EXHIBIT 10.1



  


 


 


 


EXHIBIT
10.1                                                      


                           



FORBEARANCE
LETTER


 


May 12, 2009


 


PRO-DEX, INC.


2631 McGaw Avenue


Irvine, CA 92614


 


Gentlemen:


 


            Reference is made to that certain Credit
Agreement dated as of November 1, 2007 (as amended from time to time, the
“Credit Agreement”) by and between Pro-Dex, Inc., a Colorado corporation
(“Borrower”) and Wells Fargo Bank, National Association (“Bank”).  Capitalized terms
used herein but not defined shall have the meanings set forth in the Credit
Agreement.


 


As evidenced by Borrower’s financial statements for the
fiscal quarter ending March 31, 2009, Borrower has violated Section 4.9(d) and
Section 4.9 (e) of the Credit Agreement (the “Existing Violations”).  Before
Bank can determine whether and under what conditions it might be willing to
waive the Existing Violations, Bank must conduct, and review the results of, a
collateral audit and a fixed asset analysis.  Borrower has requested that Bank
forbear from exercising its rights and remedies in connection with the Existing
Violations until July 2, 2009.  Bank is willing to do so, subject to the terms
and conditions set forth herein.


 


            Bank and Borrower hereby agree as follows:


 


            1.         Bank hereby agrees to forbear from
exercising its rights and remedies with respect to the Existing Violations
until July 2, 2009.  Such agreement to forbear shall not be deemed a waiver of
the Existing Violations, or an agreement to waive or forbear with respect to
any new violation which may occur, including without limitation any new
violation of the provisions which are the subject of the Existing Violations.


 


            2.         During the forbearance period set
forth above, Bank shall continue to make advances to Borrower under the Line of
Credit, subject to the terms and conditions of the Credit Agreement; provided,
however, during the forbearance period the maximum amount available under the
Line of Credit shall be reduced to One Million Dollars ($1,000,000.00).  The
Credit Agreement and the Line of Credit Note shall be deemed amended hereby to
reflect this reduction.


 


            3.         Except as expressly provided herein,
all terms and provisions of the Credit Agreement and the other Loan Documents shall
continue in full force and effect, without waiver or modification.


 


            4.         This letter agreement is entered into
for the sole protection and benefit of Bank and Borrower, and no other person
or entity shall have a direct or indirect cause of action or a claim in
connection herewith.


 


            5.         This letter agreement constitutes the
entire agreement between Bank and Borrower with respect to the matters
described herein, supersedes all prior negotiations, discussions and
correspondence concerning the subject matter hereof, and may only be amended or
modified by a written instrument executed by Bank and Borrower.


 













 






 


 


 


 


            6.         This letter agreement may be executed
in any number of counterparts, each of which shall be deemed an original and
all of which together shall constitute one and the same agreement.


 


            7.         This letter agreement shall not be
effective until Borrower has executed it in the space provided below and
returned it to Bank.


 


WELLS
FARGO BANK, 


NATIONAL ASSOCIATION


 


By:
/s/  MANISHI PARIKH


        Manishi Parikh


        Vice President


 


Acknowledged and Agreed to by:


 


PRO-DEX, INC.


 


By: /s/  JEFFREY J. RITCHEY


      Jeffrey Ritchey


      Chief Financial Officer,


      Treasurer, Secretary


 


By: /s/  MARK
MURPHY       


      Mark P. Murphy


      Chief Executive Officer

 

 

 

 

 




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