Exhibit 10.1 - Asset Purchase Agreement













Exhibit 10.1













ASSET PURCHASE AGREEMENT

BETWEEN

PRO-DEX ASTROMEC, INC. ("PURCHASER")

AND

ASTROMEC, INC. ("SELLER")


AND  


Malcolm D.
Glover, Jr., AND M.D. Glover, Inc.

(collectively, the "Seller Shareholders")




DATED

January 5, 2006

 

 

 

 

 

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ASSET PURCHASE AGREEMENT




THIS ASSET PURCHASE AGREEMENT (the "Agreement") is entered
into as of January 5, 2006, between Pro-Dex Astromec, Inc., a Nevada
corporation with offices located at 151 East Columbine Avenue, Santa Ana,
California 92707 ("Purchaser"), Astromec, a Nevada corporation with
offices located at 2950 Arrowhead Drive, Carson City, Nevada 89706 ("Seller"),
and Malcolm D. Glover, Jr., an individual, and M.D. Glover, Inc., a Nevada
corporation (collectively, the "Seller Shareholders").


R E C I
T A L S


A.       Seller owns and operates an electric motor business
(the "Business").


B.        Purchaser desires to acquire from Seller, and the
Seller desires to sell to Purchaser, all of the Assets (as defined below) used
by Seller in the operation of the Business.


NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:


ARTICLE I

DEFINED TERMS


The following capitalized terms, when used in this Agreement,
shall have the meanings set forth below, unless the context clearly indicates
otherwise.


1.1             
"Affiliate" means, with
respect to any specified Person, any other Person that directly, or indirectly
through one or more intermediaries, controls, is controlled by, or is under
common control with, such specified Person.


1.2             
"Agreement" means this Asset
Purchase Agreement.


1.3             
"Assets" means all right, title and
interest in and to substantially of all of the assets of Seller, including all
of its (a) Purchased Personal Property, (b) Intellectual Property and rights
thereunder, remedies against infringements thereof, and rights to protection of
interests therein under the laws of all jurisdictions, (c) personal property
leases, subleases and rights thereunder, (d) Purchased Contracts, (e)
indentures, mortgages, instruments, security interests, grantees, other similar
arrangements and rights thereunder (but only to the extent Seller has any
right, title or interest in any of the items listed in this
subsection (e)), (f) accounts, notes and other receivables,
(g) claims, deposits, prepayments, refunds, causes of action, chooses in
action, rights of recovery, and rights of setoff, (h) franchises, approvals,
permits, licenses, orders, registrations, certificates, variances, similar
rights obtained from any governments or any Governmental Authority, (i) books,
records, ledgers, files, documents, correspondence, lists, plats, materials,
advertising and promotional materials, studies, reports and other printed or
written materials, and (j) all goodwill; provided, however, that the Assets
shall not include the Excluded Assets.

 


























1.4             
"Assignment Agreements" means the
assignment agreements in the forms attached as Exhibit B, under which
Seller will assign, and Purchaser will assume, all of Seller's right, title and
interest in and to all of those Assets which are contracts, agreements,
Purchased Intellectual Property, licenses and permits.


1.5             
"Assumed Liabilities" means the
liabilities set forth on Attachment 1.5, and only the liabilities set
forth on Attachment 1.5.  The Assumed Liabilities shall not include any
liability of Seller which is not expressly included on Attachment 1.5. 
Without limiting the generality of the foregoing, Purchaser is not assuming (i)
any liability of Seller for income, transfer, sales, use and other taxes
arising in connection with the consummation of the transactions contemplated by
this Agreement (including any income taxes arising because the Seller is
transferring the Assets), (ii) any liability of Seller for unpaid taxes of
Seller or any other party, (iii) any obligation of Seller to indemnify any
person (including any of the shareholders of Seller) by reason of the fact that
such person was a director, officer, employee or agent of Seller or was serving
at the request of any such entity as a partner, trustee, director, officer,
employee, or agent of another entity, (iv) any liability resulting from,
arising out of, relating to, in the nature of or caused by any breach of
contract, tort, infringement or violation of law, (v) any liability of Seller
for costs and expenses incurred in connection with this Agreement and the
transactions contemplated in this Agreement, (vi) any liability or obligation
of Seller under this Agreement or under any other agreement between Seller on
the one hand and Purchaser on the other hand created on or after the date of
this Agreement or (vii) any liability or obligation resulting from any
litigation, arbitration, claim or controversy which Seller or any officer,
director, employee or shareholder of Seller was or is currently a party.


1.6             
[intentionally deleted]


1.7             "Benefit Arrangements" shall have
the meaning set forth in Section 4.16.


1.8             "Bill of Sale" means the bill of
sale in the form of attached as Exhibit C, under which Seller will sell,
transfer, assign and convey all of its rights, title and interest in and to all
of those Assets which are tangible personal property.


1.9             "Business" means the electric motor
business owned and operated by Seller.


1.10         
"Closing" means the closing of the
purchase and sale of the Assets in accordance with this Agreement.


1.11         
"Closing Date" means
the date on which Closing will take place, as specified in Section 3.1.


1.12         
"Closing Date Balance Sheet" shall have the meaning set forth in Section 2.3(a).


1.13         
"Closing Date Balance Sheet Difference"
shall have the meaning set forth in Section 2.3(b).


1.14         
"Code" means the
Internal Revenue Code of 1986, as amended.

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1.15         
 "Disclosure Schedule"
means the disclosure schedules described in the preamble to Article IV and
attached hereto as Exhibit A.



1.16         
"Environmental Law"
means all applicable laws, permits, or other binding determinations of any
Governmental Authority relating to, imposing liability under standards
concerning, or otherwise addressing the environment, occupational health or
safety, including, but not limited to, rules of common law, the Comprehensive
Environmental Response, Compensation and Liability Act, the Solid Waste Disposal
Act, as amended by the Resource Conservation and Recovery Act, the Emergency
Plan and Community Right to Know Act of 1986, the Clean Air Act, the Clean
Water Act, the Toxic Substances Control Act, the Hazardous Materials
Transportation Act, the Federal Insecticide, Fungicide and Rodenticide Act, the
Federal Safe Drinking Water Act, the Federal Radon and Indoor Air Quality
Research Act, and the Occupational Safety and Health Act, as all such laws or
acts have been amended, including any judicial or administrative
interpretations thereof, and any judicial or administrative orders, consents,
decrees or judgments.


1.17          
[intentionally deleted]


1.18         
"Excluded Assets" means (i) the
assets set forth on Attachment 1.18, (ii) any personal property of
Seller's shareholders and/or employees on the premises of Seller that is not
material to the operation of the Business, (iii) the Seller's corporate
charter, qualifications to conduct business as a foreign corporation,
arrangements with registered agents relating to foreign qualifications,
taxpayer and other identification numbers, seals, minute books, stock transfer
books, blank stock certificates, and other documents relating to the
organization, maintenance and existence of Seller as a corporation (provided
Purchaser has the right to make copies of such materials), (iv) copies of
Seller's books and records necessary for preparation and filing of any tax
returns or other documents required by any Governmental Authority (provided
Purchaser has the right to make copies of such materials), and (v) any of the
rights of Seller under this Agreement or under any other agreement between
Seller on the one hand and Purchaser on the other hand entered into on or after
the date of this Agreement.


1.19         
"Financial Statements" means the Financial Statements of Seller referred to in Section
4.4.


1.20         
"Financial Statement Date"
shall have the meaning set forth in Section 4.4.



1.21         
"Governmental Authority" shall mean
any federal, state, local or foreign governmental, administrative or regulatory
authority, agency, commission, department, board, bureau, tribunal, court or
other body.


1.22         
"Hazardous Substance" means any substance which is listed or defined as a hazardous
substance, hazardous constituent or solid waste pursuant to any Environmental
Law.


1.23          
"Holdback Amount" shall have the meaning set forth in Section
2.2(b).


1.24           "Indemnified Party" shall
have the meaning set forth in Section 7.6(a).


1.25          
"Indemnifying Party" shall have the
meaning set forth in Section 7.6(a).

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1.26          
"Independent Accountant" shall have the meaning set forth
in Section 2.3(a).


1.27          
"Intellectual Property" shall have the meaning set forth
in Section 4.15(a).


1.28         
"Liabilities" means all
indebtedness, claims, liabilities, obligations, responsibilities, losses,
damages, judgments, punitive damages, economic damages, treble damages, costs
and expenses (including, without limitation, reasonable attorney, expert,
engineering and consulting fees and costs and any fees and costs associated
with any investigation, feasibility, or remedial action studies or
transportation, disposal or other remedial actions), fines, penalties and
monetary sanctions, and interest, whether accrued, absolute or contingent,
known or unknown, and whether or not of a kind required by generally accepted
accounting principles to be set forth on a financial statement or in notes
thereto.


1.29         
 "Losses" means any
demand, claims, actions, suits, proceedings, assessments, judgments, awards,
costs, losses, damages, liabilities and expenses (including, without
limitation, reasonable attorneys' fees and related costs).


1.30          
"Person" means an individual, a
partnership, a corporation, a limited liability company, an association, a
joint stock company, a trust, a joint venture, an unincorporated organization,
or a Governmental Authority.


1.31            "Pro-Dex" means Pro-Dex, Inc., a
Colorado corporation, which owns one hundred percent (100%) of the outstanding
capital stock of Purchaser.


1.32            "Purchase Price" means
the purchase price to be paid for the Assets in accordance with Section 2.2.


1.33            "Purchase Price Adjustment"
shall have the meaning set forth in Section 2.3(b).


1.34            "Purchased Contracts"
means all of Seller's agreements and contracts (including, without limitation,
those agreements and contracts listed on Schedule 4.8), except those
contracts that are Excluded Assets.


1.35           
"Purchased Personal Property" means
all of Seller's tangible personal property such as machinery, computers,
equipment, fixtures and fittings thereon, inventories of raw materials and
supplies, manufactured and purchased parts, goods in process and finished
goods, furniture, automobiles, trucks, tractors, trailers, tools, jigs and
dies, including but not limited to the tangible personal property which is
listed on Attachment 1.35.


1.36           
"Purchaser" means
Pro-Dex Astromec, Inc., a Nevada corporation, which is a wholly-owned
subsidiary of Pro-Dex.


1.37           
"Real Property" has
the meaning set forth in Section 4.11(a).


1.38           
"Real Property Purchase
Agreement" means the purchase agreement whereby Purchaser shall
purchase certain real property located in Carson City, Nevada, owned by M.D.
Glover, Inc., in the form attached hereto as Exhibit D.

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1.39         
"Restricted Period"
shall have the meaning set forth in Section 6.6(a).


1.40         
"Restricted Territory" means all states, territories, districts, provinces and
commonwealths of the United States, and Canada and throughout the world in
which the Seller has conducted any aspect of the Business, and all states,
territories, districts and commonwealths of the United States, Canada and
throughout the world in which Purchaser conducts its business (including,
without limitation, the Business) hereafter.


1.41          
[intentionally deleted]


1.42         
"Seller" means Astromec, a Nevada
corporation.  


1.43         
"Seller's Knowledge" means
the actual knowledge, after reasonable investigation, of any executive officer
or director of Seller.


1.44         
"Seller Shareholders" means Malcolm D. Glover, Jr., an
individual, and M.D. Glover, Inc., a Nevada corporation.


1.45          
[intentionally deleted]


1.46         
"Third Party Claim" shall have the meaning set forth in Section
7.6(a).


1.47         
"Working Capital" means current assets minus current
liabilities, excluding any current portion of any long term debt owed to either
or both of Malcolm D. Glover, Jr., and/or M.D. Glover, Inc., a Nevada
corporation. 


ARTICLE II

PURCHASE AND SALE OF ASSETS AND ASSUMPTION OF
LIABILITIES


2.1             Sale of Assets.  Subject to the
terms and conditions set forth in this Agreement, Purchaser agrees to purchase
from Seller, and Seller agrees to sell, transfer, convey and deliver to
Purchaser, all of the Assets at the Closing for the consideration specified in Section
2.2 below, subject to the adjustment in Section 2.3 below.  In
addition, at the Closing, Purchaser agrees to assume and become responsible for
all of the Assumed Liabilities.  Purchaser will not assume or have any
responsibility, however, with respect to any other obligation or liability of
Seller not specifically included within the definition of Assumed Liabilities.


2.2             
Purchase Price.  The Purchase Price
for the Assets shall be payable as follows:


(a)               
Two Million Seven Hundred Thousand Dollars ($2,700,000), less One
Hundred Thousand Dollars ($100,000) (the "Holdback Amount"), in cash to
Seller at Closing.


(b)              
The Holdback Amount, less any Purchase Price Adjustment due to Purchaser
and not paid by Seller in accordance with Section 2.3(b) (if any) and
any amount offset by Purchaser pursuant to Section 7.4 (if any), in cash
to Seller on the six month anniversary of the Closing Date.

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2.3             
Purchase Price Adjustment.  


(a)               
Within five (5) business days after the Closing
Date (time being of the essence), Seller shall deliver to Moss Adams LLP (the "Independent
Accountant") copies of all documents and materials necessary for the
Independent Accountant to prepare a balance sheet of the Seller at and
as of the Closing Date (the "Closing Date Balance Sheet") to be
delivered to both Purchaser and Seller within sixty (60) days of the Closing
Date.  The Closing Date Balance Sheet shall be prepared in accordance with
generally accepted accounting principals.  Purchaser shall bear the fees and
expenses incurred in the preparation and audit of the Closing Date Balance
Sheet.  Both Seller and Purchaser shall work in good faith with the Independent
Auditor and provide the Independent Auditor with such additional documents and
information, as the Independent Auditor shall reasonably request, in order for
the Independent Auditor to deliver the Closing Date Balance Sheet within sixty
(60) days of the Closing Date.  The Independent Auditor's determinations as set
forth on the Closing Date Balance Sheet shall be conclusive, final and binding
upon both Purchaser and Seller.


(b)              
The Purchase Price shall be adjusted as follows (the "Purchase Price
Adjustment"): The "Closing Date Balance Sheet Difference" shall
equal Seller's Working Capital as reflected on the Financial Statements balance
sheet minus Seller's Working Capital on the Closing Date Balance Sheet.  In the
event the Closing Date Balance Sheet Difference is a negative number, within
two (2) business days of receipt of the Closing Date Balance Sheet, Purchaser
shall pay to Seller in cash an amount equal to the absolute value of the
Closing Date Balance Sheet Difference by wire transfer of immediately available
funds to an account designated in writing by Seller to Purchaser.  In the event
the Closing Date Balance Sheet Difference is a positive number, within two (2)
business days of receipt of the Closing Date Balance Sheet, Seller shall pay to
Purchaser in cash an amount equal to the Closing Date Balance Sheet Difference
by wire transfer of immediately available funds to an account designated in
writing by Purchaser to Seller.



2.4             
Purchase Price Allocation; Taxes. 
The parties agree to allocate the Purchase Price among the Assets for all
purposes (including financial accounting and tax purposes) in accordance with
the allocation schedule attached to this Agreement as Attachment 2.4. 
Any transfer, documentary, sales, use or other taxes assessed upon or with
respect to the transfer of the Assets to Purchaser, and any recording or filing
fees with respect thereto, shall be the responsibility of Seller.


ARTICLE III

CLOSING


3.1             
Closing Date.  The Closing shall
occur at a time convenient to the parties; provided that all conditions to
Closing herein set forth will have been satisfied; and further provided that
Closing will occur not later than January 5, 2006, (the "Closing Date"),
unless the parties agree in writing to an extension of the Closing Date.  Closing shall be deemed effective on the Closing Date
at 11:59 p.m. in each time zone in which Assets are located.

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3.2             
Place of Closing.  Closing will
take place at the offices of Robison, Belaustegui, Sharp & Low, 71
Washington Street, Reno, Nevada 89503 or at such other place as the parties may
agree in writing.


3.3             
Performance by Seller at Closing. 
At Closing, the Seller will deliver to Purchaser the following:


(a)               
The Assignment Agreements, in the form attached as Exhibit B,
duly executed by Seller;


(b)              
The Bill of Sale, in the form attached as Exhibit C, duly
executed by Seller;


(c)               
The Real Property Purchase Agreement, in the form attached as Exhibit
D, shall have been previously duly executed by M.D. Glover, Inc. and
delivered to Pro-Dex;


(d)              
Copies of resolutions of both the board of directors and the
shareholders of Seller authorizing and approving this Agreement and all
transactions and agreements contemplated hereby, certified by the Secretary of
Seller;


(e)               
A certificate of the Nevada Secretary of State verifying the good
standing of Seller on a date within fifteen (15) days prior to the Closing
Date;


(f)                A UCC search report, dated within fifteen (15) days of the Closing Date
and certified by the Nevada Secretary of State, which verifies the
representations set forth in Section 4.12; and


(g)               
Evidence of all third party notices and/or consents (including, without
limitation, all notices and consents set forth on Schedule 4.3) which
may be necessary, in the reasonable opinion of Purchaser and its counsel, for
the sale, transfer and conveyance of the Assets to Purchaser.


3.4             
Performance by Purchaser at Closing. 
At Closing, Purchaser will deliver to Seller the following:


(a)               
The cash portion of the Purchase Price, less the Holdback Amount, by
cashier's check or wire transfer, payable to Seller as provided in Section
2.2(a);


(b)                The Assignment Agreements, in the form attached as Exhibit B,
duly executed by Purchaser;


(c)               
The Bill of Sale, in the form attached as Exhibit C, duly
executed by Purchaser;


(d)                The Real Property Purchase Agreement, in the form attached as Exhibit
D, shall have been previously duly executed by Pro-Dex and delivered to
M.D. Glover, Inc.;

 

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(e)               
A certificate of the Nevada Secretary of State verifying the formation
of Purchaser, dated within fifteen (15) days prior to the Closing Date; and


(f)                
Copies of resolutions of the board of directors of Purchaser authorizing
and approving this Agreement and all transactions and agreements contemplated
hereby, certified by Secretary of Purchaser.


3.5             
Approval of Documents.  Unless
otherwise provided herein, all instruments and documents to be delivered will
be dated as of the Closing Date and will be reasonably satisfactory to the
parties and their respective counsel, as to form and content.


ARTICLE IV

REPRESENTATIONS AND WARRANTIES BY SELLER


Seller, each Seller Shareholder and Malcolm D. Glover, Sr.,
hereby jointly and severally represents and warrants to Purchaser that the
following statements are true and correct on the date hereof, except as set
forth in the disclosure schedule delivered by Seller to Purchaser on the date
hereof and attached hereto as Exhibit A (the "Disclosure
Schedule"):


4.1             
Corporate Status.  Seller is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Nevada, and has all requisite corporate power and
authority and all licenses, permits and authorizations necessary to own or
lease its properties and to carry on its business as it is now being conducted.


4.2             
Corporate Documents.  Seller has
provided Purchaser true, correct and complete copies of its Articles of
Incorporation and Bylaws, including all amendments thereto, and true, correct
and complete copies of the minutes of all directors' and shareholders' meetings
and the stock record books and stock certificate books of Seller.

4.3             
Authority to Perform Agreement. 
Seller has the power to enter into this Agreement and to carry out its
obligations hereunder, and the execution, delivery and performance of this
Agreement by Seller has been duly authorized by all necessary corporate action
on the part of the shareholders and board of directors of Seller.  The
execution and performance of this Agreement does not violate, or result in a
beach of, or constitute a default under, any judgment, order or decree to which
Seller or any of the Assets may be subject.  Such execution or performance does
not constitute a violation of or conflict with any duty to which Seller is
subject or any provision of the Articles of Incorporation or Bylaws of Seller. 
Neither the exercise and delivery of this Agreement, nor the consummation of
the transactions contemplated herein, nor compliance with the terms and
provisions hereof, will result in the creation or imposition of any lien,
charge or encumbrance upon any of the property of Seller pursuant to the terms
of, or conflict in any way with the provisions of, or constitute a default
under, or require the consent of any other party to, any indenture, mortgage,
deed of trust, agreement, lease, or other instrument to which Seller is a party
or by which it may be bound or to which it, the Business or any of the Assets
may be subject, except for the consents or approvals of those Persons
identified on Schedule 4.3, which consents or approvals have been
obtained.  Except as set forth on Schedule 4.3, neither the execution of
this Agreement nor consummation of the sale of the Assets hereunder (a)
requires notice to or the approval or consent of any (i) Governmental
Authority having jurisdiction over the Business or (ii) any party to any
agreement with Seller, as a condition to (A) the continuance of Seller's
conduct of its business or (B) the continuance by Purchaser of the
Business, nor (b), to Seller's Knowledge, adversely affects relationships, as
historically enjoyed up to the Closing Date, with current customers of the Business
after the sale, transfer and conveyance of the Assets in accordance with this
Agreement.

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4.4             
Financial Statements.  Seller has
provided Purchaser with a balance sheet of Seller as of June 30, 2005 (the "Financial
Statement Date"), prepared in house by Seller, a copy of which is attached
hereto as Schedule 4.4 (the "Financial Statements"), and such
other financial information, corporate records and documents material to the
operation of Seller's business as Purchaser has reasonably requested.  The
Financial Statements are true and correct in all material respects and present
fairly the financial condition and results of operations of Seller for the
period specified.  The books of account from which the Financial Statements
were prepared accurately reflect all of the items of income and expense, all
assets and liabilities, and all accruals.  Seller has no undisclosed
depreciable assets, and all depreciation and investment credit taken for tax
purposes is disclosed on the Financial Statements.  Purchaser acknowledges Seller has permitted Purchaser's
representative full access to examine and test Seller's books of account from
which the Financial Statements were prepared.


4.5             
Liabilities.  Seller has no
liabilities or obligations of any nature or of any amount whatsoever, whether
accrued, absolute, liquidated or unliquidated, contingent or otherwise, and
there is no basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand against Seller which might
give rise to obligations or liabilities of Seller, except:


(a)               to the extent reflected in the Financial Statements and not already paid
or discharged,


(b)              those that have been or will be incurred in or as a result of the normal
and ordinary course of business consistent with past custom and practice since
the Financial Statement Date, and


(c)               those expressly approved in writing by Purchaser. 


4.6             
Litigation.  Except as set forth on
Schedule 4.6, there are no actions, suits, claims, proceedings or
investigations pending or, to Seller's Knowledge, threatened against or
affecting Seller at law or in equity or before or by any Governmental
Authority.  Except as set forth on Schedule 4.6, Seller is not subject
to or in default with respect to any order, writ, injunction or decree of any
Governmental Authority.  Seller has complied in all material respects with all
laws, regulations and orders applicable to its business or properties.  None of
the actions, suits, claims, proceedings and investigations disclosed on Schedule
4.6 could result in any adverse change in the business, financial
condition, operations, results of operations or future prospects of the
Business, or impair the value of the Assets.

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4.7             
Stockholder, Officer and Employee Claims.  No stockholder, officer or employee of Seller has any claim
or claims against Seller, and Seller is not obligated or liable to any such
persons in any way or for any amounts except compensation due to employees in
the ordinary course of business and except as disclosed in the Financial
Statements.


4.8             
Contracts.  Schedule 4.8
lists the following contracts and other agreements to which Seller is a party:


(a)               Any agreement (or group of related agreements) for the lease of personal
property to or from any person providing for lease payments in excess of $1,000
per year;


(b)              
Any agreement (or group of related agreements) for the purchase or sale
of raw materials, commodities, supplies, products or other personal property,
or for the furnishing or receipt of services, the performance of which will
extend over a period of time of more than one year, result in a material loss
to Seller, or involve the payment of consideration in excess of $1,000 during
the term of such agreement;


(c)               
Any agreement concerning a partnership or joint venture;


(d)                Any agreement concerning any license, sublicense or other permission in
or to the Purchased Intellectual Property;


(e)               
Any outstanding purchase orders;


(f)                Any agreement (or group of related agreements) under which Seller has
created, incurred, assumed or guaranteed any indebtedness for borrowed money,
or any lease obligation, in excess of $1,000 or under which it has imposed or
granted a security interest on any of its assets, tangible or intangible;


(g)               
Any agreement concerning confidentiality or noncompetition;


(h)               
Any profit sharing, stock option, stock purchase, stock appreciation,
deferred compensation, severance, or other plan or arrangement for the benefit
of its current or former directors, officers or employees;


(i)                 
Any collective bargaining agreement;


(j)                
Any agreement for the employment of any individual on a full-time,
part-time, consulting or other basis providing annual compensation in excess of
$1,000, or providing severance benefits, or which requires more than thirty
(30) days notice of termination;


(k)                Any agreement under which it has advanced or loaned any amount to any of
its directors, officers and employees;


(l)                 Any agreement under which the consequences of the default or termination
could have a material adverse affect on the business, financial condition,
operations, results of operations or future prospects of Seller; or

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(m)               Any other agreement (or group of related agreements), the performance of
which involves consideration in excess of $1,000.


Seller has delivered to Purchaser a correct, complete and fully
executed copy of each written agreement listed in Schedule 4.8, and a
written summary setting forth the terms and conditions of each oral agreement
referred to in Schedule 4.8.  With respect to each such agreement:  (i)
the agreement is legal, valid, binding, enforceable and in full force and
effect; (ii) the agreement will continue to be legal, valid, binding,
enforceable and in full force and effect on identical terms following the
consummation of the transactions contemplated in this Agreement; (iii) no party
is in breach or default under the agreement, and to the Seller's Knowledge, no
events or circumstances have occurred which could reasonably be anticipated to
create a default under the agreement; and (iv) no party has reputed any
provision of the agreement.


4.9             
Tax Returns.  Seller has filed with
the appropriate Governmental Authorities all tax and related returns required
to be filed by it, and such returns accurately reflect the taxes payable.  All
federal, state, local, county, franchise, sales, use, excise, property and
other taxes which are due and payable have been duly paid; and no reserves for
unpaid taxes have been set up or are required on the basis of the facts and in
accordance with generally accepted accounting principles, except as reflected
in the Financial Statements.  There are no unpaid assessments or proposed
assessments of federal income taxes pending against Seller; and there are no
federal, state or local tax audits or disputes pending or threatened.  Seller
has never filed a consent under Section 341(f) of the Internal Revenue Code.  Seller
has withheld and paid all taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent contractor,
creditor, stockholder or other third party.  No claim has been made by an
authority in a jurisdiction where Seller does not file tax returns that Seller
may be subject to taxation by that jurisdiction.


4.10         
Leases.  Seller does
not own, and has never owned, any real property.  All properties currently
leased by Seller are set forth on Schedule 4.10.  None of the buildings,
structures or other appurtenances or improvements on said real property (or any
equipment therein), nor the operation or maintenance thereof, violates any
restrictive covenant or any provision of any federal, state or local law,
ordinance, rule or regulation or encroaches on property of others.  No
condemnation proceeding is pending or threatened which would preclude or impair
the use of any of such real property for the purpose for which it is currently
used.  Each lease set forth on Schedule 4.10 is in full force and
effect, all rents and additional rents due to date have been paid, no default
thereunder exists or has been claimed, and the consummation of the transactions
contemplated by this Agreement will not create a default thereunder. 



4.11         
Environmental.  All real
properties leased currently or at any time in the past by Seller (the "Real
Property"), are identified by address on Schedule 4.11.  Except as set forth on Schedule 4.11:


(a)               
the Real Property has been maintained and operated by Seller in
compliance with all applicable Environmental Laws;

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(b)              all notices, permits, licenses or similar authorizations, if any,
required to be obtained or filed by Seller under any Environmental Law in
connection with the Real Property have been obtained or filed;


(c)               there are no past, pending or, to Seller's Knowledge, threatened
investigations, proceedings, notice of violation or other claims against Seller
with respect to any Real Property relating to the presence, release, threatened
release or remediation of any Hazardous Material or pollutant for
non-compliance with any Environmental Law or the environmental condition of any
such property; Seller is not, and, to Seller's Knowledge, no prior owner or
operator of any Real Property is, the subject of any liabilities under
Environmental Laws; and there are no liens, deed restrictions, notice or
registration requirements or other limitations applicable to the Real Property
based upon any Environmental Laws;


(d)              during any period in which Seller leased or otherwise controlled the
Real Property, no conditions or circumstances at any time in, at, on, under, a
part of, involving or otherwise related to the Real Property exist or have
existed, including without limitation the off-site disposal of Hazardous
Materials, that could currently or in the future give rise to any remedial
action against Seller or Purchaser under, or impose any liability on Seller or
Purchaser with respect to, any Environmental Law; there are no underground
storage tanks located in, at, on, or under the Real Property; and there are no
PCBs, lead paint, asbestos, and materials, articles and products containing
PCBs, lead paint or asbestos located in, at, on or under the Real Property;


(e)               Seller has not received any notice or claim that Seller is or may be liable
to any Person as a result of any Hazardous Material generated, treated or
stored in connection with the ownership, use or operation of the Real Property;
and


(f)                no conditions or circumstances exist or have existed, and no activities
are occurring or have occurred, that are resulting or have resulted in the
exposure of any person or property to a Hazardous Material such that Seller or
Purchaser may in the future be liable to such person or to the owners of such
property for personal or other injuries or damages resulting from such
exposure.


4.12         
Title to Assets.  Except as
disclosed on Schedule 4.12, Seller has good and marketable title to all
of the Assets, free and clear of any and all mortgages, liens, pledges,
privileges, charges or encumbrances of every kind, nature and description; all
tangible properties which comprise the Assets are in Seller's possession or
custody or under its control; and all of its operating properties which
comprise Assets are in good operating condition and repair.


4.13         
Accounts Receivable.  All the
accounts receivable of Seller reflected in the Financial Statements have been
collected or are good and collectable in the aggregate recorded amounts thereof
(less a reasonable amount for doubtful accounts), can reasonably be anticipated
to be paid in full after good faith collection efforts, and are subject to no
set-offs or counterclaims.  Seller will be obligated to reimburse Purchaser for
uncollectible accounts which are included in the Assets in accordance with Section
6.1 below. 

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4.14         
Inventory.  All of the inventory of
Seller reflected in the Financial Statements was in existence at the date
thereof.  All such inventory and all inventory items acquired since the date of
the Financial Statements are of good and merchantable quality and are usable in
the ordinary course of Seller's business except for damage or deterioration
adequately covered by insurance or by claims against financially responsible
third parties.  Such inventories were valued at the lower of cost or net
realizable value and were determined in accordance with generally accepted
accounting principles consistently applied.  


4.15         
Intellectual Properties.  


(a)               
"Intellectual Property" shall mean any or all of the following:
(i) works of authorship including, without limitation, computer programs,
algorithms, routines, source code and executable code, whether embodied in
software or otherwise, documentation, designs, files, records and data; (ii)
inventions (whether or not patented or patentable), improvements, and
technology; (iii) proprietary and confidential information, including technical
data and customer and supplier lists, trade secrets, show how, know how and
techniques; (iv) databases, data compilations and collections and technical
data; (v) processes, devices, prototypes, schematics, bread boards, net
lists, mask works, test methodologies and hardware development tools; (vi)
logos, trade names, trade dress, trademarks, service marks, and other
indicators of origin of products and services (whether or not any of the items
listed in this subsection (vi) are registered or registerable and including,
without limitation, all right, title and interest in and to the name
"Astromec"); (vii) World Wide Web addresses, uniform resource locators and
domain names, tools, methods and processes; and (viii) all instantiations of
the foregoing in any form and embodied in any media.


(b)              
Each item of Intellectual Property
owned or used by Seller immediately prior to the Closing will be owned or
available for use by Purchaser on identical terms and conditions immediately
following the Closing.  Seller has taken all necessary action to maintain and
protect each item of Intellectual Property owned or used by it.


(c)               
Seller does not own or use any Intellectual
Property that is the subject of an application, certificate, filing,
registration or other document issued by, filed with, or recorded by, any
private, state, government or other public legal authority at any time,
including, without limitation, the United States Patent and Trademark Officer
or any foreign equivalent.


(d)              Schedule
4.15
lists all Intellectual Property that the Seller has the right to use
pursuant to license, sublicense, agreement or permission. Seller has delivered
to Purchaser true, correct and complete copies of all licenses, agreements and
permissions for the Intellectual Property listed on Schedule 4.15.


(e)               
Seller is not infringing or
otherwise acting adversely to the right of any other Person under, or in
respect to, any Intellectual Property including, without limitation, any
patent, license, trademark, trade name, service mark, copyright or similar
intangible right of any other Person.

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4.16         
Employees Benefits.  Schedule
4.16 lists all pension, retirement, profit sharing, deferred compensation,
employee stock ownership, stock option, severance, bonus, commission,
incentive, life insurance, health and benefit plans or arrangements
established, maintained or adopted by Seller that are currently in force ("Benefit
Arrangements").  Complete, accurate copies of all documents relating to the
establishment, terms or funding of such Benefit Arrangements (including
contracts or agreements with trustees and insurance companies) have been
provided to Purchaser.  No accumulated funding deficiency exists and no waiver
of the minimum funding standards of Section 412 of the Code has been requested
with respect to a Pension Plan (as defined in Section 3(2) of ERISA) that is
subject to Section 412 of the Code.  Seller has received no notice of a claim
of "withdrawal liability" as defined in Section 4201 of ERISA.  No employee
Benefit Plan (within the meaning of Section 3(3) of ERISA) has engaged or
become involved in a prohibited transaction (as defined in Section 406 of ERISA
or Section 4975 of the Code) to which an exemption did not apply.  No Welfare
Plan (as defined is Section 3(1) of ERISA) provides benefits for former
employees or their dependents except as required by Section 4980B of the Code. 
Each Benefit Arrangement has been and is maintained, operated and administered
in all material respects in compliance with its terms and any related documents
or agreements, and in all material respects in compliance with all applicable
laws and regulations, including the due submission of all required filings and
reports.  To the Seller's Knowledge, there is no pending or threatened
assessment, complaint, proceeding, or investigation of any kind with respect to
any Benefit Arrangement, or any material claims for benefits or expenses under
such arrangements.  With respect to each of the Employee Benefit Plans, Seller
has delivered to Purchaser true and complete copies of each of the following
documents:  (i) a copy of the plan (including all amendments thereto); (ii) a
copy of the annual report, if required under ERISA, with respect to the plan
for the last two years; (iii) a copy of the actuarial report, if required under
ERISA, with respect to the plan for the last two years; (iv) a copy of the most
recent Summary Plan Description, together with each Summary of Material
Modification, if required under ERISA, with respect to the plan, and all
material employee communications relating to such plan; (v) if the plan is
funded through a trust or any third party funding vehicle, a copy of the trust
or other funding agreement (including all amendments thereto) and the latest
financial statements thereof; (vi) all contracts relating to the plan,
including without limitation service provider agreements, insurance contracts,
investment management agreements, subscription and participation agreements and
record keeping agreements; and (vii) the most recent determination letter
received from the IRS with respect to the plan, if any.  Each Employee Benefit
Plan intended to qualify under Section 401(a) of the Code is so qualified, and
each trust maintained in connection with such plan is exempt from tax under
Section 501(a) of the Code.


4.17         
Employment Practices.  Schedule
4.17 lists all of the employees of Seller, and their current compensation
rates.  Seller has not received notice of any material violation of any federal
or state law respecting employment or employment practices, terms and
conditions of employment and wages and hours.  Seller is not engaged in any
unfair labor practice.  There are no collective bargaining agreements which
restrict Seller from carrying out the terms of this Agreement; and Seller has
no contract with any of its employees which cannot be terminated without
penalty on no more than ten (10) days' notice.


4.18         
No Broker.  Seller has not employed
any broker, finder or agent, nor otherwise become in any way obligated for any
broker's, finder's or agent's or similar fee with respect to the transactions
contemplated by this Agreement.

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4.19         
Insurance.  Schedule 4.19
sets forth the following information with respect to each insurance policy
(including policies providing property, casualty, liability, and workers'
compensation coverage and bond and surety arrangements) to which Seller has
been a party, a named insured, or otherwise the beneficiary of coverage at any
time within the past three (3) years:


(a)               the name, address, and telephone number of the agent;


(b)              
the name of the insurer, the name of the policyholder, and the name of
each covered insured;


(c)               the policy number and the period of coverage;


(d)              the scope (including an indication of whether the coverage was on a
claim made, occurrence, or other basis) and amount (including a description of
how deductibles and ceilings are calculated and operate) of coverage; and


(e)               a description of any retroactive premium adjustments or other
loss-sharing arrangements.


With respect to each such insurance policy:  (i) the policy is
legal, valid, binding, enforceable, and in full force and effect; (ii) the
policy will continue to be legal, valid, binding, enforceable, and in full
force and effect on identical terms following the consummation of the
transactions contemplated hereby; (iii) neither Seller nor any other party to
the policy is in breach or default (including with respect to the payment of
premiums or the giving or notices), and no event has occurred which, with
notice or the lapse of time, would constitute such a breach or default, or
permit termination, modification, or acceleration, under the policy; and (iv)
no party to the policy has repudiated any provision thereof.  Seller has been
covered during the past six (6) years by insurance in scope and amount customary
and reasonable for the businesses in which it has engaged during the
aforementioned period.  Schedule 4.19 describes any self-insurance
arrangements affecting Seller.


4.20         
Subsidiaries.  Seller does not own
any capital stock of any other corporation or any interest in any other Person.


4.21         
Licenses, Permits, Etc.  Except as
disclosed in Schedule 4.21, the conduct of the Business is not dependent
on any governmental or private license, permit or other authorization, and the
consummation of the transactions contemplated by this Agreement will not
terminate or adversely affect any such license, permit or authorization.

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4.22         
Absence of Certain Events, Circumstances, Etc.  Since the Financial Statement Date, Seller has not (a)
incurred any obligation or liability, whether absolute or contingent, except
obligations and liabilities incurred in the ordinary course of Seller's
business; (b) discharged or satisfied any lien or encumbrances or paid any
obligation or liability whether absolute or contingent, other than current
liabilities having become due and payable since that date in the ordinary
course of Seller's business and obligations and liabilities under contracts
referred to in the exhibits annexed hereto; (c) made or agreed to make any
wage, salary or employee benefit increases for full time employees; (d) sold or
transferred any of its tangible or intangible assets or canceled any debts or
claims, except, in each case, in the ordinary course of business; (e) sold,
assigned or transferred any patents, patent applications, patent rights,
licenses, trademarks, trademark applications, trademark rights, trade names,
trade name rights, service marks, service mark rights, copyrights, copyright
applications or any similar rights; (f) suffered any losses that would have a materially
adverse effect on the business or financial condition of Seller, or waived any
rights of substantial value; (g) suffered any loss, damage or destruction to
any of its properties due to fire or other casualty whether or not insured,
which loss, damage or destruction materially and adversely affects its
business, properties or operations; (h) issued or sold or agreed to issue or
sell any shares of its capital stock or any other securities or reclassified or
agreed to reclassify its capital stock; (i) mortgaged, pledged or subjected to
lien, charge or other encumbrance any of its tangible or intangible assets,
except the lien of current real and personal property taxes not yet due and
payable or purchase money or similar liens incurred in the ordinary course of
business; (j) made or agreed to make capital expenditures; (k) declared or paid
a dividend or transferred property or loaned any money or agreed to loan money
to any of its directors, officers or employees; (l) amended its Articles of
Incorporation or Bylaws; (m) conducted its business otherwise than in its
ordinary and usual manner; or (n) become aware of an event, transaction or
circumstance which does or could materially adversely affect its condition
(financial or otherwise), assets, liabilities, earnings, business or
operations.


4.23         
Disclosure.  Neither this Agreement
nor any of the Attachments, Schedules or Exhibits attached to this Agreement
contains any untrue statement of any material fact or omits to state any
material fact required to be stated herein or therein, or necessary in order to
make the statements contained herein or therein not misleading.  To the
Seller's Knowledge, there is no fact which materially adversely affects, or in
the future may (so far as Seller can now reasonably foresee) materially
adversely affect the Assets or the prospects or condition (financial or
otherwise) of the Business, which fact has not been disclosed in writing to
Purchaser prior to the date hereof or set forth herein or in the Schedules
attached to this Agreement.


4.24         
Directors and Officers.  Schedule 4.24 lists as of the date of this Agreement
all of the directors and officers of Seller.


4.25         
Powers of Attorney.  There are no
outstanding powers of attorney executed on behalf of Seller.


4.26         Condition of Buildings and Equipment.  All of the buildings leased by Seller and all of the
equipment of Seller are in good operating condition and repair and to the
Seller's Knowledge are in conformity with all applicable ordinances and
regulations and building, zoning, and other laws.


4.27          Purchase of Astro Mec Motors Assets.  On or around November 5, 1985, Seller consummated a
transaction with Astro Mec Motors, Inc., a California corporation ("Astro
Mec CA") whereby Seller purchased substantially all of the assets of Astro
Mec CA (the "Astro Mec CA Transaction").  Seller has no documentation
regarding the Astro Mec CA Transaction, except for a copy of the Bill of Sale
without copies of exhibits referenced therein.  Seller has good and marketable
title to all of the assets purchased in the Astro Mec CA Transaction, free and
clear of any and all mortgages, liens, pledges, privileges, charges or
encumbrances of every kind, nature and description. 

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4.28          
Bulk Sales Law. 
Seller is not subject to the bulk sales laws of any jurisdiction in connection with
the transactions contemplated by this Agreement.


ARTICLE V

REPRESENTATIONS AND WARRANTIES BY PURCHASER


Purchaser represents and warrants to Seller that the following
statements are true and correct on the date hereof:


5.1             
Organization in Good Standing. 
Purchaser is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada.


5.2             
Authority to Perform Agreement. 
Purchaser has the corporate power to enter into this Agreement and to carry out
its obligations hereunder.  The execution and delivery of this Agreement, the
payments provided for herein, and the consummation of transactions contemplated
hereby, have been duly authorized by Purchaser's board of directors, and no
other corporate proceeding on the part of Purchaser is necessary to authorize
Purchaser's officers to perform this Agreement and the transactions
contemplated herein.


ARTICLE VI

COVENANTS


6.1             
Reimbursement for Uncollectible Accounts.  Seller will indemnify and hold Purchaser harmless from any
accounts receivable included in the Assets which become more than one hundred
eighty (180) days past due (in addition to any obligation to indemnify created
under Article VII below), to the extent such uncollectible accounts
exceed reserves for bad debts as reflected in Seller's Financial Statements. 
Purchaser may, at its option, offset against the Holdback any and all amounts
to which Purchaser is entitled pursuant to this Section 6.1 in
accordance with Section 7.4, provided Purchaser has in good faith
attempted to collect any account receivable it proposes to offset.  If an
account receivable is offset pursuant to the preceding sentence, such account
receivable shall be assigned by Purchaser to Seller.


6.2              
Further Action.  If at any time
after Closing any further action is necessary or desirable to carry out the
purposes of this Agreement, Purchaser and Seller will take such further action
(including the execution and delivery of such further instruments and
documents) as the other party to this Agreement reasonably may request, all at
the sole cost and expense of the requesting party unless the requesting party
is entitled to indemnification thereof under Article VII below. 
Seller acknowledges and agrees that from and after the Closing, Purchaser will
be entitled to possession of all documents, books, records, tax records,
agreements and financial data of any sort relating to the Assets.

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6.3              
Litigation Support.  If and for so
long as any party actively is contesting or defending against any action, suit,
proceeding, hearing, investigation, charge, complaint, claim or demand in
connection with (i) any transaction contemplated under this Agreement or (ii)
any fact, situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving the Business or the Assets, the other party will
cooperate with it and its counsel in the contest or defense, make available its
personnel, and provide such testimony and access to its books and records as may
be necessary or desirable in connection with the contest or defense, all at the
sole cost and expense of the contesting or defending party, unless the
contesting or defending party is entitled to indemnification therefor under Article
VII below.


6.4              
Transition.  Seller will not take
any action that is designed or intended to have the effect of discouraging any
lessor, licensor, customer, supplier, or other business associate of Seller
from maintaining the same business relationships with Purchaser after the Closing
as such party maintained with Seller prior to the Closing.  Seller will refer
all customer inquiries relating to the Business to Purchaser from and after
Closing.


6.5              
Employees.  Purchaser
may need to contract with various key personnel of Seller as of or after the
Closing.  Seller shall take all actions reasonably required by Purchaser to
assist in this process including, without limitation, providing Purchaser
access to all Seller's organizational charts, personnel records (but only to
the extent a particular employee has executed a written release with respect to
providing Purchaser such personnel records) and payroll records and by allowing
and encouraging Seller's employees to meet with Purchaser's representatives. 
Notwithstanding anything to the contrary in this Agreement, Purchaser shall
have no obligation of any kind with respect to any of Seller's employees.
Seller shall be solely responsible for the termination and any related costs of
all Seller's employees who are terminated or whose employment is otherwise
adversely affected by Seller's execution of this Agreement or the transactions
contemplated hereby.


6.6              
Non-Competition.  


(a)               
As further consideration for the purchase and
sale of the Assets and the other transactions contemplated by this Agreement, during
the period commencing on the Closing Date, and ending on the date which is four
(4) years thereafter (the "Restricted Period"), neither the Seller nor
any Seller Shareholder nor Malcolm D. Glover, Sr. nor William Rhea Gustafson
(Seller Shareholders, Malcolm D. Glover, Sr., and William Rhea Gustafson,
collectively, the "Non-Competing Shareholders") shall, in any Restricted
Territory, directly or indirectly:


(i)                 
engage in any business, activity, or enterprise competitive with or
substantially similar to the Business, including, without limitation, in the
manufacture, production, design, engineering, importation, purchase, marketing,
sale, distribution, research or development of any electric motor, or engage or
invest in, own, manage, operate, finance, control, solicit business related to,
or participate in the ownership, management, operation, financing, or control
of, be employed by, lend its name or any similar name, or lend its credit to,
or render services or advice to, any Person engaged in any business, activity
or enterprise competitive with the Business including, without limitation, in
the manufacture, production, design, engineering, importation, purchase,
marketing, sale, distribution, research or development of any electric motor;

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(ii)               
on behalf of itself or any other Person, recruit or solicit any person
who has been an employee, representative, consultant or agent of Purchaser or
former employee of Seller hired by Purchaser, to terminate his or her
employment with Purchaser;


(iii)              
solicit, call upon, or attempt to communicate with any customer, former
customer, or prospective customer of Purchaser or Seller for the purposes of
manufacture, production, design, engineering, importation, purchase, marketing,
sale, distribution, research or development of any electric motor; provided,
however, that Seller or a Non-Competing Shareholder may solicit, call upon, or
attempt to communicate with any customer, former customer, or prospective
customer of Purchaser or Seller pursuant to specific written authorization from
an officer of Purchaser.  For purposes of this paragraph, "contact" means
interaction between Seller, a Non-Competing Shareholder, or any officers,
directors, employees or agents (directly or indirectly) of Seller or a
Non-Competing Shareholder, and the customer, former customer or prospective
customer which takes place to further the business relationship, or performing
of services, on behalf of Seller or a Non-Competing Shareholder.


(b)              
Seller and Non-Competing Shareholders shall be deemed to be competing with
Purchaser in violation of Section 6.9(a) if any thereof, or any
Affiliate of the Seller or Non-Competing Shareholders, is engaged or
participates in any activity or activities described in Section 6.9(a),
directly or indirectly, whether for its own account or for that of any other
Person, and whether as a shareholder, partner or investor controlling any such
entity or as principal, agent, representative, proprietor or partner, or in any
other capacity; provided, however, that nothing herein shall
prohibit purely passive investments in any business so long as the aggregate
interest represented by such investments does not exceed one percent (1%) of
any class of the outstanding debt or equity securities of said business.


(c)               
Because a breach, or failure to comply with, this Section 6.9
will cause irreparable injury to Purchaser for which there is no adequate
remedy at law and the exact amount of which will be difficult to ascertain, if
Seller, a Non-Competing Shareholder or any Affiliate of Seller or of a Non-Competing
Shareholder, should in any way breach, or fail to comply with, the terms of
this Section 6.9, Purchaser shall be entitled to seek and obtain an
injunction restraining such Seller, Non-Competing Shareholder and/or its
Affiliate(s), as applicable, from any such breach or failure without having to
prove monetary damages.  All remedies expressly provided for herein are
cumulative of any and all other remedies now existing at law or in equity, to
the extent permitted under applicable law.  Purchaser shall, in addition to the
remedies herein provided, be entitled to avail itself of all such other
remedies as may now or hereafter exist at law or in equity for compensation,
and for the specific enforcement of the covenants contained herein without the
necessity of proving actual damages.  Resort to any remedy provided for
hereunder or provided for by law shall not preclude or bar the concurrent or
subsequent employment of any other appropriate remedy or remedies, or preclude
the recovery by Purchaser of monetary damages and compensation, including,
without limitation, its right to indemnification pursuant to Article VII.

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(d)              
If any provision of this Section 6.9 shall finally be
judicially determined to be invalid, ineffective or unenforceable, such
determination shall apply only in the jurisdiction in which such adjudication
is made and every other provision of this Section 6.9 shall remain
in full force and effect.  The invalid, ineffective or unenforceable provision
shall, without further action by the parties, be automatically amended, to the
extent permitted under applicable law, to effect the original purpose and
intent of the invalid, ineffective or unenforceable provision (and if such
provision governs the duration of the Restricted Period or geographic scope of
the Restricted Territory, such provision shall be amended to reduce such
duration or scope, as applicable, as minimally as possible so that such
provision is valid, effective and enforceable for the longest period of time
and fullest geographic area as is adjudged permissible for such provision to be
valid, effective and enforceable); provided, however, that such
amendment shall apply only with respect to the operation of such provision in
the particular jurisdiction in which such adjudication is made.


(e)               Seller and each Non-Competing Shareholder acknowledges that the duration
of the Restricted Period, the geographic scope of the Restricted Territory, and
the scope of restricted activities described in Section 6.9(a) are
reasonable and necessary to protect the legitimate business interests of
Purchaser in view of the nature of the Business, the nature of the business in
which Purchaser is engaged, and the nature of the transactions contemplated by
this Agreement.  Seller and Non-Competing Shareholders understand that the
foregoing restrictions will significantly limit or bar its or his ability to
engage in business related to the Business, but nevertheless believes that it
or he has received and will receive, directly or indirectly, sufficient
consideration and other benefits pursuant to this Agreement to clearly justify
such restrictions.


6.7             
Name Change.  Within two (2) business days of the Closing
Date, Seller shall stop using the name "Astromec," "Astro Mec" or similar
names, or any other trade names or trademarks being
purchased by Purchaser hereunder, and from and after such date, Seller shall
not use such name or any similar names.  Within such two (2) business day
period, Seller shall file an amendment to its Articles of Incorporation with
the Nevada Secretary of State changing its name in accordance with the first
sentence of this Section 6.7.


6.8             
Audit Preparation.  Seller and each Seller Shareholder
shall provide or otherwise make available to Purchaser any and all instruments,
documents and information reasonably necessary, and provide such other
assistance as may be reasonably requested by Purchaser, for Purchaser's
auditors to prepare audited financial statements in compliance with generally
accepted accounting principles (including, without limitation, an audited
balance sheet and statement of income) for Seller's fiscal year ended December
31, 2005.


ARTICLE VII

INDEMNIFICATION OF PURCHASER


7.1             
Survival of Representations, Warranties and Covenants.  The representations, warranties and covenants contained in
this Agreement shall survive the Closing.

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7.2             
Indemnity for the Benefit of Purchaser.  Seller, each Seller Shareholder, and Malcolm D.
Glover, Sr., jointly and severally agree to and shall
indemnify Purchaser and hold Purchaser harmless from and against the following:


(a)               
For a period of two (2) years from the Closing Date:


(i)                 
 any and all Losses or Liabilities resulting from any misrepresentation
made, or breach of warranty given or covenant made by Seller in this Agreement,
except those set forth in Sections 4.9, 4.11, 4.12 and 4.15; 


(ii)               
any and all Losses or Liabilities resulting from any action, suit,
claim, proceeding or investigation disclosed on Schedule 4.6; and


(iii)              
any and all Losses or Liabilities incurred by, arising out of, or
relating in any way to matters pertaining to the conduct of the Business which
have arisen or may arise because or as a result of any fact, event or
transaction existing or occurring on or before the Closing Date, regardless of
when the cause of action thereof shall be deemed to arise.


(b)              
For the applicable statute of limitations: 


(i)                 any and all Losses or Liabilities resulting from any misrepresentation
made, or breach of warranty given or covenant made in Sections 4.9, 4.11,
4.12 and 4.15.  The indemnity of Seller, each Seller Shareholder and
Malcolm D. Glover, Sr., hereunder shall extend to any federal, state or local
tax liability of Seller of any nature whatsoever, including but not limited to
any deficiency or governmental charge which arises by virtue of the adjustment,
disallowance or inclusion of any item for tax purposes, and which is occasioned
by adjustments for tax years (or portions thereof) prior to the Closing Date. 
The indemnification for tax liabilities contained herein shall bind the Seller,
notwithstanding any qualifications to Seller's representations under Section
4.9, or any other provision of this Agreement;


(ii)               
notwithstanding the representations and warranties set forth in Section 4.11
or any disclosures on the Disclosure Schedule related thereto, any and all
Losses or Liabilities resulting from or related to any Environment Law with
respect to any Real Property or the Business, whether such Loss or Liability
results from acts or activities of any Person prior to, on or after the Closing
Date, except to the extent such Loss or Liability results from the activities
of Purchaser after the Closing Date with respect to the Real Property or the
Business; and


(iii)              
any and all Losses and Liabilities resulting from fraud or a knowing and intentional misrepresentation on the
part of Seller.


7.3             
Indemnity for the Benefit of Seller. 
Purchaser agrees to and shall indemnify Seller and hold Seller harmless from
and against the following:


(a)               
For a period of two (2) years from
the Closing Date:

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(i)                 Any and all Losses and Liabilities resulting from any misrepresentation
made or breach of warranty given or covenant made by Purchaser in this
Agreement; and 


(ii)               
Any and all Losses and Liabilities incurred by, arising out of, or
relating in any way to matters pertaining to the conduct of the business of
Purchaser which may arise because or as a result of any fact, event or
transaction occurring after the Closing Date, except for claims which are
subject to Seller's indemnification obligations under Section 7.2. 


(b)              
For the applicable statute of limitations, any and all Losses and
Liabilities resulting from fraud or a knowing and
intentional misrepresentation on the part of Purchaser.


7.4             
Right of Offset.  In addition to
any other remedies which Purchaser may have against the Seller, Seller
Shareholders or Malcolm D. Glover, Sr. at law, in
equity or pursuant to this Agreement, Purchaser may, at its option, offset
against the Holdback Amount any and all amounts with respect to which Purchaser
is entitled to indemnification pursuant to this Article VII, regardless
of when the claim for indemnification shall be deemed to arise.  Purchaser
shall exercise its right of offset by notifying Seller that Purchaser is
reducing the Holdback Amount anytime prior to the payment of the Holdback
Amount to Seller in accordance with Section 2.2(b).


7.5             Notice.  If a party shall claim any
right of indemnity under Sections 7.2 or 7.3, the party shall give the
other party a written notice of such claim, setting forth in reasonable detail
the facts giving rise to the claim and the amount of liability asserted by
reason thereof.


7.6             
Matters Involving Third Parties.


(a)               
If any third party shall notify either party to this Agreement (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may
give rise to a claim for indemnification against any other party to this
Agreement (the "Indemnifying Party") under this Article VII, then
the Indemnified Party shall promptly notify the Indemnifying Party thereof in
writing; provided, however, that no delay on the part of the Indemnified Party
in notifying the Indemnifying Party shall relieve the Indemnifying Party from
any obligation hereunder unless (and then solely to the extent) the
Indemnifying Party thereby is prejudiced.

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(b)              
The Indemnifying Party will have the right to defend the Indemnified
Party against the Third Party Claim with counsel of its choice reasonably
satisfactory to the Indemnified Party so long as (i) the Indemnifying Party
notifies the Indemnified Party that the Indemnifying Party will indemnify the
Indemnified Party from the Third Party Claim, (ii) the Indemnifying Party
provides the Indemnified Party with evidence reasonably acceptable to the
Indemnified Party that the Indemnifying Party will have the financial resources
to defend against the Third Party Claim and fulfill its indemnification
obligations hereunder, (iii) the Third Party Claim involves only money damages
and does not seek an injunction or other equitable relief, (iv) settlement of,
or an adverse judgment with respect to, the Third Party Claim is not, in the
good faith judgment of the Indemnified Party, likely to establish a
precedential custom or practice materially adverse to the continuing business
interests of the Indemnified Party, and (v) the Indemnifying Party conducts the
defense of the Third Party Claim actively and diligently.


(c)               
So long as the Indemnifying Party is conducting the defense of the Third
Party Claim in accordance with Section 7.6(b) above, (i) the Indemnified
Party may retain separate co-counsel at its sole cost and expense and
participate in the defense of the Third Party Claim, (ii) the Indemnified Party
will not consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of the
Indemnifying Party, which shall not be unreasonably withheld, and (iii) the
Indemnifying Party will not consent to the entry of any judgment or enter into
any settlement with respect to the Third Party Claim without the prior written
consent of the Indemnified Party, which shall not be withheld unreasonably.


(d)              
If any of the conditions in Section 7.6(b) above is or becomes
unsatisfied, however, (i) the Indemnified Party may defend against, and consent
to the entry of any judgment or enter into any settlement with respect to, the
Third Party Claim in any manner it reasonably may deem appropriate (and the
Indemnified Party need not consult with, or obtain any consent from, any
Indemnifying Party in connection therewith), (ii) the Indemnifying Party will
reimburse the Indemnified Party promptly and periodically for the costs of defending
against the Third Party Claim (including reasonable attorneys' fees and
expenses), and (iii) the Indemnifying Party will remain responsible for any
Losses and Liabilities the Indemnified Party may suffer resulting from, arising
out of, relating to, in the nature of, or caused by the Third Party Claim to
the fullest extent provided in this Article VII.


7.7             
Amount of Damages.  Each party
agrees that the amount of any Liabilities or Losses claimed by it under the
indemnity provided in this Article VII shall be a net amount
after adjustment for any benefit to such party from insurance receipts from
third parties or offsetting tax advantages.


7.8             
Resolution of Disputes.  Any
dispute arising under or related to this Agreement shall be resolved by
arbitration submitted before the Judicial Arbitration and Mediation
Services, Inc. ("JAMS") in accordance with the
Streamlined Arbitration Rules & Procedures of JAMS, in Orange County,
California.  The arbitration hearing shall be conducted by a single neutral
arbitrator, who shall be an active California State Bar member in good
standing.  In addition to all other powers, the arbitrator shall have the right
to determine all issues of arbitrability and shall have the authority to issue
subpoenas.    The parties shall be entitled to only the following
limited discovery:


(a)               
each party shall exchange all documents relevant to the subject matter
of the dispute;


(b)              
each party shall be entitled to one deposition limited to four hours;

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(c)               
each party may serve one set of interrogatories limited to 15
interrogatories including subparts;


(d)              
each party may make application to the arbitrator to order the
deposition of a witness to be taken for use as evidence and not for discovery
if (i) the witness cannot be compelled to attend the hearing, or, (ii) if such
exceptional circumstances exist as to make it desirable in the interest of
justice and with due regard to the importance of presenting the testimony of
witnesses at the hearing to allow the deposition to be taken.


All discovery shall be completed within
ninety (90) calendar days after the request for arbitration is filed with the
appropriate authorities and the first hearing date shall be set for no later
than thirty (30) calendar days after the completion of discovery.  The
arbitrator may extend such period for any reason, including, without
limitation, legal objections raised to such discovery or unavailability of a
witness due to absence or illness.  The deposition set forth in subsection (b)
above may be taken by either party upon seven (7) calendar days written
notice.  All disputes relating to discovery that cannot be resolved by the
parties shall be submitted to the arbitrator, whose decision shall be
conclusive, final and binding upon the parties.  The prevailing party in any
such arbitration shall be entitled to any award of its reasonable attorneys'
fees and costs.  Any party shall be entitled to file an action in Orange County
Superior Court, or in any other court which shall have jurisdiction over the
parties of this Agreement, to compel or aid in the arbitration, or for
injunctive relief.  Judgment on any arbitration award may be entered in any
court of competent jurisdiction.


ARTICLE VIII

MISCELLANEOUS


8.1             
Notices.  All notices, requests,
demands, and other communications called for by this Agreement shall be in
writing and shall be deemed to have been given if delivered or mailed first
class, postage prepaid:


If to
Seller, to:

Astromec

5 University Circle

Rancho Mirage, California 92270

Attn: Malcolm Glover


With
copy to:

Malcolm Glover, Jr.

9475 King Road

Loomis, California  95650


And a
copy to:

Robison, Belaustegui, Sharp & Low 

71 Washington Street

Reno, Nevada 89503

Attn: F. DeArmond Sharp, Esq.

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If to Purchaser, to:

Pro-Dex, Inc.

151 East Columbine Avenue

Santa Ana, California 92707

Attn: Patrick Johnson


With
copy to:

Rutan & Tucker, LLP

611 Anton Blvd., 14th Floor

Costa Mesa, California 92626-1931

Attn: Thomas J. Crane


A party's notice address set forth above may be changed by
providing written notice to the other party of such change in accordance with
this Section 8.1.


8.2             
Counterparts.  For the convenience
of the parties hereto, this Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.


8.3             
Headings.  The headings of the
several articles and sections herein are inserted for convenience of reference
only and are not intended to be a part of, or affect the meaning or
interpretation of, this Agreement.


8.4             
 Parties in Interest.  This
Agreement shall benefit and bind the parties and their respective successors,
heirs and assigns.


8.5             Governing Law.  This Agreement
shall be construed and enforced in accordance with the laws of the State of
California, without reference to the choice of law principles thereof.


8.6             
Amendment.  This Agreement may be
amended at any time by written instrument executed by both Seller and
Purchaser.


8.7             
Entire Agreement.  This Agreement,
including the agreements contemplated hereby and attached as Exhibits hereto,
contain the entire understanding of the parties relating to the subject matter
hereof and supersede any prior agreements, written or oral, with respect to the
same subject matter.  The Attachments, Exhibits and Schedules identified in
this Agreement are incorporated in and made a part of this Agreement by
reference.


8.8             
Expenses.  Each party shall
separately bear the expenses incurred by it in connection with this Agreement;
provided, however, that if either party shall commence legal action to
specifically enforce or otherwise seek redress under or for breach of this
Agreement, the prevailing party in such action shall be entitled to recover its
costs and reasonable attorneys' fees therein, including costs and fees incurred
in any appellate proceeding.  

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8.9             
Waiver.  Any of the terms or
conditions of this Agreement may be waived at any time by the party which is
entitled to the benefit thereof.  All such waivers shall be in writing and no
waiver by any party of any default, misrepresentation, or breach of
representation, warranty or covenant hereunder, whether intentional or not,
shall be deemed to extend to any prior or subsequent default,
misrepresentation, or breach of representation, warranty or covenant hereunder
or affect in any way any rights arising by virtue of any prior or subsequent
such occurrence.


8.10          
Construction.  The
parties have participated jointly in the negotiation and drafting of this
Agreement.  In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the parties
an no presumption or burden of proof shall arise favoring or disfavoring any
party by virtue of the authorship of any of the provisions of the Agreement. 
Any reference to any federal, state, local or foreign statute or law shall be
deemed also to refer to all rules and regulations promulgated thereunder,
unless the context requires otherwise.  The parties intend that each
representation, warranty and covenant contained in this Agreement shall have
independent significance.  If any party has breached any representation,
warranty or covenant contained herein in any respect, the fact that there
exists another representation, warranty or covenant relating to the same
subject matter (regardless of their relative levels of specificity) which the
party has not breached shall not detract from or mitigate the fact that the
party is in breach of the first representation, warranty or covenant.


8.11          
Termination.  Should the sale not close on or before
January 5, 2006 (which date may be extended by written agreement between the
parties), the parties shall each be relieved of any obligation to the other and
each party shall be responsible solely for the payment of its own costs and
attorneys' fees.


[SIGNATURE PAGE FOLLOWS]

 

 

 

 

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IN WITNESS WHEREOF, Purchaser,
Seller and Seller Shareholders have executed this Asset Purchase Agreement as
of the date and year first above written.


	

PURCHASER:  












			PRO-DEX
ASTROMEC, INC.,

a Nevada corporation 

		/s/ Patrick Johnson                                                         

Patrick Johnson, President

	 	  
	

SELLER:  









			ASTROMEC,
INC., a Nevada corporation/s/ William Rhea Gustafson                                             
		

William Rhea Gustafson, President and Secretary

		

	

SELLING SHAREHOLDERS: 





			 /s/  Malcolm D. Glover, Jr.                                                 
		

Malcolm D. Glover, Jr.
	

 	   
	

 


			M.D. Glover, Inc., a Nevada corporation
	

 


			
/s/  Malcolm D. Glover, Sr.                                                    

Malcolm D. Glover, Sr., President, Secretary and Treasurer


The undersigned hereby
agrees to his performance pursuant to Section 6.6, Article IV
and Article VII of this Agreement.

	 	 /s/  Malcolm D. Glover, Sr.                                                   

		Malcolm D. Glover, Sr.



The undersigned hereby
agrees to his performance pursuant to Section 6.6 of this Agreement.





	 	 /s/  William Rhea Gustafson                                                  

		William Rhea Gustafson








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