EXHIBIT 10.1
SECOND MODIFICATION AGREEMENT

         
DATE:
  August 5, 2008    
 
       
PARTIES:
  Borrower:   WHITE ELECTRONIC DESIGNS CORPORATION,
 
      an Indiana corporation
 
       
 
  Bank:   JPMORGAN CHASE BANK, N.A., as Administrative
 
      Agent and Lender

RECITALS:
     A. Bank has extended to Borrower credit (“Loan”) under that Credit
Agreement, dated as of April 3, 2007 (as amended from time to time, “Credit
Agreement”) in the original principal amount of $30,000,000.00 as evidenced by
that Note (Revolving Loans) dated as of April 3, 2007 (the “Note”). As of
August 5, 2008, the outstanding principal balance of the Loan is $0.00. All
undefined capitalized terms used herein shall have the meaning given them in the
Credit Agreement.
     B. The Loan is secured by, among other things, the Security Documents. The
agreements, documents, and instruments securing the Loan and the Credit
Agreement are referred to individually and collectively as the “Security
Documents.”
     C. Borrower has requested that Bank modify the Loan and the Credit
Documents as provided herein. Bank is willing to so modify the Loan and the
Credit Documents, subject to the terms and conditions herein.
AGREEMENT:
     For good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Borrower and Bank agree as follows:
SECTION 1. ACCURACY OF RECITALS, ACKNOWLEDGEMENTS.
     1.1 Borrower acknowledges the accuracy of the Recitals.
SECTION 2. MODIFICATION OF CREDIT DOCUMENTS; OTHER AGREEMENTS.
     2.1 The definition of Net Income in Section 1.01 of the Credit Agreement is
hereby amended to read as follows:
     “Net Income” means, as applied to any Person, the net income (or net loss)
of such Person for the period in question (after provision for income taxes)
determined in accordance with GAAP, provided that the impact of any
extraordinary non-cash gains or losses, determined in accordance with GAAP and
any non-cash goodwill impairments or non-cash gains or losses on sale of

 

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discontinued operations shall be excluded from the determination of “Net
Income.”
SECTION 3. RATIFICATION OF CREDIT DOCUMENTS AND COLLATERAL.
     The Credit Documents are ratified and affirmed by Borrower and shall remain
in full force and effect as modified herein. Any property or rights to or
interests in property granted as security in the Credit Documents shall remain
as security for the Loan and the obligations of Borrower in the Credit
Documents.
SECTION 4. BORROWER REPRESENTATIONS AND WARRANTIES.
     Borrower represents and warrants to Bank:
     4.1 No default or event of default under any of the Credit Documents as
modified herein, nor any event, that, with the giving of notice or the passage
of time or both, would be a default or an event of default under the Credit
Documents as modified herein has occurred and is continuing.
     4.2 There has been no material adverse change in the financial condition of
Borrower or any other person whose financial statement has been delivered to
Bank in connection with the Loan from the most recent financial statement
received by Bank.
     4.3 Each and all representations and warranties of Borrower in the Credit
Documents are accurate on the date hereof.
     4.4 Borrower has no claims, counterclaims, defenses, or set-offs with
respect to the Loan or the Credit Documents as modified herein.
     4.5 The Credit Documents as modified herein are the legal, valid, and
binding obligation of Borrower, enforceable against Borrower in accordance with
their terms.
     4.6 Borrower is validly existing under the laws of the State of its
formation or organization and has the requisite power and authority to execute
and deliver this Agreement and to perform the Credit Documents as modified
herein. The execution and delivery of this Agreement and the performance of the
Credit Documents as modified herein have been duly authorized by all requisite
action by or on behalf of Borrower. This Agreement has been duly executed and
delivered on behalf of Borrower.
SECTION 5. BORROWER COVENANTS.
     Borrower covenants with Bank:
     5.1 Borrower shall execute, deliver, and provide to Bank such additional
agreements, documents, and instruments as reasonably required by Bank to
effectuate the intent of this Agreement.

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     5.2 Borrower fully, finally, and absolutely and forever releases and
discharges Bank and its present and former directors, shareholders, officers,
employees, agents, representatives, successors and assigns, and their separate
and respective heirs, personal representatives, successors and assigns, from any
and all actions, causes of action, claims, debts, damages, demands, liabilities,
obligations, and suits, of whatever kind or nature, in law or equity of
Borrower, whether now known or unknown to Borrower, and whether contingent or
matured, (i) in respect of the Loan, the Credit Documents, or the actions or
omissions of Bank in respect of the Loan or the Credit Documents and
(ii) arising from events occurring prior to the date of this Agreement.
SECTION 6. CONDITIONS.
     6.1 The agreements of Bank and the modifications contained herein shall not
be binding upon Bank until Bank has executed and delivered this Agreement and
Bank has received, at Borrower’s expense, all of the following, all of which
shall be in form and content satisfactory to Bank and shall be subject to
approval by Bank:
          (a) An original of this Agreement fully executed by the Borrower and
Guarantors.
          (b) Such resolutions or authorizations and such other documents as
Bank may require relating to the existence and good standing of that
corporation, partnership or trust, and the authority of any person executing
this Agreement or other documents on behalf of that corporation, limited
liability company, partnership or trust.
          (c) Payment of all the internal and external costs and expenses
incurred by Bank in connection with this Agreement (including, without
limitation, inside and outside attorneys, appraisal, appraisal review,
processing, title, filing, and recording costs, expenses, and fees).

SECTION 7.   INTEGRATION, ENTIRE AGREEMENT, CHANGE, DISCHARGE, TERMINATION, OR
WAIVER.

     The Credit Documents as modified herein contain the complete understanding
and agreement of Borrower and Bank in respect of the Loan and supersede all
prior representations, warranties, agreements, arrangements, understandings, and
negotiations. No provision of the Credit Documents as modified herein may be
changed, discharged, supplemented, terminated, or waived except in a writing
signed by the parties thereto.
SECTION 8. BINDING EFFECT.
     The Credit Documents as modified herein shall be binding upon and shall
inure to the benefit of Borrower and Bank and their successors and assigns and
the executors, legal administrators, personal representatives, heirs, devisees,
and beneficiaries of Borrower, provided, however, Borrower may not assign any of
its right or delegate any of its obligation under the Credit Documents and any
purported assignment or delegation shall be void.

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SECTION 9. CHOICE OF LAW.
     This Agreement shall be governed by and construed in accordance with the
laws of the State of Arizona, without giving effect to conflicts of law
principles.
SECTION 10. COUNTERPART EXECUTION.
     This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original and all of which together shall constitute one and
the same document. Signature pages may be detached from the counterparts and
attached to a single copy of this Agreement to physically form one document.
     DATED as of the date first above stated.

                  WHITE ELECTRONIC DESIGNS
CORPORATION, an Indiana corporation
 
           
 
  By:   /s/ Roger A. Derse    
 
  Name:   Roger A. Derse    
 
  Title:   VP/CFO    
 
     
 
   
 
      BORROWER  

                  JPMORGAN CHASE BANK, N.A., individually
and as Administrative Agent
 
           
 
  By:   /s/ Stephen B. Monyer    
 
  Name:   Stephen B. Monyer    
 
  Title:   VP    
 
           
 
      BANK  

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