of Jury Trial. Mortgagor and Lender irrevocably waives any and all right to
trial by jury in any legal proceeding arising out of or relating to this
Agreement or any of the Loan Documents (as defined in the Credit Agreement) or
the transactions contemplated hereby or thereby.


          10.         Binding
Effect; Gender. This Agreement shall inure to the benefit of Lender, and
the Indemnified Parties, and shall bind Mortgagor and Mortgagor’s successors
and assigns. The obligations of Mortgagor under this Agreement shall be
enforceable in all events against Mortgagor, and Mortgagor’s successors and
assigns, and each of them, jointly and severally. The use of any gender herein
shall include all other genders.


[The remainder of this page has been left blank intentionally.]


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          IN
WITNESS WHEREOF, Mortgagor has executed this Agreement as of the date first
above written.


	
  

 	
  

 	
  

 	
  

 
	
  

 	
 ELECTROMED, INC.

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 By: 

 	
 



 	
  

 
	
  

 	
 Name: Robert D. Hansen 

 	
  

 
	
  

 	
 Title: Chief Executive Officer

 	
  

 



[Signature Page to Environmental and ADA Indemnification Agreement]





EXHIBIT A


(Description of Environmental Reports)


Phase I Environmental Site Assessment Report prepared
by Vieau Associates Inc., dated September 8, 2009.