RIVERSIDE FORBEARANCE AGREEMENT

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:

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:

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:

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:

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.