ELMD Electromed Inc

On September 24, 2021, Electromed, Inc., a Minnesota corporation (the “Company”), entered into a Cooperation Agreement (the “Cooperation Agreement”) with Summers Value Partners LLC and certain of its affiliates signatory thereto (collectively, the “Shareholder Group”).

In connection with the Cooperation Agreement, the Company (i) has agreed to nominate each of Joseph L. Galatowitsch and Kathleen A. Tune for election to the Board of Directors of the Company (the “Board”) at the Company’s Fiscal 2022 Annual Meeting of Shareholders (the “Fiscal 2022 Annual Meeting”) to be held in November 2021, and (ii) acknowledged that each of Stephen H. Craney and Dr. George H. Winn, D.D.S. has indicated his intention not to stand for reelection to the Board at the 2022 Annual Meeting. With these changes, the Board is expected to continue to have seven directors following the Fiscal 2022 Annual Meeting and will elect a new independent Chair of the Board immediately following the Fiscal 2022 Annual Meeting.

In addition, the Cooperation Agreement provides for director replacement procedures during the standstill period described below, provided that the Shareholder Group maintains beneficial ownership of at least 3.0% of the Company’s then-outstanding common stock, and the establishment of a new Finance and Strategy Committee of the Board (the “Finance and Strategy Committee”) to be formed immediately following the Fiscal 2022 Annual Meeting. The purpose of the Finance and Strategy Committee will be to conduct a review of the Company’s business and make recommendations to the Board with respect to the Company’s strategy and opportunities to enhance shareholder value, including but not limited to strategic growth plans, long-term business plans, shareholder engagement, research and development, capital allocation, and buy- or sell-side M&A transactions.

Pursuant to the Cooperation Agreement, and concurrently with the execution of the Cooperation Agreement, the Shareholder Group irrevocably withdrew its notice of shareholder nomination dated August 12, 2021, and any related materials or notices submitted to the Company in connection therewith.

The Cooperation Agreement also includes, among other provisions, certain standstill commitments by the Shareholder Group, including but not limited to restrictions on the Shareholder Group’s ability to (i) engage in any solicitation of proxies or consents, (ii) encourage any person to submit nominees in furtherance of a contested solicitation for the election or removal of directors, (iii) submit any proposal for consideration by shareholders of the Company at any annual or special meeting of shareholders or (iv) seek further representation on the Board. These restrictions apply during a standstill period that will terminate on the date that is the earlier of (A) 30 days prior to the last date pursuant to which shareholder nominations for director elections are permitted pursuant to the Amended and Restated Bylaws of the Company with respect to the Company’s Fiscal 2023 Annual Meeting of Shareholders or (B) the date that is 120 calendar days prior to the first anniversary of the Fiscal 2022 Annual Meeting.

The Cooperation Agreement further provides that during the standstill period the Shareholder Group will vote (i) for all directors nominated by the Board for election at any annual or special meeting and (ii) in accordance with the recommendation of the Board on any other proposals or other business (other than certain extraordinary transactions) that comes before any annual or special meeting.

The description of the Cooperation Agreement contained herein is qualified in its entirety by reference to the full text of the Cooperation Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.