Employment Arrangement



 Exhibit 10.3 
 PERSONAL AND CONFIDENTIAL 
 April 20, 2012 

Michael J. Berthelot 
 P O Box 7277 

Rancho Santa Fe, CA 92067 
 Dear Mike:

 On behalf of the Board of Directors (the “Board”) I am pleased to extend this employment letter agreement concerning your employment
as Chief Executive Officer of Pro-Dex Inc. (the “Company”) as an “at-will” employee, serving at the pleasure of the Board and in accordance with the Company’s Bylaws and applicable law. As Chief Executive Officer, you will
perform the duties assigned to you from time to time by the Board. You may also be required to serve as the Chief Executive Officer and/or a director or other officer of subsidiaries or other related entities of the Company with no additional
compensation. You will be based out of our Irvine, California office. 
 Salary 
 Your bi-weekly salary will be $11,538 which equals $300,000 on an annualized basis, subject to increases from time to time at the discretion of the Board, and subject to reductions that do not constitute
a “material reduction in your salary” as defined below. 
 Benefits 
 You will be eligible to participate in benefits including health, dental, disability and life insurance, qualified retirement plans, and optional employee benefits which, by Board approval, are or become
available to all Company employees, except you will not participate in the Company-wide employee quarterly bonus/non-qualified profit sharing plan. You will receive the greater of (i) Paid Time Off equal to four weeks per year or (ii) Paid
Time Off in accordance with the plan established for senior executives of the Company. 
 You will receive reimbursement for ordinary and
necessary business expenses incurred in the ordinary course of business, consistent with the Company’s policies applicable to all employees (including, without limitation, the requirement to provide appropriate supporting documentation) and
subject to review by the Company’s finance department and Audit Committee. 
 Bonus/Incentive Compensation 

Commencing with the fiscal year beginning July 1, 2012 you will be eligible to participate in all Company created and Board approved incentive
compensation plans open to participation for 







 
senior executives of the Company, subject to the terms and provisions of the applicable plan documents covering any such plans. The terms of such plans may be changed from time to time at the
discretion of the Board. Currently, the Company offers an Annual Incentive Plan and a Long Term Incentive Plan. Copies of the related plan documents have been attached hereto as Exhibits A and Exhibit B respectively. 

Equity Grants 
 You will be permitted to
participate in any program of stock option or other equity grants which the Company may from time to time provide key employees. Such grants are made under the terms and provisions of the Second Amended and Restated 2004 Stock Option Plan in varying
amounts to individual participants based upon their perceived impact upon the long term success of the Company and are made at the sole and absolute discretion of the Board, generally at the first Board meeting following the filing of the
Company’s Form 10-K for the previous fiscal year. Subject to the foregoing, your initial grant under this program will be 200,000 options to purchase the Company’s common shares at the closing price for the Company’s shares as of the
last business day immediately prior to the grant date in which a closing price is available and such options will vest in their entirety on the third anniversary of the grant date. The options will have a term of ten years from the grant date and to
the maximum extent permissible under the relevant Internal Revenue Service regulations, will be made as Incentive Stock Options. The initial grant of options will occur on the sixth trading day following the release of the Company’s financial
results for the quarter ended March 31, 2012. 
 Term 
 This letter agreement will terminate on the third anniversary of its execution (which shall be deemed to be the date first set forth on the top of this document) but may be extended by a written agreement
executed by the parties and approved by the Board of Directors. Your employment is at-will, and the term of this letter agreement does not establish a specified term of employment with the Company. Upon the termination of this letter agreement
during your employment, without an express written extension executed by the parties and approved by the Board of Directors, your at-will employment with the Company will continue until terminated by the Company or by you, but shall no longer be
controlled by the terms and provisions of this letter agreement, and any obligations of the Company pursuant to this letter agreement, following its termination, shall be without force or effect. 

Termination/Severance 
 In the event that
your employment with the Company terminates for any reason, the Company shall pay you your (i) salary up through the date of termination (including any accrued but unused Paid Time Off remaining as of the termination date), plus; (ii) any
Annual Incentive Plan or Long Term Incentive Plan awards (or prorated portion thereof) actually earned based on existing Board-established criteria and the terms of such bonus plans, but not yet paid as of the termination date, each of which shall
be paid less applicable withholding for taxes as required by law. You shall also receive reimbursement for any ordinary and necessary business expenses outstanding as of the date of termination. 







 In addition to the above, in the event you are terminated involuntarily by the Company without
“Cause” or in the event that you resign for “Good Reason” each as defined below, the Company shall pay you severance compensation (the “Severance Payment”) in accordance with the Company’s general severance
policy in effect at that time (the “Severance Policy”). The full Severance Payment will be paid in accordance with the terms and conditions set forth in the Severance Policy. You hereby acknowledge that such Severance Payment will
be the total and sole remedy for any claims by you, known or unknown, arising from your employment with the Company or the termination thereof, and you will be required to execute a written separation agreement with the Company, substantially in the
form required by the Severance Policy, if applicable, otherwise, in the form and content of those agreements entered into by other employees leaving the Company, containing a general release of claims against the Company in form and content
acceptable to both you and the Company and our respective counsel. However, the separation agreement will not alter your rights under the Indemnification Agreement between you and the Company, indemnification provisions of the Company’s
Articles of Incorporation and/or Bylaws (if any), or the Company’s insurance for Officers and Directors. 
 As used herein, the term
“Cause” shall mean termination by the Company due to: 
  

	 	(i)	your inability or failure to adequately perform your duties with the Company; 


 

	 	(ii)	your failure to substantially follow and comply with the specific and lawful directives of the Board; 


 

	 	(iii)	The Board’s determination of your commission of an act of fraud or dishonesty; your indictment or plea of no contest in any state or federal jurisdiction for
any felony, or any misdemeanor crime involving dishonesty, moral turpitude, or which has, or is reasonably likely to have, an adverse effect on the Company’s image; gross misconduct; or your material violation of any material written policy,
guideline, code, handbook or similar document governing the conduct of directors, officers or employees of the Company or its related entities; however, if it is later determined that you did not violate the Company’s policies or
commit such acts as listed in this paragraph, your termination will deemed to have occurred for without “Cause”; or 

  

	 	(iv)	a material breach by you of the terms of this letter agreement. 

 As used herein, the term resignation for “Good Reason” shall mean your resignation due to: 
  

	 	(i)	a material reduction in your salary as set forth herein or failure of the Company to pay any amount owing to you hereunder when due. For purposes of this letter the
term “material reduction in your salary” shall mean an involuntary reduction of greater than twenty percent (20%) total from your maximum base salary for a consecutive period of more than six (6) months but shall not include an
“across the board” reduction of salary or benefits made applicable to substantially all Company employees; 









	 	(ii)	the Company’s requiring you to be based full time in any office or location outside of a one hundred (100) mile radius from your current residence in Rancho
Santa Fe, California; 

  

	 	(iii)	a material diminution in the scope of your authority, duties, and responsibilities, including the assignment of duties inconsistent with the position of a Chief
Executive officer of a publicly traded company; 

  

	 	(iv)	this Agreement is not renewed or a new employment agreement is not entered into within ninety (90) days prior to of the expiration of this Agreement or any renewal
thereof; 

 or 
  

	 	(iii)	a material breach by the Company of the terms of this letter agreement. 

 In case of a claim of “Cause” for termination, the Board shall promptly notify you in writing and in reasonable detail of the existence of such Cause, and if the basis of such claim is
reasonably susceptible of cure and in fact is fully cured within thirty (30) days of your receipt of such notice, it shall no longer be grounds for termination with “Cause” for resignation. In case of your claim of resignation for
“Good Reason,” your resignation must occur within a limited period of time not to exceed two (2) years following the initial event giving rise to the Good Reason, and you must notify the Company in writing and in reasonable detail of
the event or condition constituting “Good Reason” within thirty (30) days of the initial existence of such event or condition, specifying that you intend to terminate your employment for such Good Reason and specifying the facts and
circumstances constituting Good Reason. If the Company remedies the specified condition within thirty (30) days after receipt of such notice, it shall no longer be grounds for your resignation for “Good Reason.” 

The Board has approved a Change of Control Agreement for you to enter into with the Company, the form of which is attached to this letter as Exhibit C.
Upon a change of control (as defined in the Change of Control Agreement) and certain other conditions being met, you will receive certain payments in accordance with the terms and provisions of the Change of Control Agreement. 

Indemnification 
 The Company will
continue its commitment to indemnify you in accordance with the Company’s standard Indemnification Agreement for its officers and directors (which you have previously executed in your capacity as an officer and/or director of the Company) and
any such provisions concerning indemnification under its Articles of Incorporation or Bylaws. 
 At Will Employment; Other 

By entering into this letter agreement, you confirm your understanding that your employment will be on an “at-will” basis meaning that either
you or the Company may terminate the employment relationship at any time for any reason with or without notice or Cause, and that neither you nor the Company has entered into any other agreement regarding the duration of








 
your employment. this letter agreement represents the full and exclusive understanding between us of the matters set forth herein and supersedes fully any prior agreement between you and the
Company. There is no other agreement, written or oral, which governs the matters described herein. Any amendment to this letter agreement must be in writing, and must be executed by you and by an authorized representative of the Company’s
Board. 
 Please sign both copies of this letter to indicate your acceptance of this offer and retain one copy for your records and return the
second copy to us. 
  

					
	Pro-Dex, Inc.	 		 	
			
	 /s/ William Healey
	 		 	 /s/ Michael J. Berthelot

			
	William Healey	 		 	Michael J. Berthelot
	Chairman on behalf of	 		 	
	The Board of Directors	 		 	
			
	 /s/ Harold A. Hurwitz
	 		 	
	Harold A. Hurwitz, CFO