Exhibit 10.9 to Electromed, Inc. Form S1



Exhibit 10.9


GUARANTY


          THIS
GUARANTY, dated as of December 9, 2009, is made and given by ELECTROMED
FINANCIAL, LLC, a limited liability company organized under the laws of the
State of Minnesota (the “Guarantor”), in favor of U.S. BANK NATIONAL
ASSOCIATION, a national banking association (the “Lender”).


RECITALS


          A.      Electromed,
Inc., a Minnesota corporation (the “Borrower”), and the Lender have entered
into a Credit Agreement dated as of December 9, 2009 (as the same may hereafter
be amended, restated, or otherwise modified from time to time, the “Credit
Agreement”) pursuant to which the Lender has agreed to extend to the Borrower
certain credit accommodations consisting of a revolving facility and two term
loan facilities.


          B.      It
is a condition precedent to the obligation of the Lender to extend credit
accommodations pursuant to the terms of the Credit Agreement that this Guaranty
be executed and delivered by the Guarantor.


          C.      The
Guarantor is the majority-owned subsidiary of the Borrower.


          D.      The
Guarantor expects to derive benefits from the extension of credit
accommodations to the Borrower by the Lender and find Guarantor it
advantageous, desirable and in its their best interests to execute and deliver
this Guaranty to the Lender.


          NOW,
THEREFORE, In consideration of the credit accommodations to be extended to the
Borrower and for other good and valuable consideration, the Guarantor hereby
covenants and agrees with the Lender as follows:


          Section
1.     Defined Terms. As used in this Guaranty,
the following terms shall have the meaning indicated:


	
  

 	
  

 
	
  

 	
           “Borrower”
 shall have the meaning indicated in Recital A. 

 
	
  

 	
  

 
	
  

 	
           “Credit
 Agreement” shall have the meaning indicated in Recital A. 

 
	
  

 	
  

 
	
  

 	
           “Guarantor”
 shall have the meaning indicated in the opening paragraph hereof. 

 
	
  

 	
  

 
	
  

 	
           “Lender”
 shall have the meaning indicated in the opening paragraph hereof.

 
	
  

 	
  

 
	
  

 	
           “Obligations” shall mean (a) all indebtedness, liabilities and
 obligations of the Borrower to the Lender of every kind, nature or
 description under the Credit Agreement, including the Borrower’s obligation
 on any promissory note or notes under the Credit Agreement and any note or
 notes hereafter issued in substitution or replacement thereof, (b) any and
 all liabilities and obligations of the Borrower to the Lender of every kind,
 nature and description, whether direct or indirect or hereafter acquired by
 the Lender from any Person, absolute or contingent, regardless of how such
 liabilities arise or by what agreement or instrument they may be evidenced,
 and (c) in all of the foregoing

 


1









	
  

 	
  

 
	
  

 	
 cases whether due or to become due, and whether now existing or
 hereafter arising or incurred.

 
	
  

 	
  

 
	
  

 	
           “Person”
 shall mean any individual, corporation, partnership, limited partnership,
 limited liability company, joint venture, firm, association, trust,
 unincorporated organization, government or governmental agency or political
 subdivision or any other entity, whether acting in an individual, fiduciary
 or other capacity.

 



          Section
2.     The Guaranty. Subject always to the
following Section, the Guarantor hereby absolutely and unconditionally
guarantees to the Lender the payment when due (whether at a stated maturity or
earlier by reason of acceleration or otherwise) and performance of the
Obligations.


          Section
3.     Limitation; Insolvency Laws. As used in
this Section: (a) the term “Applicable Insolvency Laws” means the laws of the
United States of America or of any State, province, nation or other
governmental unit relating to bankruptcy, reorganization, arrangement,
adjustment of debts, relief of debtors, dissolution, insolvency, fraudulent
transfers or conveyances or other similar laws (including, without limitation,
11 U. S. C. §547, §548, §550 and other “avoidance” provisions of Title 11 of
the United Stated Code) as applicable in any proceeding in which the validity
and/or enforceability of this Guaranty or any Specified Lien is in issue; and
(b) “Specified Lien” means any security interest, mortgage, lien or encumbrance
securing this Guaranty, in whole or in part. Notwithstanding any other
provision of this Guaranty, if, in any proceeding, a court of competent
jurisdiction determines that this Guaranty or any Specified Lien would, but for
the operation of this Section, be subject to avoidance and/or recovery or be
unenforceable by reason of Applicable Insolvency Laws, this Guaranty and each
such Specified Lien shall be valid and enforceable only to the maximum extent
that would not cause this Guaranty or such Specified Lien to be subject to
avoidance, recovery or unenforceability. To the extent that any payment to, or
realization by, the Lender on the guaranteed Obligations exceeds the
limitations of this Section and is otherwise subject to avoidance and recovery
in any such proceeding, the amount subject to avoidance shall in all events be
limited to the amount by which such actual payment or realization exceeds such
limitation, and this Guaranty as limited shall in all events remain in full
force and effect and be fully enforceable against the Guarantor This Section is
intended solely to reserve the rights of the Lender hereunder against the
Guarantor in such proceeding to the maximum extent permitted by Applicable
Insolvency Laws and neither the Guarantor the Borrower, any other guarantor of
the Obligations nor any Person shall have any right, claim or defense under
this Section that would not otherwise be available under Applicable Insolvency
Laws in such proceeding.


          Section
4.     Continuing Guaranty. This Guaranty is an
absolute, unconditional and continuing guaranty of payment and performance of
the Obligations, and the obligations of the Guarantor. hereunder shall not be
released, in whole or in part, by any action or thing which might, but for this
provision of this Guaranty, be deemed a legal or equitable discharge of a
surety or guarantor, other than irrevocable payment and performance in full of
the Obligations. No notice of the Obligations to which this Guaranty may apply,
or of any renewal or extension thereof need be given to the Guarantor and none
of the foregoing acts shall release the Guarantor from liability hereunder. The
Guarantor hereby expressly waives (a) demand of payment, presentment, protest,
notice of dishonor, nonpayment or nonperformance on any and all forms of


2





the
Obligations; (b) notice of acceptance of this Guaranty and notice of any
liability to which it may apply; (c) all other notices and demands of any kind
and description relating to the Obligations now or hereafter provided for by
any agreement, statute, law, rule or regulation; and (d) any and all defenses
of the Borrower pertaining to the Obligations except for the defense of
discharge by payment. The Guarantor shall not be exonerated with respect to the
Guarantor’s liabilities under this Guaranty by any act or thing except
irrevocable payment and performance of the Obligations, it being the purpose
and intent of this Guaranty that the Obligations constitute the direct and
primary obligations of the Guarantor and that the covenants, agreements and all
obligations of the Guarantor hereunder be absolute, unconditional and
irrevocable. The Guarantor shall be and remain liable for any deficiency
remaining after foreclosure of any mortgage, deed of trust or security
agreement securing all or any part of the Obligations, whether or not the
liability of the Borrower or any other Person for such deficiency is discharged
pursuant to statute, judicial decision or otherwise. The acceptance of this
Guaranty by the Lender is not intended and does not release any liability
previously existing of any guarantor or surety of any indebtedness of the
Borrower to the Lender.


          Section
5.     Other Transactions. The Lender is
expressly authorized (a) to exchange, surrender or release with or without
consideration any or all collateral and security which may at any time be
placed with it by the Borrower or by any other Person, or to forward or deliver
any or all such collateral and security directly to the Borrower for collection
and remittance or for credit, or to collect the same in any other manner
without notice to the Guarantor and (b) to amend, modify, extend or supplement
the Credit Agreement, any note or other instrument evidencing the Obligations
or any part thereof and any other agreement with respect to the Obligations,
waive compliance by the Borrower or any other Person with the respective terms
thereof and settle or compromise any of the Obligations without notice to the
Guarantor and without in any manner affecting the absolute liabilities of the
Guarantor hereunder. No invalidity, irregularity or unenforceability of all or
any part of the Obligations or of any security therefor or other recourse with
respect thereto shall affect, impair or be a defense to this Guaranty. The
liabilities of the Guarantor hereunder shall not be affected or impaired by any
failure, delay, neglect or omission on the part of the Lender to realize upon
any of the Obligations of the Borrower to the Lender, or upon any collateral or
security for any or all of the Obligations, nor by the taking by the Lender of
(or the failure to take) any other guaranty or guaranties to secure the
Obligations, nor by the taking by the Lender of (or the failure to take or the
failure to perfect its security interest in or other lien on) collateral or
security of any kind. No act or omission of the Lender, whether or not such
action or failure to act varies or increases the risk of, or affects the rights
or remedies of the Guarantor shall affect or impair the obligations of the
Guarantor hereunder. The Guarantor acknowledges that this Guaranty is in effect
and binding without reference to whether this Guaranty is signed by any other
Person or Persons, that possession of this Guaranty by the Lender shall be
conclusive evidence of due delivery hereof by the Guarantor and that this
Guaranty shall continue in full force and effect, both as to the Obligations
then existing and/or thereafter created, notwithstanding the release of or
extension of time to any other guarantor of the Obligations or any part
thereof.


          Section
6.     Actions Not Required. The Guarantor
hereby waives any and all right to cause a marshalling of the assets of the
Borrower or any other action by any court or other governmental body with
respect thereto or to cause the Lender to proceed against any security for the
Obligations or any other recourse which the Lender may have with respect
thereto and


3





further
waives any and all requirements that the Lender institute any action or
proceeding at law or in equity, or obtain any judgment, against the Borrower or
any other Person, or with respect to any collateral security for the
Obligations, as a condition precedent to making demand on or bringing an action
or obtaining and/or enforcing a judgment against, the Guarantor upon this
Guaranty. The Guarantor further acknowledges that time is of the essence with
respect to the Guarantor’s obligations under this Guaranty. Any remedy or right
hereby granted which shall be found to be unenforceable as to any Person or
under any circumstance, for any reason, shall in no way limit or prevent the
enforcement of such remedy or right as to any other Person or circumstance, nor
shall such unenforceability limit or prevent enforcement of any other remedy or
right hereby granted.


          Section
7.     No Subrogation. Notwithstanding any
payment or payments made by the Guarantor hereunder, the Guarantor waives all
rights of subrogation to any of the rights of the Lender against the Borrower
or any other Person liable for payment of any of the Obligations or any
collateral security or guaranty or right of offset held by the Lender for the
payment of the Obligations, and the Guarantor waives all rights to seek any
recourse to or contribution or reimbursement from the Borrower or any other
Person liable for payment of any of the Obligations in respect of payments made
by the Guarantor hereunder.


          Section
8.     Application of Payments. Any and all
payments upon the Obligations made by the Guarantor or by any other Person,
and/or the proceeds of any or all collateral or security for any of the
Obligations, may be applied by the Lender on such items of the Obligations as
the Lender may elect.


          Section
9.     Recovery of Payment. If any payment
received by the Lender and applied to the Obligations is subsequently set
aside, recovered, rescinded or required to be returned for any reason
(including, without limitation, the bankruptcy, insolvency or reorganization of
the Borrower or any other obligor), the Obligations to which such payment was
applied shall for the purposes of this Guaranty be deemed to have continued in
existence, notwithstanding such application, and this Guaranty shall be
enforceable as to such Obligations as fully as if such application had never
been made. References in this Guaranty to amounts “irrevocably paid” or to
“irrevocable payment” refer to payments that cannot be set aside, recovered,
rescinded or required to be returned for any reason.


          Section
10.     Borrower’s Financial Condition. The
Guarantor is familiar with the financial condition of the Borrower, and the
Guarantor has executed and delivered this Guaranty based on the Guarantor’s own
judgment and not in reliance upon any statement or representation of the
Lender. The Lender shall have no obligation to provide the Guarantor with any
advice whatsoever or to inform the Guarantor at any time of the Lender’s
actions, evaluations or conclusions on the financial condition or any other
matter concerning the Borrower.


          Section
11.     Remedies. All remedies afforded to the
Lender by reason of this Guaranty are separate and cumulative remedies and it
is agreed that no one of such remedies, whether or not exercised by the Lender,
shall be deemed to be in exclusion of any of the other remedies available to
the Lender and no one of such remedies shall in any way limit or prejudice any
other legal or equitable remedy which the Lender may have hereunder and with
respect to the


4





Obligations.
Mere delay or failure to act shall not preclude the exercise or enforcement of
any rights and remedies available to the Lender.


          Section
12.     Bankruptcy of the Borrower. The
Guarantor expressly agrees that the liabilities and obligations of the
Guarantor under this Guaranty shall not in any way be impaired or otherwise
affected by the institution by or against the Borrower or any other Person of
any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or any other similar proceedings for relief under any bankruptcy law or similar
law for the relief of debtors and that any discharge of any of the Obligations
pursuant to any such bankruptcy or similar law or other law shall not diminish,
discharge or otherwise affect in any way the obligations of the Guarantor under
this Guaranty, and that upon the institution of any of the above actions, such
obligations shall be enforceable against the Guarantor.


          Section
13.     Costs and Expenses. The Guarantor will
pay or reimburse the Lender on demand for all reasonable out-of-pocket expenses
paid or incurred by the Lender, including in each case filing and recording
costs and fees, charges and disbursements of outside counsel to the Lender
(determined on the basis of such counsel’s 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, arising out of or in connection with the collection and enforcement of
this Guaranty against the Guarantor or arising out of or in connection with any
failure of the Guarantor to fully and timely perform the obligations of the
Guarantor hereunder.


          Section
14.     Waivers and Amendments. This Guaranty
can be waived, modified, amended, terminated or discharged only explicitly in a
writing signed by the Lender. A waiver so signed shall be effective only in the
specific instance and for the specific purpose given.


          Section
15.     Notices. Any notice or other
communication to any party in connection with this Guaranty shall be in writing
and shall be sent by manual delivery, telegram, telex, facsimile transmission,
overnight courier or United States mail (postage prepaid) addressed to such
party at the address specified on the signature page hereof, or at such other
address as such party shall have specified to the other party hereto in
writing. All periods of notice shall be measured from the date of delivery
thereof if manually delivered, from the date of sending thereof if sent by
telegram, telex or facsimile transmission, from the first business day after
the date of sending if sent by overnight courier, or from four days after the
date of mailing if mailed.


          Section
16.     Guarantor Acknowledgements. The
Guarantor hereby acknowledges that (a) counsel has advised the Guarantor in the
negotiation, execution and delivery of this Guaranty, (b) the Lender has no
fiduciary relationship to the Guarantor the relationship being solely that of
debtor and creditor, and (c) no joint venture exists between the Guarantor and
the Lender.


          Section
17.     Representations and Warranties.
Electromed Financial, LLC hereby represents and warrants to the Lender that it
is a limited liability company organized, validly existing and in good standing
under the laws of the State of Minnesota and has the power and authority and
the legal right to own and operate its properties and to conduct the business
in which it is currently engaged. Electromed Financial, LLC further represents
and warrants to the Lender that:


5









	
  

 	
  

 
	
  

 	
           (a)     It
 has the power and authority and the legal right to execute and deliver, and
 to perform its obligations under, this Guaranty and has taken all necessary
 action required by its form of organization to authorize such execution,
 delivery and performance.

 
	
  

 	
  

 
	
  

 	
           (b)     This
 Guaranty constitutes its legal, valid and binding obligation enforceable in
 accordance with its terms, except as enforceability may be limited by
 applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
 affecting the enforcement of creditors’ rights generally and by general
 equitable principles (whether enforcement is sought by proceedings in equity
 or at law).

 
	
  

 	
  

 
	
  

 	
           (c)     The
 execution, delivery and performance of this Guaranty will not (i) violate any
 provision of any law, statute, rule or regulation or any order, writ,
 judgment, injunction, decree, determination or award of any court, governmental
 agency or arbitrator presently in effect having applicability to it, (ii)
 violate or contravene any provision of its organizational documents, or (iii)
 result in a breach of or constitute a default under any indenture, loan or
 credit agreement or any other agreement, lease or instrument to which it is a
 party or by which it or any of its properties may be bound or result in the
 creation of any lien thereunder. It is not in default under or in violation
 of any such law, statute, rule or regulation, order, writ, judgment,
 injunction, decree, determination or award or any such indenture, loan or
 credit agreement or other agreement, lease or instrument in any case in which
 the consequences of such default or violation could have a material adverse
 effect on its business, operations, properties, assets or condition
 (financial or otherwise).

 
	
  

 	
  

 
	
  

 	
           (d)     No
 order, consent, approval, license, authorization or validation of, or filing,
 recording or registration with, or exemption by, any governmental or public
 body or authority is required on its part to authorize, or is required in
 connection with the execution, delivery and performance of, or the legality,
 validity, binding effect or enforceability of, this Guaranty.

 
	
  

 	
  

 
	
  

 	
           (e)     There
 are no actions, suits or proceedings pending or, to its knowledge, threatened
 against or affecting it or any of its properties before any court or
 arbitrator, or any governmental department, board, agency or other
 instrumentality which, if determined adversely to it, would have a material
 adverse effect on its business, operations, property or condition (financial
 or otherwise) or on its ability to perform its obligations hereunder.

 
	
  

 	
  

 
	
  

 	
           (f)     It
 expects to derive benefits from the transactions resulting in the creation of
 the Obligations. The Lender may rely conclusively on the continuing warranty,
 hereby made, that it continues to be benefited by the Lender’s extension of
 credit accommodations to the Borrower and the Lender shall have no duty to
 inquire into or confirm the receipt of any such benefits, and this Guaranty
 shall be effective and enforceable by the Lender without regard to the
 receipt, nature or value of any such benefits.

 


6





          Section
18.     Continuing Guaranty; Assignments under
Credit Agreement. This Guaranty shall (a) remain in full force and effect
until irrevocable payment in full of the Obligations and the expiration of the
obligations, if any, of the Lender to extend credit accommodations to the
Borrower, (b) be binding upon the Guarantor, its successors and assigns and (c)
inure to the benefit of, and be enforceable by, the Lender and its successors,
transferees, and assigns. Without limiting the generality of the foregoing
clause (c), the Lender may assign or otherwise transfer all or any portion of
its rights and obligations under the Credit Agreement to any other Persons to
the extent and in the manner provided in the Credit Agreement and may similarly
transfer all or any portion of its rights under this Guaranty to such Persons.


          Section
19.     Reaffirmation. The Guarantor agrees
that when so requested by the Lender from time to time it will promptly execute
and deliver to the Lender a written reaffirmation of this Guaranty in such form
as the Lender may require.


          Section
20.     Revocation. Notwithstanding any other
provision hereof, the Guarantor may revoke this Guaranty prospectively as to
future transactions by written notice to that effect actually received by the
Lender. No such revocation shall release, impair or affect in any manner any
liability hereunder with respect to Obligations created, contracted, assumed or
incurred prior to receipt by the Lender of written notice of revocation, or
Obligations created, contracted, assumed or incurred after receipt of such
notice pursuant to any contract entered into by the Lender prior to receipt of
such notice, or any renewals or extensions thereof, theretofore or thereafter
made, or any interest accrued or accruing on such Obligations, or all other
costs, expenses and attorneys’ fees arising from such Obligations.


          Section
21.     Governing
Law and Construction. THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY
OF THIS GUARANTY SHALL BE GOVERNED BY THE LAWS OF THE STATE OF MINNESOTA,
WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF, BUT GIVING EFFECT
TO FEDERAL LAWS OF THE UNITED STATES APPLICABLE TO NATIONAL BANKS. Whenever
possible, each provision of this Guaranty 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 Guaranty 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 Guaranty or any
other statement, instrument or transaction contemplated hereby or relating
hereto.


          Section
22.     Consent
to Jurisdiction. AT THE OPTION OF THE LENDER, THIS GUARANTY MAY BE
ENFORCED IN ANY FEDERAL COURT OR MINNESOTA STATE COURT SITTING IN HENNEPIN COUNTY,
MINNESOTA; AND THE GUARANTOR 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 THE GUARANTOR COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE
UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE
RELATIONSHIP CREATED BY THIS GUARANTY, THE LENDER AT ITS OPTION SHALL BE


7





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.


          Section
23.     Waiver of
Jury Trial. EACH OF THE GUARANTOR AND THE LENDER, BY ITS ACCEPTANCE
OF THIS GUARANTY, IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE
TRANSACTIONS CONTEMPLATED HEREBY.


          Section
24.     Counterparts. This Guaranty may be
executed in any number of counterparts, each of which when so executed and delivered
shall be deemed an original, but all such counterparts together shall
constitute but one and the same instrument.


          Section
25.     General. All representations and
warranties contained in this Guaranty or in any other agreement between the Guarantor
and the Lender shall survive the execution, delivery and performance of this
Guaranty and the creation and payment of the Obligations. Captions in this
Guaranty are for reference and convenience only and shall not affect the
interpretation or meaning of any provision of this Guaranty.


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


8





          IN
WITNESS WHEREOF, the Guarantor has executed this Guaranty as of the date first
above written.


	
  

 	
  

 	
  

 
	
  

 	
 GUARANTOR:

 
	
  

 	
  

 	
  

 
	
  

 	
 ELECTROMED FINANCIAL, LLC

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 By

 	
 


 
	
  

 	
 Name: Robert D. Hansen

 
	
  

 	
 Title: Chief Manager and Chief Executive Officer 

 



Address:


500
Sixth Avenue NW 

New Prague, MN 56071 

ATTN: Robert D. Hansen 

Fax Number: 952-758-1941


Address
for the Lender:


U.S.
Bank National Association 

BC-MN-H03W 

800 Nicollet Mall 

Minneapolis, MN 55402-4302 

ATTN: Daniel J. Miller 

Fax Number: 612-303-2252


[Signature Page to Guaranty]