INDEMNIFICATION AGREEMENT

THIS INDEMNIFICATION AGREEMENT (“Agreement” is entered into as of this ___ day
of _____, 200__, by and between PRO-DEX, INC., a Colorado corporation (the
“Company”) and the Indemnitee identified on the signature page hereto (the
“Indemnitee”).

R E C I T A L S:

A.        The Company and Indemnitee recognize the continued difficulty in
obtaining liability insurance for its directors, officers, employees, agents and
fiduciaries, the significant increases in the cost of such insurance and the
general reductions in the coverage of such insurance.

B.        The Company and Indemnitee further recognize the substantial increase
in corporate litigation in general, subjecting directors, officers, employees,
agents and fiduciaries to expensive litigation risks at the same time as the
availability and coverage of liability insurance has been severely limited.

C.        Indemnitee does not regard the current protection available as
adequate under the present circumstances, and Indemnitee and other directors,
officers, employees, agents and fiduciaries of the Company may not be willing to
continue to serve in such capacities without additional protection.

D.        The Company (i) desires to attract and retain the services of highly
qualified individuals, such as Indemnitee, to serve the Company and, in part, in
order to induce Indemnitee to continue to provide services to the Company and
(ii) wishes to provide for the indemnification and advancing of expenses to each
Indemnitee to the maximum extent permitted by law.

E.         In view of the considerations set forth above, the Company desires
that Indemnitee be indemnified by the Company as set forth herein.

NOW, THEREFORE, the Company and Indemnitee hereby agree as follows:

 

 

 

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Indemnification.

 

Indemnification of Expenses.  The Company shall indemnify and hold harmless
Indemnitee (including its partners, employees and agents) to the fullest extent
permitted by law if Indemnitee was or is or becomes a party to or witness other
participant in, or is threatened to be made a party to or witness or other
participant in, any threatened, pending or completed action, suit, proceeding or
alternative dispute resolution mechanism, or any hearing, inquiry or
investigation (whether formal or informal) that Indemnitee in good faith
believes might lead to the institution of any such action, suit, proceeding or
alternative dispute resolution mechanism, whether civil, criminal,
administrative, investigative or other (hereinafter a “Claim”) by reason of (or
arising in part out of) any event or occurrence related to the fact that
Indemnitee is or was a director, officer, employee, controlling person, agent or
fiduciary of the Company, or any subsidiary of the Company, or is or was serving
at the request of the Company as a director, officer, employee, controlling
person, agent or fiduciary of another corporation, partnership, joint venture,
trust or other enterprise, or by reason of any action or inaction on the part of
Indemnitee while serving in such capacity including, without limitation, any and
all losses, claims, damages, expenses and liabilities, joint or several
(including any investigation, legal and other expenses incurred in connection
with, and any amount paid in settlement of, any action, suit, proceeding or any
claim asserted) under the Securities Act of 1933, as amended (the “Securities
Act”), the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or
other federal or state statutory law or regulation, at common law or otherwise,
which relate directly or indirectly to the registration, purchase, sale, holding
or ownership of any securities of the Company or to any fiduciary obligation
owed with respect thereto (hereinafter an “Indemnification Event”) against any
and all expenses (including attorneys’ fees and all other costs, expenses and
obligations incurred in connection with investigating, defending a witness in or
participating in (including on appeal), or preparing to defend, be a witness in
or participate in, any such action, suit, proceeding, alternative dispute
resolution mechanism, hearing, inquiry or investigation), judgments, fines,
penalties and amounts paid in settlement (if such settlement is approved in
advance by the Company, which approval shall not be unreasonably withheld) of
such Claim and any federal, state, local or foreign taxes imposed on Indemnitee
as a result of the actual or deemed receipt of any payments under this Agreement
(collectively, hereinafter “Expenses”), including all interest, assessments and
other charges paid or payable in connection with or in respect of such
Expenses.  Expenses shall also include reasonable compensation for time spent by
Indemnitee for which he is not compensated by the Company or any subsidiary or
third party for any period during which Indemnitee is not an agent, in the
employment of, or providing services for compensation to, the Company or any
subsidiary; and (ii) if the rate of compensation and the estimated time involved
is approved by the directors of the Company who are not parties to any action
with respect to when expenses are incurred, for Indemnitee while an agent of,
employed by, or providing services for compensation to the Company or any
subsidiary. Such payment of Expenses shall be made by the Company as soon as
practicable but in any event no later than five days after written demand by the
Indemnitee therefor is presented to the Company.  The parties agree that for the
purposes of any Expense advancement for which Indemnitee has made written demand
to the Company in accordance with this Agreement, all Expenses , except
Indemnitee’s  counsel’s fees and expenses, included in such Expense advancement
that are certified by Indemnitee's counsel as being reasonable shall be presumed
conclusively to be reasonable.

 

 

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Contribution.  If the indemnification provided for in Section 1(a) above for any
reason is held by a court of competent jurisdiction to be unavailable to an
Indemnitee in respect of any losses, claims, damages, expenses or liabilities
referred to therein, then the Company, in lieu of indemnifying Indemnitee
thereunder, shall contribute to the amount paid or payable by Indemnitee as a
result of such losses, claims, damages, expenses or liabilities (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Indemnitee, or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company and the Indemnitee in connection with the
action or inaction which resulted in such losses, claims, damages, expenses or
liabilities, as well as any other relevant equitable considerations.  In
connection with the registration of the Company’s securities, the relative
benefits received by the Company and the Indemnitee shall be deemed to be in the
same respective proportions that the net proceeds from the offering (before
deducting expenses) received by the Company and the Indemnitee, in each case as
set forth in the table on the cover page of the applicable prospectus, bear to
the aggregate public offering price of the securities so offered.  The relative
fault of the Company and the Indemnitee shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Indemnitee and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.

The Company and the Indemnitee agree that it would not be just and equitable if
contribution pursuant to this Section 1(b) were determined by pro rata or per
capita allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraph.  In connection with the registration of the Company’s securities, in
no event shall an Indemnitee be required to contribute any amount under this
Section 1(b) in excess of the lesser of (i) that proportion of the total of such
losses, claims, damages or liabilities indemnified against equal to the
proportion of the total securities sold under such registration statement which
is being sold by such Indemnitee or (ii) the proceeds received by Indemnitee
from its sale of securities under such registration statement.  No person found
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not found guilty of such fraudulent misrepresentation.

 

(i)         Protection from Contribution

The Company hereby agrees to fully indemnify and hold harmless Indemnitee from
any claims for contribution for which the Indemnitee would otherwise be
indemnified hereunder which may be brought by Officers, Directors or employees
of the Company (other than Indemnitee) who may be jointly liable with Indemnitee

 

 

(ii)        Protection from Contribution in Event of Joint Liability

Whether or not the indemnification provided elsewhere in this agreement is
available, in respect of any threatened, pending or completed action, suit or
proceeding in which Company is jointly liable with Indemnitee, Company shall pay
the entire amount of any judgment or settlement of such action, suit or
proceeding without requiring Indemnitee to contribute to such payment. Company
shall not enter into any settlement of any action, suit or proceeding in which
Company is jointly liable with Indemnitee (or would be if joined in such action,
suit or proceeding) unless such settlement provides for a full and final release
of all claims asserted against Indemnitee.  

 

Survival Regardless of Investigation.  The indemnification and contribution
provided for in this Section 1 will remain in full force and effect regardless
of any investigation made by or on behalf of the Indemnitee or any officer,
director, employee, agent or controlling person of the Indemnitee.

 

 

 

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Change in Control.  The Company agrees that if there is a Change in Control of
the Company (other than a Change in Control which has been approved by a
majority of the Company’s Board of Directors who were directors immediately
prior to such Change in Control) then, with respect to all matters thereafter
arising concerning the rights of Indemnitee to payments of Expenses under this
Agreement or any other agreement or under the Company’s Certificate of
Incorporation or Bylaws as now or hereafter in effect, Independent Legal Counsel
(as defined in Section 11(d) hereof) shall be selected by the Indemnitee and
approved by the Company (which approval shall not be unreasonably withheld). 
Such counsel, among other things, shall render its written opinion to the
Company and Indemnitee as to whether and to what extent Indemnitee would be
permitted to be indemnified under applicable law.  The Company agrees to abide
by such opinion and to pay the reasonable fees of the Independent Legal Counsel
referred to above and to fully indemnify such counsel against any and all
expenses (including attorneys’ fees), claims, liabilities and damages arising
out of or relating to this Agreement or its engagement pursuant hereto.

Mandatory Payment of Expenses.  Notwithstanding any other provision of this
Agreement other than Section 9 hereof, to the extent that Indemnitee have been
successful on the merits or otherwise, including, without limitation, the
dismissal of an action without prejudice in the defense of any action, suit,
proceeding, inquiry or investigation referred to in Section (1)(a) hereof or in
the defense of any claim, issue or matter therein, Indemnitee shall be
indemnified against all Expenses incurred by Indemnitee in connection therewith.

Expenses; Indemnification Procedure.

Advancement of Expenses.  The Company agrees to pay all Expenses incurred by
Indemnitee in connection with any Indemnification Event in advance of the final
disposition thereof, provided that the Company has received an undertaking by or
on behalf of Indemnitee, substantially in the form attached hereto as Exhibit A,
to repay the amount so advanced to the extent that it is ultimately determined
that Indemnitee is not entitled to be indemnified by the Company under this
Agreement or otherwise.  The advances to be made hereunder shall be paid by the
Company to Indemnitee within twenty (20) days following delivery of a written
request therefor by Indemnitee to the Company. The right to advances under this
section shall in all events continue until final disposition of any proceeding,
including any appeal therein.

Notice/Cooperation by Indemnitee.   Indemnitee agrees to notify promptly the
Company in writing of any claim made against Indemnitee for which
indemnification will or could be sought under this Agreement; provided, however,
that a delay in giving such notice will not deprive Indemnitee of any right to
be indemnified under this Agreement unless, and then only to the extent that,
the Company did not otherwise learn of the proceeding and such delay is
materially prejudicial to the Company’s ability to defend such proceeding; and,
provided, further, that notice will be deemed to have been given without any
action on the part of Indemnitee in the event the Company is a party to the same
proceeding. The omission to notify the Company will not relieve the Company from
any liability for indemnification which it may have to Indemnitee otherwise than
under this Agreement.

No Presumptions; Burden of Proof.  For purposes of this Agreement, the
termination of any Claim by judgment, order, settlement (whether with or without
court approval) or conviction, or upon a plea of nolo contenders, or its
equivalent, shall not create a presumption that Indemnitee did not meet any
particular standard of conduct or have any particular belief or that a court has
determined that indemnification is not permitted by applicable law.  In
connection with any determination as to whether Indemnitee is entitled to be
indemnified hereunder, the burden of proof shall be on the Company to establish
that Indemnitee is not so entitled.

 

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Notice to Insurers.  If, at the time of the receipt by the Company of a notice
of a Claim pursuant to Section 2(b) hereof, the Company has liability insurance
in effect which may cover such Claim, the Company shall give prompt notice of
the commencement of such Claim to the insurers in accordance with the procedures
set forth in the respective policies.  The Company shall thereafter take all
necessary or desirable action to cause such insurers to pay, on behalf of
Indemnitee, all amounts payable as a result of such action, suit, proceeding,
inquiry or investigation in accordance with the terms of such policies.

Selection of Counsel.  In the event the Company shall be obligated hereunder to
pay the Expenses of any Claim, the Company shall be entitled to assume the
defense of such Claim, with counsel approved by the Indemnitee, which approval
shall not be unreasonably withheld, upon the delivery to Indemnitee of written
notice of its election to do so.  After delivery of such notice, approval of
such counsel by the Indemnitee and the retention of such counsel by the Company,
the Company will not be liable to Indemnitee under this Agreement for any fees
of counsel subsequently incurred by Indemnitee with respect to the same Claim;
provided, that (i) the Indemnitee shall have the right to employ Indemnitee’s
counsel in any such Claim at the Indemnitee’s expense and (ii) if (A) the
employment of counsel by the Indemnitee has been previously authorized by the
Company, (B) Indemnitee shall have reasonably concluded that there may be a
conflict of interest between the Company and Indemnitee in the conduct of any
such defense or Indemnitee shall have any defense to a Claim which is not
available to the Company, (C) the Company shall not continue to retain such
counsel to defend such Claim, or (D) after a Change in Control, the employment
of counsel by Indemnitee has been approved by counsel mutually acceptable to
both parties then the fees and expenses of the Indemnitee’s counsel shall be at
the expense of the Company.  Without Indemnitee’s prior written consent, the
Company shall not enter into any settlement of any proceeding in which the
Company is jointly liable with Indemnitee (or would be if joined in such
proceeding) unless such settlement provides for a full and final release of all
claims asserted against Indemnitee. The Company shall be permitted to settle any
action except that it shall not settle any action or claim in any manner which
would impose any penalty or limitation on the Indemnitee without Indemnitee’s
written consent, which may be given or withheld in Indemnitee’s sole discretion.

Additional Indemnification Rights; Nonexclusivity.

Scope.  The Company hereby agrees to indemnify Indemnitee to the fullest extent
permitted by law, notwithstanding that such indemnification is not specifically
authorized by the other provisions of this Agreement, the Company’s Certificate
of Incorporation, the Company’s Bylaws or by statute.  In the event of any
change after the date of this Agreement in any applicable law, statute or rule
which expands the right of a Colorado corporation to indemnify a member of its
Board of Directors or an officer, employee, agent or fiduciary, it is the intent
of the parties hereto that Indemnitee shall enjoy by this Agreement the greater
benefits afforded by such change.  In the event of any change in any applicable
law, statute or rule which narrows the right of a Colorado corporation to
indemnify a member of its Board of Directors or an officer, employee, agent or
fiduciary, such change, to the extent not otherwise required by such law,
statute or rule to be applied to this Agreement, shall have no effect on this
Agreement or the parties’ rights and obligations hereunder except as set forth
in Section 8(a) hereof.

Nonexclusivity.  The indemnification provided by this Agreement shall be in
addition to any rights to which Indemnitee may be entitled under the Company’s
Certificate of Incorporation, its Bylaws, any agreement, any vote of
shareholders or disinterested directors, the General Corporation Law of the
State of Colorado, or otherwise.  The indemnification provided under this
Agreement shall continue as to Indemnitee for any action Indemnitee took or did
not take while serving in an indemnified capacity even though the Indemnitee may
have ceased to serve in such capacity.

 

 

 

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No Duplication of Payments. 

The Company shall not be liable under this Agreement to make any payment in
connection with any Claim made against Indemnitee to the extent such Indemnitee
has otherwise actually received payment (under any insurance policy, Certificate
of Incorporation, Bylaw or otherwise) of the amounts otherwise indemnifiable
hereunder.

Partial Indemnification.

If Indemnitee is entitled under any provision of this Agreement to
indemnification by the Company for any portion of Expenses incurred in
connection with any Claim, but not, however, for all of the total amount
thereof, the Company shall nevertheless indemnify Indemnitee for the portion of
such Expenses to which Indemnitee is entitled.

[Reserved]. 

 

Liability Insurance.

 

(a)        Maintenance of Insurance

The Company hereby covenants and agrees that, so long as the Indemnitee shall
continue to serve as an agent of the Company and thereafter so long as the
Indemnitee shall be subject to any possible proceeding by reason of the fact
that the Indemnitee was an agent of the Company, but not to exceed six years,
the Company shall promptly obtain and maintain in full force and effect
directors’ and officers’ liability insurance (“D&O Insurance”)

(b)       Annual Review

At the Director’s request, the Company shall arrange an annual review of the D
&O Insurance by an independent insurance adviser, all fees and charges arising
from such review to be met by the Company.

(c)        Tail Coverage

In the event of a Change in Control, the Company shall maintain in force any and
all insurance policies then maintained by the Company in providing
insurance--directors’ and officers’ liability, fiduciary, employment practices
or otherwise--in respect of Indemnitee, for a period of six years thereafter
(“Tail Coverage”).

(d)       Indemnitee Control

the Company shall not discontinue or significantly reduce the scope or amount of
coverage from one policy period to the next (i) without the prior approval
thereof by a majority vote of the incumbent directors, even if less than a
quorum, or (ii) if at the time that any such discontinuation or significant
reduction in the scope or amount of coverage is proposed there are no incumbent
directors, without the prior written consent of Indemnitee (which consent shall
not be unreasonably withheld or delayed).

 

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Failure to Indemnify.

 

In the event that any action is instituted by Indemnitee under this Agreement or
under any liability insurance policies maintained by the Company to enforce or
interpret any of the terms hereof or thereof, Indemnitee shall be entitled to be
paid all Expenses incurred by Indemnitee with respect to such action, regardless
of whether Indemnitee is ultimately successful in such action, and shall be
entitled to the advancement of Expenses with respect to such action, unless as a
part of such action a court of competent jurisdiction over such action
determines that each of the material assertions made by Indemnitee as a basis
for such action was frivolous. In the event of an action instituted by or in the
name of the Company under this Agreement to enforce or interpret any of the
terms of this Agreement, Indemnitee shall be entitled to be paid all Expenses
incurred by Indemnitee in defense of such action (including costs and Expenses
incurred with respect to Indemnitee’s counterclaims and cross-claims made in
such action), and shall be entitled to the advancement of Expenses with respect
to such action.

It shall be a defense to such action (other than an action brought to enforce a
claim for expenses incurred in connection with any action, suit or proceeding in
advance of its final disposition) that Indemnitee has not met the standard of
conduct which make it permissible under applicable law for the Company to
indemnify Indemnitee for the amount claimed, but the burden of proving such
defense shall be on the Company and Indemnitee shall be entitled to receive
interim payments of interim expenses pursuant to Section 2 hereof unless and
until such defense may be finally adjudicated by court order or judgment from
which no further right of appeal exists.  It is the parties’ intention that if
the Company contests Indemnitee’s right to indemnification, the question of
Indemnitee’s right to indemnification shall be for the court to decide, and
neither the failure of the Company (including its Board of Directors,
independent legal counsel, or its shareholders) to have made a determination
that indemnification of Indemnitee is proper in the circumstances because
Indemnitee has met the applicable standard of conduct required by applicable
law, nor an actual determination by the Company (including its board of
directors, any committee or subgroup of the Board of Directors, independent
legal counsel, or its shareholders) that Indemnitee has not met such applicable
standard of conduct, shall create a presumption that Indemnitee has or has not
met the applicable standard of conduct.

Exceptions.

Any other provision herein to the contrary notwithstanding, the Company shall
not be obligated pursuant to the terms of this Agreement:

Excluded Action or Omissions.  To indemnify Indemnitee for Indemnitee’s acts,
omissions or transactions from which the Indemnitee may not be relieved of
liability under applicable law;

 

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Claims Initiated by Indemnitee.  To indemnify or advance expenses to Indemnitee
with respect to Claims initiated or brought voluntarily by Indemnitee and not by
way of defense, except (i) with respect to actions or proceedings to establish
or enforce a right to indemnify under this Agreement or any other agreement or
insurance policy or under the Company’s Certificate of Incorporation or Bylaws
now or hereafter in effect relating to Claims for Indemnifiable Events, (ii) in
specific cases if the Board of Directors has approved the initiation or bringing
of such Claim, or (iii) as otherwise required under Section 145 of the Colorado
General Corporation Law, regardless of whether Indemnitee ultimately is
determined to be entitled to such indemnification, advance expense payment or
insurance recovery, as the case may be;

Frivolous Claims.  To indemnify Indemnitee for any expenses incurred by
Indemnitee with respect to any proceeding instituted by Indemnitee to enforce or
interpret this Agreement, if a court of competent jurisdiction determines that
each of the material assertions made by Indemnitee in such proceeding was
frivolous; or

Claims Under Section 16(b).  To indemnify Indemnitee for expenses and the
payment of profits arising from the purchase and sale by Indemnitee of
securities in violation of Section 16(b) of the Securities Exchange Act of 1934,
as amended or any similar successor statute, but only to the extent the Company
reasonably determines that Indemnitee clearly violated Section 16(b) and must
disgorge the profits to the Company. Notwithstanding anything to the contrary
stated or implied in this Section 9, indemnification pursuant to this Agreement
relating to any proceeding against Indemnitee for an accounting of profits made
from the purchase or sale by Indemnitee of securities of the Company pursuant to
the provisions of Section 16(b) of the Exchange Act or similar provisions of any
federal, state or local laws shall not be prohibited if Indemnitee ultimately
establishes in any proceeding that no recovery of such profits from Indemnitee
is permitted under Section 16(b) of the Exchange Act or similar provisions of
any federal, state or local laws.

Period of Limitations.

No legal action shall be brought and no cause of action shall be asserted by or
in the right of the Company against Indemnitee, Indemnitee’s estate, spouse,
heirs, executors or personal or legal representatives after the expiration of
one year from the date of accrual of such cause of action, and any claim or
cause of action of the Company shall be extinguished and deemed released unless
asserted by the timely filing of a legal action within such two-year period;
provided, however, that if any shorter period of limitations is otherwise
applicable to any such cause of action, such shorter period shall govern.

Construction of Certain Phrases.

For purposes of this Agreement, references to the “Company” shall include, in
addition to the resulting corporation, any constituent corporation (including
any constituent of a constituent) absorbed in a consolidation or merger which,
if its separate existence had continued, would have had power and authority to
indemnify its directors, officers, employees, agents or fiduciaries, so that if
Indemnitee is or was a director, officer, employee, agent, control person, or
fiduciary of such constituent corporation, or is or was serving at the request
of such constituent corporation as a director, officer, employee, agent, control
person or fiduciary, each Indemnitee shall stand in the same position under the
provisions of this Agreement with respect to the resulting or surviving
corporation as Indemnitee would have with respect to such constituent
corporation if its separate existence had continued.

 

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For purposes of this Agreement, references to “other enterprises” shall include
employee benefit plans; references to “fines” shall include any excise taxes
assessed on Indemnitee with respect to an employee benefit plan; and references
to “serving at the request of the Company” shall include any service as a
director, officer, employee, agent or fiduciary of the Company which imposes
duties on, or involves services by, such director, officer, employee, agent or
fiduciary with respect to an employee benefit plan, its participants or its
beneficiaries; and if Indemnitee acted in good faith and in a manner Indemnitee
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan, Indemnitee shall be deemed to have acted in a
manner not opposed to the best interests of the Company as referred to in this
Agreement.

For purposes of this Agreement a “Change in Control” shall be deemed to have
occurred if (i) any “person” (as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended), other than a trustee or
other fiduciary holding indirectly by the shareholders of the Company in
substantially the same proportions as their ownership of stock of the Company,
(A) who is or becomes the beneficial owner, directly or indirectly, of
securities of the Company representing 10% or more of the combined voting power
of the Company’s then outstanding Voting Securities, increases his beneficial
ownership of such securities by 5% or more over the percentage so owned by such
person, or (B) becomes the “beneficial owner” (as defined in Rule 13d-3 under
said Act), directly or indirectly, of securities of the Company representing
more than 20% of the total voting power represented by the Company’s then
outstanding Voting Securities, (ii) during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board of
Directors of the Company and any new director whose election by the Board of
Directors or nomination for election by the Company’s shareholders was approved
by a vote of at least two-thirds of the directors then still in office who
either were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute a majority thereof, or (iii) the shareholders of the Company approve
a merger or consolidation of the Company with any other corporation other than a
merger or consolidation which would result in the Voting Securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into Voting Securities of the
surviving entity) at least 80% of the total voting power represented by the
Voting Securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or the shareholders of the
Company approve a plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of (in one transaction or a series of
transactions) all or substantially all of the Company’s assets.

For purposes of this Agreement, “Independent Legal Counsel” shall mean an
attorney or firm of attorneys, selected in accordance with the provisions of
Section 1(d) hereof, who shall not have otherwise performed services for the
Company or Indemnitee within the last three years (other than with respect to
matters concerning the right of Indemnitee under this Agreement, or of other
indemnitees under similar indemnity agreements).

For purposes of this Agreement, “Voting Securities” shall mean any securities of
the Company that vote generally in the election of directors.

Counterparts. 

This Agreement may be executed in one or more counterparts, each of which shall
constitute an original.

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Binding Effect; Successors and Assigns.

This Agreement shall be binding upon and inure to the benefit of and be
enforceable by the parties hereto and their respective successors, assigns,
including any direct or indirect successor by purchase, merger, consolidation or
otherwise to all or substantially all of the business and/or assets of the
Company, spouses, heirs, and personal and legal representatives.  The Company
shall require and cause any successor (whether direct or indirect by purchase,
merger, consolidation or otherwise) to all, substantially all, or a substantial
part, of the business and/or assets of the Company, by written agreement in form
and substance satisfactory to Indemnitee, expressly to assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform if no such succession had taken place. 
This Agreement shall continue in effect with respect to Claims relating to
Indemnifiable Events regardless of whether Indemnitee continues to serve as a
director, officer, employee, agent, controlling person, or fiduciary of the
Company or of any other enterprise at the Company’s request.

Attorneys’ Fees.

In the event that any action is instituted by Indemnitee under this Agreement or
under any liability insurance policies maintained by the Company to enforce or
interpret any of the terms hereof or thereof, any Indemnitee shall be entitled
to be paid all Expenses incurred by Indemnitee with respect to such action,
regardless of whether Indemnitee is ultimately successful in such action, and
shall be entitled to the advancement of Expenses with respect to such action,
unless, as a part of such action, a court of competent jurisdiction over such
action determines that each of the material assertions made by Indemnitee as a
basis for such action was not made in good faith or was frivolous.  In the event
of an action instituted by or in the name of the Company under this Agreement to
enforce or interpret any of the terms of this Agreement, the Indemnitee shall be
entitled to be paid all Expenses incurred by Indemnitee in defense of such
action (including costs and expenses incurred with respect to Indemnitee
counterclaims and cross-claims made in such action), and shall be entitled to
the advancement of Expenses with respect to such action, unless, as a part of
such action, a court having jurisdiction over such action determines that each
of Indemnitee’s material defenses to such action was made in bad faith or was
frivolous.

Notice.

All notices and other communications required or permitted hereunder shall be in
writing, shall be effective when given, and shall in any event be deemed to be
given (a) five (5) days after deposit with the U.S. Postal Service or other
applicable postal service, if delivered by first class mail, postage prepaid,
(b) upon delivery, if delivered by hand, (c) one business day after the business
day if deposited with Federal Express or similar overnight courier, freight
prepaid, or (d) one day after the business day of delivery by facsimile
transmission, if deliverable by facsimile transmission, with copy by first class
mail, postage prepaid, and shall be addressed if to Indemnitee, at Indemnitee’s
address as set forth beneath the Indemnitee’s signature to this Agreement and if
to the Company at the address of its principal corporate offices (attention:
Secretary) or at such other address as such party may designate by ten days’
advance written notice to the other party hereto.

 

 

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Consent to Jurisdiction.

 

 

The Company and Indemnitee each hereby irrevocably consent to the jurisdiction
of the courts of the State of Colorado for all purposes in connection with any
action or proceeding which arises out of or relates to this Agreement and agree
that any action instituted under this Agreement shall be commenced, prosecuted
and continued only in the Superior Court of the State of Colorado, which shall
be the exclusive and only proper forum for adjudicating such a claim.

Severability.

The provisions of this Agreement shall be severable in the event that any of the
provisions hereof (including any provision within a single section, paragraph or
sentence) are held by a court of competent jurisdiction to be invalid, void or
otherwise unenforceable, and the remaining provisions shall remain enforceable
to the fullest extent permitted by law.  Furthermore, to the fullest extent
possible, the provisions of this Agreement (including, without limitations, each
portion of this Agreement containing any provision held to be invalid, void or
otherwise unenforceable, that is not itself invalid, void or unenforceable)
shall be construed so as to give effect to the intent manifested by the
provision held invalid, illegal or unenforceable.

Choice of Law.

This Agreement shall be governed by and its provisions construed and enforced in
accordance with the laws of the State of Colorado, as applied to contracts
between Colorado residents, entered into and to be performed entirely within the
State of Colorado, without regard to the conflict of laws principles thereof.

 

Subrogation.

In the event of payment under this Agreement, the Company shall be subrogated to
the extent of such payment to all of the rights of recovery of Indemnitee who
shall execute all documents required and shall do all acts that may be necessary
to secure such rights and to enable the Company effectively to bring suit to
enforce such rights.

Amendment and Termination.

No amendment, modification, termination or cancellation of this Agreement shall
be effective unless it is in writing signed by all parties hereto.  No waiver of
any of the provisions of this Agreement shall be deemed or shall constitute a
waiver of any other provisions hereof (whether or not similar) nor shall such
waiver constitute a continuing waiver.

Integration and Entire Agreement.

This Agreement sets forth the entire understanding between the parties hereto
and supersedes and merges all previous written and oral negotiations,
commitments, understandings and agreements relating to the subject matter hereof
between the parties hereto.

No Construction as Employment Agreement.

Nothing contained in this Agreement shall be construed as giving Indemnitee any
right to be retained in the employ of the Company or any of its subsidiaries.

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23.       Effectiveness of Agreement

 

            This Agreement shall be effective as of the date set forth on the
first page, and this Agreement applies to any Indemnifiable Event that occurred
prior to or after such date if Indemnitee was an officer, director, employee or
agent of, or attorney for, Company, or was serving at the request of Company as
a director, officer, employee or agent of, or attorney for, another corporation,
partnership, joint venture, trust or other enterprise, at the time such
Indemnifiable Event occurred.

            All the rights and privileges afforded by this Agreement, including
the right to indemnification and the advancement of legal fees provided under
this Agreement, shall continue as to Indemnitee for any action taken or not
taken while serving in an indemnified capacity pertaining to an Indemnifiable
Event even though Indemnitee may have ceased to serve in such capacity at the
time of any proceeding.

24.       Contract Right

The right to be indemnified or to receive advancement of Expenses under this
Agreement (i) is a contract right based upon good and valuable consideration,
pursuant to which Indemnitee may sue, (ii) is and is intended to be retroactive
and shall be available as to events occurring prior to the date of this
Agreement and (iii) shall continue after any rescission or restrictive
modification of this Agreement as to events occurring prior thereto

25.       Monetary Damages Insufficient/Specific Enforcement

The Company and Indemnitee agree that a monetary remedy for breach of this
Agreement may be inadequate, impracticable and difficult of proof, and further
agree that such breach may cause Indemnitee irreparable harm. Accordingly, the
parties hereto agree that Indemnitee may enforce this Agreement by seeking
injunctive relief and/or specific performance hereof, without any necessity of
showing actual damage or irreparable harm and that by seeking injunctive relief
and/or specific performance, Indemnitee shall not be precluded from seeking or
obtaining any other relief to which he may be entitled. The Company and
Indemnitee further agree that Indemnitee shall be entitled to such specific
performance and injunctive relief, including temporary restraining orders,
preliminary injunctions and permanent injunctions, without the necessity of
posting bonds or other undertaking in connection therewith. The Company
acknowledges that in the absence of a waiver, a bond or undertaking may be
required of Indemnitee by the Court, and the Company hereby waives any such
requirement of a bond or undertaking.

26.       Binding Presumption of Entitlement for Failure to Act

If the person or persons empowered to make a determination of entitlement to
indemnification shall have failed to make the requested determination within
ninety (90) days after any judgment, order, settlement, dismissal, arbitration
award, conviction, acceptance of a plea of nolo contendere or its equivalent, or
other disposition or partial disposition of any proceeding or any other event
that could enable the Corporation to determine Indemnitee’s entitlement to
indemnification, the requisite determination that Indemnitee is entitled to
indemnification shall be deemed to have been made.

27.       Enforcement of Rights

(a)        Right to Enforce in Court

If Indemnitee has not received full indemnification within thirty (30) days
after making a demand in accordance with Section 1, Indemnitee shall have the
right to enforce its indemnification rights under this Agreement by commencing
litigation in any court in the State of Colorado or any other court having
subject matter jurisdiction thereof seeking an initial determination by the
court or challenging any determination by the Reviewing Party or any aspect
thereof. The Company hereby consents to service of process and to appear in any
such proceeding. The remedy provided for in this Section 27 shall be in addition
to any other remedies available to Indemnitee at law or in equity.

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28.       Rights in Event of a Change of Control

(a)        Company pays for Indemnitee to Sue Company—After Change in Control

            Notwithstanding anything in this Agreement to the contrary,
Indemnitee shall not be entitled to indemnification pursuant to this Agreement
in connection with any proceeding initiated by Indemnitee against the Company or
any director or officer of the Company unless the proceeding is instituted after
a Change in Control (other than a Change in Control approved by a majority of
the directors on the Board who were directors immediately prior to such Change
in Control).

29.       Information Sharing

If the Indemnitee is the subject of or is implicated in any way during an
investigation, whether formal or informal, the Company shall share with
Indemnitee any information it has turned over to any third parties concerning
the investigation except information subject to attorney client privilege.

30.       Interest

Interest shall be paid by the Company to Indemnitee at the legal rate under
Colorado law for amounts which the Company indemnifies or is obliged to
indemnify for the period commencing with the date on which Indemnitee requests
indemnification, contribution, reimbursement or advancement of any Expenses and
ending with the date on which such payment is made to Indemnitee by the Company.

31.       No Imputation

The knowledge and/or actions, or failure to act, of any director, officer, agent
or employee of the Corporation or the Corporation itself shall not be imputed to
Indemnitee for purposes of determining any rights under this Agreement.

32.       Determination of Good Faith

For purposes of any determination of good faith, Indemnitee shall be deemed to
have acted in good faith if Indemnitee's action is based on the records or books
of account of the Company, including financial statements, or on information
supplied to Indemnitee by the officers of the Company in the course of their
duties, or on the advice of legal counsel for the Company or the Board or
counsel selected by any committee of the Board or on information or records
given or reports made to the Company by an independent certified public
accountant or by an appraiser, investment banker, compensation consultant, or
other expert selected with reasonable care by the Company or the Board of
Directors or any committee of the Board of Directors. The provisions of this
Section 32 shall not be deemed to be exclusive or to limit in any way the other
circumstances in which the Indemnitee may be deemed to have met the applicable
standard of conduct. Whether or not the foregoing provisions of this Section are
satisfied, it shall in any event be presumed that Indemnitee has at all times
acted in good faith and in a manner he or she reasonably believed to be in or
not opposed to the best interests of the Company.

 

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

 

COMPANY:

PRO-DEX, INC.
a Colorado corporation

By:                                                                                         

    Its:                                                                        

Address:
2361 McGaw Avenue
Irvine, California 92614

 

 

INDEMNITEE:

                                                                                   

 

(signature)

 

__________________________________________

 

(print name)    

 

 

 

 

 

 

 

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EXHIBIT A

UNDERTAKING AGREEMENT

THIS UNDERTAKING AGREEMENT is made on ___________________, between PRO-DEX,
INC., a Colorado corporation (the “Company”) and __________________________, an
officer and/or member of the Board of Directors of the Company (“Indemnitee”).

WHEREAS, Indemnitee may become involved in investigations, claims, actions,
suits or proceedings which have arisen or may arise in the future as a result of
Indemnitee’s service to the Company; and

WHEREAS, Indemnitee desires that the Company pay any and all expenses
(including, but not limited to, attorneys’ fees and court costs) actually and
reasonably incurred by Indemnitee or on Indemnitee’s behalf in defending or
investigating any such suits or claims and that such payment be made in advance
of the final disposition of such investigations, claims, actions, suits or
proceedings to the extent that Indemnitee has not been previously reimbursed by
insurance; and

WHEREAS, the Company is willing to make such payments but, in accordance with
Section 7-109-104(b) of the Colorado Revised Statutes, the Company may make such
payments only if it receives an undertaking to repay from Indemnitee; and

WHEREAS, Indemnitee is willing to give such an undertaking;

NOW, THEREFORE, in consideration of the mutual promises contained herein, the
parties agree as follows:

1.                  In regard to any payments made by the Company to Indemnitee
pursuant to the terms of the Indemnification Agreement dated
____________________, 2002, between the Company and Indemnitee, Indemnitee
hereby undertakes and agrees to repay to the Company any and all amounts so paid
promptly and in any event within thirty (30) days after the disposition,
including any appeals, of any litigation or threatened litigation on account of
which payments were made, but only to the extent that Indemnitee is ultimately
found not entitled to be indemnified by the Company under the Indemnification
Agreement, the Bylaws of the Company and the Colorado Revised Statutes, or other
applicable law.

2.                  This Agreement shall not affect in any manner rights which
Indemnitee may have against the Company, any insurer or any other person to seek
indemnification for or reimbursement of any expenses referred to herein or any
judgment which may be rendered in any litigation or proceeding.

 

 

 

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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the
date first above written.

 

COMPANY:

PRO-DEX, INC.
a Colorado corporation

By:                                                                                         

    Its:                                                                        

Address:
2361 McGaw Avenue
Irvine, California 92614

 

 

INDEMNITEE:

                                                                                   

 

(signature)

 

__________________________________________

 

(print name)    

 

 

 

 

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