Document:

Exhibit

Execution Version

FOURTH AMENDMENT TO 
FOURTH AMENDED AND RESTATED CREDIT AGREEMENT 

#4825252
THIS FOURTH AMENDMENT TO FOURTH AMENDED AND RESTATED CREDIT AGREEMENT (this “Fourth Amendment”) is entered into as of December 15, 2016 (the “Effective Date”), by and among Ensco plc, an English public limited company (the “Parent”), Pride International Inc., a Delaware corporation and indirect wholly-owned Subsidiary of the Parent (collectively, the “Borrowers”), the undersigned Banks party hereto, Citibank, N.A., as administrative agent (the “Administrative Agent”), and the Issuing Banks party hereto.
PRELIMINARY STATEMENTS
WHEREAS, the Borrowers, the Banks, the Administrative Agent and the Issuing Banks are parties to that certain Fourth Amended and Restated Credit Agreement dated as of May 7, 2013 (as amended by the First Amendment dated as of September 30, 2014, the Second Amendment dated as of March 9, 2015, the Third Amendment dated as of July 1, 2016, and the Extension Agreement dated as of October 4, 2016, and as the same may be further amended, restated, increased and extended, the “Credit Agreement”; capitalized terms used herein that are not defined herein and are defined in the Credit Agreement are used herein as defined in the Credit Agreement); and
WHEREAS, the Borrowers have requested that the Banks, the Administrative Agent and the Issuing Banks modify the Credit Agreement and change certain terms thereof, and the Administrative Agent, the Issuing Banks and the Banks party hereto, which are the Majority Banks, have agreed to do so subject to the terms and conditions of this Fourth Amendment; and
WHEREAS, the Borrowers, the Administrative Agent, the Banks, and the Issuing Banks party hereto wish to execute this Fourth Amendment to evidence such agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein contained and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Borrowers, the Administrative Agent, the Banks, and  the Issuing Banks party hereto hereby agree as follows:
Section 1.Amendment to Credit Agreement.
(a)    The definition of “Permitted Debt” in Section 1.01 of the Credit Agreement is hereby amended by replacing existing clauses (k) and (l) in their entirety with the following clauses (k), (l) and (m):  
(k)    senior unsecured convertible notes in an aggregate principal amount of up to $862,500,000 issued by Ensco Jersey Finance Limited (“Jersey FinCo”) on or about December 12, 2016 (or within forty-five (45) days thereafter with respect to any portion of such notes issued pursuant to the initial purchasers’ option to purchase additional notes), so long as: 

(i)    the Borrower has delivered the following items to the Administrative Agent (or its counsel), each in form and substance reasonably satisfactory to the Administrative Agent, on or prior to the date that is thirty (30) days after such issuance, or such later date as the Administrative Agent has approved in writing: 
(A)    a Guaranty duly and validly executed and delivered by a duly authorized director of Jersey FinCo; 
(B)    a certificate of a director or a Responsible Person of Jersey FinCo, certifying the following: (1) the resolutions of the governing body of Jersey FinCo approving all Loan Documents to which it is a party, and the transactions contemplated thereby, in each case evidencing any necessary company action, (2) the name and true signature of an agent or agents of Jersey FinCo authorized to sign each Loan Document to which Jersey FinCo is a party and any other documents to be delivered hereunder, and (3) true, correct and complete copies of the certificate of formation and limited liability company agreement (or corresponding organizational documents) of Jersey FinCo; 
(C)    a certificate of good standing (or corresponding document) with respect to Jersey FinCo; and 
(D)    a favorable opinion of counsel for Jersey FinCo, in such form and covering such matters as the Administrative Agent may reasonably request; and 
(ii)    the net proceeds of such senior unsecured convertible notes are not used for any purpose other than the repurchase or refinancing of existing Debt and general corporate purposes; 
(l)    extensions, refinancings, renewals or replacements of Debt permitted above which, in the case of any such extension, refinancing, renewal or replacement, does not increase the amount of such Debt being extended, refinanced, renewed or replaced, other than amounts incurred to pay fees and expenses reasonably incurred in connection with such extension, refinancing, renewal or replacement; provided that, with respect to any extension, refinancing, renewal or replacement of Debt originally permitted under clause (k) above, (i) the Borrower shall have delivered to the Administrative Agent a certificate of the chief executive officer, chief financial officer or treasurer of the Parent setting forth a detailed calculation of the threshold set forth in Section 5.11(a) as of the end of the most recently ended fiscal quarter, on a pro forma basis after giving effect to such extension, refinancing, renewal or replacement, and (ii) if such pro forma calculation shows that the aggregate amount of Debt of the Restricted Subsidiaries that are not Loan Parties would exceed 10% of Consolidated Tangible Net Worth, the issuer of such Debt that extends, refinances, 

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renews or replaces Debt originally permitted under clause (k) above shall have delivered to the Administrative Agent (A) a Guaranty by such issuer and (B) the other items described in clause (k)(i) above; and 
 (m)    any other Debt of the Restricted Subsidiaries, provided (i) the Parent is in pro forma compliance with the financial covenant set forth in Section 6.01 (immediately after giving effect thereto), (ii) no Default or Event of Default exists at the time of the incurrence of such Debt, nor would such result therefrom, and (iii) the aggregate principal amount of such Debt of the Restricted Subsidiaries (excluding all such Debt permitted under clauses (a) through (l) above) outstanding shall not exceed, at the time of incurrence thereof, the greater of (1) $100,000,000 or (2) 10% of Consolidated Tangible Net Worth as of the last day of the most recently ended fiscal quarter for which financial statements are available. 
(b)    Section 6.11(a) of the Credit Agreement is hereby amended by replacing the text reading “clause (k) of the definition of ‘Permitted Debt’” with text reading “clause (l) of the definition of ‘Permitted Debt’”.  
Section 2.    Representations True; No Default.  Each of the Borrowers represents and warrants that:
(a)    this Fourth Amendment has been duly authorized, executed and delivered on its behalf, and the Credit Agreement, as amended by this Fourth Amendment, and the other Loan Documents to which it is a party, constitute the legal, valid and binding obligations of such Borrower, enforceable against such Borrower in accordance with their terms, except as such enforceability may be limited by any applicable bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditors’ rights generally and by general principles of equity;
(b)    the representations and warranties of such Borrower contained in Article IV of the Credit Agreement are true and correct in all material respects on and as of the date hereof as though made on and as of the date hereof (other than (i) those representations and warranties that expressly relate to a specific earlier date, which representations and warranties were true and correct in all material respects as of such earlier date and (ii) those representations and warranties that are by their terms subject to a materiality qualifier, which representations and warranties are true and correct in all respects); and
(c)    after giving effect to this Fourth Amendment, no Default or Event of Default under the Credit Agreement has occurred and is continuing.
Section 3.    Effectiveness.  This Fourth Amendment shall become effective as of the Effective Date upon the satisfaction of the following conditions precedent: 
(a)    the Administrative Agent (or its counsel) has received counterparts of this Fourth Amendment duly and validly executed and delivered by duly authorized officers of each Borrower, the Administrative Agent, and the Majority Banks; and 

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(b)    the Borrowers shall have paid all costs and expenses which are payable pursuant to Section 9.04 of the Credit Agreement to the extent invoiced prior to the Effective Date. 
Section 4.    Miscellaneous Provisions.
(a)    From and after the execution and delivery of this Fourth Amendment, the Credit Agreement shall be deemed to be amended and modified as herein provided, and except as so amended and modified the Credit Agreement shall continue in full force and effect.  Each Borrower hereby agrees and acknowledges that the Administrative Agent, the Issuing Banks, and the Banks require and will require strict performance by the Borrowers of all of their respective obligations, agreements and covenants contained in the Credit Agreement, as amended hereby, and the other Loan Documents (including any action or circumstance which is prohibited or limited during the existence of a Default or Event of Default), and no inaction or action by the Administrative Agent, any Issuing Bank, or any Bank regarding any Default or Event of Default is intended to be or shall be a waiver thereof.  Each Borrower hereby also agrees and acknowledges that no course of dealing and no delay in exercising any right, power, or remedy conferred to the Administrative Agent, any Issuing Bank, or any Bank in the Credit Agreement or in any other Loan Documents or now or hereafter existing at law, in equity, by statute, or otherwise shall operate as a waiver of or otherwise prejudice any such right, power, or remedy.
(b)    The Administrative Agent, the Issuing Banks, and the Banks hereby expressly reserve all of their rights, remedies, and claims under the Loan Documents.  Nothing in this Fourth Amendment shall constitute a waiver or relinquishment of (i) any Default or Event of Default under any of the Loan Documents, (ii) any of the agreements, terms or conditions contained in any of the Loan Documents, (iii) any rights or remedies of the Administrative Agent, any Issuing Bank, or any Bank with respect to the Loan Documents, or (iv) the rights of the Administrative Agent, any Issuing Bank, or any Bank to collect the full amounts owing to them under the Loan Documents.
(c)    The Credit Agreement and this Fourth Amendment shall be read and construed as one and the same instrument.
(d)    Any reference in any of the Loan Documents to the Credit Agreement shall be a reference to the Credit Agreement as amended by this Fourth Amendment.
(e)    This Fourth Amendment is a Loan Document for purposes of the provisions of the other Loan Documents.  Without limiting the foregoing, any breach of the representations, warranties, and covenants under this Fourth Amendment may be a Default or an Event of Default under the Loan Documents.
(f)    This Fourth Amendment shall be construed in accordance with and governed by the laws of the State of New York.
(g)    This Fourth Amendment may be signed in any number of counterparts and by different parties in separate counterparts and may be in original or facsimile form, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

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(h)    The headings herein shall be accorded no significance in interpreting this Fourth Amendment.
Section 5.    Binding Effect.  This Fourth Amendment shall be binding upon and inure to the benefit of the Borrowers, the Banks, the Issuing Banks and the Administrative Agent and their respective successors and assigns, except that the Borrowers shall not have the right to assign their rights hereunder or any interest herein.
[Signature Pages Follow.]

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IN WITNESS WHEREOF, the parties hereto have caused this Fourth Amendment to be executed by their respective officers thereunto duly authorized, as of the date first above written.
BORROWERS:
	
		
	ENSCO PLC

	By:
	/s/ Melissa Cougle

	Name:
	Melissa Cougle

	Title:
	VP Treasury

	
		
	PRIDE INTERNATIONAL, INC.

	By:
	/s/ David Armour

	Name:
	David Armour

	Title:
	Vice President

Signature Page to Fourth Amendment (Ensco)

ADMINISTRATIVE AGENT:
	
		
	CITIBANK, N.A., as Administrative Agent

	By:
	/s/ Michael Vondriska

	Name:
	Michael Vondriska

	Title:
	Vice President

BANKS AND ISSUING BANKS:
	
		
	CITIBANK, N.A., as a Bank and an Issuing Bank

	By:
	/s/ Michael Vondriska

	Name:
	Michael Vondriska

	Title:
	Vice President

Signature Page to Fourth Amendment (Ensco)

	
		
	DNB CAPITAL LLC, as a Bank

	By:
	/s/ Philippe Wulfers

	Name:
	Philippe Wulfers

	Title:
	Vice President

	
		
	By:
	/s/ Sybille Andaur

	Name:
	Sybille Andaur

	Title:
	First Vice President

	
		
	DNB BANK ASA, NEW YORK BRANCH, as an Issuing Bank

	By:
	/s/ Philippe Wulfers

	Name:
	Philippe Wulfers

	Title:
	Vice President

	
		
	By:
	/s/ Sybille Andaur

	Name:
	Sybille Andaur

	Title:
	First Vice President

Signature Page to Fourth Amendment (Ensco)

	
		
	DEUTSCHE BANK AG NEW YORK BRANCH, as a Bank and an Issuing Bank

	By:
	/s/ Ming K Chu

	Name:
	Ming K Chu

	Title:
	Director

	
		
	By:
	/s/ Scott Flieger

	Name:
	Scott Flieger

	Title:
	Managing Director

Signature Page to Fourth Amendment (Ensco)

	
		
	HSBC BANK USA, NA, as a Bank and an Issuing Bank

	By:
	/s/ John M. Robinson

	Name:
	John M. Robinson

	Title:
	Managing Director

Signature Page to Fourth Amendment (Ensco)

	
		
	BANK OF AMERICA, N.A., as a Bank

	By:
	/s/ Michael Clayborne

	Name:
	Michael Clayborne

	Title:
	Director

Signature Page to Fourth Amendment (Ensco)

	
		
	THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., as a Bank

	By:
	/s/ Kevin Sparks

	Name:
	Kevin Sparks

	Title:
	Director

Signature Page to Fourth Amendment (Ensco)

	
		
	BNP PARIBAS, as a Bank

	By:
	/s/ Ann Rhoads

	Name:
	Ann Rhoads

	Title:
	Managing Director

	
		
	By:
	/s/ Vincent Trapet

	Name:
	Vincent Trapet

	Title:
	Director

Signature Page to Fourth Amendment (Ensco)

	
		
	GOLDMAN SACHS BANK USA, as a Bank

	By:
	/s/ Ushma Dedhiya

	Name:
	Ushma Dedhiya

	Title:
	Authorized Signatory

Signature Page to Fourth Amendment (Ensco)

	
		
	AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED, as a Bank

	By:
	/s/ Robert Grillo

	Name:
	Robert Grillo

	Title:
	Director

Signature Page to Fourth Amendment (Ensco)

	
		
	MORGAN STANLEY BANK, N.A., as a Bank

	By:
	/s/ Patrick Layton

	Name:
	Patrick Layton

	Title:
	Authorized Signatory

Signature Page to Fourth Amendment (Ensco)

	
		
	STANDARD CHARTERED BANK, as a Bank

	By:
	/s/ Steven Aloupis

	Name:
	Steven Aloupis

	Title:
	Managing Director

Signature Page to Fourth Amendment (Ensco)Exhibit
10.1

 

 

 *000700000015695*

 

BUSINESS
LOAN AGREEMENT (ASSET BASED)

 

	Principal	Loan Date	Maturity	Loan No	Call / Coll	Account	Officer	Initials
	$2,500,000.00	12-18-2016	12-18-2017	15695	5200	107560-1	10070	 
	References
                                         in the boxes above are for Lender’s use only and do not limit the applicability of this
                                         document to any particular loan or item.

        Any
        item above containing “***” has been omitted due to text length limitations.

 

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

 

THIS
BUSINESS LOAN AGREEMENT (ASSET BASED) dated December 18, 2016, 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, 2016, 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.

 

LINE
OF CREDIT. Lender agrees to make Advances to Borrower from time to time from the date of this Agreement to the Expiration
Date, provided the aggregate amount of such Advances outstanding at any time does not exceed the Borrowing Base. Within the foregoing
limits, Borrower may borrow, partially or wholly prepay, and reborrow under this Agreement as follows:

 

Conditions
Precedent to Each Advance. Lender’s obligation to make any Advance to or for the account of Borrower under this Agreement
is subject to the following conditions precedent, with all documents, instruments, opinions, reports, and other items required
under this Agreement to be in form and substance satisfactory to Lender:

 

(1)
Lender shall have received evidence that this Agreement and all Related Documents have been duly authorized, executed, and delivered
by Borrower to Lender.

 

(2)
Lender shall have received such opinions of counsel, supplemental opinions, and documents as Lender may request.

 

(3)
The security interests in the Collateral shall have been duly authorized, created, and perfected with first lien priority and
shall be in full force and effect.

 

(4)
All guaranties required by Lender for the credit facility(ies) shall have been executed by each Guarantor, delivered to Lender,
and be in full force and effect.

 

(5)
Lender, at its option and for its sole benefit, shall have conducted an audit of Borrower’s Accounts, books, records, and operations,
and Lender shall be satisfied as to their condition.

 

(6)
Borrower shall have paid to Lender all fees, costs, and expenses specified in this Agreement and the Related Documents as are
then due and payable.

 

(7)
There shall not exist at the time of any Advance a condition which would constitute an Event of Default under this Agreement,
and Borrower shall have delivered to Lender the compliance certificate called for in the paragraph below titled “Compliance
Certificate.”

 

Making
Loan Advances. Advances under this credit facility, as well as directions for payment from Borrower’s accounts, may be requested
orally or in writing by authorized persons. Lender may, but need not, require that all oral requests be confirmed in writing.
Each Advance shall be conclusively deemed to have been made at the request of and for the benefit of Borrower (1) when credited
to any deposit account of Borrower maintained with Lender or (2) when advanced in accordance with the instructions of an authorized
person. Lender, at its option, may set a cutoff time, after which all requests for Advances will be treated as having been requested
on the next succeeding Business Day.

 

Mandatory
Loan Repayments. If at any time the aggregate principal amount of the outstanding Advances shall exceed the applicable Borrowing
Base, Borrower, immediately upon written or oral notice from Lender, shall pay to Lender an amount equal to the difference between
the outstanding principal balance of the Advances and the Borrowing Base. On the Expiration Date, Borrower shall pay to Lender
in full the aggregate unpaid principal amount of all Advances then outstanding and all accrued unpaid interest, together with
all other applicable fees, costs and charges, if any, not yet paid.

 

Loan
Account. Lender shall maintain on its books a record of account in which Lender shall make entries for each Advance and such
other debits and credits as shall be appropriate in connection with the credit facility. Lender shall provide Borrower with periodic
statements of Borrower’s account, which statements shall be considered to be correct and conclusively binding on Borrower unless
Borrower notifies Lender to the contrary within thirty (30) days after Borrower’s receipt of any such statement which Borrower
deems to be incorrect.

 

COLLATERAL.
To secure payment of the Primary Credit Facility and performance of all other Loans, obligations and duties owed by Borrower
to Lender, Borrower (and others, if required) shall grant to Lender Security Interests in such property and assets as Lender may
require. Lender’s Security Interests in the Collateral shall be continuing liens and shall include the proceeds and products of
the Collateral, including without limitation the proceeds of any insurance. With respect to the Collateral, Borrower agrees and
represents and warrants to Lender:

 

Perfection
of Security Interests. Borrower agrees to execute all documents perfecting Lender’s Security Interest and to take whatever
actions are requested by Lender to perfect and continue Lender’s Security Interests in the Collateral. Upon request of Lender,
Borrower will deliver to Lender any and all of the documents evidencing or constituting the Collateral, and Borrower will note
Lender’s interest upon any and all chattel paper and instruments if not delivered to Lender for possession by Lender. Contemporaneous
with the execution of this Agreement, Borrower will execute one or more UCC financing statements and any similar statements as
may be required by applicable law, and Lender will file such financing statements and all such similar statements in the appropriate
location or locations. Borrower hereby

 

     

     

    

 

	 	BUSINESS
    LOAN AGREEMENT (ASSET BASED)	 
	Loan No: 15695	(Continued)	Page 2
	 	 	 

 

appoints
Lender as its irrevocable attorney-in-fact for the purpose of executing any documents necessary to perfect or to continue any
Security Interest. Lender may at any time, and without further authorization from Borrower, file a carbon, photograph, facsimile,
or other reproduction of any financing statement for use as a financing statement. Borrower will reimburse Lender for all expenses
for the perfection, termination, and the continuation of the perfection of Lender’s security interest in the Collateral. Borrower
promptly will notify Lender before any change in Borrower’s name including any change to the assumed business names of Borrower.
Borrower also promptly will notify Lender before any change in Borrower’s Social Security Number or Employer Identification Number.
Borrower further agrees to notify Lender in writing prior to any change in address or location of Borrower’s principal governance
office or should Borrower merge or consolidate with any other entity.

 

Collateral
Records. Borrower does now, and at all times hereafter shall, keep correct and accurate records of the Collateral, all of
which records shall be available to Lender or Lender’s representative upon demand for inspection and copying at any reasonable
time. With respect to the Accounts, Borrower agrees to keep and maintain such records as Lender may require, including without
limitation information concerning Eligible Accounts and Account balances and agings. Records related to Accounts (Receivables)
are or will be located at the Borrower’s Corporate Headquarters. The above is an accurate and complete list of all locations at
which Borrower keeps or maintains business records concerning Borrower’s collateral.

 

Collateral
Schedules. Concurrently with the execution and delivery of this Agreement, Borrower shall execute and deliver to Lender schedules
of Accounts and schedules of Eligible Accounts in form and substance satisfactory to the Lender. Thereafter supplemental schedules
shall be delivered according to the following schedule: With respect to Eligible Accounts, schedules shall be delivered according
to the additional requirements under the paragraph titled “Affirmative Covenants”.

 

Representations
and Warranties Concerning Accounts. With respect to the Accounts, Borrower represents and warrants to Lender: (1) Each Account
represented by Borrower to be an Eligible Account for purposes of this Agreement conforms to the requirements of the definition
of an Eligible Account; (2) All Account information listed on schedules delivered to Lender will be true and correct, subject
to immaterial variance; and (3) Lender, its assigns, or agents shall have the right at any time and at Borrower’s expense to inspect,
examine, and audit Borrower’s records and to confirm with Account Debtors the accuracy of such Accounts.

 

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.

 

Fees
and Expenses Under This Agreement. Borrower shall have paid to Lender all fees, costs, and expenses specified in this Agreement
and the Related Documents as are then due and payable.

 

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 Northwest, 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 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

 

     

     

    

 

	 	BUSINESS
    LOAN AGREEMENT (ASSET BASED)	 
	Loan No: 15695	(Continued)	Page 3
	 	 	 

 

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.

 

Additional
Requirements.

 

1.
Borrower will provide, as soon as available, but in no event later than forty-five (45) days after the end of each calendar quarter,
Borrower’s Accounts Receivable Aging report.

 

2.
Borrower will provide, as soon as available, but in no event later than forty-five (45) days after the end of each month, Borrower’s
Collateral Schedule.

 

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.

 

1.
Borrower must maintain a Minimum Tangible Net Worth of not less than $10,125,000.00. 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.

 

3.
A pro-rated non-usage fee of 0.120% based on the average unused portion of the line of credit or $3,000.00, whichever is less,
will be assessed annually at loan maturity.

 

COVENANTS
REVIEWED AND ACCEPTED BY:   /s/ JB    (initials).

 

Insurance.
Maintain fire and other risk insurance, public liability insurance, and such other insurance as Lender may require with respect
to

 

     

     

    

 

	 	BUSINESS
    LOAN AGREEMENT (ASSET BASED)	 
	Loan No: 15695	(Continued)	Page 4

	 

 

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, 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

 

     

     

    

 

	 	BUSINESS
    LOAN AGREEMENT (ASSET BASED)	 
	Loan No: 15695	(Continued)	Page 5

	 

 

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.

 

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

 

     

     

    

 

	 	BUSINESS
    LOAN AGREEMENT (ASSET BASED)	 
	Loan No: 15695	(Continued)	Page 6

	 

 

“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.

 

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 extending Loan Advances, 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 extension of Loan Advances and delivery to
Lender of the Related Documents, shall be continuing in nature, shall be deemed made and redated by Borrower at the time each
Loan Advance is made, 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

 

     

     

    

  

	 	BUSINESS
    LOAN AGREEMENT (ASSET BASED)	 
	Loan No: 15695	(Continued)	Page 7

	 

 

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:

 

Account.
The word “Account” means a trade account, account receivable, other receivable, or other right to payment for goods
sold or services rendered owing to Borrower (or to a third party grantor acceptable to Lender).

 

Account
Debtor. The words “Account Debtor” mean the person or entity obligated upon an Account.

 

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

 

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

 

Borrowing
Base. The words “Borrowing Base” mean, as determined by Lender from time to time, the lesser of (1) $2,500,000.00
or (2) 57.000% of the aggregate amount of Eligible Accounts.

 

Business
Day. The words “Business Day“ mean a day on which commercial banks are open in the State of Minnesota.

 

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. The word Collateral also includes without limitation all collateral described in the Collateral
section of this Agreement.

 

Eligible
Accounts. The words “Eligible Accounts” mean at any time, all of Borrower’s Accounts which contain selling terms
and conditions acceptable to Lender. The net amount of any Eligible Account against which Borrower may borrow shall exclude all
returns, discounts, credits, and offsets of any nature. Unless otherwise agreed to by Lender in writing, Eligible Accounts do
not include:

 

(1)
Accounts with respect to which the Account Debtor is employee or agent of Borrower.

 

(2)
Accounts with respect to which the Account Debtor is a subsidiary of, or affiliated with Borrower or its shareholders, officers,
or directors.

 

(3)
Accounts with respect to which goods are placed on consignment, guaranteed sale, or other terms by reason of which the payment
by the Account Debtor may be conditional.

 

(4)
Accounts with respect to which Borrower is or may become liable to the Account Debtor for goods sold or services rendered by the
Account Debtor to Borrower.

 

(5)
Accounts which are subject to dispute, counterclaim, or setoff.

 

(6)
Accounts with respect to which the goods have not been shipped or delivered, or the services have not been rendered, to the Account
Debtor.

 

(7)
Accounts with respect to which Lender, in its sole discretion, deems the creditworthiness or financial condition of the Account
Debtor to be unsatisfactory.

 

(8)
Accounts of any Account Debtor who has filed or has had filed against it a petition in bankruptcy or an application for relief
under any provision of any state or federal bankruptcy, insolvency, or debtor-in-relief acts; or who has had appointed a trustee,
custodian, or receiver for the assets of such Account Debtor; or who has made an assignment for the benefit of creditors or has
become insolvent or fails generally to pay its debts (including its payrolls) as such debts become due.

 

(9)
Accounts which have not been paid in full within 90 Days from the invoice date.

 

(10)
Contractor progress billings, foreign receivables, bonded receivables and retainages.

 

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.

 

Expiration
Date. The words “Expiration Date” mean the date of termination of Lender’s commitment to lend under 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

 

     

     

    

 

	 	BUSINESS
    LOAN AGREEMENT (ASSET BASED)	 
	Loan No: 15695	(Continued)	Page 8

	 

 

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, 2016 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.

 

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.

 

Primary
Credit Facility. The words “Primary Credit Facility” mean the credit facility described in the Line of Credit 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 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 (ASSET BASED) AND BORROWER AGREES TO ITS TERMS. THIS
BUSINESS LOAN AGREEMENT (ASSET BASED) IS DATED DECEMBER 18, 2016.

 

BORROWER:

 

	ELECTROMED, INC.	 
	 	 	 
	By:	/s/
    Jeremy Brock	 
	 	Jeremy Brock, Chief Financial Officer of Electromed,
    Inc.	 
	 	 	 
	LENDER:	 
	 	 	 
	VENTURE BANK	 
	 	 	 
	By:	/s/
    Kevin P. Doyle	 
	 	Authorized Signer	 

	 

 

LaserPro,
Ver. 16.3.10.005 Copr. D+H USA Corporation 1997, 2016.     All Rights Reserved. - MN c:\APPS\CFI\CFI\LPL\C40.FC
TR-6872 PR-39

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