Document:

Exhibit 10.1

BUSINESS LOAN AGREEMENT (ASSET BASED)

	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 
	Principal

 	Loan Date

 	Maturity

 	Loan No

 	Call / Coll

 	Account

 	Officer

 	Initials

 
	$2,500,000.00

 	12-18-2015

 	12-18-2016

 	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.

    500 Sixth Avenue

Northwest 

    New Prague, MN 56071	Lender:	Venture Bank 

    Golden Valley Office 

    6210 Wayzata Boulevard 

    Golden Valley, MN 55416

	 

 	 

 	 

 
	 

 	 

 	 

 
	THIS BUSINESS LOAN AGREEMENT (ASSET BASED) dated December 18, 2015, 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, 2015, 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 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 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 will be assessed annually at loan maturity.

 
	 

 	 

 	 

 
	COVENANTS REVIEWED AND ACCEPTED BY: JTB (initials).

 
	 
	 

 	 

 	 

 
	 

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

 
	 

 	 

 	 

 
	 

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

 
	 

 	 

 	 

 
	 

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

 
	 

 	 

 	 

 
	 

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

 
	 

 	 

 	 

 
	 

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

 
	 

 	 

 	 

 
	 

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

 
	 

 	 

 	 

 
	 

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

 
	 

 	 

 	 

 
	 

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

 
	 

 	 

 	 

 
	 

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

 
	 

 	 

 	 

 
	 

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

 
	 

 	 

 	 

 
	 

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

 
	 

 	 

 	 

 
	 

 	Environmental Compliance and Reports. Borrower
 shall comply in all respects with any and all Environmental Laws; not cause or permit to exist, as a result of an intentional
 or unintentional action or omission on Borrower’s part or on the part of any third party, on property owned and/or 

 

 

    	 

    	 

    

 

	 

 	 

 	 

 
	 

 	 

 	 

 
	 

 	occupied by Borrower, any
environmental activity where damage may result to the environment, unless such environmental activity is pursuant to and in compliance
with the conditions of a permit issued by the appropriate federal, state or local governmental authorities; shall furnish to Lender
promptly and in any event within thirty (30) days after receipt thereof a copy of any notice, summons, lien, citation, directive,
letter or other communication from any governmental agency or instrumentality concerning any intentional or unintentional action
or omission on Borrower’s part in connection with any environmental activity whether or not there is damage to the environment
and/or other natural resources.

 
	 

 	 

 	 

 
	 

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

 
	 

 	 

 	 

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

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

 
	 

 	 

 	 

 
	 

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

 
	 

 	 

 	 

 
	 

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

 
	 

 	 

 	 

 
	 

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

 
	 

 	 

 	 

 
	 

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

 
	 

 	 

 	 

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

 
	 

 	 

 	 

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

 
	 

 	 

 	 

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

 
	 

 	 

 	 

 
	 

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

 
	 

 	 

 	 

 
	 

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

 
	 

 	 

 	 

 
	 

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

 
	 

 	 

 	 

 
	 

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

 
	 

 	 

 	 

 
	 

 	Defective Collateralization. This Agreement
 or any of the Related Documents ceases to be in full force and effect (including failure of any 

 

 

    	 

    	 

    

 

	 

 	 

 	 

 
	 

 	 

 	 

 
	 

 	collateral document to create
a valid and perfected security interest or lien) at any time and for any reason.

 
	 

 	 

 	 

 
	 

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

 
	 

 	 

 	 

 
	 

 	Events Affecting Guarantor. Any of the preceding
 events occurs with respect to any Guarantor of any of the Indebtedness or any Guarantor dies or becomes incompetent, or revokes
 or disputes the validity of, or liability under, any Guaranty of the Indebtedness.

 
	 

 	 

 	 

 
	 

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

 
	 

 	 

 	 

 
	 

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

 
	 

 	 

 	 

 
	 

 	Insecurity. Lender in good faith believes itself
 insecure.

 
	 

 	 

 	 

 
	 

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

 
	 	 

	 

 	 

 	 

 
	EFFECT OF AN EVENT OF DEFAULT. If any Event
 of Default shall occur, except where otherwise provided in this Agreement or the Related Documents, all commitments and obligations
 of Lender under this Agreement or the Related Documents or any other agreement immediately will terminate (including any obligation
 to make further Loan Advances or disbursements), and, at Lender’s option, all Indebtedness immediately will become due and payable, all
without notice of any kind to Borrower, except that in the case of an Event of Default of the type described in the “Insolvency”
subsection above, such acceleration shall be automatic and not optional. In addition, Lender shall have all the rights and remedies
provided in the Related Documents or available at law, in equity, or otherwise. Except as may be prohibited by applicable law,
all of Lender’s rights and remedies shall be cumulative and may be exercised singularly or concurrently. Election by Lender
to pursue any remedy shall not exclude pursuit of any other remedy, and an election to make expenditures or to take action to
perform an obligation of Borrower or of any Grantor shall not affect Lender’s right to declare a default and to exercise
its rights and remedies.

 
	

 
	 

 	 

 	 

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

 
	 

 	 

 	 

 
	 

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

 
	 

 	 

 	 

 
	 

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

 
	 

 	 

 	 

 
	 

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

 
	 

 	 

 	 

 
	 

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

 
	 

 	 

 	 

 
	 

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

 
	 

 	 

 
	 

 	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 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 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, 2015 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, 2015.

 

	 

 	 

 	 

 
	BORROWER:

 
	 

 
	ELECTROMED, INC.

 
	 

 
	By:

 	/s/
                                         Jeremy Brock

 	 

 
	 

 	Jeremy	Brock, Chief Financial Officer of Electromed, Inc.

 	 

 
	 

 	 

 	 

 
	LENDER:

 	 

 
	 

 	 

 
	VENTURE BANK

 	 

 
	 

 	 

 
	By:

 	/s/
                                         Kevin Doyle

 	 

 
	 

 	Authorized SignerExhibit 10.2 

 

RIDER
TO BUSINESS LOAN AGREEMENT (ASSET BASED)

AND RELATED DOCUMENTS

 

This
Rider to Business Loan Agreement (Asset Based) (“Rider”) is attached to and made a part of that certain Business
Loan Agreement (Asset Based) dated December 18, 2015 (“Business Loan
Agreement”) between Electromed, Inc. (“Borrower”) and Venture Bank (“Lender”).
In the event of any inconsistency between this Rider and the Business Loan Agreement or any of the Related Documents, as defined
therein, the terms of this Rider shall control. Terms used herein and not otherwise defined shall have the meanings given such
terms in the Business Loan Agreement. Accordingly, notwithstanding any provisions of the Business Loan Agreement or any of the
Related Documents:

 

1.     Lender
does not require any opinions of counsel to Borrower in connection with the Loan.

 

2.     Borrower’s
representations and warranties with respect to Hazardous Substances are made to the best of its knowledge, based upon reasonable
investigation, and subject to any matters disclosed in any environmental site assessments obtained by or delivered to Lender.
Lender acknowledges and agrees that the Collateral has been used for the storage, use and generation of hazardous substances as
customary in Borrower’s business in compliance with all applicable laws and may in the future be used for such purposes
in compliance with all applicable laws. Further, inspections, tests and assessments of the Collateral by Lender to determine compliance
with the provisions of the Business Loan Agreement and Related Documents relating to Hazardous Substances shall be at Borrower’s
expense only if Lender has reasonable cause to believe Borrower is in violation of such provisions.

 

3.     Lender’s
request for additional information and insurance coverage shall be reasonable for the type of business and type of property constituting
the Collateral. Borrower shall not have the obligation to have the Collateral appraised for insurance purposes during the term
of the Loan.

 

4.     Borrower
shall not have the obligation to notify Lender of defaults under any agreements other than the Business Loan Agreement or Related
Documents unless such defaults are material.

 

5.     Borrower
shall not have the obligation to notify Lender of management changes other than executive management changes.

 

6.     Lender
shall give Borrower reasonable notice prior to inspection of the tangible Collateral or Borrower’s books and records.

 

7.     Lender
shall not have the right to exercise any of the remedies (including the right of setoff
and the right to freeze accounts of Borrower) provided for under the Business Loan Agreement or Related Documents except
upon the occurrence of an Event of Default as defined therein and during the continuance of such Event of Default.

 

8.
   Failure of the Borrower to make any payment when due under the Loan shall not constitute an Event of Default
under the Business Loan Agreement or any of the Related Documents until five (5) days after written notice thereof is given to
Borrower.

 

9.     Lender
will promptly notify Borrower if it makes any expenditures or takes any action pursuant to the paragraph labeled “LENDER’S
EXPENDITURES.”

 

10.
  Borrower shall have the right to incur indebtedness and grant related liens
to other lenders and to enter into equipment leases from third party vendors or finance companies to finance equipment
acquisitions not to exceed $100,000 per year without the consent of Lender.

 

    	 

    	 

    

 

11.
  The filing of any involuntary bankruptcy or insolvency petition against Borrower shall not constitute an Event of
Default unless the Borrower fails to have such filing dismissed within thirty days after such tiling is made or the court grants
the petition tor relief.

 

12.
  A change in ownership of Borrower’s stock shall not constitute a default.

 

13.   A
material adverse change in Borrower’s financial condition, or Lender believing the prospect of payment or performance is
impaired, or the Lender otherwise believing itself insecure, shall not constitute an event of default so long as no other event
of default has occurred and is continuing.

 

14.   Borrower
shall have the right to sell obsolete equipment or fixtures constituting part of the Collateral without the consent of Lender,
so long as such equipment or fixtures are promptly replaced with items of equivalent or greater value.

 

15.   Lender
shall not sell the Loan to another lender or sell participation interests in the Loan without Borrower’s prior consent,
except in the event of the sale or transfer of substantially all the assets of Lender.

 

16.   There
are no guarantors of the Loan, and no affiliates of Borrower shall be required to provide Collateral.

 

17.   The
definition of “Eligible Accounts” is hereby modified to include (i) foreign accounts that are secured by a letter
of credit issued by a U.S. state or federal bank acceptable to Lender, and (ii) accounts that are conditional but are carried
on Borrower’s books in accordance with GAAP. Further, Lender shall not unreasonably disqualify accounts as Eligible Accounts
based upon the creditworthiness or financial condition of the Account Debtor.

 

18.   The
Commercial Security Agreement shall secure only the Note, the obligations under the Related Documents, and that certain Promissory
Note dated December 18, 2013 between Borrower and Lender in the amount of $1,300,000 (the “RE Note”) and the “Related
Documents” as defined in the Business Loan Agreement of even date herewith between Borrower and Lender relating to the RE
Note.

 

19.   Borrower
may maintain deductib1es under its insurance policies up to $20,000. Borrower shall not have the obligation to notify Lender and
shall have the right to adjust and receive insurance proceeds upon damage to the Collateral not exceeding $50,000, so long as
Borrower promptly repairs and restores such damage. The occurrence of casualty damage or other loss which is insured (other than
a reasonable deductible) shall not constitute an Event of Default.

 

20.   Lender
waives the obligation of Borrower to make monthly payments into reserves for payment of insurance unless and until an Event of
Default occurs.

 

21.   Lender
will not require direct payment of accounts to Lender or into a lock box unless and until an Event of Default occurs.

 

22.   Borrower
has a corporate seal but it is not required for effective execution of the Business Loan Agreement or any of the Related Documents.

 

23.
  The immediate termination of all commitments pursuant to the paragraph labeled “EFFECT OF AN EVENT OF DEFAULT”
will not trigger the mandatory loan prepayment obligation of Borrower pursuant to the paragraph labeled “Mandatory Loan
Repayments” unless and until Lender elects to accelerate the Indebtedness.

 

    	 

    	 

    

 

24.   Borrower
may sell inventory in the ordinary course of business without the prior written consent of the Lender. Borrower may also compromise,
settle, adjust or extend payment under or with regard to Accounts in the ordinary course of business using prudent business practices,
provided the Borrower promptly remedies any noncompliance with the Borrowing Base following such action.

 

25.   All
representation and warranties made by Borrower related to Collateral ownership, title and Security Interests, as well as all conditions
precedent to Advances and covenants of Borrower related to the foregoing, are amended to specifically permit the existence of
and allow the continuance of Permitted Liens.

 

26.   The
terms set forth in the Business Loan Agreement (as modified and controlled by this Rider) control in the event of any inconsistency
between the Business Loan Agreement (as modified and controlled by this Rider) and any Related Document.

 

27.   Borrower
shall only be obligated to reimburse or make payment to Lender for reasonable costs, expenditures and expenses incurred by Lender;
provided, however, that in the event of an enforcement action or proceeding, Borrower shall be obligated to reimburse Lender for
all costs, expenditures and expenses.

 

28.   A
default will not arise in respect of any representations, warranties or covenants made by or binding on Borrower related to compliance
with laws, ordinances, rules and regulations unless the Borrower has failed to comply with such laws, ordinances, rules and regulations
in a manner that has or could have, in the reasonable opinion of the Lender, a material adverse effect on Borrower’s operations
or properties.

 

Signature
page follows

 

    	 

    	 

    

 

IN
WITNESS WHEREOF, the parties hereto have caused this Rider to be duly executed as of December 18, 2015.  

	 	 	 	 
	 	VENTURE BANK
	 	 
	 	By: 	 /s/
    Kevin P. Doyle
	 	Name:  	 Kevin P. Doyle

	 	 	 	 
	 	Title: 	Vice President
	 	 
	 	ELECTROMED, INC.
	 	 
	 	By: 	/s/ Jeremy Brock
	 	Name: Jeremy Brock
	 	Title: Chief Financial Officer

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