Exhibit
10.6


 


 


*009600000015696*


 


CHANGE
IN TERMS AGREEMENT


 


	Principal	Loan
    Date	Maturity	Loan
    No	Call
    / Coll	Account	Officer	Initials
	$1,178,391.18	12-18-2016	12-18-2018	15696	 	107560-1	10070	 
	References
    in the boxes above are for Lender’s use only and do not limit the applicability of this document to any particular loan or
    item.
	Any
    item above containing “***” has been omitted due to text length limitations.


 


	Borrower:	Electromed, Inc.	Lender:	Venture Bank
	 	500 Sixth Avenue NW	 	Golden Valley Office
	 	New Prague, MN 56071	 	6210 Wayzata Boulevard
	 	 	 	Golden Valley, MN 55416
	 	 	 	 


 





	Principal
    Amount:    $1,178,391.18	Date
    of Agreement:    December 18, 2016







 


DESCRIPTION
OF EXISTING INDEBTEDNESS. Promissory Note #15696 dated 12/18/2013, in the original amount of $1,300,000.00 from Borrower to
Lender.


 


DESCRIPTION
OF COLLATERAL. :


 


-   Real
Property located at 500 and 502 Sixth Avenue NW, New Prague, MN 56071 per Mortgage dated 12/18/2013.


-   An
Assignment of Rents on the Real Property located at 500 and 502 Sixth Avenue NW, New Prague, MN 56071 dated 12/18/2013.


 


DESCRIPTION
OF CHANGE IN TERMS. Lower interest rate from 5.00% to 3.88%.


 


PROMISE
TO PAY. Electromed, Inc. (“Borrower”) promises to pay to Venture Bank (“Lender”), or order, in lawful money
of the United States of America, the principal amount of One Million One Hundred Seventy-eight Thousand Three Hundred Ninety-one
& 18/100 Dollars ($1,178,391.18), together with interest on the unpaid principal balance from December 18, 2016, calculated
as described in the “INTEREST CALCULATION METHOD” paragraph using an interest rate of 3.880% per annum based on a year
of 360 days, until paid in full. The interest rate may change under the terms and conditions of the “INTEREST AFTER DEFAULT”
section.


 


PAYMENT.
Borrower will pay this loan in 23 regular payments of $7,931.96 each and one irregular last payment estimated at $1,084,893.20.
Borrower’s first payment is due January 18, 2017, and all subsequent payments are due on the same day of each month after that.
Borrower’s final payment will be due on December 18, 2018, and will be for all principal and all accrued interest not yet paid.
Payments include principal and interest. Unless otherwise agreed or required by applicable law, payments will be applied first
to any accrued unpaid interest; then to principal; then to any unpaid collection costs; and then to any late charges. Borrower
will pay Lender at Lender’s address shown above or at such other place as Lender may designate in writing.


 


INTEREST
CALCULATION METHOD. Interest on this loan is computed on a 365/360 basis; that is, by applying the ratio of the interest rate
over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal
balance is outstanding. All interest payable under this loan is computed using this method. This calculation method results in
a higher effective interest rate than the numeric interest rate stated in the loan documents.


 


PREPAYMENT
PENALTY. Upon prepayment of this Agreement, Lender is entitled to the following prepayment penalty: In the event of a prepayment
of more than 20% of the original principal amount of the loan within a twelve month period due to loan being refinanced at another
institution, a prepayment penalty shall be assessed as follows:


 



1)
 If the prepayment occurs on or before 12/18/2016, the prepayment penalty will equal three percent (3%) of the principal
amount prepaid.


 


2)
 If the prepayment occurs after the 12/18/2016, but on or before 12/18/2017, the prepayment penalty will equal two percent
(2%) of the principal amount prepaid.


 


3)
 If the prepayment occurs after 12/18/2017, but on or before 06/20/2018, the prepayment penalty will equal one percent (1%)
of the principal amount prepaid.


 


*   The
Prepayment Penalty will be waived from 06/21/2018 to loan maturity on 12/18/2018.


Except
for the foregoing, Borrower may pay all or a portion of the amount owed earlier than it is due. Early payments will not, unless
agreed to by Lender in writing, relieve Borrower of Borrower’s obligation to continue to make payments under the payment schedule.
Rather, early payments will reduce the principal balance due and may result in Borrower’s making fewer payments. Borrower agrees
not to send Lender payments marked “paid in full”, “without recourse”, or similar language. If Borrower sends
such a payment, Lender may accept it without losing any of Lender’s rights under this Agreement, and Borrower will remain obligated
to pay any further amount owed to Lender. All written communications concerning disputed amounts, including any check or other
payment instrument that indicates that the payment constitutes “payment in full” of the amount owed or that is tendered
with other conditions or limitations or as full satisfaction of a disputed amount must be mailed or delivered to: Venture Bank,
P.O. Box 9180 Minneapolis, MN 55480-9180.


 


LATE
CHARGE. If a payment is 10 days or more late, Borrower will be charged 5.000% of the unpaid portion of the regularly scheduled
payment or $50.00, whichever is greater.


 


INTEREST
AFTER DEFAULT. Upon default, including failure to pay upon final maturity, the interest rate on this loan shall be increased
by 6.000 percentage points. However, in no event will the interest rate exceed the maximum interest rate limitations under applicable
law.


 


DEFAULT.
Each of the following shall constitute an Event of Default under this Agreement:


 


Payment
Default. Borrower fails to make any payment when due under the Indebtedness.


 


Other
Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this
Agreement or in any of the Related Documents or to comply with or to perform any term, obligation, covenant or condition contained
in any other agreement between Lender and Borrower.


 


False
Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower’s behalf under
this Agreement or the Related Documents is false or misleading in any material respect, either now or at the time made or furnished
or becomes false or misleading at any time thereafter.


 


Insolvency.
The dissolution or termination of Borrower’s existence as a going business, the insolvency of Borrower, the appointment of
a receiver for any part of Borrower’s property, any assignment for the benefit of creditors, any type of creditor workout, or
the


 






    


     


    

 


	 	CHANGE
    IN TERMS AGREEMENT	 
	Loan No: 15696	(Continued)	Page 2
	 	 	 


 


commencement
of any proceeding under any bankruptcy or insolvency laws by or against Borrower.


 


Creditor
or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the
Indebtedness. This includes a garnishment of any of Borrower’s accounts, including deposit accounts, with Lender. However, this
Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim
which is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture
proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined
by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.


 


Events
Affecting Guarantor. Any of the preceding events occurs with respect to any guarantor, endorser, surety, or accommodation
party of any of the Indebtedness or any guarantor, endorser, surety, or accommodation party dies or becomes incompetent, or revokes
or disputes the validity of, or liability under, any Guaranty of the Indebtedness evidenced by this Note.


 


Change
In Ownership. Any change in ownership of twenty-five percent (25%) or more of the common stock of Borrower.


 


Adverse
Change. A material adverse change occurs in Borrower’s financial condition, or Lender believes the prospect of payment or
performance of the Indebtedness is impaired.


 


Insecurity.
Lender in good faith believes itself insecure.


 


Cure
Provisions. If any default, other than a default in payment, is curable and if Borrower has not been given a notice of a breach
of the same provision of this Agreement within the preceding twelve (12) months, it may be cured if Borrower, after Lender sends
written notice to Borrower demanding cure of such default: (1) cures the default within fifteen (15) days; or (2) if the cure
requires more than fifteen (15) days, immediately initiates steps which Lender deems in Lender’s sole discretion to be sufficient
to cure the default and thereafter continues and completes all reasonable and necessary steps sufficient to produce compliance
as soon as reasonably practical.


 


LENDER’S
RIGHTS. Upon default, Lender may declare the entire unpaid principal balance under this Agreement and all accrued unpaid interest
immediately due, and then Borrower will pay that amount.


 


ATTORNEYS’
FEES; EXPENSES. Lender may hire or pay someone else to help collect this Agreement if Borrower does not pay. Borrower will
pay Lender that amount. This includes, subject to any limits under applicable law, Lender’s reasonable attorneys’ fees and Lender’s
legal expenses, whether or not there is a lawsuit, including reasonable attorneys’ fees, expenses for bankruptcy proceedings (including
efforts to modify or vacate any automatic stay or injunction), and appeals. If not prohibited by applicable law, Borrower also
will pay any court costs, in addition to all other sums provided by law.


 


GOVERNING
LAW. This Agreement will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the
laws of the State of Minnesota without regard to its conflicts of law provisions. This Agreement has been accepted by Lender in
the State of Minnesota.


 


DISHONORED
ITEM FEE. Borrower will pay a fee to Lender of $32.00 if Borrower makes a payment on Borrower’s loan and the check or preauthorized
charge with which Borrower pays is later dishonored.


 


RIGHT
OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower’s accounts with Lender
(whether checking, savings, or some other account). This includes all accounts Borrower holds jointly with someone else and all
accounts Borrower may open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for
which setoff would be prohibited by law. Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff
all sums owing on the indebtedness against any and all such accounts, and, at Lender’s option, to administratively freeze all
such accounts to allow Lender to protect Lender’s charge and setoff rights provided in this paragraph.


 


COLLATERAL.
Borrower acknowledges this Agreement is secured by :


 


-   Real
Property located at 500 and 502 Sixth Avenue NW, New Prague, MN 56071 per Mortgage dated 12/18/2013.


-   An
Assignment of Rents on the Real Property located at 500 and 502 Sixth Avenue NW, New Prague, MN 56071 dated 12/18/2013.


 


CONTINUING
VALIDITY. Except as expressly changed by this Agreement, the terms of the original obligation or obligations, including all
agreements evidenced or securing the obligation(s), remain unchanged and in full force and effect. Consent by Lender to this Agreement
does not waive Lender’s right to strict performance of the obligation(s) as changed, nor obligate Lender to make any future change
in terms. Nothing in this Agreement will constitute a satisfaction of the obligation(s). It is the intention of Lender to retain
as liable parties all makers and endorsers of the original obligation(s), including accommodation parties, unless a party is expressly
released by Lender in writing. Any maker or endorser, including accommodation makers, will not be released by virtue of this Agreement.
If any person who signed the original obligation does not sign this Agreement below, then all persons signing below acknowledge
that this Agreement is given conditionally, based on the representation to Lender that the non-signing party consents to the changes
and provisions of this Agreement or otherwise will not be released by it. This waiver applies not only to any initial extension,
modification or release, but also to all such subsequent actions.


 


LOAN
AGREEMENT. A document titled, “Business Loan Agreement”, is attached to this Promissory Note.


 


SUCCESSORS
AND ASSIGNS. Subject to any limitations stated in this Agreement on transfer of Borrower’s interest, this Agreement shall
be binding upon and inure to the benefit of the parties, their successors and assigns. If ownership of the Collateral becomes
vested in a person other than Borrower, Lender, without notice to Borrower, may deal with Borrower’s successors with reference
to this Agreement and the Indebtedness by way of forbearance or extension without releasing Borrower from the obligations of this
Agreement or liability under the Indebtedness.


 


MISCELLANEOUS
PROVISIONS. If any part of this Agreement cannot be enforced, this fact will not affect the rest of the Agreement. Lender
may delay or forgo enforcing any of its rights or remedies under this Agreement without losing them. In addition, Lender shall
have all the rights and remedies provided in the related documents or available at law, in equity, or otherwise. Except as may
be prohibited by applicable law, all of Lender’s rights and remedies shall be cumulative and may be exercised singularly or concurrently.
Election by Lender to pursue any remedy shall not exclude pursuit of any other remedy, and an election to make expenditures or
to take action to perform an obligation of Borrower shall not affect Lender’s right to declare a default and to exercise its rights
and remedies. Borrower and any other person who signs, guarantees or endorses this Agreement, to the extent allowed by law, waive
presentment, demand for payment, and notice of dishonor. Upon any change in the terms of this Agreement, and unless otherwise
expressly stated in writing, no party who signs this Agreement, whether as maker, guarantor, accommodation maker or endorser,
shall be released from liability. All such parties agree that Lender may renew or extend (repeatedly and for any length of time)
this loan or release any party or guarantor or collateral; or impair, fail to realize upon or perfect Lender’s security interest
in the collateral; and take any other action deemed necessary by Lender without the consent of or notice to anyone. All such parties
also agree that Lender may modify this loan without the consent of or notice to anyone other than the party with whom the modification
is made. The obligations under this Agreement are joint and several.


 






    


     


    

 


	 	CHANGE
    IN TERMS AGREEMENT	 
	Loan No: 15696	(Continued)	Page 3
	 	 	 


 


SECTION
DISCLOSURE. To the extent not preempted by federal law, this loan is made under Minnesota Statutes, Section 334.01.


 


PRIOR
TO SIGNING THIS AGREEMENT, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS AGREEMENT. BORROWER AGREES TO THE TERMS OF
THE AGREEMENT.


 


BORROWER:


 


	ELECTROMED, INC.	 
	 	 	 
	By:	/s/
    Jeremy Brock	 
	 	Jeremy Brock, Chief Financial Officer of Electromed,
    Inc.	 





	 
	LENDER:
	 
	 
	VENTURE BANK


 


	X	/s/
    Kevin P. Doyle	 
	 	Authorized Signer	 


 


	LaserPro,
    Ver. 16.3.10.005 Copr. D+H USA Corporation 1997, 2016. All Rights Reserved. - MN c:\APPS\CFI\CFI\LPL\D20C.FC TR-6873 PR-22