EXHIBIT 10.1







 


 


 







 


 


 


 


 


EXHIBIT
10.1


 


	

WELLS FARGO


			REVOLVING LINE OF CREDIT
		NOTE
	

  

			 
	

$1,000,000.00


			Irvine, California 

		November 1, 2009



FOR
VALUE RECEIVED, the undersigned Pro-Dex, Inc. ("Borrower")
promises to pay to the order of WELLS FARGO BANK, NATIONAL
ASSOCIATION ("Bank") at its office at Orange County RCBO, 2030
Main Street, Suite #900, Irvine, CA 92614, or
at such other place as the holder hereof may designate, in lawful money of the United
States of America and in immediately available funds, the principal sum of $1,000,000.00,
or so much thereof as may be advanced and be outstanding, with
interest thereon, to be computed on each advance from the date of its
disbursement as set forth herein.


DEFINITIONS:


As
used herein, the following terms shall have the meanings set forth after each,
and any other term defined in this Note shall have the meaning set forth at the
place defined:


1.1   "Business Day" means any day except a
Saturday, Sunday or any other day on which commercial banks in

California are authorized or required by law to close.


1.2   "Fixed
Rate Term" means a period commencing on a Business Day and continuing for 3
months, as designated by Borrower, during which all or a portion of
the outstanding principal balance of this Note bears interest determined in
relation to LIBOR; provided however, that no Fixed Rate Term may be selected
for a principal amount less than $100,000.00; and provided further, that
no Fixed Rate Term shall extend beyond the scheduled maturity date hereof. If any
Fixed Rate Term would end on a day which is not a Business Day, then such Fixed Rate Term shall be
extended to the next succeeding Business Day.


1.3   "LIBOR" means the rate per annum
(rounded upward, if necessary, to the nearest whole 1/8 of 1%)
determined by dividing Base LIBOR by a percentage equal to 100% less any
LIBOR Reserve Percentage.


(a)       "Base
LIBOR" means the rate per annum for United States dollar deposits quoted
by Bank as the Inter-Bank Market Offered Rate, with the understanding
that such rate is quoted by Bank for the purpose of calculating
effective rates of interest for loans making reference thereto, on the first
day of a Fixed Rate Term for delivery of funds on said date for a period of
time approximately equal to the number of days in such Fixed Rate
Term and in an amount approximately equal to the principal amount to which such
Fixed Rate Term applies. Borrower understands and agrees that Bank may base its
quotation of the Inter-Bank Market Offered Rate upon such offers or other
market indicators of the Inter-Bank Market as Bank in its discretion deems
appropriate including, but not limited to, the rate offered for U.S. dollar
deposits on the London
Inter-Bank Market.


(b)     
"LIBOR Reserve Percentage" means the reserve
percentage prescribed by the Board of Governors of the Federal
Reserve System (or any successor) for "Eurocurrency Liabilities" (as
defined in Regulation D of the Federal Reserve Board, as
amended), adjusted by Bank for expected changes in such reserve percentage during
the applicable Fixed Rate Term.


1.4            "Prime
Rate" means at any time the rate of interest most recently announced
within Bank at its principal office as its Prime Rate, with the understanding
that the Prime Rate is one of Bank's base rates and serves as the basis upon
which effective rates of interest are calculated for those loans making
reference thereto, and is evidenced by the recording thereof after its
announcement in such internal publication or publications as Bank may designate.

 

 

 

 


	
  
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2.          INTEREST:


2.1       Interest. The outstanding
principal balance of this Note shall bear interest (computed on the basis of a 360-day
year, actual days elapsed) either (a) at a fluctuating rate per annum 1.50000%
above the Prime Rate in effect
from time to time, or (b) at a fixed rate per annum determined by Bank to be 2.50000%
above LIBOR in effect on the first
day of the applicable Fixed Rate Term. When interest is determined in relation
to the Prime Rate, each change in the
rate of interest hereunder shall become effective on the date each Prime Rate
change is announced within Bank. With
respect to each LIBOR selection option selected hereunder, Bank is hereby
authorized to note the date, principal amount, interest rate and Fixed Rate
Term applicable thereto and any payments made thereon on Bank's books and
records (either manually or by electronic entry) and/or on any schedule attached to this Note, which notations
shall be prima facie evidence of the accuracy of the information noted.


2.2       Selection of Interest Rate Options.
At any time any portion of this Note bears interest determined in relation to LIBOR, it may be continued by Borrower
at the end of the Fixed Rate Term applicable thereto so that all or a portion
thereof bears interest determined in relation to the Prime Rate or to LIBOR for
a new Fixed Rate Term designated by
Borrower. At any time any portion of this Note bears interest determined in
relation to the Prime Rate, Borrower
may convert all or a portion thereof so that it bears interest determined in
relation to LIBOR for a Fixed Rate
Term designated by Borrower. At such time as Borrower requests an advance hereunder
or wishes to select a LIBOR option
for all or a portion of the outstanding principal balance hereof, and at the
end of each Fixed Rate Term, Borrower
shall give Bank notice specifying: (a) the interest rate option selected by Borrower; (b) the principal amount subject
thereto; and (c) for each LIBOR selection, the length of the applicable Fixed Rate Term. Any such notice may be given by
telephone (or such other electronic method as Bank may permit) so long as, with
respect to each LIBOR selection, (i) if requested by Bank, Borrower provides to
Bank written confirmation thereof not
later than 3 Business Days after such notice is given, and (ii) such notice is
given to Bank prior to 10:00 a.m. on
the first day of the Fixed Rate Term, or at a later time during any Business
Day if Bank, at it's sole option but
without obligation to do so, accepts Borrower's notice and quotes a fixed rate
to Borrower. If Borrower does not immediately accept a fixed rate when quoted
by Bank, the quoted rate shall expire
and any subsequent LIBOR request from Borrower shall be subject to a
redetermination by Bank of the applicable
fixed rate. If no specific designation of interest is made at the time any
advance is requested hereunder or at
the end of any Fixed Rate Term, Borrower shall be deemed to have made a Prime
Rate interest selection for such advance or the principal amount to
which such Fixed Rate Term applied.


2.3       Taxes and Regulatory Costs. Borrower
shall pay to Bank immediately upon demand, in addition to any other amounts due or to become due hereunder, any
and all (a) withholdings, interest equalization taxes, stamp taxes or other taxes (except income and franchise
taxes) imposed by any domestic or foreign governmental authority and related in any manner to LIBOR, and
(b) future, supplemental, emergency or other changes in the LIBOR Reserve Percentage, assessment rates imposed
by the Federal Deposit Insurance Corporation, or similar requirements or costs imposed by any domestic or
foreign governmental authority or resulting from compliance by Bank with any request or directive (whether or
not having the force of law) from any central bank or other governmental authority and related in any manner
to LIBOR to the extent they are not included in the calculation of LIBOR. In determining which of the foregoing are
attributable to any LIBOR option available to Borrower hereunder, any reasonable allocation made by Bank
among its operations shall be conclusive and binding upon Borrower.


2.4       Payment of Interest. Interest accrued on this Note shall be payable on
the 1st day of each month, commencing December 1, 2009.


2.5
      Default Interest. From and after the maturity date of this Note,
or such earlier date as all principal owing hereunder becomes due
and payable by acceleration or otherwise, or at Bank's option upon the
occurrence, and during the continuance of an Event of
Default, the outstanding principal balance of this Note shall bear interest at an
increased rate per annum (computed on the basis of a 360-day year, actual days
elapsed) equal to 4% above the rate of interest from time to time applicable to
this Note.


	
  
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3.          BORROWING AND REPAYMENT:


3.1       Borrowing and Repayment. Borrower
may from time to time during the term of this Note borrow, partially or wholly repay its outstanding borrowings, and
reborrow, subject to all of the limitations, terms and conditions of this Note and of the Credit Agreement between
Borrower and Bank defined below; provided however, that the total outstanding borrowings under this Note shall
not at any time exceed the principal amount stated above. The unpaid principal balance of this obligation at
any time shall be the total amounts advanced hereunder by the holder hereof less the amount of principal payments
made hereon by or for Borrower, which balance may be endorsed hereon from time
to time by the holder. The outstanding principal balance of this Note shall be
due and payable in full on November 1,
2010.


3.2       Advances. Advances hereunder, to
the total amount of the principal sum available hereunder, may be made by the holder at the oral or written request
of (a) Mark P. Murphy or Jeffrey Ritchey, any one acting alone, who are authorized to request advances and direct
the disposition of any advances until written notice of the revocation of such
authority is received by the holder at the office designated above, or (b) any
person, with respect to advances
deposited to the credit of any deposit account of Borrower, which advances,
when so deposited, shall be
conclusively presumed to have been made to or for the benefit of Borrower
regardless of the fact that persons
other than those authorized to request advances may have authority to draw
against such account. The holder shall
have no obligation to determine whether any person requesting an advance is or
has been authorized by Borrower.


3.3       Application
of Payments. Each payment made on this Note shall be credited first, to any
interest then due and second, to the
outstanding principal balance hereof. All payments credited to principal shall
be applied first, to the outstanding principal balance of this Note which bears
interest determined in relation to the Prime Rate, if any, and second, to the outstanding principal
balance of this Note which bears interest determined in relation to LIBOR,
with such payments applied to the oldest Fixed Rate Term first.


4.         PREPAYMENT:


4.1       Prime Rate.
Borrower may prepay principal on any portion of this Note which bears interest
determined in relation to the Prime Rate at any time, in any amount and
without penalty.


4.2       LIBOR. Borrower may prepay
principal on any portion of this Note which bears interest determined in relation to LIBOR at any time and in the minimum
amount of $100,000.00; provided however, that if the outstanding principal balance of such portion of
this Note is less than said amount, the minimum prepayment amount shall be the entire outstanding principal
balance thereof. In consideration of Bank providing this prepayment option to Borrower, or if any such
portion of this Note shall become due and payable at any time prior to the last day of the Fixed Rate Term
applicable thereto by acceleration or otherwise, Borrower shall pay to Bank immediately upon demand a fee which is the sum
of the discounted monthly differences for each month from the month of prepayment through the month in
which such Fixed Rate Term matures, calculated as follows for each such
month:


(a)      
Determine the amount of interest
which would have accrued each month on the amount prepaid at the
interest rate applicable to such amount had it remained outstanding until the
last day of the Fixed Rate Term applicable thereto.


(b)       Subtract from the amount
determined in (a) above the amount of interest which would have accrued for the same
month on the amount prepaid for the remaining term of such Fixed Rate Term at
LIBOR in effect on the date of prepayment for new loans made for such term and in
a principal amount equal to the amount prepaid.


(c)       
If the result obtained in (b) for any month is greater
than zero, discount that difference by LIBOR used in (b) above.


	
  
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Borrower
acknowledges that prepayment of such amount may result in Bank incurring
additional costs, expenses and/or
liabilities, and that it is difficult to ascertain the full extent of such
costs, expenses and/or liabilities. Borrower,
therefore, agrees to pay the above-described prepayment fee and agrees that
said amount represents a reasonable
estimate of the prepayment costs, expenses and/or liabilities of Bank. If
Borrower fails to pay any prepayment
fee when due, the amount of such prepayment fee shall thereafter bear interest
until paid at a rate per annum 2.000%
above the Prime Rate in effect from time to time (computed on the basis of
a 360-day year, actual days elapsed).


5.           EVENTS OF DEFAULT:


This Note is made pursuant to and is subject to
the terms and conditions of that certain Credit Agreement between Borrower and Bank dated as of November
1, 2007, as amended from time to time (the "Credit Agreement"). Any default in the payment or
performance of any obligation under this Note, or any defined event of
default under the Credit Agreement, shall constitute an "Event of
Default" under this Note.


6.          MISCELLANEOUS:


6.1        Remedies. Upon the occurrence of
any Event of Default, the holder of this Note, at the holder's option, may declare all sums of principal and interest
outstanding hereunder to be immediately due and payable without presentment,
demand, notice of nonperformance, notice of protest, protest or notice of
dishonor, all of which are expressly
waived by Borrower, and the obligation, if any, of the holder to extend any
further credit hereunder shall
immediately cease and terminate. Borrower shall pay to the holder immediately
upon demand the full amount of all
payments, advances, charges, costs and expenses, including reasonable
attorneys' fees (to include outside
counsel fees and all allocated costs of the holder's in-house counsel),
expended or incurred by the holder in connection with the enforcement of the
holder's rights and/or the collection of any amounts which become due to the holder under this Note, and the prosecution
or defense of any action in any way related to this Note, including without limitation, any action for
declaratory relief, whether incurred at the trial or appellate level, in an arbitration proceeding or otherwise, and including
any of the foregoing incurred in connection with any bankruptcy proceeding (including without
limitation, any adversary proceeding, contested matter or motion brought
by Bank or any other person) relating to Borrower or any other person or
entity.



6.2        Obligations Joint and Several. Should more than one person or entity sign this Note as a Borrower, the
obligations of each such Borrower shall be joint and several.


6.3        Governing Law. This Note shall
be governed by and construed in accordance with the laws of the State of California.


IN WITNESS WHEREOF, the undersigned has executed
this Note as of the date first written above. Pro-Dex, Inc.







	
  
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FIFTH AMENDMENT TO CREDIT
AGREEMENT


THIS
AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is entered into as
of November 1, 2009, by and between PRO-DEX, INC., a Colorado corporation
("Borrower"), and WELLS FARGO BANK, NATIONAL ASSOCIATION
("Bank").


RECITALS


WHEREAS, Borrower is currently
indebted to Bank pursuant to the terms and conditions of that certain Credit Agreement between Borrower and
Bank dated as of November 1, 2007, as amended from time to time ("Credit
Agreement").


WHEREAS, Bank and Borrower have
agreed to certain changes in the terms and conditions set forth in the Credit
Agreement and have agreed to amend the Credit Agreement to reflect said
changes.


NOW, THEREFORE, for valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree that the Credit Agreement shall be amended as follows:


1.           Section 1.1. (a) is hereby amended by
deleting "November 1, 2009" as the last day on which Bank will make advances under the Line of Credit, and by
substituting for said date "November 1, 2010," with such change to be
effective upon the execution and delivery to Bank of a promissory note dated as
of November 1, 2009 (which promissory note shall replace and be deemed the Line
of Credit Note defined in and made pursuant to the Credit Agreement) and
all other contracts, instruments and documents required by Bank to evidence
such change.


2.           Section 1.4. (c) is hereby
deleted in its entirety. and the following substituted therefor:


"(c) Unused Commitment Fee. Borrower shall pay to Bank a fee equal to one and one-half percent (1.50%)
per annum (computed on the basis of a 360-day
year, actual days elapsed) on the average daily unused amount of the
Line of Credit, which fee shall be calculated on a quarterly basis by Bank and
shall be due and payable by Borrower in
arrears on each March 31, June 30, September 30 and December 31."


3.           Section 4.9. (c) is hereby
deleted in its entirety, and the following substituted therefor:


"(c)       Net income after taxes not less than $1.00 on
a trailing 12 month basis, determined
as of each fiscal year end, and pre-tax
profit not less than $1.00 on a quarterly basis, determined as of each
fiscal quarter end."


4.           Section 4.9. (d) is hereby deleted in
its entirety, without substitution.


 




	
  
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5.          Section 6.1. is hereby deleted in its entirety, and the
following substituted therefor:


          "SECTION 6.1.             The occurrence of any of the following shall constitute an "Event
of Default" under this Agreement:


(a)                
Borrower shall fail to pay when due
any principal, interest, fees or other amounts payable under any of the Loan
Documents.


(b)                
Any financial statement or
certificate furnished to Bank in connection
with, or any representation or warranty made by Borrower or any other
party under this Agreement or any other Loan Document shall prove to be
incorrect, false or misleading in any material respect when furnished or made.


(c)                
Any
default in the performance of or compliance with any obligation, agreement or other provision contained herein or
in any other Loan Document (other than those specifically described as an
"Event of Default" in this section 6.1), and with respect to any such
default that by its nature can be cured, such default shall continue for a
period of twenty (20) days from its occurrence.


(d)                
Any default in the payment or
performance of any obligation, or any defined event of default, under the terms
of any contract, instrument or document (other than any of the Loan Documents) pursuant to which Borrower, any
guarantor hereunder or any general
partner or joint venturer in Borrower if a partnership or joint venture
(with each such guarantor, general partner and/or joint venturer referred to
herein as a "Third Party Obligor") has incurred any debt or other
liability to any person or entity, including Bank.


(e)                
Borrower or any Third Party
Obligor shall become insolvent, or shall
suffer or consent to or apply for the appointment of a receiver,
trustee, custodian or liquidator of itself or any of its property, or shall generally fail to pay its debts
as they become due, or shall make a
general assignment for the benefit of creditors; Borrower or any Third
Party Obligor shall file a voluntary petition
in bankruptcy, or seeking reorganization, in order to effect a plan or other arrangement with creditors or any
other relief under the Bankruptcy Reform Act, Title 11 of the United
States Code, as amended or recodified from time to time ("Bankruptcy
Code"), or under any state or federal law granting relief to debtors,
whether now or hereafter in effect; or Borrower or any Third Party Obligor
shall file an answer admitting the jurisdiction of the court and the material allegations of any involuntary
petition; or Borrower or any Third
Party Obligor shall be adjudicated a bankrupt, or an order for relief
shall be entered against Borrower




	
  
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or any
Third Party Obligor by any court of competent jurisdiction under the Bankruptcy Code or any other applicable
state or federal law relating to bankruptcy, reorganization or other
relief for debtors.


(f)              
The filing of a notice of judgment
lien against Borrower or any Third Party Obligor; or the recording of any abstract of judgment against Borrower or any Third
Party Obligor in any county in which
Borrower or such Third Party Obligor has an interest in real property; or the service of a notice of levy and/or
of a writ of attachment or execution, or other like process, against the
assets of Borrower or any Third Party Obligor; or the entry of a judgment
against Borrower or any Third Party Obligor; or any involuntary petition or proceeding pursuant to the Bankruptcy Code
or any other applicable state or federal law relating to bankruptcy,
reorganization or other relief for debtors is filed or commenced against
Borrower or any Third Party Obligor.


(g)               
There shall exist or occur any event or condition that Bank in good faith believes impairs, or is
substantially to impair, the prospect of payment or performance by
Borrower, any Third Party Obligor, or the
general partner of either if such entity is a partnership, of its
obligations under any of the Loan Documents.


(h)               
The death or incapacity of Borrower or any Third Party Obligor if an
individual. The dissolution or liquidation of Borrower or any Third
Party Obligor if a corporation, partnership, joint venture or other type of
entity; or Borrower or any such Third Party Obligor, or any of its directors,
stockholders or members, shall take action seeking to effect the dissolution or
liquidation of Borrower or such Third Party Obligor.


(i)                 
Any change in control of Borrower or any entity or combination of
entities that directly or indirectly control Borrower, with
"control" defined as ownership of an aggregate of twenty-five percent
(25%) or more of the common stock, members' equity or other ownership interest (other than a limited partnership interest)."


6.                  
Except as specifically provided
herein, all terms and conditions of the Credit Agreement remain in full force
and effect, without waiver or modification. All terms defined in the Credit
Agreement shall have the same meaning when used in this Amendment. This
Amendment and the Credit Agreement shall be read together, as one document.


7.                  
Borrower hereby remakes all
representations and warranties contained in the Credit Agreement and reaffirms all covenants set forth therein. Borrower
further certifies that as of the date
of this Amendment there exists no Event of Default as defined in the Credit Agreement, nor any condition, act or event which
with the giving of notice or the passage of time or both would
constitute any such Event of Default.




	
  
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IN WITNESS
WHEREOF, the parties hereto have caused this Amendment to be executed as of
the day and year first written above.