Document:

Exhibit 10.4 

 

COMMERCIAL
SECURITY AGREEMENT

	
        Principal

        $2,500,000.00
	
        Loan Date

        12-18-2013
	
        Maturity

        12-18-2014
	
        Loan No

        15695
	Call / Coll	Account	Officer 	Initials
	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.

 

	Grantor:

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

THIS COMMERCIAL SECURITY AGREEMENT
dated December 18, 2013, is made and executed between Electromed, Inc. (“Grantor”) and Venture Bank (“Lender”).

GRANT OF SECURITY INTEREST. For valuable
consideration, Grantor grants to Lender a security interest in the Collateral to secure the Indebtedness and agrees that Lender
shall have the rights stated in this Agreement with respect to the Collateral, in addition to all other rights which Lender may
have by law.

COLLATERAL DESCRIPTION. The word
“Collateral” as used in this Agreement means the following described property, whether now owned or hereafter acquired,
whether now existing or hereafter arising, and wherever located, in which Grantor is giving to Lender a security interest for the
payment of the Indebtedness and performance of all other obligations under the Note and this Agreement:

All inventory, equipment, accounts
(including but not limited to all health-care-insurance receivables), chattel paper, instruments (including but not limited to
all promissory notes), letter-of-credit rights, letters of credit, documents, deposit accounts, investment property, money, other
rights to payment and performance, and general intangibles (including but not limited to all software and all payment intangibles);
all oil, gas and other minerals before extraction; all oil, gas, other minerals and accounts constituting as-extracted collateral;
all fixtures; all timber to be cut; all attachments, accessions, accessories, fittings, increases, tools, parts, repairs, supplies,
and commingled goods relating to the foregoing property, and all additions, replacements of and substitutions for all or any part
of the foregoing property; all insurance refunds relating to the foregoing property; all good will relating to the foregoing property;
all records and data and embedded software relating to the foregoing property, and all equipment, inventory and software to utilize,
create, maintain and process any such records and data on electronic media; and all supporting obligations relating to the foregoing
property; all whether now existing or hereafter arising, whether now owned or hereafter acquired or whether now or hereafter subject
to any rights in the foregoing property; and all products and proceeds (including but not limited to all insurance payments) of
or relating to the foregoing property.

In addition, the word “Collateral”
also includes all the following, whether now owned or hereafter acquired, whether now existing or hereafter arising, and wherever
located:

(A) All accessions, attachments,
accessories, tools, parts, supplies, replacements of and additions to any of the collateral described herein, whether added now
or later.

(B) All products and produce of
any of the property described in this Collateral section.

(C) All accounts, general intangibles,
instruments, rents, monies, payments, and all other rights, arising out of a sale, lease, consignment or other disposition of any
of the property described in this Collateral section.

(D) All proceeds (including insurance
proceeds) from the sale, destruction, loss, or other disposition of any of the property described in this Collateral section, and
sums due from a third party who has damaged or destroyed the Collateral or from that party’s insurer, whether due to judgment,
settlement or other process.

(E) All records and data relating
to any of the property described in this Collateral section, whether in the form of a writing, photograph, microfilm, microfiche,
or electronic media, together with all of Grantor’s right, title, and interest in and to all computer software required to
utilize, create, maintain, and process any such records or data on electronic media.

CROSS-COLLATERALIZATION. In addition
to the Note, this Agreement secures all obligations, debts and liabilities, plus interest thereon, of Grantor to Lender, or any
one or more of them, as well as all claims by Lender against Grantor or any one or more of them, whether now existing or hereafter
arising, whether related or unrelated to the purpose of the Note, whether voluntary or otherwise, whether due or not due, direct
or indirect, determined or undetermined, absolute or contingent, liquidated or unliquidated, whether Grantor may be liable individually
or jointly with others, whether obligated as guarantor, surety, accommodation party or otherwise, and whether recovery upon such
amounts may be or hereafter may become barred by any statute of limitations, and whether the obligation to repay such amounts may
be or hereafter may become otherwise unenforceable.

RIGHT OF SETOFF. To the extent
permitted by applicable law, Lender reserves a right of setoff in all Grantor’s accounts with Lender (whether checking, savings,
or some other account). This includes all accounts Grantor holds jointly with someone else and all accounts Grantor 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. Grantor 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.

GRANTOR’S REPRESENTATIONS AND
WARRANTIES WITH RESPECT TO THE COLLATERAL. With respect to the Collateral, Grantor represents and promises to Lender that:

    	 

    	 

    
 

	 	COMMERCIAL
                                         SECURITY AGREEMENT	 
	Loan No:  15695	(Continued)	Page 2
	 	 	 

Perfection of Security Interest.
Grantor agrees to take whatever actions are requested by Lender to perfect and continue Lender’s security interest in the
Collateral. Upon request of Lender, Grantor will deliver to Lender any and all of the documents evidencing or constituting the
Collateral, and Grantor will note Lender’s interest upon any and all chattel paper and instruments if not delivered to Lender
for possession by Lender. This is a continuing Security Agreement and will continue in effect even though all or any part of
the Indebtedness is paid in full and even though for a period of time Grantor may not be indebted to Lender.

Notices to Lender. Grantor
will promptly notify Lender in writing at Lender’s address shown above (or such other addresses as Lender may designate from
time to time) prior to any (1) change in Grantor’s name; (2) change in Grantor’s assumed business name(s); (3) change
in the management of the Corporation Grantor; (4) change in the authorized signer(s); (5) change in Grantor’s principal office
address; (6) change in Grantor’s state of organization; (7) conversion of Grantor to a new or different type of business
entity; or (8) change in any other aspect of Grantor that directly or indirectly relates to any agreements between Grantor and
Lender. No change in Grantor’s name or state of organization will take effect until after Lender has received notice.

No Violation. The execution
and delivery of this Agreement will not violate any law or agreement governing Grantor or to which Grantor is a party, and its
certificate or articles of incorporation and bylaws do not prohibit any term or condition of this Agreement.

Enforceability of Collateral.
To the extent the Collateral consists of accounts, chattel paper, or general intangibles, as defined by the Uniform Commercial
Code, the Collateral is enforceable in accordance with its terms, is genuine, and fully complies with all applicable laws and regulations
concerning form, content and manner of preparation and execution, and all persons appearing to be obligated on the Collateral have
authority and capacity to contract and are in fact obligated as they appear to be on the Collateral. At the time any account becomes
subject to a security interest in favor of Lender, the account shall be a good and valid account representing an undisputed, bona
fide indebtedness incurred by the account debtor, for merchandise held subject to delivery instructions or previously shipped or
delivered pursuant to a contract of sale, or for services previously performed by Grantor with or for the account debtor. So long
as this Agreement remains in effect, Grantor shall not, without Lender’s prior written consent, compromise, settle, adjust,
or extend payment under or with regard to any such Accounts. There shall be no setoffs or counterclaims against any of the Collateral,
and no agreement shall have been made under which any deductions or discounts may be claimed concerning the Collateral except those
disclosed to Lender in writing.

Location of the Collateral.
Except in the ordinary course of Grantor’s business, Grantor agrees to keep the Collateral (or to the extent the Collateral
consists of intangible property such as accounts or general intangibles, the records concerning the Collateral) at Grantor’s
address shown above or at such other locations as are acceptable to Lender. Upon Lender’s request, Grantor will deliver to
Lender in form satisfactory to Lender a schedule of real properties and Collateral locations relating to Grantor’s operations,
including without limitation the following: (1) all real property Grantor owns or is purchasing; (2) all real property Grantor
is renting or leasing; (3) all storage facilities Grantor owns, rents, leases, or uses; and (4) all other properties where Collateral
is or may be located.

Removal of the Collateral.
Except in the ordinary course of Grantor’s business, including the sales of inventory, Grantor shall not remove the Collateral
from its existing location without Lender’s prior written consent. To the extent that the Collateral consists of vehicles,
or other titled property, Grantor shall not take or permit any action which would require application for certificates of title
for the vehicles outside the State of Minnesota, without Lender’s prior written consent. Grantor shall, whenever requested,
advise Lender of the exact location of the Collateral.

Transactions Involving Collateral.
Except for inventory sold or accounts collected in the ordinary course of Grantor’s business, or as otherwise provided for
in this Agreement, Grantor shall not sell, offer to sell, or otherwise transfer or dispose of the Collateral. While Grantor is
not in default under this Agreement, Grantor may sell inventory, but only in the ordinary course of its business and only to buyers
who qualify as a buyer in the ordinary course of business. A sale in the ordinary course of Grantor’s business does not include
a transfer in partial or total satisfaction of a debt or any bulk sale. Grantor shall not pledge, mortgage, encumber or otherwise
permit the Collateral to be subject to any lien, security interest, encumbrance, or charge, other than the security interest provided
for in this Agreement, without the prior written consent of Lender. This includes security interests even if junior in right to
the security interests granted under this Agreement. Unless waived by Lender, all proceeds from any disposition of the Collateral
(for whatever reason) shall be held in trust for Lender and shall not be commingled with any other funds; provided however, this
requirement shall not constitute consent by Lender to any sale or other disposition. Upon receipt, Grantor shall immediately deliver
any such proceeds to Lender.

Title. Grantor represents
and warrants to Lender that Grantor holds good and marketable title to the Collateral, free and clear of all liens and encumbrances
except for the lien of this Agreement. No financing statement covering any of the Collateral is on file in any public office other
than those which reflect the security interest created by this Agreement or to which Lender has specifically consented. Grantor
shall defend Lender’s rights in the Collateral against the claims and demands of all other persons.

Repairs and Maintenance.
Grantor agrees to keep and maintain, and to cause others to keep and maintain, the Collateral in good order, repair and condition
at all times while this Agreement remains in effect. Grantor further agrees to pay when due all claims for work done on, or services
rendered or material furnished in connection with the Collateral so that no lien or encumbrance may ever attach to or be filed
against the Collateral.

Inspection of Collateral.
Lender and Lender’s designated representatives and agents shall have the right at all reasonable times to examine and inspect
the Collateral wherever located.

Taxes, Assessments and Liens.
 Grantor will pay when due all taxes, assessments and liens upon the Collateral, its use or operation, upon this Agreement,
upon any promissory note or notes evidencing the Indebtedness, or upon any of the other Related Documents. Grantor may withhold
any such payment or may elect to contest any lien if Grantor is in good faith conducting an appropriate proceeding to contest the
obligation to pay and so long as Lender’s interest in the Collateral is not jeopardized in Lender’s sole opinion. If
the Collateral is subjected to a lien which is not discharged within fifteen (15) days, Grantor shall deposit with Lender cash,
a sufficient corporate surety bond or other security satisfactory to Lender in an amount adequate to provide for the discharge
of the lien plus any interest, costs, reasonable attorneys’ fees or other

    	 

    	 

    

 

	 	COMMERCIAL
                                         SECURITY AGREEMENT	 
	Loan No:  15695	(Continued)	Page 3
	 	 	 

charges that could accrue as a result of foreclosure
or sale of the Collateral. In any contest Grantor shall defend itself and Lender and shall satisfy any final adverse judgment before
enforcement against the Collateral. Grantor shall name Lender as an additional obligee under any surety bond furnished in the contest
proceedings. Grantor further agrees to furnish Lender with evidence that such taxes, assessments, and governmental and other charges
have been paid in full and in a timely manner. Grantor may withhold any such payment or may elect to contest any lien if Grantor
is in good faith conducting an appropriate proceeding to contest the obligation to pay and so long as Lender’s interest in
the Collateral is not jeopardized.

Compliance with Governmental
Requirements. Grantor shall comply promptly with all laws, ordinances, rules and regulations of all governmental authorities,
now or hereafter in effect, applicable to the ownership, production, disposition, or use of the Collateral, including all laws
or regulations relating to the undue erosion of highly-erodible land or relating to the conversion of wetlands for the production
of an agricultural product or commodity. Grantor may contest in good faith any such law, ordinance or regulation and withhold compliance
during any proceeding, including appropriate appeals, so long as Lender’s interest in the Collateral, in Lender’s opinion,
is not jeopardized.

Hazardous Substances. Grantor
represents and warrants that the Collateral never has been, and never will be so long as this Agreement remains a lien on the Collateral,
used in violation of any Environmental Laws or for the generation, manufacture, storage, transportation, treatment, disposal, release
or threatened release of any Hazardous Substance. The representations and warranties contained herein are based on Grantor’s
due diligence in investigating the Collateral for Hazardous Substances. Grantor hereby (1) releases and waives any future claims
against Lender for indemnity or contribution in the event Grantor becomes liable for cleanup or other costs under any Environmental
Laws, and (2) agrees to indemnify, defend, and hold harmless Lender against any and all claims and losses resulting from a breach
of this provision of this Agreement. This obligation to indemnify and defend shall survive the payment of the Indebtedness and
the satisfaction of this Agreement.

Maintenance of Casualty Insurance.
Grantor shall procure and maintain all risks insurance, including without limitation fire, theft and liability coverage together
with such other insurance as Lender may require with respect to the Collateral, in form, amounts, coverages and basis reasonably
acceptable to Lender and issued by a company or companies reasonably acceptable to Lender. Grantor, upon request of Lender, will
deliver to Lender from time to time the policies or certificates of insurance in form satisfactory to Lender, including stipulations
that coverages will not be cancelled or diminished without at least ten (10) days’ prior written notice to Lender and not
including any disclaimer of the insurer’s liability for failure to give such a notice. Each insurance policy also shall include
an endorsement providing that coverage in favor of Lender will not be impaired in any way by any act, omission or default of Grantor
or any other person. In connection with all policies covering assets in which Lender holds or is offered a security interest, Grantor
will provide Lender with such loss payable or other endorsements as Lender may require. If Grantor at any time fails to obtain
or maintain any insurance as required under this Agreement, Lender may (but shall not be obligated to) obtain such insurance as
Lender deems appropriate, including if Lender so chooses “single interest insurance,” which will cover only Lender’s
interest in the Collateral.

Application of Insurance Proceeds.
Grantor shall promptly notify Lender of any loss or damage to the Collateral if the estimated cost of repair or replacement exceeds
$1,000.00, whether or not such casualty or loss is covered by insurance. Lender may make proof of loss if Grantor fails to do so
within fifteen (15) days of the casualty. All proceeds of any insurance on the Collateral, including accrued proceeds thereon,
shall be held by Lender as part of the Collateral. If Lender consents to repair or replacement of the damaged or destroyed Collateral,
Lender shall, upon satisfactory proof of expenditure, pay or reimburse Grantor from the proceeds for the reasonable cost of repair
or restoration. If Lender does not consent to repair or replacement of the Collateral, Lender shall retain a sufficient amount
of the proceeds to pay all of the Indebtedness, and shall pay the balance to Grantor. Any proceeds which have not been disbursed
within six (6) months after their receipt and which Grantor has not committed to the repair or restoration of the Collateral shall
be used to prepay the Indebtedness.

Insurance Reserves. Lender
may require Grantor to maintain with Lender reserves for payment of insurance premiums, which reserves shall be created by monthly
payments from Grantor of a sum estimated by Lender to be sufficient to produce, at least fifteen (15) days before the premium due
date, amounts at least equal to the insurance premiums to be paid. If fifteen (15) days before payment is due, the reserve funds
are insufficient, Grantor shall upon demand pay any deficiency to Lender. The reserve funds shall be held by Lender as a general
deposit and shall constitute a non-interest-bearing account which Lender may satisfy by payment of the insurance premiums required
to be paid by Grantor as they become due. Lender does not hold the reserve funds in trust for Grantor, and Lender is not the agent
of Grantor for payment of the insurance premiums required to be paid by Grantor. The responsibility for the payment of premiums
shall remain Grantor’s sole responsibility.

Insurance Reports. Grantor,
upon request of Lender, shall furnish to Lender reports on each existing policy of insurance showing such information as Lender
may reasonably request including the following: (1) the name of the insurer; (2) the risks insured; (3) the amount of the policy;
(4) the property insured; (5) the then current value on the basis of which insurance has been obtained and the manner of determining
that value; and (6) the expiration date of the policy. In addition, Grantor shall upon request by Lender (however not more often
than annually) have an independent appraiser satisfactory to Lender determine, as applicable, the cash value or replacement cost
of the Collateral.

Financing Statements. Grantor
authorizes Lender to file a UCC financing statement, or alternatively, a copy of this Agreement to perfect Lender’s security
interest. At Lender’s request, Grantor additionally agrees to sign all other documents that are necessary to perfect, protect,
and continue Lender’s security interest in the Property. Grantor will pay all filing fees, title transfer fees, and other
fees and costs involved unless prohibited by law or unless Lender is required by law to pay such fees and costs. Grantor irrevocably
appoints Lender to execute documents necessary to transfer title if there is a default. Lender may file a copy of this Agreement
as a financing statement.

GRANTOR’S RIGHT TO POSSESSION
AND TO COLLECT ACCOUNTS. Until default and except as otherwise provided below with respect to accounts, Grantor may have possession
of the tangible personal property and beneficial use of all the Collateral and may use it in any lawful manner not inconsistent
with this Agreement or the Related Documents, provided that Grantor’s right to possession and beneficial use shall not apply
to any Collateral where possession of the Collateral by Lender is required by law to perfect Lender’s security interest in
such Collateral. Until otherwise notified by Lender, Grantor may collect any of the Collateral consisting of accounts. At any time
and even though no Event of Default exists, Lender may exercise its rights to collect the accounts and to notify account debtors
to make payments directly to Lender for

    	 

    	 

    

 

	 	COMMERCIAL
                                         SECURITY AGREEMENT	 
	Loan No:  15695	(Continued)	Page 4
	 	 	 

application to the Indebtedness. If Lender at any time has possession of any Collateral,
whether before or after an Event of Default, Lender shall be deemed to have exercised reasonable care in the custody and preservation
of the Collateral if Lender takes such action for that purpose as Grantor shall request or as Lender, in Lender’s sole discretion,
shall deem appropriate under the circumstances, but failure to honor any request by Grantor shall not of itself be deemed to be
a failure to exercise reasonable care. Lender shall not be required to take any steps necessary to preserve any rights in the Collateral
against prior parties, nor to protect, preserve or maintain any security interest given to secure the Indebtedness.

LENDER’S EXPENDITURES. If
any action or proceeding is commenced that would materially affect Lender’s interest in the Collateral or if Grantor fails
to comply with any provision of this Agreement or any Related Documents, including but not limited to Grantor’s failure to
discharge or pay when due any amounts Grantor is required to discharge or pay under this Agreement or any Related Documents, Lender
on Grantor’s behalf may (but shall not be obligated to) take any action that Lender deems appropriate, including but not
limited to discharging or paying all taxes, liens, security interests, encumbrances and other claims, at any time levied or placed
on the Collateral and paying all costs for insuring, maintaining and preserving the Collateral. All such expenditures incurred
or paid by Lender for such purposes will then bear interest at the rate charged under the Note from the date incurred or paid by
Lender to the date of repayment by Grantor. All such expenses will become a part of the Indebtedness and, at Lender’s option,
will (A) be payable on demand; (B) be added to the balance of the Note and be apportioned among and be payable with any installment
payments to become due during either (1) the term of any applicable insurance policy; or (2) the remaining term of the Note; or
(C) be treated as a balloon payment which will be due and payable at the Note’s maturity. The Agreement also will secure
payment of these amounts. Such right shall be in addition to all other rights and remedies to which Lender may be entitled upon
Default.

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

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

Other Defaults. Grantor
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 Grantor.

False Statements. Any warranty,
representation or statement made or furnished to Lender by Grantor or on Grantor’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.

Defective Collateralization.
This Agreement or any of the Related Documents ceases to be in full force and effect (including failure of any collateral document
to create a valid and perfected security interest or lien) at any time and for any reason.

Insolvency.  The dissolution
or termination of Grantor’s existence as a going business, the insolvency of Grantor, the appointment of a receiver for any
part of Grantor’s property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement
of any proceeding under any bankruptcy or insolvency laws by or against Grantor.

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 Grantor or by any governmental agency against any collateral securing the Indebtedness. This includes a garnishment
of any of Grantor’s accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if
there is a good faith dispute by Grantor as to the validity or reasonableness of the claim which is the basis of the creditor or
forfeiture proceeding and if Grantor 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 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.

Adverse Change.  A material
adverse change occurs in Grantor’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 Grantor 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 Grantor, after Lender sends written notice to Grantor
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.

RIGHTS AND REMEDIES ON DEFAULT.
If an Event of Default occurs under this Agreement, at any time thereafter, Lender shall have all the rights of a secured party
under the Minnesota Uniform Commercial Code. In addition and without limitation, Lender may exercise any one or more of the following
rights and remedies:

Accelerate Indebtedness.
Lender may declare the entire Indebtedness, including any prepayment penalty which Grantor would be required to pay, immediately
due and payable, without notice of any kind to Grantor.

Assemble Collateral. Lender
may require Grantor to deliver to Lender all or any portion of the Collateral and any and all certificates of title and other documents
relating to the Collateral. Lender may require Grantor to assemble the Collateral and make it available to Lender at a place to
be designated by Lender. Lender also shall have full power to enter upon the property of Grantor to take possession of and remove
the Collateral. If the Collateral contains other goods not covered by this Agreement at the time of repossession, Grantor agrees
Lender may take such other goods, provided that Lender makes reasonable efforts to return them to Grantor after repossession.

    	 

    	 

    

 

	 	COMMERCIAL
                                         SECURITY AGREEMENT	 
	Loan No:  15695	(Continued)	Page 5
	 	 	 

Sell the Collateral. Lender
shall have full power to sell, lease, transfer, or otherwise deal with the Collateral or proceeds thereof in Lender’s own
name or that of Grantor. Lender may sell the Collateral at public auction or private sale. Unless the Collateral threatens to decline
speedily in value or is of a type customarily sold on a recognized market, Lender will give Grantor, and other persons as required
by law, reasonable notice of the time and place of any public sale, or the time after which any private sale or any other disposition
of the Collateral is to be made. However, no notice need be provided to any person who, after Event of Default occurs, enters into
and authenticates an agreement waiving that person’s right to notification of sale. The requirements of reasonable notice
shall be met if such notice is given at least ten (10) days before the time of the sale or disposition. All expenses relating to
the disposition of the Collateral, including without limitation the expenses of retaking, holding, insuring, preparing for sale
and selling the Collateral, shall become a part of the Indebtedness secured by this Agreement and shall be payable on demand, with
interest at the Note rate from date of expenditure until repaid.

Appoint Receiver.  Lender
shall have the right to have a receiver appointed to take possession of all or any part of the Collateral, with the power to protect
and preserve the Collateral, to operate the Collateral preceding foreclosure or sale, and to collect the rents from the Collateral
and apply the proceeds, over and above the cost of the receivership, against the Indebtedness. The receiver may serve without bond
if permitted by law. Lender’s right to the appointment of a receiver shall exist whether or not the apparent value of the
Collateral exceeds the Indebtedness by a substantial amount. Employment by Lender shall not disqualify a person from serving as
a receiver.

Collect Revenues, Apply Accounts.
 Lender, either itself or through a receiver, may collect the payments, rents, income, and revenues from the Collateral. Lender
may at any time in Lender’s discretion transfer any Collateral into Lender’s own name or that of Lender’s nominee
and receive the payments, rents, income, and revenues therefrom and hold the same as security for the Indebtedness or apply it
to payment of the Indebtedness in such order of preference as Lender may determine. Insofar as the Collateral consists of accounts,
general intangibles, insurance policies, instruments, chattel paper, choses in action, or similar property, Lender may demand,
collect, receipt for, settle, compromise, adjust, sue for, foreclose, or realize on the Collateral as Lender may determine, whether
or not Indebtedness or Collateral is then due. For these purposes, Lender may, on behalf of and in the name of Grantor, receive,
open and dispose of mail addressed to Grantor; change any address to which mail and payments are to be sent; and endorse notes,
checks, drafts, money orders, documents of title, instruments and items pertaining to payment, shipment, or storage of any Collateral.
To facilitate collection, Lender may notify account debtors and obligors on any Collateral to make payments directly to Lender.

Obtain Deficiency. If Lender
chooses to sell any or all of the Collateral, Lender may obtain a judgment against Grantor for any deficiency remaining on the
Indebtedness due to Lender after application of all amounts received from the exercise of the rights provided in this Agreement.
Grantor shall be liable for a deficiency even if the transaction described in this subsection is a sale of accounts or chattel
paper.

Other Rights and Remedies.
Lender shall have all the rights and remedies of a secured creditor under the provisions of the Uniform Commercial Code, as may
be amended from time to time. In addition, Lender shall have and may exercise any or all other rights and remedies it may have
available at law, in equity, or otherwise.

Election of Remedies. Except
as may be prohibited by applicable law, all of Lender’s rights and remedies, whether evidenced by this Agreement, the Related
Documents, or by any other writing, 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 Grantor under this Agreement, after Grantor’s failure to perform, shall not affect Lender’s right
to declare a default and exercise its remedies.

MISCELLANEOUS PROVISIONS. The
following miscellaneous provisions are a part of this Agreement:

Amendments. This Agreement,
together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth
in this Agreement. No alteration of or amendment to this Agreement shall be effective unless given in writing and signed by the
party or parties sought to be charged or bound by the alteration or amendment.

Attorneys’ Fees; Expenses.
Grantor agrees to pay upon demand all of Lender’s costs and expenses, including Lender’s reasonable attorneys’
fees and Lender’s legal expenses, incurred in connection with the enforcement of this Agreement. Lender may hire or pay someone
else to help enforce this Agreement, and Grantor shall pay the costs and expenses of such enforcement. Costs and expenses include
Lender’s reasonable attorneys’ fees and legal expenses whether or not there is a lawsuit, including reasonable attorneys’
fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals,
and any anticipated post-judgment collection services. Grantor also shall pay all court costs and such additional fees as may be
directed by the court.

Caption Headings. Caption
headings in this Agreement are for convenience purposes only and are not to be used to interpret or define the provisions of this
Agreement.

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.

No Waiver by Lender. Lender
shall not be deemed to have waived any rights under this Agreement unless such waiver is given in writing and signed by Lender.
No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right.
A waiver by Lender of a provision of this Agreement shall not prejudice or constitute a waiver of Lender’s right otherwise
to demand strict compliance with that provision or any other provision of this Agreement. No prior waiver by Lender, nor any course
of dealing between Lender and Grantor, shall constitute a waiver of any of Lender’s rights or of any of Grantor’s
obligations as to any future transactions. Whenever the consent of Lender is required under this Agreement, the granting of such
consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent is required
and in all cases such consent may be granted or withheld in the sole discretion of Lender. 

    	 

    	 

    

 

	 	COMMERCIAL
                                         SECURITY AGREEMENT	 
	Loan No:  15695	(Continued)	Page 6
	 	 	 

Notices. Any notice required
to be given under this Agreement shall be given in writing, and shall be effective when actually delivered, when actually received
by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight courier, or, if mailed,
when deposited in the United States mail, as first class, certified or registered mail postage prepaid, directed to the addresses
shown near the beginning of this Agreement. Any party may change its address for notices under this Agreement by giving formal
written notice to the other parties, specifying that the purpose of the notice is to change the party’s address. For notice
purposes, Grantor agrees to keep Lender informed at all times of Grantor’s current address. Unless otherwise provided or
required by law, if there is more than one Grantor, any notice given by Lender to any Grantor is deemed to be notice given to all
Grantors.

Power of Attorney. Grantor
hereby appoints Lender as Grantor’s irrevocable attorney-in-fact for the purpose of executing any documents necessary to
perfect, amend, or to continue the security interest granted in this Agreement or to demand termination of filings of other secured
parties. Lender may at any time, and without further authorization from Grantor, file a carbon, photographic or other reproduction
of any financing statement or of this Agreement for use as a financing statement. Grantor will reimburse Lender for all expenses
for the perfection and the continuation of the perfection of Lender’s security interest in the Collateral.

Severability. If a court
of competent jurisdiction finds any provision of this Agreement to be illegal, invalid, or unenforceable as to any circumstance,
that finding shall not make the offending provision illegal, invalid, or unenforceable as to any other circumstance. If feasible,
the offending provision shall be considered modified so that it becomes legal, valid and enforceable. If the offending provision
cannot be so modified, it shall be considered deleted from this Agreement. Unless otherwise required by law, the illegality, invalidity,
or unenforceability of any provision of this Agreement shall not affect the legality, validity or enforceability of any other provision
of this Agreement.

Successors and Assigns.
Subject to any limitations stated in this Agreement on transfer of Grantor’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 Grantor, Lender, without notice to Grantor, may deal with Grantor’s successors with reference to this Agreement
and the Indebtedness by way of forbearance or extension without releasing Grantor from the obligations of this Agreement or liability
under the Indebtedness.

Survival of Representations
and Warranties. All representations, warranties, and agreements made by Grantor in this Agreement shall survive the execution
and delivery of this Agreement, shall be continuing in nature, and shall remain in full force and effect until such time as Grantor’s
Indebtedness shall be paid in full.

Time is of the Essence.
Time is of the essence in the performance of this Agreement.

DEFINITIONS. The following capitalized
words and terms shall have the following meanings when used in this Agreement. Unless specifically stated to the contrary, all
references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms used in the singular
shall include the plural, and the plural shall include the singular, as the context may require. Words and terms not otherwise
defined in this Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code:

Agreement. The word “Agreement”
means this Commercial Security Agreement, as this Commercial Security Agreement may be amended or modified from time to time, together
with all exhibits and schedules attached to this Commercial Security Agreement from time to time.

Borrower.  The word “Borrower”
means Electromed, Inc. and includes all co-signers and co-makers signing the Note and all their successors and assigns.

Collateral. The word “Collateral”
means all of Grantor’s right, title and interest in and to all the Collateral as described in the Collateral Description
section of this Agreement.

Default. The word “Default”
means the Default set forth in this Agreement in the section titled “Default”.

Environmental Laws. The
words “Environmental Laws” mean any and all state, federal and local statutes, regulations and ordinances relating
to the protection of human health or the environment, including without limitation the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq. (“CERCLA”), the Superfund Amendments and Reauthorization
Act of 1986, Pub. L. No. 99-499 (“SARA”), the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq.,
the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., or other applicable state or federal laws, rules,
or regulations adopted pursuant thereto, or common law, and shall also include pollutants, contaminants, polychlorinated biphenyls,
asbestos, urea formaldehyde, petroleum and petroleum products, and agricultural chemicals.

Event of Default. The words
“Event of Default” mean any of the events of default set forth in this Agreement in the default section of this Agreement.

Grantor.  The word “Grantor”
means Electromed, Inc..

Guaranty.  The word “Guaranty”
means the guaranty from guarantor, endorser, surety, or accommodation party to Lender, including without limitation a guaranty
of all or part of the Note.

Hazardous Substances. The
words “Hazardous Substances” mean materials that, because of their quantity, concentration or physical, chemical or
infectious characteristics, may cause or pose a present or potential hazard to human health or the environment when improperly
used, treated, stored, disposed of, generated, manufactured, transported or otherwise handled. The words “Hazardous Substances”
are used in their very broadest sense and include without limitation any and all hazardous or toxic substances, materials or waste
as defined by or listed under the Environmental Laws. The term “Hazardous Substances” also includes, without limitation,
petroleum and petroleum by-products or any fraction thereof and asbestos.

Indebtedness. The word
“Indebtedness” means the indebtedness evidenced by the Note or Related Documents, including all principal and interest
together with all other indebtedness and costs and expenses for which Grantor is responsible under this Agreement or under any
of the

    	 

    	 

    

 

	 	COMMERCIAL
                                         SECURITY AGREEMENT	 
	Loan No:  15695	(Continued)	Page 7
	 	 	 

Related Documents. Specifically, without limitation, Indebtedness includes all amounts that may be indirectly secured by
the Cross-Collateralization provision of this Agreement.

Lender. The word “Lender”
means Venture Bank, its successors and assigns.

Note. The word “Note”
means the Note dated December 18, 2013 and executed by Electromed, Inc. in the principal amount of $2,500,000.00, together with
all renewals of, extensions of, modifications of, refinancings of, consolidations of, and substitutions for the note or credit
agreement.

Property.  The word “Property”
means all of Grantor’s right, title and interest in and to all the Property as described in the “Collateral Description”
section of this Agreement.

Related Documents. The
words “Related Documents” mean all promissory notes, credit agreements, loan agreements, environmental agreements,
guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements
and documents, whether now or hereafter existing, executed in connection with the Indebtedness.

GRANTOR HAS READ AND UNDERSTOOD ALL
THE PROVISIONS OF THIS COMMERCIAL SECURITY AGREEMENT AND AGREES TO ITS TERMS. THIS AGREEMENT IS DATED DECEMBER 18, 2013.

GRANTOR: 

ELECTROMED, INC. 

	By:	/s/ Jeremy Brock	 
	 	Jeremy Brock, Chief Financial Officer of
Electromed, Inc.Exhibit
10.5

 

BUSINESS
LOAN AGREEMENT

	
        Principal

        $1,300,000.00
	
        Loan Date

        12-18-2013
	
        Maturity

        12-18-2018
	
        Loan No

        15696
	Call / Coll	Account	Officer 	Initials
	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	 	6210 Wayzata Boulevard
	 	New Prague, MN 56071	 	Golden Valley, MN 55416
	 	 	 	 

THIS BUSINESS LOAN AGREEMENT dated
December 18, 2013, is made and executed between Electromed, Inc. (“Borrower”) and Venture Bank (“Lender”)
on the following terms and conditions. Borrower has received prior commercial loans from Lender or has applied to Lender for a
commercial loan or loans or other financial accommodations, including those which may be described on any exhibit or schedule attached
to this Agreement. Borrower understands and agrees that: (A) in granting, renewing, or extending any Loan, Lender is relying upon
Borrower’s representations, warranties, and agreements as set forth in this Agreement; (B) the granting, renewing, or extending
of any Loan by Lender at all times shall be subject to Lender’s sole judgment and discretion; and (C) all such Loans shall
be and remain subject to the terms and conditions of this Agreement.

TERM. This Agreement shall be
effective as of December 18, 2013, and shall continue in full force and effect until such time as all of Borrower’s Loans
in favor of Lender have been paid in full, including principal, interest, costs, expenses, attorneys’ fees, and other fees
and charges, or until such time as the parties may agree in writing to terminate this Agreement.

CONDITIONS PRECEDENT TO EACH ADVANCE.
Lender’s obligation to make the initial Advance and each subsequent Advance under this Agreement shall be subject to the
fulfillment to Lender’s satisfaction of all of the conditions set forth in this Agreement and in the Related Documents.

Loan Documents.  Borrower
shall provide to Lender the following documents for the Loan: (1) the Note; (2) Security Agreements granting to Lender security
interests in the Collateral; (3) financing statements and all other documents perfecting Lender’s Security Interests; (4)
evidence of insurance as required below; (5) together with all such Related Documents as Lender may require for the Loan; all in
form and substance satisfactory to Lender and Lender’s counsel.

Borrower’s Authorization.
Borrower shall have provided in form and substance satisfactory to Lender properly certified resolutions, duly authorizing the
execution and delivery of this Agreement, the Note and the Related Documents. In addition, Borrower shall have provided such other
resolutions, authorizations, documents and instruments as Lender or its counsel, may require.

Payment of Fees and Expenses.
 Borrower shall have paid to Lender all fees, charges, and other expenses which are then due and payable as specified in this
Agreement or any Related Document.

Representations and Warranties.
The representations and warranties set forth in this Agreement, in the Related Documents, and in any document or certificate delivered
to Lender under this Agreement are true and correct.

No Event of Default. There
shall not exist at the time of any Advance a condition which would constitute an Event of Default under this Agreement or under
any Related Document.

REPRESENTATIONS AND WARRANTIES.
Borrower represents and warrants to Lender, as of the date of this Agreement, as of the date of each disbursement of loan proceeds,
as of the date of any renewal, extension or modification of any Loan, and at all times any Indebtedness exists:

Organization. Borrower
is a corporation for profit which is, and at all times shall be, duly organized, validly existing, and in good standing under and
by virtue of the laws of the State of Minnesota. Borrower is duly authorized to transact business in all other states in which
Borrower is doing business, having obtained all necessary filings, governmental licenses and approvals for each state in which
Borrower is doing business. Specifically, Borrower is, and at all times shall be, duly qualified as a foreign corporation in all
states in which the failure to so qualify would have a material adverse effect on its business or financial condition. Borrower
has the full power and authority to own its properties and to transact the business in which it is presently engaged or presently
proposes to engage. Borrower maintains an office at 500 Sixth Avenue NW, New Prague, MN 56071. Unless Borrower has designated otherwise
in writing, the principal office is the office at which Borrower keeps its books and records including its records concerning the
Collateral. Borrower will notify Lender prior to any change in the location of Borrower’s state of organization or any change
in Borrower’s name. Borrower shall do all things necessary to preserve and to keep in full force and effect its existence,
rights and privileges, and shall comply with all regulations, rules, ordinances, statutes, orders and decrees of any governmental
or quasi-governmental authority or court applicable to Borrower and Borrower’s business activities.

Assumed Business Names.
Borrower has filed or recorded all documents or filings required by law relating to all assumed business names used by Borrower.
Excluding the name of Borrower, the following is a complete list of all assumed business names under which Borrower does business:
None.

Authorization.  Borrower’s
execution, delivery, and performance of this Agreement and all the Related Documents have been duly authorized by all necessary
action by Borrower and do not conflict with, result in a violation of, or constitute a default under (1) any provision of (a) Borrower’s
articles of incorporation or organization, or bylaws, or (b) any agreement or other instrument binding upon Borrower or (2) any
law, governmental regulation, court decree, or order applicable to Borrower or to Borrower’s properties.

Financial Information.
Each of Borrower’s financial statements supplied to Lender truly and completely disclosed Borrower’s financial condition
as of the date of the statement, and there has been no material adverse change in Borrower’s financial condition subsequent
to the date

    	 	 

    	 

    

 

	 	BUSINESS LOAN AGREEMENT	 
	Loan No:  15696	(Continued)	Page 2
	 	 	 

 

of the most recent financial
statement supplied to Lender. Borrower has no material contingent obligations except as disclosed in such financial statements.

Legal Effect. This Agreement
constitutes, and any instrument or agreement Borrower is required to give under this Agreement when delivered will constitute legal,
valid, and binding obligations of Borrower enforceable against Borrower in accordance with their respective terms.

Properties. Except as contemplated
by this Agreement or as previously disclosed in Borrower’s financial statements or in writing to Lender and as accepted by
Lender, and except for property tax liens for taxes not presently due and payable, Borrower owns and has good title to all of Borrower’s
properties free and clear of all Security Interests, and has not executed any security documents or financing statements relating
to such properties. All of Borrower’s properties are titled in Borrower’s legal name, and Borrower has not used or
filed a financing statement under any other name for at least the last five (5) years.

Hazardous Substances. Except
as disclosed to and acknowledged by Lender in writing, Borrower represents and warrants that: (1) During the period of Borrower’s
ownership of the Collateral, there has been no use, generation, manufacture, storage, treatment, disposal, release or threatened
release of any Hazardous Substance by any person on, under, about or from any of the Collateral. (2) Borrower has no knowledge
of, or reason to believe that there has been (a) any breach or violation of any Environmental Laws; (b) any use, generation, manufacture,
storage, treatment, disposal, release or threatened release of any Hazardous Substance on, under, about or from the Collateral
by any prior owners or occupants of any of the Collateral; or (c) any actual or threatened litigation or claims of any kind by
any person relating to such matters. (3) Neither Borrower nor any tenant, contractor, agent or other authorized user of any of
the Collateral shall use, generate, manufacture, store, treat, dispose of or release any Hazardous Substance on, under, about or
from any of the Collateral; and any such activity shall be conducted in compliance with all applicable federal, state, and local
laws, regulations, and ordinances, including without limitation all Environmental Laws. Borrower authorizes Lender and its agents
to enter upon the Collateral to make such inspections and tests as Lender may deem appropriate to determine compliance of the Collateral
with this section of the Agreement. Any inspections or tests made by Lender shall be at Borrower’s expense and for Lender’s
purposes only and shall not be construed to create any responsibility or liability on the part of Lender to Borrower or to any
other person. The representations and warranties contained herein are based on Borrower’s due diligence in investigating
the Collateral for hazardous waste and Hazardous Substances. Borrower hereby (1) releases and waives any future claims against
Lender for indemnity or contribution in the event Borrower becomes liable for cleanup or other costs under any such laws, and (2)
agrees to indemnify, defend, and hold harmless Lender against any and all claims, losses, liabilities, damages, penalties, and
expenses, including attorneys’ fees, consultants’ fees, and costs which Lender may directly or indirectly sustain or
suffer resulting from a breach of this section of the Agreement or as a consequence of any use, generation, manufacture, storage,
disposal, release or threatened release of a hazardous waste or substance on the Collateral. The provisions of this section of
the Agreement, including the obligation to indemnify and defend, shall survive the payment of the Indebtedness and the termination,
expiration or satisfaction of this Agreement and shall not be affected by Lender’s acquisition of any interest in any of
the Collateral, whether by foreclosure or otherwise.

Litigation and Claims.
No litigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes) against Borrower
is pending or threatened, and no other event has occurred which may materially adversely affect Borrower’s financial condition
or properties, other than litigation, claims, or other events, if any, that have been disclosed to and acknowledged by Lender in
writing.

Taxes. To the best of Borrower’s
knowledge, all of Borrower’s tax returns and reports that are or were required to be filed, have been filed, and all taxes,
assessments and other governmental charges have been paid in full, except those presently being or to be contested by Borrower
in good faith in the ordinary course of business and for which adequate reserves have been provided.

Lien Priority. Unless otherwise
previously disclosed to Lender in writing, Borrower has not entered into or granted any Security Agreements, or permitted the filing
or attachment of any Security Interests on or affecting any of the Collateral directly or indirectly securing repayment of Borrower’s
Loan and Note, that would be prior or that may in any way be superior to Lender’s Security Interests and rights in and to
such Collateral.

Binding Effect. This Agreement,
the Note, all Security Agreements (if any), and all Related Documents are binding upon the signers thereof, as well as upon their
successors, representatives and assigns, and are legally enforceable in accordance with their respective terms.

AFFIRMATIVE COVENANTS. Borrower
covenants and agrees with Lender that, so long as this Agreement remains in effect, Borrower will:

Notices of Claims and Litigation.
Promptly inform Lender in writing of (1) all material adverse changes in Borrower’s financial condition, and (2) all existing
and all threatened litigation, claims, investigations, administrative proceedings or similar actions affecting Borrower or any
Guarantor which could materially affect the financial condition of Borrower or the financial condition of any Guarantor.

Financial Records. Maintain
its books and records in accordance with GAAP, applied on a consistent basis, and permit Lender to examine and audit Borrower’s
books and records at all reasonable times.

Financial Statements. Furnish
Lender with the following:

Interim Statements. As soon
as available, but in no event later than 45 days after the end of each month, Borrower’s balance sheet and profit and loss
statement for the period ended, prepared by Borrower.

Tax Returns. As soon as
available, but in no event later than 45 days after the applicable filing date for the tax reporting period ended, Borrower’s
Federal and other governmental tax returns, prepared by a tax professional satisfactory to Lender.

All financial reports required
to be provided under this Agreement shall be prepared in accordance with GAAP, applied on a consistent basis, and certified by
Borrower as being true and correct.

Additional Information.
Furnish such additional information and statements, as Lender may request from time to time.

Additional Requirements.

    	 	 

    	 

    

 

	 	BUSINESS LOAN AGREEMENT	 
	Loan No:  15696	(Continued)	Page 3
	 	 	 

 

1. Borrower must maintain a Minimum
Tangible Net Worth of not less than $12,000,000.00. Tangible Net Worth is defined as total capital plus debt subordinated to Venture
Bank less intangible assets. Intangible assets include but are not limited to goodwill, non-compete agreements, trademarks, notes
due from related parties and employee advances. Tangible Net Worth will be calculated quarterly based on SEC filed financial statements.

2. Borrower will maintain their
primary deposit accounts with Venture Bank.

Insurance.  Maintain fire
and other risk insurance, public liability insurance, and such other insurance as Lender may require with respect to Borrower’s
properties and operations, in form, amounts, coverages and with insurance companies acceptable to Lender. Borrower, upon request
of Lender, will deliver to Lender from time to time the policies or certificates of insurance in form satisfactory to Lender, including
stipulations that coverages will not be cancelled or diminished without at least ten (10) days prior written notice to Lender.
Each insurance policy also shall include an endorsement providing that coverage in favor of Lender will not be impaired in any
way by any act, omission or default of Borrower or any other person. In connection with all policies covering assets in which Lender
holds or is offered a security interest for the Loans, Borrower will provide Lender with such lender’s loss payable or other
endorsements as Lender may require.

Insurance Reports. Furnish
to Lender, upon request of Lender, reports on each existing insurance policy showing such information as Lender may reasonably
request, including without limitation the following: (1) the name of the insurer; (2) the risks insured; (3) the amount of the
policy; (4) the properties insured; (5) the then current property values on the basis of which insurance has been obtained, and
the manner of determining those values; and (6) the expiration date of the policy. In addition, upon request of Lender (however
not more often than annually), Borrower will have an independent appraiser satisfactory to Lender determine, as applicable, the
actual cash value or replacement cost of any Collateral. The cost of such appraisal shall be paid by Borrower.

Other Agreements.  Comply
with all terms and conditions of all other agreements, whether now or hereafter existing, between Borrower and any other party
and notify Lender immediately in writing of any default in connection with any other such agreements.

Loan Proceeds.  Use all
Loan proceeds solely for Borrower’s business operations, unless specifically consented to the contrary by Lender in writing.

Taxes, Charges and Liens.
Pay and discharge when due all of its indebtedness and obligations, including without limitation all assessments, taxes, governmental
charges, levies and liens, of every kind and nature, imposed upon Borrower or its properties, income, or profits, prior to the
date on which penalties would attach, and all lawful claims that, if unpaid, might become a lien or charge upon any of Borrower’s
properties, income, or profits. Provided however, Borrower will not be required to pay and discharge any such assessment, tax,
charge, levy, lien or claim so long as (1) the legality of the same shall be contested in good faith by appropriate proceedings,
and (2) Borrower shall have established on Borrower’s books adequate reserves with respect to such contested assessment,
tax, charge, levy, lien, or claim in accordance with GAAP.

Performance.  Perform and
comply, in a timely manner, with all terms, conditions, and provisions set forth in this Agreement, in the Related Documents, and
in all other instruments and agreements between Borrower and Lender. Borrower shall notify Lender immediately in writing of any
default in connection with any agreement.

Operations. Maintain executive
and management personnel with substantially the same qualifications and experience as the present executive and management personnel;
provide written notice to Lender of any change in executive and management personnel; conduct its business affairs in a reasonable
and prudent manner.

Environmental Studies.
Promptly conduct and complete, at Borrower’s expense, all such investigations, studies, samplings and testings as may be
requested by Lender or any governmental authority relative to any substance, or any waste or by-product of any substance defined
as toxic or a hazardous substance under applicable federal, state, or local law, rule, regulation, order or directive, at or affecting
any property or any facility owned, leased or used by Borrower.

Compliance with Governmental
Requirements. Comply with all laws, ordinances, and regulations, now or hereafter in effect, of all governmental authorities
applicable to the conduct of Borrower’s properties, businesses and operations, and to the use or occupancy of the Collateral,
including without limitation, the Americans With Disabilities Act. Borrower may contest in good faith any such law, ordinance,
or regulation and withhold compliance during any proceeding, including appropriate appeals, so long as Borrower has notified Lender
in writing prior to doing so and so long as, in Lender’s sole opinion, Lender’s interests in the Collateral are not
jeopardized. Lender may require Borrower to post adequate security or a surety bond, reasonably satisfactory to Lender, to protect
Lender’s interest.

Inspection. Permit employees
or agents of Lender at any reasonable time to inspect any and all Collateral for the Loan or Loans and Borrower’s other properties
and to examine or audit Borrower’s books, accounts, and records and to make copies and memoranda of Borrower’s books,
accounts, and records. If Borrower now or at any time hereafter maintains any records (including without limitation computer generated
records and computer software programs for the generation of such records) in the possession of a third party, Borrower, upon request
of Lender, shall notify such party to permit Lender free access to such records at all reasonable times and to provide Lender with
copies of any records it may request, all at Borrower’s expense.

Compliance Certificates.
Unless waived in writing by Lender, provide Lender at least annually, with a certificate executed by Borrower’s chief financial
officer, or other officer or person acceptable to Lender, certifying that the representations and warranties set forth in this
Agreement are true and correct as of the date of the certificate and further certifying that, as of the date of the certificate,
no Event of Default exists under this Agreement.

Environmental Compliance and
Reports. Borrower shall comply in all respects with any and all Environmental Laws; not cause or permit to exist, as a result
of an intentional or unintentional action or omission on Borrower’s part or on the part of any third party, on property owned
and/or occupied by Borrower, any environmental activity where damage may result to the environment, unless such environmental activity
is pursuant to and in compliance with the conditions of a permit issued by the appropriate federal, state or local governmental
authorities; shall furnish to Lender promptly and in any event within thirty (30) days after receipt thereof a copy of any notice,
summons, lien, citation, directive,

    	 	 

    	 

    

 

	 	BUSINESS LOAN AGREEMENT	 
	Loan No:  15696	(Continued)	Page 4
	 	 	 

 

letter or other communication from any governmental agency or instrumentality concerning any
intentional or unintentional action or omission on Borrower’s part in connection with any environmental activity whether
or not there is damage to the environment and/or other natural resources.

Additional Assurances.
Make, execute and deliver to Lender such promissory notes, mortgages, deeds of trust, security agreements, assignments, financing
statements, instruments, documents and other agreements as Lender or its attorneys may reasonably request to evidence and secure
the Loans and to perfect all Security Interests.

LENDER’S EXPENDITURES. If
any action or proceeding is commenced that would materially affect Lender’s interest in the Collateral or if Borrower fails
to comply with any provision of this Agreement or any Related Documents, including but not limited to Borrower’s failure
to discharge or pay when due any amounts Borrower is required to discharge or pay under this Agreement or any Related Documents,
Lender on Borrower’s behalf may (but shall not be obligated to) take any action that Lender deems appropriate, including
but not limited to discharging or paying all taxes, liens, security interests, encumbrances and other claims, at any time levied
or placed on any Collateral and paying all costs for insuring, maintaining and preserving any Collateral. All such expenditures
incurred or paid by Lender for such purposes will then bear interest at the rate charged under the Note from the date incurred
or paid by Lender to the date of repayment by Borrower. All such expenses will become a part of the Indebtedness and, at Lender’s
option, will (A) be payable on demand; (B) be added to the balance of the Note and be apportioned among and be payable with any
installment payments to become due during either (1) the term of any applicable insurance policy; or (2) the remaining term of
the Note; or (C) be treated as a balloon payment which will be due and payable at the Note’s maturity.

NEGATIVE COVENANTS. Borrower covenants
and agrees with Lender that while this Agreement is in effect, Borrower shall not, without the prior written consent of Lender:

Indebtedness and Liens. 
(1) Except for trade debt incurred in the normal course of business and indebtedness to Lender contemplated by this Agreement,
create, incur or assume indebtedness for borrowed money, including capital leases, (2) sell, transfer, mortgage, assign, pledge,
lease, grant a security interest in, or encumber any of Borrower’s assets (except as allowed as Permitted Liens), or (3)
sell with recourse any of Borrower’s accounts, except to Lender.

Continuity of Operations. 
(1) Engage in any business activities substantially different than those in which Borrower is presently engaged, (2) cease operations,
liquidate, merge, transfer, acquire or consolidate with any other entity, change its name, dissolve or transfer or sell Collateral
out of the ordinary course of business, or (3) pay any dividends on Borrower’s stock (other than dividends payable in its
stock), provided, however that notwithstanding the foregoing, but only so long as no Event of Default has occurred and is continuing
or would result from the payment of dividends, if Borrower is a “Subchapter S Corporation” (as defined in the Internal
Revenue Code of 1986, as amended), Borrower may pay cash dividends on its stock to its shareholders from time to time in amounts
necessary to enable the shareholders to pay income taxes and make estimated income tax payments to satisfy their liabilities under
federal and state law which arise solely from their status as Shareholders of a Subchapter S Corporation because of their ownership
of shares of Borrower’s stock, or purchase or retire any of Borrower’s outstanding shares or alter or amend Borrower’s
capital structure.

Loans, Acquisitions and Guaranties.
(1) Loan, invest in or advance money or assets to any other person, enterprise or entity, (2) purchase, create or acquire any interest
in any other enterprise or entity, or (3) incur any obligation as surety or guarantor other than in the ordinary course of business.

Agreements. Enter into
any agreement containing any provisions which would be violated or breached by the performance of Borrower’s obligations
under this Agreement or in connection herewith.

CESSATION OF ADVANCES. If Lender
has made any commitment to make any Loan to Borrower, whether under this Agreement or under any other agreement, Lender shall have
no obligation to make Loan Advances or to disburse Loan proceeds if: (A) Borrower or any Guarantor is in default under the terms
of this Agreement or any of the Related Documents or any other agreement that Borrower or any Guarantor has with Lender; (B) Borrower
or any Guarantor dies, becomes incompetent or becomes insolvent, files a petition in bankruptcy or similar proceedings, or is adjudged
a bankrupt; (C) there occurs a material adverse change in Borrower’s financial condition, in the financial condition of any
Guarantor, or in the value of any Collateral securing any Loan; or (D) any Guarantor seeks, claims or otherwise attempts to limit,
modify or revoke such Guarantor’s guaranty of the Loan or any other loan with Lender; or (E) Lender in good faith deems itself
insecure, even though no Event of Default shall have occurred.

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.

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 Loan.

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.

    	 	 

    	 

    

 

	 	BUSINESS LOAN AGREEMENT	 
	Loan No:  15696	(Continued)	Page 5
	 	 	 

 

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

Defective Collateralization.
This Agreement or any of the Related Documents ceases to be in full force and effect (including failure of any collateral document
to create a valid and perfected security interest or lien) at any time and for any reason.

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 Loan. 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 of any of the Indebtedness or any Guarantor dies or becomes
incompetent, or revokes or disputes the validity of, or liability under, any Guaranty of the Indebtedness.

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
Loan is impaired.

Insecurity. Lender in good
faith believes itself insecure.

Right to Cure. If any default,
other than a default on Indebtedness, is curable and if Borrower or Grantor, as the case may be, has not been given a notice of
a similar default within the preceding twelve (12) months, it may be cured if Borrower or Grantor, as the case may be, after Lender
sends written notice to Borrower or Grantor, as the case may be, demanding cure of such default: (1) cure the default within fifteen
(15) days; or (2) if the cure requires more than fifteen (15) days, immediately initiate steps which Lender deems in Lender’s
sole discretion to be sufficient to cure the default and thereafter continue and complete all reasonable and necessary steps sufficient
to produce compliance as soon as reasonably practical.

EFFECT OF AN EVENT OF DEFAULT.
If any Event of Default shall occur, except where otherwise provided in this Agreement or the Related Documents, all commitments
and obligations of Lender under this Agreement or the Related Documents or any other agreement immediately will terminate (including
any obligation to make further Loan Advances or disbursements), and, at Lender’s option, all Indebtedness immediately will
become due and payable, all without notice of any kind to Borrower, except that in the case of an Event of Default of the type
described in the “Insolvency” subsection above, such acceleration shall be automatic and not optional. 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 or of any Grantor shall not affect Lender’s right to
declare a default and to exercise its rights and remedies.

MISCELLANEOUS PROVISIONS. The
following miscellaneous provisions are a part of this Agreement:

Amendments. This Agreement,
together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth
in this Agreement. No alteration of or amendment to this Agreement shall be effective unless given in writing and signed by the
party or parties sought to be charged or bound by the alteration or amendment.

Attorneys’ Fees; Expenses.
Borrower agrees to pay upon demand all of Lender’s costs and expenses, including Lender’s reasonable attorneys’
fees and Lender’s legal expenses, incurred in connection with the enforcement of this Agreement. Lender may hire or pay someone
else to help enforce this Agreement, and Borrower shall pay the costs and expenses of such enforcement. Costs and expenses include
Lender’s reasonable attorneys’ fees and legal expenses whether or not there is a lawsuit, including reasonable attorneys’
fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals,
and any anticipated post-judgment collection services. Borrower also shall pay all court costs and such additional fees as may
be directed by the court.

Caption Headings. Caption
headings in this Agreement are for convenience purposes only and are not to be used to interpret or define the provisions of this
Agreement.

Consent to Loan Participation.
Borrower agrees and consents to Lender’s sale or transfer, whether now or later, of one or more participation interests in
the Loan to one or more purchasers, whether related or unrelated to Lender. Lender may provide, without any limitation whatsoever,
to any one or more purchasers, or potential purchasers, any information or knowledge Lender may have about Borrower or about any
other matter relating to the Loan, and Borrower hereby waives any rights to privacy Borrower may have with respect to such matters.
Borrower additionally waives any and all notices of sale of participation interests, as well as all notices of any repurchase of
such participation interests. Borrower also agrees that the purchasers of any such participation interests will be considered as
the absolute owners of such interests in the Loan and will have all the rights granted under the participation agreement or agreements
governing the sale of such participation interests. Borrower further waives all rights of offset or counterclaim that it may have
now or later against Lender or against any purchaser of such a participation interest and unconditionally agrees that either Lender
or such purchaser may enforce Borrower’s obligation under the Loan irrespective of the failure or insolvency of any holder
of any interest in the Loan. Borrower further agrees that the purchaser of any such participation interests may enforce its interests
irrespective of any personal claims or defenses that Borrower may have against Lender.

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.

    	 	 

    	 

    

 

	 	BUSINESS LOAN AGREEMENT	 
	Loan No:  15696	(Continued)	Page 6
	 	 	 

 

No Waiver by Lender. Lender
shall not be deemed to have waived any rights under this Agreement unless such waiver is given in writing and signed by Lender.
No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right.
A waiver by Lender of a provision of this Agreement shall not prejudice or constitute a waiver of Lender’s right otherwise
to demand strict compliance with that provision or any other provision of this Agreement. No prior waiver by Lender, nor any course
of dealing between Lender and Borrower, or between Lender and any Grantor, shall constitute a waiver of any of Lender’s rights
or of any of Borrower’s or any Grantor’s obligations as to any future transactions. Whenever the consent of Lender
is required under this Agreement, the granting of such consent by Lender in any instance shall not constitute continuing consent
to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in the sole discretion
of Lender.

Notices. Any notice required
to be given under this Agreement shall be given in writing, and shall be effective when actually delivered, when actually received
by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight courier, or, if mailed,
when deposited in the United States mail, as first class, certified or registered mail postage prepaid, directed to the addresses
shown near the beginning of this Agreement. Any party may change its address for notices under this Agreement by giving formal
written notice to the other parties, specifying that the purpose of the notice is to change the party’s address. For notice
purposes, Borrower agrees to keep Lender informed at all times of Borrower’s current address. Unless otherwise provided or
required by law, if there is more than one Borrower, any notice given by Lender to any Borrower is deemed to be notice given to
all Borrowers.

Severability. If a court
of competent jurisdiction finds any provision of this Agreement to be illegal, invalid, or unenforceable as to any circumstance,
that finding shall not make the offending provision illegal, invalid, or unenforceable as to any other circumstance. If feasible,
the offending provision shall be considered modified so that it becomes legal, valid and enforceable. If the offending provision
cannot be so modified, it shall be considered deleted from this Agreement. Unless otherwise required by law, the illegality, invalidity,
or unenforceability of any provision of this Agreement shall not affect the legality, validity or enforceability of any other provision
of this Agreement.

Subsidiaries and Affiliates
of Borrower.  To the extent the context of any provisions of this Agreement makes it appropriate, including without limitation
any representation, warranty or covenant, the word “Borrower” as used in this Agreement shall include all of Borrower’s
subsidiaries and affiliates. Notwithstanding the foregoing however, under no circumstances shall this Agreement be construed to
require Lender to make any Loan or other financial accommodation to any of Borrower’s subsidiaries or affiliates.

Successors and Assigns.
All covenants and agreements by or on behalf of Borrower contained in this Agreement or any Related Documents shall bind Borrower’s
successors and assigns and shall inure to the benefit of Lender and its successors and assigns. Borrower shall not, however, have
the right to assign Borrower’s rights under this Agreement or any interest therein, without the prior written consent of
Lender.

Survival of Representations
and Warranties. Borrower understands and agrees that in making the Loan, Lender is relying on all representations, warranties,
and covenants made by Borrower in this Agreement or in any certificate or other instrument delivered by Borrower to Lender under
this Agreement or the Related Documents. Borrower further agrees that regardless of any investigation made by Lender, all such
representations, warranties and covenants will survive the making of the Loan and delivery to Lender of the Related Documents,
shall be continuing in nature, and shall remain in full force and effect until such time as Borrower’s Indebtedness shall
be paid in full, or until this Agreement shall be terminated in the manner provided above, whichever is the last to occur.

Time is of the Essence.
Time is of the essence in the performance of this Agreement.

DEFINITIONS. The following capitalized
words and terms shall have the following meanings when used in this Agreement. Unless specifically stated to the contrary, all
references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms used in the singular
shall include the plural, and the plural shall include the singular, as the context may require. Words and terms not otherwise
defined in this Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code. Accounting words and
terms not otherwise defined in this Agreement shall have the meanings assigned to them in accordance with generally accepted accounting
principles as in effect on the date of this Agreement:

Advance. The word “Advance”
means a disbursement of Loan funds made, or to be made, to Borrower or on Borrower’s behalf on a line of credit or multiple
advance basis under the terms and conditions of this Agreement.

Agreement. The word “Agreement”
means this Business Loan Agreement, as this Business Loan Agreement may be amended or modified from time to time, together with
all exhibits and schedules attached to this Business Loan Agreement from time to time.

Borrower. The word “Borrower”
means Electromed, Inc. and includes all co-signers and co-makers signing the Note and all their successors and assigns.

Collateral. The word “Collateral”
means all property and assets granted as collateral security for a Loan, whether real or personal property, whether granted directly
or indirectly, whether granted now or in the future, and whether granted in the form of a security interest, mortgage, collateral
mortgage, deed of trust, assignment, pledge, crop pledge, chattel mortgage, collateral chattel mortgage, chattel trust, factor’s
lien, equipment trust, conditional sale, trust receipt, lien, charge, lien or title retention contract, lease or consignment intended
as a security device, or any other security or lien interest whatsoever, whether created by law, contract, or otherwise.

Environmental Laws. The
words “Environmental Laws” mean any and all state, federal and local statutes, regulations and ordinances relating
to the protection of human health or the environment, including without limitation the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq. (“CERCLA”), the Superfund Amendments and Reauthorization
Act of 1986, Pub. L. No. 99-499 (“SARA”), the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq.,
the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., or other applicable state or federal laws, rules,
or regulations adopted pursuant thereto, or common law, and shall also include pollutants, contaminants, polychlorinated biphenyls,
asbestos, urea formaldehyde, petroleum and petroleum products, and agricultural chemicals.

    	 	 

    	 

    

 

	 	BUSINESS LOAN AGREEMENT	 
	Loan No:  15696	(Continued)	Page 7
	 	 	 

 

Event of Default. The words
“Event of Default” mean any of the events of default set forth in this Agreement in the default section of this Agreement.

GAAP. The word “GAAP”
means generally accepted accounting principles.

Grantor. The word “Grantor”
means each and all of the persons or entities granting a Security Interest in any Collateral for the Loan, including without limitation
all Borrowers granting such a Security Interest.

Guarantor. The word “Guarantor”
means any guarantor, surety, or accommodation party of any or all of the Loan.

Guaranty. The word “Guaranty”
means the guaranty from Guarantor to Lender, including without limitation a guaranty of all or part of the Note.

Hazardous Substances. The
words “Hazardous Substances” mean materials that, because of their quantity, concentration or physical, chemical or
infectious characteristics, may cause or pose a present or potential hazard to human health or the environment when improperly
used, treated, stored, disposed of, generated, manufactured, transported or otherwise handled. The words “Hazardous Substances”
are used in their very broadest sense and include without limitation any and all hazardous or toxic substances, materials or waste
as defined by or listed under the Environmental Laws. The term “Hazardous Substances” also includes, without limitation,
petroleum and petroleum by-products or any fraction thereof and asbestos.

Indebtedness. The word
“Indebtedness” means the indebtedness evidenced by the Note or Related Documents, including all principal and interest
together with all other indebtedness and costs and expenses for which Borrower is responsible under this Agreement or under any
of the Related Documents.

Lender. The word “Lender”
means Venture Bank, its successors and assigns.

Loan.  The word “Loan”
means any and all loans and financial accommodations from Lender to Borrower whether now or hereafter existing, and however evidenced,
including without limitation those loans and financial accommodations described herein or described on any exhibit or schedule
attached to this Agreement from time to time.

Note.  The word “Note”
means the Note dated December 18, 2013 and executed by Electromed, Inc. in the principal amount of $1,300,000.00, together with
all renewals of, extensions of, modifications of, refinancings of, consolidations of, and substitutions for the note or credit
agreement.

Permitted Liens.  The words
“Permitted Liens” mean (1) liens and security interests securing Indebtedness owed by Borrower to Lender; (2) liens
for taxes, assessments, or similar charges either not yet due or being contested in good faith; (3) liens of materialmen, mechanics,
warehousemen, or carriers, or other like liens arising in the ordinary course of business and securing obligations which are not
yet delinquent; (4) purchase money liens or purchase money security interests upon or in any property acquired or held by Borrower
in the ordinary course of business to secure indebtedness outstanding on the date of this Agreement or permitted to be incurred
under the paragraph of this Agreement titled “Indebtedness and Liens”; (5) liens and security interests which, as of
the date of this Agreement, have been disclosed to and approved by the Lender in writing; and (6) those liens and security interests
which in the aggregate constitute an immaterial and insignificant monetary amount with respect to the net value of Borrower’s
assets.

Related Documents. The
words “Related Documents” mean all promissory notes, credit agreements, loan agreements, environmental agreements,
guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements
and documents, whether now or hereafter existing, executed in connection with the Loan.

Security Agreement. The
words “Security Agreement” mean and include without limitation any agreements, promises, covenants, arrangements, understandings
or other agreements, whether created by law, contract, or otherwise, evidencing, governing, representing, or creating a Security
Interest.

Security Interest. The
words “Security Interest” mean, without limitation, any and all types of collateral security, present and future, whether
in the form of a lien, charge, encumbrance, mortgage, deed of trust, security deed, assignment, pledge, crop pledge, chattel mortgage,
collateral chattel mortgage, chattel trust, factor’s lien, equipment trust, conditional sale, trust receipt, lien or title
retention contract, lease or consignment intended as a security device, or any other security or lien interest whatsoever whether
created by law, contract, or otherwise.

BORROWER ACKNOWLEDGES HAVING READ
ALL THE PROVISIONS OF THIS BUSINESS LOAN AGREEMENT AND BORROWER AGREES TO ITS TERMS. THIS BUSINESS LOAN AGREEMENT IS DATED DECEMBER
18, 2013.

BORROWER: 

ELECTROMED, INC. 

 

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

LENDER: 

VENTURE BANK

    	 	 

    	 

    

 

	 	BUSINESS LOAN AGREEMENT	 
	Loan No:  15696	(Continued)	Page 8
	 	 	 

 

	By:	/s/
    Kevin Doyle	 
	 	Authorized Signer

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