Document:

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, 2013 (“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 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 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 filing is made or the court grants the petition
for 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 of even date herewith 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.

    	
- 2 -

    	 

    

19. 
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.

 

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. 

 

[SIGNATURES ON FOLLOWING PAGE]

    	
- 3 -

    	 

    

 

	 	VENTURE
    BANK
	 	 	 	 
	 	By:	     /s/ Kevin Doyle	 
	 	Its:	     Authorized Signer	 
	 	 	 	 
	 	ELECTROMED,
    INC.
	 	 	 
	 	By:	     /s/
    Jeremy Brock	 
	 	Its:	     Chief
    Financial Officer	 

[SIGNATURE PAGE TO RIDER TO BUSINESS LOAN AGREEMENT

AND RELATED DOCUMENTS]

    	
- 4 -Exhibit
10.3

PROMISSORY NOTE

	
        Principal

        $2,500,000.00
	
        Loan Date

        12-18-2013
	
        Maturity

        12-18-2014
	
        Loan No

        15695
	Call / Coll	Account	Officer 	Initials
	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.	Lender:	Venture Bank
	 	500 Sixth Avenue NW	 	6210 Wayzata Boulevard
	 	New Prague, MN 56071	 	Golden Valley, MN 55416
	 	 	 	 
	 	 	 	 
	Principal Amount: $2,500,000.00	 	Date of Note: December 18, 2013

 

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, 2014. In addition, Borrower will pay
regular monthly payments of all accrued unpaid interest due as of each payment date, beginning January 18, 2014, 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 Note 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 in the money rates section of 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 Note will
be calculated as described in the “INTEREST CALCULATION METHOD” paragraph using a rate of 1.500 percentage points over
the Index, adjusted if necessary for any minimum and maximum rate limitations described below, resulting in an initial rate of
4.750% per annum based on a year of 360 days. NOTICE: Under no circumstances will the interest rate on this Note be less than 4.500%
per annum or more than the maximum rate allowed by applicable law.

INTEREST CALCULATION METHOD. 
Interest on this Note 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 Note is computed using this method. This calculation method results in a higher effective interest
rate than the numeric interest rate stated in this Note.

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 Note, 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 Note 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 (“Event of Default”) under this Note:

Payment Default.  Borrower
fails to make any payment when due under this Note.

Other Defaults. Borrower
fails to comply with or to perform any other term, obligation, covenant or condition contained in this Note 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 Note 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.

    	 	 

    	 

    

 

	 	PROMISSORY NOTE	 
	Loan No:  15695	(Continued)	Page 2
	 	 	 

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 loan. 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 this
Note 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 Note 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 Note 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 Note 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 Note 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 Note 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 Note is secured by All Business Assets per Commercial Security Agreement dated 12/18/2013.

LINE OF CREDIT. This Note evidences
a revolving line of credit. Advances under this Note, 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
Note at any time may be evidenced by endorsements on this Note or by Lender’s internal records, including daily computer
print-outs. Lender will have no obligation to advance funds under this Note if: (A) Borrower or any guarantor is in default under
the terms of this Note or any agreement that Borrower or any guarantor has with Lender, including any agreement made in connection
with the signing of this Note; (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 Note or any other loan with Lender; (D)
Borrower has applied funds provided pursuant to this Note for purposes other than those authorized by Lender; or (E) Lender in
good faith believes itself insecure.

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

SUCCESSOR INTERESTS. The terms
of this Note shall be binding upon Borrower, and upon Borrower’s heirs, personal representatives, successors and assigns,
and shall inure to the benefit of Lender and its successors and assigns.

GENERAL PROVISIONS.  If any part
of this Note cannot be enforced, this fact will not affect the rest of the Note. Lender may delay or forgo enforcing any of its
rights or remedies under this Note 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

    	 	 

    	 

    

 

	 	PROMISSORY NOTE	 
	Loan No:  15695	(Continued)	Page 3
	 	 	 

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 Note, to the extent allowed by law, waive presentment, demand for payment,
and notice of dishonor. Upon any change in the terms of this Note, and unless otherwise expressly stated in writing, no party who
signs this Note, 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 Note 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 NOTE, BORROWER
READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO THE TERMS
OF THE NOTE.

BORROWER ACKNOWLEDGES RECEIPT OF A
COMPLETED COPY OF THIS PROMISSORY NOTE. 

BORROWER: 

ELECTROMED, INC. 

 

	By:	/s/ Jeremy
    Brock	 
	 	Jeremy Brock, Chief Financial Officer of Electromed,
Inc.

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