Exhibit 10.3


CHANGE IN TERMS AGREEMENT


	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 
	Principal

 	Loan Date

 	Maturity

 	Loan No

 	Call / Coll

 	Account

 	Officer

 	Initials

 
	$2,500,000.00

 	12-18-2015

 	12-18-2016

 	15695

 	5200

 	107560-1

 	10070

 	 

 
	References
                                         in the boxes above are for Lender’s use only and do not limit the applicability
                                         of this document to any particular loan or item.

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

 



	 	 	 	 
	Borrower:	Electromed, Inc.

500 Sixth Avenue 

Northwest 

New Prague, MN 56071	Lender:	Venture Bank 

    Golden Valley Office 

    6210 Wayzata Boulevard 

    Golden Valley, MN 55416







	 

 	 

 
	 

 	 

 
	Principal Amount: $2,500,000.00

 	Date of Agreement: December 18, 2015

 
	 	 




	 

 	 

 
	DESCRIPTION OF EXISTING INDEBTEDNESS. Promissory
 Note #15695 dated 12/18/2013, in the original amount of $2,500,000.00 from Borrower to Lender.

 
	 

 	 

 
	DESCRIPTION OF COLLATERAL. All Business Assets
 per Commercial Security Agreement dated 12/18/2013.

 
	 

 	 

 
	DESCRIPTION OF CHANGE IN TERMS.

 
	 

 	 

 
	1.	Extend Maturity Date to 12/18/2016.
	2.	Decrease interest rate to variable at Wall
 Street Journal Prime and remove the interest rate floor of 4.50%.
	3.	Decrease the annual pro-rated non-usage
 fee from 0.125% to 0.120%.
	 	 
	PROMISE TO PAY. Electromed, Inc. (“Borrower”)
 promises to pay to Venture Bank (“Lender”), or order, in lawful money of the United States of America, the principal
 amount of Two Million Five Hundred Thousand & 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.

 
	 

 	 

 
	PAYMENT. Borrower will pay this loan in one payment
 of all outstanding principal plus all accrued unpaid interest on December 18, 2016. In addition, Borrower will pay regular monthly
 payments of all accrued unpaid interest due as of each payment date, beginning January 18, 2016, 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’s address shown above or at such other place as Lender may designate in
 writing.

 
	 

 	 

 
	VARIABLE INTEREST RATE. 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 “Index”). 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’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.
 The Index currently is 3.250% per annum. Interest on the unpaid principal balance of this loan will be calculated as described
 in the “INTEREST CALCULATION METHOD” paragraph using a rate equal to the Index, resulting in an initial rate of 3.250%
 per annum based on a year of 360 days. NOTICE: Under no circumstances will the interest rate on this loan be more than the maximum
 rate allowed by applicable law.

 
	 

 	 

 
	INTEREST CALCULATION METHOD.
                          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.

 
	 

 	 

 
	PREPAYMENT. 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’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 “paid in full”,
 “without recourse”, or similar language. If Borrower sends such a payment, Lender may accept it without losing any
 of Lender’s rights under this Agreement, and Borrower will remain obligated to pay any further amount owed to Lender. All
 written communications concerning disputed amounts, including any check or other payment instrument that indicates that the payment
 constitutes “payment in full” 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.

 
	 

 	 

 
	LATE CHARGE. If a payment is 10 days or more
 late, Borrower will be charged 5.000% of the unpaid portion of the regularly scheduled payment or $50.00, whichever is greater.

 
	 

 	 

 
	INTEREST AFTER DEFAULT. 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 (“Default Rate Margin”). 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.

 
	 

 	 

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

 
	 

 	 

 
	 

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

 
	 

 	 

 







    	 



    	 



    

 


	 

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

 
	 

 	 

 
	 

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

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







	 

 	 

 
	 

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

 
	 

 	 

 
	 

 	Events Affecting Guarantor. Any of the preceding
 events occurs with respect to any guarantor, 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.

 
	 

 	 

 
	 

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

 
	 

 	 

 
	 

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

 
	 

 	 

 
	 

 	Insecurity. Lender in good faith believes itself
 insecure.

 
	 

 	 

 
	 

 	Cure Provisions. 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’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.

 
	 

 	 

 
	LENDER’S RIGHTS. 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.

 
	 

 	 

 
	ATTORNEYS’ FEES; EXPENSES. 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’s reasonable attorneys’ fees and Lender’s legal expenses, whether
 or not there is a lawsuit, including reasonable attorneys’ 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.

 
	 

 	 

 
	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.

 
	 

 	 

 
	DISHONORED ITEM FEE. Borrower will pay a fee
 to Lender of $32.00 if Borrower makes a payment on Borrower’s loan and the check or preauthorized charge with which Borrower
 pays is later dishonored.

 
	 

 	 

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

 
	 

 	 

 
	COLLATERAL. Borrower acknowledges this Agreement
 is secured by All Business Assets per Commercial Security Agreement dated 12/18/2013.

 
	 

 	 

 
	LINE OF CREDIT. This Agreement evidences a revolving
 line of credit. Advances under this Agreement, as well as directions for payment from Borrower’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’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’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’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.

 
	 

 	 

 
	CONTINUING VALIDITY. 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’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.
	 

 	 

 
	LOAN AGREEMENT. A document titled, “Business
 Loan Agreement (Asset Based)”, is attached to this Promissory Note.

 
	 

 	 

 
	CREDIT LINE NON-USAGE FEE. A pro-rated non-usage
 fee of 0.120% based on the average unused portion of the line of credit will be assessed annually at loan maturity.

 
	 

 	 

 
	SUCCESSORS AND ASSIGNS. Subject to any limitations
 stated in this Agreement on transfer of Borrower’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’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.

 
	 
	MISCELLANEOUS PROVISIONS.
 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’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’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’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.


	 

 	 

 
	 

 	 

 
	SECTION DISCLOSURE. To the extent not preempted
 by federal law, this loan is made under Minnesota Statutes, Section 334.01.

 
	 




    	 



    	 



    









  


	 

 	 

 
	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.

 





	 

 	 

 	 

 
	BORROWER:

 
	 

 
	ELECTROMED, INC.

 
	 

 
	By: 

 	/s/ Jeremy Brock

 	 

 
	 

 	Jeremy Brock, Chief Financial Officer of Electromed,
 Inc.

 	 

 
	 

 	 

 	 

 
	LENDER:

 	 

 
	 

 	 

 
	VENTURE BANK By:  

 	 

 
	 

 	 

 
	X

 	/s/ Kevin Doyle

 	 

 
	 

 	Authorized Signer