Exhibit 10.2 


 


RIDER
TO BUSINESS LOAN AGREEMENT (ASSET BASED)

AND RELATED DOCUMENTS


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 






    	 



    	 



    

 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 






    	 



    	 



    

 


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


 


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


 


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


 


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


 


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


 


Signature
page follows


 






    	 



    	 



    

 


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







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



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