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<SEC-DOCUMENT>0001003297-10-000163.txt : 20100716
<SEC-HEADER>0001003297-10-000163.hdr.sgml : 20100716
<ACCEPTANCE-DATETIME>20100716154410
ACCESSION NUMBER:		0001003297-10-000163
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		5
CONFORMED PERIOD OF REPORT:	20100714
ITEM INFORMATION:		Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers: Compensatory Arrangements of Certain Officers
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20100716
DATE AS OF CHANGE:		20100716

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			PRO DEX INC
		CENTRAL INDEX KEY:			0000788920
		STANDARD INDUSTRIAL CLASSIFICATION:	SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841]
		IRS NUMBER:				841261240
		STATE OF INCORPORATION:			CO
		FISCAL YEAR END:			0630

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-14942
		FILM NUMBER:		10956445

	BUSINESS ADDRESS:	
		STREET 1:		2361 MCGAW AVENUE
		CITY:			IRVINE
		STATE:			CA
		ZIP:			92614
		BUSINESS PHONE:		949-769-3200

	MAIL ADDRESS:	
		STREET 1:		2361 MCGAW AVENUE
		CITY:			IRVINE
		STATE:			CA
		ZIP:			92614
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>es8k.htm
<TEXT>
<html>

<head>
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<title>Pro-Dex Form 8-K</title>



</head>

<body lang=EN-US link=blue vlink=purple>

<div style='page:Section1;'>

<p style='margin:0in;margin-bottom:.0001pt;text-align:center;font-size:12.0pt;font-family:"Times New Roman";'><b>&nbsp;</b></p>

<p style='margin:0in;margin-bottom:.0001pt;text-align:center;font-size:12.0pt;font-family:"Times New Roman";'><b>&nbsp;</b></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;text-align:center;font-size:12.0pt;font-family:"Times New Roman";'><b>UNITED STATES</b></p>

<p style='margin:0in;margin-bottom:.0001pt;text-align:center;font-size:12.0pt;font-family:"Times New Roman";'><b>SECURITIES AND EXCHANGE COMMISSION</b></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";text-align:center'><b><font style="font-size: 12.0pt">Washington,
 D.C. 20549</font></b></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";'><font style="font-size: 12.0pt">&nbsp;</font></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";'><font style="font-size: 12.0pt">&nbsp;</font></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";text-align:center'><b><font style="font-size: 12.0pt">FORM 8-K</font></b></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";'><b><font style="font-size: 12.0pt">&nbsp;</font></b></p>

<h2 style='margin:0in;margin-bottom:.0001pt;text-align:center;page-break-after:avoid;font-size:12.0pt;font-family:"Times New Roman";font-weight:bold;'>CURRENT REPORT</h2>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";text-align:center'><b><font style="font-size: 12.0pt">Pursuant to Section 13 OR 15(d) of the</font></b></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";text-align:center'><b><font style="font-size: 12.0pt">Securities Exchange Act of 1934</font></b></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";text-align:center'><font style="font-size: 12.0pt">&nbsp;</font></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";text-align:center'><font style="font-size: 12.0pt">Date of Report </font></p>

<h1 style='margin:0in;margin-bottom:.0001pt;text-align:center;page-break-after:avoid;font-size:12.0pt;font-family:"Times New Roman";font-weight:normal;'>(Date of earliest event reported)<b> </b></h1>

<h1 style='margin:0in;margin-bottom:.0001pt;text-align:center;page-break-after:avoid;font-size:12.0pt;font-family:"Times New Roman";font-weight:normal;'><b>July 14, 2010</b></h1>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";text-align:center'><font style="font-size: 12.0pt">&nbsp;</font></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";'><font style="font-size: 12.0pt">&nbsp;</font></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";text-align:center'><b><font style="font-size: 12.0pt">PRO-DEX, INC.</font></b></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";text-align:center'><font style="font-size: 12.0pt">(Exact name of registrant as specified in its charter)</font></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";'><font style="font-size: 12.0pt">&nbsp;</font></p>

<table border="0" style="border-collapse: collapse" width="100%" id="table1">
	<tr>
		<td width="33%" align="center">

<p style='margin-bottom:0;font-size:10.0pt;font-family:"Times New Roman";text-align:center; margin-top:0'><b><font style="font-size: 12.0pt">COLORADO</font></b></p>
		</td>
		<td align="center" width="34%">
		<p style="margin-top: 0; margin-bottom: 0">
		<font style="font-size: 12.0pt" face="Times New Roman"><b>0-14942</b></font></td>
		<td width="33%" align="center">
		<p style="margin-top: 0; margin-bottom: 0"><b>
		<font style="font-size: 12.0pt" face="Times New Roman">84-1261240</font></b></td>
	</tr>
	<tr>
		<td width="33%" align="center">

<p style='margin-bottom:0;font-size:10.0pt;font-family:"Times New Roman"; margin-top:0'>
<font style="font-size: 12.0pt">(State or other</font></p></td>
		<td align="center" width="34%">
		<p style="margin-top: 0; margin-bottom: 0">
		<font style="font-size: 12.0pt" face="Times New Roman">(Commission File
		Number)</font></td>
		<td width="33%" align="center">
		<p style="margin-top: 0; margin-bottom: 0">
		<font style="font-size: 12.0pt" face="Times New Roman">(I.R.S.
Employer </font></td>
	</tr>
	<tr>
		<td width="33%" align="center">

<p style='margin-bottom:0;font-size:10.0pt;font-family:"Times New Roman"; margin-top:0'>
<font style="font-size: 12.0pt">jurisdiction of</font></p></td>
		<td align="center" width="34%">
		<p style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="33%" align="center">
		<p style="margin-top: 0; margin-bottom: 0">
		<font style="font-size: 12.0pt" face="Times New Roman">Identification
		Number)</font></td>
	</tr>
	<tr>
		<td width="33%" align="center">

<p style='margin-bottom:0;font-size:10.0pt;font-family:"Times New Roman";margin-top:0'>
<font style="font-size: 12.0pt">incorporation)</font></p>

		</td>
		<td align="center" width="34%">
		<p style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="33%" align="center">
		<p style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
	</tr>
</table>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";'><b><u><font style="font-size: 12.0pt">&nbsp;</font></u></b></p>

<p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'><b>2361 McGaw Avenue</b></p>

<p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'><b>Irvine, Ca.
92614</b></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";text-align:center'><font style="font-size: 12.0pt">(Address of principal executive offices, zip code)</font></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";text-align:center'><u><font style="font-size: 12.0pt">&nbsp;</font></u></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";text-align:center'><b><font style="font-size: 12.0pt">(949) 769-3200</font></b></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";text-align:center'><font style="font-size: 12.0pt">(Registrant&#146;s telephone number, including area code)</font></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";text-autospace:none'><font style="font-size: 12.0pt">&nbsp;</font></p>

<p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-autospace:none; margin-left:0in; margin-right:0in; margin-top:0in'>Check the appropriate box below
if the Form 8-K filing is intended to simultaneously satisfy the filing
obligation of the registrant under any of the following provisions ( <i>see </i>General
Instruction A.2. below): </p>

<p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-autospace:none; margin-left:0in; margin-right:0in; margin-top:0in'>&nbsp;&nbsp;&nbsp;&nbsp; [ ]
&nbsp;Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425) </p>

<p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-autospace:none; margin-left:0in; margin-right:0in; margin-top:0in'>&nbsp;&nbsp;&nbsp;&nbsp; [ ]
&nbsp;Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12) </p>

<p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-autospace:none; margin-left:0in; margin-right:0in; margin-top:0in'>&nbsp;&nbsp;&nbsp;&nbsp; [ ]
&nbsp;Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b)) </p>

<p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-autospace:none; margin-left:0in; margin-right:0in; margin-top:0in'>&nbsp;&nbsp;&nbsp;&nbsp; [ ]
&nbsp;Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c)) </p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";text-align:center'><font style="font-size: 12.0pt">&nbsp;</font></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";'>&nbsp;</p>

<div style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";text-align:center'>

<hr size=2 width="100%" noshade color=navy align=center>

</div>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

</div>

<font face="Times New Roman">

<b><u><br
clear=all style='page-break-before:always'>
</u></b>

</font>

<div style='page:Section2;'>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";text-indent:.5in'><font style="font-size: 12.0pt">&nbsp;</font></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";text-autospace:none'><b><u><font style="font-size: 12.0pt">Item 5.02</font></u><font style="font-size: 12.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;</font><u><font size="3">Departure of Directors or
Certain Officers; Election of Directors;<br>
</font>
</u><font size="3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Appointment
of Certain Officers; Compensatory Arrangements of <br>
</u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</font> <u><font size="3">Certain Officers.</font></u></b></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";'>&nbsp;</p>

<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>(e) </p>

<p style='font-family:"Times New Roman"; margin-left:0in; margin-right:0in'><i>Adoption of
Compensatory Plans.</i></p>

<p style='font-family:"Times New Roman"; margin-left:0in; margin-right:0in'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; On July
14, 2010, the Board of Directors (the &#147;Board&#148;) of Pro-Dex, Inc. (the &#147;Company&#148;)
acting in executive session and upon recommendation of the Company&#146;s
Compensation Committee, approved: </p>

<ul>
	<li>
	<p style='font-family:"Times New Roman";margin-right:0in'>A Long-Term Incentive
Plan (the &#147;LTIP&#148;) to provide equity-based incentive opportunities for the
Company&#146;s executives and other key personnel.&nbsp; The LTIP is attached to this
report as Exhibit 10.1, which exhibit is incorporated herein by reference.</p>
	</li>
	<li>
	<p style='font-family:"Times New Roman";margin-right:0in'>An Annual Incentive
Plan (the &#147;AIP&#148;) to provide annual cash-based incentive opportunities for the
Company&#146;s key employees.&nbsp; The AIP is attached to this report as Exhibit 10.2,
which exhibit is incorporated herein by reference.</p></li>
	<li>
	<p style='font-family:"Times New Roman";margin-right:0in'>A new compensation plan
for non-employee directors of the Board, effective as of July 1, 2010, which is
described in Exhibit 10.3 hereto, which exhibit is incorporated herein by
reference.</p></li>
</ul>

<p style='font-family:"Times New Roman"; margin-left:0in; margin-right:0in'><i>Employment
Arrangement between the Company and Mark P. Murphy.</i></p>

<p style='font-family:"Times New Roman"; margin-left:0in; margin-right:0in'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; On
July 14, 2010, the Company and Mark P. Murphy, the Chief Executive Officer of
the Company, entered into an at-will employment arrangement (&#147;Employment
Arrangement&#148;).&nbsp; The Employment Arrangement is attached to this report as
Exhibit 10.4, which exhibit is incorporated herein by this reference.&nbsp; Under
the terms of the Employment Arrangement, Mr. Murphy will report to the Board
and his compensation will consist of the following components:</p>

<ul>
	<li>
	<p style='font-family:"Times New Roman";margin-right:0in'>A base salary at an
annualized rate of $300,000, subject to increases from time to time at the
discretion of the Board.&nbsp; The base salary will be payable in accordance with
the Company&#146;s normal payroll practices, and subject to all legally-required
deductions.</p></li>
	<li>
	<p style='font-family:"Times New Roman";margin-right:0in'>Participation in all
Company incentive compensation plans open to senior executives of the Company,
subject to the terms and provisions of the applicable plan documents of the Company
covering any such plans.&nbsp; </p></li>
	<li>
	<p style='font-family:"Times New Roman";margin-right:0in'>Mr. Murphy is
	permitted to participate in any program of stock options or other equity
	grants which the Company may from time to time provide key employees. <font style="font-size: 12.0pt">Such grants are made under the terms and provisions of
the First Amended and Restated 2004 Stock Option Plan in varying amounts to
individual participants based upon their perceived impact upon the long term
success of the Company and are made at the sole and absolute discretion of the
Board, generally at the first Board meeting following the filing of the
Company&#146;s Form 10-K for the previous fiscal year.&nbsp;&nbsp; Subject to the foregoing, the
initial grant under this program will be 50,000 options to purchase the
Company&#146;s common shares at the average of the high and low prices for the
Company&#146;s shares on the grant date and which will vest ratably over the 36
month period following the grant date.&nbsp;&nbsp; The options will have a term of ten
years from the grant date and to the maximum extent permissible under the
relevant Internal Revenue Service regulations, will be made as Incentive Stock
Options.</font></p>
	</li>
</ul>

<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0 width=744
 style='width:7.75in;border-collapse:collapse'>
 <tr>
  <td width=252 valign=bottom style='width:189.0pt;padding:0in 1.8pt 0in 1.8pt'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>&nbsp;</p>
  </td>
  <td width=120 valign=bottom style='width:1.25in;padding:0in 1.8pt 0in 1.8pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
  </td>
  <td width=120 valign=bottom style='width:1.25in;padding:0in 1.8pt 0in 1.8pt'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>&nbsp;</p>
  </td>
  <td width=252 valign=bottom style='width:189.0pt;padding:0in 1.8pt 0in 1.8pt'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>&nbsp;</p>
  </td>
 </tr>
</table>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";' align="center">
<font size="3">&nbsp;2</font></p>

<div style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";text-align:center'>

<hr size=2 width="100%" noshade color=navy align=center>

</div>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<font face="Times New Roman">

<br clear=all
style='page-break-before:always'>


</font>


<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<ul>
	<li>
	<p style='font-family:"Times New Roman";margin-right:0in'>Health, dental,
disability and life insurance, qualified retirement plans, and optional
employee benefits of the Company on the same terms as other employees of the
Company, except Mr. Murphy will not participate in the Company-wide employee
quarterly bonus/non-qualified profit sharing plan.</p></li>
	<li>
	<p style='font-family:"Times New Roman";margin-right:0in'>If Mr. Murphy&#146;s
employment with the Company terminates for any reason, the Company shall pay
his (i) salary up through the date of termination, plus; (ii) any AIP or LTIP
awards earned but not yet paid as of the termination date.&nbsp; In addition, in the
event Mr. Murphy is terminated involuntarily by the Company without &#147;Cause&#148; or
following a &#147;Change in Control,&#148; or in the event that he resigns for &#147;Good
Reason,&#148; each as defined in the Employment Arrangement, the Company shall pay
Mr. Murphy severance compensation equal to one (1.0) times his then-current
annual base salary.</p></li>
</ul>

<pre style='margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";text-align:justify; margin-left:0in; margin-right:0in; margin-top:0in'>&nbsp;</pre>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";'><b><u><font style="font-size: 12.0pt">Item 9.01</font></u><font style="font-size: 12.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Financial Statements and
Exhibits.</u></font></b></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";'><font style="font-size: 12.0pt">&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Exhibit.</font></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";'><font style="font-size: 12.0pt">&nbsp;</font></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";'><font style="font-size: 12.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Exhibit
10.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Long-Term Incentive Plan.</font></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";'><font style="font-size: 12.0pt">&nbsp;</font></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";'><font style="font-size: 12.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Exhibit
10.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Annual Incentive Plan for the Senior Management.</font></p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:1.5in;margin-bottom:.0001pt;text-align:justify;text-indent:-.5in;font-size:12.0pt;font-family:"Times New Roman";margin-top:12.0pt;margin-right:
0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:left;
text-indent:.5in'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Exhibit 10.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Description of Non-Employee
Director Compensation Program.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:1.5in;margin-bottom:.0001pt;text-align:justify;text-indent:-.5in;font-size:12.0pt;font-family:"Times New Roman";margin-top:12.0pt;margin-right:
0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:left;
text-indent:.5in'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Exhibit 10.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Employment Arrangement between
Pro-Dex, Inc. and Mark Murphy dated July 14, 2010.</p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:1.5in;margin-bottom:.0001pt;text-align:justify;text-indent:-.5in;font-size:12.0pt;font-family:"Times New Roman";margin-top:12.0pt;margin-right:
0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:left;
text-indent:.5in'>&nbsp;</p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:1.5in;margin-bottom:.0001pt;text-align:justify;text-indent:-.5in;font-size:12.0pt;font-family:"Times New Roman";margin-top:12.0pt;margin-right:
0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:left;
text-indent:.5in'>&nbsp;</p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:1.5in;margin-bottom:.0001pt;text-align:justify;text-indent:-.5in;font-size:12.0pt;font-family:"Times New Roman";margin-top:12.0pt;margin-right:
0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:left;
text-indent:.5in'>&nbsp;</p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:1.5in;margin-bottom:.0001pt;text-align:justify;text-indent:-.5in;font-size:12.0pt;font-family:"Times New Roman";margin-top:12.0pt;margin-right:
0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:left;
text-indent:.5in'>&nbsp;</p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:1.5in;margin-bottom:.0001pt;text-align:justify;text-indent:-.5in;font-size:12.0pt;font-family:"Times New Roman";margin-top:12.0pt;margin-right:
0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:left;
text-indent:.5in'>&nbsp;</p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:1.5in;margin-bottom:.0001pt;text-align:justify;text-indent:-.5in;font-size:12.0pt;font-family:"Times New Roman";margin-top:12.0pt;margin-right:
0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:left;
text-indent:.5in'>&nbsp;</p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:1.5in;margin-bottom:.0001pt;text-align:justify;text-indent:-.5in;font-size:12.0pt;font-family:"Times New Roman";margin-top:12.0pt;margin-right:
0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:left;
text-indent:.5in'>&nbsp;</p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:1.5in;margin-bottom:.0001pt;text-align:justify;text-indent:-.5in;font-size:12.0pt;font-family:"Times New Roman";margin-top:12.0pt;margin-right:
0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:left;
text-indent:.5in'>&nbsp;</p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:1.5in;margin-bottom:.0001pt;text-align:justify;text-indent:-.5in;font-size:12.0pt;font-family:"Times New Roman";margin-top:12.0pt;margin-right:
0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:left;
text-indent:.5in'>&nbsp;</p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:1.5in;margin-bottom:.0001pt;text-align:justify;text-indent:-.5in;font-size:12.0pt;font-family:"Times New Roman";margin-top:12.0pt;margin-right:
0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:left;
text-indent:.5in'>&nbsp;</p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:1.5in;margin-bottom:.0001pt;text-align:justify;text-indent:-.5in;font-size:12.0pt;font-family:"Times New Roman";margin-top:12.0pt;margin-right:
0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:left;
text-indent:.5in'>&nbsp;</p>

<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in' align="center">&nbsp;3</p>

<div style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";text-align:center'>

<hr size=2 width="100%" noshade color=navy align=center>

</div>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<font face="Times New Roman">

<br clear=all
style='page-break-before:always'>


</font>


<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";text-align:center'><b><font style="font-size: 12.0pt">SIGNATURES</font></b></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";'><font style="font-size: 12.0pt">&nbsp;</font></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";'><font style="font-size: 12.0pt">&nbsp;</font></p>

<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pursuant to the requirements of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";'><font style="font-size: 12.0pt">&nbsp;</font></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";'><font style="font-size: 12.0pt">&nbsp;</font></p>

<table border="0" style="border-collapse: collapse" width="100%" id="table2">
	<tr>
		<td width="50%"><font style="font-size: 12.0pt">Date:&nbsp; July 16, 2010</font></td>
		<td width="50%">

<p style='margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman"; margin-right:0in; margin-top:0in'>
<font style="font-size: 12.0pt"><b>PRO-DEX, Inc (Registrant).</b></font></p>

		</td>
	</tr>
	<tr>
		<td width="50%">&nbsp;</td>
		<td width="50%">

<p style='margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman"; margin-right:0in; margin-top:0in'><font style="font-size: 12.0pt">&nbsp;</font></p>

		</td>
	</tr>
	<tr>
		<td width="50%">&nbsp;</td>
		<td width="50%">

<p style='margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman"; margin-right:0in; margin-top:0in'><font style="font-size: 12.0pt">&nbsp;</font></p>

		</td>
	</tr>
	<tr>
		<td width="50%">&nbsp;</td>
		<td width="50%">

<p style='margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";margin-right:0in; margin-top:0in'><font style="font-size: 12.0pt">By:
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>/s/&nbsp; Jeffrey J. Ritchey&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u></font></p>

		</td>
	</tr>
	<tr>
		<td width="50%">&nbsp;</td>
		<td width="50%">

<h3 style='margin-top:0in;margin-right:0in;margin-bottom:0in;margin-bottom:.0001pt;page-break-after:avoid;font-size:12.0pt;font-family:"Times New Roman";font-weight:normal'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Jeffrey J. Ritchey</h3>

		</td>
	</tr>
	<tr>
		<td width="50%">&nbsp;</td>
		<td width="50%">

<h3 style='margin-top:0in;margin-right:0in;margin-bottom:0in;margin-bottom:.0001pt;page-break-after:avoid;font-size:12.0pt;font-family:"Times New Roman";font-weight:normal'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Chief Financial Officer</h3>

		</td>
	</tr>
</table>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";'>&nbsp;</p>

<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in' align="center">&nbsp;</p>
<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in' align="center">&nbsp;</p>
<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in' align="center">&nbsp;</p>
<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in' align="center">&nbsp;</p>
<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in' align="center">&nbsp;</p>
<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in' align="center">&nbsp;</p>
<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in' align="center">&nbsp;</p>
<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in' align="center">&nbsp;</p>
<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in' align="center">4</p>

<div style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";text-align:center'>

<hr size=2 width="100%" noshade color=navy align=center>

</div>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<font face="Times New Roman">

<br clear=all
style='page-break-before:always'>


</font>


<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";text-align:center'><b><font style="font-size: 12.0pt">INDEX TO EXHIBITS</font></b></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";'><b><font style="font-size: 12.0pt">&nbsp;</font></b></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";'><b><font style="font-size: 12.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font></b></p>

<h4 style='margin:0in;margin-bottom:.0001pt;page-break-after:avoid;font-size:12.0pt;font-family:"Times New Roman";font-weight:bold;'>&nbsp;&nbsp;  Exhibit</h4>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";'><b><u><font style="font-size: 12.0pt">&nbsp; Number&nbsp; </font></u><font style="font-size: 12.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Description&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u></font></b></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";'><font style="font-size: 12.0pt">&nbsp;</font></p>

<p style='font-size:10.0pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'><font style="font-size: 12.0pt">Exhibit 10.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Long-Term
Incentive Plan.</font></p>

<p style='font-size:10.0pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'><font style="font-size: 12.0pt">Exhibit 10.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Annual
Incentive Plan for the Senior Management.</font></p>

<p style='margin-top:0in;margin-right:0in;margin-left:1.5in;text-align:justify;text-indent:-.5in;font-size:12.0pt;font-family:"Times New Roman";margin-top:12.0pt;margin-right:
0in;margin-left:0in;text-align:left;
text-indent:0in'>Exhibit 10.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Description of Non-Employee Director Compensation
Program.</p>

<p style='margin-top:0in;margin-right:0in;margin-left:1.5in;text-align:justify;text-indent:-.5in;font-size:12.0pt;font-family:"Times New Roman";margin-left:0in;text-align:left;
text-indent:0in;'>Exhibit 10.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Employment Arrangement
between Pro-Dex, Inc. and Mark Murphy dated July 14, 2010.</p>
<p style='margin-top:0in;margin-right:0in;margin-left:1.5in;text-align:justify;text-indent:-.5in;font-size:12.0pt;font-family:"Times New Roman";margin-left:0in;text-align:left;
text-indent:0in;'>&nbsp;</p>
<p style='margin-top:0in;margin-right:0in;margin-left:1.5in;text-align:justify;text-indent:-.5in;font-size:12.0pt;font-family:"Times New Roman";margin-left:0in;text-align:left;
text-indent:0in;'>&nbsp;</p>
<p style='margin-top:0in;margin-right:0in;margin-left:1.5in;text-align:justify;text-indent:-.5in;font-size:12.0pt;font-family:"Times New Roman";margin-left:0in;text-align:left;
text-indent:0in;'>&nbsp;</p>
<p style='margin-top:0in;margin-right:0in;margin-left:1.5in;text-align:justify;text-indent:-.5in;font-size:12.0pt;font-family:"Times New Roman";margin-left:0in;text-align:left;
text-indent:0in;'>&nbsp;</p>
<p style='margin-top:0in;margin-right:0in;margin-left:1.5in;text-align:justify;text-indent:-.5in;font-size:12.0pt;font-family:"Times New Roman";margin-left:0in;text-align:left;
text-indent:0in;'>&nbsp;</p>
<p style='margin-top:0in;margin-right:0in;margin-left:1.5in;text-align:justify;text-indent:-.5in;font-size:12.0pt;font-family:"Times New Roman";margin-left:0in;text-align:left;
text-indent:0in;'>&nbsp;</p>
<p style='margin-top:0in;margin-right:0in;margin-left:1.5in;text-align:justify;text-indent:-.5in;font-size:12.0pt;font-family:"Times New Roman";margin-left:0in;text-align:left;
text-indent:0in;'>&nbsp;</p>
<p style='margin-top:0in;margin-right:0in;margin-left:1.5in;text-align:justify;text-indent:-.5in;font-size:12.0pt;font-family:"Times New Roman";margin-left:0in;text-align:left;
text-indent:0in;'>&nbsp;</p>
<p style='margin-top:0in;margin-right:0in;margin-left:1.5in;text-align:justify;text-indent:-.5in;font-size:12.0pt;font-family:"Times New Roman";margin-left:0in;text-align:left;
text-indent:0in;'>&nbsp;</p>
<p style='margin-top:0in;margin-right:0in;margin-left:1.5in;text-align:justify;text-indent:-.5in;font-size:12.0pt;font-family:"Times New Roman";margin-left:0in;text-align:left;
text-indent:0in;'>&nbsp;</p>

<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0 width=744
 style='width:7.75in;border-collapse:collapse'>
 <tr>
  <td width=252 valign=bottom style='width:189.0pt;padding:0in 1.8pt 0in 1.8pt'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>&nbsp;</p>
  </td>
  <td width=120 valign=bottom style='width:1.25in;padding:0in 1.8pt 0in 1.8pt'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>&nbsp;</p>
  </td>
  <td width=120 valign=bottom style='width:1.25in;padding:0in 1.8pt 0in 1.8pt'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>&nbsp;</p>
  </td>
  <td width=252 valign=bottom style='width:189.0pt;padding:0in 1.8pt 0in 1.8pt'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>&nbsp;</p>
  </td>
 </tr>
</table>

<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in' align="center">&nbsp;5</p>

<div style='margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:1.5in;margin-bottom:.0001pt;text-align:justify;text-indent:-.5in;font-size:12.0pt;font-family:"Times New Roman";margin-left:0in;text-align:
center;text-indent:0in'>

&nbsp;</div>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:1.5in;margin-bottom:.0001pt;text-align:justify;text-indent:-.5in;font-size:12.0pt;font-family:"Times New Roman";margin-top:12.0pt;margin-right:
0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:left;
text-indent:0in'>&nbsp;</p>

</div>

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<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>es10-1.htm
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<head>
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<title>Exhibit 10.1</title>



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<body lang=EN-US>

<div style='page:Section1;'>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;'><b>&nbsp;</b></p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;'><b>&nbsp;</b></p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;'><b>Exhibit 10.1</b></p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;
text-align:center;text-autospace:none'><b>PRO-DEX,
INC.<br>
LONG-TERM INCENTIVE PLAN</b></p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>INTRODUCTION</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:.1in;margin-bottom:0in;
margin-left:0in;margin-bottom:.0001pt;text-indent:.25in;text-autospace:none'>The Pro-Dex, Inc.
Long-Term Incentive Plan (the &quot;Plan&quot;) is a long-term incentive plan
for eligible employees of the Company. The Plan is intended to provide
equity-based incentive opportunities to executives and other key employees of
the Company. Plan payments, if any, will be conditioned on attainment of
certain Performance Goals for one or more fiscal years as approved by the
Committee and ratified by its Board of Directors.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>I.&nbsp; PURPOSE</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:.05in;margin-bottom:0in;
margin-left:0in;margin-bottom:.0001pt;text-indent:.25in;text-autospace:none'>The purpose of the
Plan is to allow the Company to attract, motivate and retain highly qualified
employees; to obtain from each employee the best possible performance;
to establish Performance Measures that support the Company's long-term business
strategies; and to provide consistency in and alignment with the
Company's approach to performance-based pay and overall executive compensation
strategy.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>II. DEFINITIONS</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:.25in;margin-bottom:.0001pt;text-autospace:none'>For purposes of the Plan, the following
terms shall have the following meanings:</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:.1in;margin-bottom:0in;
margin-left:.25in;margin-bottom:.0001pt;text-autospace:none'><b>AWARD PARAMETERS DESCRIPTION</b>. A document or compilation of documents
approved by the Committee and ratified by the Board of Directors, in writing, to set forth the parameters necessary for
determining a Long-Term Incentive Compensation Award, including the (i) Award
Period, (ii) the Performance
Measures, (iii) the Performance Goals and (iv) the amount of Long-Term
Incentive Compensation Award payable with respect to the achievement of
each Performance Goal. The award parameters described in the Award Parameters
Description need not be identical for all the Participants.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:.45in;margin-bottom:0in;
margin-left:.25in;margin-bottom:.0001pt;text-autospace:none'><b>AWARD PERIOD.
</b>Unless otherwise provided by the Committee and ratified by the Board of
Directors, the Award Period to which a Long-Term Incentive Compensation Award relates shall encompass three
(3) consecutive fiscal years.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-top:0in;margin-right:.45in;margin-bottom:0in;
margin-left:.25in;margin-bottom:.0001pt;text-autospace:none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:.05in;margin-bottom:0in;
margin-left:.25in;margin-bottom:.0001pt;text-autospace:none'><b>BOARD OF DIRECTORS</b>. The Board of Directors of Pro-Dex,
Inc.; provided that, with respect to any Long-Term Incentive Compensation
Awards of the Chief Executive Officer of Pro-Dex, Inc. , &quot;Board of
Directors&quot; shall mean only the members of the Board of Directors who
qualify as &quot;outside directors&quot; under Section 162(m) of the Code and
who meet the independence requirements of applicable law and the NASDAQ Listing
Rule 5605(a)(2) (or any such comparable provision of any other primary exchange
on which the company<sup>'</sup>s shares are listed).</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:.25in;margin-bottom:.0001pt;text-autospace:none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri'>&nbsp;</p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri'>&nbsp;</p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri'>&nbsp;</p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri'>&nbsp;</p>

<div style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;
text-align:center;line-height:normal'>

<hr size=2 width="100%" noshade color=navy align=center>

</div>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;'>&nbsp;</p>

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<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:.05in;margin-bottom:0in;
margin-left:.25in;margin-bottom:.0001pt;text-autospace:none'><b>CAUSE</b>. Cause has the
meaning given to such term in any employment agreement with the Company to
which the Participant is a party and in the absence of
such agreements (and not intended to modify or add to any such existing
agreement terms), it shall mean: (i) conviction for the commission of a felony
or a crime involving moral turpitude or the commission of any other act or
omission involving dishonesty, disloyalty or fraud; (ii) conduct that brings or
is reasonably likely to bring the Company into public disgrace or disrepute,
(iii) repeated failure to perform duties as reasonably directed by the Company;
(iv) gross negligence or willful misconduct with respect to the Company; and/or (v) habitual insobriety, or use of illicit
drugs or other controlled substances following one medically supervised course
of treatment for such drug or alcohol use or upon refusal to participate
in such course of treatment.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-top:0in;margin-right:0in;
margin-bottom:0in;margin-left:.25in;margin-bottom:.0001pt;text-align:right;
text-autospace:none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:.25in;margin-bottom:.0001pt;text-autospace:none'><b>CHANGE IN CONTROL</b>. &quot;Change in the ownership or
effective control of the corporation&quot; or &quot;change in the ownership of
a substantial portion of the assets of the corporation&quot;, as such terms are
defined in Section 1.409A-3(i)(5) of the final regulations and other applicable
guidance promulgated under Section 409A of the Code.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-top:0in;margin-right:1.7in;margin-bottom:0in;
margin-left:.25in;margin-bottom:.0001pt;text-autospace:none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:.25in;margin-bottom:.0001pt;text-autospace:none'><b>CODE</b>. The Internal
Revenue Code of 1986, as amended, and any regulations thereunder, and any
successors thereto.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:.25in;margin-bottom:.0001pt;text-autospace:none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:.25in;margin-bottom:.0001pt;text-autospace:none'><b>COMMITTEE</b>. The Compensation Committee of the Board
of Directors.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:.25in;margin-bottom:.0001pt;text-autospace:none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:.25in;margin-bottom:.0001pt;text-autospace:none'><b>COMPANY</b>. Pro-Dex Inc., its subsidiaries and any other entity which is
a &quot;service recipient&quot; (as such term is defined in Section 1.409A1(g)
of the final regulations and other applicable guidance promulgated under
Section 409A of the Code) with respect to persons performing services for the
Company.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:.25in;margin-bottom:.0001pt;text-autospace:none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:.25in;margin-bottom:.0001pt;text-autospace:none'><b>DISABILITY</b>. &quot;Disability&quot;, as such term is
defined in Section 1.409A-3(i)(4) of the final regulations and other applicable
guidance promulgated under Section 409A of the Code.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:.25in;margin-bottom:.0001pt;text-autospace:none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:.1in;margin-bottom:0in;
margin-left:.25in;margin-bottom:.0001pt;text-autospace:none'><b>LONG-TERM INCENTIVE COMPENSATION AWARD</b>. Any award paid pursuant to the Plan. A
Long-Term Incentive Compensation Award shall be determined by the Committee and
ratified by the Board of Directors, in its sole and absolute discretion. Unless
otherwise specified by the Committee and
ratified by the Board of D<sup>i</sup>rectors, with respect to any Performance Measure:
(i) the Long-Term Incentive Compensation Award payable with respect to the maximum Performance Goal shall not exceed
one hundred and fifty percent (150%) of the Long-Term Incentive Compensation
Award payable with respect to the target Performance Goal; and (ii) the
Long-Term Incentive Compensation Award payable with respect to a minimum
Performance Goal shall not be less than fifty percent (50%) of the Long-Term
Incentive Compensation Award payable with respect to the target Performance Goal. The Long-Term Incentive
Compensation Award payable to any individual Participant with respect to any
particular Award Period shall not exceed $1,000,000. (one million
dollars).</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-top:0in;margin-right:.1in;margin-bottom:0in;
margin-left:.25in;margin-bottom:.0001pt;text-autospace:none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:.2in;margin-bottom:0in;
margin-left:.25in;margin-bottom:.0001pt;text-autospace:none'><b>PARTICIPANT</b>. An executive or
other key employee of the Company, or a person who has agreed to commence
serving in any of such capacities, and
who is designated by the Committee to participate in the Plan. No person shall
be a Participant in the Plan prior to the execution by such person of the
Participation Agreement.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-top:0in;margin-right:.2in;margin-bottom:0in;
margin-left:.25in;margin-bottom:.0001pt;text-autospace:none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri'>&nbsp;</p>

<div style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;
text-align:center;line-height:normal'>

<hr size=2 width="100%" noshade color=navy align=center>

</div>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;'>&nbsp;</p>

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<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:.2in;margin-bottom:0in;
margin-left:.25in;margin-bottom:.0001pt;text-autospace:none'><b>PARTICIPATION AGREEMENT</b>. An agreement executed by the
Participant in substantially the form attached hereto as <b><u>Exhibit A</u></b>.
Executed Participation Agreements are
incorporated into the Plan by reference and made a part thereof to the same
extent and with the same force and effect as if fully set forth therein.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-top:0in;margin-right:.2in;margin-bottom:0in;
margin-left:.25in;margin-bottom:.0001pt;text-autospace:none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:.1in;margin-bottom:0in;
margin-left:.25in;margin-bottom:.0001pt;text-autospace:none'><b>PERFORMANCE GOAL</b>. Performance Goal means, with respect to
a Performance Measure, a measure of achievement of such Performance Measure,
approved by the Committee and ratified by the Board of Directors and set forth
in the Award Parameters Description. Unless otherwise provided by the Committee
and ratified by the Board of D<sup>i</sup>rectors, there shall be three (3)
Performance Goals with respect to each Performance Measure &#150; (i) minimum
Performance Goal, (ii) target Performance Goal and (iii) maximum Performance
Goal. Performance Goals shall be deemed to be achieved only if achieved in the
course of the applicable Award Period.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:.25in;margin-bottom:.0001pt;text-autospace:none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:.25in;margin-bottom:.0001pt;text-autospace:none'><b>PERFORMANCE MEASURES</b>. Certain performance categories set
forth in <u>Section V</u> of the Plan. Performance Measures shall be set forth
by the Committee in the Award Parameters Description.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:.25in;margin-bottom:.0001pt;text-autospace:none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:.5in;margin-bottom:0in;
margin-left:.25in;margin-bottom:.0001pt;text-autospace:none'><b>PRO-DEX, INC. </b>Pro-Dex, Inc., a Colorado corporation.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:.5in;margin-bottom:0in;
margin-left:.25in;margin-bottom:.0001pt;text-autospace:none'><b>&nbsp;</b></p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:.5in;margin-bottom:0in;
margin-left:.25in;margin-bottom:.0001pt;text-autospace:none'><b>SEPERATION FROM SERVICE</b>. &quot;Separation from service<sup>&quot;</sup>,
as such term is defined in Section 1.409A-1(h) of the final regulations and
other applicable guidance promulgated under Section 409A of the Code.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-top:0in;margin-right:.5in;margin-bottom:0in;
margin-left:.25in;margin-bottom:.0001pt;text-autospace:none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:.05in;margin-bottom:0in;
margin-left:.25in;margin-bottom:.0001pt;text-autospace:none'><b>TSR</b>. TSR (total
shareholder return) shall mean A minus B expressed as a percentage of B (A-B)/x100)], where A is the per-share price of a Company's common stock at the
end of the applicable Award Period and B is the average per-share price of the
Company's common stock at the beginning of the applicable Award Period. For
purposes of calculations of TSR, cash dividends paid on a share of common stock
shall be deemed to be reinvested in the Company's common stock on the day they
are paid at the average of the high and the low per-share price of that
Company's common stock on that day, as quoted on the primary exchange on which
the Company's shares are listed. The value at the end of the applicable Award
Period of such common stock deemed purchased with cash dividends shall be added
to A (above) for purposes of calculation of TSR. If in the course of the Award
Period the outstanding shares of common stock of the Company are increased or
decreased or changed into or exchanged for a different number or kind of shares
or other securities of the Company by reason of any recapitalization,
reclassification, reorganization, stock split, reverse split, combination of
shares, exchange of shares, stock dividend or other distribution payable in
capital stock of the Company or other increase or decrease in such shares
effected without receipt of consideration by
the Company, an appropriate and proportionate adjustment approved by the
Committee shall be made to the calculation of TSR set forth above. For purposes of determining TSR, the stock price
at the beginning date and end date of an Award Period shall be the average of
the closing stock prices for the ninety (90) days immediately preceding
such dates as quoted on the primary exchange on which the company<sup>'</sup>s
shares are listed.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>III. EFFECTIVE DATE</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:.25in;margin-bottom:.0001pt;text-autospace:none'>The Plan is effective as of July 1, 2010.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:.25in;margin-bottom:.0001pt;text-autospace:none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri'>&nbsp;</p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri'>&nbsp;</p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri'>&nbsp;</p>

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text-align:center;line-height:normal'>

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</div>

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</font>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:.25in;margin-bottom:.0001pt;text-indent:-.25in;text-autospace:none'>IV. DETERMINATION OF AMOUNTS OF AND
ELIGIBILITY FOR LONG-TERM INCENTIVE COMPENSATION AWARDS</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-top:0in;margin-right:.05in;margin-bottom:0in;
margin-left:0in;margin-bottom:.0001pt;text-indent:.25in;text-autospace:none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:.05in;margin-bottom:0in;
margin-left:0in;margin-bottom:.0001pt;text-indent:.25in;text-autospace:none'>Unless otherwise provided in the Plan, if
the Performance Goals are achieved in the course of the applicable Award Period
and such achievements are certified by the Committee based upon the audited
financial statements for the last fiscal year of the Award Period contained in
the Company's annual report filed with the
Securities and Exchange Commission, then Long-Term Incentive Compensation
Awards will be paid in amounts determined by the Committee and ratified
by the Board of Directors pursuant to the Plan and the Award Parameters Description.
Unless otherwise set forth in the Award Parameters Description with respect to any Participant: (i) the amount of
the Long-Term Incentive Compensation Award payable in connection with achieving
any Performance Goal of TSR shall not exceed fifty percent (50%) of the
maximum Long-Term Incentive Compensation Award that can be made under the Plan
in connection with the applicable Award
Period; and (ii) the amount of the Long-Term Incentive Compensation Award
payable in connection with achieving any Performance Goal(s) other than TSR shall not exceed fifty percent
(50%) of the maximum Long-Term Incentive Compensation Award that can be made
under the Plan in connection with the applicable Award Period.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>V. PERFORMANCE MEASURES</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:.05in;margin-bottom:0in;
margin-left:0in;margin-bottom:.0001pt;text-autospace:none'>A. <u>Generally.</u> Unless otherwise
provided in the Plan, payment of Long-Term Incentive Compensation Awards is
conditioned on the attainment in the course
of the Award Period of Performance Goals set with respect to Performance
Measures. The Performance Goals and Performance Measures need not be
identical with respect to all the Participants. Performance Goals may be
established based upon the Company<sup>'</sup>s performance in isolation or by
judging the Company's performance relative to one or more comparator companies
or upon the performance of one or more of the Company<sup>'</sup>s subsidiaries
or divisions. Performance Goals and the amount of Long-Term Incentive
Compensation Award payable with respect to the achievement of any Performance
Goal for any Long-Term Incentive Award that
is intended to qualify as &quot;performance-based compensation<sup>&quot;</sup> under Section 162(m) of the Code must be
established in writing no later than September 13 (i.e. 75 days) following the
beginning of the applicable Award Period and may be based on one or more
of the following objective criteria (the &quot;Performance Measures<sup>&quot;</sup>):</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-top:0in;margin-right:.05in;margin-bottom:0in;
margin-left:0in;margin-bottom:.0001pt;text-autospace:none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:0.6in;margin-bottom:.0001pt;line-height:normal;
text-autospace:none'>(1)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; TSR, including its components of stock
price appreciation, dividends and/or dividend yield;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:.6in;margin-bottom:.0001pt;text-autospace:none'>(2)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Return on assets,
equity, invested capital, cash flow, investment, or sales;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:.6in;margin-bottom:.0001pt;text-autospace:none'>(3)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales, including
gross margin;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:.55in;margin-bottom:0in;
margin-left:0.6in;margin-bottom:.0001pt;line-height:normal;
text-autospace:none'>(4)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pre-tax or after-tax
profit levels, including: earnings per share; earnings before interest and
taxes; earnings before interest, taxes, depreciation and amortization; net
operating profits after tax, and net income;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:.6in;margin-bottom:.0001pt;text-autospace:none'>(5)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash flow and cash
flow return on investment;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:.6in;margin-bottom:.0001pt;text-autospace:none'>(6)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Economic profit
and/or cost of capital;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:.6in;margin-bottom:.0001pt;text-autospace:none'>(7)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Turnover of assets,
capital, or inventory;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:.6in;margin-bottom:.0001pt;line-height:normal;
text-autospace:none'>(8)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Levels of operating
expense or other expense items as reported on the income statement, including
operating and maintenance expense;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:.6in;margin-bottom:.0001pt;line-height:normal;
text-autospace:none'>(9)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Measures of customer
satisfaction and customer service, including the relative improvement therein;
and</p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:.6in;margin-bottom:.0001pt;line-height:normal;
text-autospace:none'>(10)&nbsp;&nbsp;&nbsp;&nbsp; Market share, including by product line
or geographic market or submarkets.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri'>&nbsp;</p>

<div style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;
text-align:center;line-height:normal'>

<hr size=2 width="100%" noshade color=navy align=center>

</div>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;'>&nbsp;</p>

<font face="Times New Roman">

<br clear=all
style='page-break-before:always'>


</font>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:.2in;margin-bottom:0in;
margin-left:0in;margin-bottom:.0001pt;text-indent:.25in;text-autospace:none'>Performance Goals
may be determined by reference to levels of and/or growth in a Performance
Measure. Performance Goals with respect to Performance Measures shall be objectively measurable
and established for a period coinciding with or ending within the Award Period.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-top:0in;margin-right:.2in;margin-bottom:0in;
margin-left:0in;margin-bottom:.0001pt;text-indent:.25in;text-autospace:none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Times New Roman;margin-bottom:.0001pt;text-indent:.25in;
line-height:normal;text-autospace:none; margin-left:0in; margin-right:0in; margin-top:0in'>B.<u>Certain
Factors and Events Excluded.</u>
In establishing Performance Goals and Performance Measures for Participants and
in certifying the achievement of Performance Goals as the end of an Award
Period, the Committee may include or exclude the impact of specified objective
events, including any of the following:
expenses as a result of restructuring or productivity initiatives,
non-operating items; acquisition expenses; and any other items of gain, loss or
expense that are determined to be extraordinary or unusual in nature or
infrequent in occurrence or related to the disposal of a segment of a business
or to a change of accounting principles.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:.15in;margin-bottom:0in;
margin-left:0in;margin-bottom:.0001pt;text-indent:.25in;line-height:normal;
text-autospace:none'>C.<u>Default Performance Measures.</u> Unless otherwise specified by the
Committee and ratified by the Board of Directors, the Performance Measures
shall consist of: (i) TSR relative to a group of comparator companies; and (ii)
one or more Performance Goals other than TSR.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Calibri;margin-top:0in;margin-right:.15in;margin-bottom:0in;
margin-left:.25in;margin-bottom:.0001pt;line-height:normal;text-autospace:none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:.0001pt;text-indent:0in;
text-autospace:none; margin-left:0in; margin-right:0in; margin-top:0in'>VI.&nbsp;&nbsp;&nbsp;&nbsp;
PAYMENT OF LONG-TERM
INCENTIVE COMPENSATION AWARDS</p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:.0001pt;text-indent:0in;
text-autospace:none; margin-left:0in; margin-right:0in; margin-top:0in'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-indent:
..3in;text-autospace:none'>Unless otherwise provided in the Plan, the payment of a
Long-Term Incentive Compensation Award shall be made on the first day following
the approval of such award by the Committee and the filing of the fiscal year
end Form 10-K for the final
year of the Award Period to which it relates; provided that, subject to Section
VII, the Participant is actively employed with the Company on such date. Unless
otherwise provided in the Plan, Long-Term Incentive Compensation Awards shall
be paid in shares of Company stock valued at the closing price of the Company&#146;s
shares on the day preceding such payment.&nbsp; For the purposes of this Section VI,
payment within 75 days following a specified payment date shall be deemed to
constitute payment on the specified payment date.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;text-indent:
..3in;text-autospace:none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:.0001pt;text-indent:0in;
text-autospace:none; margin-left:0in; margin-right:0in; margin-top:0in'>VII.&nbsp; TERMINATION OF SERVICE, SPIN-OFFS AND
SIMILAR TRANSACTIONS DURING THE AWARD PERIOD</p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:.0001pt;text-indent:0in;
text-autospace:none; margin-left:0in; margin-right:0in; margin-top:0in'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Times New Roman;margin-bottom:.0001pt;text-indent:.3in;
line-height:normal;text-autospace:none; margin-left:0in; margin-right:0in; margin-top:0in'>A.<u>Involuntary
Separation from Service, Death or Disability.</u> Subject to Section VII. C., if before the end of an Award
Period a Participant experiences a Separation from Service with the Company by
virtue of termination of the Participant<sup>'</sup>s service by the Company,
other than for Cause, or if a Participant experiences Separation from Service with
the Company due to death or Disability, the Participant's Long-Term Incentive
Compensation Awards for any Award Period in effect at the time of such
Separation from Service will be prorated on the basis of the ratio of the
number of days of Participant's service during such Award Period prior to such
Separation from Service to the total number of days in such Award Period. The
determination of such prorated Long-Term Compensation Awards will be based on
the attainment of the Performance Goals with respect to the applicable
Performance Measure(s) and will be paid on the date the Participant would have received payments with respect to such
Long-Term Compensation Awards had the Participant not experienced a Separation
from Service with the Company.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; B.<u>&nbsp; Termination
by the Company for Cause, Voluntary Separation from Service.</u> In the event a
Participant experiences a Separation from Service with the Company by virtue of
termination of the Participant<sup>'</sup>s service by the Company for Cause,
or by virtue of voluntary termination of
service by the Participant, the Participant shall have no rights whatsoever to
any unpaid Long-Term Compensation Awards and no payments with respect to
any unpaid Long-Term Compensation Awards shall be made to the Participant.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri'>&nbsp;</p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri'>&nbsp;</p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri'>&nbsp;</p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri'>&nbsp;</p>

<div style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;
text-align:center;line-height:normal'>

<hr size=2 width="100%" noshade color=navy align=center>

</div>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;'>&nbsp;</p>

<font face="Times New Roman">

<u><br clear=all
style='page-break-before:always'>
</u>

</font>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Times New Roman;margin-bottom:.0001pt;text-indent:.3in;
line-height:normal;text-autospace:none; margin-left:0in; margin-right:0in; margin-top:0in'>C.<u> Termination
Close In Time To the Change in Control of Pro-Dex, Inc.</u> In the event the Participant experiences
a Separation from Service with the Company (not including separation caused by
death or Disability) by virtue of termination of the Participant's service by the
Company less than six (6) months following a Change in Control of Pro-Dex,
Inc., and such Separation from Service occurs prior to the end of the Award
Period, then upon the Participant<sup>'</sup>s Separation from Service, all Performance Goals with respect to Performance
Measures shall be deemed to have been met with respect to such Participant and
any applicable Long-Term Incentive Compensation Awards shall be paid to
such Participant on the date of Separation from Service. This Section VII. C.
shall not apply if the Participant<sup>'</sup>s service with the Company is
terminated by the Company for Cause. Additionally, this Section VII. C. shall
not apply unless at the time of Change in Control of Pro-Dex, Inc., the entity
for whom the Participant is performing services is Pro-Dex, Inc. or Pro-Dex,
Inc. is the &quot;majority shareholder<sup>&quot;</sup> (as such term is
defined in Section 1.409A-3(i)(5)(ii)(3) of the final regulations promulgated
under Section 409A of the Internal Revenue Code) of such entity.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Times New Roman;margin-bottom:.0001pt;text-indent:.3in;
line-height:normal;text-autospace:none; margin-left:0in; margin-right:0in; margin-top:0in'>D.&nbsp; <u>Spin-Offs and Similar Transactions.</u> In the event an entity (&quot;Departed
Entity&quot;) that is a part of the Company ceases to be a part of the Company
(the &quot;Departure<sup>&quot;</sup>), a Participant who at the time of the Departure is performing services
for the Departed Entity, shall be considered, for purposes of Section VII. A..,
to have experienced a Separation from
Service with the Company by virtue of termination of the Participant<sup>'</sup>s
service by the Company without Cause; provided that such Participant
does not perform any services for the Company immediately after the Departure.
Such Separation from Service with the Company will be deemed to have occurred
at the time of the Departure.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Times New Roman;margin-bottom:.0001pt;text-indent:.3in;
line-height:normal;text-autospace:none; margin-left:0in; margin-right:0in; margin-top:0in'>E. <u>Specified Employees.</u> Notwithstanding anything in the Plan to
the contrary, if as of the date of Participant<sup>'</sup>s Separation from
Service, Participant is a &quot;specified employee<sup>&quot;</sup>, as defined
under Section 409A of the Internal Revenue Code of 1986, as amended
(&quot;Section 409A<sup>&quot;</sup>) or any regulations or Treasury guidance
promulgated thereunder (&quot;Section 409A Guidance<sup>&quot;</sup>),
Participant shall not be entitled to any payments paid upon such Separation
from Service until the earlier of (i) the date which is six months after his
Separation from Service for any reason other than death or (ii) the date of his
death. The provisions of this Section VII. E. shall apply solely to payments
made pursuant to a plan that provides for deferral of compensation. Whether a
plan provides for deferral of compensation shall be determined pursuant to
Section 409A or Section 409A Guidance. Any payments that would have been paid
to Participant prior to the earlier of (i) the date which is six months after
his separation from service for any reason other than death or (ii) the date of
his death, were it not for this Section VII. E., shall be accumulated and paid
to Participant on the first day of the 7th month following Participant<sup>'</sup>s
Separation from Service. Notwithstanding the foregoing, the provisions of this
Section VII. E. shall not </p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:.05in;margin-bottom:0in;
margin-left:0in;margin-bottom:.0001pt;text-autospace:none'>apply to payments
made under the circumstances described in Section 1.409A-3(j)(4)(ii) (domestic
relations order), 1.409A-3 (j)(4)(iii) (conflicts of interest) or 1.409A-3 (j)(4)(vi) (payment of
employment taxes) of the final Treasury Department regulations issued pursuant
to Section 409A.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-top:0in;margin-right:.05in;margin-bottom:0in;
margin-left:0in;margin-bottom:.0001pt;text-autospace:none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:.2in;margin-bottom:0in;
margin-left:0in;margin-bottom:.0001pt;text-indent:.3in;line-height:normal;
text-autospace:none'>F. <u>Timing of Payments.</u> For the purposes of
this Section VII, payment within 75 days following a specified payment date
shall be deemed to constitute
payment on the specified payment date.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-top:0in;margin-right:.2in;margin-bottom:0in;
margin-left:0in;margin-bottom:.0001pt;text-autospace:none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:none'>VIII.
RETURN OF OR REDUCTION IN THE LONG-TERM INCENTIVE COMPENSATION AWARD</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri'>&nbsp;</p>

<div style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;
text-align:center;line-height:normal'>

<hr size=2 width="100%" noshade color=navy align=center>

</div>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;'>&nbsp;</p>

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style='page-break-before:always'>


</font>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-indent:
..3in;text-autospace:none'>In the
event that following the end of the Award Period, it is determined by the
Committee and ratified by the Board of Directors that a Long-Term Incentive Compensation Award was, in whole or in
part, based on incorrect data (including financial results which pursuant to
applicable laws, roles, regulations or applicable accounting principles
are required to be restated), the Participant shall return to the Company the
Overpayment Amount, where the Overpayment Amount shall be equal to the
Long-Term Incentive Compensation Award distributed to the Participant, reduced
by the Long-Term Incentive Compensation Award
the Participant would have received had the correct data been used in the
calculation of the Long-Term Incentive Compensation Award, as determined by
the Committee in good faith. The determinations made by the Committee and
ratified by the Board of Directors pursuant to this Section shall be conclusive
and binding on the Participant unless reached in an arbitrary and capricious
manner.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:none'>IX.
SPECIAL AWARDS AND OTHER PLANS</p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-indent:
..3in;text-autospace:none'>Nothing
contained in the Plan shall prohibit the Company or any of its subsidiaries
from granting special performance or recognition awards, under such conditions and in such form and manner as it sees
fit, to employees (including Participants) for meritorious service of any nature.
In addition, nothing contained in the Plan shall prohibit the Company or
any of its subsidiaries from establishing other incentive compensation plans
providing for the payment of incentive compensation to employees (including
Participants).</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-top:0in;margin-right:.2in;margin-bottom:0in;
margin-left:0in;margin-bottom:.0001pt;text-indent:.25in;text-autospace:none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:none'>X.
ADMINISTRATION, AMENDMENT AND INTERPRETATION OF THE PLAN</p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:.3in;margin-bottom:.0001pt;text-autospace:none'>A.&nbsp; <u>Amendment and Termination</u>.&nbsp;
The Board of Directors shall have the right to amend the Plan from time to time
or to repeal it entirely or to direct the discontinuance of Long-Term Incentive
Compensation Awards either temporarily or permanently; provided, however, that
no amendment of the Plan shall operate to annul a Long-Term Incentive
Compensation Award with respect to an Award Period in effect at the time of the
amendment. Notwithstanding the foregoing, and
subject to Section VII. C., in the event this Plan is terminated before the
last day of an Award Period, Long-Term Incentive Compensation Awards
payable for such Award Period will be prorated on the basis of the ratio of the
number of weeks in such Award Period prior to such termination to the aggregate
number of weeks in such Award Period and will be based on the attainment of
Performance Goals with respect to the applicable Performance Measures and paid only after the end of such Award Period in accordance
with Section VI above which will be deemed to continue until the expiration
thereof as if this Plan had not been terminated. .</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:.15in;margin-bottom:0in;
margin-left:.3in;margin-bottom:.0001pt;text-autospace:none'>&nbsp;B.&nbsp; <u>Administration</u>. The Committee
shall determine the parameters necessary to grant Long-Term Incentive
Compensation Awards, including Award Periods,
Performance Measures, Performance Goals and the amounts of Long-Term Incentive
Compensation Awards with respect to each Performance Goal. The Committee
shall have full authority to administer the Plan, including authority to interpret
and construe any provision of the Plan and the terms of any Long-Term Incentive
Compensation Awards issued under it and to adopt such rules and regulations for
administering the Plan as it may deem necessary. Decisions of the Committee
shall be final and binding on all parties and all decisions, determinations,
selections and other actions permitted or required to be taken or made by the
Committee with respect to the Plan shall be subject to the absolute discretion
of the Committee.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-top:0in;margin-right:.15in;margin-bottom:0in;
margin-left:0in;margin-bottom:.0001pt;text-autospace:none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:.3in;margin-bottom:.0001pt;text-autospace:none'>C. <u>Delegation to Officers or Employees</u>.&nbsp;
The Board of Directors and the Committee, as applicable, may designate officers
or employees of the Company to assist the Committee in the administration of
the Plan.</p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:.3in;margin-bottom:.0001pt;text-autospace:none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri'>&nbsp;</p>

<div style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;
text-align:center;line-height:normal'>

<hr size=2 width="100%" noshade color=navy align=center>

</div>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;'>&nbsp;</p>

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<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;'>M. MISCELLANEOUS</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:.3in;margin-bottom:.0001pt;text-indent:0in;line-height:normal;
text-autospace:none'>A.<u>Expenses.</u> All expenses and costs in connection
with the operation of the Plan shall be borne by the Company (including any
employment taxes which applicable law requires the Company to pay).</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:.3in;margin-bottom:.0001pt;text-indent:5.4pt;text-autospace:none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:.3in;margin-bottom:.0001pt;text-indent:0in;line-height:normal;
text-autospace:none'>B.<u>Taxes.</u> All Long-Term Incentive Compensation Awards under the Plan
are subject to withholding, where applicable, for federal, state and local
taxes.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0.3in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-indent:
5.4pt;text-autospace:none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:.3in;margin-bottom:.0001pt;text-indent:0in;line-height:normal;
text-autospace:none'>C.<u> Unsecured Obligation.</u> Unless otherwise determined by the
Committee, all Long-Term Incentive Compensation Awards will be paid from the
Company<sup>'</sup>s general assets, and nothing contained in this Plan will
require the Company to set aside or hold in trust any funds for the benefit of
any Participant, who will have the status of a general unsecured creditor of
the Company.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0.3in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Times New Roman;margin-bottom:.0001pt;line-height:normal;text-autospace:none; margin-left:0.3in; margin-right:0in; margin-top:0in'>
D.<u> No Right to Employment.</u> This Plan will not confer upon any
Participant any right with respect to continuance of employment or other
service with the Company or any subsidiary,
nor will it interfere in any way with any right the Company or any subsidiary
would otherwise have to terminate or modify the terms of such
Participant<sup>'</sup>s employment or other service at any time.</p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Times New Roman;margin-bottom:.0001pt;line-height:normal;text-autospace:none; margin-left:0.3in; margin-right:0in; margin-top:0in'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Times New Roman;margin-bottom:.0001pt;line-height:normal;text-autospace:none; margin-left:0.3in; margin-right:0in; margin-top:0in'>
E.<u> No Assignment,
Alienation.</u> Except as otherwise provided in this Plan, no right or benefit
under this Plan will be subject to anticipation, alienation, sale, assignment,
pledge, encumbrance, or charge, and any attempt to anticipate, alienate, sell,
assign, pledge, encumber, or charge such right or benefit will be void. No such
right or benefit will in any manner be liable for or subject to the debts,
liabilities, or torts of a Participant.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:0.3in;margin-bottom:.0001pt;text-autospace:none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Times New Roman;margin-bottom:.0001pt;line-height:normal;text-autospace:none; margin-left:0.3in; margin-right:0in; margin-top:0in'>
F.<u> Separate
Provisions.</u> If any provision in this Plan is held to be invalid or
unenforceable, no other provision of this Plan will be affected thereby.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:.3in;margin-bottom:.0001pt;text-autospace:none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Times New Roman;margin-bottom:.0001pt;line-height:normal;text-autospace:none; margin-left:0.3in; margin-right:0in; margin-top:0in'>
G. <u>Applicable Law.</u> This Plan will be governed by and
construed in accordance with applicable United States Federal law and, to the
extent not preempted by such Federal law, in accordance with the laws of the
State of California, without giving effect to the principles of conflict of
laws thereof.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0.3in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:.1in;margin-bottom:0in;
margin-left:0.3in;margin-bottom:.0001pt;line-height:normal;
text-autospace:none'>H.<u>Liability for the
Long-Term Incentive Compensation Awards.</u> Only the entity for which the Participant performs services
at the commencement of the Award Period shall be liable with respect to the
Long-Term Incentive Compensation Award which relates to an Award Period.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri'>&nbsp;</p>

<div style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;
text-align:center;line-height:normal'>

<hr size=2 width="100%" noshade color=navy align=center>

</div>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;'>&nbsp;</p>

<font face="Times New Roman">

<br clear=all
style='page-break-before:always'>


</font>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;
text-align:center;text-autospace:none'><b>EXHIBIT A [to LTIP]</b></p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;
text-align:center;text-autospace:none'><b>&nbsp;</b></p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'><b>Participation
Agreement for ____________________ for the award dated ____________</b></p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:.25in;margin-bottom:.0001pt;text-indent:-.25in;line-height:normal;
text-autospace:none'><b>A.&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;Total Shareholder Return (TSR):&nbsp; (50% of
Award)</b></p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt'><b>&nbsp;</b></p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt'>The TSR will be measured against the
comparator companies as set forth in the Long-Term Incentive Plan.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt'><b>TSR Award will be based as follows:</b></p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt'><b>&nbsp;</b></p>

<table class=MsoNormalTable border=1 cellspacing=0 cellpadding=0
 style='border-collapse:collapse;border:none' width="100%">
 <tr>
  <td width=109 valign=top style='width:81.9pt;border:solid black 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt'>Minimum</p>
  </td>
  <td width=270 valign=top style='width:202.5pt;border:solid black 1.0pt;
  border-left:none;padding:0in 5.4pt 0in 5.4pt'>
  <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;
  text-align:center'>Company TSR
  must be at the 40<sup>th</sup> percentile of comparator companies</p>
  </td>
  <td width=211 valign=top style='width:2.2in;border:solid black 1.0pt;
  border-left:none;padding:0in 5.4pt 0in 5.4pt'>
  <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;
  text-align:center'>12.5% of
  Annual Base Pay at the end of fiscal year</p>
  </td>
 </tr>
 <tr>
  <td width=109 valign=top style='width:81.9pt;border:solid black 1.0pt;
  border-top:none;padding:0in 5.4pt 0in 5.4pt'>
  <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt'>Target</p>
  </td>
  <td width=270 valign=top style='width:202.5pt;border-top:none;border-left:
  none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;
  text-align:center'>Company TSR
  must be at the 60<sup>th</sup> percentile of comparator companies</p>
  </td>
  <td width=211 valign=top style='width:2.2in;border-top:none;border-left:none;
  border-bottom:solid black 1.0pt;border-right:solid black 1.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;
  text-align:center'>25.0% of
  Annual Base Pay at the end of fiscal year</p>
  </td>
 </tr>
 <tr>
  <td width=109 valign=top style='width:81.9pt;border:solid black 1.0pt;
  border-top:none;padding:0in 5.4pt 0in 5.4pt'>
  <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt'>Maximum</p>
  </td>
  <td width=270 valign=top style='width:202.5pt;border-top:none;border-left:
  none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;
  text-align:center'>Company TSR
  must be at the 75<sup>th</sup> percentile of comparator companies.</p>
  </td>
  <td width=211 valign=top style='width:2.2in;border-top:none;border-left:none;
  border-bottom:solid black 1.0pt;border-right:solid black 1.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;
  text-align:center'>37.5% of
  Annual Base Pay at the end of the fiscal year</p>
  </td>
 </tr>
</table>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:.25in;margin-bottom:.0001pt'>If the minimum Performance Goal
of 40<sup>th</sup> percentile is not met, the amount payable is $0.00.&nbsp; If the
maximum Performance Goal is exceeded, the amount payable will not exceed the
amount set forth above.&nbsp; For performance between minimum and target Performance
Goals and between target and maximum Performance goals, the amount payable will
be determined based upon straight-line interpolation.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt'><b>&nbsp;</b></p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:.25in;margin-bottom:.0001pt;text-indent:-.25in;line-height:normal;
text-autospace:none'><b>B.&nbsp;&nbsp;&nbsp;&nbsp; Strategic Objectives <i>(note &#150; the objectives
reflected below are only examples and are not intended to be indicative of
objectives for each participant)</i>:&nbsp; </b></p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:.5in;margin-bottom:.0001pt;text-indent:-.25in;line-height:normal;
text-autospace:none'>1.&nbsp;&nbsp;&nbsp;&nbsp;(Example) Turn around our Program into a
profitable business by achieving $3.0M Operating Income by end of fiscal 2013.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt'>&nbsp;</p>

<div align=center>

<table class=MsoNormalTable border=1 cellspacing=0 cellpadding=0
 style='margin-left:-15.05pt;border-collapse:collapse;border:none' width="50%">
 <tr>
  <td width=140 valign=top style='width:104.9pt;border:solid black 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt'>&nbsp;</p>
  </td>
  <td width=95 valign=top style='width:71.05pt;border:solid black 1.0pt;
  border-left:none;padding:0in 5.4pt 0in 5.4pt'>
  <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;
  text-align:center'>2010</p>
  </td>
  <td width=93 valign=top style='width:70.0pt;border:solid black 1.0pt;
  border-left:none;padding:0in 5.4pt 0in 5.4pt'>
  <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;
  text-align:center'>2013</p>
  </td>
 </tr>
 <tr>
  <td width=140 valign=top style='width:104.9pt;border:solid black 1.0pt;
  border-top:none;padding:0in 5.4pt 0in 5.4pt'>
  <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt'>Operating Income</p>
  </td>
  <td width=95 valign=top style='width:71.05pt;border-top:none;border-left:
  none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;
  text-align:center'>$1.2M</p>
  </td>
  <td width=93 valign=top style='width:70.0pt;border-top:none;border-left:none;
  border-bottom:solid black 1.0pt;border-right:solid black 1.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;
  text-align:center'>$3.0M</p>
  </td>
 </tr>
 <tr>
  <td width=140 valign=top style='width:104.9pt;border:solid black 1.0pt;
  border-top:none;padding:0in 5.4pt 0in 5.4pt'>
  <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt'>Net Sales</p>
  </td>
  <td width=95 valign=top style='width:71.05pt;border-top:none;border-left:
  none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;
  text-align:center'>$18.4M</p>
  </td>
  <td width=93 valign=top style='width:70.0pt;border-top:none;border-left:none;
  border-bottom:solid black 1.0pt;border-right:solid black 1.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;
  text-align:center'>$25.0M</p>
  </td>
 </tr>
</table>

</div>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:.25in;margin-bottom:.0001pt'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:.5in;margin-bottom:.0001pt;text-indent:-.25in;line-height:normal;
text-autospace:none'>2.&nbsp;&nbsp;&nbsp;&nbsp;(Example) Achieve customer satisfaction
rating of 95% based on a third party survey.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:.5in;margin-bottom:.0001pt'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:.5in;margin-bottom:.0001pt;text-indent:-.25in;line-height:normal;
text-autospace:none'>3.&nbsp;&nbsp;&nbsp;&nbsp;(Example) Achieve Net Sales of $30M by
the end of 2013.&nbsp; Currently it is $18M.&nbsp; This is an increase of 66% from 2010
year end results.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt'><b>Award for strategic
goals will be based on the following: (50% of Award)</b></p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri'>&nbsp;</p>

<div style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;
text-align:center;line-height:normal'>

<hr size=2 width="100%" noshade color=navy align=center>

</div>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;'>&nbsp;</p>

<font face="Times New Roman">

<br clear=all
style='page-break-before:always'>


</font>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt'><b>&nbsp;</b></p>

<table class=MsoNormalTable border=1 cellspacing=0 cellpadding=0 width=590
 style='width:100%;border-collapse:collapse;border:medium none; '>
 <tr>
  <td width=109 valign=top style='width:81.9pt;border:solid black 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt'>Minimum</p>
  </td>
  <td width=270 valign=top style='width:202.5pt;border:solid black 1.0pt;
  border-left:none;padding:0in 5.4pt 0in 5.4pt'>
  <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt'>Must meet at least 80%
  of established goals</p>
  </td>
  <td width=211 valign=top style='width:2.2in;border:solid black 1.0pt;
  border-left:none;padding:0in 5.4pt 0in 5.4pt'>
  <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;
  text-align:center'>12.5% of
  Annual Base Pay at the end of fiscal year</p>
  </td>
 </tr>
 <tr>
  <td width=109 valign=top style='width:81.9pt;border:solid black 1.0pt;
  border-top:none;padding:0in 5.4pt 0in 5.4pt'>
  <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt'>Target &amp; Maximum</p>
  </td>
  <td width=270 valign=top style='width:202.5pt;border-top:none;border-left:
  none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt'>Based on 100%
  achievement of established goals</p>
  </td>
  <td width=211 valign=top style='width:2.2in;border-top:none;border-left:none;
  border-bottom:solid black 1.0pt;border-right:solid black 1.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;
  text-align:center'>25.0% of Annual
  Base Pay at the end of fiscal year</p>
  </td>
 </tr>
 <tr>
  <td width=109 valign=top style='width:81.9pt;border:solid black 1.0pt;
  border-top:none;padding:0in 5.4pt 0in 5.4pt'>
  <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt'>Maximum</p>
  </td>
  <td width=270 valign=top style='width:202.5pt;border-top:none;border-left:
  none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt'>Based on 150%
  achievement of established goals</p>
  </td>
  <td width=211 valign=top style='width:2.2in;border-top:none;border-left:none;
  border-bottom:solid black 1.0pt;border-right:solid black 1.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;
  text-align:center'>37.5% of
  Annual Base Pay at the end of the fiscal year</p>
  </td>
 </tr>
</table>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-family:Times New Roman;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:.25in;margin-bottom:.0001pt'><font size="1">If the minimum Performance Goal
of 80% is not met, the amount payable is $0.00.&nbsp; If the maximum Performance
Goal is exceeded, the amount payable will not exceed the amount set forth
above.&nbsp; For performance between minimum and target Performance
Goals and between target and maximum Performance goals, the amount payable will
be determined based upon straight-line interpolation.</font></p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:.25in;margin-bottom:.0001pt'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt'>Any amount payable as a
Long-Term Incentive Compensation Award pursuant to this Participation Agreement
will be determined and paid pursuant to, and subject to, the terms and
conditions set forth herein and in the Plan.&nbsp; All terms and provisions of the
Plan are incorporated herein and made part hereof as if stated herein.&nbsp; If any
provision hereof and of the Plan shall be in conflict, the terms of the Plan
shall govern.&nbsp; All capitalized terms used herein and not defined shall have the
meanings assigned to them in the Plan.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:.25in;margin-bottom:.0001pt'><b>&nbsp;</b></p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt'>&nbsp;</p>

<table class=MsoNormalTable border=1 cellspacing=0 cellpadding=0 width=584
 style='width:438.2pt;margin-left:.2in;border-collapse:collapse;border:none'>
 <tr style='height:133.6pt'>
  <td width=584 valign=top style='width:438.2pt;border:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt;height:133.6pt'>
  <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt'>&nbsp;</p>
  <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt'>I
  agree and understand these long term performance objectives.&nbsp; </p>
  <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt'>&nbsp;</p>
  <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt'>&nbsp;</p>
  <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt'>&nbsp;</p>
  <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt'>&nbsp;</p>
  <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt'>&nbsp;</p>
  <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt'>&nbsp;</p>
  <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt'>Signature
  (Key Executive)</p>
  <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:26.5pt'>
  <td width=584 valign=top style='width:438.2pt;border:solid windowtext 1.0pt;
  border-top:none;padding:0in 5.4pt 0in 5.4pt;height:26.5pt'>
  <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt'>&nbsp;</p>
  <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt'>Date:</p>
  </td>
 </tr>
</table>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri'>&nbsp;</p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri'>&nbsp;</p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri'>&nbsp;</p>

<div style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;
text-align:center;line-height:normal'>

<hr size=2 width="100%" noshade color=navy align=center>

</div>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;
text-align:center;text-autospace:none'>&nbsp;</p>

</div>

</body>

</html>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>3
<FILENAME>es10-2.htm
<TEXT>
<html>

<head>
<!-- Document Prepared With IDEAxfiler Software-->
<!-- Copyright 2009 IDEAxfiler TRADEMARK-->
<!-- All rights reserved EDGAR2.com -->



<title>Exhibit 10.2</title>


</head>

<body lang=EN-US>

<div style='page:Section1;'>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;'><b>&nbsp;</b></p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;'><b>&nbsp;</b></p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;'><b>Exhibit 10.2</b></p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;
text-align:center;text-autospace:none'><b>Pro-Dex Inc.</b></p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none' align="center"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Annual
Incentive Plan for the Senior Management Team</b></p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none' align="center"><b>(Last
updated: 05/19/2010)</b></p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>The
goal of this Incentive Compensation Plan is to directly align the focus and
remuneration of divisional and corporate management with that of the
shareholders.&nbsp; This means that long term growth in the value of the business,
in addition to short term profit increases, will be key considerations in
awarding bonuses.&nbsp; Individuals receiving bonuses should have the criteria used
in determining and measuring those bonuses fall within events which they can
control and/or influence.&nbsp; Individuals, and individual business units, should
be rewarded for their performance and should not be penalized for the failure
of another unit or department, yet at the same time, at another level, it is
important to recognize that we are all in this together.&nbsp; Incentive
Compensation should be adequately high to motivate the best managers, yet not
become an obstacle in the minds of shareholders that management is receiving a disproportionate
award.&nbsp; Each of these considerations is addressed and included in this plan.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'><b>The
objective of this Annual Incentive Compensation Plan for the Senior Management
Team (the &#147;AIP&quot;) is to recognize the achievement of above average results
in the current fiscal year. </b>These goals are consistent with
the guidelines and objectives of the incentive compensation program as
established by the Board of Directors.<b> </b></p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'><b>Participation</b></p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>Participants
in the plan shall include the Chief Executive Officer and such other officers
and key employees whose performance will have a significant impact upon the
Company&#146;s success and whom the Chief Executive Officer and the Compensation
Committee approve for participation.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'><b>Annual
Cash Bonus</b></p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>The
targeted bonus award for each participant, assuming 100% achievement of the
aggregate AIP performance goals, is not more than 50% of base salary.&nbsp; The
maximum award for any individual participant is 200% of the target bonus, i.e.,
100% of base salary.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;'>Bonuses
are to be paid in cash annually following the conclusion of the fiscal year end
audit and the certification and filing of the Company&#146;s annual Form 10-K with
the SEC.&nbsp; Determination of each participant&#146;s eligibility, target bonus amount
as a percentage of salary, and Performance Objectives and their respective
weighting will be determined and agreed to by the participant, CEO and the
Compensation Committee at the beginning of the fiscal year. </p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;'>&nbsp;</p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;'>&nbsp;</p>

<div style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;
text-align:center;line-height:normal'>

<hr size=2 width="100%" noshade color=navy align=center>

</div>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;'>&nbsp;</p>

<font face="Times New Roman">

<br clear=all
style='page-break-before:always'>


</font>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'><b>Performance
Objectives</b></p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>The
individual performance objectives to be used in calculating the amount of the
AIP award may vary from one participant to another so long as each objective is
associated with a measurable outcome and is tied to the achievement of the
overall Company objectives and strategy.&nbsp; Each participant may have from three
to six Performance Objectives with the weighting of each Performance Objective
based upon its perceived impact upon the Company&#146;s success and the individual
participant&#146;s ability to influence each Performance Objective.&nbsp; All such
Performance Objectives must be approved by the Compensation Committee in
writing not later than the 75<sup>th</sup> day of each fiscal year, i.e.,
September 13th.&nbsp; </p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>Performance
Objectives may include such measurable targets as (but not limited to) revenue,
operating income, EBITDA or net income growth, market share gains, return on
equity, cash flow,&nbsp; budgeted financial or operating goals, expense management,
productivity improvements, new product development or qualification, cost
reduction, and customer and/or employee satisfaction.&nbsp; Individual Strategic
Objectives may include very specific projects for which an individual has
significant control over, such as, for example, the completion of a specific
project by a specific date, implementation of a new IT system, relocation of a
facility or product line, development and qualification of a specific new
product, etc.&nbsp; Each Objective, either performance or strategic, must be
developed and defined adequately to permit a clear evaluation of accomplishment
against the objective at the end of the measurement period.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>With
regard to the award for the CEO for the initial year (FYE 6/30/2011) of the
AIP, the following performance objectives apply: <font color="#0000FF"> <i>(note &#150; these should be negotiated with the CEO as he prepares
his business plan for 2011 &#150; the objectives reflected below are illustrative
only at this point)</i></font></p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;</p>

<table border="0" style="border-collapse: collapse" width="60%" id="table1">
	<tr>
		<td width="682">

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'><u>Performance
Objective</u>&nbsp;&nbsp;&nbsp; </p>

		</td>
		<td align="right"> <u>Weighting</u></td>
	</tr>
	<tr>
		<td width="682">

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>Achieve budget pre-tax income&nbsp;&nbsp;&nbsp;&nbsp; </p>

		</td>
		<td align="right">30%</td>
	</tr>
	<tr>
		<td width="682">

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>Achieve strategic objectives&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </p>

		</td>
		<td align="right">15%</td>
	</tr>
	<tr>
		<td width="682">

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>Achieve budgeted free cash flow&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </p>

		</td>
		<td align="right">10%</td>
	</tr>
	<tr>
		<td width="682">

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>Increase revenues 6%&nbsp;&nbsp; </p>

		</td>
		<td align="right">10%</td>
	</tr>
	<tr>
		<td width="682">

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>Increase Operating income &gt;10%&nbsp;&nbsp;&nbsp;&nbsp; </p>

		</td>
		<td align="right">30%</td>
	</tr>
	<tr>
		<td width="682">

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>Achieve Return on Investment &gt;10%&nbsp;&nbsp;&nbsp; </p>

		</td>
		<td align="right">&nbsp;<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5%</u></td>
	</tr>
	<tr>
		<td width="682">

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-indent:
..5in;text-autospace:none'>Total&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </p>

		</td>
		<td align="right">100%</td>
	</tr>
</table>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;</p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>Budget
operating income (30%) is the amount of pre-tax profit reflected in the final
budget approved by the CEO and the Board.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri'>&nbsp;</p>

<div style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;
text-align:center;line-height:normal'>

<hr size=2 width="100%" noshade color=navy align=center>

</div>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;'>&nbsp;</p>

<font face="Times New Roman">

<br clear=all
style='page-break-before:always'>


</font>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>Budget
objectives (15%) are the not more than three strategic or operating objectives
that the individual, department, or the Company as a whole must achieve in
order to move the Company forward towards the implementation of its strategy
and the accomplishment of its goals.&nbsp; Each objective is worth 5 points of the
total 15 for this criteria.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>Budgeted
free cash flow (10%) is the amount of cash flow forecasted for the year in the
final budget as approved by the CEO.&nbsp; Cash flow will be measured using the
statement of cash flow as prepared by the Company&#146;s auditors as part of the
year end financial statements.&nbsp; Free cash flow is defined as the net cash
provided by operations less capital expenditures and required payments of long
term debt principal.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>Revenue
growth in excess of the 6% target (10%) will be measured based upon the audited
year end financial statement compared to that of the previous year.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>Return
on investment in excess of a 10% target (5%) is calculated based upon the
Company&#146;s prior year end equity balance and the current year&#146;s audited net
income.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>Operating
income growth in excess of the10% target (30%) will be measure based upon the
audited year end financial statement compared to that of the previous year.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>Productivity
growth in excess of the 6% target (5%) is measured based upon revenues per
employee for the current and prior years.&nbsp; Revenue per employee equals total
revenue divided by the month end average number of employees for each of the
twelve months included in the fiscal year.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>Adjustments
to any of the above criteria may be made by the Compensation Committee in order
to recognize one-off events or items that might penalize or reward individuals
who had no participation or control in the event.&nbsp; That said, such adjustments
will be very rarely made and then only in extreme situations.&nbsp; Management is
expected to anticipate events that will occur in the immediate fiscal year as
part of the budgeting process.&nbsp; In making any such adjustments to either
reported or budgeted results, the Compensation Committee may, at its sole
discretion, recognize the impact of non-recurring or unusual items, including
but not limited to the following:</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:1.5in;margin-bottom:.0001pt;text-indent:-.25in;line-height:normal;
text-autospace:none'>a.&nbsp;&nbsp;&nbsp;Extraordinary gains and
losses as defined by generally accepted accounting principles,</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:1.5in;margin-bottom:.0001pt;text-indent:-.25in;line-height:normal;
text-autospace:none'>b.&nbsp;&nbsp;&nbsp;Write-downs of goodwill,</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:1.5in;margin-bottom:.0001pt;text-indent:-.25in;line-height:normal;
text-autospace:none'>c.&nbsp;&nbsp;&nbsp;Gains or losses on the sale
of a business or product line,</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:1.5in;margin-bottom:.0001pt;text-indent:-.25in;line-height:normal;
text-autospace:none'>d.&nbsp;&nbsp;&nbsp;Losses due to a force
majeure,</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri'>&nbsp;</p>

<div style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;
text-align:center;line-height:normal'>

<hr size=2 width="100%" noshade color=navy align=center>

</div>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;'>&nbsp;</p>

<font face="Times New Roman">

<br clear=all
style='page-break-before:always'>


</font>


<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:1.5in;margin-bottom:.0001pt;text-indent:-.25in;line-height:normal;
text-autospace:none'>e.&nbsp;&nbsp;&nbsp;Change in accounting
method due to a change in GAAP during its first year of application, </p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:1.5in;margin-bottom:.0001pt;text-indent:-.25in;line-height:normal;
text-autospace:none'>f.&nbsp;&nbsp;&nbsp; Gains
or losses on lawsuits unrelated to the operations of the business (including
but not limited to the Orange County Water District case costs and settlement),
and</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:1.5in;margin-bottom:.0001pt;text-indent:-.25in;line-height:normal;
text-autospace:none'>g.&nbsp;&nbsp;&nbsp;Any other negative
impact on the actual results of the Company (lost revenue or incurred expense)
which the Board of Directors, in its sole discretion, determines was beyond the
participant&#146;s control or influence.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>Each
individual criteria for the AIP will stand on its own merit and no bonus will
be paid for the performance against any criteria that is less than 80% of the
target, i.e., a bonus criteria that is achieved at less than 80% will be
counted as a zero in the points earned column.&nbsp; In the event that a &#147;hurdle&#148;
rate, such as budgeted plan targets, ROI, growth, etc are exceeded, then the
relative points awarded under that criteria may exceed the amount shown above
by the ratio of the actual over the target <i>but not more than 300% of the
target points</i>.&nbsp; As a result, based upon the AIP&#146;s measurable criteria, the
bonus paid out could be more than 100% of the target bonus,<b> however, the
total bonus paid under the AIP will be limited to 200% of target for any
individual participant.</b></p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>An
example of how a bonus could exceed 100% of the target bonus is set forth
below:</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;</p>

<table border="0" style="border-collapse: collapse" width="80%" id="table2">
	<tr>
		<td width="55%">

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>Performance Objective</p></td>
		<td align="center" width="15%">Actually</td>
		<td align="center" width="15%">Plan points</td>
		<td align="center" width="15%">Bonus points</td>
	</tr>
	<tr>
		<td width="55%">

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;</p>

		</td>
		<td align="center" width="15%">Achieved</td>
		<td align="center" width="15%">@ Target </td>
		<td align="center" width="15%">Earned</td>
	</tr>
	<tr>
		<td width="55%">

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>Budgeted operating income</p></td>
		<td align="right" width="15%">120% </td>
		<td align="right" width="15%">30%</td>
		<td align="right" width="15%">36.0%</td>
	</tr>
	<tr>
		<td width="55%">

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>Strategic objectives </p></td>
		<td align="right" width="15%">100%</td>
		<td align="right" width="15%">15% </td>
		<td align="right" width="15%">15.0%</td>
	</tr>
	<tr>
		<td width="55%">

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>Budgeted cash flow&nbsp;&nbsp;&nbsp; </p></td>
		<td align="right" width="15%">90%</td>
		<td align="right" width="15%">10% </td>
		<td align="right" width="15%">9.0%</td>
	</tr>
	<tr>
		<td width="55%">

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>Increase revenues 6%&nbsp;&nbsp; </p></td>
		<td align="right" width="15%">8%</td>
		<td align="right" width="15%">10%</td>
		<td align="right" width="15%">13.3%</td>
	</tr>
	<tr>
		<td width="55%">

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>Operating income growth &gt;10% </p></td>
		<td align="right" width="15%">13%</td>
		<td align="right" width="15%">30%</td>
		<td align="right" width="15%">39.0%</td>
	</tr>
	<tr>
		<td width="55%">

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>Return
on investment &gt;10%</p></td>
		<td align="right" style="border-bottom: 1px solid #000000" width="15%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 7%</td>
		<td align="right" style="border-bottom: 1px solid #000000" width="15%">5%</td>
		<td align="right" style="border-bottom: 1px solid #000000" width="15%">&nbsp;&nbsp;
0.0%</td>
	</tr>
	<tr>
		<td width="55%">

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-indent:
..5in;text-autospace:none'>Total&nbsp;&nbsp;&nbsp; </p></td>
		<td align="right" width="15%">100%</td>
		<td align="right" width="15%">100% </td>
		<td align="right" width="15%">112.3%</td>
	</tr>
</table>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>Under
the above scenario, the actual bonus to be paid would be 112.3% of the
respective target bonus.&nbsp; </p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>Achievement
of criteria and calculation of the amount of the bonus pool will take place in
local currency without regard to conversion of amounts into US dollars.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;
</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri'>&nbsp;</p>

<div style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;
text-align:center;line-height:normal'>

<hr size=2 width="100%" noshade color=navy align=center>

</div>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;'>&nbsp;</p>

<font face="Times New Roman">

<br clear=all
style='page-break-before:always'>


</font>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'><b>In
the event of termination of employment without cause, death, or disability, </b>a bonus
will be considered &#147;earned&#148; if the employee worked for the Company for more
than six-months of the fiscal year and will be paid based upon the pro-rated
number of months the participant was employed during the measurement period.&nbsp;
Actual payment of any bonus earned under such circumstances would take place
following the completion of the fiscal year and at the same time as other
participants in the plan received any bonus payments earned for the year.&nbsp; In
the event of termination of employment for &#147;cause&#148; during the fiscal year, no
bonus will be paid.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>Awards
will not be assignable or transferable other than by will or the laws of
descent and distribution.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'><b>Return
of or Reduction in the Award</b></p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>If
following the end of the performance period, the Compensation Committee
determines that an award was, in whole or in part, based on incorrect data
(including financial results that, pursuant to applicable laws, rules,
regulations or applicable accounting principles, are required to be restate),
then the participant must return to the Company the overpayment amount.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;text-autospace:
none'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;'>This Annual Incentive Plan for the Senior Management Team is
intended to comply with Section 409A of the Internal Revenue Code. </p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;'>&nbsp;</p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;font-size:11.0pt;font-family:Times New Roman;'>&nbsp;</p>

</div>

</body>

</html>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>4
<FILENAME>es10-3.htm
<TEXT>
<html>

<head>
<!-- Document Prepared With IDEAxfiler Software-->
<!-- Copyright 2009 IDEAxfiler TRADEMARK-->
<!-- All rights reserved EDGAR2.com -->



<title>Exhibit 10.3</title>


</head>

<body lang=EN-US>

<div style='page:Section1;'>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Times New Roman;'><b>&nbsp;</b></p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Times New Roman;'><b>&nbsp;</b></p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;line-height:
1.0pt'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;line-height:
1.0pt'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Calibri;'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;line-height:
1.0pt'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Times New Roman;'><b>Exhibit 10.3</b></p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Times New Roman;text-align:center'><b>Description of Non-Employee Director
Compensation Program</b></p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Times New Roman;'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; On
July 14, 2010, the Company&#146;s Board of Directors (&#147;Board&#148;) of Pro-Dex, Inc. (the
&#147;Company&#148;) acting in executive session and upon recommendation of the Company&#146;s
Compensation Committee, approved the Company&#146;s new
compensation plan for non-employee directors of the Board, effective as of July
1, 2010, as described below:</p>

<table border="0" style="border-collapse: collapse" width="55%" id="table1">
	<tr>
		<td width="540">

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:.5in;line-height:115%;font-size:11.0pt;font-family:Times New Roman;text-indent:-.25in'>
&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Annual retainer for each
director&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </p>

		</td>
		<td align="right">$24,000</td>
	</tr>
	<tr>
		<td width="540">

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:.5in;line-height:115%;font-size:11.0pt;font-family:Times New Roman;margin-bottom:0in;margin-bottom:.0001pt;
text-indent:-.25in'>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Additional
annual retainer for service as:&nbsp; </p>

		</td>
		<td align="right">&nbsp;</td>
	</tr>
	<tr>
		<td width="540">

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:.5in;line-height:115%;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:0in;margin-bottom:
0in;margin-left:1.0in;margin-bottom:.0001pt;text-indent:-.25in'>o&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Lead Director/Chairman</p>

		</td>
		<td align="right">$7,000</td>
	</tr>
	<tr>
		<td width="540">

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:.5in;line-height:115%;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:0in;margin-bottom:
0in;margin-left:1.0in;margin-bottom:.0001pt;text-indent:-.25in'>o&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Audit Committee Chair&nbsp;&nbsp;&nbsp;&nbsp; </p>

		</td>
		<td align="right">$5,000</td>
	</tr>
	<tr>
		<td width="540">

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:.5in;line-height:115%;font-size:11.0pt;font-family:Times New Roman;margin-top:0in;margin-right:0in;margin-bottom:
0in;margin-left:1.0in;margin-bottom:.0001pt;text-indent:-.25in'>o&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Compensation&nbsp;&nbsp; Committee Chair&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </p>

		</td>
		<td align="right">$5,000</td>
	</tr>
	<tr>
		<td width="540">

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:.5in;line-height:115%;font-size:11.0pt;font-family:Times New Roman;margin-left:1.0in;text-indent:-.25in'>
o&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Governance and Nominating Chair&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </p>

		</td>
		<td align="right">$5,000</td>
	</tr>
</table>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Times New Roman;'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Times New Roman;'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; All
retainers are to be paid in quarterly installments at the end of each calendar
quarter.&nbsp; In the event that a director attends more than 6 board meetings or
more than 6 meetings of any committee upon which they serve in one fiscal year,
an additional per meeting fee of $1,000 for in person meetings or $500 for
telephone meetings will be paid. If any such &#147;excess&#148; committee meeting is held
on the same date as a board meeting, only the board meeting will be considered
compensable.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Times New Roman;'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Upon
their initial election or appointment to the Board, each director will receive
an award of 15,000 options.&nbsp; Upon their re-election to the Board each director
will receive an award of 10,000 options.&nbsp; All such equity awards will be made
as of the date of such election or appointment and in accordance with the terms
of the Company&#146;s applicable option plan.</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Calibri;'>&nbsp;</p>

<div style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;
text-align:center;line-height:normal'>

&nbsp;</div>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Calibri;margin-bottom:0in;margin-bottom:.0001pt;line-height:
1.0pt'>&nbsp;</p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;font-size:11.0pt;font-family:Calibri;'>&nbsp;</p>

</div>

</body>

</html>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.4
<SEQUENCE>5
<FILENAME>es10-4.htm
<TEXT>
<html>

<head>
<!-- Document Prepared With IDEAxfiler Software-->
<!-- Copyright 2009 IDEAxfiler TRADEMARK-->
<!-- All rights reserved EDGAR2.com -->



<title>Exhibit 10.4</title>



</head>

<body lang=EN-US>

<div style='page:Section1;'>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'><b>&nbsp;</b></p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'><b>&nbsp;</b></p>

<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'><b>Exhibit 10.4</b></p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'><b>PERSONAL AND CONFIDENTIAL</b></p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>July 14, 2010</p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>Mark P. Murphy</p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";margin-top:0in'>21295 Clear Haven Dr.</p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";margin-top:0in'>Yorba Linda, CA 92886</p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>Dear Mark:</p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'><a name="_DV_M4"></a>On behalf of the Board of Directors (the
&#147;Board&#148;) I am pleased to extend this amended employment letter agreement
concerning your employment as Chief Executive Officer of Pro-Dex Inc. (the &#147;Company&#148;)
as an &#147;at-will&#148; employee, serving at the pleasure of the Board and in
accordance with the Company&#146;s Bylaws and applicable law. As Chief Executive
Officer, you will perform the duties assigned to you from time to time by the
Board. You may also be required to serve as the Chief Executive Officer and/or a
director or other officer of subsidiaries or other related entities of the
Company with no additional compensation. You will be based out of our Irvine, California office.&nbsp; This agreement will be effective as of July 1, 2010.</p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";page-break-after:avoid'><a name="_DV_M5"></a><i>Salary</i></p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'><a name="_DV_M6"></a>Your bi-weekly salary will be $11,538
which equals $300,000 on an annualized basis, subject to increases from time to
time at the discretion of the Board, and subject to reductions that do not
constitute a &#147;material reduction in your salary&#148; as defined below.&nbsp; </p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";page-break-after:avoid'><a name="_DV_M7"></a><i>Benefits</i></p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'><a name="_DV_M8"></a>You will be eligible to participate in
benefits including health, dental, disability and life insurance, qualified
retirement plans, and optional employee benefits which, by Board approval, are
or become available to all Company employees, except you will not participate
in the Company-wide employee quarterly bonus/non-qualified profit sharing plan.&nbsp;
You will receive Paid Time Off in accordance with the plan established for senior
executives of the Company.</p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'><a name="_DV_M9"></a>You will receive reimbursement for
ordinary and necessary business expenses incurred in the ordinary course of
business, consistent with the Company&#146;s policies applicable to all employees
(including, without limitation, the requirement to provide appropriate
supporting documentation) and subject to review by the Company&#146;s finance
department and Audit Committee.</p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";page-break-after:avoid'><a name="_DV_M10"></a></p>

<p style='margin-bottom:.0001pt;text-align:center;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>-1-</p>

<div style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>

<hr size=2 width="100%" noshade color=navy align=center>

</div>

<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

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<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'><i>Bonus/Incentive
Compensation</i></p>

<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>You will be eligible to participate in all Company created
and Board approved incentive compensation plans open to participation for
senior executives of the Company, subject to the terms and provisions of the
applicable plan documents covering any such plans.&nbsp; The terms of such plans may
be changed from time to time at the discretion of the Board.&nbsp; Currently, the
Company offers or expects to offer an Annual Incentive Plan and a Long Term
Incentive Plan. Copies of the related plan documents have been attached hereto
as Exhibits A and Exhibit B respectively.&nbsp; </p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'><i>Equity Grants</i></p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>You will be permitted to participate in any program of stock
option or other equity grants which the Company may from time to time provide
key employees.&nbsp; Such grants are made under the terms and provisions of the First
Amended and Restated 2004 Stock Option Plan in varying amounts to individual
participants based upon their perceived impact upon the long term success of
the Company and are made at the sole and absolute discretion of the Board,
generally at the first Board meeting following the filing of the Company&#146;s Form
10-K for the previous fiscal year.&nbsp; &nbsp;Subject to the foregoing, your initial
grant under this program will be 50,000 options to purchase the Company&#146;s
common shares at the average of the high and low prices for the Company&#146;s
shares on the grant date and which will vest ratably over the 36 month period following the grant date.&nbsp;&nbsp; The options will have a term of ten years from the
grant date and to the maximum extent permissible under the relevant Internal
Revenue Service regulations, will be made as Incentive Stock Options. &nbsp;</p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>
<i>Term</i></p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>This letter agreement will terminate on the third
anniversary of its execution (which shall be deemed to be the date first set
forth on the top of this document) but may be extended by a written agreement
executed by the parties and approved by the Board of Directors. &nbsp;Your
employment is at-will, and the term of this letter agreement does not establish
a specified term of employment with the Company.&nbsp; Upon the termination of
this letter agreement during your employment, without an express written
extension executed by the parties and approved by the Board of Directors, your
at-will employment with the Company will continue until terminated by the
Company or by you, but shall no longer be controlled by the terms and
provisions of this letter agreement, and any obligations of the Company
pursuant to this letter agreement, following its termination, shall be without
force or effect.</p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'><i>Termination/Severance</i></p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'><a name="_DV_M22"></a>In the event that your employment with
the Company terminates for any reason, the Company shall pay you your (i)
salary up through the date of termination (including any accrued but unused
Paid Time Off remaining as of the termination date), plus; (ii) any Annual Incentive
Plan or Long Term Incentive Plan awards (or prorated portion thereof) actually
earned based on existing Board-established criteria and the terms of such bonus
plans, but not yet paid as of the termination date, each of which shall be paid
less applicable withholding for taxes as required by law.&nbsp; You shall also
receive reimbursement for any ordinary and necessary business expenses
outstanding as of the date of termination.</p>

<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin-bottom:.0001pt;text-align:center;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
- -2-</p>

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</div>

<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

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<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>In addition to the above, in the event you are terminated
involuntarily by the Company without &#147;Cause&#148; or following a &#147;Change in Control,&#148;
or in the event that you resign <a name="_DV_M23"></a>for &#147;Good Reason&#148; each as defined below,
the Company shall pay you&nbsp; severance compensation equal to one (1.0) times your
then-current annual base salary (the &#147;Severance Payment&#148;).&nbsp; The full Severance Payment
will be paid in a single lump-sum payment, subject to applicable withholding, within
seven (7) calendar days of the effective date of the separation agreement
described below. You hereby acknowledge that such Severance Payment will be the
total and sole remedy for any claims by you, known or unknown, arising from
your employment with the Company or the termination thereof, and you will be
required to execute a written separation agreement with the Company, substantially
in the form and content of those agreements entered into by other employees
leaving the Company, containing a general release of claims against the Company
in form and content acceptable to both you and the Company and our respective
counsel. However, the separation agreement will not alter your rights under the
Indemnification Agreement between you and the Company, indemnification
provisions of the Company&#146;s Articles of Incorporation and/or Bylaws (if any),
or the Company&#146;s insurance for Officers and Directors.</p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'><a name="_DV_M24"></a>As used herein, the term &#147;Cause&#148; shall
mean termination by the Company due to:</p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:1.0in;margin-bottom:.0001pt;text-align:justify;text-indent:-.5in;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; your inability or
failure to perform your duties with the Company;</p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:1.0in;margin-bottom:.0001pt;text-align:justify;text-indent:-.5in;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>(ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; your failure to
substantially follow and comply with the specific and lawful directives of the
Board;</p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:1.0in;margin-bottom:.0001pt;text-align:justify;text-indent:-.5in;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>(iii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The Board&#146;s determination of
your commission of an act of fraud or dishonesty; your&nbsp; conviction or plea
of no contest in any state or federal jurisdiction for any felony, or any
misdemeanor crime involving dishonesty, moral turpitude, or which has, or is
reasonably likely to have, an adverse effect on the Company&#146;s image; gross
misconduct; or your material violation of any material written policy,
guideline, code, handbook or similar document governing the conduct of
directors, officers or employees of the Company or its related entities; <b><i><u>however,
if it is later determined that you did not violate the Company&#146;s policies or
commit such acts as listed in this paragraph, your termination will deemed to
have occurred for without &#147;Cause&#148;</u></i></b>; or</p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:1.0in;margin-bottom:.0001pt;text-align:justify;text-indent:-.5in;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>(iv)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; a material breach by
you of the terms of this letter agreement.</p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'><a name="_DV_M29"></a>As used herein, the term resignation
for &#147;Good Reason&#148; shall mean your resignation due to:</p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:1.0in;margin-bottom:.0001pt;text-align:justify;text-indent:-.5in;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>
(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; a <a name="_DV_C19">material </a><a
name="_DV_M31"></a>reduction in your salary as set forth herein or failure of
the Company to pay any amount owing to you hereunder when due<a name="_DV_C20">.
For purposes of this letter the term &#147;material reduction in your salary&#148; shall
mean an involuntary reduction of greater than fifteen percent (15%) total from
your maximum base salary for a consecutive period of more than six (6) </a>months but shall not include an &#147;across the board&#148; reduction of salary or benefits made applicable
to substantially all Company employees; &nbsp;</p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:1.0in;margin-bottom:.0001pt;text-align:justify;text-indent:-.5in;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>(ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; the Company&#146;s requiring you to be based full time in any office
or location outside of a sixty (60) mile radius from your current residence in Yorba Linda, California;</p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:1.0in;margin-bottom:.0001pt;text-align:justify;text-indent:-.5in;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>(iii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a material diminution in the scope of your authority, duties, and
responsibilities, including the assignment of duties inconsistent with the
position of a Chief Executive officer of a publicly traded company;</p>

<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin-bottom:.0001pt;text-align:center;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
- -3-</p>

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</div>

<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

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<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:1.0in;margin-bottom:.0001pt;text-align:justify;text-indent:-.5in;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>(iv)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;this Agreement is not renewed or a new employment agreement is
not entered into within ninety (90) days prior to of the expiration of this
Agreement or any renewal thereof;</p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:1.0in;margin-bottom:.0001pt;text-align:justify;text-indent:-.5in;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>or</p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:1.0in;margin-bottom:.0001pt;text-align:justify;text-indent:-.5in;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>(v)&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;a material breach by
the Company of the terms of this letter agreement.</p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'><a name="_DV_M38"></a>In case of a claim of &#147;Cause&#148; for termination,
the Board shall promptly notify you in writing and in reasonable detail of the
existence of such Cause, and if the basis of such claim is reasonably
susceptible of cure and in fact is fully cured within thirty (30) days of your
receipt of such notice, it shall no longer be grounds for termination with
&#147;Cause.&#148;&nbsp; In case of your claim of resignation for &#147;Good Reason,&#148; your
resignation must occur within a limited period of time not to exceed two (2)
years following the initial event giving rise to the Good Reason, and you must
notify the Company in writing and in reasonable detail of the event or
condition constituting &#147;Good Reason&#148; within thirty (30) days of the initial
existence of such event or condition, specifying that you intend to terminate
your employment for such Good Reason and specifying the facts and circumstances
constituting Good Reason.&nbsp; If the Company remedies the specified condition
within thirty (30) days after receipt of such notice, it shall no longer be
grounds for your resignation for &#147;Good Reason.&#148; </p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>In the case of a change in control of the Company arising
from a sale of all or substantially all of the shares or assets of the Company
or a change in the constitution of the Board of Directors of more than 50% with
the newly elected majority of the members of the Board of Directors not having
been recommended by the previous Board of Directors for election (not including
you in either the denominator or numerator) within one calendar year (a &#147;Change
in Control&#148;), and:&nbsp; (1) during the six (6) month period immediately following
such Change in Control your employment is involuntarily terminated without
Cause or you are offered an executive position with
the Company or any of its affiliates with a
material diminution in your authority, duties, or responsibilities as they
existed immediately before the Change in Control (including a position in which
the authority, duties, or responsibilities of the supervisor to whom you are
required to report are materially diminished); or (2) in
connection with such Change in Control you are not offered an executive
position with the Company or any of its affiliates with substantially
comparable responsibilities, compensation, benefits and incentives, you shall receive the Severance Payment, subject to the
same terms and conditions described above in the event of termination without
&#147;Cause&#148; or resignation for &#147;Good Reason,&#148; including, but not limited to, the
requirement to execute a mutually acceptable separation agreement including a
general release of claims</p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'><a name="_DV_M39"></a><i>Indemnification &nbsp;</i></p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>The &nbsp;&nbsp;&nbsp;&nbsp; Company will continue its commitment to indemnify
you in accordance with the Company&#146;s standard Indemnification Agreement for its
officers and directors (which you have previously executed in your capacity as
an officer and/or director of the Company) and any such provisions concerning
indemnification under its Articles of Incorporation or Bylaws.</p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:center;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman"'>
- -4-</p>

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</div>

<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

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<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'><a name="_DV_M40"></a><i>At Will Employment; Other</i></p>

<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>By entering into this letter agreement, you confirm your
understanding that your employment will be on an &#147;at-will&#148; basis meaning that
either you or the Company may terminate the employment relationship at any time
for any reason with or without notice or Cause, and that neither you nor the
Company has entered into any other agreement regarding the duration of your
employment. Except for the Annual Bonus provision as it relates to FY2010
contained in the letter agreement between the parties dated May 15, 2008, which
shall remain in full force and effect until mutually resolved between the
parties, this letter agreement represents the full and exclusive understanding
between us of the matters set forth herein and supersedes fully any prior
agreement between you and the Company. There is no other agreement, written or
oral, which governs the matters described herein. &nbsp;Any amendment to this letter
agreement must be in writing, and must be execut<a name=Verdatum></a>ed by you
and by an authorized representative of the Company&#146;s Board.</p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>Please sign both copies of this letter to indicate your
acceptance of this offer and retain one copy for your records and return the
second copy to us.</p>

<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";text-align:left'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";text-align:left'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";text-align:left'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";text-align:left'>Pro-Dex, Inc.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </p>

<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";text-align:left'>&nbsp;</p>

<table border="0" style="border-collapse: collapse" width="100%" id="table1">
	<tr>
		<td width="50%">

<p style='margin-bottom:0;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";text-align:left; margin-top:0'>&nbsp;</p>

		</td>
		<td width="50%">
		<p style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
	</tr>
	<tr>
		<td width="50%">

<p style='margin-bottom:0;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";text-align:left; margin-top:0'>
<u>&nbsp;&nbsp; /s/ William Healey</u>__</p></td>
		<td width="50%">
		<p style="margin-top: 0; margin-bottom: 0"><u>&nbsp;&nbsp; /s/ Mark Murphy&nbsp;&nbsp;
		</u></td>
	</tr>
	<tr>
		<td width="50%">

<p style='margin-bottom:0;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";text-align:left; margin-top:0'>&nbsp;</p>

		</td>
		<td width="50%">
		<p style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
	</tr>
	<tr>
		<td width="50%">

<p style='margin-bottom:0;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";text-align:left; margin-top:0'>
William Healey</p></td>
		<td width="50%">
		<p style="margin-top: 0; margin-bottom: 0">Mark Murphy</td>
	</tr>
	<tr>
		<td width="50%">

<p style='margin-bottom:0;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";text-align:left; margin-top:0'>Lead Director on behalf
of</p>

		</td>
		<td width="50%">
		<p style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
	</tr>
	<tr>
		<td width="50%">

<p style='margin-bottom:0;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";text-align:left; margin-top:0'>The Board of Directors</p>

		</td>
		<td width="50%">
		<p style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
	</tr>
	<tr>
		<td width="50%">

<p style='margin-bottom:0;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";text-align:left; margin-top:0'>&nbsp;</p>

		</td>
		<td width="50%">
		<p style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
	</tr>
	<tr>
		<td width="50%">

<p style='margin-bottom:0;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";text-align:left; margin-top:0'>&nbsp;</p>

		</td>
		<td width="50%">
		<p style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
	</tr>
	<tr>
		<td width="50%">

<p style='margin-bottom:0;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";text-align:left; margin-top:0'>
<u>&nbsp;&nbsp; /s/ Jeff Ritchey&nbsp;&nbsp;&nbsp;&nbsp; </u></p></td>
		<td width="50%">
		<p style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
	</tr>
	<tr>
		<td width="50%">

<p style='margin-bottom:0;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";text-align:left;margin-top:0'>Jeff Ritchey, CFO</p>
		</td>
		<td width="50%">
		<p style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
	</tr>
</table>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p align="center">-5-</p>

<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>

<div style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>

<hr size=2 width="100%" noshade color=navy align=center>

</div>

<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";text-align:left'>&nbsp;</p>

</div>

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