Exhibit 10.2


INCENTIVE STOCK OPTION AGREEMENT


ELECTROMED, INC.

2014 EQUITY INCENTIVE PLAN


          THIS
AGREEMENT, made effective as of this ____ day of ____________, 20__, by and
between Electromed, Inc., a Minnesota corporation (the “Company”), and __________________
(“Participant”).


W I T N E S
S E T H:


          WHEREAS, Participant on
the date hereof is an Employee of the Company or one of its Subsidiaries; and


          WHEREAS,
the Company wishes to grant an incentive stock option to Participant to purchase
shares of the Company’s Common Stock pursuant to the Company’s 2014 Equity
Incentive Plan (the “Plan”); and


          WHEREAS,
the Administrator of the Plan has authorized the grant of an incentive stock
option to Participant and has determined that, as of the effective date of this
Agreement, the fair market value of the Company’s Common Stock is $___ per
share;


          NOW,
THEREFORE, in consideration of the premises and of the mutual covenants herein
contained, the parties hereto agree as follows:


          1.       Grant of Option. The Company hereby
grants to Participant on the date set forth above (the “Date of Grant”), the
right and option (the “Option”) to purchase all or portions of an aggregate of
____________________ (__________) shares of Common Stock at a per share price
of $______ on the terms and conditions set forth herein, and subject to
adjustment pursuant to Section 13 of the Plan. This Option is intended to be an
incentive stock option within the meaning of Section 422, or any successor
provision, of the Internal Revenue Code of 1986, as amended (the “Code”), and
the regulations thereunder, to the extent permitted under Code Section 422(d).
However, to the extent this Option fails to satisfy the requirements of Code
Section 422, the Option will be deemed to be a nonqualified stock option. 





          2.       Duration and Exercisability.


                    a.          General. The term during which this
Option may be exercised shall terminate on the close of business on ____________,
20__, except as otherwise provided in Paragraphs 2(b) through 2(e) below. This
Option shall become exercisable according to the following schedule:


[INSERT VESTING SCHEDULE]


Once
the Option becomes exercisable to the
extent of one hundred percent (100%) of the aggregate number of shares
specified in Paragraph 1, Participant may continue to exercise this
Option under the terms and conditions of this Agreement until the termination
of the Option as provided herein. If, upon an exercise of this Option,
Participant does not purchase the full number of shares which Participant is
then entitled to purchase, Participant may purchase upon any subsequent
exercise prior to this Option’s termination such previously unpurchased shares
in addition to those Participant is otherwise entitled to purchase. 


                    b.          Termination of Employment for Cause. If
Participant’s employment with the Company or any Subsidiary is terminated for
Cause, as defined below, the unexercised portion of this Option shall
immediately expire, and all rights of Participant under this Option shall be
forfeited. 


                    For
purposes of this Section 2, “Cause” shall mean (i) the conviction of
Participant for the commission of any felony, (ii) the commission by
Participant of any crime involving moral turpitude (e.g., larceny, embezzlement)
which results in harm to the business, reputation, prospects or financial
condition of the Company or any Affiliate, or (iii) a disciplinary discharge
pursuant to the terms of the Company’s management handbooks or policies as in
effect at the time. 


                    c.          Termination of Employment (other than for Cause,
Disability or Death). If Participant’s employment with the
Company or any Subsidiary is terminated for any reason other than for Cause,
disability or death, this Option shall completely terminate on the earlier of:
(i) the close of business on the three-month anniversary date of such
termination of employment; and (ii) the expiration date of this Option stated
in Paragraph 2(a) above. In such period following the termination of
Participant’s employment, this Option shall be exercisable only to the extent
the Option was exercisable on the vesting date immediately preceding such
termination of employment, but had not previously been exercised. To the extent
this Option was not exercisable upon such termination of employment, or if
Participant does not exercise the Option within the time specified in this
Paragraph 2(c), all rights of Participant under this Option shall be forfeited.



                    d.          Disability. If Participant’s employment
terminates because of disability (as defined in Code Section 22(e), or any
successor provision), this Option shall terminate on the earlier of: (i) the close
of business on the twelve-month anniversary date of such termination of
employment; and (ii) the expiration date of this Option stated in Paragraph
2(a) above. In such period following the termination of Participant’s
employment, this Option shall be exercisable only to the extent the Option was
exercisable on the vesting date immediately preceding such termination of
employment, but had not previously been exercised. To the extent this Option
was not exercisable upon such termination of employment, or if Participant does
not exercise the Option within the time specified in this Paragraph 2(d), all
rights of Participant under this Option shall be forfeited. 





                    e.          Death. In the event of Participant’s
death, this Option shall terminate on the earlier of: (i) the close of business
on the twelve-month anniversary of the date of Participant’s death; and (ii)
the expiration date of this Option stated in Paragraph 2(a) above. In such
period following Participant’s death, this Option may be exercised by the
person or persons to whom Participant’s rights under this Option shall have
passed by Participant’s will or by the laws of descent and distribution only to
the extent the Option was exercisable on the vesting date immediately preceding
the date of Participant’s death, but had not previously been exercised. To the
extent this Option was not exercisable upon the date of Participant’s death, or
if such person or persons fail to exercise this Option within the time
specified in this Paragraph 2(e), all rights under this Option shall be
forfeited.           


          3.       Manner of Exercise.


                    a.          General. The Option may be exercised
only by Participant (or other proper party in the event of death or incapacity),
subject to the conditions of the Plan and subject to such other administrative
rules as the Administrator may deem advisable, by delivering within the option
period written notice of exercise to the Company at its principal office. The
notice shall state the number of shares as to which the Option is being
exercised and shall be accompanied by payment in full of the option price for
all shares designated in the notice. The exercise of the Option shall be deemed
effective upon receipt of such notice by the Company and upon payment that
complies with the terms of the Plan and this Agreement. The Option may be
exercised with respect to any number or all of the shares as to which it can
then be exercised and, if partially exercised, may be so exercised as to the
unexercised shares any number of times during the option period as provided
herein.


                    b.          Form of Payment. Subject to the
approval of the Administrator, payment of the exercise price by Participant may
be (i) in cash, or with a
personal check or certified check, (ii) by the transfer from the Participant to
the Company of previously acquired unencumbered shares of Common Stock, (iii)
through the withholding of shares of Common Stock from the number of shares
otherwise issuable upon the exercise of the Option (e.g., a net share settlement), (iv) through broker-assisted
cashless exercise if such exercise complies with applicable securities laws and
any insider trading policy of the Company, (v) such other form of payment as may
be authorized by the Administrator, or (vi) by a combination thereof. 


                    In
the event the Participant elects to pay the exercise price in whole or in part
with previously acquired shares of Common Stock or through a net share settlement,
the then-current Fair Market Value of the Common Stock delivered or withheld
shall equal the total exercise price for the shares being purchased in such
manner. Participant acknowledges that, if the Participant elects to pay the
exercise price with previously acquired shares of Common Stock, a net share
settlement or broker-assisted cashless exercise, then to the extent that any
shares surrendered, withheld or sold were acquired through the exercise by
Participant of an incentive stock option (including this Option), such
surrender, withholding or sale may be considered a “disqualifying disposition”
under Code Section 422.


                    For
purposes of this Agreement, “previously acquired” shares of Common Stock means
shares of Common Stock which the Participant has owned for at least six (6)
months prior to the exercise of the Option (or for such period of time, if any,
required by applicable accounting principles). 





                    c.          Stock Transfer Records. As soon as
practicable after the effective exercise of all or any part of the Option,
Participant shall be recorded on the stock transfer books of the Company as the
owner of the shares purchased, and the Company shall deliver to Participant one
or more duly issued stock certificates evidencing such ownership, or, if
requested by Participant and permitted by the Company’s governing documents,
its designated agent, and applicable law, shall cause the purchased shares to
be issued in book entry form. All requisite original issue or transfer
documentary stamp taxes shall be paid by the Company. 


          4.       General Provisions.


                    a.          Employment
or Other Relationship; Rights as Shareholder. This Agreement
shall not confer on Participant any right with respect to the continuance of
employment or any other relationship with the Company or any of its
Subsidiaries, nor will it interfere in any way with the right of the Company to
terminate such employment or relationship. Nothing in this Agreement shall be
construed as creating an employment contract for any specified term between
Participant and the Company or any Affiliate. Participant shall have no rights
as a shareholder with respect to shares subject to this Option until such
shares have been issued to Participant (or, if permitted, a book entry made)
upon exercise of this Option. No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other property),
distributions or other rights for which the record date is prior to the date
such shares are issued, except as provided in Section 13 of the Plan.


                    b.          280G Limitations. Notwithstanding
anything in the Plan, this Agreement or in any other agreement, plan, contract
or understanding entered into from time to time between Participant and the
Company or any of its Subsidiaries to the contrary (except an agreement that expressly modifies
or excludes the application of this Paragraph 4(b)), the exercisability of this
Option shall not be accelerated in connection with a Change of Control to
the extent that such acceleration, taking into account all other rights,
payments and benefits to which Participant is entitled under any other plan or
agreement, would constitute a “parachute payment” or an “excess parachute
payment” for purposes of Code Sections 280G and 4999, or any successor
provisions, and the regulations issued thereunder; provided, however, that the
Administrator, in its sole discretion and in accordance with applicable law,
may modify or exclude the application of this Paragraph 4(b).


                    c.          Securities Law Compliance. The exercise
of all or any parts of this Option shall only be effective at such time as the
Company and its counsel shall have determined that the issuance and delivery of
Common Stock pursuant to such exercise will not violate any state or federal
securities or other laws. If the issuance of such shares upon exercise is not
registered under a then-currently effective registration statement under the
Securities Act of 1933, as amended, the Participant may be required by the
Company, as a condition of the effectiveness of any exercise of this Option, to
give any written assurances that are necessary or desirable in the opinion of
the Company and its counsel to ensure the issuance complies with applicable
securities laws, including that all Common Stock to be acquired pursuant to
such exercise shall be held, until such time that such Common Stock is
registered and freely tradable under applicable state and federal securities
laws, for Participant’s own account without a view to any further distribution
thereof; that the certificates (or, if permitted, book entries) for such shares
shall bear an appropriate legend or notation to that effect; and that such
shares will be not transferred or disposed of except in compliance with
applicable state and federal securities laws. 





                    d.          Extension of Expiration Date. In the event that the exercise of this
Option would be prohibited solely because the issuance of shares of Common
Stock pursuant to the Option would violate applicable securities laws, the
Administrator may, in its sole discretion and in accordance with Code Section
409A and the regulations, notices and other guidance of general applicability
thereunder, permit the expiration of the Option to be tolled during such time
as its exercise is so prohibited; provided, however, that the
expiration date may not thereby be extended more than 30 days after the date
the exercise first would no longer violate applicable securities laws.
Notwithstanding anything in the Plan or this Agreement to the contrary, if the
expiration date is extended in accordance with this Paragraph 4(d) beyond a
term of ten years from the Date of Grant, this Option shall be deemed to be a
nonqualified stock option. 


                    e.          Mergers, Recapitalizations, Stock Splits, Etc.
Except as otherwise specifically provided in any employment, change of control,
severance or similar agreement executed by the Participant and the Company, pursuant and subject to Section 13 of the Plan, certain
changes in the number or character of the Common Stock of the Company (through
sale, merger, consolidation, exchange, reorganization, divestiture (including a
spin-off), liquidation, recapitalization, stock split, stock dividend or
otherwise) shall result in an adjustment, reduction or enlargement, as
appropriate, in Participant’s rights with respect to any unexercised portion of
the Option (i.e.,
Participant shall have such “anti-dilution” rights under the Option with
respect to such events, but, subject to the Administrator’s discretion, shall
not have “preemptive” rights).


                    f.          Shares Reserved. The Company shall at
all times during the term of this Agreement reserve and keep available such
number of shares as will be sufficient to satisfy the requirements of this
Agreement.


                    g.          Withholding Taxes. To permit the
Company to comply with all applicable federal and state income tax laws or
regulations, the Company may take such action as it deems appropriate to ensure
that, if necessary, all applicable federal and state payroll, income, or other
taxes are withheld from any amounts payable by the Company to the Participant.
If the Company is unable to withhold such federal and state taxes, for whatever
reason, the Participant hereby agrees to pay to the Company an amount equal to
the amount the Company would otherwise be required to withhold under federal or
state law. Subject to such rules as the Administrator may adopt, the
Administrator may, in its sole discretion, permit Participant to satisfy such
withholding tax obligations, in whole or in part by: (i) delivering shares of
Common Stock, or (ii) electing to have the Company withhold shares of Common
Stock otherwise issuable to the Participant as a result of the exercise of the
Option. In either case, such shares shall have a Fair Market Value, as of the
date the amount of tax to be withheld is determined under applicable tax law,
equal to the statutory minimum amount required to be withheld for tax purposes.
Participant acknowledges that, if the shares delivered or withheld to satisfy
such withholding tax obligations were acquired through the exercise of an
incentive stock option (including this Option), such delivery or withholding of
such shares may result in a “disqualifying disposition” under Code Section 422.
The Participant’s request to deliver shares or to have shares withheld for
purposes of such withholding tax obligations shall be made on or before the
date that triggers such obligations, or, if later, the date that the amount of
tax to be withheld is determined under applicable tax law, and shall be
irrevocable on such date if approved by the Administrator. Participant’s
request shall comply with such rules as the Administrator may adopt to assure
compliance with Rule 16b-3, if applicable.





                    h.         Nontransferability. During the lifetime
of Participant, the Option shall be exercisable only by Participant or by the
Participant’s guardian or other legal representative, and shall not be
assignable or transferable by Participant, in whole or in part, other than by
will or by the laws of descent and distribution.


                    i.          2014 Equity Incentive Plan. The Option
evidenced by this Agreement is granted pursuant to the Plan, a copy of which
Plan has been made available to Participant and is hereby incorporated into
this Agreement. This Agreement is subject to and in all respects limited and
conditioned as provided in the Plan. All capitalized terms in this Agreement
not defined herein shall have the meanings ascribed to them in the Plan. The
Plan governs this Option and, in the event of any questions as to the
construction of this Agreement or in the event of a conflict between the Plan
and this Agreement, the Plan shall govern, except as the Plan otherwise
provides.


                    j.          Lockup Period Limitation. Participant
agrees that in the event the Company advises the Participant that it plans an
underwritten public offering of its Common Stock in compliance with the
Securities Act of 1933, as amended, the Participant will execute any lock-up
agreement the Company and the underwriter(s) deem necessary or appropriate, in
their sole discretion, in connection with such public offering. 


                    k.          Blue Sky Limitation. Notwithstanding
anything in this Agreement to the contrary, in the event the Company makes any
public offering of its securities and it is determined that it is necessary to
reduce the number of issued but unexercised stock purchase rights so as to
comply with any state securities or Blue Sky law limitations with respect
thereto, and such determination is affirmed by the Board of Directors, unless
the Board of Directors determines otherwise, (i) the exercisability of this
Option and the date on which this Option must be exercised shall be
accelerated, provided that the Company agrees to give Participant 15 days’
prior written notice of such acceleration; and (ii) any portion of this Option
or any other option granted to Participant pursuant to the Plan which is not
exercised prior to or contemporaneously with such public offering shall be
canceled. Notice shall be deemed given when delivered personally or when
deposited in the United States mail, first class postage prepaid and addressed
to Participant at the address of Participant on file with the Company.


                    l.          Affiliates. Participant agrees that, if
Participant is an “affiliate” of the Company or any Affiliate (as defined in
applicable legal and accounting principles) at the time of a Change of Control
(as defined in Section 1(f) of the Plan), Participant will comply with all
requirements of Rule 145 of the Securities Act of 1933, as amended, and the
requirements of such other applicable legal or accounting principles, and will
execute any documents necessary to ensure such compliance.





                    m.         Stock Legend. The Administrator may
require that the certificates (or, if permitted, book entries) for any shares
of Common Stock purchased by Participant (or, in the case of death,
Participant’s successors) shall bear an appropriate legend or notation to
reflect the restrictions of Paragraph 4(c) and Paragraphs 4(j) through 4(l) of
this Agreement; provided, however,
that failure to so endorse any of such certificates shall not render invalid or
inapplicable Paragraph 4(c) or Paragraphs 4(j) through 4(l).


                    n.          Scope of Agreement. This Agreement
shall bind and inure to the benefit of the Company and its successors and
assigns and Participant and any successor or successors of Participant
permitted by Paragraph 2 or Paragraph 4(h) above. This Award is expressly
subject to all terms and conditions contained in the Plan and in this Agreement
and Participant’s failure to execute this Agreement shall not relieve
Participant from complying with such terms and conditions. 


                    o.          Choice of Law. The law of the state of
Minnesota shall govern all questions concerning the construction, validity, and
interpretation of this Plan, without regard to that state’s conflict of laws
rules. 


                    p.          Severability. In the event that any
provision of this Plan shall be held illegal or invalid for any reason, such
illegality or invalidity shall not affect the remaining provisions of this
Plan, and the Plan shall be construed and enforced as if the illegal or invalid
provision had not been included. 


                    q.          Arbitration.
Any dispute arising out of or relating to this Agreement or the alleged breach
of it, or the making of this Agreement, including claims of fraud in the
inducement, shall be discussed between the disputing parties in a good faith
effort to arrive at a mutual settlement of any such controversy. If,
notwithstanding, such dispute cannot be resolved, such dispute shall be settled
by binding arbitration. Judgment upon the award rendered by the arbitrator may
be entered in any court having jurisdiction thereof. The arbitrator shall be a
retired state or federal judge or an attorney who has practiced securities or
business litigation for at least 10 years. If the parties cannot agree on an
arbitrator within 20 days, any party may request that the chief judge of the
District Court of Scott County, select an arbitrator. Arbitration will be
conducted pursuant to the provisions of this Agreement, and the commercial
arbitration rules of the American Arbitration Association, unless such rules
are inconsistent with the provisions of this Agreement. Limited civil discovery
shall be permitted for the production of documents and taking of depositions.
Unresolved discovery disputes may be brought to the attention of the arbitrator
who may dispose of such dispute. The arbitrator shall have the authority to
award any remedy or relief that a court of this state could order or grant;
provided, however, that punitive or exemplary damages shall not be awarded. The
arbitrator may award to the prevailing party, if any, as determined by the
arbitrator, all of its costs and fees, including the arbitrator’s fees,
administrative fees, travel expenses, out-of-pocket expenses and reasonable
attorneys’ fees. Unless otherwise agreed by the parties, the place of any
arbitration proceedings shall be Scott County, Minnesota.


***Signature
Page Follows***





          ACCORDINGLY,
the parties hereto have caused this Agreement to be executed on the day and
year first above written.


	
  

 	
  

 	
  

 	
  

 
	
  

 	
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Stock Option Agreement Signature Page]