Document:

Exhibit 10.26

PRO-DEX, INC. 

CHARTER OF THE
AUDIT COMMITTEE 

PURPOSE:

             The
purpose of the Audit Committee (the "Committee") of the Board of Directors (the
"Board") of Pro-Dex, Inc., a Colorado corporation (the "Company") shall be to
make such examinations as are necessary to monitor the corporate financial
reporting and the internal and external audits of the Company, to provide the
Board the results of its examinations and recommendations derived therefrom, to
outline to the Board improvements made, or to be made, in internal accounting
controls, to nominate independent auditors, and to provide such additional
information and materials as it may deem necessary to make the Board aware of
significant financial matters which require the Board's attention.

COMPOSITION:

             Except as discussed herein, the
Committee shall be comprised of at least three members, a majority of which are
"independent" members of the Board, each of whom is able to read and understand
fundamental financial statements and at least one of whom has past employment
experience in finance or accounting, is a certified public accountant, or has
other comparable experience, including a current or past position as chief
executive, financial officer or other senior officer with financial oversight
responsibilities.  A member of the Board
is independent only if he or she has no relationship to the Company that may
interfere with the exercise of his or her independent judgment.  The members of the Committee and its
Chairman will be appointed by and serve at the discretion of the Board.

FUNCTIONS AND AUTHORITY:

             The
operation of the Committee shall be subject to the Bylaws of the Company, as in
effect from time to time, and Section 7, Article 108 of the Colorado Business
Corporation Act, as amended.  The
Committee shall be obligated, and shall have full power and authority, to carry
out the following responsibilities:

  	1.   	To
recommend annually to the full Board the firm of certified public accountants
to be employed by the Company as its independent auditors for the ensuing year.
	 
	2.   	To
receive a formal written statement from the Company's independent auditors
delineating all relationships between the auditors and the Company.

 

 

  	3.   	To
review the engagement of the independent auditors, including the scope, extent
and procedures of the audit and the compensation to be paid therefore, and all
other matters the Committee deems appropriate.
	 
	4.   	To
instruct the independent auditors that the independent auditors are accountable
to the Board and the Committee as stockholder representatives, and that the
Committee has a responsibility to select, evaluate, and where appropriate,
replace the independent auditors.
	 
	5.   	To
have familiarity, through the individual efforts of its members, with the
accounting and reporting principles and practices applied by the Company in
preparing its financial statements, including, without limitation, the policies
for recognition of revenues in financial statements.
	 
	6.   	To
periodically review new and proposed releases and pronouncements by the
Financial Accounting Standards Board (FASB), the American Institute of
Certified Public Accountants (AICPA) and the Securities and Exchange Commission
(SEC) that may affect current or future financial statements or other
disclosures in financial reports.
	 
	7.   	To
meet separately with management and the independent auditors, upon completion
of their audit, to review and discuss the Company's financial results for the
year, as reported in the Company's financial statements, or other disclosures.
	 
	8.   	To
provide a report in the Company's annual meeting proxy statement and the
Company's Form 10-K stating whether the Committee has complied with its
responsibilities under the Charter, including without limitation, whether the
Committee has reviewed and discussed the Company's audited financial statements
with the Company's management, whether the Committee recommended to the Board
that the audited financial statements be included in the Company's Annual
Report on Form 10-K, and whether anything came to the attention of the
Committee that caused the Committee to believe that the audited financial
statements contain any materially misleading information or omit any material
information.
	 
	9.   	To
instruct the independent auditors that the independent auditors shall discuss
the Company's financial results with the Committee and the Company's management
prior to filing of a Form 10-Q.

 

 

  
    	10.   	To
assist and interact with the independent auditors in order that they may carry
out their duties in the most efficient and cost effective manner.
	 
	11.   	To
evaluate the cooperation received by the independent auditors during their
audit examination, including their access to all requested records, data and
information, and elicits the comments of management regarding the
responsiveness of the independent auditors to the Company's needs.
	 
	12.   	To
review the Company's balance sheets, profit and loss statements and statements
of cash flows and stockholder's equity for each interim period, and any changes
in accounting policy that have occurred during the interim period.
	 
	13.   	To
review and approve all professional services provided to the Company by its
independent auditors and consider the possible effect of such services on the
independence of such auditors.
	 
	14.   	To
consult with the independent auditors and discuss with the Company management
the scope and quality of internal accounting and financial reporting controls
in effect.
	 
	15.   	To
determine, as regards to new transactions or events, the auditor's reasoning in
determining the appropriateness of the accounting principles and disclosure
practices adopted by management.
	 
	16.   	To
assure that the auditor's reasoning is described in determining the
appropriateness of changes in accounting principles and disclosure practices.
	 
	17.   	To
disclose in the Company's annual meeting proxy statement whether that Committee
has a written charter, and to file the Committee's Charter every three years in
the Company's annual meeting proxy statement.
	 
	18.   	To
review and update the Committee's Charter annually.
	 
	19.   	To
investigate, review and report to the Board the propriety and ethical
implications of any transactions, as reported or disclosed to the Committee by
the independent auditors, employees, officers members of the Board, or
otherwise, between (a) the Company and (b) any employee, officer or member of
the Board of the Company, or any affiliates of the foregoing.
	 
	20.   	To
perform such other functions and have such other power as may be necessary or
convenient in the efficient and lawful discharge of the foregoing.

  

 

 

MEETINGS AND PROCEDURAL
MATTERS:

 

            The
Committee will hold at least two regular meetings per year and additional
meetings as the Chairman or Committee deems appropriate.  The Committee will meet at such time as
shall be determined by its Chairperson, or upon the request of any two of its
members.  The agenda of each meeting
will be prepared by the Secretary of the Committee and, whenever reasonably
practicable circulated to each member prior to the meeting date.  The chief executive officer or the chief
accounting officer may attend any meeting of the Committee, except for portions
of the meetings where his, her or their presence would be inappropriate, as
determined by the Committee Chairman.

            One-third of the members, but not
less than two (2) members, will constitute a quorum.  A majority of the members present at any meeting at which a
quorum is present may act on behalf of the Committee.  The Chairperson will preside, when present, at all meetings of
the Committee.  The Committee may meet
by telephone, video conference, and may take action by written consent.  Minutes of each meeting of the Committee
shall be kept and distributed to each member of the Committee, members of the
Board who are not members of the Committee and the Secretary of the
Company.  The Chairman of the Committee
shall report to the Board from time to time, or whenever so requested by the
Board.ex10.27

A. SETTLEMENT
STATEMENT

U.S. Department of Housing

and Urban Development

OMB No. 2502-0265

	
  B.
  Type of Loan

  
	
  1.___FHA      2.___FMHA        3. X  Conf. Unins.             6. File Number  
  00205146          7. Loan Number      8. Mortgage Insurance Case Number

  4.___VA        5.___Conv. Ins.                                                
 

  
	
  C.
  NOTE: This form is furnished to give you a statement of actual settlement
  costs. Amounts paid to and by the settlement agent are shown.                 
  

  Items marked (P.O.C.) were
  paid outside the closing; they are shown here for information purposes and
  are not included in the totals.   

  
	
  D. Name and Address of Borrower                 
  E. Name and Address of Seller               
  F. Name and Address of Lender:   

  AHMAD NADIMI                                                PDMI SUBSIDIARY C. INC.                      CENTRAL BANK OF LAKE
  OF THE OZARKS

  5395 HWY 54                                                         151
  EAST COLUMBINE AVE.                    P.O. BOX 207

  OSAGE BEACH, MISSOURI 65065                    SANTA ANA, CA  92707                           OSAGE
  BEACH, MO 65065

  
	
  G.
  Property Location

  1100
  BLUFF DRIVE

  OSAGE BEACH, MISSOURI 65065 

  CHALLENGE PRODUCTS LOT 1

  	

  	
  H.
  Settlement Agent
 GUARANTY LAND TITLE INSURANCE, INC.

  
	

  	
  Place
  of Settlement

  4558 HI6HMAY 54, SUITE 104

  OSAGE BEACH, MO 65065

  	
  1. Settlement

  Date

  06/20/02

  
	
  4. SUMMARY OP
  BORROWER'S TRANSACTION:

  	
  K,
  SUMMARY OF SELLER'S TRANSACTION:

  
	
  100
  Gross Amount Due Prom Borrower

  	
  400.
  Gross Amount Due To Seller

  
	
  101.
  Contract sales price

  	

  	
  401.
  Contract sales price

  	
  395,000.00

  
	
  102.
  Personal property

  	

  	
  402.
  Personal Property

  	

  
	
  103.
  Settlement charges to borrower (Line 1400)

  	

  	
  403.

  	

  
	
  104.

  	

  	
  404.

  	

  
	
  105.

  	

  	
  405.

  	

  
	
  Adjustments
  for Items paid by seller in advance

  	
  Adjustments
  for items paid by seller in advance

  
	
  106.
  City/town taxes                          
                                        to

  	

  	
  406.
  City/town taxes                                                            
  to

  	

  
	
  107.
  County taxes                                                                    
  to

  	

  	
  407.
  County taxes                                                                 to

  	

  
	
  108.
  Assessments                                                                     to

  	

  	
  408.
  Assessments                                                                
  to

  	

  
	
  109.

  	

  	
  409.

  	

  
	
  110.

  	

  	
  410.

  	

  
	
  111.

  	

  	
  411.

  	

  
	
  112.

  	

  	
  412.

  	

  
	
  120.
  GROSS AMOUNT DUE FROM BORROWER

  	

  	
  420.
  GROSS AMOUNT DUE TO SELLER

  	
  395,000.00

  
	
  200.
  Amounts paid By or In Behalf of Borrower

  	
  500.
  Reductions In Amount Due To Seller

  	

  
	
  201.
  Deposit of earnest money

  	

  	
  501.
  Excess Deposit (see instructions)

  	

  
	
  202.
  Principal amount of new loans

  	

  	
  502.
  Settlement charges to seller (line 1400)

  	
  21,107.50

  
	
  203.
  Existing loan(s) taken subject to

  	

  	
  503.
  Existing loan(s) taken subject to

  	

  
	
  204.

  	

  	
  504.
  Payoff of first mortgage loan

  	
  109,561.83

  
	

  	

  	
  CENTRAl BANK OF LAKE OF THE OZARKS

  	

  
	
  205.

  	

  	
  505.
  Payoff of second mortgage loan

  	

  
	

  	

  	

  	

  
	
  206.

  	

  	
  506.

  	

  
	
  207.

  	

  	
  507.

  	

  
	
  208.

  	

  	
  508.

  	

  
	
  209.

  	

  	
  509.

  	

  
	
  Adjustments
  for Items unpaid by seller

  	
  Adjustments for Items unpaid by
  seller

  
	
  210.
  City/town taxes                                                              
  to

  	

  	
  510.
  City/town taxes                                                             
  to

  	

  
	
  211.
  County taxes                                                  01/01/ to 6/20

  	

  	
  511.
  County taxes                                               01/01 to 8/20

  	
  2,720.84

  
	
  212.
  Assessments                                                                   
  to

  	

  	
  512.
  Assessments                                                                   to

  	

  
	
  213.

  	

  	
  513. 
  

  	

  
	
  214.

  	

  	
  514.

  	

  
	
  215.

  	

  	
  515.

  	

  
	
  216.

  	

  	
  516.

  	

  
	
  217.

  	

  	
  517.

  	

  
	
  218.

  	

  	
  518.

  	

  
	
  219

  	

  	
  519.

  	

  
	
  220.
  TOTAL PAID BY/FOR BORROWER

  	

  	
  520.
  TOTAL REDUCTION AMOUNT DUE SELLER

  	
  133,390.17

  
	
  300.
  Cash At Settlement From or to Borrower

  	
  600.
  Cash At Settlement To or From Seller

  
	
  301.
  Gross amount due from borrower (line 120)

  	

  	
  601.
  Gross amount due to seller (line 420)

  	
  395,000.00

  
	
  302.
  Less amounts paid by/for borrower (line 220)

  	

  	
  602.
  Less reduction amount due seller (line 520)

  	
  133,390.17

  
	
  303.
  CASH FROM BORROWER

  	

  	
  603.
  CASH    TO    SELLER

  	
  261,609.83

  

 

 

U.S.
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT                SETTLEMENT STATEMENT                                                                 PAGE
2

	
  L.
  SETTLEMENT CHARGES:                                                    FILE
  #: 00205146

  	
  PAID
  FROM

  BORROWER'S

  FUNDS AT

  SETTLEMENT

  	
  PAID
  FROM

  SELLER'S

  FUNDS AT

  SETTLEMENT

  
	
  700.
  TOTAL SALES/BROKER'S COMMISSION based on price $                    395.000.00@               5.00 = 19,750.00

  
	
         Division of commission (line 700) as
  follows:

  
	
  701.$                        19.750.00 to John Farrell
  Real Estate

  
	
  702.$                                         to

  
	
  703.
  Commission paid at Settlement

  	

  	
  19,750.00

  
	
  704.

  	

  	

  
	
  800. ITEMS
  PAYABLE IN CONNECTION WITH LOAN

  
	
  801.
  Loan Origination Fee %

  	

  	

  
	
  802.
  Loan Discount %

  	

  	

  
	
  803.
  Appraisal Fee                     to

  	

  	

  
	
  804.
  Credit Report                      to

  	

  	

  
	
  805.
  Lender's Inspection Fee     to

  	

  	

  
	
  806. Mtg.
  Ins. Application Fee   to

  	

  	

  
	
  807.
  Assumption Fee                 to

  	

  	

  
	
  808.

  	

  	

  
	
  809.

  	

  	

  
	
  810.

  	

  	

  
	
  811.

  	

  	

  
	
  812.

  	

  	

  
	
  813.

  	

  	

  
	
  814.

  	

  	

  
	
  815.

  	

  	

  
	
  900.
  ITEMS REQUIRED BY LENDER TO BE PAID IN ADVANCE

  
	
  901.
  Interest from                          
                       to                                 @$                     /day                        Days

  	

  	

  
	
  902.
  Mortgage Insurance Premium for               
  to

  	

  	

  
	
  903. Hazard
  Insurance Premium for      yrs         to

  	

  	

  
	
  904.

  	

  	

  
	
  905.

  	

  	

  
	
  1000.
  RESERVES DEPOSITED WITH LENDER FOR

  
	
  1001.
  Hazard Insurance                                        mo.@$                     /mo.

  	

  	

  
	
  1002.
  Mortgage Insurance                                   mo.®$                     /mo.

  	

  	

  
	
  1003.
  City property taxes                                     mo.®$                     /mo.

  	

  	

  
	
  1004.
  County property taxes                               mo.®$                     /mo.

  	

  	

  
	
  1005.
  Annual Assessments                                mo.@$                    /mo.

  	

  	

  
	
  1006.                                                                      
  mo.@$                    /mo.

  	

  	

  
	
  1007.                                                                      
  mo.@$                    /mo.

  	

  	

  
	
  1008.

  	

  	

  
	
  1100.
  TITLE CHARGES

  
	
  1101.
  Settlement or closing fee                              to        GUARANTY LAND TITLE

  	

  	
  150.00

  
	
  1102.
  Abstract or title search                                 to

  	

  	

  
	
  1103. Title
  examination                                           to

  	

  	

  
	
  1104. Title
  insurance binder                                   to        GUARANTY LAND TITLE

  	

  	
  100.00

  
	
  1105.
  Document preparation                                  to

  	

  	

  
	
  1106.
  Notary fees                                  
                   to

  	

  	

  
	
  1107.
  Attorney's fees                                              to

  	

  	

  
	
  (includes
  above items No: )

  	

  	

  
	
  1108.
  Title insurance                                              
  to        GUARANTY LAND TITLE

  	

  	
  1.067.50

  
	
  (Includes
  above items No: )

  	

  	

  
	
  1109.
  Lender's coverage $

  
	
  1110.
  Owner's coverage $                                        395,000.00
  ---- 1067.50

  
	
  1111.
  OVERNIGHT PROCESSING FEE                           GUARANTY LAND
  TITLE

  	

  	
  40.00

  
	
  1112.

  	

  	

  
	
  1113.

  	

  	

  
	
  1200.
  GOVERNMENT RECORDING AND TRANSFER CHARGES .

  
	
  1201.
  Recording fees                                                 
  Deed$                       Mortgage $                             
  ;Releases $

  	

  	

  
	
  1202. City/county/stamps                                         Deed$                        Mortgage $

  	

  	

  
	
  1203.
  Slate tax/stamps                                               
  Deed$                        Mortgage $

  	

  	

  
	
  1204.

  	

  	

  
	
  1205.

  	

  	

  
	
  1300.
  ADDITIONAL SETTLEMENT CHARGES

  
	
  1301.
  Survey                                                            
  to

  	

  	

  
	
  1302.
  Pest Inspection                                              to

  	

  	

  
	
  1303.

  	

  	

  
	
  1304.

  	

  	

  
	
  1305.

  	

  	

  
	
  1306.

  	

  	

  
	
  1307.

  	

  	

  
	
  1308.

  	

  	

  
	
  1400.
  TOTAL SETTLEMENT CHARGES (enter on lines 103 and 502, Sections J and K)

  	

  	
  21,107.50

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