PRO-DEX, INC.

2004 AMENDED AND RESTATED DIRECTORS’ STOCK OPTION PLAN

This 2004 Amended and Restated Directors’ Stock Option Plan, adopted in consideration for services rendered and to be rendered to Pro-Dex, Inc. and related companies, is amended this 4th day of December, 2007 (the “ Plan ”).

1.         Definitions . Unless otherwise indicated or required by the particular context, the terms used in this Plan shall have the following meanings:

(a)          Board : The Board of Directors of Pro-Dex, Inc.

(b)          Code : The Internal Revenue Code of 1986, as amended.

(c)          Common Stock : The no par value common stock of Pro-Dex, Inc.

(d)          Company : Pro-Dex, Inc., a corporation incorporated under the laws of Colorado, and any successors in interest by merger, operation of law, assignment or purchase of all or substantially all of the property, assets or business of the Company.

(e)           Date of Grant : The date on which an Option (see below) is granted under the Plan.

(f)           Fair Market Value : If, at any time an Option is granted under the Plan, the Company’s Common Stock is publicly traded, Fair Market Value shall be determined as of the last business day for which the prices or quotes discussed in this sentence are available prior to the date an Option is granted and shall mean (i) the average (on that date) of the high and low prices of the Common Stock on the principal national securities exchange by which the Common Stock is traded, if the stock is then traded on a national securities exchange; or, (ii) the last reported sale price (on that date) of the Common Stock on an established securities market, if the stock is not then traded on a national securities exchange; or (iii) the closing bid price (or average of bid prices) last quoted (on that date) by an established securities market or quotation service for over-the-counter securities, if the last sale price is not reported for the stock on the service or market on which the stock is quoted.  However, if the Common Stock is not publicly-traded at the time an Option is granted under the Plan, Fair Market Value shall be as determined in good faith by the Board after such consultation with outside legal, accounting and other experts as the Board may deem advisable provided that such valuation shall take into account all available information material to the value of the company, including but not limited to the value of the tangible and intangible assets of the company, the present value of its anticipated future cash flows, the market value of the stock or equity interests in other entities engaged in substantially the same business, recent arm’s length transactions involving the sale of such stock, and other relevant factors.

(g)             Nonemployee Director : A person who is a member of the Board of Directors and who is not an employee of the Company.

(h)             Option : The rights to purchase Common Stock granted pursuant to the terms and conditions of an Option Agreement (defined below).

(i)            Option Agreement :  The written agreement (including any amendments or supplements thereto) between the Company and a Nonemployee Director designating the terms and conditions of an Option.

(j)              Option Shares : The shares of Common Stock underlying an Option granted to a Nonemployee Director.

(k)             Optionee : A Nonemployee Director who has been granted an Option.

2.          Purpose and Scope .

(a)             The purpose of this Plan is to advance the interests of the Company and its shareholders by affording Nonemployee Directors, whose participation and guidance contribute to the successful operation of the Company, and affording them an opportunity for investment in the Company and the incentive advantages inherent in stock ownership in this Company.

(b)             This Plan authorizes that Options be granted to Nonemployee Directors according to the formula set forth in Section 3 of this Plan.

(c)              It is the further intent of the Plan that it conform in all respects with the requirements of Rule 16b-3 of the Securities and Exchange Commission under the Exchange Act (“ Rule 16b-3 ”). To the extent that any aspect of the Plan or its administration is at any time viewed as inconsistent with the requirements of Rule 16b-3 or, in connection with ISOs, the Code, that aspect shall be deemed to be modified, deleted, or otherwise changed as necessary to ensure continued compliance with the Rule 16b-3 requirements.

3.          Operation of the Plan .

(a)             Grant of Options; Amount and Timing . Options to purchase 20,000 shares of Common Stock shall be granted under the Plan to each Nonemployee Director at the later to occur of (i) the date this Plan is adopted by the Company’s shareholders, or (ii) the date he or she is first elected or appointed a Nonemployee Director of the Company. In addition, effective on the anniversary dates of commencement of service on the Board, options to purchase an additional 15,000 shares shall automatically be granted to the Optionee provided that, at that time, he or she is a Nonemployee Director. All Options shall be exercisable only as set forth in Sections 3(c) and 6 below and shall be subject to the other terms and conditions set forth in this Plan or otherwise established by the Company.

(b)            Option Purchase Price . The exercise price for each Option Share shall be the Fair Market Value of the Company’s Common Stock on the Date of Grant.

(c)             Term . Each Option shall expire ten years after the Date of Grant, except that an Option will expire, if not exercised, 90 days after the Optionee ceases to be a director of the Company.  In no event shall an Option be extended beyond the initial ten year term unless said extension is granted at a time when the exercise price of the Option does not equal or exceed the Fair Market Value of the stock that could be purchased pursuant to the Option.

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(d)             Amendments . This Plan may be changed or modified from time to time provided, however, that, (i) no such change or modification shall impair any Option previously granted under the Plan; (ii) the provisions relating to the amount, price and timing of the Options shall not be amended more than once every six months other than to comport with changes in the Code, the Employee Retirement Income Security Act, or rules promulgated thereunder, or other applicable law; and (iii) the approval by the affirmative vote of the holders of a majority of shares of the Company’s securities present, or represented, and entitled to vote at a meeting duly held in accordance with the applicable laws of the State of Colorado, shall be required for any amendment which would do any of the following:

(i)         materially modify the eligibility requirements for receiving Options under the Plan;

(ii)        except as provided in Section 8 relative to capital changes, increase the number of shares purchasable pursuant to the granting of any Option hereunder or the exercise price of each Option;

(iii)        increase the maximum term of Options granted;

(iv)        decrease the minimum price at which Options may be granted;

(v)         change the dollar amount pursuant to which Options may be granted at any one time;

(vi)        change the timing of Option Grants; or

(vii)        increase the term of the Plan.

4.          Number of Shares . The Board is authorized to appropriate, issue and sell for the purposes of the Plan, an aggregate maximum of 500,000 shares of Common Stock, including both treasury and newly issued shares, or the number and kind of shares of stock or other securities which in accordance with Section 8 shall be substituted for the 500,000 shares or into which such 500,000 shares shall be adjusted. Such number of shares shall include any options granted under any other stock option plan of the Company that may from time to time become subject to and governed by the terms and conditions of this Plan. All or any unsold shares subject to an Option that for any reason expires or otherwise terminates before it has been exercised, again may be made subject to other Options granted under the Plan.

5.           Eligibility . Options shall be granted under the Plan only to Nonemployee Directors provided that any Nonemployee Director may waive his right to participate in the Plan.

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6.          Exercise of Options .

(a)              Each Option granted pursuant to this Plan shall be exercisable in full commencing six months after the Date of Grant, except as otherwise determined by the Board of Directors.

(b)               Except as otherwise provided in Section 9 , during the lifetime of the Optionee, the Option shall be exercisable only by the Optionee; provided that, in the event of the legal disability of an Optionee, the guardian or personal representative of the Optionee may exercise the Option.

(c)               Each Option shall be exercised in whole or in part by delivering to the office of the Treasurer of the Company written notice of the number of shares with respect to which the Option is to be exercised and by paying in full the purchase price for the Option Shares as set forth in Section 7 herei