Document:

EXHIBIT 10.2

 

RIVERSIDE FORBEARANCE AGREEMENT

 

This Agreement made
as of February 3, 2015 (“Effective Date”), by and among Riverside Manufacturing, Inc., a Minnesota corporation (“Borrower”)
and Pro-Dex Sunfish Lake, LLC, a Delaware limited liability company (“Lender”).

 

 

Riverside Loan

 

WHEREAS, commencing
on or before December 10, 1998, Vermillion State Bank, Lender’s predecessor in title (“Vermillion”), made a series
of loans to Borrower, the last of which was made on or around December 15, 2010, in the original principal amount of $431,858.25
(“Riverside Loan”). The Riverside Loan was designated as Loan No. 54408616. In connection with the Riverside Loan,
Borrower executed and/or delivered the following documents in favor of Vermillion, among others:

 

		1.	Promissory Note, dated December 15, 2010, in the principal amount of $431,858.25, executed by Borrower
in favor of Vermillion, which was subsequently renewed on March 17, 2011, August 15, 2011, December 22, 2011, June 22, 2012, March
8, 2013, July 19, 2013, October 4, 2013, and June 20, 2014 (collectively, with renewal notes, the “Riverside Note”).

 

		2.	The Riverside Loan is secured by that Commercial Security Agreement dated March 10, 2006, executed
by Borrower in favor of Vermillion (“Riverside Security Agreement 1”), granting Vermillion a security interest in all
of Riverside’s accounts and other rights to payment, inventory, equipment, instruments, general intangibles, deposit accounts,
and other assets (“Riverside Collateral”), which Riverside Security Agreement 1 and all preceding and subsequent security
agreements executed by Borrower in favor of Vermillion, were and are perfected by the UCC-1 Financing Statement originally filed
with the Minnesota Secretary of State on December 10, 1998, filing number 2089800; and the continuation filed on September 29,
2003, filing number 2003888914; and the amendment and continuation both filed on August 25, 2008, filing numbers 20081297350 and
20081297347, respectively; and the amendment filed on January 7, 2011, filing number 20112271998; and the continuation filed on
October 17, 2013, filing number 20133419570 (“Riverside UCC Financing Statement”).

 

		3.	Guaranty of Sheldon A. Mayer (“S. Mayer”) and Melinda Mayer (“M. Mayer”)
dated September 14, 2007, in favor of Vermillion, personally guaranteeing all obligations owed by Borrower to Vermillion, including
the obligations under the Riverside Note and Riverside Loan Documents, defined below (“Mayer Guaranty”). The Mayer
(Riverside) Guaranty is secured by the Mayer Mortgage, defined below.

 

		4.	Mortgage, dated September 14, 2007, executed by S. Mayer and M. Mayer in favor of Vermillion, securing
the Mayer Guaranty up to a maximum principal amount of up to

 

    	 

    	 

    

 

		  	$150,000, recorded with the Office of the Registrar of Titles of Anoka
County, Minnesota as Document No. 1996002.008 (“Mayer Mortgage”). The Mayer Mortgage affects certain real property
commonly known as 9124 Collins Drive, Ramsey, Minnesota (“Collins Property”), and legally described as Lot 11, Block
2, Itasca Heights.

 

		5.	Guaranty of Sheldon A. Mayer, LLC (“LLC”), dated April 25, 2010, in favor of Vermillion,
guaranteeing Borrower’s obligations under the Riverside Note and Riverside Loan Documents (“LLC Guaranty”).

 

All of the foregoing documents, and all
other documents executed or delivered in connection with the Riverside Loan, including all amendments, restatements, extensions,
renewals, replacements and/or modifications thereto, are referred to herein as the “Riverside Loan Documents”. S. Mayer,
M. Mayer, and the LLC, as guarantors of the Riverside Loan, are referred to herein as the “Riverside Guarantors.”

 

LLC Debt

 

WHEREAS, on or around
July 24, 2006, Vermillion made a loan to the LLC in the original principal amount of $1,200,000.00 (“LLC Debt”). The
LLC Debt was designated as Loan No. 57400701.

 

WHEREAS Borrower executed
a corporate guaranty, dated July 24, 2006, in favor of Vermillion, guaranteeing the LLC’s obligations under the LLC Debt
(“Riverside Guaranty”). Borrower’s obligations under the Riverside Guaranty are secured by a Commercial Security
Agreement dated July 24, 2006, executed by Borrower in favor of Vermillion (“Riverside Security Agreement 2”), granting
Vermillion a security interest in all of Borrower’s accounts and other rights to payment, inventory, equipment, instruments,
general intangibles, deposit accounts, and other assets and is perfected by the Riverside UCC Financing Statement.

 

Defaults

 

WHEREAS, Borrower defaulted
on its obligations under the Riverside Note and is currently in default under the terms of the Riverside Loan Documents because,
among other things, the Riverside Note matured and Borrower failed to pay the same in full when due.

 

WHEREAS, the LLC defaulted
on its obligation to repay the LLC Debt and is currently in default under the terms of the LLC Debt and related documents because,
among other things, the LLC Debt matured and the LLC failed to pay the same in full when due.

 

WHEREAS, Borrower defaulted
on its obligations under the Riverside Guaranty and is currently in default under the terms of the Riverside Guaranty because,
among other things, the LLC Debt matured and Borrower failed to pay the same in full when due according to the terms of the Riverside
Guaranty.

 

    	 

    	 

    

 

WHEREAS, on or about
November 21, 2014, Lender acquired from Vermillion all interest and title in, among other things, the Riverside Loan Documents,
the LLC Debt, the Riverside Guaranty, and the Riverside Security Agreement 2. Vermillion executed all necessary assignments to
transfer its interest in these documents to Lender.

 

WHEREAS, Lender has
filed, among other things, all necessary UCC financing statements amending the Riverside UCC Financing Statement and has recorded
the mortgage assignment relating to the Mayer Mortgage.

 

WHEREAS, Borrower has
requested that Lender extend the maturity date of the Riverside Loan and forbear from enforcing the remedies available
to Lender under the Riverside Loan Documents, the Riverside Guaranty, and the Riverside Security Agreement 2;

 

WHEREAS, Borrower
has requested that Lender extend additional credit to be used by Borrower for working capital and settling various unsecured
obligations. Lender has agreed to enter into a Revolving Loan Agreement and related Revolving Promissory Note and
additional loan documents (“Revolving Loan”), subject to the conditions and covenants provided for herein.

 

NOW, THEREFORE, for good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged by each of the parties hereto, it is hereby agreed as follows:

 

1.      Recitals. The above recitals
are true and correct as of the date this Agreement is executed and constitute a part of this Agreement.

 

2.      Confirmation, Waiver and Release.
Borrower hereby confirms, acknowledges and agrees that:

 

			         (a)         Borrower fully, finally, and forever releases and discharges Lender, together with
Lender’s successors, assigns, directors, officers, employees, agents, and representatives, from any and all actions, causes
of action, claims, debts, demands, liabilities, obligations, and suits, of whatever kind or nature, in law or in equity (collectively,
the “Claim”), that Borrower has or in the future may have, whether known or unknown, with respect to its obligations
to pay and perform under the Riverside Loan Documents, the Riverside Guaranty, and the Riverside Security Agreement 2, or the
acts or omissions of Lender relating to the transactions evidenced or secured thereby.  It is the intention of Borrower that
the above release shall be effective as a full and final release of each and every matter specifically and generally referred
to above; and

 

			         (b)         The unpaid principal
balance, accrued interest and late fees on the Riverside Note and the LLC Debt are as follows:

 

	 	 	 	Principal	 	 	 	Interest Thru 01/30/2015	 	 	 	Late Fees	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Riverside Note	 		$365,420	 	 		$29,050.87	 	 		$18,271	 
	LLC Debt	 		$1,004,467	 	 		$80,357.36	 	 		$50,223.35	 
	 	 	 	 	 	 	 	 	 	 	 	 	 

 

    	 

    	 

    

 

			         (c)         Borrower agrees to
pay all fees and expenses, including attorneys’ fees, incurred by both Borrower and Lender in the negotiation of and preparation
of this Agreement. Lender’s fees and expenses, including attorneys’ fees, total $1,717 as of the Effective Date. Borrower
and Lender agree that this amount will be added to the total amount due under the Riverside Note.

 

			         (d)         Borrower agrees to
pay to Lender a forbearance fee in the total amount of 5% of the outstanding principal balance of the Riverside Note. As of the
Effective Date, such amount totals $20,637.08. Borrower and Lender agree that this amount will be added to the total amount due
under the Riverside Note.

 

3.      Forbearance. From the
Effective Date through July 31, 2015 (“Forbearance Period”), Lender hereby agrees to further forbear from enforcing
the remedies available to it under the Riverside Loan Documents, the Riverside Guaranty, and the Riverside Security Agreement 2,
and applicable law on the condition that:

 

			         (a)         The Borrower does
not file, or have filed against it, any petition for bankruptcy under any chapter of the United States Bankruptcy Code; and

 

			         (b)         No other creditor
of Borrower: (i) executes on or garnishes any of the property of Borrower; or (ii) commences any action or proceeding to enforce
any remedies or collect any amounts due or claimed due from Borrower which action or proceeding is not dismissed within thirty
(30) days after commencement of the same; and

 

			         (c)         Except
as to the specific defaults described in the Recitals of this Agreement, Borrower is not in default under the terms of any indebtedness
extended by Lender to Borrower or obligation owed by Borrower to Lender, including the Riverside Loan Documents and the Riverside
Guaranty; and

 

			         (d)         Borrower
performs all of its obligations hereunder; and

 

			         (e)         No
representations or warranties of Borrower prove to be false or misleading in any material respect; and

 

			         (f)         On
the first (1st) day of each month commencing March 1, 2015 and continuing on the first (1st) day of each month thereafter through
and including July 1, 2015, Borrower shall make principal and interest payments in the amount of $500.00 to Lender. All payments
made under this Subsection (f) shall be applied first to accrued interest, then to the unpaid principal balance of the Riverside
Note; and

 

			         (g)         Borrower
is in full compliance with the terms of the Revolving Loan; and

 

    	 

    	 

    

 

			         (h)         Except
for the maturity date and payment obligations which have been adjusted as provided for herein, Borrower will observe all of the
other terms and conditions of the Riverside Loan Documents, the Riverside Guaranty, and the Riverside Security Agreement 2.

 

4.      Extension of Maturity Date.
The maturity dates for the Riverside Note is  hereby extended to July 31, 2015, so long as Borrower
is in full compliance with the terms of this Agreement and the Revolving Loan.

 

5.      Default by Borrower. If
Borrower defaults under any term of this Agreement, the Riverside Loan Documents, the Riverside Guaranty, the Riverside Security
Agreement 2, or the Revolving Loan, or any other obligation owed under any of the foregoing documents or obligations, Lender may
exercise all rights it has under any of the foregoing documents and related security instruments without notice to the Borrower.

 

6.      Confirmation of Indebtedness
and Security. By entering into this Agreement, Borrower confirms that the obligations of Borrower to the Lender under the Riverside
Loan Documents, the Riverside Guaranty, the Riverside Security Agreement 2, and this Agreement constitute indebtedness and valid
and enforceable security interests described in more detail therein.

 

7.      Representations
and Warranties. Borrower, by execution of this Agreement, hereby represents and warrants to Lender as follows:

 

			         (a)         The execution and
delivery of this Agreement by Borrower has been duly authorized by all necessary action; and

 

			         (b)         The obligations under
the Riverside Loan Documents, the Riverside Guaranty, and the Riverside Security Agreement 2, are valid and enforceable without
offset, defense or counterclaim, subject to the forbearance provisions set forth herein.

 

8.      Binding Effect. The parties
hereto agree that this Agreement shall be binding upon and inure to the benefit of their respective heirs, successors in interest
and assigns including any holder of the Riverside Loan Documents, the Riverside Guaranty, and the Riverside Security Agreement
2, provided, however, that the Borrower may not assign or transfer its interest hereunder or under the Riverside Loan Documents,
the Riverside Guaranty, and the Riverside Security Agreement 2, without the prior written consent of Lender.

 

9.      Time is of
the Essence. Time shall be of the essence to this Agreement.

 

10.    Governing Law. This Agreement
and the rights and obligations of the parties hereunder and under the Riverside Loan Documents, the Riverside Guaranty, and the
Riverside Security Agreement 2, and any other documents delivered herewith shall be construed in accordance with and governed by
the laws of the State of Minnesota. The Borrower hereby consents to the jurisdiction of the courts of the State of Minnesota for
any actions brought hereon.

 

    	 

    	 

    

 

11.    Further Assurances. Borrower
agrees to execute such other and further documents as Lender may reasonably request to evidence or consummate the transactions
contemplated hereby.

 

12.    No Third Party Beneficiaries.
It is the explicit intention of the parties hereto that except for the Lender, no person or entity other than the parties hereto
and their permitted successors and assigns is or shall be entitled to bring any action to enforce any provision of this Agreement
against any of the parties hereto, and the covenants, undertakings and agreements set forth in this Agreement shall be solely for
the benefit of, and shall be enforceable only by, the parties hereto or their respective successors and assigns as permitted hereunder.
Nothing contained in this Agreement shall under any circumstances whatsoever be deemed or construed, or be interpreted, as making
any third party (other than Lender) a beneficiary of any term or provision of this Agreement or any instrument or document delivered
pursuant hereto, and the parties expressly reject any such intent, construction or interpretation of this Agreement.

 

13.    Legal Counsel. Borrower
represents, warrants and agrees that it has either sought or obtained the advice of legal counsel in connection with the execution
of this Agreement or has had the opportunity to seek and obtain the advice of legal counsel, but has chosen not to do so.

 

14.    No Duress or Coercion.
Borrower acknowledges and agrees that it has entered into this Agreement of its own free will and volition and was not coerced
to do so, nor under duress at the time of executing this Agreement, and that Borrower has chosen to enter into this Agreement voluntarily
and knowingly.

 

15.    Waiver, Modification or Amendment.
No waiver, modification or amendment of any term, condition or provision of this Agreement shall be valid or of any effect unless
it is made in writing, signed by the parties to be bound by its duly authorized representative, and specifies with particularity
the nature and extent of such waiver, modification or amendment. Any waiver by the Lender of any default shall not affect or impair
any right arising from any subsequent default.

 

16.    Drafting. The parties
hereto acknowledge and agree that all parties hereto have contributed to the drafting of this Agreement and that any ambiguities
contained herein shall not be construed against any particular party.

 

17.    Waiver of Right to Trial
by Jury. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION (a) ARISING UNDER THE THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, ANY PRESENT OR FUTURE MODIFICATION HEREOF;
OR (b) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO
THIS AGREEMENT (AS NOW OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER

 

    	 

    	 

    

 

SUCH CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION IS NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH
PARTY HEREBY AGREES AND CONSENTS THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF ANY RIGHT THEY MIGHT OTHERWISE HAVE TO TRIAL
BY JURY.

 

18.    Counterparts.
This Agreement may be executed in any number of counterparts, each of which shall constitute one and the same instrument.

 

IN WITNESS WHEREOF, the
parties hereto have executed this Agreement as of the date set forth above.

 

		 	 
	BORROWER:	Riverside Manufacturing, Inc.
	 	 	 
	 	By:	/s/ Scott Robertson
	 	 	Scott Robertson
	 	 	Its: President
	 	 	 
	 	 	 
	LENDER:	Pro-Dex Sunfish Lake, LLC
	 	 	 
	 	By:	/s/ Richard L. Van Kirk
	 	 	Richard L. Van Kirk
	 	 	Its: PresidentEXHIBIT 10.3

 

REVOLVING LOAN AGREEMENT

 

THIS REVOLVING LOAN
AGREEMENT (“Loan Agreement”) is made effective the 3rd day of February, 2015, by and between RIVERSIDE MANUFACTURING,
INC., a Minnesota corporation (“Borrower”), and PRO-DEX SUNFISH LAKE, LLC, a Delaware limited liability company, its
endorsees, successors and assigns (“Lender”).

 

RECITALS

 

A.               
Subject to the terms and conditions of this Loan Agreement, the Lender has committed to extend a loan to the Borrower in
the principal sum of up to TWO HUNDRED THOUSAND AND NO/100 DOLLARS ($200,000.00) (“Loan”).

 

B.                
The Borrower has requested the Loan from the Lender for the purposes set forth in the correspondence from the Borrower to
the Lender, of even date herewith (the “Loan Request”).

 

C.                
The Borrower is in default under the terms of additional debt owed to Lender, which debt is the subject of two forbearance
agreements executed in connection with and on the same date hereof (“Forbearance Agreements”).

 

D.               
The Loan to the extent advanced by the Lender is secured by all of the Borrower’s accounts and other rights to payment,
inventory, equipment, instruments, general intangibles, deposit accounts, and other assets (“Collateral”), described
in more detail in the Commercial Security Agreement, dated March 10, 2006 (“Security Agreement”), executed by the Borrower
in favor of Vermillion State Bank, which was subsequently assigned to the Lender on November 21, 2014. The Security Agreement,
and all preceding and subsequent security agreements executed by the Borrower in favor of the Lender or Vermillion State Bank,
the Lender’s predecessor in title, were and are perfected by the UCC-1 Financing Statement originally filed with the Minnesota
Secretary of State on December 10, 1998, filing number 2089800; and the continuation filed on September 29, 2003, filing number
2003888914; and the amendment and continuation both filed on August 25, 2008, filing numbers 20081297350 and 20081297347, respectively;
and the amendment filed on January 7, 2011, filing number 20112271998; and the continuation filed on October 17, 2013, filing number
20133419570; and the amendment filed on December 8, 2014, filing number 798191000025.

 

E.                
The Lender is willing to agree to provide the requested Loan to the Borrower upon the Borrower’s satisfaction of the
conditions precedent listed in Section 3.4 below and the other terms and conditions provided herein.

 

NOW, THEREFORE,
in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto covenant and agree as follows:

 

1.                 Recitals.   The above-stated recitals are true and correct and are incorporated herein by reference.

    	 

    	 

    

 

2.           Documents Delivered by Borrower.   To induce the Lender to commit to making the requested Loan, and as a condition
of providing the Loan to the Borrower hereunder, the Borrower shall on or before the effective date hereof, deliver to the Lender
in addition to this Loan Agreement the following documents all dated effective of even date herewith and in form and substance
satisfactory to Lender (collectively, “Loan Documents”):

 

2.1.           
Promissory Note.   A promissory note in the original principal amount of TWO HUNDRED THOUSAND AND NO/100 DOLLARS ($200,000.00)
issued by the Borrower and payable to the order of the Lender (“Note”).

 

2.2.           
Lockbox and Lockbox Account Control Agreement.   A Lockbox and Lockbox Account Control Agreement, the terms of which will be substantially similar to the draft agreement attached hereto as Exhibit A, which the parties agree to cooperate in good faith to negotiate (“Lockbox Agreement”).

 

2.3.           
Other Documents.   Such other documents as the Lender may reasonably require.

 

3.            Commitment of Lender.

 

3.1.           
Commitment to Lend.   Upon the terms and subject to the conditions set forth herein, the Lender agrees to loan to the
Borrower on a revolving basis, and the Borrower agrees to borrow, repay, and re-borrow from the Lender, the maximum principal sum
of up to TWO HUNDRED THOUSAND AND NO/100 DOLLARS ($200,000.00). The Loan shall be due and payable according to the terms and conditions
of the Note. The proceeds of the Loan may be advanced as the Initial Advance and one or more Advances (as each of such terms is
defined below).

 

3.2.           
Borrowing Procedure.   Prior to any advance of proceeds with respect to the Loan, the Borrower shall have delivered
to the Lender, without expense to the Lender a written request for disbursement (a “Disbursement Request”) and all
documentation necessary for Lender to determine whether the Conditions Precedent to Loan described in Section 3.4 have been met.
Each Disbursement Request shall set forth with specificity the intended use of the funds requested. The Lender retains exclusive
authority to make the disbursement of Loan proceeds in the amount requested or in any lesser amount that it deems is warranted
to be used as indicated on the Disbursement Request. Scott Robertson is authorized on behalf of the Borrower to make Disbursement
Requests.

 

3.3.            Fees
and Reimbursement of Expenses.   Borrower agrees to pay all fees and expenses, including attorneys’
fees, incurred by Lender in the negotiation of and preparation of this Loan Agreement, the Note, and the Lockbox Agreement.
Lender’s fees and expenses, including attorneys’ fees, total $3,948 as of the effective date hereof, which amount
will increase as the parties formalize the Lockbox Agreement. Borrower agrees that this amount will be included in the
Initial Advance, as defined below. In addition, the Borrower shall promptly reimburse the Lender for any and all expenses,
fees and disbursements including, but not limited to, reasonable attorneys’ fees, incurred in connection with the
interpretation, performance and enforcement of this Loan Agreement, the Loan Documents and any instruments or documents
related thereto, and

 

    	 

    	 

    

 

all costs and expenses of collection of the Loan made hereunder or any loans made hereinafter including, but
not limited to, reasonable attorneys’ fees, whether or not suit is filed or for the pursuance of, or defense of, any litigation,
appellate, bankruptcy or insolvency proceeding.

 

3.4.           
Conditions Precedent to Loan Advances.   As used herein, the term “Initial Advance” shall mean a one-time
advance in the amount of $49,188 which shall be made on or about the date hereof. As used herein, the term “Advance”
shall mean an advance of Loan proceeds which will be used by Borrower to pay for general operating expenses and resolving unsecured
debt obligations, all as requested in the Loan Request and when approved by the Lender. Notwithstanding anything other provision
in this Loan Agreement, the maximum total amount of advances available to Borrower under this Loan Agreement shall be $200,000.00
and Lender shall not make any Advance to Borrower after July 31, 2015.

 

		(a)	Conditions Precedent for the Initial Advance. The obligation of the Lender to disburse the
Initial Advance shall be subject to the further following conditions precedent:

 

	i.		Borrower shall have delivered to the Lender, without expense to the Lender, this Loan
Agreement and each of the Loan Documents described above, each to be duly executed;

 

	ii.		Lender shall be satisfied
with all due diligence items with respect to the Loan (including without limitation all judgment and bankruptcy searches, UCC searches,
and financial statements of Borrower, if any);

 

	iii.		No Event of Default (as
hereinafter defined) has occurred and is continuing, and no event has occurred which with the giving of notice or passage of time
or both would accrue into an Event of Default hereunder; and

 

	iv.		Borrower has submitted to
the Lender and the Lender has approved a Disbursement Request for the Initial Advance describing in detail the purpose and intended
use of the proceeds from the Initial Advance, which shall be consistent with the Loan Request.

 

		(b)	Conditions Precedent for All Additional Advances. The obligation of the Lender to disburse
an Advance shall be subject to the further following conditions precedent:

 

	i.		No liens or other encumbrances
which have not been approved by Lender encumber the Collateral;

 

	ii.		The representations and
warranties contained in Section 4 hereof are true and correct on the date Borrower submits a Disbursement Request for the Advance
and on the date Lender disburses the Advance (the receipt by the

 

    	 

    	 

    

 

	 		Borrower of the proceeds of the Advance shall be deemed to constitute
a representation or warranty by the Borrower that such statements are true);

 

	iii.		No Event of Default (as
hereinafter defined) has occurred and is continuing, and no event has occurred which with the giving of notice or passage of time
or both would accrue into an Event of Default hereunder; and

 

	iv.		Borrower shall have provided
Lender any other documentation that Lender may reasonably request.

 

4.           Representations and Warranties.   The Borrower represents and warrants that: 

 

4.1.           
Organization, Qualification and Authorization.   The Borrower is a corporation duly organized, validly existing and
in good standing under the laws of the State of Minnesota; has the power and authority to own the Collateral and to carry on its
business as now being conducted; and is duly qualified and licensed to do business.

 

4.2.           
Validity of Obligations.   The Borrower has full power, right and authority to execute and deliver this Loan Agreement,
the Loan Documents and all other documents or agreements required to be delivered by Borrower hereunder, to obtain the Loan herein
provided for, and to perform and observe each and all of the matters and things provided for in the Loan Documents. The execution
and delivery of this Loan Agreement and the Loan Documents and the performance or observance of the terms thereof have been duly
authorized by all necessary corporate action and do not contravene or violate any provision of law or any provision of any covenant,
indenture or agreement binding upon Borrower, nor require the consent or approval of any governmental entity or agency thereof.

 

4.3.           
Title to Assets.   The Borrower has good and marketable title to the Collateral, subject only to the exceptions permitted
by Lender, including the Lender’s existing security interest in the Collateral.

 

4.4.           
Litigation.   No actions, suits or proceedings are pending or, to Borrower’s knowledge, threatened, against or
affecting it before any court, governmental or administrative body or agency, except those identified by Borrower to Lender, which
might result in any material adverse change in Borrower’s business operations, personal financial status, or the Collateral
(financial or otherwise), or which would question the validity of this Loan Agreement or of any action taken or to be taken by
Borrower pursuant to or in connection with this Loan Agreement.

 

4.5.           
No Event of Default.   No Event of Default has occurred and is continuing as of the effective date hereof.

 

4.6.           
Execution of Other Documents.   The Borrower agrees that it shall execute and deliver to the Lender such further acknowledgments,
certificates, agreements and

 

    	 

    	 

    

 

other documents as may be reasonably requested from time to time by the Lender to protect the security
interests given to the Lender for the payment of the Note and to further the transaction contemplated by this Loan Agreement.

 

5.            Affirmative Covenants.   The Borrower covenants and agrees with the Lender that so long as any amount remains unpaid
on the Loan, the Borrower shall: 

 

5.1.           
Access to Records.   Permit any person designated by the Lender (prior to an Event of Default at the Lender’s
expense; and, after an Event of Default at Borrower’s expense) to visit and inspect the Collateral and the books and financial
records, including all tax related returns, schedules and filings, relating to the Collateral and Borrower’s business, and
to discuss the affairs, finances, and accounts with the Borrower, all at such reasonable times and as often as the Lender may reasonably
request. If an Event of Default has not occurred, Lender shall give Borrower reasonable advance notice of any such visit and inspection.

 

5.2.         
Notification of Changes.   Promptly notify the Lender of:

 

		(a)	Any litigation which might materially and adversely affect the Borrower or the Collateral.

 

		(b)	The occurrence of any Event of Default under this Loan Agreement or any event of which the Borrower
has knowledge and which, with the passage of time or giving of notice or both, would constitute an Event of Default under this
Loan Agreement.

 

		(c)	Any material adverse change in the operations, business, Collateral, or condition, financial or
otherwise, of the Borrower which could adversely and materially affect the Borrower’s ability to perform its obligations
under this Loan Agreement and the Loan Documents.

 

5.3.         
Corporate Existence.   Maintain its corporate existence and conduct the same general type of business as is now being
carried on and continue compliance with all applicable statutes, laws, rules and regulations.

 

5.4.         
Compliance with Laws.   Comply with all laws and regulations applicable to Borrower’s operations and the Collateral,
including without limitation, all federal, state and local environmental laws, regulations, ordinances and rulings.

 

6.          
Negative Covenants.   The Borrower hereby covenants and agrees with the Lender that so long as any amount shall remain
unpaid on the Loan, the Borrower shall not:

 

6.1.         
Default on Other Obligations.   Default upon or fail to pay any of the Borrower’s other debts or obligations
as the same mature, unless the same are being contested in good faith by appropriate proceedings and adequate reserves shall have
been established with respect thereto.

 

    	 

    	 

    

 

6.2.         
Sale of Assets.   The Borrower shall not sell, lease, assign, transfer or otherwise dispose of all or a substantial
part of its assets (whether in one transaction or in a series of transactions) to any other person or entity other than in the
ordinary course of business.

 

6.3.         
Dividends.   The Borrower shall not declare or pay any dividends on any class of its stock; provided that Borrower
may distribute cash to its shareholders to satisfy such shareholders’ federal and state income tax liability arising from
their respective allocable share of the Borrower’s taxable income.

 

6.4.         
Liens and Encumbrances.   Create, assume, incur or suffer to exist any pledge, mortgage, assignment or other lien or
encumbrance of any kind upon the Collateral, whether now owned or hereafter acquired, or of or upon the income or profits therefrom.

 

7.           
Defaults.

 

7.1.         
Event of Default.   Any one or more of the following events shall constitute an “Event of Default” under
this Loan Agreement:

 

		(a)	The Borrower shall default in the payment of any interest or principal on the Note when it becomes
due and payable, and the continuance of such default
for a period of ten (10) days after written notice thereof from Lender; or

 

		(b)	Any default under the terms of the Security Agreement shall occur; or

 

		(c)	Any default under the terms of the Forbearance Agreements shall occur; or

 

		(d)	Any default under the terms of the Note shall occur; or

 

		(e)	Any default under the terms of the Lockbox Agreement shall occur; or

 

		(f)	The Borrower shall default in the due performance or observance of any term, covenant or agreement
contained in this Loan Agreement and Borrower shall have failed to cure such default within ten (10) days after written notice
thereof from Lender; or

 

		(g)	If any representation or warranty contained in this Loan Agreement or any of the Loan Documents
proves to be materially false as of the effective date of the Loan Agreement, or the date such Loan Documents are executed; or

 

		(h)	The rendering against the Borrower of a final judgment, decree or order for the payment of money
in excess of Twenty Five Thousand and 00/100

    	 

    	 

    

		 	Dollars ($25,000) and the continuance of such judgment, decree or order remains unsatisfied
and in effect for any period of twenty (20) consecutive days without a stay of execution.

 

		(i)	Any of the Loan Documents prove to be unenforceable or invalid.

 

7.2.         
Lender’s Rights on Default.   Upon the occurrence of an Event of Default, the Lender may take such actions available
under the terms of the Loan Documents or any other documents delivered pursuant hereto or in connection herewith or take such actions
as may otherwise be available in equity or at law. In addition, upon the occurrence of an Event of Default, and the expiration
of any applicable cure period, if any:

 

		(a)	The Lender may terminate the commitment to lend under this Loan Agreement by written notice to
the Borrower;

 

		(b)	The Lender may declare immediately due and payable all unpaid principal of and accrued interest
on the Note, together with all other sums payable hereunder, and the same shall thereupon be immediately due and payable without
presentment or other demand, protest, notice of dishonor or any other notice of any kind, all of which are hereby expressly waived;

 

		(c)	The Lender may set off any funds in the account(s) that is the subject of the Lockbox Agreement
with the Borrower, without notice to the Borrower;

 

		(d)	The Lender may enter upon the real estate where the Collateral is located, wherever that may be
at the time of the default, and take possession of the Collateral. The Borrower shall be liable under this Loan Agreement to pay
to the Lender, on demand, any amount or amounts expended by the Lender in so completing the location of and recovery of the Collateral,
together with any costs, charges, or expenses incident thereto or resulting therefrom, all of which shall be secured by the Security
Agreement. In the event that a proceeding is instituted against the Borrower for recovery and reimbursement of any moneys expended
by the Lender in connection with the location of and recovery of the Collateral, a statement of such expenditures, verified by
the affidavit of an officer of the Lender, shall be prima facie evidence of the amounts so expended and of the propriety of and
necessity for such expenditures; and the burden of proving to the contrary shall be upon the Borrower. It is expressly understood
and agreed that in no event shall the Lender be obligated or liable in any way to locate and recover the Collateral; and

 

		(e)	Obtain appraisals of the Collateral at Borrower’s expense, which Borrower agrees to reimburse
Lender for within ten (10) days of demand therefor.

 

    	 

    	 

    

 

7.3.         
Remedies Cumulative.   No right or remedy by this Loan Agreement, the Loan Documents, or by any document or instrument
delivered by the Borrower pursuant hereto, conferred upon or reserved to Lender shall be or is intended to be exclusive of any
other right or remedy, and each and every right or remedy shall be cumulative and in addition to any other right or remedy now
or hereafter existing at law or in equity or by statute.

 

7.4.         
Waiver of Remedies.   Except as the Lender may hereafter otherwise agree in writing, no waiver by the Lender of any
Event of Default of the Borrower of any of its covenants, obligations or agreements under this Loan Agreement shall be deemed to
be a waiver of any subsequent Event of Default of the same or any other covenant, obligation or agreement, nor shall any forbearance
by the Lender to enforce a right or remedy for such Event of Default be deemed a waiver of its rights and remedies with respect
to such Event of Default, nor shall the Lender be deemed to have waived any of its rights and remedies unless such waiver be in
writing and executed with the same formality as the Loan Agreement.

 

8.           
Miscellaneous.

 

8.1.         
Binding Effect.   The parties hereto agree that this Loan Agreement shall be binding upon and inure to the benefit
of their respective heirs, successors in interest and assigns including any holder of the Note, provided, however, that the Borrower
may not assign or transfer its interest hereunder without the prior written consent of the Lender, and provided further, that any
assignment of all Lender’s interests hereunder and under the other Loan Documents shall not be binding upon Borrower unless
and until Borrower has received written notice of such assignment.

 

8.2.         
Governing Law.   The validity of this Loan Agreement, its construction, interpretation and enforcement and the rights
of the parties hereto shall be determined under, governed by and construed in accordance with the internal laws of the State of
Minnesota, without regard to principles of conflicts of law. The Borrower submits itself to the jurisdiction of the courts of Hennepin
County, Minnesota, and the federal courts of the United States of America located in such state in respect of all actions arising
out of or in connection with the interpretation or enforcement of this Loan Agreement and the Loan Documents, waives any argument
that venue in such forums is not convenient and agrees that any actions instituted by it shall be venued in such forums.

 

8.3.         
Waiver of Jury Trial.   The Borrower and Lender hereby knowingly, voluntarily and intentionally waive the right either
may have to a trial by jury in respect to any litigation based on, or arising out of, under or in conjunction with the Note, this
Loan Agreement, the Loan Documents, and any other documents contemplated to be executed in conjunction herewith or therewith or
any course of conduct, course of dealing, statements (whether verbal or written) or actions of either party. This provision is
a material inducement for the Lender making the Loan evidenced by the Note.

    	 

    	 

    

 

8.4.         
Notices.   Any notices required or contemplated hereunder shall be in writing and deemed effective the second business
day after the placing thereof in the United States mail, certified mail and with return receipt requested, postage prepaid, and
addressed as follows:

 

	If to Borrower:	RIVERSIDE
MANUFACTURING, INC.
	 	14280 Sunfish
Lake Blvd. NW
	 	Ramsey, Minnesota 55303
	 	Attn: Scott Robertson
	 	 
	If to Lender:	PRO-DEX SUNFISH LAKE, LLC
	 	2361 McGaw Avenue
	 	Irvine, California 92614

 

or addressed
to any such party at such other address as such party shall hereafter furnish by notice to the other party.

 

8.5.         
No Waivers.   No failure or delay on the part of the Lender in exercising any right, power or privilege hereunder and
no course of dealing between the Borrower and Lender shall operate as a waiver thereof; nor shall any single or partial exercise
of any right, power, or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right,
power or privilege.

 

8.6.         
Complete Agreement; Consistency.   This Loan Agreement constitutes the entire agreement and understanding among the
parties hereto. This Loan Agreement incorporates, memorializes, and supersedes all prior agreements, arrangements, and understandings,
whether written or otherwise, with respect to the transaction between the undersigned parties relating to the Loan, and that no
representations or warranties, oral or written, express or implied, have been made by or relied upon the undersigned parties, except
as expressly contained herein. In the event that any of the terms and provisions of this Loan Agreement are inconsistent with any
of the terms and provisions of the Loan Documents or any other documents or agreements related hereto, the Lender may enforce such
terms or provisions which it, in its sole discretion, deems to best protect its rights and remedies under this Loan Agreement and
the Loan Documents, and any other documents or agreements related hereto, and the Borrower waives any objections thereto despite
the existence of any such inconsistency.

 

8.7.         
Negation of Partnership or Joint Venture.   None of the terms or provisions of this Loan Agreement, the Loan Documents,
or any other documents or agreements provided for herein shall be deemed to create the relationship of principal, agent, partnership,
or joint venture between or among the Borrower and Lender.

 

8.8.         
Headings.   The headings of various sections of this Loan Agreement have been inserted for reference only and shall
not be deemed to be a part of this Loan Agreement.

 

    	 

    	 

    

 

8.9.         
Amendment and Waiver.   Neither this Loan Agreement nor any provision hereof may be modified, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party against whom enforcement of the change, waiver, discharge
or termination is sought.

 

8.10.     
Indemnification.   The Borrower hereby agrees to indemnify the Lender for any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, including but not limited to, reasonable attorneys’ fees, expenses
or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against the Lender in any action
by a third party relating to or arising out of the breach by the Borrower of any of the representations, warranties, covenants
and obligations set forth in this Loan Agreement or the Loan Documents for the enforcement of such terms hereof or thereof.

 

8.11.     
Advances Without Receipt of Draw Request.   Notwithstanding anything herein to the contrary, the Lender shall have
the irrevocable right at any time and from time to time to apply funds which it agrees to advance hereunder to pay interest on
the Note as and when it becomes due, and to pay any and all of the expenses of Lender referred to herein, all without receipt of
a Disbursement Request for funds from the Borrower; provided, however, the Lender shall have no obligation to make such advances
at any time.

 

8.12.     
Execution in Counterparts.   This Loan Agreement, the Loan Documents, or any other documents or agreements provided
for herein may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed to be an
original and all of which counterparts of this Loan Agreement or any other documents or agreements provided herein, as the case
may be, taken together shall constitute but one and the same instrument. This Loan Agreement may be executed by facsimile or e-mail
and facsimile or e-mail signatures shall be binding and shall constitute an original signature hereto.

 

 

 

 

 

[SIGNATURES
TO FOLLOW]

 

    	 

    	 

    

 

 

IN WITNESS WHEREOF,
with full authority to do so, the undersigned, on behalf of the parties hereto, have caused this Loan Agreement to be dully executed
effective the day and year first above written.

 

BORROWER:

 

RIVERSIDE MANUFACTURING,
INC.,

a Minnesota corporation,

 

 

By:  /s/ Scott Robertson                    

Scott Robertson, Its President

 

STATE OF Minnesota                     

 

COUNTY OF Anoka                       

This instrument was
acknowledged before me on February 4th, 2015, by Scott Robertson, the President of RIVERSIDE MANUFACTURING, INC., a Minnesota corporation,
on behalf of the corporation.

 

 

	SEAL	/s/ Pamela Joy Miller                                                   
	 	Notary Public
	 	Print Name: Pamela Joy Miller                                   
	 	My commission expires:  01/31/2020 
	 	 

		 
	LENDER:
	 	 
	PRO-DEX SUNFISH LAKE, LLC
	 	 
	By:	/s/ Richard L. Van Kirk
	 	 
	Name:	Richard L. Van Kirk
	 	 
	Its:	President

 

 

 

 

This is the signature
page to that certain Revolving Loan Agreement, dated effective February 3, 2015.

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