<SEC-DOCUMENT>0000897101-14-001840.txt : 20141217
<SEC-HEADER>0000897101-14-001840.hdr.sgml : 20141217
<ACCEPTANCE-DATETIME>20141217163012
ACCESSION NUMBER:		0000897101-14-001840
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20141216
ITEM INFORMATION:		Entry into a Material Definitive Agreement
ITEM INFORMATION:		Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20141217
DATE AS OF CHANGE:		20141217

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			Electromed, Inc.
		CENTRAL INDEX KEY:			0001488917
		STANDARD INDUSTRIAL CLASSIFICATION:	ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845]
		IRS NUMBER:				411732920
		FISCAL YEAR END:			0630

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-34839
		FILM NUMBER:		141292909

	BUSINESS ADDRESS:	
		STREET 1:		500 SIXTH AVENUE NW
		CITY:			NEW PRAGUE
		STATE:			MN
		ZIP:			56071
		BUSINESS PHONE:		952-758-9299

	MAIL ADDRESS:	
		STREET 1:		500 SIXTH AVENUE NW
		CITY:			NEW PRAGUE
		STATE:			MN
		ZIP:			56071
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>elmd144600_8k.htm
<DESCRIPTION>FORM 8-K DATED DECEMBER 16, 2014
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 <P ALIGN=CENTER><FONT SIZE=4><B>SECURITIES AND EXCHANGE COMMISSION</B></FONT></P>
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<P ALIGN=CENTER><FONT SIZE=3><B>CURRENT
REPORT<BR>
Pursuant to Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934</B></FONT></P>

<P ALIGN=CENTER><FONT SIZE=3>Date of report
(Date of earliest event reported): December 16, 2014</FONT></P>

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 <P ALIGN=CENTER><FONT SIZE=5><B>ELECTROMED, INC.</B></FONT></P>
 </TD>
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 <P ALIGN=CENTER><FONT SIZE=2>(Exact
 Name of Registrant as Specified in Its Charter)</FONT></P>
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 <P ALIGN=CENTER><FONT SIZE=3><B>Minnesota</B></FONT></P>
 </TD>
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 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
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 <P ALIGN=CENTER><FONT SIZE=3><B>001-34839</B></FONT></P>
 </TD>
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 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
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 <P ALIGN=CENTER><FONT SIZE=3><B>41-1732920</B></FONT></P>
 </TD>
 </TR>
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 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>(State
 or Other Jurisdiction of<BR>
 Incorporation)</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>(Commission
 File Number)</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>(I.R.S.
 Employer Identification<BR>
 Number)</FONT></P>
 </TD>
 </TR>
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 <P ALIGN=CENTER>&nbsp;</P>
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 <P ALIGN=CENTER><FONT SIZE=3><B>500
 Sixth Avenue NW</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=3><B>New
 Prague, MN 56071</B></FONT></P>
 </TD>
 </TR>
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 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>(Address
 of Principal Executive Offices)(Zip Code)</FONT></P>
 </TD>
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 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
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 <P ALIGN=CENTER><FONT SIZE=3><B> (952)
 758-9299</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>(Registrant&#146;s
 Telephone Number, Including Area Code)</FONT></P>
 </TD>
 </TR>
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 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
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 <P ALIGN=CENTER><FONT SIZE=3><B>Not
 Applicable</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>(Former
 Name or Former Address, if Changed Since Last Report)</FONT></P>
 </TD>
 </TR>
</TABLE>

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 </TD>
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</TABLE>
<P ALIGN=JUSTIFY><FONT SIZE=2>Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:</FONT></P>

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 <P><FONT SIZE=2 FACE=WINGDINGS>o</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Written
 communications pursuant to Rule&nbsp;425 under the Securities Act (17 CFR
 230.425)</FONT></P>
 </TD>
 </TR>
 <TR>
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 <P><FONT SIZE=1>&nbsp;</FONT></P>
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 <P><FONT SIZE=2 FACE=WINGDINGS>o</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Soliciting
 material pursuant to Rule&nbsp;14a-12 under the Exchange Act (17 CFR
 240.14a-12)</FONT></P>
 </TD>
 </TR>
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 <P><FONT SIZE=1>&nbsp;</FONT></P>
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 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
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 <P><FONT SIZE=2 FACE=WINGDINGS>o</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Pre-commencement
 communications pursuant to Rule&nbsp;14d-2(b) under the Exchange Act (17 CFR
 240.14d-2(b))</FONT></P>
 </TD>
 </TR>
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 <P><FONT SIZE=1>&nbsp;</FONT></P>
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 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2 FACE=WINGDINGS>o</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Pre-commencement
 communications pursuant to Rule&nbsp;13e-4(c) under the Exchange Act (17 CFR
 240.13e-4(c))</FONT></P>
 </TD>
 </TR>
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<BR>

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<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<P><FONT SIZE=3><B>Item
1.01&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Entry into a
Material Definitive Agreement.</B></FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
December 16, 2014, and effective December 18, 2014, the Company entered into an
amendment to and renewal of its $2,500,000 line of credit with Venture Bank,
which decreased the interest rate margin from 1.50% to 1.00% over the prime
rate of interest as published by the Wall Street Journal. The minimum interest
rate remains 4.50% per annum. The amendment also extended the maturity date of
the line of credit to December 18, 2015 and added a pro-rated non-usage fee of
0.125% based on the average unused portion of the line of credit through the
maturity date. </FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
foregoing description of the amendment is qualified in its entirety by
reference to the complete text of the Business Loan Agreement (Asset Based),
dated December 18, 2014; the Rider to Business Loan Agreement (Asset Based),
dated December 18, 2014; and the Change in Terms Agreement, dated December 18,
2014, copies of which are filed herewith as Exhibits 10.1, 10.2, and 10.3,
respectively, and incorporated herein by reference.</FONT></P>

<P STYLE="text-align: justify; margin-left: 78pt; text-indent: -78pt"><FONT SIZE=3><B>Item
2.03&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Creation of a
Direct Financial Obligation or an Obligation under an Off-Balance Sheet
Arrangement of a Registrant.</B></FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
information set forth in response to Item 1.01 of this Form 8-K is incorporated
by reference in response to this Item 2.03.</FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=3><B>Item
9.01&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Exhibits.</B></FONT></P>

<TABLE BORDER="0" CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%">
 <TR STYLE="FONT-SIZE:1PX">
    <TD STYLE="width: 15%">&nbsp;</TD>
 <TD STYLE="width: 5%; vertical-align: top">
 <P>&nbsp;</P>
 </TD>
 <TD STYLE="width: 5%; vertical-align: top">
 <P>&nbsp;</P>
 </TD>
 <TD STYLE="width: 75%; vertical-align: top">
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
    <TD>&nbsp;</TD>
 <TD STYLE="vertical-align: top">
 <P><FONT SIZE=2>(a)</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>Financial statements: None.</FONT></P>
 </TD>
 </TR>
 <TR>
    <TD>&nbsp;</TD>
 <TD STYLE="vertical-align: top">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD STYLE="vertical-align: top">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD STYLE="vertical-align: top">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
    <TD>&nbsp;</TD>
 <TD STYLE="vertical-align: top">
 <P><FONT SIZE=2>(b)</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>Pro forma financial information: None.</FONT></P>
 </TD>
 </TR>
 <TR>
    <TD>&nbsp;</TD>
 <TD STYLE="vertical-align: top">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD STYLE="vertical-align: top">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD STYLE="vertical-align: top">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
    <TD>&nbsp;</TD>
 <TD STYLE="vertical-align: top">
 <P><FONT SIZE=2>(c)</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>Shell company transactions: None.</FONT></P>
 </TD>
 </TR>
 <TR>
    <TD>&nbsp;</TD>
 <TD STYLE="vertical-align: top">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD STYLE="vertical-align: top">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD STYLE="vertical-align: top">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
    <TD>&nbsp;</TD>
 <TD STYLE="vertical-align: top">
 <P><FONT SIZE=2>(d)</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P><FONT SIZE=2>Exhibits:</FONT></P>
 </TD>
 </TR>
 <TR>
    <TD>&nbsp;</TD>
 <TD STYLE="vertical-align: top">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD STYLE="vertical-align: top">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD STYLE="vertical-align: top">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
    <TD>&nbsp;</TD>
 <TD STYLE="vertical-align: top">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD STYLE="vertical-align: top">
 <P><FONT SIZE=2>10.1</FONT></P>
 </TD>
 <TD STYLE="vertical-align: top">
 <P ALIGN=JUSTIFY><FONT SIZE=2>Business Loan
 Agreement (Asset Based) between the Company and Venture Bank, dated December
 18, 2014. </FONT></P>
 </TD>
 </TR>
 <TR>
    <TD>&nbsp;</TD>
 <TD STYLE="vertical-align: top">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD STYLE="vertical-align: top">
 <P><FONT SIZE=2>10.2</FONT></P>
 </TD>
 <TD STYLE="vertical-align: top">
 <P ALIGN=JUSTIFY><FONT SIZE=2>Rider to Business
 Loan Agreement (Asset Based) and Related Documents between the Company and
 Venture Bank, dated December 18, 2014.</FONT></P>
 </TD>
 </TR>
 <TR>
    <TD>&nbsp;</TD>
 <TD STYLE="vertical-align: top">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD STYLE="vertical-align: top">
 <P><FONT SIZE=2>10.3</FONT></P>
 </TD>
 <TD STYLE="vertical-align: top">
 <P ALIGN="JUSTIFY"><FONT SIZE=2>Change in Terms Agreement between the
 Company and Venture Bank, dated December 18, 2014.</FONT></P>
 </TD>
 </TR>
</TABLE>

<P ALIGN=CENTER>&nbsp;</P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<P ALIGN=CENTER><FONT SIZE=3><B>SIGNATURES</B></FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>Pursuant to the
requirements of the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly
authorized.</FONT></P>

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 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="55%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="6%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="39%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P><FONT SIZE=2>Electromed, Inc.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Date: December 17, 2014</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>By</FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE='BORDER:NONE;BORDER-BOTTOM:SOLID BLACK .5PT'>
 <P><FONT SIZE=2>/s/ Jeremy Brock</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Name:</FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE='BORDER:NONE'>
 <P><FONT SIZE=2>Jeremy Brock</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Title:</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Chief
 Financial Officer</FONT></P>
 </TD>
 </TR>
</TABLE>

<BR><BR><BR><BR><BR><BR><BR>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<P ALIGN=CENTER><FONT SIZE=2><B>UNITED
STATES<BR>
SECURITIES AND EXCHANGE COMMISSION<BR>
Washington, D.C. 20549</B></FONT></P>

<P ALIGN=CENTER><FONT SIZE=2><B>ELECTROMED,
INC.<BR>
EXHIBIT INDEX TO FORM 8-K</B></FONT></P>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="47%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="52%" VALIGN=TOP>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Date of Report:</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>Commission File
 No.:</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>December 16, 2014</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>001-34839</FONT></P>
 </TD>
 </TR>
</TABLE>

<BR>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="7%" VALIGN=TOP>
 <P ALIGN=CENTER>&nbsp;</P>
 </TD>
 <TD WIDTH="2%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="91%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>Exhibit</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP STYLE='BORDER:NONE;BORDER-BOTTOM:SOLID BLACK .5PT'>
 <P ALIGN=CENTER><FONT SIZE=2><B>Number</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE='BORDER:NONE;BORDER-BOTTOM:  SOLID BLACK .5PT'>
 <P ALIGN=CENTER><FONT SIZE=2><B>Description</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP STYLE='BORDER:NONE'>
 <P ALIGN=CENTER><FONT SIZE=2>10.1</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE='BORDER:NONE'>
 <P ALIGN=JUSTIFY><FONT SIZE=2>Business Loan
 Agreement (Asset Based) between the Company and Venture Bank, dated December
 18, 2014. </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>10.2</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2>Rider to Business
 Loan Agreement (Asset Based) and Related Documents between the Company and
 Venture Bank, dated December 18, 2014.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>10.3</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2>Change in Terms
 Agreement between the Company and Venture Bank, dated December 18, 2014.</FONT></P>
 </TD>
 </TR>
</TABLE>

<BR><BR><BR><BR><BR><BR><BR><BR>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3>
</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>elmd144600_ex10-1.htm
<DESCRIPTION>BUSINESS LOAN AGREEMENT
<TEXT>
<HTML>
<HEAD><TITLE></TITLE></HEAD>
<BODY>

<P ALIGN=RIGHT><FONT SIZE=3><B>Exhibit 10.1</B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=3><B>BUSINESS
LOAN AGREEMENT (ASSET BASED)</B></FONT></P>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="15%" VALIGN=TOP STYLE='BORDER:NONE;BORDER-BOTTOM:  SOLID BLACK 1px'>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="12%" VALIGN=TOP STYLE='BORDER:NONE;BORDER-BOTTOM:  SOLID BLACK 1px'>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="12%" VALIGN=TOP STYLE='BORDER:NONE;BORDER-BOTTOM:  SOLID BLACK 1px'>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="12%" VALIGN=TOP STYLE='BORDER:NONE;BORDER-BOTTOM:SOLID BLACK 1px'>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="12%" VALIGN=TOP STYLE='BORDER:NONE;BORDER-BOTTOM:  SOLID BLACK 1px'>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="12%" VALIGN=TOP STYLE='BORDER:NONE;BORDER-BOTTOM:SOLID BLACK 1px'>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="12%" VALIGN=TOP STYLE='BORDER:NONE;BORDER-BOTTOM:SOLID BLACK 1px'>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="12%" VALIGN=TOP STYLE='BORDER:NONE;BORDER-BOTTOM:SOLID BLACK 1px'>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP STYLE='BORDER-left:SOLID BLACK 1px;BORDER-right:SOLID BLACK 1px'>
 <P ALIGN=CENTER><FONT SIZE=2><B>Principal</B></FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE='BORDER-TOP:NONE;BORDER-LEFT:  NONE;BORDER-RIGHT:SOLID BLACK 1px'>
 <P ALIGN=CENTER><FONT SIZE=2><B>Loan Date</B></FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE='BORDER-TOP:NONE;BORDER-LEFT:  NONE;BORDER-RIGHT:SOLID BLACK 1px'>
 <P ALIGN=CENTER><FONT SIZE=2><B>Maturity</B></FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE='BORDER-TOP:NONE;BORDER-LEFT:  NONE;BORDER-RIGHT:SOLID BLACK 1px'>
 <P ALIGN=CENTER><FONT SIZE=2><B>Loan No</B></FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE='BORDER-TOP:NONE;BORDER-LEFT:  NONE;BORDER-RIGHT:SOLID BLACK 1px'>
 <P ALIGN=CENTER><FONT SIZE=2><B>Call /
 Coll</B></FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE='BORDER-TOP:NONE;BORDER-LEFT:  NONE;BORDER-RIGHT:SOLID BLACK 1px'>
 <P ALIGN=CENTER><FONT SIZE=2><B>Account</B></FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE='BORDER-TOP:NONE;BORDER-LEFT:  NONE;BORDER-RIGHT:SOLID BLACK 1px'>
 <P ALIGN=CENTER><FONT SIZE=2><B>Officer</B></FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE='BORDER-TOP:NONE;BORDER-LEFT:  NONE;BORDER-RIGHT:SOLID BLACK 1px'>
 <P ALIGN=CENTER><FONT SIZE=2><B>Initials</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP STYLE='BORDER:SOLID BLACK 1px;BORDER-TOP:NONE'>
 <P ALIGN=CENTER><FONT SIZE=2><B>$2,500,000.00</B></FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE='BORDER-TOP:NONE;BORDER-LEFT:  NONE;BORDER-BOTTOM:SOLID BLACK 1px;BORDER-RIGHT:SOLID BLACK 1px'>
 <P ALIGN=CENTER><FONT SIZE=2><B>12-18-2014</B></FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE='BORDER-TOP:NONE;BORDER-LEFT:  NONE;BORDER-BOTTOM:SOLID BLACK 1px;BORDER-RIGHT:SOLID BLACK 1px'>
 <P ALIGN=CENTER><FONT SIZE=2><B>12-18-2015</B></FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE='BORDER-TOP:NONE;BORDER-LEFT:  NONE;BORDER-BOTTOM:SOLID BLACK 1px;BORDER-RIGHT:SOLID BLACK 1px'>
 <P ALIGN=CENTER><FONT SIZE=2><B>15695</B></FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE='BORDER-TOP:NONE;BORDER-LEFT:  NONE;BORDER-BOTTOM:SOLID BLACK 1px;BORDER-RIGHT:SOLID BLACK 1px'>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE='BORDER-TOP:NONE;BORDER-LEFT:  NONE;BORDER-BOTTOM:SOLID BLACK 1px;BORDER-RIGHT:SOLID BLACK 1px'>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE='BORDER-TOP:NONE;BORDER-LEFT:  NONE;BORDER-BOTTOM:SOLID BLACK 1px;BORDER-RIGHT:SOLID BLACK 1px'>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE='BORDER-TOP:NONE;BORDER-LEFT:  NONE;BORDER-BOTTOM:SOLID BLACK 1px;BORDER-RIGHT:SOLID BLACK 1px'>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=8 VALIGN=TOP STYLE='BORDER-TOP:NONE;BORDER-LEFT:SOLID BLACK 1px;BORDER-BOTTOM:NONE;BORDER-RIGHT:SOLID BLACK 1px'>
 <P ALIGN=CENTER><FONT SIZE=2>References
 in the boxes above are for Lender&#146;s use only and do not limit the
 applicability of this document to any particular loan or item.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=8 VALIGN=TOP STYLE='BORDER:SOLID BLACK 1px;BORDER-TOP:NONE'>
 <P ALIGN=CENTER><FONT SIZE=2>Any
 item above containing &#147;***&#148; has been omitted due to text length limitations.</FONT></P>
 </TD>
 </TR>
</TABLE>

<BR>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="12%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="48%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="10%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="30%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>Borrower:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>Electromed, Inc.</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>Lender:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>Venture Bank</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>500 Sixth Avenue Northwest</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>4470 W 78th St. Circle</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>New Prague, MN 56071</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>Suite 100</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>Bloomington, MN 55435</B></FONT></P>
 </TD>
 </TR>
</TABLE>

<BR>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="4%" VALIGN=TOP STYLE='BORDER:NONE;BORDER-BOTTOM:DOUBLE BLACK 3px'>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="4%" VALIGN=TOP STYLE='BORDER:NONE;BORDER-BOTTOM:DOUBLE BLACK 3px'>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="92%" VALIGN=TOP STYLE='BORDER:NONE;BORDER-BOTTOM:DOUBLE BLACK 3px'>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP STYLE='BORDER:NONE'>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE='BORDER:NONE'>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE='BORDER:NONE'>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2><B>THIS BUSINESS LOAN
 AGREEMENT (ASSET BASED) dated December 18, 2014, is made and executed between
 Electromed, Inc. (&#147;Borrower&#148;) and Venture Bank (&#147;Lender&#148;) 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&#146;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&#146;s sole judgment and
 discretion; and (C) all such Loans shall be and remain subject to the terms
 and conditions of this Agreement.</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>TERM</B><FONT  SIZE=2>. This Agreement shall be effective as
 of December 18, 2014, and shall continue in full force and effect until such
 time as all of Borrower&#146;s Loans in favor of Lender have been paid in full,
 including principal, interest, costs, expenses, attorneys&#146; fees, and other
 fees and charges, or until such time as the parties may agree in writing to
 terminate this Agreement.</FONT></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>LINE OF CREDIT</B><FONT  SIZE=2>. 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:</FONT></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>Conditions
 Precedent to Each Advance</B>. Lender&#146;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:</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=2>(1) Lender shall have received evidence that this Agreement and all
 Related Documents have been duly authorized, executed, and delivered by
 Borrower to Lender.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=2>(2) Lender shall have received such opinions of counsel, supplemental
 opinions, and documents as Lender may request.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=2>(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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=2>(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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=2>(5) Lender, at its option and for its sole benefit, shall have
 conducted an audit of Borrower&#146;s Accounts, books, records, and operations,
 and Lender shall be satisfied as to their condition.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=2>(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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=2>(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 &#147;Compliance Certificate.&#148;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>Making Loan
 Advances</B>. Advances
 under this credit facility, as well as directions for payment from Borrower&#146;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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>Mandatory Loan
 Repayments</B>. 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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>Loan Account</B>. 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&#146;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&#146;s receipt of any such
 statement which Borrower deems to be incorrect.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>COLLATERAL</B><FONT  SIZE=2>. 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&#146;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:</FONT></FONT></P>
 </TD>
 </TR>
</TABLE>

<BR>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<BR>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="12%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="76%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="12%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 </TR>
 <TR>
<TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=3><B>BUSINESS
 LOAN AGREEMENT (ASSET BASED)</B></FONT></P>
 </TD>
<TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2><B>Loan No: 15695</B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN="CENTER"><FONT SIZE="3"><B>(Continued)</B> </FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2><B>Page 2</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM STYLE='BORDER:NONE;BORDER-BOTTOM:  DOUBLE BLACK 3px'>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE='BORDER:NONE;BORDER-BOTTOM:  DOUBLE BLACK 3px'>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE='BORDER:NONE;BORDER-BOTTOM:  DOUBLE BLACK 3px'>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
</TABLE>

<BR>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="4%" VALIGN=TOP>
 <P >&nbsp;</P>
 </TD>
 <TD WIDTH="4%" VALIGN=TOP>
 <P >&nbsp;</P>
 </TD>
 <TD WIDTH="92%" VALIGN=TOP>
 <P >&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Perfection of
 Security Interests</B>. Borrower agrees to execute all
 documents perfecting Lender&#146;s Security Interest and to take whatever actions
 are requested by Lender to perfect and continue Lender&#146;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&#146;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&#146;s security interest in the
 Collateral. Borrower promptly will notify Lender before any change in
 Borrower&#146;s name including any change to the assumed business names of
 Borrower. Borrower also promptly will notify Lender before any change in
 Borrower&#146;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&#146;s principal governance office or should Borrower merge
 or consolidate with any other entity.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Collateral Records</B>.
 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&#146;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&#146;s Corporate Headquarters. The above is an accurate and complete list
 of all locations at which Borrower keeps or maintains business records
 concerning Borrower&#146;s collateral.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Collateral Schedule</B>s.
 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
 &#147;Affirmative Covenants&#148;.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Representations and
 Warranties Concerning Accounts</B>. 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&#146;s expense
 to inspect, examine, and audit Borrower&#146;s records and to confirm with Account
 Debtors the accuracy of such Accounts.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>CONDITIONS PRECEDENT TO EACH ADVANCE</B><FONT  SIZE=2>. Lender&#146;s obligation to make the
 initial Advance and each subsequent Advance under this Agreement shall be
 subject to the fulfillment to Lender&#146;s satisfaction of all of the conditions
 set forth in this Agreement and in the Related Documents.</FONT></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Loan Documents</B>.
 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&#146;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&#146;s counsel.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Borrower&#146;s Authorization</B>.
 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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Fees and Expenses
 Under This Agreement</B>. 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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Representations and
 Warranties</B>. 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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>No Event of Default</B>.
 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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>REPRESENTATIONS AND WARRANTIES</B><FONT  SIZE=2>. 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:</FONT></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Organization</B>.
 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&#146;s
 state of organization or any change in Borrower&#146;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&#146;s
 business activities.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Assumed Business
 Names</B>. 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: <B>None</B>.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Authorization</B>.
 Borrower&#146;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&#146;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&#146;s properties.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Financial
 Information</B>. Each of Borrower&#146;s financial statements
 supplied to Lender truly and completely disclosed Borrower&#146;s financial
 condition as of the date of the statement, and there has been no material adverse
 change in Borrower&#146;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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Legal Effect</B>.
 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.</FONT></P>
 </TD>
 </TR>
</TABLE>

<BR>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<BR>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="12%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="76%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="12%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 </TR>

<TR>
<TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=3><B>BUSINESS
 LOAN AGREEMENT (ASSET BASED)</B></FONT></P>
 </TD>
<TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2><B>Loan No: 15695</B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN="CENTER"><FONT SIZE="3"><B>(Continued)</B> </FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2><B>Page 3</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM STYLE='BORDER:NONE;BORDER-BOTTOM:  DOUBLE BLACK 3px'>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE='BORDER:NONE;BORDER-BOTTOM:  DOUBLE BLACK 3px'>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE='BORDER:NONE;BORDER-BOTTOM:  DOUBLE BLACK 3px'>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
</TABLE>

<BR>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="4%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="4%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="92%" VALIGN=TOP>
 <P ALIGN=JUSTIFY>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Properties</B>.
 Except as contemplated by this Agreement or as previously disclosed in
 Borrower&#146;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&#146;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&#146;s properties are titled in Borrower&#146;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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Hazardous
 Substances</B>. Except as disclosed to and acknowledged
 by Lender in writing, Borrower represents and warrants that: (1) During the
 period of Borrower&#146;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&#146;s expense and
 for Lender&#146;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&#146;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&#146;
 fees, consultants&#146; 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&#146;s acquisition of any interest
 in any of the Collateral, whether by foreclosure or otherwise.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Litigation and
 Claims</B>. 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&#146;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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Taxes</B>.
 To the best of Borrower&#146;s knowledge, all of Borrower&#146;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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Lien Priority</B>.
 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&#146;s Loan and Note, that
 would be prior or that may in any way be superior to Lender&#146;s Security
 Interests and rights in and to such Collateral.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Binding Effect</B>.
 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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>AFFIRMATIVE COVENANTS</B><FONT SIZE=2>. Borrower covenants and agrees with Lender
 that, so long as this Agreement remains in effect, Borrower will:</FONT></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Notices of Claims
 and Litigation</B>. Promptly inform Lender in writing of
 (1) all material adverse changes in Borrower&#146;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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Financial Records</B>.
 Maintain its books and records in accordance with GAAP, applied on a
 consistent basis, and permit Lender to examine and audit Borrower&#146;s books and
 records at all reasonable times.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Financial
 Statements</B>. Furnish Lender with the following:</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Interim Statements</B>.
 As soon as available, but in no event later than 45 days after the end of
 each month, Borrower&#146;s balance sheet and profit and loss statement for the
 period ended, prepared by Borrower.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Tax Returns</B>.
 As soon as available, but in no event later than 45 days after the applicable
 filing date for the tax reporting period ended, Borrower&#146;s Federal and other
 governmental tax returns, prepared by a tax professional satisfactory to
 Lender.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Additional
 Requirements</B>.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2>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&#146;s
 Accounts Receivable Aging report.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2>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&#146;s Collateral
 Schedule.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2>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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Additional
 Information</B>. Furnish such additional information and
 statements, as Lender may request from time to time.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Additional Requirements</B>.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2>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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2>2. Borrower will maintain their primary deposit accounts with Venture
 Bank.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2>3. A pro-rated non-usage fee of 0.125% based on the average unused
 portion of the line of credit will be assessed up to the maturity date of
 12/18/2015.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>COVENANTS
 REVIEWED AND ACCEPTED BY: JTB (initials)</B></FONT></P>
 </TD>
 </TR>
</TABLE>

<BR>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<BR>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="12%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="76%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="12%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 </TR>
 <TR>
<TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>

 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=3><B>BUSINESS LOAN
 AGREEMENT (ASSET BASED)</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P align=justify><FONT SIZE=2><B>Loan No: 15695</B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN="CENTER"><FONT SIZE="3"><B>(Continued)</B> </FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2><B>Page 4</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM STYLE='BORDER:NONE;BORDER-BOTTOM:  DOUBLE BLACK 3px'>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE='BORDER:NONE;BORDER-BOTTOM:  DOUBLE BLACK 3px'>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE='BORDER:NONE;BORDER-BOTTOM:  DOUBLE BLACK 3px'>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
</TABLE>

<BR>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="4%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="4%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="92%" VALIGN=TOP>
 <P ALIGN=JUSTIFY>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Insurance</B>.
 Maintain fire and other risk insurance, public liability insurance, and such
 other insurance as Lender may require with respect to Borrower&#146;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&#146;s loss
 payable or other endorsements as Lender may require.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Insurance Reports</B>.
 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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Other Agreements</B>.
 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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Loan Proceeds</B>.
 Use all Loan proceeds solely for Borrower&#146;s business operations, unless
 specifically consented to the contrary by Lender in writing.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Taxes, Charges and
 Liens</B>. 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&#146;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&#146;s books
 adequate reserves with respect to such contested assessment, tax, charge,
 levy, lien, or claim in accordance with GAAP.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Performance</B>.
 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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Operations</B>.
 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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Environmental
 Studies</B>. Promptly conduct and complete, at
 Borrower&#146;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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Compliance with
 Governmental Requirements</B>. Comply with all laws,
 ordinances, and regulations, now or hereafter in effect, of all governmental
 authorities applicable to the conduct of Borrower&#146;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&#146;s sole
 opinion, Lender&#146;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&#146;s interest.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Inspection</B>.
 Permit employees or agents of Lender at any reasonable time to inspect any
 and all Collateral for the Loan or Loans and Borrower&#146;s other properties and
 to examine or audit Borrower&#146;s books, accounts, and records and to make
 copies and memoranda of Borrower&#146;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&#146;s expense.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Compliance
 Certificates</B>. Unless waived in writing by Lender,
 provide Lender at least annually, with a certificate executed by Borrower&#146;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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Environmental
 Compliance and Reports</B>. 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&#146;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&#146;s part in connection with any
 environmental activity whether or not there is damage to the environment
 and/or other natural resources.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Additional
 Assurances</B>. 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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>LENDER&#146;S EXPENDITURES</B><FONT SIZE=2>. If any action or proceeding is commenced
 that would materially affect Lender&#146;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&#146;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&#146;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&#146;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&#146;s maturity.</FONT></FONT></P>
 </TD>
 </TR>
</TABLE>

<BR>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<BR>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="12%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="76%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="12%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 </TR>
 <TR>
<TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=3><B>BUSINESS
 LOAN AGREEMENT (ASSET BASED)</B></FONT></P>
 </TD>
<TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P align=justify><FONT SIZE=2><B>Loan No: 15695</B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN="CENTER"> <FONT SIZE="3"><B>(Continued)</B> </FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2><B>Page 5</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM STYLE='BORDER:NONE;BORDER-BOTTOM:  DOUBLE BLACK 3px'>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE='BORDER:NONE;BORDER-BOTTOM:  DOUBLE BLACK 3px'>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE='BORDER:NONE;BORDER-BOTTOM:  DOUBLE BLACK 3px'>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
</TABLE>

<BR>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="4%" VALIGN=TOP>
 <P >&nbsp;</P>
 </TD>
 <TD WIDTH="4%" VALIGN=TOP>
 <P >&nbsp;</P>
 </TD>
 <TD WIDTH="92%" VALIGN=TOP>
 <P align=justify>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>NEGATIVE COVENANTS</B><FONT SIZE=2>. Borrower covenants and agrees with Lender
 that while this Agreement is in effect, Borrower shall not, without the prior
 written consent of Lender:</FONT></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Indebtedness and
 Liens</B>. (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&#146;s assets (except as allowed
 as Permitted Liens), or (3) sell with recourse any of Borrower&#146;s accounts,
 except to Lender.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Continuity of
 Operations</B>. (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&#146;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 &#147;Subchapter S Corporation&#148; (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&#146;s stock, or purchase or
 retire any of Borrower&#146;s outstanding shares or alter or amend Borrower&#146;s
 capital structure.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Loans, Acquisitions
 and Guaranties</B>. (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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Agreements</B>.
 Enter into any agreement containing any provisions which would be violated or
 breached by the performance of Borrower&#146;s obligations under this Agreement or
 in connection herewith.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>CESSATION OF ADVANCES</B><FONT SIZE=2>. 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&#146;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&#146;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.</FONT></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>RIGHT OF SETOFF</B><FONT SIZE=2>. To the extent permitted by applicable law,
 Lender reserves a right of setoff in all Borrower&#146;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&#146;s option, to administratively freeze all such accounts to
 allow Lender to protect Lender&#146;s charge and setoff rights provided in this
 paragraph.</FONT></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>DEFAULT</B><FONT SIZE=2>.
 Each of the following shall constitute an Event of Default under this
 Agreement:</FONT></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Payment Default</B>.
 Borrower fails to make any payment when due under the Loan.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Other Defaults</B>.
 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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>False Statements</B>.
 Any warranty, representation or statement made or furnished to Lender by
 Borrower or on Borrower&#146;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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Insolvency</B>.
 The dissolution or termination of Borrower&#146;s existence as a going business,
 the insolvency of Borrower, the appointment of a receiver for any part of
 Borrower&#146;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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Defective
 Collateralization</B>. 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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Creditor or
 Forfeiture Proceedings</B>. 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&#146;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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Events Affecting
 Guaranto</B>r. 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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Change in Ownership</B>.
 Any change in ownership of twenty-five percent (25%) or more of the common stock
 of Borrower.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Adverse Change</B>.
 A material adverse change occurs in Borrower&#146;s financial condition, or Lender
 believes the prospect of payment or performance of the Loan is impaired.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Insecurity</B>.
 Lender in good faith believes itself insecure.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Right to Cure</B>.
 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&#146;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.</FONT></P>
 </TD>
 </TR>
</TABLE>

<BR>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<BR>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="12%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="76%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="12%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 </TR>
 <TR>
<TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=3><B>BUSINESS
 LOAN AGREEMENT (ASSET BASED)</B></FONT></P>
 </TD>
<TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P align=justify><FONT SIZE=2><B>Loan No: 15695</B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN="CENTER"> <FONT SIZE="3"><B>(Continued)</B> </FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2><B>Page 6</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM STYLE='BORDER:NONE;BORDER-BOTTOM:  DOUBLE BLACK 3px'>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE='BORDER:NONE;BORDER-BOTTOM:  DOUBLE BLACK 3px'>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE='BORDER:NONE;BORDER-BOTTOM:  DOUBLE BLACK 3px'>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
</TABLE>

<BR>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="4%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="4%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="92%" VALIGN=TOP>
 <P ALIGN=JUSTIFY>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>EFFECT OF AN EVENT OF DEFAULT</B><FONT  SIZE=2>. 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&#146;s
 option, all Indebtedness immediately will </FONT><FONT SIZE=2>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 &#147;Insolvency&#148; 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&#146;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&#146;s right to declare a default and to exercise its rights and
 remedies.</FONT></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>MISCELLANEOUS PROVISIONS</B><FONT SIZE=2>. The following miscellaneous provisions are a
 part of this Agreement:</FONT></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Amendments</B>.
 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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Attorneys&#146; Fees;
 Expenses</B>. Borrower agrees to pay upon demand all of
 Lender&#146;s costs and expenses, including Lender&#146;s reasonable attorneys&#146; fees
 and Lender&#146;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&#146;s reasonable attorneys&#146; fees and legal
 expenses whether or not there is a lawsuit, including reasonable attorneys&#146;
 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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Caption Headings</B>.
 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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Consent to Loan
 Participation</B>. Borrower agrees and consents to
 Lender&#146;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&#146;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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>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.</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>No Waiver by Lender</B>.
 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&#146;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&#146;s rights or of any of Borrower&#146;s or any
 Grantor&#146;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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Notices</B>.
 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&#146;s address. For notice purposes,
 Borrower agrees to keep Lender informed at all times of Borrower&#146;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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Severability</B>.
 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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Subsidiaries and
 Affiliates of Borrower</B>. To the extent the context of
 any provisions of this Agreement makes it appropriate, including without
 limitation any representation, warranty or covenant, the word &#147;Borrower&#148; as
 used in this Agreement shall include all of Borrower&#146;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&#146;s subsidiaries or affiliates.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Successors and
 Assigns</B>. All covenants and agreements by or on
 behalf of Borrower contained in this Agreement or any Related Documents shall
 bind Borrower&#146;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&#146;s rights under this Agreement or any interest
 therein, without the prior written consent of Lender.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Survival of
 Representations and Warranties</B>. 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&#146;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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Time is of the
 Essence</B>. Time is of the essence in the performance
 of this Agreement.</FONT></P>
 </TD>
 </TR>
</TABLE>

<BR>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<BR>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="12%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="76%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="12%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 </TR>
 <TR>
<TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=3><B>BUSINESS
 LOAN AGREEMENT (ASSET BASED)</B></FONT></P>
 </TD>
<TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P align=justify><FONT SIZE=2><B>Loan No: 15695</B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN="CENTER"><FONT SIZE="3"><B>(Continued)</B> </FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2><B>Page 7</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM STYLE='BORDER:NONE;BORDER-BOTTOM:  DOUBLE BLACK 3px'>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE='BORDER:NONE;BORDER-BOTTOM:  DOUBLE BLACK 3px'>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE='BORDER:NONE;BORDER-BOTTOM:  DOUBLE BLACK 3px'>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
</TABLE>

<BR>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="4%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="4%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="92%" VALIGN=TOP>
 <P ALIGN=JUSTIFY>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>DEFINITIONS</B><FONT SIZE=2>. The following capitalized words and terms
 shall have the following meanings when used in this Agreement. Unless
 specifically </FONT><FONT SIZE=2>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:</FONT></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Account</B>.
 The word &#147;Account&#148; 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).</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Account Debtor</B>.
 The words &#147;Account Debtor&#148; mean the person or entity obligated upon an
 Account.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Advance</B>.
 The word &#147;Advance&#148; means a disbursement of Loan funds made, or to be made, to
 Borrower or on Borrower&#146;s behalf under the terms and conditions of this
 Agreement.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Agreement</B>.
 The word &#147;Agreement&#148; 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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Borrower</B>.
 The word &#147;Borrower&#148; means Electromed, Inc. and includes all co-signers and
 co-makers signing the Note and all their successors and assigns.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Borrowing Base</B>.
 The words &#147;Borrowing Base&#148; 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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Business Day</B>.
 The words &#147;Business Day&#148; mean a day on which commercial banks are open in the
 State of Minnesota.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Collateral</B>.
 The word &#147;Collateral&#148; 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&#146;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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Eligible Accounts</B>.
 The words &#147;Eligible Accounts&#148; mean at any time, all of Borrower&#146;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:</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2>(1) Accounts with respect to which the Account Debtor is employee or
 agent of Borrower.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2>(2) Accounts with respect to which the Account Debtor is a subsidiary
 of, or affiliated with Borrower or its shareholders, officers, or directors.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2>(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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2>(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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2>(5) Accounts which are subject to dispute, counterclaim, or setoff.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2>(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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2>(7) Accounts with respect to which Lender, in its sole discretion,
 deems the creditworthiness or financial condition of the Account Debtor to be
 unsatisfactory.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2>(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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2>(9) Accounts which have not been paid in full within 90 Days from the
 invoice date.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2>(10) Contractor progress billings, foreign receivables, bonded
 receivables and retainages.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Environmental Laws</B>.
 The words &#147;Environmental Laws&#148; 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. (&#147;CERCLA&#148;), the Superfund Amendments and
 Reauthorization Act of 1986, Pub. L. No. 99-499 (&#147;SARA&#148;), 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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Event of Default</B>.
 The words &#147;Event of Default&#148; mean any of the events of default set forth in
 this Agreement in the default section of this Agreement.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Expiration Date</B>.
 The words &#147;Expiration Date&#148; mean the date of termination of Lender&#146;s commitment
 to lend under this Agreement.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>GAAP</B>.
 The word &#147;GAAP&#148; means generally accepted accounting principles.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Grantor</B>.
 The word &#147;Grantor&#148; 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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Guarantor</B>.
 The word &#147;Guarantor&#148; means any guarantor, surety, or accommodation party of
 any or all of the Loan.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Guaranty</B>.
 The word &#147;Guaranty&#148; means the guaranty from Guarantor to Lender, including
 without limitation a guaranty of all or part of the Note.</FONT></P>
 </TD>
 </TR>
</TABLE>

<BR>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<BR>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="12%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="76%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="12%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 </TR>
 <TR>
<TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=3><B>BUSINESS
 LOAN AGREEMENT (ASSET BASED) </B></FONT></P>
 </TD>
<TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P align=justify><FONT SIZE=2><B>Loan No: 15695</B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN="CENTER"><FONT SIZE="3"><B>(Continued)</B> </FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2><B>Page 8</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM STYLE='BORDER:NONE;BORDER-BOTTOM:  DOUBLE BLACK 3px'>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE='BORDER:NONE;BORDER-BOTTOM:  DOUBLE BLACK 3px'>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE='BORDER:NONE;BORDER-BOTTOM:  DOUBLE BLACK 3px'>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
</TABLE>

<BR>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="4%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="4%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="92%" VALIGN=TOP>
 <P ALIGN=JUSTIFY>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Hazardous
 Substances</B>. The words &#147;Hazardous Substances&#148; 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 &#147;Hazardous Substances&#148; 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 &#147;Hazardous Substances&#148; also includes, without
 limitation, petroleum and petroleum by-products or any fraction thereof and
 asbestos.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Indebtedness</B>.
 The word &#147;Indebtedness&#148; 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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Lender</B>.
 The word &#147;Lender&#148; means Venture Bank, its successors and assigns.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Loan</B>.
 The word &#147;Loan&#148; 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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Note</B>.
 The word &#147;Note&#148; means the Note dated December 18, 2014 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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Permitted Liens</B>.
 The words &#147;Permitted Liens&#148; 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 &#147;Indebtedness and Liens&#148;; (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&#146;s assets.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Primary Credit
 Facility</B>. The words &#147;Primary Credit Facility&#148; mean
 the credit facility described in the Line of Credit section of this
 Agreement.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Related Documents</B>.
 The words &#147;Related Documents&#148; 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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Security Agreement</B>.
 The words &#147;Security Agreement&#148; 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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Security Interest</B>.
 The words &#147;Security Interest&#148; 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&#146;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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>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, 2014.</B></FONT></P>
 </TD>
 </TR>
</TABLE>
<BR>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="3%" VALIGN=TOP>
 <P >&nbsp;</P>
 </TD>
 <TD WIDTH="40%" VALIGN=TOP>
 <P >&nbsp;</P>
 </TD>
 <TD WIDTH="57%" VALIGN=TOP>
 <P >&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>BORROWER:</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>ELECTROMED, INC.</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>By:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE='BORDER:NONE;BORDER-BOTTOM:SOLID BLACK 1px'>
 <P align=justify><FONT SIZE=2><B>/s/ Jeremy Brock</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE='BORDER:NONE'>
 <P align=justify><FONT SIZE=2><B>Jeremy
 Brock, Chief Financial Officer of Electromed, Inc.</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=2 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>LENDER:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=2 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>VENTURE BANK</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>By:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE='BORDER:NONE;BORDER-BOTTOM:SOLID BLACK 1px'>
 <P align=justify><FONT SIZE=2><B>/s/ Kevin Doyle</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>Authorized Signer</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
</TABLE>

<BR>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="100%" VALIGN=TOP STYLE='BORDER:NONE;BORDER-BOTTOM:  DOUBLE BLACK 3px'>
 <P ALIGN=CENTER>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP >
 <P ALIGN=CENTER><FONT SIZE=1>LaserPro, Ver. 14.4.10.012 Copr. D+H USA
 Corporation 1997, 2014. <FONT SIZE=1>All Rights Reserved. - MN
 c:\APPS\CFI\CFI\LPL\C40.FC TR-0872 PR-</FONT></FONT></P>
 </TD>
 </TR>
</TABLE>

<BR>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>3
<FILENAME>elmd144600_ex10-2.htm
<DESCRIPTION>RIDER TO BUSINESS LOAN AGREEMENT
<TEXT>
<HTML>
<HEAD><TITLE></TITLE></HEAD>
<BODY>

<P ALIGN=RIGHT><FONT SIZE=3><B>Exhibit 10.2</B></FONT></P>

<P ALIGN=CENTER><FONT SIZE=3><B>RIDER TO BUSINESS LOAN AGREEMENT (ASSET
BASED)<BR>
AND RELATED DOCUMENTS</B></FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Rider
to Business Loan Agreement (Asset Based) (&#147;Rider&#148;) is attached to and made a
part of that certain Business Loan Agreement (Asset Based) dated December 18,
2014 (&#147;Business Loan Agreement&#148;) between Electromed, Inc. (&#147;Borrower&#148;) and
Venture Bank (&#147;Lender&#148;). 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:</FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lender
does not require any opinions of counsel to Borrower in connection with the
Loan.</FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Borrower&#146;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&#146;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&#146;s
expense only if Lender has reasonable cause to believe Borrower is in violation
of such provisions.</FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lender&#146;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.</FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.</FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Borrower
shall not have the obligation to notify Lender of management changes other than
executive management changes.</FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lender
shall give Borrower reasonable notice prior to inspection of the tangible
Collateral or Borrower&#146;s books and records.</FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lender
shall not have the right to exercise any of the remedies 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.</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.</FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lender
will promptly notify Borrower if it makes any expenditures or takes any action
pursuant to the paragraph labeled &#147;LENDER&#146;S EXPENDITURES.&#148;</FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Borrower
shall have the right to incur indebtedness 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. </FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 filing is made or the court
grants the petition for relief.</FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A change
in ownership of Borrower&#146;s stock shall not constitute a default.</FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
material adverse change in Borrower&#146;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.</FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.</FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lender
shall not sell the Loan to another lender or sell participation interests in
the Loan without Borrower&#146;s prior consent, except in the event of the sale or
transfer of substantially all the assets of Lender. </FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There
are no guarantors of the Loan, and no affiliates of Borrower shall be required
to provide Collateral. </FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
definition of &#147;Eligible Accounts&#148; 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&#146;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.</FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 &#147;RE Note&#148;) and the
&#147;Related Documents&#148; as defined in the Business Loan Agreement of even date
herewith between Borrower and Lender relating to the RE Note. </FONT></P>

<P ALIGN=CENTER><FONT SIZE=2>- 2 -</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;19.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Borrower
may maintain deductibles 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.</FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lender
waives the obligation of Borrower to make monthly payments into reserves for
payment of insurance unless and until an Event of Default occurs.</FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;21.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lender
will not require direct payment of accounts to Lender or into a lock box unless
and until an Event of Default occurs. </FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;22.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Borrower
has a corporate seal but it is not required for effective execution of the
Business Loan Agreement or any of the Related Documents.</FONT></P>

<P ALIGN=CENTER><FONT SIZE=2>[SIGNATURES ON FOLLOWING PAGE]</FONT></P>

<BR>
<BR><BR><BR><BR><BR><BR><BR><BR>

<P ALIGN=CENTER><FONT SIZE=2>- 3 -</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<BR>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="50%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="47%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P><FONT SIZE=2><B>VENTURE BANK</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>By:</FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=2>/s/ Kevin
 Doyle</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Its:</FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=2>Vice
 President</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P><FONT SIZE=2><B>ELECTROMED, INC.</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>By:</FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=2>/s/ Jeremy
 Brock</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Its:</FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=2>Chief
 Financial Officer</FONT></P>
 </TD>
 </TR>
</TABLE>


<BR>
<BR><BR><BR><BR><BR><BR><BR><BR>

<P ALIGN=CENTER><FONT SIZE=2>[SIGNATURE PAGE TO RIDER TO BUSINESS LOAN
AGREEMENT<BR>
AND RELATED DOCUMENTS]</FONT></P>

<P ALIGN=CENTER><FONT SIZE=2>- 4 -</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3>
</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>4
<FILENAME>elmd144600_ex10-3.htm
<DESCRIPTION>CHANGE IN TERMS AGREEMENT
<TEXT>
<HTML>
<HEAD><TITLE></TITLE></HEAD>
<BODY>


<P ALIGN=RIGHT><FONT SIZE=3><B>Exhibit 10.3</B></FONT></P>


<P ALIGN=CENTER><FONT SIZE=3><B>CHANGES IN TERMS AGREEMENT</B></FONT></P>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="15%" VALIGN=TOP STYLE='BORDER:NONE;BORDER-BOTTOM:  SOLID BLACK 1px'>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="12%" VALIGN=TOP STYLE='BORDER:NONE;BORDER-BOTTOM:  SOLID BLACK 1px'>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="12%" VALIGN=TOP STYLE='BORDER:NONE;BORDER-BOTTOM:  SOLID BLACK 1px'>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="12%" VALIGN=TOP STYLE='BORDER:NONE;BORDER-BOTTOM:SOLID BLACK 1px'>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="12%" VALIGN=TOP STYLE='BORDER:NONE;BORDER-BOTTOM:  SOLID BLACK 1px'>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="12%" VALIGN=TOP STYLE='BORDER:NONE;BORDER-BOTTOM:SOLID BLACK 1px'>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="12%" VALIGN=TOP STYLE='BORDER:NONE;BORDER-BOTTOM:SOLID BLACK 1px'>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="12%" VALIGN=TOP STYLE='BORDER:NONE;BORDER-BOTTOM:SOLID BLACK 1px'>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP STYLE='BORDER-left:SOLID BLACK 1px;BORDER-right:SOLID BLACK 1px'>
 <P ALIGN=CENTER><FONT SIZE=2><B>Principal</B></FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE='BORDER-TOP:NONE;BORDER-LEFT:  NONE;BORDER-RIGHT:SOLID BLACK 1px'>
 <P ALIGN=CENTER><FONT SIZE=2><B>Loan Date</B></FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE='BORDER-TOP:NONE;BORDER-LEFT:  NONE;BORDER-RIGHT:SOLID BLACK 1px'>
 <P ALIGN=CENTER><FONT SIZE=2><B>Maturity</B></FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE='BORDER-TOP:NONE;BORDER-LEFT:  NONE;BORDER-RIGHT:SOLID BLACK 1px'>
 <P ALIGN=CENTER><FONT SIZE=2><B>Loan No</B></FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE='BORDER-TOP:NONE;BORDER-LEFT:  NONE;BORDER-RIGHT:SOLID BLACK 1px'>
 <P ALIGN=CENTER><FONT SIZE=2><B>Call /
 Coll</B></FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE='BORDER-TOP:NONE;BORDER-LEFT:  NONE;BORDER-RIGHT:SOLID BLACK 1px'>
 <P ALIGN=CENTER><FONT SIZE=2><B>Account</B></FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE='BORDER-TOP:NONE;BORDER-LEFT:  NONE;BORDER-RIGHT:SOLID BLACK 1px'>
 <P ALIGN=CENTER><FONT SIZE=2><B>Officer</B></FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE='BORDER-TOP:NONE;BORDER-LEFT:  NONE;BORDER-RIGHT:SOLID BLACK 1px'>
 <P ALIGN=CENTER><FONT SIZE=2><B>Initials</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP STYLE='BORDER:SOLID BLACK 1px;BORDER-TOP:NONE'>
 <P ALIGN=CENTER><FONT SIZE=2><B>$2,500,000.00</B></FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE='BORDER-TOP:NONE;BORDER-LEFT:  NONE;BORDER-BOTTOM:SOLID BLACK 1px;BORDER-RIGHT:SOLID BLACK 1px'>
 <P ALIGN=CENTER><FONT SIZE=2><B>12-18-2014</B></FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE='BORDER-TOP:NONE;BORDER-LEFT:  NONE;BORDER-BOTTOM:SOLID BLACK 1px;BORDER-RIGHT:SOLID BLACK 1px'>
 <P ALIGN=CENTER><FONT SIZE=2><B>12-18-2015</B></FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE='BORDER-TOP:NONE;BORDER-LEFT:  NONE;BORDER-BOTTOM:SOLID BLACK 1px;BORDER-RIGHT:SOLID BLACK 1px'>
 <P ALIGN=CENTER><FONT SIZE=2><B>15695</B></FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE='BORDER-TOP:NONE;BORDER-LEFT:  NONE;BORDER-BOTTOM:SOLID BLACK 1px;BORDER-RIGHT:SOLID BLACK 1px'>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE='BORDER-TOP:NONE;BORDER-LEFT:  NONE;BORDER-BOTTOM:SOLID BLACK 1px;BORDER-RIGHT:SOLID BLACK 1px'>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE='BORDER-TOP:NONE;BORDER-LEFT:  NONE;BORDER-BOTTOM:SOLID BLACK 1px;BORDER-RIGHT:SOLID BLACK 1px'>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE='BORDER-TOP:NONE;BORDER-LEFT:  NONE;BORDER-BOTTOM:SOLID BLACK 1px;BORDER-RIGHT:SOLID BLACK 1px'>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=8 VALIGN=TOP STYLE='BORDER-TOP:NONE;BORDER-LEFT:SOLID BLACK 1px;BORDER-BOTTOM:NONE;BORDER-RIGHT:SOLID BLACK 1px'>
 <P ALIGN=CENTER><FONT SIZE=2>References
 in the boxes above are for Lender&#146;s use only and do not limit the
 applicability of this document to any particular loan or item.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=8 VALIGN=TOP STYLE='BORDER:SOLID BLACK 1px;BORDER-TOP:NONE'>
 <P ALIGN=CENTER><FONT SIZE=2>Any
 item above containing &#147;***&#148; has been omitted due to text length limitations.</FONT></P>
 </TD>
 </TR>
</TABLE>

<BR>


<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="12%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="48%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="10%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="30%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>Borrower:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>Electromed, Inc.</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>Lender:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>Venture Bank</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>500 Sixth Avenue Northwest</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>4470 W 78th St. Circle</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>New Prague, MN 56071</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>Suite 100</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>Bloomington, MN 55435</B></FONT></P>
 </TD>
 </TR>
</TABLE>

<BR>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="64%" VALIGN=TOP style="border-bottom:double black 3px">
 <P >&nbsp;</P>
 </TD>
 <TD WIDTH="35%" VALIGN=TOP style="border-bottom:double black 3px">
 <P>&nbsp;</P>
 </TD>
 </TR>
<TR>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>

 <TR>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>Principal
 Amount: $2,500,000.00</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="RIGHT"><FONT SIZE=2><B>Date of
 Agreement: December 18, 2014</B></FONT></P>
 </TD>
 </TR>
</TABLE>
<BR>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="4%" VALIGN=TOP>
 <P align=justify>&nbsp;</P>
 </TD>
 <TD WIDTH="96%" VALIGN=TOP>
 <P align=justify>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=2 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>DESCRIPTION OF EXISTING INDEBTEDNESS</B><FONT  SIZE=2>. Promissory Note
 #15695 dated 12/18/2013, in the original amount of $2,500,000.00 from
 Borrower to Lender.</FONT></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=2 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>DESCRIPTION OF COLLATERAL</B><FONT SIZE=2>. All Business Assets per Commercial Security
 Agreement dated 12/18/2013.</FONT></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=2 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>DESCRIPTION OF CHANGE IN TERMS</B><FONT  SIZE=2>. Decrease rate margin and extend
 maturity date to 12/18/2015.</FONT></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=2 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>PROMISE TO PAY. Electromed, Inc. (&#147;Borrower&#148;) promises to
 pay to Venture Bank (&#147;Lender&#148;), or order, in lawful money of the United
 States of America, the principal amount of Two Million Five Hundred Thousand
 &amp; 00/100 Dollars ($2,500,000.00) or so much as may be outstanding,
 together with interest on the unpaid outstanding principal balance of each
 advance. Interest shall be calculated from the date of each advance until
 repayment of each advance.</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=2 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>PAYMENT. Borrower will pay this loan in one payment of all
 outstanding principal plus all accrued unpaid interest on December 18, 2015.
 In addition, Borrower will pay regular monthly payments of all accrued unpaid
 interest due as of each payment date, beginning January 18, 2015, with all
 subsequent interest payments to be due on the same day of each month after
 that. Unless otherwise agreed or required by applicable law, payments will be
 applied first to any accrued unpaid interest; then to principal; then to any
 unpaid collection costs; and then to any late charges. Borrower will pay
 Lender at Lender&#146;s address shown above or at such other place as Lender may
 designate in writing.</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=2 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>VARIABLE INTEREST RATE</B><FONT SIZE=2>. The interest rate on this loan is subject to
 change from time to time based on changes in an independent index which is
 the Prime rate of interest as published each business day by The Wall Street
 Journal (the &#147;Index&#148;). The Index is not necessarily the lowest rate charged
 by Lender on its loans. If the Index becomes unavailable during the term of this
 loan, Lender may designate a substitute index after notifying Borrower.
 Lender will tell Borrower the current Index rate upon Borrower&#146;s request. The
 interest rate change will not occur more often than each day. Borrower
 understands that Lender may make loans based on other rates as well. <B>The Index
 currently is 3.250% per annum.</B> Interest on the unpaid principal
 balance of this loan will be calculated as described in the &#147;INTEREST
 CALCULATION METHOD&#148; paragraph using a rate of 1.000 percentage point over the
 Index, adjusted if necessary for any minimum and maximum rate limitations
 described below, resulting in an initial rate of 4.500% per annum based on a
 year of 360 days. NOTICE: Under no circumstances will the interest rate on
 this loan be less than 4.500% per annum or more than the maximum rate allowed
 by applicable law.</FONT></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=2 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>INTEREST CALCULATION METHOD</B><FONT SIZE=2>. Interest on this loan is computed on a
 365/360 basis; that is, by applying the ratio of the interest rate over a
 year of 360 days, multiplied by the outstanding principal balance, multiplied
 by the actual number of days the principal balance is outstanding. All
 interest payable under this loan is computed using this method. This
 calculation method results in a higher effective interest rate than the numeric
 interest rate stated in the loan documents.</FONT></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=2 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>PREPAYMENT</B><FONT SIZE=2>. Borrower agrees that all loan fees and other
 prepaid finance charges are earned fully as of the date of the loan and will
 not be subject to refund upon early payment (whether voluntary or as a result
 of default), except as otherwise required by law. Except for the foregoing,
 Borrower may pay without penalty all or a portion of the amount owed earlier
 than it is due. Early payments will not, unless agreed to by Lender in
 writing, relieve Borrower of Borrower&#146;s obligation to continue to make
 payments of accrued unpaid interest. Rather, early payments will reduce the
 principal balance due. Borrower agrees not to send Lender payments marked
 &#147;paid in full&#148;, &#147;without recourse&#148;, or similar language. If Borrower sends
 such a payment, Lender may accept it without losing any of Lender&#146;s rights
 under this Agreement, and Borrower will remain obligated to pay any further
 amount owed to Lender. <B>All written communications concerning disputed
 amounts, including any check or other payment instrument that indicates that
 the payment constitutes &#147;payment in full&#148; of the amount owed or that is
 tendered with other conditions or limitations or as full satisfaction of a
 disputed amount must be mailed or delivered to: Venture Bank, P.O. Box 9180
 Minneapolis, MN 55480-9180.</B></FONT></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=2 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>LATE CHARGE</B><FONT SIZE=2>. If a payment is 10 days or more late,
 Borrower will be charged <B>5.000% of the unpaid portion of the regularly
 scheduled payment or $50.00, whichever is greater</B>.</FONT></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=2 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>INTEREST AFTER DEFAULT</B><FONT SIZE=2>. Upon default, including failure to pay upon
 final maturity, the interest rate on this loan shall be increased by adding
 an additional 6.000 percentage point margin (&#147;Default Rate Margin&#148;). The
 Default Rate Margin shall also apply to each succeeding interest rate change
 that would have applied had there been no default. However, in no event will
 the interest rate exceed the maximum interest rate limitations under
 applicable law.</FONT></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=2 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>DEFAULT</B><FONT SIZE=2>.
 Each of the following shall constitute an Event of Default under this
 Agreement:</FONT></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Payment Default</B>.
 Borrower fails to make any payment when due under the Indebtedness.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Other Defaults</B>.
 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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>False Statements</B>.
 Any warranty, representation or statement made or fumished to Lender by
 Borrower or on Borrower&#146;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 fumished or becomes false or misleading at any time
 thereafter.</FONT></P>
 </TD>
 </TR>
</TABLE>

<BR>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<BR>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="12%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="76%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="12%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 </TR>
 <TR>
<TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=3><B>CHANGES IN TERMS AGREEMENT</B></FONT></P>
 </TD>
<TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P align=justify><FONT SIZE=2><B>Loan No: 15695</B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN="CENTER"><FONT SIZE="3"><B>(Continued)</B> </FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2><B>Page 2</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM STYLE='BORDER:NONE;BORDER-BOTTOM:  DOUBLE BLACK 3px'>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE='BORDER:NONE;BORDER-BOTTOM:  DOUBLE BLACK 3px'>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE='BORDER:NONE;BORDER-BOTTOM:  DOUBLE BLACK 3px'>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
</TABLE>

<BR>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="4%" VALIGN=TOP>
 <P ALIGN=JUSTIFY>&nbsp;</P>
 </TD>
 <TD WIDTH="96%" VALIGN=TOP>
 <P ALIGN=JUSTIFY>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Insolvency</B>.
 The dissolution or termination of Borrower&#146;s existence as a going business,
 the insolvency of Borrower, the appointment of a receiver for any part of
 Borrower&#146;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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Creditor or
 Forfeiture Proceedings</B>. Commencement of foreclosure
 or forfeiture proceedings, whether by judicial proceeding, self-help,
 repossession or any other method, by any creditor of Borrower or by any
 governmental agency against any collateral securing the Indebtedness. This
 includes a garnishment of any of Borrower&#146;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.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Events Affecting
 Guarantor</B>. Any of the preceding events occurs with
 respect to any guarantor, endorser, surety, or accommodation party of any of
 the Indebtedness or any guarantor, endorser, surety, or accommodation party
 dies or becomes incompetent, or revokes or disputes the validity of, or
 liability under, any Guaranty of the Indebtedness evidenced by this Note.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Change In Ownership</B>.
 Any change in ownership of twenty-five percent (25%) or more of the common
 stock of Borrower.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Adverse Change</B>.
 A material adverse change occurs in Borrower&#146;s financial condition, or Lender
 believes the prospect of payment or performance of the Indebtedness is
 impaired.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Insecurity</B>.
 Lender in good faith believes itself insecure.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2><B>Cure Provisions</B>.
 If any default, other than a default in payment is curable and if Borrower
 has not been given a notice of a breach of the same provision of this
 Agreement within the preceding twelve (12) months, it may be cured if
 Borrower, after Lender sends written notice to Borrower demanding cure of
 such default: (1) cures the default within fifteen (15) days; or (2) if the
 cure requires more than fifteen (15) days, immediately initiates steps which
 Lender deems in Lender&#146;s sole discretion to be sufficient to cure the default
 and thereafter continues and completes all reasonable and necessary steps
 sufficient to produce compliance as soon as reasonably practical.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=2 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>LENDER&#146;S RIGHTS</B><FONT SIZE=2>. Upon default, Lender may declare the entire
 unpaid principal balance under this Agreement and all accrued unpaid interest
 immediately due, and then Borrower will pay that amount.</FONT></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=2 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>ATTORNEYS&#146; FEES; EXPENSES</B><FONT SIZE=2>. Lender may hire or pay someone else to help
 collect this Agreement if Borrower does not pay. Borrower will pay Lender
 that amount. This includes, subject to any limits under applicable law,
 Lender&#146;s reasonable attorneys&#146; fees and Lender&#146;s legal expenses, whether or
 not there is a lawsuit, including reasonable attorneys&#146; fees, expenses for
 bankruptcy proceedings (including efforts to modify or vacate any automatic
 stay or injunction), and appeals. If not prohibited by applicable law,
 Borrower also will pay any court costs, in addition to all other sums
 provided by law.</FONT></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=2 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>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.</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=2 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>DISHONORED ITEM FEE</B><FONT SIZE=2>. Borrower will pay a fee to Lender of $32.00
 if Borrower makes a payment on Borrower&#146;s loan and the check or preauthorized
 charge with which Borrower pays is later dishonored.</FONT></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=2 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>RIGHT OF SETOFF</B><FONT SIZE=2>. To the extent permitted by applicable law,
 Lender reserves a right of setoff in all Borrower&#146;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&#146;s option, to administratively freeze all such
 accounts to allow Lender to protect Lender&#146;s charge and setoff rights
 provided in this paragraph.</FONT></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=2 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>COLLATERAL</B><FONT SIZE=2>. Borrower acknowledges this Agreement is
 secured by All Business Assets per Commercial Security Agreement dated
 12/18/2013.</FONT></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=2 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>LINE OF CREDIT</B><FONT SIZE=2>. This Agreement evidences a revolving line of
 credit. Advances under this Agreement, as well as directions for payment from
 Borrower&#146;s accounts, may be requested orally or in writing by Borrower or by
 an authorized person. Lender may, but need not, require that all oral
 requests be confirmed in writing. Borrower agrees to be liable for all sums
 either: (A) advanced in accordance with the instructions of an authorized
 person or (B) credited to any of Borrower&#146;s accounts with Lender. The unpaid
 principal balance owing on this Agreement at any time may be evidenced by
 endorsements on this Agreement or by Lender&#146;s internal records, including
 daily computer print-outs. Lender will have no obligation to advance funds under
 this Agreement if: (A) Borrower or any guarantor is in default under the
 terms of this Agreement or any agreement that Borrower or any guarantor has
 with Lender, including any agreement made in connection with the signing of
 this Agreement; (B) Borrower or any guarantor ceases doing business or is
 insolvent; (C) any guarantor seeks, claims or otherwise attempts to limit,
 modify or revoke such guarantor&#146;s guarantee of this Agreement or any other
 loan with Lender; (D) Borrower has applied funds provided pursuant to this
 Agreement for purposes other than those authorized by Lender; or (E) Lender
 in good faith believes itself insecure.</FONT></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=2 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>CONTINUING VALIDITY</B><FONT SIZE=2>. Except as expressly changed by this
 Agreement, the terms of the original obligation or obligations, including all
 agreements evidenced or securing the obligation(s), remain unchanged and in
 full force and effect. Consent by Lender to this Agreement does not waive
 Lender&#146;s right to strict performance of the obligation(s) as changed, nor
 obligate Lender to make any future change in terms. Nothing in this Agreement
 will constitute a satisfaction of the obligation(s). It is the intention of
 Lender to retain as liable parties all makers and endorsers of the original
 obligation(s), including accommodation parties, unless a party is expressly
 released by Lender in writing. Any maker or endorser, including accommodation
 makers, will not be released by virtue of this Agreement. If any person who
 signed the original obligation does not sign this Agreement below, then all
 persons signing below acknowledge that this Agreement is given conditionally,
 based on the representation to Lender that the non-signing party consents to
 the changes and provisions of this Agreement or otherwise will not be
 released by it. This waiver applies not only to any initial extension,
 modification or release, but also to all such subsequent actions.</FONT></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=2 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>LOAN AGREEMENT</B><FONT SIZE=2>. A document titled, &#147;Business Loan Agreement
 (Asset Based)&#148;, is attached to this Promissory Note.</FONT></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=2 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>CREDIT LINE NON-USAGE FEE</B><FONT SIZE=2>. A pro-rated non-usage fee of 0.125% based on
 the average unused portion of the line of credit will be assessed up to the
 maturity date of 12/18/2015.</FONT></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=2 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>SUCCESSORS AND ASSIGNS</B><FONT SIZE=2>. Subject to any limitations stated in this
 Agreement on transfer of Borrower&#146;s interest, this Agreement shall be binding
 upon and inure to the benefit of the parties, their successors and assigns.
 If ownership of the Collateral becomes vested in a person other than
 Borrower, Lender, without notice to Borrower, may deal with Borrower&#146;s
 successors with reference to this Agreement and the Indebtedness by way of
 forbearance or extension without releasing Borrower from the obligations of
 this Agreement or liability under the Indebtedness.</FONT></FONT></P>
 </TD>
 </TR>
</TABLE>

<BR>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<BR>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="12%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="76%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="12%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 </TR>
 <TR>
<TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=3><B>CHANGES IN TERMS AGREEMENT</B></FONT></P>
 </TD>
<TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P align=justify><FONT SIZE=2><B>Loan No: 15695</B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN="CENTER"><FONT SIZE="3"><B>(Continued)</B> </FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2><B>Page 3</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM STYLE='BORDER:NONE;BORDER-BOTTOM:  DOUBLE BLACK 3px'>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE='BORDER:NONE;BORDER-BOTTOM:  DOUBLE BLACK 3px'>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE='BORDER:NONE;BORDER-BOTTOM:  DOUBLE BLACK 3px'>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
</TABLE>

<BR>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="4%" VALIGN=TOP>
 <P align=justify>&nbsp;</P>
 </TD>
 <TD WIDTH="96%" VALIGN=TOP>
 <P align=justify>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=2 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>MISCELLANEOUS PROVISIONS</B><FONT SIZE=2>. If any part of this Agreement cannot be
 enforced, this fact will not affect the rest of the Agreement. Lender may
 delay or forgo enforcing any of its rights or remedies under this Agreement
 without losing them. In addition, Lender shall have all the rights and
 remedies provided in the related documents or available at law, in equity, or
 otherwise. Except as may be prohibited by applicable law, all of Lender&#146;s
 rights and remedies shall be cumulative and may be exercised singularly or
 concurrently. Election by Lender to pursue any remedy shall not exclude
 pursuit of any other remedy, and an election to make expenditures or to take
 action to perform an obligation of Borrower shall not affect Lender&#146;s right
 to declare a default and to exercise its rights and remedies. Borrower and
 any other person who signs, guarantees or endorses this Agreement, to the
 extent allowed by law, waive presentment, demand for payment, and notice of
 dishonor. Upon any change in the terms of this Agreement, and unless
 otherwise expressly stated in writing, no party who signs this Agreement,
 whether as maker, guarantor, accommodation maker or endorser, shall be
 released from liability. All such parties agree that Lender may renew or
 extend (repeatedly and for any length of time) this loan or release any party
 or guarantor or collateral; or impair, fail to realize upon or perfect
 Lender&#146;s security interest in the collateral; and take any other action
 deemed necessary by Lender without the consent of or notice to anyone. All
 such parties also agree that Lender may modify this loan without the consent
 of or notice to anyone other than the party with whom the modification is
 made. The obligations under this Agreement are joint and several.</FONT></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=2 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>SECTION DISCLOSURE</B><FONT SIZE=2>. To the extent not preempted by federal law,
 this loan is made under Minnesota Statutes, Section 334.01.</FONT></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=2 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>PRIOR TO SIGNING THIS AGREEMENT, BORROWER READ AND
 UNDERSTOOD ALL THE PROVISIONS OF THIS AGREEMENT, INCLUDING THE VARIABLE
 INTEREST RATE PROVISIONS. BORROWER AGREES TO THE TERMS OF THE AGREEMENT.</B></FONT></P>
 </TD>
 </TR>
</TABLE>
<BR>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="3%" VALIGN=TOP>
 <P >&nbsp;</P>
 </TD>
 <TD WIDTH="40%" VALIGN=TOP>
 <P >&nbsp;</P>
 </TD>
 <TD WIDTH="57%" VALIGN=TOP>
 <P >&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>BORROWER:</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>ELECTROMED, INC.</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>By:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE='BORDER:NONE;BORDER-BOTTOM:SOLID BLACK 1px'>
 <P align=justify><FONT SIZE=2><B>/s/ Jeremy Brock</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE='BORDER:NONE'>
 <P align=justify><FONT SIZE=2><B>Jeremy
 Brock, Chief Financial Officer of Electromed, Inc.</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=2 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>LENDER:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=2 VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>VENTURE BANK</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P align=justify><FONT SIZE=2><B>X</B></FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE='BORDER:NONE;BORDER-BOTTOM:SOLID BLACK 1px'>
 <P align=justify><FONT SIZE=2><B>/s/ Kevin Doyle</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE='BORDER:NONE'>
 <P align=justify><FONT SIZE=2><B>Authorized Signer</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
</TABLE>

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<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="100%" VALIGN=TOP STYLE='BORDER:NONE;BORDER-BOTTOM:  DOUBLE BLACK 3px'>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>LaserPro, Ver. 14.4.10.012 Copr. D*H USA
 Corporation 1997, 2014. <FONT SIZE=1>All Rights Reserved. - MN
 c:\APPS\CFI\SFI\LPL\D20C.FC TR-6872 PR-39</FONT></FONT></P>
 </TD>
 </TR>
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