Document:

Exhibit
10.1

 

COOPERATION
AGREEMENT

 

This
Cooperation Agreement (this “Agreement”) is made and entered into as of July 25, 2022 by and among Electromed,
Inc. (the “Company”) and the entities and natural persons set forth in the signature pages hereto (collectively,
“Summers Value”) (each of the Company and Summers Value, a “Party” to this Agreement, and
collectively, the “Parties”).

 

RECITALS

 

WHEREAS,
the Company and Summers Value are parties to a Cooperation Agreement dated September 24, 2021 (the “Prior Agreement”);

 

WHEREAS,
the Company and Summers Value have engaged in additional discussions and communications concerning the Company’s business,
financial performance and strategic plans;

 

WHEREAS,
as of the date hereof, Summers Value has a beneficial ownership (as determined under Rule 13d-3 promulgated under the Securities
Exchange Act of 1934, as amended (together with the rules and regulations promulgated thereunder, the “Exchange Act”))
interest in the common stock, $0.01 par value per share, of the Company (the “Common Stock”) totaling, in the
aggregate, 521,693 shares, or approximately 6.1% of the Common Stock issued and outstanding on the date hereof; and

 

WHEREAS,
as of the date hereof, the Company and Summers Value have determined to come to an agreement with respect to the composition of
the Company’s board of directors (the “Board”) and certain other matters, as provided in this Agreement,
which is intended to supersede the Prior Agreement.

 

NOW,
THEREFORE, in consideration of the foregoing premises and the mutual covenants and agreements contained herein, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto, intending to
be legally bound hereby, agree as follows:

 

		1.	Board
                                         Composition and Related Agreements.

 

(a)       Appointment
of Director. The Company agrees that, immediately following the execution of this Agreement, the Company will (i) increase
the size of the Board to eight (8) members, and (ii) appoint Andrew Summers (the “New Director”) to the Board.

 

(b)       Board
Nominees. Subject to Summers Value continuing to beneficially own (as determined under Rule 13d-3 promulgated under the Exchange
Act) in the aggregate at least the lesser of (i) 3.0% of the Company’s then-outstanding Common Stock and (ii) 255,392 shares
of Common Stock (subject to adjustment for stock splits, reclassifications, combinations and similar adjustments) (the “Minimum
Ownership Threshold”), the Company agrees that the Board and all applicable committees of the Board shall take all necessary
actions to (A) nominate a total of eight persons for election to serve as members of the Board at the fiscal 2023 annual meeting
of shareholders (the “2023 Annual Meeting”), (B) include the New Director as one of the eight nominees, and
(C) recommend, support and solicit proxies for the election of the New Director at the 2023 Annual Meeting in the same manner
as it recommends, supports and solicits proxies for the election of the Company’s other director nominees.

 

     

     

    

 

(c)       Replacements.
If the New Director (or any Replacement Director (as defined below)) is unable or unwilling to serve as a director and ceases
to be a director, resigns as a director, is removed as a director, or for any other reason fails to serve or is not serving as
a director at any time prior to the expiration of the Standstill Period (as defined below), and at such time Summers Value satisfies
the Minimum Ownership Threshold, then Summers Value shall have the ability to recommend a person to be a replacement director
in accordance with this Section 1(c) (any such replacement nominee, when appointed to the Board, shall be referred to as
a “Replacement Director”). Any Replacement Director must (A) be reasonably acceptable to the Board, (B) qualify
as “independent” pursuant to applicable national securities exchange listing standards, (C) complete a background
check to confirm the Company’s eligibility for reimbursements for its products under all state Medicaid agencies, and (D)
have the relevant financial and business experience to be a director of the Company. The Nominating and Governance Committee of
the Board (the “Nominating Committee”) shall make its determination and recommendation regarding whether such
Replacement Director meets the foregoing criteria within five (5) business days after (i) such nominee has submitted to the Company
the documentation required by Section 1(h)(iv) and (ii) representatives of the Board have conducted customary interview(s)
of such nominee, if such interviews are requested by the Board or the Nominating Committee. The Company shall use its reasonable
best efforts to conduct any interview(s) contemplated by this Section 1(c) as promptly as practicable, but in any case,
assuming reasonable availability of the nominee, within ten (10) business days after Summers Value’s submission of such
nominee. In the event the Nominating Committee does not accept a person recommended by Summers Value as the Replacement Director,
Summers Value shall have the right to recommend additional substitute person(s) whose appointment shall be subject to the Nominating
Committee recommending such person in accordance with the procedures described above. Upon the recommendation of a Replacement
Director nominee by the Nominating Committee, the Board shall vote on the appointment of such Replacement Director to the Board
no later than five (5) business days after the Nominating Committee’s recommendation of such Replacement Director; provided,
however, that if the Board does not appoint such Replacement Director to the Board pursuant to this Section 1(c), the Parties
shall continue to follow the procedures of this Section 1(c) until a Replacement Director is elected to the Board. Subject
to applicable national securities exchange rules and applicable law, upon a Replacement Director’s appointment to the Board,
the Board and all applicable committees of the Board shall take all necessary actions to appoint such Replacement Director to
any applicable committee of the Board of which the replaced director was a member immediately prior to such director’s resignation
or removal. Any Replacement Director designated pursuant to this Section 1(c) replacing the New Director prior to the mailing
of the Company’s definitive proxy statement for the 2023 Annual Meeting shall stand for election at the 2023 Annual Meeting
together with the other director nominees.

 

(d)       Finance
and Strategy Committee. During the Standstill Period, the Finance and Strategy Committee of the Board (the “Finance
and Strategy Committee”): (i) will continue a review of the Company’s business and make recommendations to the
Board with respect to the Company’s strategy and opportunities to enhance shareholder value, including but not limited to
strategic growth plans, long-term business plans, shareholder engagement, research and development, capital allocation, and buy-
or sell-side M&A transactions, and (ii) shall consist of at least four (4) but not more than five (5) independent Board members
(including the New Director). Kathleen A. Tune will continue to serve as Chair of the Finance and Strategy Committee, and effective
upon his appointment to the Board, the New Director will be appointed as Vice Chair of the Finance and Strategy Committee. Ms.
Tune and the New Director shall be entitled to serve in their respective positions on the Finance and Strategy Committee until
the conclusion of the Standstill Period, in each case subject to her or his election to serve as a member of the Board.

 

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(e)       Director
Committee Appointments. Without limiting Section 1(d) and subject to applicable national securities exchange rules
and applicable laws, the Board and all applicable committees of the Board shall take all actions necessary to ensure that during
the Standstill Period, the New Director (or any Replacement Director) will serve on the Nominating Committee. Without limiting
the foregoing, the Board shall give the New Director the same due consideration for membership to any existing or newly formed
committee of the Board as any other independent director.

 

(f)       Board
Compensation and Other Benefits. The Company agrees that the New Director (or any Replacement Director) shall receive (A)
the same benefits of director and officer insurance as all other non-management directors on the Board, (B) the same compensation
for his or her service as a director as the compensation received by other non-management directors on the Board and (C) such
other benefits on the same basis as all other non-management directors on the Board. Summers Value shall not pay any compensation
to the New Director (or any Replacement Director) for such person’s service as a member of the Board.

 

(g)      Board
Policies and Procedures. Each Party acknowledges that the New Director (or any Replacement Director), upon appointment to
the Board, shall be governed by all of the same policies, processes, procedures, codes, rules, standards and guidelines applicable
to members of the Board.

 

(h)      Additional
Agreements.

 

(i)        Summers
Value shall comply, and shall cause each of its controlled Affiliates and Associates to comply with the terms of this Agreement
and shall be responsible for any breach of this Agreement by any such controlled Affiliate or Associate. As used in this Agreement,
the terms “Affiliate” and “Associate” shall have the respective meanings set forth in Rule
12b-2 promulgated by the U.S. Securities and Exchange Commission (the “SEC”) under the Exchange Act and shall
include all persons or entities that at any time during the term of this Agreement become Affiliates or Associates of any person
or entity referred to in this Agreement.

 

(ii)       During
the Standstill Period, except as otherwise provided herein, Summers Value shall not, and shall cause each of its controlled Affiliates
and Associates not to, directly or indirectly, (A) nominate or recommend for nomination any person for election at any annual
or special meeting of the Company’s shareholders, (B) submit any proposal for consideration at, or bring any other business
before, any annual or special meeting of the Company’s shareholders, or (C) initiate, encourage or participate in any “vote
no,” “withhold” or similar campaign with respect to any annual or special meeting of the Company’s
shareholders. Summers Value shall not publicly or privately encourage or support any other shareholder, person or entity to take
any of the actions described in this Section 1(h)(ii).

 

(iii)      Summers
Value shall appear in person or by proxy at the 2023 Annual Meeting and vote all shares of Common Stock beneficially owned by
Summers Value at the 2023 Annual Meeting in favor of all directors nominated by the Board for election and otherwise in accordance
with the recommendations of the Board; provided, however, that in the event Institutional Shareholder Services Inc.
(“ISS”) or Glass Lewis & Co., LLC (“Glass Lewis”) recommends otherwise with respect
to any proposals (other than the election of directors), Summers Value shall be permitted to vote in accordance with the ISS or
Glass Lewis recommendation; provided, further, that Summers Value shall be permitted to vote in its sole discretion
with respect to any publicly announced proposals relating to a merger, acquisition, disposition of all or substantially all of
the assets of the Company or other business combination involving the Company requiring a vote of shareholders of the Company.

 

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(iv)      Summers
Value acknowledges that, prior to any appointment, each Replacement Director is required to submit to the Company a fully completed
copy of the Company’s standard director & officer questionnaire and other reasonable and customary director onboarding
documentation applicable to directors of the Company, including completion of all background reviews necessary to confirm the
Company’s continued eligibility for reimbursement by state agencies if such Replacement Director becomes a member of the
Board.

 

(v)       During
the period commencing with the date of this Agreement through the expiration of the Standstill Period, the Board and all applicable
committees of the Board shall not (A) increase the size of the Board to more than eight (8) directors or (B) seek to classify
the Board, in each case without the prior written consent of Summers Value.

 

(vi)      The
Company agrees that the Board and all applicable committees of the Board shall take all necessary actions to determine, in connection
with his initial nomination by the Company at the 2023 Annual Meeting, that the New Director is deemed to be (A) a member of the
“Incumbent Board” or “Continuing Director” (as such term may be defined in the definition of “Change
in Control,” “Change of Control” (or any similar term) under the Company’s incentive plans, options plans,
equity plans, deferred compensation plans, employment agreements, severance plans, retention plans, loan agreements, or indentures,
or any other related plans or agreements that refer to any such plan, policy or agreement’s definition of “Change
in Control” or any similar term) and (B) a member of the Board as of the beginning of any applicable measurement period
for the purposes of the definition of “Change in Control” or any similar term under the Company’s incentive
plans, options plans, equity plans, deferred compensation plans, employment agreements, severance plans, retention plans, loan
agreements, or indentures.

 

(i)       Notwithstanding
the foregoing, if at any time during the Standstill Period Summers Value ceases to satisfy the Minimum Ownership Threshold, then
the New Director or any Replacement Director will immediately tender his or her resignation from the Board and any committee of
the Board on which he or she then sits (it being understood that it shall be in the Board’s sole discretion whether to accept
or reject such resignation). Following the occurrence of the foregoing, the Company will have no further obligations under this
Section 1.

 

		2.	Standstill
                                         Provisions.

 

(a)       Summers
Value agrees that, from the date of this Agreement until the earlier of (x) the date that is thirty (30) calendar days prior to
the deadline for the submission of shareholder nominations for the Company’s fiscal 2024 annual meeting of shareholders
(the “2024 Annual Meeting”) pursuant to the Company’s Amended and Restated Bylaws or (y) the date that
is one hundred twenty (120) calendar days prior to the first anniversary of the 2023 Annual Meeting (the “Standstill
Period”), Summers Value shall not, and shall cause each of its controlled Affiliates and Associates not to, in each
case directly or indirectly, in any manner:

 

(i)        engage
in any solicitation of proxies or become a “participant” in a “solicitation” (as such terms
are defined in Regulation 14A under the Exchange Act) of proxies (including, without limitation, any solicitation of consents
that seeks to call a special meeting of shareholders), in each case, with respect to securities of the Company;

 

(ii)       form,
join, or in any way knowingly participate in any “group” (within the meaning of Section 13(d)(3) of the Exchange
Act) with respect to the shares of the Common Stock (other than a “group” that includes all or some of the
members of Summers Value, but does not include any other entities or persons that are not members of Summers Value as of the date
hereof); provided, however, that nothing herein shall limit the ability of an Affiliate of Summers Value to join
the “group” following the execution of this Agreement, so long as any such Affiliate agrees to be bound by
the terms and conditions of this Agreement;

 

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(iii)      deposit
any shares of Common Stock in any voting trust or subject any shares of Common Stock to any arrangement or agreement with respect
to the voting of any shares of Common Stock, other than any such voting trust, arrangement or agreement solely among the members
of Summers Value and otherwise in accordance with this Agreement;

 

(iv)      acquire,
offer or propose to acquire, or agree to acquire, on the market or through a private transaction, directly or indirectly, whether
by purchase, tender or exchange offer, through the acquisition of control of another person, by joining a partnership, limited
partnership, syndicate or other group, through swap or hedging transactions or otherwise, any securities of the Company or any
rights decoupled from the underlying securities of the Company that would result in Summers Value beneficially owning more than
9.9% of the outstanding shares of Common Stock (it being acknowledged and agreed that (i) securities awarded or granted to the
New Director by the Company in connection with his service as a director of the Company shall be excluded from such restriction
and (ii) ownership in excess of 9.9% of the outstanding shares of Common Stock attributed to a decrease in the number of outstanding
shares of Common Stock shall not be prohibited);

 

(v)       seek
or submit, or knowingly encourage any person or entity to seek or submit, nomination(s) in furtherance of a “contested
solicitation” for the appointment, election or removal of directors with respect to the Company or seek, or knowingly
encourage or take any other action with respect to the appointment, election or removal of any directors (except as specifically
permitted in Section 1), in each case in opposition to the recommendation of the Board; provided, however,
that nothing in this Agreement shall prevent Summers Value or its Affiliates or Associates from taking actions in furtherance
of identifying director candidates in connection with the 2024 Annual Meeting so long as such actions do not create a public disclosure
obligation for Summers Value or the Company and are undertaken on a basis reasonably designed to be confidential;

 

(vi)      (A)
make any proposal for consideration by shareholders at any annual or special meeting of shareholders of the Company, (B) make
any offer or proposal (with or without conditions) with respect to any merger, tender (or exchange) offer, acquisition, recapitalization,
restructuring, disposition or other business combination involving Summers Value and the Company, (C) affirmatively solicit a
third party to make an offer or proposal (with or without conditions) with respect to any merger, tender (or exchange) offer,
acquisition, recapitalization, restructuring, disposition or other business combination involving the Company, or publicly encourage,
initiate or support any third party in making such an offer or proposal, (D) publicly comment on any third party proposal regarding
any merger, tender (or exchange) offer, acquisition, recapitalization, restructuring, disposition, or other business combination
with respect to the Company by such third party prior to such proposal becoming public or (E) call or seek to call a special meeting
of shareholders;

 

(vii)     seek,
alone or in concert with others, representation on the Board, except as specifically permitted in Section 1;

 

(viii)    advise,
knowingly encourage, knowingly support or knowingly influence any person or entity with respect to the voting or disposition of
any securities of the Company at any annual or special meeting of shareholders with respect to the appointment, election or removal
of director(s), except in accordance with Section 1; or

 

(ix)       make
any request or submit any proposal to amend the terms of this Agreement other than through non-public communications with the
Company or the Board that would not be reasonably determined to trigger public disclosure obligations for any Party.

 

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(b)       Except
as expressly provided in Section 1 or Section 2(a), Summers Value shall be entitled to (i) vote any shares of Common
Stock that it beneficially owns as Summers Value determines in its sole discretion and (ii) disclose, publicly or otherwise, how
it intends to vote or act with respect to any securities of the Company, any shareholder proposal or other matter to be voted
on by the shareholders of the Company and the reasons therefor.

 

(c)       Notwithstanding
anything in Section 2(a) or elsewhere in this Agreement, nothing in this Agreement shall prohibit or restrict Summers Value
from (i) communicating privately with the Board or any of the Company’s officers regarding any matter, so long as such communications
are not intended to, and would not reasonably be expected to, require any public disclosure of such communications, (ii) communicating
with shareholders of the Company and others in a manner that does not otherwise violate Section 2(a) or Section 12,
or (iii) taking any action necessary to comply with any law, rule or regulation or any action required by any governmental or
regulatory authority or stock exchange that has jurisdiction over Summers Value.

 

(d)       Nothing
in Section 2 or elsewhere in this Agreement shall be deemed to limit the exercise in good faith by the New Director (or
a Replacement Director) of such person’s fiduciary duties solely in such person’s capacity as a director of the Company.

 

		3.	Representations
                                         and Warranties of the Company.

 

The
Company represents and warrants to Summers Value that (a) the Company has the corporate power and authority to execute this Agreement
and to bind it thereto, (b) this Agreement has been duly and validly authorized, executed and delivered by the Company, and assuming
due execution by each counterparty hereto, constitutes a valid and binding obligation and agreement of the Company, and is enforceable
against the Company in accordance with its terms, except as enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or similar laws generally affecting the rights of creditors and subject to general
equity principles, (c) immediately prior to the execution of this Agreement, the Board was composed of seven (7) directors and
there were no vacancies on the Board, (d) the execution, delivery and performance of this Agreement by the Company does not and
will not (i) violate or conflict with any law, rule, regulation, order, judgment or decree applicable to the Company, or (ii)
result in any breach or violation of or constitute a default (or an event which with notice or lapse of time or both would constitute
such a breach, violation or default) under or pursuant to, or result in the loss of a material benefit under, or give any right
of termination, amendment, acceleration or cancellation of, any organizational document or material agreement to which the Company
is a party or by which it is bound, and (e) the Company has at all times complied with the terms of the Prior Agreement in all
material respects.

 

		4.	Representations
                                         and Warranties of Summers Value.

 

Summers
Value represents and warrants to the Company that (a) the authorized signatory of Summers Value set forth on the signature page
hereto has the power and authority to execute this Agreement and any other documents or agreements to be entered into in connection
with this Agreement and to bind Summers Value thereto, (b) this Agreement has been duly authorized, executed and delivered by
Summers Value, and assuming due execution by each counterparty hereto, is a valid and binding obligation of Summers Value, enforceable
against Summers Value in accordance with its terms except as enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or similar laws generally affecting the rights of creditors and subject to general
equity principles, (c) the execution of this Agreement, the consummation of any of the transactions contemplated hereby, and the
fulfillment of the terms hereof, in each case in accordance with the terms hereof, will not conflict with, or result in a breach
or violation of the organizational documents of Summers Value as currently in effect, (d) the execution, delivery and performance
of this Agreement by Summers Value does not and will not (i) violate or conflict with any law, rule, regulation, order, judgment
or decree applicable to Summers Value, or (ii) result in any breach or violation of or constitute a default (or an event which
with notice or lapse of time or both would constitute such a breach, violation or default) under or pursuant to, or result in
the loss of a material benefit under, or give any right of termination, amendment, acceleration or cancellation of, any organizational
document, agreement, contract, commitment, understanding or arrangement to which such member is a party or by which it is bound,
(e) Summers Value has at all times complied with the terms of the Prior Agreement in all material respects, (f) as of the date
of this Agreement, Summers Value is deemed to beneficially own 521,693 shares of Common Stock, and (g) as of the date hereof,
and except as set forth in clause (f) above, Summers Value does not currently have, and does not currently have any right to acquire,
any interest in any securities or assets of the Company or its Affiliates (or any rights, options or other securities convertible
into or exercisable or exchangeable (whether or not convertible, exercisable or exchangeable immediately or only after the passage
of time or the occurrence of a specified event) for such securities or assets or any obligations measured by the price or value
of any securities of the Company or any of its controlled Affiliates, including any swaps or other derivative arrangements designed
to produce economic benefits and risks that correspond to the ownership of shares of Common Stock or any other securities of the
Company, whether or not any of the foregoing would give rise to beneficial ownership (as determined under Rule 13d-3 promulgated
under the Exchange Act), and whether or not to be settled by delivery of shares of Common Stock or any other class or series of
the Company’s stock, payment of cash or by other consideration, and without regard to any short position under any such
contract or arrangement).

 

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		5.	Press
                                         Release; Communications.

 

Promptly
following the execution of this Agreement, the Company and Summers Value shall jointly issue a mutually agreeable press release
(the “Press Release”) announcing certain terms of this Agreement in the form attached hereto as Exhibit
A. Prior to the issuance of the Press Release and subject to the terms of this Agreement, neither the Company (including the
Board and any committee thereof) nor Summers Value shall issue any press release or make any public announcement regarding this
Agreement or the matters contemplated hereby without the prior written consent of the other Party. During the Standstill Period,
neither the Company nor Summers Value shall make any public announcement or statement that is inconsistent with or contrary to
the terms of this Agreement. Summers Value acknowledges and agrees that the Company may file this Agreement and file or furnish
the Press Release with the SEC as exhibits to a Current Report on Form 8-K and other filings with the SEC. Summers Value shall
be given a reasonable opportunity to review and comment on any Current Report on Form 8-K or other filing with the SEC made by
the Company with respect to this Agreement, and the Company shall give reasonable consideration to any comments of Summers Value.
The Company acknowledges and agrees that Summers Value may file this Agreement as an exhibit to its Schedule 13D with the SEC.
The Company shall be given a reasonable opportunity to review and comment on such Schedule 13D filing made by Summers Value with
respect to this Agreement, and Summers Value shall give reasonable consideration to any comments of the Company.

 

		6.	Specific
                                         Performance.

 

Each
of Summers Value, on the one hand, and the Company, on the other hand, acknowledges and agrees that irreparable injury to the
other Party hereto may occur in the event any of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached and that such injury may not be adequately compensable by the remedies available at
law (including the payment of money damages). It is accordingly agreed that Summers Value, on the one hand, and the Company, on
the other hand (the “Moving Party”), shall each be entitled to seek specific enforcement of, and injunctive
relief to prevent any violation of, the terms hereof, and the other Party hereto will not take action, directly or indirectly,
in opposition to the Moving Party seeking such relief on the grounds that any other remedy or relief is available at law or in
equity. This Section 6 is not the exclusive remedy for any violation of this Agreement.

 

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		7.	Expenses.

 

Each
Party shall be responsible for its own fees and expenses incurred in connection with the negotiation, execution and effectuation
of this Agreement and the transactions contemplated hereby, except that the Company shall reimburse Summers Value for its reasonable
documented expenses, including legal fees, incurred in connection with the negotiation and entry into this Agreement, the 2023
Annual Meeting and the matters related thereto, in an amount not to exceed $30,000.

 

		8.	Severability.

 

If
any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force
and effect and shall in no way be affected, impaired or invalidated. It is hereby stipulated and declared to be the intention
of the Parties that the Parties would have executed the remaining terms, provisions, covenants and restrictions without including
any of such which may be hereafter declared invalid, void or unenforceable. In addition, the Parties agree to use their best efforts
to agree upon and substitute a valid and enforceable term, provision, covenant or restriction for any of such that is held invalid,
void or enforceable by a court of competent jurisdiction.

 

		9.	Notices.

 

Any
notices, consents, determinations, waivers or other communications required or permitted to be given under the terms of this Agreement
must be in writing and will be deemed to have been delivered: (a) upon receipt, when delivered personally; (b) upon confirmation
of receipt, when sent by email (provided such confirmation is not automatically generated); or (c) two (2) business days
after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the Party to receive
the same. The addresses for such communications shall be:

 

If
to the Company:

 

Electromed,
Inc.

500
Sixth Avenue NW

New
Prague, Minnesota 56071

Attention:
Kathleen S. Skarvan

E-mail: kskarvan@electromed.com

 

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with
a copy (which shall not constitute notice) to:

 

Faegre
Drinker Biddle & Reath LLP

2200
Wells Fargo Center, 90 South Seventh Street

Minneapolis,
Minnesota 55402

Attention:
Joshua L. Colburn

Email:
joshua.colburn@faegredrinker.com

 

If
to Summers Value:

 

Summers
Value Partners LLC

90
Madison Street, Suite 303

Denver,
Colorado 80206

Attention:
Andrew Summers

Email:
andy@summersvalue.com

 

with a copy (which shall not constitute notice) to:

 

Olshan
Frome Wolosky LLP

1325 Avenue of the Americas

New York, New York 10019

Attention: Ryan Nebel

Email: rnebel@olshanlaw.com

 

		10.	Applicable
                                         Law.

 

This
Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Minnesota without reference
to the conflict of laws principles thereof that would result in the application of the law of another jurisdiction. Each of the
Parties hereto irrevocably agrees that any legal action or proceeding with respect to this Agreement and the rights and obligations
arising hereunder, or for recognition and enforcement of any judgment in respect of this Agreement and the rights and obligations
arising hereunder brought by the other Party hereto or its successors or assigns, shall be brought and determined exclusively
in the state or federal courts located in the State of Minnesota. Each of the Parties hereto hereby irrevocably submits with regard
to any such action or proceeding for itself and in respect of its property, generally and unconditionally, to the personal jurisdiction
of the aforesaid courts and agrees that it will not bring any action relating to this Agreement in any court other than the aforesaid
courts. Each of the Parties hereto hereby irrevocably waives, and agrees not to assert in any action or proceeding with respect
to this Agreement, (a) any claim that it is not personally subject to the jurisdiction of the above-named courts for any reason,
(b) any claim that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced
in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution
of judgment or otherwise) and (c) to the fullest extent permitted by applicable legal requirements, any claim that (i) the suit,
action or proceeding in such court is brought in an inconvenient forum, (ii) the venue of such suit, action or proceeding is improper
or (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.

 

		11.	Counterparts.

 

This
Agreement may be executed in two or more counterparts, each of which shall be considered one and the same agreement and shall
become effective when counterparts have been signed by each of the Parties and delivered to the other Party (including by means
of electronic delivery or facsimile).

 

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		12.	Mutual
                                         Non-Disparagement.

 

Subject
to applicable law, each of the Parties covenants and agrees that, during the Standstill Period, or if earlier, until such time
as the other Party or any of its agents, subsidiaries, Affiliates, executive officers or directors shall have breached this Section
12, neither it nor any of its respective agents, subsidiaries, Affiliates, executive officers or directors shall in any way
publicly disparage, call into disrepute or otherwise defame or slander (as distinct from objective statements reflecting business
criticism) the other Party or such other Party’s subsidiaries, Affiliates, officers (including any current officer of a
Party or a Party’s subsidiaries who no longer serves in such capacity following the execution of this Agreement), directors
(including any current director of a Party or a Party’s subsidiaries who no longer serves in such capacity following the
execution of this Agreement) or employees, or any of their businesses, products or services, in any manner that would reasonably
be expected to damage the business or reputation thereof. For the avoidance of doubt, the foregoing shall not prevent the making
of any factual statement, including, but not limited to, in connection with any compelled testimony or production of information
by legal process, subpoena or as part of a response to a request for information from any governmental authority with purported
jurisdiction over the Party from whom information is sought.

 

		13.	Entire
                                         Agreement; Amendment and Waiver; Successors and Assigns; Third Party Beneficiaries; Term.

 

This
Agreement supersedes the Prior Agreement, which is hereby null and void and of no further effect, and contains the entire understanding
of the Parties with respect to its subject matter. There are no restrictions, agreements, promises, representations, warranties,
covenants or undertakings between the Parties other than those expressly set forth herein. No modifications of this Agreement
can be made except in writing signed by an authorized representative of each of the Company and Summers Value. No failure on the
part of any Party to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of such right, power or remedy by such Party preclude any other or further exercise thereof
or the exercise of any other right, power or remedy. All remedies hereunder are cumulative and are not exclusive of any other
remedies provided by law. The terms and conditions of this Agreement shall be binding upon, inure to the benefit of, and be enforceable
by the Parties hereto and their respective successors, heirs, executors, legal representatives, and permitted assigns. No Party
shall assign this Agreement or any rights or obligations hereunder without, with respect to Summers Value, the prior written consent
of the Company, and with respect to the Company, the prior written consent of Summers Value. This Agreement is solely for the
benefit of the Parties and is not enforceable by any other persons or entities. Unless otherwise mutually agreed in writing by
each Party, this Agreement shall terminate at the end of the Standstill Period. Notwithstanding the foregoing, the provisions
of Section 6 through Section 11 and this Section 13 shall survive the termination of this Agreement. No termination
of this Agreement shall relieve any Party from liability for any breach of this Agreement prior to such termination.

 

[The
remainder of this page intentionally left blank]

 

    10 

     

    

IN
WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized signatories of the Parties as of the
date hereof.

 

	 	Electromed,
    Inc.
	 	 
	 	By:	/s/
Kathleen S. Skarvan

	 	 	Name:	Kathleen
    S. Skarvan
	 	 	Title:	President
    and CEO

 

[Signature
Page to Agreement]

 

     

     

    

	 	SUMMERS
    VALUE FUND LP
	 	 
	 	By:	Summers
    Value Partners GP LLC

    General Partner
	 	 
	 	By:	/s/
Andrew Summers

	 	 	Name:	Andrew
    Summers
	 	 	Title:	Managing
    Member

 

	 	SVP
    DEAL FUND 1 LP
	 	 
	 	By:	SVP
    Deal Fund 1 GP LLC

    General Partner
	 	 
	 	By:	/s/
Andrew Summers

	 	 	Name:	Andrew
    Summers
	 	 	Title:	Managing
    Member

 

	 	SUMMERS
    VALUE PARTNERS GP LLC
	 	 
	 	By:	/s/
Andrew Summers

	 	 	Name:	Andrew
    Summers
	 	 	Title:	Managing
    Member

 

	 	SVP
    DEAL FUND 1 GP LLC
	 	 
	 	By:	/s/
Andrew Summers

	 	 	Name:	Andrew
    Summers
	 	 	Title:	Managing
    Member

 

	 	SUMMERS
    VALUE PARTNERS LLC
	 	 
	 	By:	/s/
Andrew Summers

	 	 	Name:	Andrew
    Summers
	 	 	Title:	Managing
    Member

 

	 	/s/
Andrew Summers

	 	ANDREW
    SUMMERS

 

[Signature
Page to Agreement]

 

     

     

    

 

Exhibit
A

 

[Press Release]cosm_ex101.htm

EXHIBIT 10.1
   
 BINDING 
  
 LETTER OF INTENT (LOI)
  
 This Letter of Intent (“LOI”) sets forth the terms and conditions for a proposed acquisition and financing by Cosmos Holdings, Inc. (“Cosmos”), a corporation organized under the laws of the State of Nevada, with Company I.R.S number (27-0611758),located at 141 West Jackson Boulevard, Suite 4236, Chicago, IL 60604, of Pharmaceutical Laboratories Cana S.A. (the “Company”), a company organized under the laws of Greece with Company number (ΓΕΜΥ) 237301000, VAT number 094007210, located at 446 Irakliou Avenue, Iraklio 14122, Attica, Greece, via the acquisition of Cana Laboratories Holding (Cyprus) Limited (SPV), a corporation organized under the laws of Cyprus, with Company number HE341107, VAT number 10341107U located at Arsinois 12, Agia Marina Chrisochous, 8881 Paphos from the owners of the SPV (the “SPV Owners”, together with the SPV and the Company, the “Sellers”).
  
 Company is the owner of a fully licensed, operational GMP (Good Manufacturing Practices) facility that manufactures health products under the following categories of the Greek Regulatory Authorities: (a) Pharmaceuticals, (b) Food Supplements, (c) Cosmetics, (d) Medical Devices and (e) Biocides. The afore-mentioned license categories permit the Company to manufacture subcategories of products such as nutraceuticals and dermocosmetics.
  
 This LOI is intended to be a binding agreement setting out the basic terms of the acquisition and financing, and shall be superseded by a definitive Sales and Purchase Agreement (“SPA”) and Secured Promissory Note (“Secured Note”) and related transaction documents as described herein (“Transaction Documents”) entered by the parties governing the Transaction (as defined below).
  
  	 Transaction:
  
	 The overall transaction as described below (the “Transaction”) shall consist of two simultaneous transactions:  (1) pursuant to the Secured Note, Cosmos shall provide financing to the SPV; and (2) pursuant to the SPA, Cosmos shall, directly or indirectly through a subsidiary, acquire all of the outstanding shares of capital stock of the SPV (the “SPV Shares”), free and clear of all encumbrances, in exchange for cash and shares of Cosmos stock (Nasdaq COSM), payable (and/or issued) to the SPV Owners  
  

	  
  
	 Due to the time sensitivity of the Transaction (in relation to the Company’s obligations borne by the Restructuring Plan submitted to the Greek Courts of Law on December 20th 2021 (Pre Pack Agreement), the SPV first will acquire the totality of the outstanding shares of capital stock of the Company, free and clear of all encumbrances, thus undertaking to execute the obligations, within the timelines, as established in the Pre Pack Agreement. 
  

	  
	 Cosmos will issue a  Secured Note to the SPV (subject to the SPV having acquired the Company and within 30 days of the date of ratification by the Greek Courts of the Pre Pack Agreement and subject to such acquisition and ratification), amounting to €4,000,000, whose use of proceeds are defined in Annex 1 attached to this LOI.  The Secured Note will have a 5-year Maturity Date and shall accrue fixed interest at 5% per annum.  
  

 
    
  	 
	 -1-

	

	 

 
    
  	  
  
	 The Secured Note will be secured by (1) a Share Pledge over the SPV’s shares by the SPV Owners and (2) a Pledge over the SPV’s assets (including 100% of the shares of the Company and the Company’s assets) (together, the “Pledge Agreements”).
  

	  
  
	 The SPA will be signed by Cosmos, the SPV Owners and the SPV with terms as described below.

	  
  
	 The closing of the Transaction has to be completed by December 31st 2022 (the “Closing”).

	 Due Diligence:
  
	 Further to the documents and information already shared with Cosmos following the Confidentiality Agreement signed by the Parties on December 17th 2021, from and after the date of this LOI, the SPV’s management and the Company’s management shall allow Cosmos and its advisors full access to the SPV’s and the Company’s facilities, records, key employees and advisors for the purpose of completing Cosmos’s due diligence review. The due diligence investigation will include, but is not limited to, a complete review of the SPV’s and the Company’s financial, legal, tax, environmental, intellectual property and labor records and agreements, and any other matters as Cosmos’s accountants, tax and legal counsel, and other advisors deem necessary.  For the avoidance of doubt, the due diligence shall include a PCAOB audit of the Company and the SPV.
  

	 SPA Purchase Price:
  
	 Cosmos, the SPV Owners and the SPV (that shall own 100% of the Company prior to signing of the SPA) agree that the purchase price for 100% of the Shares of the SPV pursuant to the SPA, shall be €1,700,000 paid in cash to the SPV Owners plus $1,300,000 paid in Cosmos’s common stock to the SPV Owners, as defined in Annex 2.  Cosmos shall deposit the cash portion of the purchase price into a U.S. based escrow account for the benefit of the SPV Owners to be released at Closing pursuant to an escrow agreement (the “Escrow Agreement”).  [Cosmos] will cover the costs of the escrow.
  

	 Conditions:
  
	 Cosmos’s obligation to close the proposed Transaction via the execution of the definitive SPA, Note and other Transaction Documents will be subject to:  (1) the SPV having acquired the Company; (2) ratification by the Greek Courts of the Pre Pack Agreement; and (3) customary conditions; including, but not limited to: (a) Cosmos’s satisfactory completion of due diligence, (b) the approval of the Transaction by the Board of Directors and/or the stockholders of Cosmos and the Company, (c) confirmation from Cosmos’s auditors that the financial statements of the Company and the SPV can be audited in accordance with PCAOB and SEC rules and regulations.
  

	 Management Condition:
  
	 Parties agreed that certain current managers of the Company and the SPV will remain managing directors of the Company and the SPV. Parties will negotiate in good faith customary service agreements for the managing directors, whereby the Parties agree that the economic terms of such new agreements shall be equal or more favorable for the managing directors compared to their current service agreements.
  

 
     
  	 
	-2-
	

	 

 
   
  	 Definitive Agreements:
  
	 In addition to the provisions specifically described herein, the SPA, the Secured Note, the Pledge Agreements, the Escrow Agreement and any other Transaction Documents will contain standard representations, warranties, survival periods, indemnification, limits on indemnification, covenants, termination rights and other provisions appropriate for a transaction of the type contemplated herein, , as may be required under US securities Rule 144.
  

	 Exclusivity:
  
	 In consideration of the expenses that Cosmos has incurred and will incur in connection with the proposed Transaction, the Company and the SPV agree to define the “Exclusivity Period” as the period from signing of the LOI until 30 natural days post the date of the Court Approval of the Pre Pack Agreement. During the Exclusivity Period, neither the Company, the SPV, the SPV Owners, nor any of their respective representatives, officers, employees, directors, agents, stockholders, subsidiaries or affiliates (the “Seller Group”) shall initiate, solicit, entertain, negotiate, accept or discuss, directly or indirectly, any proposal or offer from any person or group of persons other than Cosmos and its affiliates (an “Acquisition Proposal”) to acquire all or any significant part of the business and properties, capital stock or capital stock equivalents of the Company and the SPV, whether by merger, purchase of stock, purchase of assets, tender offer or otherwise, or provide any non-public information to any third party in connection with an Acquisition Proposal or enter into any agreement, arrangement or understanding requiring it to abandon, terminate or fail to consummate the Transaction with Cosmos. The Company and the SPV each agrees to immediately notify Cosmos if any member of the Seller Group receives any indications of interest, requests for information or offers in respect of an Acquisition Proposal, and will communicate to Cosmos in reasonable detail the terms of any such indication, request or offer, and will provide Cosmos with copies of all written communications relating to any such indication, request or offer. Immediately upon execution of this LOI, the Company, the SPV and the SPV Owners shall, and shall cause the Seller Group to, terminate any and all existing discussions or negotiations with any person or group of persons other than Cosmos and its affiliates regarding an Acquisition Proposal. The Company, the SPV and the SPV Owners each represents that no member of the Seller Group is party to or bound by any agreement with respect to an Acquisition Proposal other than under this LOI.
  

	 Expenses:
  
	 Cosmos agrees that the audit and due diligence shall be conducted at its sole expense.
  

	 Confidentiality:
  
	 The parties acknowledge that Cosmos is publicly traded on the U.S. NASDAQ (ticker symbol: COSM), and this LOI or a respective press release may be published or otherwise filed with the Securities and Exchange Commission, further approval by the Company. Any other obligations for non-disclosure are governed by the Confidentiality Agreement signed by the Parties on December 17, 2021.
  

 
    
  	 
	-3-
	

	 

 
   
  	 Expiration; Termination:
  
	 This LOI will remain in effect until 11:59 PM, New York time, on December 31, 2022, unless earlier terminated by the mutual written agreement of the parties.
  

	 Governing Law; Forum
  
	 This LOI shall be governed by and construed in accordance with the internal laws of the State of New York, without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of laws of any jurisdiction other than those of the State of New York.
  

	  
	 The parties hereby consent to the concurrent jurisdiction exclusive jurisdiction of the courts of the State of New York and the United States located in New York County, New York in connection with any suit, action or proceeding arising out of or relating in any manner to this LOI, and each of the parties further irrevocably agree to waive any objection to the venue of any such suit or proceeding in either court, or to in personam jurisdiction.
  

	 Miscellaneous:
  
	 This LOI may be executed in counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one agreement. The headings of the various sections of this LOI have been inserted for reference only and shall not be deemed to be a part of this LOI.
  

	  
  
	 This LOI contains the entire agreement and understanding between the parties hereto with respect to the subject matter hereof, and supersedes all prior and contemporaneous agreements, understandings, inducements and conditions, express or implied, oral or written, of any nature whatsoever with respect to the subject matter hereof (with the express exclusion of the Confidentiality Agreement signed on December 17th, 2021). The express terms hereof control and supersede any course of performance and/or usage of the trade inconsistent with any of the terms hereof.
  

	 Third Party Beneficiaries:
  
	 Except as specifically set forth or referred to herein, nothing herein is intended or shall be construed to confer upon any person or entity other than the parties and their successors or assigns, any rights or remedies under or by reason of this LOI.
  

 
   
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	 -4-

	

	 

 
     
 If you agree with the terms set forth above and desire to proceed with the proposed Transaction on that basis, please sign this LOI in the space provided below.
    
 Dated: July 19, 2022
  
  		 COSMOS HOLDINGS, INC.
	  

	  
	  
	  
	  

	  
	 By:
	 /s/ Grigorios Siokas
	  

	  
	 Name:
	 Grigorios Siokas
	  

	  
	 Title:
	 CEO
	  

 
  
 Agreed and Accepted:
  
 PHARMACEUTICAL LABORATORIES CANA S.A.
  
  	 By:
	 /s/ Konstantinos-Gaston Kanaroglou
	  

	 Name:
	 Konstantinos-Gaston Kanaroglou
	  

	 Title: 
	 President & CEO
	  

 
  
 CANA LABORATORIES HOLDING (CYPRUS) LIMITED
    
  	 By:   
	 /s/ Dimitra Tsogka 
	   
	 By:  
	 /s/ Konstantinos-Gaston Kanaroglou 

	 Name:  
	 Dimitra Tsogka 
	   
	 Name: 
	 Konstantinos-Gaston Kanaroglou 

	 Title:  
	 Legal Representative 
	   
	 Title: 
	 Owner 

	  
	  
	  
	  
	  

	  
	  
	  
	 By:
	 /s/ Konstantina-Mathilde Kanaroglou

	  
	  
	  
	 Name:
	 Konstantina-Mathilde Kanaroglou

	  
	  
	  
	 Title:
	 Owner

 
        
  	 
	-5-
	

	 

 
  
 Annex 1
  
 Secured Note
  
 Secured Note characteristics:
  
  	  
	 1.
	 Amount: €4,000,000

	  
	 2.
	 Disbursement Maturity: 30 days after ratification date of the Pre Pack Agreement by the Greek court and acquisition of the Company by the SPV.

	  
	 3.
	 Restrictions: from the signing of the Secured Note and the disbursement of the above-mentioned amount and until Closing, the Sellers will be prohibited from entering into any other transaction such as the issuance of new capital shares and the signing of any equity mechanism like convertible note or bond etc.

	  
	 4.
	 Maturity Date and Interest: 5 years from disbursement with interest fixed at 5% per annum.

 
   
 Use of Proceeds of the Secured Note:
  
  	  
	 1.
	 €4,000,000 will be used as a capital increase to the Company to cover:

 
   
  	  
	 a.
	 Payment of €2,700,000 to Cepal within 2 months (30 days specified by the Pre Pack Agreement plus a further 30 days allowance specified by Greek Law) of the date of ratification of the Pre Pack Agreement by the Greek Courts.

	  
	 b.
	 Payment of €600,000 to insurance funds EFKA, TAYFE and TEAYFE, (the exact amount will be determined depending on the date of ratification of the Pre Pack Agreement by the Greek Courts) within 2 months of the date of ratification of the Pre Pack Agreement by the Greek Courts.

	  
	 c.
	 Remaining €700,000 shall be used as working capital by the Company.

 
   
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	-6-
	

	 

 
  
 Annex 2
  
 SPA
  
 Paid in Cash : €1,700,000
  
  	  
	 1.
	 The amount of €1,200,000 will be paid in cash into an escrow account upon the signing of the SPA between Cosmos and the SPV Owners.

	  
	 2.
	 The amount of €500,000 will be paid in cash within 120 days of the signing of the SPA between Cosmos and the owners of the SPV.

 
   
 Paid in Stock: $1,300,000
  
 At Closing, #433,334 Restricted Cosmos Stock (as defined below) for the amount of $1,300,000 at an issuance price of $3.00 per share will be issued  the SPV Owners. In the event that at Closing of the SPA the market price would be higher than $3.00 per share, then the number of shares and the issuance price will be adjusted at the market price accordingly to the amount of $1,300,000. 
  
 Restricted Cosmos Stock has the following characteristics: SEC Rule 144 requires a selling security holder to hold shares of a reporting company for six months after the securities are fully paid.
  
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	-7-

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