Ex. 10.1 TERMINATION AGREEMENT





 

TERMINATION AGREEMENT


AND




GENERAL RELEASE OF ALL CLAIMS




This
Termination Agreement and General Release of All Claims (the "Agreement")
is entered into as of October 25, 2004, by and between Ronald G. Coss,
an individual resident of  the state of California ("Coss") and Pro-Dex,
Inc., a Colorado corporation (the "Company"),




RECITALS




A.        Coss is a party to that
certain Non-Competition Agreement (the "Noncompete Agreement") by and
between the Company and Coss, a copy of which is attached hereto, as Exhibit
A.  There is currently $328,726.18 due and owing by the Company to
Coss  under the terms of the Noncompete Agreement.




B.        Coss is the maker on that
certain Promissory Note (the "Note") payable to the Company, a copy of which is
attached hereto as Exhibit B. There is currently owing under the Note $199,811.89
($198,653.08 in principal and $1,158.81 in interest).  Coss
and the Company desire that amounts owing under the Note be paid at this time as
part of the transactions contemplated herein.




C.       The Noncompete Agreement
has been the subject of various interpretations between the Company and Coss
and both the Company and Coss desire to end such uncertainty between them.




D.       The net difference between
the amount (i) owing by the Company to Coss under the Noncompete Agreement and
(ii) owing by Coss to the Company under the Note is One Hundred Twenty-Eight
Thousand Nine Hundred Fourteen Dollars ($128,914.29) in favor of Coss.






D.       The parties desire to
terminate the Noncompete Agreement, pay off and cancel the Note, and to provide
the mutual releases set forth herein. 




AGREEMENT




            NOW, THEREFORE, for full
and valuable consideration, and based upon the foregoing recitals and the
terms, conditions, covenants and. agreements contained herein, the parties
hereto agree as follows:




            1.        Termination of Noncompete Agreement and Payment of Note.  The
Noncompete Agreement is hereby terminated, and of no further force or effect. 
The Note is hereby paid in full, has been marked "PAID IN FULL" and is being
returned to Coss herewith.

2.       
Payment. Upon
execution of this Agreement, the Company shall pay to Coss the amount of One
Hundred Twenty-Eight Thousand Nine Hundred Fourteen Dollars ($128,914.29).

 



 
















by check
or wire transfer, representing the full and complete payment of all amounts
owing by the Company to Coss under the Noncompete Agreement net of amounts
owing by Coss to the Company under the Note. Coss acknowledges receipt of such
amount.




3.    Complete Release by Coss.   Coss hereby releases and forever discharges the
Company and each of its predecessors, successors, assigns, employees, shareholders,
officers, directors, agents, attorneys, subsidiaries, divisions or affiliated
corporations or organizations, whether previously or hereafter affiliated in
any manner (collectively "Released Company Parties"), from any and all
claims, demands, causes of action, charges of discrimination, obligations, damages,
attorneys' fees, costs and liabilities of any nature whatsoever, including
without limitation all claims of race, sex, national origin, religion, handicap
and age discrimination under any federal or state statute, or otherwise,
whether or not now known, suspected or claimed, which Coss ever had, now has,
or may claim to have as of the date of this Agreement against the Released
Company Parties.




4.    
Complete Release by the
Company. The Company hereby releases and forever discharges Coss, and
each of his predecessors, successors, assigns, agents, attorneys, whether
previously or hereafter affiliated in any manner (collectively "Released
Coss Parties"), from any and all claims, demands, causes of action,
charges of violation of any prior employment, loan, non-compete or other agreement,
obligations, damages, attorneys' fees, costs and liabilities of any nature
whatsoever or otherwise, whether or not now known, suspected or claimed, which
the Company ever had, now has, or may claim to have as of the date of this
Agreement against the Released Coss Parties.




 5.    
General Nature of
Release The releases set forth in Sections 3 and 4 above of this
Agreement are general releases of all claims, demands, causes of action,
obligations, damages, and liabilities of any nature whatsoever that are
described in the release and are intended to encompass all known and unknown,
foreseen and unforeseen claims which Coss may have against the Company, and
which the Company may have against Coss, except for any terms which may
expressly arise from the terms of this Agreement.




6.     
Release of Section
1542 Rights. Coss and the Company
waive and relinquish all rights and benefits either may have under section 1542
of the Civil Code of the State of California.  That section reads as follows:




§
1542. [Certain claims not affected by general release.] A general release does
not extend to claims which the creditor does not know or suspect to
exist in his favor at the time of executing the release, which if known by him
must have materially affected his settlement with the debtor.




7.     Non-Admission
of Liability; Acknowledgement. Coss and the Company acknowledge and agree
that this Agreement shall not in any way be construed as an admission of
liability by any of the parties to this Agreement. Coss acknowledges that he
will, in good faith, continue to maintain the confidentiality of any Company
trade secrets and seek to comply with applicable state and federal securities
laws.

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8.     Non-Assignment of Claims.
Coss and the Company warrant that they have made no assignment and will
make no assignment of any claim, right of action, or any right of any kind
whatsoever, embodied in this Agreement and allegations refereed to herein, and
that no other person or entity of any kind (other than as
expressly mentioned above) had or has any interest in any of the demands,
obligations, actions, causes of action, debts, liabilities, rights, contracts,
damages, attorneys' fees, costs, expenses, losses or claims referred to herein,




9.    Interpretation.  
Should any portion, word, clause, phrase, sentence or paragraph of this
Agreement be declared void or unenforceable, such portion shall be considered
independent and severable from the remainder, the validity of which shall remain
unaffected. Whenever required by the context, as used in this Agreement the singular
number shall include the plural, and the masculine gender shall include the
feminine and neuter.




10.   Entire Agreement,
With respect to the subject matter hereof, this Agreement constitutes the
entire agreement between the parties who have executed it and supersedes any
and all other agreements, understandings, negotiations, or discussions, either
oral or in writing, express or implied, between the parties to this Agreement.
The parties hereto acknowledge that no representation, inducements,
promises, agreements, or warranties, oral or otherwise, have been made by
them, or anyone acting on their behalf, which are not embodied in this Agreement, that they have not executed this Agreement in reliance on any such
representations, inducements, promise, agreement or warranty, and that no representation, inducement, promise, agreement
or warranty not contained in
this Agreement, including, but not limited to, any purported supplements,
modifications,  waivers or terminations of this Agreement shall be
valid or binding, unless executed in writing by all of the parties to this
Agreement.




11.. Governing Law. 
This
Agreement is made and entered into in the state of California and shall in
all respects be interpreted, enforced and governed under the laws of said State.




12.  Knowing
and Voluntary Agreement. This Agreement in all respects has been voluntarily
and knowingly executed by the parties hereto. Coss has been advised that this
is an important legal document and that he should consult with an
attorney and tax advisor of his choosing prior to entering into this
Agreement. Coss specifically represents that he has been given an opportunity
to consult with counsel and that, to the extent desired, he or she has
consulted with an attorney and tax advisor of his choosing regarding the terms
and conditions of this Agreement.  Coss acknowledges that neither the Company,  nor the 
Company's legal counsel has provided him or her with
any legal, tax, financial, or other advice in connection with this Agreement.




13.   Arbitration. Any
disputes concerning this Agreement shall he submitted to final and binding
arbitration in Orange County, California before a single JAMS arbitrator under
the JAMS Comprehensive Arbitration Rules and Procedures.




14.    Successors.
This Agreement shall be binding on the parties' successors in interest.

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                IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the date first set forth above.




 








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EXHIBIT A


COPY OF NONCOMPETE AGREEMENT




(attached)

 

 

 

 

 

 

 

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NON-COMPETITION AGREEMENT






This 
Non-Competition Agreement (this "Agreement"), dated as of July 26, 1995, is between RONALD
G. COSS ("Covenantor"), and PRO-DEX,  INC., a Colorado corporation ("Parent").




WHEREAS Micro Motors, Inc., a California corporation
("Micro") is merging with a newly formed subsidiary of Parent (which subsidiary is
referred to herein as "Company") pursuant to a Merger Agreement among Micro,
the Company, the Parent, and Covenantor, among others, dated as of July ___, 1995
(such agreement, with all exhibits, schedules and written information delivered
pursuant thereto, the "Merger Agreement");




WHEREAS the parties to the Merger
Agreement have agreed that the Parent and the Covenantor shall execute an
Employment Agreement as a condition to Closing under the Merger Agreement;




WHEREAS the parties to the
Merger Agreement have agreed that the Parent and the Covenantor shall execute
a Non-Competition Agreement as a condition to Closing under the Merger
Agreement;




NOW THEREFORE, in
consideration of the foregoing and the mutual agreements and covenants contained herein, Covenantor and the Parent agree as follows:




1.        
Term.  The terms of this agreement shall commence upon the expiration or earlier termination
of Covenantor's five (5) year Employment Agreement (which expires June 30,
2000) and shall terminate five (5) years thereafter, unless earlier terminated
or extended pursuant to this Agreement (the "Term").

2.        
Confidential Information.










a.       
Proprietary Information.  Covenantor agrees that the relationships between Covenantor and
the Company and between Covenantor and the Parent are fiduciary relationships
which have given and hereafter shall give Covenantor access to certain
confidential information of the Company and Parent (the
"Proprietary Information" ). The parties agree that the Proprietary
Information shall include:




i.       
federal, state, and foreign trade names, trademarks, service marks, trademark and service mark registrations and
applications, patents, patent registrations and applications, copyrights and
copyright applications, common law

 

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intellectual property
rights, proprietary information, inventions, trade secrets, secret processes,
secret formulas, customer and supplier lists, licensed and unlicensed know-how,
writings and works of authorship, computer programs,
routines, program codes, drawings, designs, specifications, mask works,
Inventions (as hereinafter defined), related documentation and technical data
used in the Company's or Parent's business, including any existing and future
improvements thereto, in which Covenantor, the Company
or Parent shall have any right, title or interest,
whether or not patented or patentable (all
of which, the "Trade Rights").  The term "Trade
Rights" shall specifically exclude all rights
of Covenantor in new products, designs or inventions which he develops during
the term of his employment with the Parent, as described at Paragraph 10 of his
Employment Agreement.




ii.          technical information,
including all writings, drawings, diagrams, technical analysis, descriptions,
formulas, lists, computer protocol, routines,
codes, designs and other data preserved or
accessible by any means which shall relate to any of
the Trade Rights, of the Company or the Parent,
whether now existing or hereafter developed,
invented or created by Covenantor or any other
person.




b. Covenant of Confidentiality.
During the Term of this Agreement Covenantor shall not:

i.           reveal or use any Proprietary Information in (a) any business in which Covenantor
shall be an employee,
owner, partner, shareholder, consultant, member, or in which Covenantor shall have any ownership interest; or (b) with which Covenantor
shall have any contractual relationship or other understanding which results in,
or may result in, any pecuniary benefit to Covenantor; or




ii.          reveal any Proprietary
Information to any individual,
business or entity which shall compete with
the motion control business of the Company in any
market from which the Company shall have derived percent (20%) of its sales in any year during
the term of this Agreement or within five (5) years after the
termination of this Agreement.

 

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3.        Covenant of Non-Competition.

a.        During the Term of this
Agreement, Covenantor agrees that he shall not knowingly, directly or
indirectly, compete with the Company or the Parent in the businesses of
manufacturing or distributing precision motion control mechanisms for medical,
dental, commercial or industrial markets, whether alone or in association with
any other individual or entity, whether as an employee owner, partner,
shareholder, consultant, member, inventor, lender, investor, or advisor, of
any business in which Covenantor shall have any ownership interest or which
accords any pecuniary benefit to Covenantor, in the greater Los Angeles,
California area, in the Colorado Springs-Denver-Boulder corridor in Colorado,
or in any market form which the Company shall have derived twenty percent (20%)
or more of its revenues in any year;




b.        During the Term of this Agreement, Covenantor
agrees that he shall not induce or attempt to induce any employee, supplier,
customer, licensee or licensor of the Company or the Parent to (i) terminate
his relationship with the Company or the Parent; (ii) modify his
relationship with the Company to the Company's detriment; (iii) disclose any
Trade Rights; (iv) modify the terms of any Trade Rights to the Company's
detriment; or (v) cause any holder or owner of any Trade Rights to grant any
interest therein to Covenantor.




c.        Nothing herein shall
prevent Covenantor from investing in the securities of any competing entity
by purchase of any security of such entity on any national exchange, if the
value of Covenantor's investment therein (i) does not exceed ten percent
(10%) of Covenantor's net worth at any time during the Term hereof; and (ii) does
not exceed three percent (3%) of the issues and outstanding shares or the
aggregate principal outstanding of such competing entity's securities.




4.       
Consideration. In consideration for Covenantor's execution hereof, Parent
shall pay to Covenantor the sum of $1,000,000, payable in quarterly installments
of $50,000
each over the five (5) year term hereof, commencing with the payment due April
1, 2000, and continuing on the first day of each calendar quarter thereafter to
and including the payment due January 1, 2005. In the event of Covenantor's
death during the term of this Agreement, the consideration payable hereunder
shall continue to be payable as scheduled,

 

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and shall be paid to the person (s) indicated by Covenantor pursuant to his
written instructions to the Parent from time to time prior to his death, or in
the absence of such instructions then to the heirs of Covenantor.











5.        Default.


In the
event that any covenant payment due to Covenantor hereunder is not paid within
fifteen ( l5 ) days after its scheduled due date, then both of the following
shall occur:




(a)       The remaining unpaid
covenant payment scheduled hereunder shall accelerate and shall become
immediately due and payable to Covenantor






(b)       Covenantor's obligations
pursuant to Paragraphs 2 and 3 of this Agreement  shall terminate immediately.




6.        
Indemnification.




a.        
Indemnification by Covenantor.




Covenantor
shall indemnify the Parent harmless against, and hold it harmless
from and in respect of any and all damages, losses, settlement payments,
obligations, liabilities, claims, actions or causes of action
encumbrances, and reasonable costs and expenses suffered, sustained, incurred or required to
be paid by the Parent, including reasonable
attorney's  fees, because of the breach of any obligation of Covenantor
contained in this Agreement.




b.        
Indemnification by the Parent.




The
Parent shall indemnify the Covenantor against and hold him harmless from and in
respect of, any and all damages, losses, settlement payments, obligations,
liabilities, claims, actions or causes of action encumbrances, and reasonable
costs and expenses suffered, sustained, incurred or required to be paid by the
Covenantor, including reasonable attorney's fees, because of the breach or any
obligation of the Parent contained in this Agreement.






7.        
Injunctive Relief . The parties hereto
agree that any breach of the covenant of confidentiality regarding the
Proprietary Information,
or the covenant of non-competition by Covenantor,
would cause extreme hardship to the company and Parent, which would be difficult
for either to measure in damages,
and that the Company or Parent would not have an

 

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adequate
remedy at law for such breach. Therefore, in addition to any other recovery in
damages and indemnification hereunder, the Company and Parent shall be entitled
to seek and obtain specific performance of the covenants herein, and temporary,
preliminary and permanent injunctive relief from the violation of this
Agreement from any court of competent jurisdiction, without the necessity of
proof of actual damages from breach.




8. 
       Remedies Cumulative. Except as otherwise provided
herein, the remedies provided herein and in any exhibit hereto shall be
cumulative and shall not preclude the assertion by any party hereto of any
other rights or the seeking of any other remedies against the other party
hereto,




9.          Miscellaneous.




a.        Amendment
and Waiver.
This Agreement may not be amended and no provision hereof may be waived, except
by an instrument in writing signed by all the parties. Any waiver of any matter
in a particular instance shall not effect a general waiver of that or any
matter




b.        Parties
in Interest. All
the terms and provisions of this Agreement shall be binding upon, shall insure
to the benefit of and shall be enforceable by and against, the respective
successor and assigns of the parties hereto.




c.        Entire Agreement. This
Agreement contains the entire understanding of the parties with respect to the
subject matter hereof.




d..       Headings. The
section and paragraph headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.




e.        Survival.
The covenants of confidentiality regarding proprietary information and
indemnification provisions of the
Agreement shall survive for a period of five (5) years after the term of this
Agreement.




f.         Notices. All
notices, requests, claims, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered, transmitted by facsimile or three days after being mailed by
registered or certified mail, postage prepaid, return receipt requested, as
follows:

 

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(a)  If to
the Covenantor:




Mr.
Ronald G. Coss

151 E.
Columbine Avenue

Santa
Ana, California 92707




Copy
to:




John P.
King, Esq.

Drummy
King & White

3200 Park
Center Drive, 10th Floor

Costa Mesa,
California 92626

Facsimile:       (714)
850-4500




(b) If to the Parent




Pro-Dex,
Inc.

Attn:  Kent E. Searl, Chairman of
the Board

1401 Walnut
Street, Suite 540

Boulder,
Colorado 80307

Facsimile:     (303) 443-4480




Copy
to:




Dawn
C. Anderson, Esq.

1401 Walnut
Street, Suite 540

Boulder,
Colorado 80302

Facsimile:     (303) 443-4480




John
G. Herbert, Esq.

John G. Herbert, P.C.

1675
Larimer Street, Suite 310

Denver,
Colorado 80202

Facsimile:     (303) 534-3638




or to
such other address or facsimile number or such additional recipient as any
party may have furnished to the others in writing in accordance herewith,
except that such notices of changes of address shall only be effective upon
receipt.




g.  
Law Governing; Choice of Forum. This Agreement has been made and executed under,
and will be construed and interpreted in accordance with, the laws of the State
of California. The parties consent to the jurisdiction of the courts of the
State of California in any action or proceeding arising out of this Agreement,
and agree that in those actions or proceedings, venue will be proper in the
Superior Court of the County of Orange.

 

 

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            IN WITNESS WHEREOF, this Agreement
has been duly executed and delivered by Covenantor and the Company, as of the
date first above written.


 



 


 














EXHIBIT B


COPY OF PROMISSORY NOTE




(attached)

 

 

 

 

 

 

 

 

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