Document:

exv10w1

Exhibit 10.1

EXECUTION VERSION

ASSET PURCHASE AGREEMENT

This ASSET PURCHASE AGREEMENT (this “Agreement”), is made and entered into as of this
25th day of March, 2010, by and between WHITE ELECTRONIC DESIGNS CORPORATION, an Indiana
corporation (the “Seller”), and BOWMAR LLC, an Indiana limited liability company (the
“Purchaser”). The Seller and Purchaser are hereinafter referred to as the
“Parties.”

WHEREAS, the Seller is engaged in the Business (as such term is defined in Exhibit A);
and

WHEREAS, the Seller wishes to sell to the Purchaser, and the Purchaser wishes to purchase from
the Seller, the Purchased Assets, and in connection therewith the Purchaser is willing to assume
from the Seller all of the Assumed Liabilities (as hereinafter defined), all upon the terms and
subject to the conditions set forth herein.

NOW, THEREFORE, in consideration of the promises and the mutual agreements and covenants
hereinafter set forth, and intending to be legally bound, the Seller and the Purchaser hereby agree
as follows:

ARTICLE I

DEFINITIONS

SECTION 1.01. Certain Defined Terms. For purposes of this Agreement terms not
otherwise defined in the body of this Agreement are defined in Exhibit A.

SECTION 1.02. Interpretation and Rules of Construction. In this Agreement, except to
the extent otherwise provided or that the context otherwise requires:

(a) when a reference is made in this Agreement to an Article, Section, Exhibit or Schedule,
such reference is to an Article or Section of, or an Exhibit or Schedule to, this Agreement unless
otherwise indicated;

(b) the table of contents and headings for this Agreement are for reference purposes only and
do not affect in any way the meaning or interpretation of this Agreement;

(c) whenever the words “include,” “includes” or “including” are used in this Agreement, they
are deemed to be followed by the words “without limitation;”

(d) the words “hereof,” “herein” and “hereunder” and words of similar import, when used in
this Agreement, refer to this Agreement as a whole and not to any particular provision of this
Agreement;

(e) all terms defined in this Agreement have the defined meanings when used in any certificate
or other document made or delivered pursuant hereto, unless otherwise defined therein;

 

 

(f) the definitions contained in this Agreement are applicable to the singular as well as the
plural forms of such terms;

(g) references to a Person are also to its successors and permitted assigns; and

(h) the use of “or” is not intended to be exclusive unless expressly indicated otherwise.

ARTICLE II

PURCHASE AND SALE

SECTION 2.01. Purchase and Sale of Assets.

(a) Upon the terms and subject to the conditions of this Agreement, at the Closing, the Seller
shall sell, assign, transfer, convey and deliver, or cause to be sold, assigned, transferred,
conveyed and delivered, to the Purchaser, and the Purchaser shall purchase from the Seller, all of
the Seller’s right, title and interest in and to the following assets (the “Purchased
Assets”):

     (i) the Real Property;

     (ii) the Tangible Assets;

     (iii) the Inventories, which, in no event shall be less than (A) with respect to
finished goods, twenty five thousand dollars ($25,000) and (B) with respect to the
aggregate, one million two hundred eighty thousand dollars ($1,280,000) of total net
Inventory (the “Anticipated Inventory Amount”);

     (iv) the rights of the Seller under the Assigned Contracts;

     (v) the Transferred Intellectual Property as listed on Schedule 3.11;

     (vi) all customer and supplier contact lists and information, all telephone and
facsimile numbers, advertising materials and business plans;

     (vii) the books of account, general, financial, tax and personnel records, invoices,
shipping records, supplier lists, correspondence and other documents, records and files and
any rights thereto owned, solely associated with or solely employed by the Seller in the
conduct of the Business;

     (viii) the Granite State Prepayment Amount as defined and discussed on Schedule
2.02 (a)(vi); and

     (iv) reimbursement from Palomar Products Inc., if any, due under the Purchase Order
(number 92-541829-BD) by and between Seller and Palomar Products Inc.

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(b) Notwithstanding anything in Section 2.01(a) to the contrary, the Seller shall not sell,
convey, assign, transfer or deliver, nor cause to be sold, conveyed, assigned, transferred or
delivered, to the Purchaser, and the Purchaser shall not purchase, and the Purchased Assets shall
not include, the Seller’s right title and interest to any assets of the Seller not expressly
included in the Purchased Assets (the “Excluded Assets”), including:

     (i) the Receivables;

     (ii) the other Excluded Assets on Schedule 2.01(b)(ii);

     (iii) all cash and cash equivalents, securities, and negotiable instruments of the
Seller on hand, in lock boxes, in financial institutions or elsewhere, including all cash
residing in any collateral cash account securing any obligation or contingent obligation of
the Seller or any Affiliate relating solely to the Business; and

     (iv) all rights of the Seller under this Agreement and the Additional Agreements.

SECTION 2.02. Assumption and Exclusion of Liabilities.

(a) Upon the terms and subject to the conditions set forth in this Agreement, the Purchaser
shall, by executing and delivering, at the Closing, the Assumption Agreement, assume, and agree to
pay, perform and discharge when due, the following obligations and Liabilities of Seller
(collectively, the “Assumed Liabilities”):

     (i) all Liabilities of the Seller related to the Assigned Contracts arising on or after
the Closing Date (except for Warranty Claims for products of the Business sold prior to the
Closing Date);

     (ii) all Liabilities for Warranty claims relating to products of the Business sold on
or after the Closing Date;

     (iii) all Liabilities in respect of any and all accounts payables and the accrued
vacation, sick leave, workers’ compensation claims and insurance claims of the Transferred
Employees arising on or after the Closing Date, including any claims or liabilities arising
out of any collective bargaining or other agreements (written or oral) between Purchaser and
the UAW (as defined below);

     (iv) all Environmental Liabilities arising on or after the Closing Date relating to the
Purchaser’s operation of the Business, use of the Real Property or other actions of the
Purchaser on or after the Closing Date;

     (v) all Taxes relating to the Purchased Assets or the Business other than (A) Excluded
Taxes, and (B) the portion of Taxes related to a Straddle Period which are attributable to
Seller pursuant to the terms hereof; and

     (vi) all Liabilities listed on Schedule 2.02 (a)(vi).

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(b) Notwithstanding any other provision of this Agreement, except for the Assumed Liabilities
expressly set forth in Section 2.02(a), Purchaser will not assume, acquire, or be responsible for
any Liabilities, obligations or expenses, whether fixed or contingent, known or unknown, matured or
unmatured, executory or non-executory, to the extent such liability or obligations arise out of
occurrences, events or transactions prior to the Closing Date, even if they do not become known
until after such date (collectively, the “Excluded Liabilities”). Excluded Liabilities
shall expressly include the following:

     (i) all Excluded Taxes and the portion of Taxes related to a Straddle Period which are
attributable to Seller pursuant to the terms hereof;

     (ii) all Liabilities relating to or arising out of the Excluded Assets;

     (iii) the Seller’s obligations under this Agreement;

     (iv) all Liabilities in respect of any and all accounts payables and the accrued
vacation, sick leave, workers’ compensation claims and insurance claims of the Transferred
Employees arising prior to the Closing Date;

     (v) all Environmental Liabilities relating to the Seller’s operation of the Business
prior to the Closing Date;

     (vi) all Liabilities under any Employee Benefit Plan created or maintained by Seller
(including, without limitation, the Unfunded Obligations); and

     (vii) all Liabilities for Warranty claims relating to products of the Business sold
prior to the Closing Date.

SECTION 2.03. Purchase Price; Allocation of Purchase Price.

(a) Subject to the adjustments set forth in Section 2.07, the purchase price for the Purchased
Assets shall be one million eight hundred thousand dollars ($1,800,000) (the “Purchase
Price”), of which one million five hundred thousand dollars ($1,500,000) shall be paid in cash
at the Closing by wire transfer in immediately available funds (the “Closing Payment
Amount”) and the other three hundred thousand dollars ($300,000) to be documented as the
Promissory Note.

(b) The sum of the Purchase Price and the Assumed Liabilities (to the extent required by Tax
Law) shall be allocated among the Purchased Assets as of the Closing in accordance with Exhibit
2.03(b) (the “Allocation”). For all Tax purposes, the Purchaser and the Seller agree that
the Contemplated Transactions shall be reported in a manner consistent with the terms of this
Agreement, including the Allocation, and that neither of them will take any position inconsistent
therewith in any Tax Return, in any refund claim, in any litigation, or otherwise. Each of the
Seller and the Purchaser agrees to cooperate with the other in preparing IRS Form 8594, and to
furnish the other with a copy of such form prepared in draft form within a reasonable period before
its filing due date.

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SECTION 2.04. Closing. Subject to the terms and conditions of this Agreement, the
sale and purchase of the Purchased Assets and the assumption of the Assumed Liabilities
contemplated by this Agreement shall take place at a closing (the “Closing”) to be held at the
offices of Snell & Wilmer L.L.P., One Arizona Center, 400 East Van Buren Street, Phoenix, Arizona
85004 on the date of this Agreement.

SECTION 2.05. Closing Deliveries by the Seller. At the Closing, the Seller shall
deliver or cause to be delivered to the Purchaser:

(a) executed counterparts of each Additional Agreement to which the Seller is a party;

(b) a true and complete copy, certified by a duly authorized officer of the Seller, of the
resolutions duly and validly adopted by the appropriate members or other authorized body of the
Seller evidencing its authorization of the execution and delivery of this Agreement and the
Additional Agreements and the consummation of the Contemplated Transactions; and

(c) possession of the Purchased Assets.

SECTION 2.06. Closing Deliveries by the Purchaser. At the Closing, the Purchaser
shall deliver to the Seller (except as to the deliverables in Section 2.06(c) which Seller may
waive as of Closing and which thereafter become post-Closing deliverables which must be delivered
by Purchaser to Seller within three (3) days of the Closing Date):

(a) the Closing Payment Amount by wire transfer in immediately available funds to the Purchase
Price Bank Account;

(b) executed counterparts of each Additional Agreement to which the Purchaser is a party;

(c) as required by Section 42.1204 of the Federal Acquisition Regulations (“FAR”):

     (i) evidence of Purchaser’s capability to perform the currently open contracts
with the U.S. government that the Seller holds that are as set forth in Schedule
2.06(d) (hereinafter the “USG Contracts”) and are the subject of the
novation agreement previously provided to Purchaser by Seller, as prescribed by the
U.S. government with the express understanding by Purchaser that the U.S. government
may request additional evidence to what is provided by Purchaser at Closing; with
Purchaser’s express agreement herein that it will provide to Seller whatever
information is requested by the U.S. government regarding Purchaser’s capability to
perform the USG Contracts, and with Purchaser’s express commitment to take all
commercially reasonable steps (not including the payment of money, creation of any
escrow or contribution of any additional capital) to assist Seller in its efforts to
convince the U.S. government that the novation of the USG Contracts is in the best
interest of the U.S. government;

     (ii) an authenticated copy of Purchaser’s articles of organization and
operating agreement;

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     (iii) an opinion of legal counsel of Purchaser; and

     (iv) balance sheets of Purchaser as of immediately before and after the Closing
Date, with signed certifications by a senior official of Purchaser explaining why
independent accountants have not certified the accuracy of the balance sheets, yet
explaining why the Purchaser feels the balance sheets are accurate; and

(d) a true and complete copy, certified by an authorized officer of the Purchaser, of the
resolutions duly and validly adopted by the board of directors (or similar body) of the Purchaser
evidencing its authorization of the execution and delivery of this Agreement and the Additional
Agreements to which it is a party and the consummation of the transactions contemplated hereby and
thereby.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

OF THE SELLER

Seller represents and warrants the following to Purchaser as of the date hereof:

SECTION 3.01. Organization and Good Standing. Seller is a corporation, duly
organized and validly existing under the laws of Indiana.

SECTION 3.02. Authority and Enforceability; No Conflict.

(a) Seller has the power and authority to enter into this Agreement, to enter into the
Additional Agreements and to consummate the Contemplated Transactions. The execution and delivery
of this Agreement and the Additional Agreements have been authorized by all necessary action on
Seller’s part. This Agreement and the Additional Agreements to which Seller is a party, when fully
executed and delivered, will constitute legal, valid and binding obligations of Seller, enforceable
against it in accordance with their respective terms except that such enforcement may be subject to
(i) bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting or relating
to enforcement of creditors’ rights generally and (ii) general equitable principles.

(b) Assuming that all consents, approvals, authorizations and other actions described in
Schedule 3.2 with respect to Seller with respect to Purchaser have been obtained and except
as may result from any facts or circumstances relating solely to Purchaser, Seller’s execution and
delivery of this Agreement and the Additional Agreements and the consummation of the Contemplated
Transactions do not violate, conflict with or result in a breach of any provision of (i) Seller’s
Governing Documents, (ii) any statute, law, ordinance, rule, regulation, judgment, decree, order,
injunction, writ, permit or license of any court or Governmental Authority applicable to Seller or
any of its properties or assets, or (iii) any note, bond, mortgage, indenture, deed of trust,
license, franchise, permit, concession, contract, lease or other instrument, obligation or
agreement of any kind to which Seller is now a party or by which it or any of its properties or
assets may be bound or affected, except in the case of clauses (ii) and (iii), as would not (A)
materially and adversely affect the ability of the Seller to carry out its

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obligations under and to consummate the Contemplated Transactions, or (B) otherwise have a
Material Adverse Effect.

SECTION 3.03. Financial Statements.

(a) True and complete copies of (i) the unaudited balance sheet of the Business for the fiscal
year ended as of September 30, 2009, and the related unaudited statements of income and cash flows
of the Business (collectively, the “Financial Statements”) and (ii) the unaudited balance
sheet of the Business as of January 31, 2010, and the related unaudited statements of income and
cash flows of the Business have been delivered by the Seller to the Purchaser (the “Interim
Financial Statements”).

(b) The Financial Statements and the Interim Financial Statements (i) were prepared in
accordance with the books of account and other financial records of the Seller (except as may be
indicated in the notes thereto), and (ii) present fairly in all material respects the financial
condition and results of operations of the Business as of the dates thereof or for the periods
covered thereby and (iii) were prepared in accordance with GAAP applied on a basis consistent with
the past practices of the Seller, clauses (ii) and (iii) above being subject, in the case of the
Interim Financial Statements, to normal recurring year end adjustments and the absence of notes,
the effect of which are not, individually or in the aggregate, material.

SECTION 3.04. Undisclosed Liabilities. Except as set forth on Schedule 3.4,
the Purchased Assets have no liabilities or obligations of any nature required to be reflected on a
balance sheet prepared in accordance with GAAP, other than those (a) reflected in the Disclosure
Schedules to this Agreement, (b) current liabilities incurred by the Business in the ordinary
course since January 31, 2010 or (c) which would not have a Material Adverse Effect.

SECTION 3.05. Tax Matters. Except as set forth on Schedule 3.5:

(a) the Seller has not received from any foreign, federal, state or local taxing authority,
and which remains currently unresolved, any (a) written notice indicating an intent to open an
audit or other review, (b) request for information related to Tax matters, or (c) notice of any
assessment or proposed assessment for any period; and

(b) there are no liens for Taxes on any of Seller’s assets, other than liens for Taxes not yet
due and payable.

SECTION 3.06. Title. Seller has sufficient title to the Purchased Assets and
the Real Property to conduct its business as currently conducted, with only such exceptions as
would not, individually or in the aggregate, have a Material Adverse Effect. The Purchased Assets
are free and clear of Encumbrances in an aggregate amount equal to or less than ten thousand
dollars ($10,000) (except for Encumbrances for Taxes for the current year which are not yet due and
payable). To the Seller’s Knowledge, the Seller has not conducted any repairs to the Real Property
in an aggregate amount equal to or more than ten thousand dollars ($10,000) in the previous ninety
(90) days prior to the Closing Date.

(a) Schedule 3.6(a) contains a true and complete list of all material Tangible Assets
that Seller primarily used in connection with the operation of, or that are related to, the

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Business or the absence of which would not individually or in the aggregate result in a
Material Adverse Effect.

(b) Schedule 3.6(b) contains a true and complete list of all material Prepaid Expenses
relating to the Business.

	 	 	SECTION 3.07. Contracts.

(a) Schedule 3.7 (a) identifies each Material Contract (but only to the extent such
contract and agreement would be transferred to Purchaser hereunder or the absence of which would
not individually or in the aggregate result in a Material Adverse Effect). Seller has delivered to
Purchaser a true and complete copy of each Material Contract.

(b) Except as set forth on Schedule 3.7 (b):

          (i) each Material Contract is in full force and effect and is legal, valid, binding and
enforceable against Seller (and to Seller’s Knowledge binding and enforceable against the
other parties to the Material Contracts) in accordance with its terms;

          (ii) each Material Contract is assignable by Seller to Purchaser without the consent of
any other Person;

          (iii) to Sellers’ Knowledge, following the Closing, each Assigned Contract will
continue to be legal, valid, binding, enforceable and in full force and effect on identical
terms; and

          (iv) to Seller’s Knowledge, there exist no defaults by Seller under any Assigned
Contract (except such defaults, which taken as a whole, would not result in a Material
Adverse Effect).

SECTION 3.08. Real Property.

(a) Schedule 3.8 sets forth the address, legal description and tax parcel
identification number for the Real Property. Except for the Real Property, Seller does not own or
lease any property necessary for the continued operation of the Business as it is currently being
conducted.

(b) Except as disclosed to Purchaser in writing, Seller has not assigned, transferred,
conveyed, mortgaged, deeded in trust or encumbered all or any portion of its interest in any of the
Real Property.

SECTION 3.09. Condition of Assets. Except as set forth on Schedule
3.9:

(a) the Tangible Assets are in generally good repair and operating condition (ordinary wear
and tear excepted), are suitable for immediate use in the ordinary course of operating the
Business; and

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(b) Seller has maintained all of the Tangible Assets in the ordinary course of the Business.

SECTION 3.10. Inventories. To Seller’s Knowledge, each item of Seller’s finished
goods Inventory is fit for the purpose for which it was manufactured by the Business. Except as
otherwise shown on Schedule 3.10, to Seller’s Knowledge, Seller is not in possession of any
Inventory that it does not own.

SECTION 3.11. Intellectual Property. The attached Schedule 3.11 contains a
true and complete list of Transferred Intellectual Property and any and all corporate and assumed
names under which Seller has conducted (in the past 15 years) or is currently conducting the
Business. Except as set forth on the attached Schedule 3.11 and to Seller’s Knowledge,
Seller has the right to use and own, has good and marketable title to and has the exclusive right
to assign its entire right, title and interest in and to all of the Transferred Intellectual
Property, and each item of the Transferred Intellectual Property is in full force and effect. To
Seller’s Knowledge, the items comprising the Transferred Intellectual Property are the only
Intellectual Property necessary to conduct the Business as presently conducted by Seller. To
Seller’s Knowledge, Seller has received no written notice from any third party claiming that any of
the Transferred Intellectual Property infringes on the rights of any third party.

SECTION 3.12. Permits and Licenses. Schedule 3.12 is a list of all Licenses.
Seller has provided Purchaser with copies of all Licenses. Except as set forth on Schedule
3.12, all of the Licenses are in full force and effect and are assignable or transferable to
Purchaser in connection with the Contemplated Transactions.

SECTION 3.13. Employees.

(a) Schedule 3.13(a) contains an accurate list of all of the agents and employees of
Seller who are employed at the Business and the following information: (i) each employee’s and
agent’s current salary or hourly rate, (ii) annual bonus (and, if applicable, any fringe benefits
available to such employees), if any, for the fiscal year ended September 30, 2009 and the current
fiscal year, (iii) each employee’s and agent’s title and position; (iv) whether any such employee
or agent is employed fulltime at the Business; and (v) whether such employee or agent is absent
from active employment and, if so, the date such absence commenced, the reason for such absence and
the anticipated date of return to active employment.

(b) Except as set forth on Schedule 3.13(b) or as agreed to or negotiated by
Purchaser, to Seller’s Knowledge there are no, nor have there ever been, written or verbal
collective bargaining or union contracts, employment agreements or other understandings with or
affecting any of Seller’s employees who are listed on Schedule 3.13.

(c) Except as set forth on Schedule 3.13(c), all payments due from Seller on account
of employees’ work, including health or welfare insurance, vacation monies, retirement plan
contributions and severance payments, have been paid pursuant to the ordinary course of the
Business.

(d) To Seller’s Knowledge and except as set forth on Schedule 3.13(d) or as may have
been conveyed to Purchaser by the labor union established in connection with the Business

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(i) no labor dispute pertaining to the Business has been threatened in writing by the
applicable union, and (ii) there are no unfair labor practice complaints pending against the Seller
or threatened in writing.

(e) Seller has supplied Purchaser a complete and materially accurate copy of (i) each
employee’s Form I-9 (Employment Eligibility Verification Form) and (ii) all other records,
documents or other papers prepared, procured or retained by Seller pursuant to the Immigration
Reform and Control Act of 1986. Seller has not been cited, fined, served with a notice of intent
to fine or with a cease and desist order, nor, to Seller’s Knowledge has any action or
administrative proceeding been initiated or threatened in writing against the Seller by reason of
any actual or alleged failure to comply with the Immigration Reform and Control Act of 1986.

(f) To Seller’s Knowledge and assuming Purchaser hires the Transferred Employees, Seller has
not engaged in any “Plant Closing” or “Mass Layoff” in connection with the Contemplated
Transactions as defined in the Worker Adjustment and Retraining Notification Act (WARN).

SECTION 3.14. Employee Benefits.

(a) Plans and Material Documents. Schedule 3.14 lists all Employee Benefit
Plans with respect to which the Seller has any obligation or which are maintained, contributed to
or sponsored by the Seller for the benefit of any current or former employee, officer or director
of the Business. Each Employee Benefit Plan is in writing, and the Seller has made available to
the Purchaser a true and complete copy of each such plan.

(b) Compliance of Plans. Each Employee Benefit Plan has been operated in all material
respects in accordance with its terms and the requirements of applicable Requirements of Law. The
Seller has performed all material obligations required to be performed by it under, not in any
material respect in default under or in material violation of, and the Seller has no Knowledge of
any material default or violation by any party to, any Employee Benefit Plan. No Proceeding is
pending or, to the Knowledge of the Seller, threatened with respect to any Employee Benefit Plan
(other than claims for benefits in the ordinary course).

(c) Qualification of Certain Plans. Except as specifically set forth in Schedule
3.14, each Employee Benefit Plan that is intended to be qualified under Section 401 of the Code
has timely received a favorable determination letter from the IRS covering all of the provisions
applicable to such plan (for which determination letters are currently available) that such plan is
so qualified and any trust established in connection with any Employee Benefit Plan which is
intended to be exempt from federal income taxation under Section 501 of the Code has received a
determination letter from the IRS that it is so exempt, and no letter from the IRS to adversely
affect the qualified status of any such plan or the exempt status of any such trust has been
received.

(d) No Multiemployer Plans or Unfunded Obligations. None of the Employee Benefit
Plans are multiemployer plans (as defined by the Code or ERISA) and Seller has made all
contributions to such Employee Benefit Plans as required by the terms of such Plans and

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applicable law arising out of pre-Closing employee services except as otherwise set forth on
Schedule 3.14(d).

SECTION 3.15. Customers. Schedule 3.15 lists, for the fiscal year ended September
30, 2009, and for the four months ending January 31, 2010, the ten (10) largest customers (by
dollar volume) of the Business during such year or partial year, showing the dollar volume of each.
As of the date hereof, to Seller’s Knowledge, no customer listed in Schedule 3.15 has notified
Seller of its intention to cease or substantially reduce purchasing goods or services from Seller.

SECTION 3.16. Suppliers. Schedule 3.16 lists, for the fiscal year ended September
30, 2009 and for the four months ending January 31, 2010, the ten (10) largest suppliers (by dollar
volume) of the Business during such year or partial year, showing the dollar volume of each. As of
the date hereof, to Seller’s Knowledge, no supplier listed in Schedule 3.16 has notified Seller of
its intention to cease or substantially reduce supplying goods or services to Seller.

SECTION 3.17. Environmental, Health and Safety Matters. Seller has provided
Purchaser with true, correct and complete copies of all Environmental Reports within Seller’s
possession generated within the last three (3) years with respect to the Business. To Seller’s
Knowledge, and except as set forth in the Environmental Reports or on Schedule 3.17 or as
would not otherwise have a Material Adverse Effect:

(a) Seller has not received notice of Proceedings or losses relating to alleged violations by
Seller of any Environmental Laws relating to the Business or relating to the presence, discharge,
release or disposal of Hazardous Materials at, on, in or under the Real Property, or any property
adjoining the Real Property;

(b) Seller has not received notice or a request for information as a potentially responsible
party for any facility, site or location pursuant to CERCLA or other similar Environmental Law
relating to the Business or the Real Property; and

(c) There are currently no underground storage tanks, active or abandoned on or under the Real
Property.

SECTION 3.18. Legal Proceedings; Orders. Except as set forth in Schedule
3.18 there is no pending or, to Seller’s Knowledge, threatened Proceeding by or against
Seller or that primarily relates to the Business or any of the Purchased Assets that would have a
Material Adverse Effect or would affect the legality, validity or enforceability of this Agreement,
any Additional Agreements or the Contemplated Transactions. Except as set forth in Schedule
3.18, there is no Order to which the Purchased Assets is subject.

SECTION 3.19. Compliance With Laws. Except as set forth in Schedule 3.19 and
as would not (a) adversely affect the ability of the Seller to carry out its obligations under, and
to consummate the transactions contemplated by, this Agreement and the Additional Agreements or (b)
otherwise have a Material Adverse Effect,

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(a) Seller has conducted and continues to conduct the Business in accordance with all
Requirement of Law applicable to the Business or the ownership or use of any of its assets; and

(b) to Seller’s Knowledge, Seller has not received any notice or other communication (whether
oral or written) from any Governmental Authority or any other Person regarding (A) any actual,
alleged, possible or potential violation of, or failure to comply with, any Requirement of Law or
(B) any actual, alleged, possible or potential obligation on the part of Seller to undertake, or to
bear all or any portion of the cost of, any remedial action of any nature.

SECTION 3.20. Warranty Matters.

(a) Schedule 3.20 contains an accurate list of any individual warranty claim with an
amount in question equal to or more than $5,000 made with respect to goods or services provided by
the Business since January 1, 2006, including the claimant’s name, the nature of the claim and the
amount paid to satisfy the claim. Schedule 3.20 contains a true and complete list of each
form of Warranty related to products of the Business.

(b) Except as listed on Schedule 3.20, Seller is not aware of (i) any actual or
alleged accident, failure, condition or defect in any of Seller’s products or services that
resulted, or is alleged to have resulted, in bodily injury or damage to property (including
Seller’s product), or (ii) any complaints of defects in, or complaints of any actual or potential
malfunction of, any of Seller’s products and services.

SECTION 3.21. Brokers’ or Finders’ Fees. Neither Seller nor any of its employees,
agents or representatives have incurred any obligation, contingent or otherwise, for brokerage or
finders’ fees or agents’ commissions or other similar payments in connection with the sale of the
Purchased Assets or the Contemplated Transactions.

SECTION 3.22. Relationships with Related Persons. Except as disclosed in
Schedule 3.22 or as a result of ownership of equity stock in the Seller, no Affiliate,
officer or director of Seller:

(a) has any interest in any property (whether real, personal or mixed) used in or pertaining
to the Business;

(b) has business dealings or a material financial interest in any transaction with the
Business; or

(c) has engaged in competition with the Business with respect to any line of the products or
services of the Division in any market presently served by Seller, except for individual ownership
of less than ten percent (10%) of the outstanding capital stock of a competing business that is
publicly traded on any recognized exchange or in the over the counter market.

SECTION 3.23. Disclaimer of Seller. (A) THE PURCHASED ASSETS AND THE REAL PROPERTY
ARE BEING SOLD ON AN “AS IS,” “WHERE IS” BASIS AS OF THE CLOSING AND IN ITS CONDITION AS OF CLOSING
WITH “ALL FAULTS” AND,

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EXCEPT FOR REPRESENTATION AND WARRANTIES SET FORTH IN THIS ARTICLE III OR AS CONTAINED IN ANY
DEED TO ANY REAL PROPERTY DELIVERED AT THE CLOSING, NONE OF THE SELLER, ITS AFFILIATES OR ANY OF
THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES OR REPRESENTATIVES MAKE OR HAVE MADE ANY OTHER
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN RESPECT OF THE BUSINESS OR
ANY OF THE PURCHAED ASSETS, INCLUDING WITH RESPECT TO (I) MERCHANTABILITY OR FITNESS FOR ANY
PARTICULAR PURPOSE, (II) THE OPERATION OF THE BUSINESS BY THE PURCHASER AFTER THE CLOSING, (III)
THE PROBABLE SUCCESS OR PROFITABILITY OF THE BUSINESS AFTER THE CLOSING, OR (IV) THE BOWMAR NAME OR
ANY RIGHTS THAT SELLER MAY HAVE UNDER THIS MARK AND (B) OTHER THAN AS EXPRESSLY PROVIDED IN ARTICLE
VII OF THIS AGREEMENT, NONE OF THE SELLER, ITS AFFILIATES OR ANY OF THEIR REPRESENTATIVES WILL HAVE
OR BE SUBJECT TO ANY LIABILITY TO THE PURCHASER, ITS AFFILIATES OR REPRESENTATIVES RESULTING FROM
INFORMATION PROVIDED TO THE PURCHASER, ITS AFFILIATES, ADVISORS OR REPRESENTATIVES, WHETHER ORALLY
OR IN WRITING, IN CERTAIN DATA ROOMS, MANAGEMENT PRESENTATIONS, DISCUSSIONS OR RESPONSES TO
QUESTIONS IN CONNECTION WITH THE EVALUATION OF THE CONTEMPLATED TRANSACTIONS. ANY SUCH OTHER
REPRESENTATION OR WARRANTY IS HEREBY EXPRESSLY DISCLAIMED.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

OF THE PURCHASER

Purchaser represents and warrants the following to Seller as of the date hereof:

SECTION 4.01. Organization and Good Standing. Purchaser is a limited liability
company, duly organized and validly existing under the laws of Indiana.

SECTION 4.02. Authority and Enforceability; No Conflict.

(a) Purchaser has the power and authority to enter into this Agreement, to enter into the
Additional Agreements and to consummate the Contemplated Transactions. The execution and delivery
of this Agreement and the Additional Agreements have been authorized by all necessary action on
Purchaser’s part. This Agreement and the Additional Agreements to which Purchaser is a party, when
fully executed and delivered, will constitute legal, valid and binding obligations of Purchaser,
enforceable against it in accordance with their respective terms except that such enforcement may
be subject to (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting or relating to enforcement of creditors’ rights generally and (ii) general equitable
principles.

(b) Assuming that all consents, approvals, authorizations and other actions described in
Schedule 3.2 (with respect to Seller) and in Schedule 4.2 (with respect to
Purchaser) have been obtained and except as may result from any facts or circumstances relating
solely to Seller, Purchaser’s execution and delivery of this Agreement and the Additional
Agreements and

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the consummation of the Contemplated Transactions do not violate, conflict with or result in a
breach of any provision of (i) Purchaser’s Governing Documents, (ii) any statute, law, ordinance,
rule, regulation, judgment, decree, order, injunction, writ, permit or license of any court or
governmental authority applicable to Purchaser or any of its properties or assets, or (iii) except
as set forth in Schedule 4.2, any note, bond, mortgage, indenture, deed of trust, license,
franchise, permit, concession, contract, lease or other instrument, obligation or agreement of any
kind to which Purchaser is now a party or by which it or any of its properties or assets may be
bound or affected, except in the case of clauses (ii) and (iii), as would not (A) materially and
adversely affect the ability of the Purchaser to carry out its obligations under and to consummate
the Contemplated Transactions, or (B) otherwise have a material adverse effect.

SECTION 4.03. Financing. As of the date hereof, the Purchaser has sufficient
immediately available funds to pay, in cash, the Purchase Price and all other amounts payable
pursuant to this Agreement and the Additional Agreements or otherwise necessary to consummate the
Contemplated Transactions.

SECTION 4.04. Litigation. Except as set forth in Schedule 4.4, as of the
date hereof, no Proceeding by or against the Purchaser is pending or, to the knowledge of the
Purchaser, threatened, which could affect the legality, validity or enforceability of this
Agreement, any Additional Agreement or the consummation of the Contemplated Transactions.

SECTION 4.05. Brokers. Neither Purchaser nor any of its employees, agents or
representatives have incurred any obligation, contingent or otherwise, for brokerage or finders’
fees or agents’ commissions or other similar payments in connection with the sale of the Purchased
Assets or the Contemplated Transactions.

SECTION 4.06. Independent Investigation; Seller’s Representations. The Purchaser has
conducted its own independent investigation, review and analysis of the business, operations,
assets, liabilities, results of operations, financial condition, technology and prospects of the
Business, which investigation, review and analysis was done by the Purchaser and its Affiliates and
representatives. The Purchaser acknowledges that it and its representatives have been provided
adequate access to the personnel, properties, premises and records of the Business for such
purpose. In entering into this Agreement, the Purchaser acknowledges that it has relied solely
upon the aforementioned investigation, review and analysis and not on any factual representations
or opinions of the Seller or its representatives (except the specific representations and
warranties of the Seller set forth in Article IV and the schedules thereto and in the Additional
Agreements). The Purchaser hereby agrees and acknowledges that (a) other than the representations
and warranties made to Seller in Article IV and Deed (if any), none of the Seller, its Affiliates,
or any of their respective officers, directors, employees or representatives make or have made any
representation or warranty, express or implied, at law or in equity, with respect to the Purchased
Assets or the Business including as to (i) merchantability or fitness for any particular use or
purpose, (ii) the operation of the Business by the Purchaser after the Closing in any manner other
than as used and operated by the Seller or (iii) the probable success or profitability of the
Business after the Closing and (b) other than the obligations of the Seller set forth in
Section 7.02, none of the Seller, its Affiliates, or any of their respective officers,
directors, employees or representatives will have or be subject to any liability or indemnification
obligation to the Purchaser or to any other Person resulting from the distribution to the

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Purchaser, its Affiliates or representatives of, or the Purchaser’s use of, any information
relating to the Business, including any information, documents or material made available to the
Purchaser, whether orally or in writing, in certain “data rooms,” management presentations,
functional “break-out” discussions, responses to questions submitted on behalf of the Purchaser or
in any other form in expectation of the Contemplated Transactions. No knowledge that the Purchaser
should have gained as a result of its due diligence investigation shall limit the scope of the
remedies available to Purchaser based on Seller’s representations and warranties made in Article IV
of this Agreement or any of the Additional Agreements; provided, however that the knowledge that
Purchaser has obtained as a result of the independent investigation, review and analysis of the
business, operations, assets, liabilities, results of operations, financial condition, technology
and prospects of the Business shall prevent Purchaser from later making a claim for a breach of a
covenant set forth in this Agreement or specific representations and warranties of the Seller set
forth in Article III (and the related disclosure schedules) and in the Additional Agreements.

ARTICLE V

ADDITIONAL AGREEMENTS

SECTION 5.01. Maintenance of Customer and Government Certifications.

(a) The Seller shall use its commercially reasonable efforts to assist Purchaser in
maintaining the certifications, existing at the Closing Date, from the Seller’s customers related
to the Business, including both private and governmental certifications but excluding general
quality certifications similar to the following certifications of the Business: AS9100/ISO9001
Registered, Calibration Compliance to ISO 10012 and ESD Controls — Reference MIL-STD-1686)
(“Certifications”).

(b) If, in maintaining the Certifications (or undergoing third-party audits or assessments
related to Certifications), the Purchaser incurs reasonable costs and expenses from external
advisors or counsel during the two (2) years following the Closing Date, the Purchaser shall submit
with sufficient supporting evidence an invoice(s) accounting for such reasonable costs and expenses
of external advisors or counsel to Seller for reimbursement; provided, however, that Seller’s
maximum obligation to reimburse Purchaser pursuant to this Section 5.01 shall not exceed
$150,000; provided, further, that the reimbursement obligations of Seller under this Section
5.01(b) excludes Purchaser’s costs and expenses associated with (i) export licensing and
registration with competent U.S. government export control law authorities and (ii) Purchaser’s
obtaining its own DUNS number and any other registration necessary to be recognized as a contractor
by the United States government. If not disputed, Seller shall reimburse Purchaser for such costs
and expenses of external advisors or counsel. If disputed, and the parties are unable to resolve
such amounts within sixty (60) days of Seller’s receipt of the applicable invoice(s) from
Purchaser, then the matter shall be handled consistent with Section 8.15
(Arbitration) hereunder, unless otherwise mutually agreed to in writing by the parties. In the
event of a Fundamental Change, Seller’s remaining obligations, if any, under this Section
5.01 shall terminate.

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SECTION 5.02. Bulk Transfer Laws. The Purchaser hereby waives compliance by the
Seller with any applicable bulk sale or bulk transfer laws of any jurisdiction in connection with
the sale of the Purchased Assets to the Purchaser.

SECTION 5.03. Transition Services. Following the Closing, the Seller shall provide,
or cause to be provided, to the Purchaser the following services (absent a Fundamental Change, in
which case Seller’s obligation under this Section 5.03 shall terminate):

(a) For period of nine (9) months following the Closing Date, the Seller shall, assuming
reasonable advance notice by Purchaser, use commercially reasonable efforts to make its sales force
available during normal business hours to the Purchaser to introduce the Purchaser’s sales
personnel to customers of the Business; and

(b) For a period of one hundred twenty (120) days following the Closing Date, the Seller
shall, assuming reasonable advance notice, provide information technology services to the Purchaser
consistent with the parameters set forth on Schedule 5.03(b). During this period, the
Seller and the Purchaser will separate all information technology hardware and software related to
the Business from the Seller’s system. Seller shall not be liable to Purchaser for any Loss (as
defined in Section 7.02) arising out of or resulting from the information technology services to be
provided to Purchaser as set forth on Schedule 5.03(b).

(c) For a period of twelve (12) months following the Closing Date, the Seller shall include a
pointer on Seller’s website to direct visitors inquiring as to the products or services of the
Business to the Purchaser’s website.

SECTION 5.04. Further Action. The parties hereto shall use all commercially
reasonable efforts to take, or cause to be taken, all appropriate action, to do or cause to be done
all things necessary, proper or advisable under applicable Law, and to execute and deliver such
documents and other papers, as may be required to carry out the provisions of this Agreement and
consummate and make effective the Contemplated Transactions. These actions of the parties shall
include continued commercially reasonable efforts to obtain customer consents related to purchaser
orders existing as of the Closing Date (including, without limitation, consents to assignment
regarding purchase order in connection with Non-Consented Contracts and consents to novation for
purchase orders in connection with Novation Contracts) all as listed on Schedule 3.2 (except for
those five purchase orders listed at the end of Schedule 3.2 which are related to non-current
customers of Seller).

SECTION 5.05. Tax Cooperation and Exchange of Information. Until Purchaser files its
Tax Returns for fiscal year 2010, assuming that Purchaser complies with all applicable filing
deadlines in connection with such filing, the Seller and the Purchaser will provide each other with
such cooperation and information as either of them reasonably may request of the other (and the
Purchaser shall cause the Company and the Subsidiaries to provide such cooperation and information)
in filing any Tax Return, amended Tax Return or claim for refund, determining any liability for
Taxes or a right to a refund of Taxes or participating in or conducting any audit or other
proceeding in respect of Taxes relating to the Purchased Assets or the Business. Such cooperation
and information shall include providing copies of relevant Tax Returns or portions thereof,
together with accompanying schedules and related work papers and

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documents relating to rulings or other determinations by taxing authorities. The Seller and
the Purchaser will make themselves (and their respective employees) available, on a mutually
convenient basis, to provide explanations of any documents or information provided under this
Section 5.05. Each of the Seller and the Purchaser will retain all Tax Returns, schedules and work
papers and all material records or other documents in its possession (or in the possession of its
Affiliates) relating to Tax matters relevant to the Purchased Assets or the Business for the
taxable period first ending after the Closing and for all prior taxable periods until the later of
(i) the expiration of the statute of limitations of the taxable periods to which such Tax Returns
and other documents relate, without regard to extensions, or (ii) six years following the due date
(without extension) for such Tax Returns. After such time, before the Seller or the Purchaser
shall dispose of any such documents in its possession (or in the possession of its Affiliates), the
other party shall be given the opportunity, after 90 days’ prior written notice, to remove and
retain all or any part of such documents as such other party may select (at such other party’s
expense). Any information obtained under this Section 5.09 shall be kept confidential, except as
may be otherwise necessary in connection with the filing of Tax Returns or claims for refund or in
conducting an audit or other proceeding.

SECTION 5.06. Conveyance Taxes. The Purchaser agrees to assume liability for and to
pay all Conveyance Taxes incurred as a result of the Contemplated Transactions. In the event that
any Conveyance Taxes may be avoided under applicable laws with respect to any portion of the
Purchased Assets or Real Property, by Purchaser providing to Seller at or prior to Closing, an
exemption certificate, resale certificate or similar documentation, Purchaser shall not be
responsible for any taxes on such portion of the Purchased Assets or Real Property provided such
documentation is fully and accurately completed and would be accepted by the appropriate taxing
authority.

SECTION 5.07. Proration of Taxes, Refunds and Certain Charges. All real property
Taxes, personal property Taxes or similar ad valorem obligations levied with respect to the
Purchased Assets for any Straddle Period, whether imposed or assessed before or after the date of
the Closing, shall be prorated as shown on the Closing Statement.

(a) All real property Taxes, personal property Taxes or similar ad valorem obligations levied
with respect to the Purchased Assets for any Straddle Period, whether imposed or assessed before or
after the date of the Closing, shall be prorated between the Seller and the Purchaser as of 12:01
A.M. on the date of the Closing. If any Taxes subject to proration are paid by the Purchaser, on
the one hand, or the Seller, on the other hand, the proportionate amount of such Taxes paid (or in
the event a refund of any portion of such Taxes previously paid is received, such refund) shall be
paid promptly by (or to) the other after the payment of such Taxes (or promptly following the
receipt of any such refund).

(b) Except as otherwise provided in this Agreement, all installments of special assessments or
other charges on or with respect to the Purchased Assets payable by the Seller for any period in
which the date of the Closing shall occur, including base rent, common area maintenance, royalties,
all municipal, utility or authority charges for water, sewer, electric or gas charges, garbage or
waste removal, and cost of fuel, shall be apportioned as of the Closing, and each party shall pay
its proportionate share promptly upon the receipt of any bill, statement or other charge with
respect thereto. If such charges or rates are assessed either based upon time or

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for a specified period, such charges or rates shall be prorated as of 12:01 A.M. on the date
of the Closing. If such charges or rates are assessed based upon usage of utility or similar
services, such charges shall be prorated based upon meter readings taken on the date of the
Closing.

(c) All refunds, reimbursements, installments of base rent, additional rent, license fees or
other use related revenue receivable by any party to the extent attributable to the operation of
the Business for any period in which the Closing shall occur shall be prorated so that the Seller
shall be end to that portion of any such installment applicable to the period up to but not
including the date of the Closing and the Purchaser shall be entitled to that portion of any such
installment applicable to any period from and after the date of the Closing, and if the Purchaser
or the Seller, as the case may be, shall receive any such payments after the date of the Closing,
they shall promptly remit to such other parties their share of such payments.

(d) In the event that any sales, transfer, excise or similar taxes (“Sales Taxes”) are
imposed on the transfer of the Purchased Assets or Real Property from Seller to Purchaser pursuant
to this Agreement, Purchaser hereby agrees that it will bear responsibility for any such taxes.

(e) The Parties acknowledge and agree that any Tax refunds relating to any Taxes in which
Seller is responsible for under this Agreement shall be the property of the Seller. The Purchaser
agrees to immediately transfer any Tax refunds that it or any of its Affiliates receive related to
such Taxes to the Seller, and Purchaser agrees to promptly execute and file any claim for refund
with respect to such Taxes with the appropriate government and taxing authority and fully pursue
and resolve such claim as requested by the Seller.

(f) The prorations pursuant to this Section 5.07 may be calculated after the Closing
Date, as each item to be prorated (including any such Tax, obligation, assessment, charge, refund,
reimbursement, rent installment, fee or revenue) accrues or comes due, provided that, in any event,
any such proration shall be calculated not later than thirty (30) days after the party requesting
proration of any item obtains the information required to calculate such proration of such item.

SECTION 5.08. Non-Compete.

(a) Each of the Seller and its Affiliates, employees, officers, and directors (the
"Restricted Parties”) agrees that it will not directly or indirectly own, manage, operate,
join, control or participate in or be employed by, directly or indirectly, for the purpose of
producing, distributing, selling goods or products or competing with the Business in the
manufacturing, production and selling of electromechanical devices for the defense and aerospace
industry (as such Business was being conducted by Seller prior to the Closing Date) within the
Territory at any time during the Term.

(b) The term “Territory” shall include the entire domestic and international market
for the Business in the electromechanical devices for the defense and aerospace industry (in light
of the actual and potential customers for the Business existing on the Closing Date). Each of the
Restricted Parties expressly agrees that the geographic restriction contained herein is reasonable
in its scope and geographic restraints.

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(c) The “Term” of the non-competition provisions set forth in this Section
5.08 shall begin on the Closing Date and shall terminate on the third (3rd) anniversary of the
Closing. In the event of a Fundamental Change, Seller’s obligations under this Section
5.08 shall not be enforceable against or apply to any acquiror of Seller or any merged entity
in which Seller was merged into (or any Parent of any such merged entity) if such acquirer or
entity, prior to the consummation of the Fundamental Change, had an existing product line or
business that would be deemed to be competitive with the Business.

(d) During the Term, none of the Restricted Parties shall, directly or indirectly, communicate
with or contact any person or entity who was a customer of the Business in the Territory prior to
the Closing Date for the purpose of soliciting such customer to purchase any goods or products of a
type being manufactured, marketed, sold or distributed by the Business in the Territory prior to
the Closing. Notwithstanding the foregoing, nothing in this Section 5.08(d) shall be
deemed to restrict the Restricted Parties from communicating with the customers of Seller for
purposes not in violation of this Section 5.08.

(e) Each of the Restricted Parties acknowledges and recognizes that a violation of this
Section 5.08 may cause irreparable and substantial damage and harm to the Purchaser and the
Purchaser will have no adequate remedy at law for such violation, absent specific performance
enforcing this covenant. The provisions of this Section 5.08 are specifically enforceable
and, upon a showing of a violation of this Agreement, each of the Restricted Parties agrees that
the Purchaser shall be entitled as a matter of right to a temporary restraining order and a
preliminary and permanent injunction from any court of competent jurisdiction, restraining any
further violation of such terms. Such rights to specific enforcement and injunctive relief shall
be cumulative and in addition to any other remedies the Purchaser may have under this Agreement or
either at law or in equity.

SECTION 5.09. Warranty Work for Pre-closing Products. During the term of any
applicable Warranty relating to products of the Business sold prior to the Closing Date, the
Purchaser hereby agrees and covenants to service any Warranty claims and perform any Warranty work
on Business products sold by the Seller prior to the Closing Date. The Purchaser shall charge the
Seller for such work at the rates and fees mutually agreed upon by the Purchaser and the Seller as
set forth in Schedule 5.09. Following the completion of such Warranty work, the Purchaser
shall distribute an invoice documenting any Warranty work performed and evidencing any costs of
such work (“Warranty Invoice”) and Seller, assuming it does not dispute such invoice, shall
pay such amount owed to the Seller for such Warranty work performed. If disputed, and the parties
are unable to resolve such amounts within sixty (60) days of Seller’s receipt of the applicable
invoice(s), then the matter shall be handled consistent with Section 8.15 (Arbitration) hereunder,
unless otherwise agreed to in writing by the parties. In the event of a Fundamental Change, (i)
the Seller’s obligation under this Section 5.09 shall terminate and (ii) the amount of principal
owed under the Promissory Note shall be reduced by an amount equal to $20,000 (so, by way of
example, if the principal of the Promissory Note was then currently at $300,000 then the principal
amount under the Promissory Note would be reduced to $280,000), provided, however, if no principal
amount is owed under the Promissory Note, Seller shall make a payment in an amount equal to $20,000
to Purchaser.

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SECTION 5.10. Additional Named Insured on Insurance Policy. Seller shall within
thirty (30) days of the Closing Date cause Purchaser to be named as an additional named insured on
the Insurance Policy. Seller shall use its commercially reasonable efforts to cause to be
maintained the Insurance Policy in full force and effect for a period of at least ten (10) years
from the date of the commencement of the Insurance Policy.

SECTION 5.11. Receivables. The Parties acknowledge and agree that the payments due
relating to the Receivables (and any other Excluded Asset) shall be the property of the Seller.
The Purchaser agrees to immediately transfer to Seller any such payments received by it or any of
its Affiliates relating to the Receivables (and any other Excluded Asset).

SECTION 5.12. Unfunded Obligations. Seller shall satisfy all obligations relating to
the Union Pension Plan (or other claimant entitled thereto) with respect to any and all Unfunded
Obligations.

SECTION 5.13. Acceleration of Shipment of Certain Contracts. The Purchaser shall use
its commercially reasonable efforts to (i) obtain written authorization from the applicable
customers to accelerate shipments under the Non-consented Contracts and the Novation Contracts and
(ii) accelerate shipments under the Non-consented Contracts and the Novation Contracts for those
customers that have provided written authorization, provided that such acceleration of shipments
shall be subject to Purchaser’s other production obligations, and provided further that Purchaser
shall not be obligated to incur any overtime, expedited shipping or other unusual expenses in
accelerating such shipments. Purchaser shall notify Seller in writing if it accelerates shipments
under the Non-consented Contracts or the Novation Contracts.

SECTION 5.14. Purchaser Infrastructure to Contract with United States Government.
The Purchaser represents that immediately following the Closing Date, and in no event more than
three (3) business days after the Closing Date, Purchaser shall initiate obtaining its own DUNS
number and registration under the Central Contractor Registration (“CCR”) to permit
Purchaser to contract with the United State government after the Closing. Purchaser understands
that these registrations are needed in order for Seller to properly request the novation of the USG
Contracts and the transfer of the current Commercial and Government Entity (“CAGE”) code of
the Seller for the benefit of the Acquired Assets to Purchaser. During the Interim Period (as
defined below), the parties hereby agree to mutually coordinate efforts with the U.S. government
after the Closing Date to determine how requests for new contracts by the U.S. government related
to the Business after the Closing Date should be handled until the U.S. government determines
approval of the request of Seller to assign or novate the USG Contracts to Purchaser and transfer
the CAGE Code related to the Acquired Assets to Purchaser. The period between the Closing Date and
the date that is the earlier of (i) the date the Seller’s CAGE code is transferred to Purchaser or
(ii) the date that the U.S. government notifies Seller that the CAGE code cannot be transferred,
shall be referred to as the “Interim Period.”

SECTION 5.15. USG Contracts During the Interim Period, Seller shall take commercially
reasonable steps, during the process of requesting the novation of the USG Contracts, to transfer
to the CAGE Code currently held by the Seller for the benefit of the Business. Notwithstanding any
of the foregoing, this obligations set forth in Section 5.15 is contingent upon the United
States government agreeing to the novation of the USG Contracts

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and the Defense Logistics Information Service and applicable legal requirements permitting the
transfer of the CAGE Code.

SECTION 5.16. Open Bids. Seller reserves the right to cancel any bid to a
prospective customer of the Business that has been submitted by Seller prior to the Closing Date
and for which the prospective customer of the Business needs only accept the bid in order for
Seller to be bound contractually to the prospective customer (“Open Bids”). Seller agrees,
however, to use commercially reasonable efforts to assist Purchaser to encourage such prospective
customers to accept replacement bids from Purchaser for Open Bids in lieu of Seller cancelling Open
Bids.

SECTION 5.17 Operations During the Interim Period. During the Interim Period (and
absent a Fundamental Change, in which case Seller’s obligation under this Section 5.17 shall
terminate), the parties shall use commercially reasonable efforts to:

(a) promptly inform each of other of efforts and communications with the U.S. government
regarding the novation of the USG Contracts and the transfer of Seller’s CAGE code; and

(b) with respect to Seller, forward to Purchaser all requests, inquiries and communications
(including, without limitation, invitations to bid) received which reasonably relate to the
Acquired Assets and with respect to Purchaser, forward to Seller all requests, inquiries and
communications (including, without limitation, invitations to bid) received which do not reasonably
relate to the Acquired Assets; and

(c) coordinate efforts to permit Purchaser to use Seller’s CAGE code to bid on U.S. government
contracts (with any such use of Seller’s CAGE code being agreed to in advance by the parties);
provided that such efforts by Seller and any use by Purchaser of the CAGE code shall in no way
obligate or require Seller to incur any liability for purchase orders, contracts or agreements
entered into on or after the Closing Date or incur overtime or other unusual expenses.

SECTION 5.18. Forwarding of Payments. Seller shall, as soon as reasonably
practicable but in no event less than ten (10) business days after receipt by Seller, forward to
Purchaser any and all payments Seller receives on or after the Closing Date which are reasonably
determined to be the rightful property of Purchaser taking into account the transactions
contemplated by this Agreement. Purchaser shall, as soon as reasonably practicable but in no event
less than ten (10) business days after receipt by Purchaser, forward to Seller any and all payments
Purchaser receives on or after the Closing Date which are reasonably determined to be the rightful
property of Seller taking into account the transaction contemplated by this Agreement.

ARTICLE VI

EMPLOYEE MATTERS

SECTION 6.01. Offer of Employment. As of the Closing Date, except for those
employees identified on Schedule 6.01, the Purchaser shall offer employment to each of the
then-current employees of the Business. As used herein, “Transferred Employee” means

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each employee who accepts such offer. Purchaser hereby covenants to employ the Transferred
Employee on the same terms as set forth on Schedule 6.01, which schedule includes a list of
salary and benefits of each such Transferred Employee.

SECTION 6.02. Employee Benefits. As of the Closing Date, each Transferred Employee
shall cease to be covered under the Employee Benefit Plans. As of the Closing Date, the
Transferred Employees shall be covered by the employee benefit plans of the Purchaser, if any.
Each Transferred Employee shall receive credit for services with the Seller and its Affiliates and
predecessors under the Purchaser’s employee benefit plans for purposes of eligibility, vesting and
benefit accrual; provided, however, that in no event shall such credit result in the duplication of
benefits or the funding thereof.

SECTION 6.03. Modification and Amendments to Certain Contracts. Purchaser hereby
covenants that it shall not modify or amend the terms and conditions of, or subcontract the
obligations under the the Non-consented Contracts or the Novation Contracts without Seller’s
express written consent, to be given in Seller’s sole discretion.

SECTION 6.04. ITAR

(a) Subject to the prior written consent of the Seller (which consent shall not be
unreasonably withheld, conditioned or delayed) (and absent a Fundamental Change, upon which event
Seller’s obligation under this Section 6.04 shall cease), the Purchaser shall be able to
export products subject to the ITAR but exempt from licensing under the ITAR and products permitted
to be exported as of the time of export under any valid export license held by the Seller for the
Business at the time of the Closing until the earlier of:

     (i) a period of nine (9) months following the Closing Date or

     (ii) until the Purchaser is registered as an exporter/manufacturer under the ITAR and
has obtained its own export licensing for the export of the unshipped items on Seller’s
export licenses for the Business at the time of the Closing.

(b) In order for the Purchaser to use the export brokering service offered by Seller to the
Purchaser and contemplated in this Section 6.04, the Purchaser shall notify Seller in writing each
time the Purchaser desires to use Seller’s export brokering service, providing sufficient detail
for Seller to determine if the proposed export transactions are covered by existing export
authorizations from DDTC. Each transaction in which Seller will act as an export broker for the
Purchaser needs to be approved in writing by Seller , which approval shall not be unreasonably
withheld, conditioned or delayed.

(c) The parties hereby agree that the shipment that Purchaser intends to make to Ascot in
Japan on April 15, 2010 is authorized under Seller’s export license; provided that Seller reserves
(and Purchaser expressly grants) the right of Seller to review the documentation against the
product intended for export prior to the intended shipment on or about April 15, 2010 to ensure
that the shipment and its documentation fully comply with the terms of the applicable export
license.

(d) It is expressly understood and accepted by the Purchaser that:

22

 

(i) the Purchaser will pay all costs associated with the shipment and insurance coverage on
the conveyance of all Defense Articles and Technical Data exported by Seller on behalf of the
Purchaser pursuant to this Section 6.04;

(ii) the Purchaser shall indemnify Seller and hold Seller harmless for all liability incurred
by the Seller related to this Section 6.04, including but not limited to the unauthorized export,
alleged or actual, of Defense Articles or Technical Data by Seller on behalf of the Purchaser;

(iii) Seller is not obligated after the Closing Date to prepare or file any new license
applications or other requests for export authorization for the benefit of the Business. Purchaser
understands and accepts that it will be responsible for all costs (including outside advisors)
associated with the preparation, filing, tracking, and review of any new license applications or
other requests for export authorization after Closing.

(iv) As soon as practicable after DDTC approves the registration of the Purchaser as an
manufacturer/exporter under the ITAR, the Purchaser will apply for and obtain licenses and other
export authorizations to replace the licenses and other export authorizations from DDTC then held
by Seller for the benefit of the Business. The Purchaser will use best efforts to timely obtain
all export authorizations from DDTC necessary to release Seller of the obligation contained herein
to provide an export brokering service for the Business.

(v) The Purchaser will provide written monthly updates to Seller, within the first five (5)
business day of each calendar month, regarding the status of the Purchaser’s efforts to obtain
registration as a manufacturer/exporter under the ITAR and licenses and other export authorizations
to replace the licenses and other export authorizations from DDTC held by Seller for the benefit of
the Business. The amount of detail required in these monthly updates are fact and circumstances
specific, and the Purchaser agrees to provide updates that contain all the material facts which are
required to present Seller with an accurate understanding of where things stand.

SECTION 6.05. Union Representation. Purchaser hereby covenants that, on or
immediately after the Closing Date, the International Union, United Automobile, Aerospace and
Agricultural Implement Workers of America and its Local 1389 (“UAW”), will continue to be
recognized as the legal representative of production and maintenance employees of the Business for
purposes of collective bargaining. The terms and conditions of employment for those Transferred
Employees will be those agreed to between the UAW and the Purchaser. As of the Closing Date, any
further obligations to the UAW or to UAW represented Transferred Employees for recognition,
bargaining, compensation or fringe benefits, not including the Unfunded Obligations, will be with
the Purchaser, not the Seller.

ARTICLE VII

INDEMNIFICATION

SECTION 7.01. Survival of Representations and Warranties. The representations and
warranties of the parties hereto contained in this Agreement shall survive the

23

 

Closing for a period of twelve (12) months after the Closing; provided, however, that the
representations and warranties contained in Section 3.05 (relating to Taxes) and Section 3.01
(relating to organization, good standing) and 3.02 (relating to authority and enforceability, no
conflicts), will survive until six (6) months after the expiration of the applicable statute of
limitations, as determined by a court of competent jurisdiction; provided further that any claim
made with reasonable specificity by the party seeking to be indemnified within the time periods set
forth in this Section 7.01 shall survive until such claim is finally and fully resolved.
Except for those covenants and agreements that by their explicit terms are to be performed in whole
or in part for a different time frame, all covenants and agreements contained herein shall remain
in full force and effect for a period of twelve (12) months following the Closing Date.

SECTION 7.02. Indemnification by the Seller. The Purchaser and its Affiliates,
officers, directors, employees, agents, successors and assigns (each, a “Purchaser Indemnified
Party”) shall be indemnified and held harmless by the Seller for and against all losses, damages,
claims, costs and expenses, interest, awards, judgments and penalties (including reasonable
attorneys’ and consultants’ fees and expenses) actually suffered or incurred by them (hereinafter,
a “Loss”), arising out of or resulting from: (i) the breach of any representation or warranty made
by the Seller contained in this Agreement; (ii) the breach of any covenant or agreement by the
Seller contained in this Agreement; (iii) the Excluded Assets; (iv) the Excluded Liabilities and
(v) the Unfunded Obligations.

SECTION 7.03. Indemnification by the Purchaser. The Seller and its Affiliates,
officers, directors, employees, agents, successors and assigns (each, a “Seller Indemnified Party”)
shall be indemnified and held harmless by the Purchaser for and against any and all Losses, arising
out of or resulting from: (i) the breach of any representation or warranty made by the Purchaser
contained in this Agreement; (ii) the breach of any covenant or agreement by the Purchaser
contained in this Agreement; (iii) the Assumed Liabilities; (iv) the Purchased Assets; or (v) the
conduct of the Business by the Purchaser following the Closing, including the failure to perform
the obligations under the Assigned Contracts, whether fully assigned or transferred pursuant to a
novation agreement by Seller.

SECTION 7.04. Limits on Indemnification.

(a) No claim may be asserted nor may any Action be commenced against either party hereto for
breach of any representation, warranty, covenant or agreement contained herein, unless written
notice of such claim or action is received by such party describing in reasonable detail the facts
and circumstances with respect to the subject matter of such claim or Action on or prior to the
date on which the representation, warranty, covenant or agreement on which such claim or Action is
based ceases to survive as set forth in Section 7.01, irrespective of whether the subject
matter of such claim or action shall have occurred before or after such date.

(b) Notwithstanding anything to the contrary contained in this Agreement: (i) the maximum
amount of indemnifiable Losses which may be recovered by either Party arising out of or resulting
from the causes set forth in Section 7.02 (in the case of Purchaser) or Section
7.03 (in the case of Seller) shall be an amount equal to the Closing Payment Amount; (ii)
neither party hereto shall have any liability under any provision of this Agreement or any
Ancillary Agreement for any punitive, incidental, consequential, special or indirect damages,
including

24

 

loss of future revenue or income, or loss of business reputation or opportunity relating to
the breach or alleged breach of this Agreement or any Ancillary Agreement; (iii) in the event a
party hereto establishes prior to the Closing that any of the representations and warranties to
survive the Closing in accordance with Section 7.01 are not true and correct as of the
Closing, its sole and exclusive remedy with respect to any such breach shall be to not close the
transaction, and (v) no breach by the Seller of any representation, warranty, covenant or agreement
in this Agreement shall be deemed to be a breach of this Agreement for any purpose hereunder, and
neither the Purchaser nor any Affiliate of Purchaser shall have any claim or recourse against the
Seller or its directors, officers, employees, Affiliates, controlling persons, agents advisors or
representatives with respect to such breach, if the Purchaser or any Affiliate of Purchaser had,
prior to the execution of this Agreement, actual knowledge of such breach.

(c) For all purposes of this Article VIII, “Losses” shall be net of any insurance or other
recoveries payable to the Indemnified Party or its Affiliates in connection with the facts giving
rise to the right of indemnification.

SECTION 7.05. Notice of Loss; Third Party Claims.

(a) An Indemnified Party shall give the Indemnifying Party notice of any matter which an
Indemnified Party has determined has given or could give rise to a right of indemnification under
this Agreement, within 60 days of such determination, stating the amount of the Loss, if known, and
method of computation thereof, and containing a reference to the provisions of this Agreement in
respect of which such right of indemnification is claimed or arises.

(b) If an Indemnified Party shall receive notice of any Action, audit, claim, demand or
assessment (each, a “Third Party Claim”) against it which may give rise to a claim for Loss
under this Article VIII, within 30 days of the receipt of such notice, the Indemnified Party shall
give the Indemnifying Party notice of such Third Party Claim. The Indemnifying Party shall be
entitled to assume and control the defense of such Third Party Claim at its expense and through
counsel of its choice if it gives notice of its intention to do so to the Indemnified Party within
15 days of the receipt of such notice from the Indemnified Party. If the Indemnifying Party elects
to undertake any such defense against a Third Party Claim the Indemnified Party may participate in
such defense at its own expense. The Indemnified Party shall cooperate with the Indemnifying Party
in such defense and make available to the Indemnifying Party, at the Indemnifying Party’s expense,
all witnesses, pertinent records, materials and information in the Indemnified Party’s possession
or under the Indemnified Party’s control relating thereto as is reasonably required by the
Indemnifying Party. If the Indemnifying Party elects to direct the defense of any such claim or
proceeding, the Indemnified Party shall not pay, or permit to be paid, any part of such Third Party
Claim unless the Indemnifying Party consents in writing to such payment or unless the Indemnifying
Party withdraws from the defense of such Third Party Claim liability or unless a final judgment
from which no appeal may be taken by or on behalf of the Indemnifying Party is entered against the
Indemnified Party for such Third Party Claim. If the Indemnified Party assumes the defense of any
such claims or proceeding pursuant to this Section 8.05 and proposes to settle such claims or
proceeding prior to a final judgment thereon or to forgo any appeal with respect thereto, then the
Indemnified Party shall give the Indemnifying

25

 

Party prompt written notice thereof and the Indemnifying Party shall have the right to
participate in the settlement or assume or reassume the defense of such claims or proceeding.

SECTION 7.06. Tax Treatment. To the extent permitted by Law, the parties hereto
agree to treat all payments made under this Article VIII, under any other indemnity provision
contained in this Agreement, and for any misrepresentations or breach of warranties or covenants,
as adjustments to the Purchase Price for all Tax purposes.

SECTION 7.07. Remedies. The Purchaser and the Seller acknowledge and agree that (i)
following the Closing, the indemnification provisions of Section 7.02 and Section
7.03 shall be the sole and exclusive remedies of the Purchaser and the Seller for any breach by
the other party of the representations and warranties in this Agreement and for any failure by the
other party to perform and comply with any covenants and agreements in this Agreement, and (ii)
anything herein to the contrary notwithstanding, no breach of any representation, warranty,
covenant or agreement contained herein shall give rise to any right on the part of the Purchaser or
the Seller, after the consummation of the purchase and sale of the Purchased Assets contemplated by
this Agreement, to rescind this Agreement or any of the transactions contemplated hereby. Each
party hereto shall take all reasonable steps to mitigate its Losses upon and after becoming aware
of any event which could reasonably be expected to give rise to any Losses.

ARTICLE VIII

GENERAL PROVISIONS

SECTION 8.01. Expenses. Except as otherwise specified in this Agreement, all costs
and expenses, including fees and disbursements of counsel, financial advisors and accountants,
incurred in connection with this Agreement and the transactions contemplated by this Agreement
shall be paid by the party incurring such costs and expenses, whether or not the Closing shall have
occurred.

SECTION 8.02. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and shall be deemed to
have been duly given or made upon receipt) by delivery in person, by an internationally recognized
overnight courier service, by facsimile or registered or certified mail (postage prepaid, return
receipt requested) to the respective parties hereto at the following addresses (or at such other
address for a party as shall be specified in a notice given in accordance with this Section
8.02):

	 	(a)	 	if to the Seller:

White Electronic Designs Corporation

3601 East University Drive

Phoenix, Arizona 85034

Telecopy: (602) 437-0556

Attention: Chief Executive Officer

with a copy to:

26

 

	 	 	 	Snell & Wilmer L.L.P.

400 E. Van Buren

Phoenix, AZ 85004

Telecopy: (602) 382-6070

Attention: Franc Del Fosse
	 
	 	(b)	 	if to the Purchaser:

Ruffolo Benson LLC

200 East Main Street, Suite 540

Fort Wayne, IN 46802

Telecopy: 260-420-1013

Attention: Karen Goldner

with a copy to:

Richard C. Bruder, Esq.

7457 Franklin Road, Suite 250

Bloomfield Hills, MI 48301

Telecopy: 248-406-5111

SECTION 8.03. Public Announcements. Neither party to this Agreement shall make, or
cause to be made, any press release or public announcement in respect of this Agreement or the
Contemplated Transactions or otherwise communicate with any news media with respect to the same
without the prior written consent of the other Party unless otherwise required by Law or applicable
stock exchange regulation, and the parties to this Agreement shall cooperate as to the timing and
contents of any such press release, public announcement or communication.

SECTION 8.04. Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any Law or public policy, all other terms and
provisions of this Agreement shall nevertheless remain in full force and effect for so long as the
economic or legal substance of the transactions contemplated by this Agreement is not affected in
any manner materially adverse to either party hereto. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original intent of the parties
as closely as possible in an acceptable manner in order that the transactions contemplated by this
Agreement are consummated as originally contemplated to the greatest extent possible.

SECTION 8.05. Entire Agreement. This Agreement and the Additional Agreements
constitute the entire agreement of the parties hereto with respect to the subject matter hereof and
thereof and supersede all prior agreements and undertakings, both written and oral, between the
Seller and the Purchaser with respect to the subject matter hereof and thereof.

27

 

SECTION 8.06. Assignment. This Agreement may not be assigned by operation of law or
otherwise without the express written consent of the Seller and the Purchaser (which consent may be
granted or withheld in the sole discretion of the Seller or the Purchaser), as the case may be.

SECTION 8.07. Amendment. This Agreement may not be amended or modified except (a) by
an instrument in writing signed by, or on behalf of, the Seller and the Purchaser or (b) by a
waiver in accordance with Section 8.08.

SECTION 8.08. Waiver. Either party to this Agreement may (a) extend the time for the
performance of any of the obligations or other acts of the other party, (b) waive any inaccuracies
in the representations and warranties of the other party contained herein or in any document
delivered by the other party pursuant hereto or (c) waive compliance with any of the agreements of
the other party or conditions to such party’s obligations contained herein.

SECTION 8.09. No Third Party Beneficiaries. This Agreement shall be binding upon and
inure solely to the benefit of the parties hereto and their respective successors and permitted
assigns and nothing herein, express or implied (including the provisions of Article VIII relating
to indemnified parties), is intended to or shall confer upon any other Person any legal or
equitable right, benefit or remedy of any nature whatsoever, including any rights of employment for
any specified period, under or by reason of this Agreement.

SECTION 8.10. Currency. Unless otherwise specified in this Agreement, all references
to currency, monetary values and dollars set forth herein shall mean United States (U.S.) dollars
and all payments hereunder shall be made in United States dollars.

SECTION 8.11. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Indiana.

SECTION 8.12. Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY WAIVES TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO
ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH OF THE PARTIES HERETO HEREBY (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.12.

SECTION 8.13. Counterparts. This Agreement may be executed and delivered (including
by facsimile transmission) in one or more counterparts, and by the different parties hereto in
separate counterparts, each of which when executed shall be deemed to be an original,

28

 

but all of which taken together shall constitute one and the same agreement. Telecopied
(faxed) or emailed (adobe pdf) signatures shall be binding as originals.

SECTION 8.14. Further Assurances. From time to time after the date of this
Agreement, either party hereto may reasonably request the other party execute and deliver, or cause
to be executed and delivered, such further instruments of conveyance, assignment and transfer, and
take such other action, as the requesting party may reasonably request in order to more effectively
consummate the Contemplated Transactions, which shall include but not be limited to matters in
connection with closing the books of the pre-Closing Business, requesting financial information of
the Business including relating to pre-Closing Tax filings and returns and any other information
with respect to assisting Seller with its public reporting obligations. Upon a party’s reasonable
request, the other party will cooperate and use their commercially reasonable efforts to have their
Affiliates, officers, directors, employees and agents cooperate on or after the date of this
Agreement by furnishing information and other assistance in connection with the consummation of the
Contemplated Transactions.

SECTION 8.15. Arbitration. Any dispute between the parties regarding any provision
in this Agreement shall be resolved by expedited binding arbitration before a single arbitrator.
Such arbitrator will be selected mutually by representatives of the Seller and Purchaser. Unless
otherwise agreed to by the parties, the arbitration will be conducted in accordance with the rules
of commercial arbitration of the American Arbitration Association (AAA). Such arbitration shall
occur in Fort Wayne, Indiana. Judgment upon the award of the arbitrators may be entered by any
court of competent jurisdiction. Costs of the arbitrator and fees of AAA shall be allocated equally
among the parties, provided that if the arbitrator determines appropriate, such arbitrator may
allocate fees (including legal fees of the other party) to the losing party if the facts and
circumstances indicate the losing party should bear more of the expense and costs of the
arbitration taking into account intentional misconduct, delay, abuse of process or general gross
negligence.

29

 

IN WITNESS WHEREOF, the Seller and the Purchaser have caused this Agreement to be executed as
of the date first written above by their respective officers thereunto duly authorized.

	 	 	 	 	 
	 	WHITE ELECTRONIC DESIGNS CORPORATION

 	 
	 	By:  	 	 
	 	 	Name:  	Dante V. Tarantine 	 
	 	 	Title:  	Executive Vice President 	 
	 
	 	BOWMAR LLC

 	 
	 	By:  	 	 
	 	 	Name:  	Harold B. Benson 	 
	 	 	Title:  	President 	 
	 

 

 

EXECUTION VERSION

EXHIBIT A

DEFINITIONS

“Action” means any claim, action, suit, arbitration, inquiry, proceeding or investigation
by or before any Governmental Authority.

“Additional Agreements” means the Bill of Sale, the Deed, the Assumption Agreement and the
Promissory Note.

“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.

“Assigned Contracts” means the written or oral contracts, subcontracts, agreements,
commitments, leases or other instruments to which Seller is bound relating to the Business or the
Purchased Assets as listed on Schedule 2.01(a)(iv) and which Seller intends to assign to
Purchaser in connection with the Contemplated Transactions.

“Assumption Agreement” means the Assignment and Assumption Agreement to be executed by the
Purchaser and the Seller at the Closing, substantially in the form of Exhibit A.

“Bill of Sale” means the Bill of Sale and Assignment to be executed by the Seller at the
Closing, substantially in the form of Exhibit B.

“Business” shall mean the business conducted by the Seller’s Fort Wayne, Indiana operations
(also known as the Electromechanical Products Division and/or the Bowmar Instruments Division),
including (without limitation) the manufacture, sale, installation and servicing of build-to-print
mechanical, electromechanical, and electronic assemblies, and interface products.

“Business Day” means any day that is not a Saturday, a Sunday or other day on which banks
are required or authorized by Law to be closed in United States.

“Closing Date” means the date of this Agreement.

“Code” means the Internal Revenue Code of 1986, as amended through the date hereof.

“Contemplated Transactions” means those transactions contemplated to be consummated in this
Agreement and the Additional Agreements.

“Control” (including the terms “controlled by” and “under common control
with”), with respect to the relationship between or among two or more Persons, means the
possession, directly or indirectly or as trustee, personal representative or executor, of the power
to direct or cause the direction of the affairs or management of a Person, whether through the
ownership of voting securities, as trustee, personal representative or executor, by contract,
credit arrangement or otherwise.

 

 

“Conveyance Taxes” means all sales, use, excise, value added, transfer, stamp, stock
transfer, real or personal property transfer or gains and similar Taxes.

“Deed” means the instrument of conveyance customary to the applicable jurisdiction to be
executed by the Seller at the Closing in order to convey to the Purchaser the Seller’s interest, if
any, in each parcel of Real Property substantially in the form set forth in Exhibit C.

“Deferred Tax Asset” means any Tax benefit recognized for the estimated future tax effects
attributable to temporary differences and carryforwards of the Business arising from Taxes incurred
pre-Closing.”

“Disclosure Schedule” means the Disclosure Schedule attached hereto, dated as of the date
hereof, delivered by the Seller to the Purchaser in connection with this Agreement.

“Employee Benefit Plan” means and includes any Pension Plan, Welfare Plan and any bonus,
profit-sharing, severance, deferred compensation, annuity, retirement, stock option, stock
purchase, executive compensation, incentive compensation, educational assistance, fringe benefit,
insurance or other plan or arrangement whether oral or written providing benefits to a current or
former employee, director or consultant of the Business provided by Seller prior to Closing Date.

“Environmental Laws” means any and all international, federal, state, and local statutes,
laws, regulations, ordinances, orders, common law, and similar provisions having the force or
effect of law, concerning public health or safety, worker health or safety or pollution or
protection of the environment, including but not limited to, the Clean Air Act, 42 U.S.C. § 7401 et
seq., the Clean Water Act, 33 U.S.C. § 1251 et seq., the Resource Conservation Recovery Act
(“RCRA”), 42 U.S.C. § 6901 et seq., the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq., and
the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), 42 U.S.C. §
9601 et seq. whether currently in existence or hereafter enacted or which govern: (i) the
existence, cleanup, removal and/or remedy of contamination or threat of contamination on or about
owned or leased real property; (ii) the emission or discharge of Hazardous Materials into the
environment; (iii) the control of Hazardous Materials; or (iv) the use, generation, transport,
treatment, storage, disposal, removal, recycling, handling or recovery of Hazardous Materials,
including building materials.

“Environmental Reports” means any and all environmental review and assessment reports and
all further inspections, assessments or reports conducted on or with respect to the environmental
conditions of, on, in or under the Real Property or the compliance with Environmental Laws of the
facilities owned, leased or operated by the Seller at any time with respect to the Business.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“Excluded Taxes” means all Taxes relating to the Purchased Assets or the Business for any
Pre-Closing Period. For purposes of this Agreement, in the case of any Straddle Period, (i)
Property Taxes relating to the Purchased Assets allocable to the Pre-Closing Period shall be equal
to the amount of such Property Taxes for the entire Straddle Period multiplied by a fraction, the
numerator of which is the number of days during the Straddle Period that fall within the Pre-

 

 

Closing Period and the denominator of which is the number of days in the entire Straddle Period,
and (ii) Taxes (other than Property Taxes) relating to the Purchased Assets for the Pre-Closing
Period shall be computed as if such taxable period ended as of the close of business on the Closing
Date.

“Fixed Assets” means all furniture, fixtures and other fixed assets primarily used in
connection with the Purchased Assets or the Business.

“Fundamental Change” means any of the following occurring to Seller: (A) any sale or
transfer of all or substantially all of the assets of the Seller to an entity not under direct or
indirect control by, or under common control with, the Seller; (B) a merger or consolidation
involving the Seller, unless the shareholders of the Seller receive in the transaction, with
respect to their stock in Seller, stock or other securities representing eighty percent (80%) in
voting interest of the acquiring entity’s equity securities; (C) any sale of a majority voting
interest of the outstanding stock of the Seller by the holders thereof in a single transaction or
series of related transactions; or (D) any change in a majority of the members of the Board that
occurs in any twelve (12) month period.

“GAAP” means generally accepted accounting principles in the United States as set forth in
the opinions and pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other Persons as may be approved by the
accounting profession, which are applicable to the circumstances as of the date of determination
and which are applied on a consistent basis.

“Governing Documents” means, with respect to any Person, the articles of incorporation,
articles of formation, partnership certificates, bylaws, partnership agreement or other
organizational or governing documents of such Person.

“Governmental Authority” means any nation or government, any state or other political
subdivision, and any entity exercising executive, legislative, judicial, regulatory or
administrative functions or pertaining to government.

“Governmental Order” means any order, writ, judgment, injunction, decree, stipulation,
determination or award entered by or with any Governmental Authority.

“Hazardous Materials” means any material or substance: (i) which is defined as a “hazardous
substance”, “pollutant” or “contaminant” pursuant to CERCLA and amendments thereto and regulations
promulgated thereunder; (ii) containing gasoline, oil, diesel fuel or other petroleum products, or
fractions thereof; (iii) which is defined as a “hazardous waste” pursuant to RCRA and amendments
thereto and regulations promulgated thereunder; (iv) containing polychlorinated biphenyls (PCBs);
(v) containing asbestos; (vi) which is radioactive, including but not limited to radon and other
radioactive elements, ionizing radiation, electromagnetic field radiation and other non-ionizing
radiation; (vii) which is a pesticide, fungicide, fertilizer or defoliant; (viii) which is
biologically hazardous, infectious carcinogenic, mutagenic or etiologic; (ix) the presence of which
requires investigation or remediation under any federal, state or local statute, regulation,
ordinance or policy; (x) which is defined as a “hazardous waste”, “hazardous

 

 

substance”, “pollutant” or “contaminant” or other such terms used to define a substance having an
adverse effect on the environment under any federal, state or local statute, regulation or
ordinance; (xi) any toxic, flammable, explosive, dangerous, corrosive or otherwise hazardous
substance, material or waste which is regulated by any federal, state or local governmental
authority; or (xii) which causes a nuisance upon or waste to real property.

“Indemnified Party” means a Purchaser Indemnified Party or a Seller Indemnified Party, as
the case may be.

“Indemnifying Party” means the Seller pursuant to Section 8.02 and the Purchaser pursuant
to Section 8.03, as the case may be.

“Insurance Policy” means that certain policy from ACE/INA Policy No. PPL G24885082-001
indemnifying from certain liability concerning environmental conditions on the Real Property.

“Intangible Pension Asset” means the assets of the Pension Plan associated with the labor
union of the Business immediately prior to Closing.

“Intellectual Property” means (a) patents and patent applications, (b) trademarks, service
marks, trade names, trade dress and domain names, together with the goodwill associated exclusively
therewith, (c) copyrights, including copyrights in computer software, (d) confidential and
proprietary information, including trade secrets and know-how, plans, blueprints, customer lists
and (e) registrations and applications for registration of the foregoing.

“Inventories” means all inventory, merchandise, finished goods, work in progress, obsolete
or slow moving inventory, and raw materials primarily related to the Business and maintained, held
or stored by or for the Seller, as of the Closing, and any prepaid deposits for any of the same.

“IRS” means the Internal Revenue Service of the United States.

“ITAR” means the International Traffic in Arms Regulations, which is codified in Parts 120
through 130 of Chapter 22 of the Code of Federal Regulations.

“Law” means any federal, national, supranational, state, provincial, local or similar
statute, law, ordinance, regulation, rule, code, order, requirement or rule of law (including
common law).

“Liabilities” means any and all debts, liabilities and obligations, whether accrued or
fixed, absolute or contingent, matured or unmatured or determined or determinable, including those
arising under any Law, Action or Governmental Order and those arising under any contract,
agreement, arrangement, commitment or undertaking.

“Licenses” means all foreign, federal, state and local Governmental franchises, permits,
licenses, certificates or other authorizations held by Seller in connection with the Purchased
Assets.

“Litigation Rights” mean all claims and rights concerning any Proceeding in connection with
or with respect to the Business or the Purchased Assets in which Seller is a claimant.

 

 

“Machinery and Equipment” means all tools, jigs, hardware systems, equipment, machinery,
office equipment and vehicles primarily used in connection with or related to the Business or the
Purchased Assets.

“Material Adverse Effect” means any circumstance, change in or effect on the Business that
is (or reasonably could be based on the facts and circumstances existing at the time) materially
adverse to the assets, results of operations or the financial condition of the Business, taken as a
whole; provided, however, that none of the following, either alone or in
combination, shall be considered in determining whether there has been a breach of a
representation, warranty, covenant or agreement that is qualified by the term “Material Adverse
Effect”: (a) events, circumstances, changes or effects that generally affect the industries in
which the Business operates (including legal and regulatory changes), (b) general economic or
political conditions or events, circumstances, changes or effects affecting the securities markets
generally, (c) changes arising from the consummation of the transactions contemplated by, or the
announcement of the execution of, this Agreement, including (i) any actions of competitors, (ii)
any actions taken by or losses of employees or (iii) any delays or cancellations of orders for
products or services, (d) any reduction in the price of services or products offered by the
Business in response to the reduction in price of comparable services or products offered by a
competitor, (e) any circumstance, change or effect that results from any action taken pursuant to
or in accordance with this Agreement or at the request of the Purchaser, and (f) changes caused by
a material worsening of current conditions caused by acts of terrorism or war (whether or not
declared) occurring after the date hereof.

“Material Contract” means written or oral contracts, subcontracts, agreements, commitments,
leases or other instruments to which Seller is bound relating to the Business or the Purchased
Assets that cannot be terminated by Seller without liability on not more than thirty (30) days
notice or that requires payments to or from Seller aggregating $30,000 or more, including without
limitation, any agreement to provide services or materials or to acquire any assets or properties
and all material third party warranties and claims for warranties relating to the Business or the
Purchased Assets.

“Non-consented Contract” shall have the meaning set forth in Schedule 3.2.

“Novation Contract” shall have the meaning set forth in Schedule 3.2.

“Order” means any order, ruling, decree, judgment or stipulation to which either Seller is
a party or by which either Seller or any of the Purchased Assets are bound, by or with any
Governmental Authority.

“Pension Plan” means any employee pension benefit plan as defined in Section 3(2) of ERISA.

“Person” means any individual, partnership, firm, corporation, limited liability company,
association, trust, unincorporated organization or other entity, as well as any syndicate or group
that would be deemed to be a person under Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended.

“Post-Closing Period” means any taxable period (or portion thereof) beginning after the
date of the Closing.

 

 

“Pre-Closing Period” means any taxable period (or portion thereof) ending on or prior to
the date of the Closing.

“Prepaid Expenses” means all prepaid expenses, deposits, advance payments, claims for
refunds, credits and the like, including postal and utility deposits, if any, and other prepaid
items relating to the Purchased Assets.

“Proceeding” means action, cause of action, claim, demand, suit, proceeding, citation,
summons, subpoena, inquiry or investigation of any nature, civil, criminal, regulatory or
otherwise, in law or in equity, by or before any court, tribunal, arbitrator or other Governmental
Authority.

“Promissory Note” means the promissory note from the Purchaser to the Seller substantially
in the form of Exhibit D.

“Property Taxes” means real and personal ad valorem property Taxes and any other Taxes
imposed on a periodic basis and measured by the level of any item.

“Purchase Price Bank Account” means a bank account in the United States to be designated by
the Seller in a written notice to the Purchaser at least five Business Days before the Closing.

“Real Property” means the real property commonly known as 8000 Bluffton Road and 3005
Commercial Road, Fort Wayne, Indiana together with all buildings and other structures, facilities
or improvements currently or hereafter located thereon, all fixtures, systems, improvements
equipment and items of personal property of the Seller attached or appurtenant thereto and, to the
extent transferrable, all easements, licenses, rights, permits, approvals, licenses, services and
appurtenances relating to the foregoing.

“Receivables” means any and all accounts receivable, notes and other amounts receivable
from third parties, including customers, arising from the conduct of the Business before the
Closing Date, whether or not in the ordinary course, together with any unpaid financing charges
accrued thereon.

“Regulations” means the Treasury Regulations (including Temporary Regulations) promulgated
by the United States Department of Treasury with respect to the Code or other federal tax statutes.

“Requirements of Law” means, with respect to any Person, the Governing Documents of such
Person and any statute, law, treaty, rule, regulation, order or determination of an arbitrator or a
court or other Governmental Authority, in each case applicable to or binding upon such Person or
any of its property or to which such Person or any of its property is subject, including without
limitation Environmental Laws.

“Seller’s Knowledge” means the knowledge of the following individuals: Dan Tarantine,
Leslie Striedel, Dan Wyss and Scott Ford, except for purposes of Section 3.07(b)(iv) it shall mean
the knowledge of Dan Tarantine and Leslie Striedel. A Person will be deemed to have knowledge of a
particular fact or other matter if: (i) that individual is actually aware of the fact or matter;
or (ii) a prudent individual could be expected to discover or otherwise become aware of that fact
or

 

 

matter in the ordinary course of business, without the assumption of any investigation regarding
the fact.

“Straddle Period” means any taxable period which includes a day before the Closing Date and
ends after the Closing Date.

“Tangible Assets” means all of the Fixed Assets, Machinery and Equipment, and improvements
thereto.

“Tax” or “Taxes” means any and all taxes of any kind (together with any and all
interest, penalties, additions to tax and additional amounts imposed with respect thereto) imposed
by any government or taxing authority.

“Tax Returns” means any and all returns, reports and forms (including, elections,
declarations, amendments, schedules, information returns or attachments thereto) required to be
filed with a Governmental Authority with respect to Taxes.

“Transferred Intellectual Property” means all Intellectual Property included by the Seller
in the Purchased Assets.

“Unfunded Obligations” means any and all liabilities to employees arising under the Union
Pension Plan, with respect to employee service rendered prior to the Closing Date.

“Union Pension Plan” means the Seller’s non-contributory pension plan for eligible union
employees at its Fort Wayne, Indiana facility.

“Warranties” means all written warranties, guaranties and assurances provided in
respect of the products of the Business.

 

 

EXECUTION VERSION

EXHIBIT A

FORM OF ASSUMPTION AGREEMENT

 

 

EXHIBIT B

FORM OF BILL OF SALE

 

 

EXHIBIT C

FORM OF DEED

 

 

SPECIAL WARRANTY DEED

          THIS INDENTURE WITNESSETH, that WHITE ELECTRONIC DESIGNS CORPORATION, an Indiana corporation
and successor by merger with Bowmar Instrument Corporation, an Indiana corporation (“Grantor”),
conveys and specially warrants to BOWMAR, LLC, an Indiana limited liability company (“Grantee”),
for the sum of Ten and no/100 Dollars ($10.00) and other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the following described real estate in Allen County,
State of Indiana:

          (See attached and incorporated Exhibit “A” for description of the real estate.)

          This conveyance is made subject to:

	 	a.	 	Real estate taxes for 2009 due and payable in 2010 and all such
taxes thereafter; and
	 
	 	b.	 	Any and all easements, rights-of-way, orders, agreements and
restrictions of record.

          Grantor, as its sole warranty herein, specially warrants to Grantee, its successors and
assigns, that it will forever defend title to the real estate (subject to all matters to which this
conveyance is hereinabove made subject) against only those claims of persons claiming title to or
asserting claims affecting title to the real estate, or any part thereof, by, through or under
Grantor, but not otherwise.

          The undersigned person executing this Special Warranty Deed on behalf of Grantor represents
and certifies that he is authorized to execute and deliver this Special Warranty Deed; that Grantor
has full capacity to convey the real estate described in Exhibit “A”; and that all necessary action
for the making of such conveyance has been taken.

 

 

          IN WITNESS WHEREOF, Grantor has executed this Special Warranty Deed as of the ___ day of
March, 2010.

	 	 	 	 	 
	 	WHITE ELECTRONIC DESIGNS CORPORATION,

an Indiana corporation

 	 
	 	By:  	 	 
	 	 	Its: 	 	 
	 	 	 	 

 

 

	 	 	 	 	 

STATE OF ________________ )

) SS:

COUNTY OF ______________ )

          Before me, a Notary Public in and for said County and State, personally appeared                                         , known by me
to be the                      of White Electronic Designs Corporation, an Indiana corporation, and being first duly
sworn, acknowledged the execution of the foregoing Special Warranty Deed for and on behalf of said
corporation.

          Witness my hand and Notarial Seal this            day of March, 2010.

	 	 	 	 	 
	 	 	 
	 	
 	 
	 	Signature 	 
	 	 	 
	 	
 	 
	 	Printed 	 
	 
	 	My County of Residence

 	 
	 	
 	 
	 	 	 
	 	 	 
	 

	 	 	 
	My Commission Expires:
	 	 
	 
	 	 
	 
 

	 	 

          I affirm, under the penalties for perjury, that I have taken due care to redact all social
security numbers or tax identification numbers from this document, except as required by law.

	 	 	 	 	 
	 	 	 
	 	
 	 
	 	 	 
	 	 	 
	 

This instrument prepared by and return Deed to: Marc D. Pfleging, Baker & Daniels LLP, 600 E. 96th
Street, Suite 600, Indianapolis, Indiana 46240

          Send tax bills to: Bowmar, LLC, Attn: H. Bix Benson, 200 East Main Street, Suite 540, Fort
Wayne, Indiana 46802

 

 

EXHIBIT “A”

Parcel I:

Part of the Southeast Quarter of Section 33, Township 30 North, Range 12 East, Allen County,
Indiana more particularly described as follows:

Beginning at a point on the East line of the Southeast Quarter of Section 33, Township 30 North,
Range 12 East in Allen County, Indiana, said point being situated 225.0 feet South of the Northeast
corner of the said Southeast Quarter of Section 33, Township 30 North, Range 12 East; thence South
550.0 feet along the said East line of the Southeast Quarter of Section 33, Township 30 North,
Range 12 East; thence West 792.0 feet on a line parallel with the North line of the said Southeast
Quarter of Section 33, Township 30 North, Range 12 East; thence North 550.0 feet on a line parallel
with the aforementioned East line of the Southeast Quarter of Section 33, Township 30 North, Range
12 East; thence East 792.0 feet on a line parallel with the aforementioned North line of the
Southeast Quarter of Section 33, Township 30 North, Range 12 East, to the place of beginning,
containing 10.00 acres of land, more or less.

Parcel II:

A 10-acre tract, between Commercial Road and Exchange Road, West of the Bluffton Road, in the
Southeast Quarter of Section 33, Township 30 North, Range 12 East, described as follows:

Beginning at a point on the centerline of the aforementioned Commercial Road, said point being
situated 225 feet South and 792 feet West of the Northeast corner of the Southeast Quarter of
Section 33, Township 30 North, Range 12 East; thence South parallel to the East line of the
aforementioned Southeast Quarter of Section 33, Township 30 North, Range 12 East 550 feet; thence
West parallel to the North line thereof 792 feet; thence North 550 feet parallel to the
aforementioned East line thereof; thence East 792 feet to the point of beginning, containing 10
acres of land, more or less.

 

 

EXHIBIT D

FORM OF PROMISSORY NOTE

 

 

PROMISSORY NOTE

	 	 	 
	$300,000.00

	 	Ft. Wayne, Indiana
	 

	 	March 25, 2010

     FOR VALUE RECEIVED, the undersigned, Bowmar, LLC, an Indiana limited liability company
(“Borrower”), unconditionally promises to pay to the order of White Electronic Designs
Corporation, an Indiana corporation (“Lender”), the principal sum of Three Hundred Thousand and
00/100 Dollars ($300,000.00). Principal shall be paid by the Borrower in lawful money of the
United States of America at Lender’s address shown below, or at such other address as the Lender
may designate in writing to the Borrower.

PAYMENT. Principal shall be paid by the Borrower as follows: on the First and Second
Anniversary of the date of this Note, Borrower shall make payments to Lender in the amount of One
Hundred Fifty Thousand Dollars ($150,000) each. So long as no Event of Default has occurred,
interest shall not accrue on the outstanding principal balance.

PREPAYMENT. Borrower shall have the right at any time to prepay the principal balance
hereof without penalty in whole or in part.

DEFAULT. The failure to make any payment when due shall be deemed an “Event of Default”
hereunder,

          Upon the occurrence of any Event of Default hereunder at the option of the Lender, without
notice to the Borrower, the entire indebtedness evidenced hereby shall become immediately due and
payable. In addition, at Lender’s option, upon the occurrence of an Event of Default, interest on
the outstanding principal shall commence accruing at the rate of 10% per annum. Borrower further
promises to pay any and all costs of collecting the amount due hereunder, including, without
limitation, reasonable attorney fees. No delay on the part of the Lender in the exercise of any of
the aforesaid rights or remedies shall operate as a waiver thereof, and no single or partial
exercise of any right or remedy by the Lender shall preclude the exercise of any other right or
remedy. Any remedy provided hereunder shall be in addition to all other remedies available to
Lender and such remedies shall be cumulative.

SETOFF. This Note is issued in connection with that certain Asset Purchase Agreement
between Borrower (as Buyer) and Lender (as Seller) of even date herewith (the “Asset Purchase
Agreement”). Amounts due hereunder may be subject to setoff if Lender owes any amounts to Borrower
under the Asset Purchase Agreement, but only to the extent of the amounts so owed by Lender.

NOTICES. Any notice or other communications required or permitted hereunder shall be
sufficiently given if in writing and delivered personally or sent by confirmed facsimile
transmission, telex, telecopy or other wire transmission (with request for confirmation in a manner
typical with respect to communications of that type), overnight air courier (postage prepaid), or
registered or certified mail (postage prepaid with return receipt requested) addressed

 

to the respective party and their counsel at the addresses for notices set forth in the Asset
Purchase Agreement.

Unless otherwise specified herein, notices shall be deemed received (a) on the date delivered, if
delivered personally, by wire transmission or confirmed facsimile transmission; (b) on the next
business day after deposit with an overnight air courier; or (c) three (3) business days after
being sent, if sent by registered or certified mail.

WAIVER. The Borrower and all endorsers, sureties and guarantors hereby jointly and
severally waive presentment, demand for payment, notice of dishonor, notice of protest, and
protest, and all other notices or demands in connection with the delivery, acceptance, performance,
default, endorsement or guaranty of this instrument (except for any notice or grace period
expressly provided in this Note); and agree that no obligation hereunder shall be discharged by any
extension, indulgence or release given to Borrower or to any guarantor or other person or by the
release or non-enforcement of any security or guaranty given in connection herewith.
Notwithstanding anything herein to the contrary, nothing shall limit any rights granted to Lender
by other instruments or by law. All amounts payable under this Note shall be payable without
relief from valuation and appraisement laws.

PARTIAL INVALIDITY. If any provision of this Note is held by a court of competent
jurisdiction to be invalid, void or unenforceable in any manner, the remaining provisions of this
Note shall nonetheless continue in full force and effect without being impaired or invalidated in
any way. In addition, if any provision of this Note may be modified by a court of competent
jurisdiction such that it may be enforced, then that provision shall be so modified and as modified
shall be fully enforced.

GOVERNING LAW. This Note is being executed and delivered in the State of Indiana and shall
be governed by and be construed in accordance with the laws of the State of Indiana. The Borrower
agrees that all actions arising from or in connection with this Note shall, be litigated only in
the United States District Court for the Northern District of Indiana, or the Allen County Indiana
Circuit Court, and the Borrower consents to the jurisdiction and venue of these courts.

WAIVER OF JURY TRIAL. THE PARTIES ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL
ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO
CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT
WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF ANY LITIGATION REGARDING THE PERFORMANCE OR
ENFORCEMENT OF, OR IN ANY WAY RELATED TO THIS PROMISSORY NOTE.

[SIGNATURE PAGE FOLLOWS]

	 	 	 
	 
	 	 
	Promissory Note — Bowmar, LLC to White Electronics Design Corporation

	 	Page 2 of 3

 

	 	 	 	 	 
	 	“Borrower”

Bowmar, LLC, an Indiana limited liability company

 	 
	 	By:  	
 	 
	 	 	H. Bix Benson, Member 	 
	 	 	 	 

	 	 	 
	 
	 	 
	Promissory Note — Bowmar, LLC to White Electronics Design Corporation

	 	Page 3 of 3

 

	 	 	 	 	 

EXHIBIT 2.03(b)

ALLOCATION OF PURCHASE PRICEexhibit104.htm

    
       

        
          

        

      
Exhibit 10.4

     

    *AGREEMENT PREVIOUSLY
FILED*

    *RE-FILED TO INCLUDE ALL
EXHIBITS, SCHEDULES, AND ATTACHMENTS*

     

    PURCHASE
AND SALE AGREEMENT

     

    THIS
PURCHASE AND SALE AGREEMENT (as amended from time to time, this “Agreement”) is
entered into as of the 3rd day of April, 2006, by and between COVENANT TRANSPORT, INC., a
Tennessee corporation (“Seller”); and CT CHATTANOOGA TN, LLC, a
Delaware limited liability company (the “Buyer”).

    

    RECITALS

    

    A.           Seller
holds title to the Property (as hereinafter defined).

    

    B.           Buyer
desires to purchase the Property (as hereinafter defined) for the price defined
herein, and lease the Property (as hereinafter defined) back to Seller, as
tenant, and upon the terms hereinafter set forth.

    

    Now,
therefore, in consideration of the mutual covenants herein contained and other
good and valuable consideration, the parties, intending to be legally bound,
agree as follows:

    

    1.           Sale of
Property.  Seller agrees to sell the property located in
Tennessee identified on Exhibit A (the “Property”) to Buyer,
and Buyer agrees to purchase from Seller the Property, all on the terms and
conditions set forth herein, including the following rights:

     

        
(a)           Fee simple
title in and to the parcel of real property (the land constituting such parcel
being the “Land”), as more
particularly described on Exhibit A attached
hereto, together with all easements, rights-of-way, and privileges appurtenant
thereto and all buildings and improvements situated thereon (collectively, the
“Improvements”
and such parcel, including the Land and Improvements shall be called the “Parcel”);

     

        
(b)           All right,
title and interest of Seller in and to the lighting, electrical, mechanical,
plumbing and heating, ventilation and air conditioning systems permanently
affixed to and used in connection with the Land and the Improvements, including
all elevators, pipings, conduits, ducts, partitions, boilers, compressors and
furnaces, and all other fixtures (the “Fixtures”) attached
or appurtenant to the Land in such a manner as to constitute real estate under
applicable state law; and

     

        
(c)           Seller’s
copies of all original and supplemental surveys, structural and engineering
reports, geo-technical reports, plans, specifications, operating manuals,
warranties and guarantees covering the Improvements and the Fixtures that are
currently in the possession of Seller, or its subsidiaries; and Seller’s right,
title and interest in all such assignable agreements, and any assignable
licenses or permits relating to the ownership or operation of the Property
(except those required to be maintained by Seller or its subsidiary for the
continued operations of its business at the Property).

    

    2.           Price.  The
purchase price to be paid by Buyer to Seller for the Property (the “Purchase Price”)
shall be $30,000,000.  Subject to the terms and conditions set forth
in this Agreement, the Purchase Price, less any prorations to be credited to
Buyer, plus any prorations to be credited to Seller, shall be paid in
immediately available funds at Closing.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    3.           Seller’s Deliveries; Third
Party Reports.  Seller has provided to Buyer the materials
listed on Schedule
1 attached to this Agreement (which, together with all other information
and materials relating to the Parcel that is supplied to Buyer by Seller or any
of its subsidiaries or at Seller’s expense, are hereinafter referred to as the
“Seller
Information”).  Seller has ordered a new owner’s title
insurance commitment (the “Commitment”) in the
name of Buyer from First American Title Insurance Company with respect to the
Property and an updated ALTA as-built survey for the Parcel (the “New
Survey”).  If the transaction described in this Agreement is
not consummated for any reason, Buyer shall deliver to Seller all Seller
Information in Buyer’s possession.

    

    4.           Inspection
Period.  Buyer shall have until, but no later than, the Date of
Closing, as defined below (the “Inspection Period”)
to conduct in regard to the Parcel such tests, feasibility studies, surveys,
inspections and reviews of the due diligence materials provided by Seller as
Buyer chooses to conduct, and to review title, survey and environmental
matters.  Buyer shall notify Seller in writing as to the date on which
Closing will take place (the “Date of Closing”),
which date shall be no later than April 3, 2006.  In the event that
Buyer disapproves of any matters affecting the Parcel in accordance with the
terms hereof, and Seller does not commit to resolve the same to Buyer’s
satisfaction, Buyer may terminate this Agreement by submitting written notice of
termination to Seller on or before the Date of Closing.

    

    5.           Closing.  The
closing of the sale of the Property (the “Closing”) shall be
held, subject to the fulfillment of all conditions to Buyer’ obligations to
close or waiver thereof by Buyer, on the Date of Closing.  At Closing,
Seller shall execute and deliver to First American Title Insurance Company, 6142
Shallowford Road, Suite 104, Chattanooga, Tennessee 37421, Attn:  Kelly
Komorowski (“Escrow
Agent”) or to Buyer’ counsel, the following with respect to each
Parcel:

     

     
(a)           A warranty
deed in customary form for the jurisdiction in which such Parcel is located
conveying good and marketable fee simple title to the Land and the Improvements
to Buyer, and, if the related Property includes any personal property, a bill of
sale and assignment conveying good and marketable title to all such personal
property, in each case free and clear of all liens, charges, encumbrances,
easements, covenants and restrictions except for (i) unpaid taxes not yet due
and payable, (ii) matters shown on the surveys provided to Buyer, unless Buyer
has objected thereto as set forth in this Agreement, and (iii) matters of
record, unless Buyer has objected thereto as set forth in this
Agreement;

     

     
(b)           copies of
all surveys, plans, specifications, structural and engineering reports, manuals,
warranties and guarantees described in paragraph 1(c) to the
extent in Seller’s, or Seller’s subsidiary’s, possession;

     

     
(c)           A fully
executed original counterpart of a lease substantially in the form attached
hereto as Exhibit
B (the “Lease”) and a
memorandum of lease in recordable form, and a lease guaranty in the form
attached hereto as Exhibit C (the “Lease Guaranty”),
duly executed by Seller’s parent, Covenant Transport, Inc., a Nevada corporation
(the “Lease
Guarantor”);

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    (d)           An
affidavit stating that Seller is not a “foreign person” within the meaning of
Section 1445(f)(3) of the Internal Revenue Code of 1986;

    

    (e)           Any
customary affidavits reasonably required by the title insurance company to issue
its title policy(ies) to Buyer;

    

    (f)           All
other documents affecting title to and possession of the Property and necessary
to transfer or assign the same to Buyer, free and clear of all liens, security
interests, charges and encumbrances, except the Permitted Exceptions (as defined
in Paragraph
9);

    

    (g)           A
copy of a resolution for Seller authorizing the sale and leaseback of the
Property in accordance with the terms of this Agreement, and further authorizing
the execution of all closing documents and the performance of all other acts
necessary to close the sale and leaseback of the Property in accordance with the
terms of this Agreement, and a copy of a resolution of Lease Guarantor
authorizing the execution, delivery and performance of the Lease
Guaranty;

    

    (h)           A
secretary’s certificate relating to incumbency and organizational documents for
Seller and Lease Guarantor;

    

    (i)           A
copy of the certificate of occupancy or legal equivalent thereof for the
Parcel;

    

    (j)           Insurance
certificates as required under the Lease for the Parcel;

    

    (k)           An
opinion of counsel for Seller and Lease Guarantor covering such matters as Buyer
may reasonably request; and

    

    (l)           Other
documents and certificates reasonably requested by Buyer.

    

    In
addition, Buyer’s obligation hereunder to purchase the Property shall be
conditioned on the receipt by Buyer of the following, each of which shall be in
form and substance satisfactory to Buyer:

    

    (a)           An
appraisal for the Parcel that meets the requirements of the Financial
Institutions Reform, Recovery and Enforcement Act of 1989 and which shows that
the fair market value of the Parcel is not less than the Purchase Price
therefor, plus any transaction costs funded by Buyer;

    

    (b)           A
Phase I Environmental Assessment for the Parcel and, if recommended in such
Phase I Environmental Assessment, a Phase II Environmental Assessment by an
environmental services firm satisfactory to Buyer; and

    

    (c)           A
property condition report for the Parcel conducted by an engineering firm
satisfactory to Buyer.

    

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    At Closing, Buyer shall execute and/or
deliver to Seller (i) an original of the Lease and the memorandum of Lease, (ii)
a transfer tax declaration (or similar instruments as may be required by law),
(iii) the Purchase Price for such Parcel, and (iv) any other document or
instrument reasonably required by Seller.

    

    Seller
shall pay 100% of the cost of all recordation, transfer and intangible taxes
imposed on the warranty deed for the Property and the Lease and the cost of
recording any title curative documents, including, without limitation,
satisfactions of deeds to secure debt, mortgages and deeds of trust, and
financing statement terminations.  At Closing, Seller shall pay for
(i) Buyer’s owner’s title insurance premium (including all endorsements
requested by Buyer that are legally available in the related jurisdiction) for
the policy issued pursuant to the Commitment, and title search costs, (ii) the
cost of the New Survey, (iii) the cost of the environmental audits, the
appraisal and the property condition report conducted on behalf of Buyer for the
Parcel, (iv) all costs and fees of the Escrow Agent, and (v) Seller’s legal
expenses.  Buyer shall be responsible for its own legal expenses
incurred in connection with the Closing.  The Closing and delivery of
all such documents shall take place as shall be mutually agreeable to the
parties.  Seller agrees to deliver possession of the Parcel to Buyer
on the Date of Closing, subject only to rights of Seller, as tenant, under the
Lease.

    

    6.           Lease.  The
Parcel shall be leased to Seller under a net lease in form substantially
identical to that attached hereto as Exhibit
B.

    

    7.           Termination.  If
Closing does not occur on or before the Date of Closing, time being of the
essence, and (i) all of the conditions precedent to Buyer’ obligation to close
set forth in this Agreement have been satisfied and (ii) Seller is not in breach
of any of its obligations to Buyer contained in this Agreement, Seller may
terminate this Agreement upon written notice to Buyer.

    

    8.           Income and Expenses of the
Property.  Through the Date of Closing, Seller shall pay when
due any payments of principal and interest secured by any liens or encumbrances
on the Property.  Seller shall be responsible for all expenses of the
Property, and shall be entitled to all income from the Property, attributable to
the period prior to Closing.  Seller agrees that all expenses related
to the Property or otherwise accrued for the period prior to the Date of Closing
shall be paid in full by Seller when due.

    

    Seller
shall indemnify, defend and hold Buyer harmless from and against any costs,
expenses, penalties or damages, including reasonable attorneys’ fees, resulting
from any failure by Seller to timely pay or cause to be paid any of the items
described in this paragraph 8 that are
attributable to the period on or before the Date of Closing.

    

    9.           Title Examination; Title
Defects.  The matters listed on Schedule 2 attached
hereto are “Permitted
Exceptions.”  From the date of this Agreement (the “Effective Date”)
Seller shall not consent to, or permit to exist, any encumbrances, easements or
other restrictions to be placed on or granted with respect to the Parcel, other
than any matters consented to by Buyer in writing and the Permitted Exceptions,
without the prior written consent of Buyer (such encumbrances prohibited hereby
being “Seller
Encumbrances”).

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    The title
exceptions set forth in the Commitment for the Parcel shall reflect only the
Permitted Exceptions and any title matters consented to in writing by
Buyer.  The Commitment shall include such endorsements as may be
reasonably requested by Buyer and that are available in the applicable
jurisdiction.  Seller shall have obtained the commitment of the title
company to insure the so-called “gap period” at Closing. Seller shall be
responsible for satisfying all the requirements of the Commitment on or before
the Date of Closing.

    

    At any
time before Closing, Buyer may notify Seller of any Seller Encumbrance or other
additional title matter affecting the Parcel that Buyer is purchasing that is
not a Permitted Exception or any matter shown on the survey of the Parcel, in
each case that is not acceptable to Buyer (such being a "Title
Defect").  Seller shall have up to ten (10) business days after
receipt of such notice to cure such Title Defect or to provide evidence
reasonably satisfactory to Buyer that such Title Defect will be cured or
"insured over" at Closing, or to provide notice to Buyer that Seller will not
cure such Title Defect.  If requested by Seller, the Closing shall be
extended for up to ten (10) business days in order to permit Seller sufficient
time to remove such Title Defect.  If Seller fails or refuses to cure
such Title Defect or to provide such evidence within the cure period described
above, then Buyer may terminate this Agreement upon written notice to Seller of
its election to so terminate.

    

    10.           Environmental Defects;
Property Condition Defects.  In the event that Buyer discovers
any contamination or pollution on the Parcel or any violation of any
environmental law, or any noncompliance by Seller or its affiliates with any
recommendations set out in the environmental audits conducted on behalf of Buyer
by an environmental firm selected by Buyer (the “Environmental
Reports”), or any other condition or circumstance not acceptable to Buyer
with respect to the environmental condition of the Parcel (each such defect or
item of noncompliance being an "Environmental
Defect"), then Buyer may terminate this Agreement upon written notice to
Seller of its election to so terminate.  In the event that Buyer
discovers any deferred maintenance or other unsatisfactory condition with
respect to the Parcel (each such item, a “Condition Defect”),
Buyer may notify Seller thereof and Seller shall have up to ten (10) business
days after receipt of such notice to cure such Condition Defect or to provide
evidence reasonably satisfactory to Buyer that such Condition Defect will be
cured in a time frame and in a manner reasonably satisfactory to Buyer, or to
provide notice to Buyer that Seller will not cure such Condition
Defect.  If requested by Seller, the Closing shall be extended for up
to ten (10) business days in order to permit Seller sufficient time to cure such
Condition Defect.  If Seller fails or refuses to cure such Condition
Defect or to provide such evidence within the cure period described above, then
Buyer may terminate this Agreement upon written notice to Seller of its election
to so terminate.

    

    11.           Inspections.  Buyer
and its representatives shall have the right from and after the Effective Date
to enter upon the Property during Seller’s normal business hours for the purpose
of conducting such inspections, tests and investigations of the Property as it
may desire.  Notwithstanding the foregoing, Buyer (a) shall not
unreasonably interfere with, interrupt or disrupt the operation of Seller’s
business on the Property, (b) shall not cause any construction, mechanic’s or
materialman’s liens or other liens to attach to the Property or any portion
thereof by reason of the performance of any work or the purchase of any
materials by Buyer or any other party in connection with the studies or tests
conducted on the Property, (c) shall give Seller not less than 24 hours notice
prior to entry onto the Property by Buyer (unless such notice is waived by
Seller) or any other party directed by Buyer and shall permit Seller to have a
representative present during all investigations and inspections conducted with
respect to the Property, and (d) shall take all reasonable actions to ensure
that all actions taken in connection with the investigations and inspections of
the Property, and all equipment, materials and substances generated, used or
brought onto the Property pose no threat to the safety of persons or the
environment and cause no material damage to the Property, Seller or other
persons.  Buyer agrees to indemnify and hold Seller harmless from and
against any liens, claims, actions, charges, damages, expenses (including,
without limitation, reasonable attorneys’ fees and court costs) and liabilities
incurred through, and agrees to make any repairs to the Property arising out of
damage resulting from (and Seller agrees to provide Buyer and its agent,
contractors and representative access to the Property to make such repairs), the
exercise by Buyer and its agents, contractors, or representatives, of the
privilege granted in this paragraph, except to the extent attributable to
Seller’s, or Seller’s affiliate’s, gross negligence or willful
misconduct.  Seller agrees to promptly notify Buyer of any such claim
or potential claim, and agrees that Buyer shall have the right to control the
defense of any such claim.  The obligations under this paragraph 11 shall
survive termination of this Agreement.

    

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    12.           Broker’s/Advisor’s
Fees.  Seller represents and warrants to Buyer, and Buyer
represents and warrants to Seller, that no brokers' or real estate commissions
or similar fees will be due as a result of Seller’s or Buyer’s, as the case may
be, retention of, or obligation to, any broker or agent in connection with
Closing the sale of the Property.  Each party agrees to indemnify the
other against any cost and expense (including reasonable attorneys' fees)
incurred by the other as a result of the untruthfulness or inaccuracy of the
foregoing representation.

    

    13.           Representations, Warranties
by Seller.  Seller represents to Buyer that:

    

    (a)           Seller
has all requisite power and authority to execute this Agreement, the Lease, the
Closing Documents listed in paragraph 5 and all
other documents required to be delivered by Seller, and to assume and perform
all of its obligations under this Agreement, the Lease and such Closing
Documents.  The execution of this Agreement and the Lease by Seller,
and the performance by Seller of its obligations hereunder and thereunder, do
not require the consent of any third party, including any governmental
authority.

    

    (b)           The
execution and delivery of this Agreement and the Lease, and the performance by
Seller of its obligations hereunder and thereunder, have been duly authorized by
such corporate action as may be required, and the execution and delivery of this
Agreement and the Lease, and the sale and leaseback of the Property do not and
will not violate, or create a lien pursuant to, the organizational documents of
Seller, any judgment, order, agreement, indenture or contract to which Seller is
a party, or any law, ordinance, rule or regulation applicable to Seller, or by
which Seller is bound.  Upon execution by Seller, this Agreement, the
Lease and the other documents and agreements to be executed by Seller in
connection with the transactions contemplated by this Agreement, shall
constitute the legal, valid and binding obligations of Seller, enforceable
against Seller in accordance with their respective terms, subject to general
equitable principles and to applicable bankruptcy, insolvency, reorganization
and similar laws affecting the enforcement of creditors’ rights
generally.

     

    (c)           Seller
is a corporation duly organized, validly existing and in good standing under the
laws of Tennessee.  Seller has full power and authority to own, sell
and lease the Property and enter into this Agreement and the Lease.

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    (d)           There
will be no leasing commissions payable with respect to the Lease.

    

    (e)           There
shall be no service, maintenance, property management, leasing or other
contracts affecting the Property in existence as of the Date of Closing to which
either Buyer or the Property shall be bound or be subject after the Closing,
except for those that have been disclosed in writing by Seller to Buyer and (i)
which will be the obligations of Seller, as tenant under the Lease (and not
obligations of Buyer), and (ii) which are terminable by Buyer without penalty or
cost on no more than thirty (30) days’ notice.  Neither Seller nor the
Property is subject to any obligation or agreement, including any right of first
refusal, which could prevent Seller from completing the sale of the Property to
Buyer under this Agreement.

    

    (f)           There
is no action, suit, proceeding, litigation, administrative agency action,
condemnation proceeding or proceeding of any kind pending or, to Seller’s
knowledge, threatened against Seller affecting or questioning Seller’s title to,
right to sell or use, maintenance or operation of the Property, including any
requests for public dedication, nor does Seller know of any basis for any such
action.  Seller has received no written notice from any governmental
agency of any violation by Seller of any law, rule or regulation with respect to
Seller’s ownership, use, occupancy maintenance or operation of the
Property.

    

    (g)           To
Seller’s knowledge, (1) the Property does not contain any “Hazardous Materials”
(as defined below) in violation of any applicable “Environmental Laws” (as
defined below), (2) the Property is not subject to federal, state or local
regulations or liability because of the presence of stored, leaked, spilled or
disposed petroleum products, waste materials or debris, underground storage
tanks, “PCBs” or PCB items (as defined in 40 C.F.R. §761.3), “asbestos” (as
defined in 40 C.F.R. §763.63), or the past or present accumulation, treatment,
storage, disposal, spillage or leakage of any Hazardous Materials; (3) no
portion of the Land has been used for the disposal of Hazardous Materials nor
have any wetlands or tidal waters, as those terms are defined in 33 C.F.R.
§328.3 been filled in violation of any Environmental Laws; and (4) no Hazardous
Materials have been generated, treated, stored, recycled, transported, released,
discharged, emitted, disposed of or otherwise handled at, on or under the
Property except in de minimis quantities stored, used and disposed of in
accordance with applicable Environmental Laws.  Seller further
represents to Buyer that the Property shall be maintained in the condition
represented above through the Date of Closing.  As used in this paragraph 14(g), the
term “Hazardous
Materials” shall mean any contaminant, oil, petroleum or petroleum
by-product, asbestos or asbestos-related products, hazardous wastes, hazardous
substances, hazardous materials, toxic substances, hazardous air pollutants or
toxic pollutants, as those terms are defined in Environmental
Laws;  the term “Environmental Laws”
shall mean the Resource Conservation and Recovery Act (42 U.S.C.A. §§6901 et seq.), the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C.A.
§§9601 et seq.), the
Hazardous Materials Transportation Act (42 U.S.C.A. §§1801 et seq.), the Toxic
Substances Control Act (15 U.S.C.A. §§2601 et seq.), the Clean Air Act
(42 U.S.C.A. §§7401 et
seq.), and the Clean Water Act (33 U.S.C.A. §§1251 et seq.), any amendments
thereto, and any regulations promulgated pursuant thereto, and any other
federal, state or local laws dealing with the environment, health or safety
related to the environment or any other state or local law, regulation or
ordinance relating to the foregoing matters.

    

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    (h)           All
buildings and improvements on the Land constituting a portion of the Property
fully conform with all applicable zoning ordinances and regulations (as modified
by any “special exceptions” or “special use permits” or the like), building,
health, fire and safety codes and restrictions and other laws, ordinances, rules
and regulations except to a de minimis extent not materially and adversely
affecting the use, occupancy, maintenance, ownership, marketability, operation,
value or mortgageability of the Property, and are located entirely within the
boundaries of the Land.

    

    (i)           No
assessments or charges for any public improvements have been made against the
Property which remain unpaid, except as may be shown in the title commitment for
the Property, and Seller has no knowledge of any plans for improvements which
might give rise to a special assessment.

    

    Seller
hereby agrees that the truthfulness of each of the foregoing representations is
a condition precedent to the performance by Buyer of its obligations under this
Agreement.  Upon the material breach by Seller of any representation
made in this Agreement or the failure to occur of any condition to Buyer’s
obligation to Close, and if Seller has failed to cure such breach or condition
within ten (10) business days of receipt of written notice of such breach or
condition from Buyer, Buyer may, at its option prior to the Date of Closing,
terminate this Agreement.

    

    15.           Representations, Warranties
by Buyer.  Buyer represents to Seller that Buyer has all
requisite power and authority to execute this Agreement and the Lease, that the
execution and delivery of this Agreement and the Lease, and the performance by
Buyer of its obligations hereunder and thereunder have been duly authorized by
such action as may be required, that no further action or approval is required
in order to constitute this Agreement as a binding and enforceable obligation of
Buyer, and that Buyer is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of
Delaware.

    

    16.           Defaults.  Upon
the breach by Seller of any of the representations contained in this Agreement,
or the default by Seller in the performance of any other obligation of Seller
set forth in this Agreement, and, in each case, Seller has failed to cure such
breach or default within ten (10) business days after written notice from Buyer,
Buyer may exercise all remedies available to it, including any or all of the
following: (a) Buyer may terminate this Agreement by delivery of written notice
to Seller; and (b) Buyer may institute proceedings in any court of competent
jurisdiction to specifically enforce the performance by Seller of the terms of
this Agreement.  In addition, Seller shall be responsible for the
payment of, or reimbursement of Buyer for, all reasonable costs and expenses
incurred by Buyer in connection with the transaction contemplated by this
Agreement, including all reasonable legal fees and expenses, and all costs for
the New Survey, the environmental audits of the Parcel, the appraisal and the
property condition report for the Parcel.

    

    If Buyer
defaults in the performance of any of its obligations under this Agreement,
Seller shall be entitled to receive and retain from Buyer copies of all surveys,
inspections, evaluations and other reports on the Property prepared by or for
Buyer and neither party shall have any other claim against the
other.

    

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    17.           Damage, Destruction and Eminent
Domain.

    

     (a)           If,
prior to the Date of Closing, the Parcel or any part thereof is damaged or
destroyed by fire, the elements or any other destructive force or cause to the
extent that repairing such damage or destruction is reasonably estimated to cost
Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00) or more, then,
within a reasonable time of any such damage or destruction, Seller shall give a
written notice to Buyer specifying the insurance carrier's estimate of the
amount of insurance payable as the result of such damage or
destruction.  Within ten (10) business days after Buyer has received
the written notice described in the preceding sentence, Buyer may elect to
terminate this Agreement by delivery of written notice to Seller.  If
Buyer elects to consummate the purchase despite the damage or destruction, or if
any lesser damage or destruction has occurred, there shall be no reduction in or
abatement of the Purchase Price, and the parties shall treat such casualty
damage as having occurred during the term of the Lease.

    

     (b)           If,
prior to the Date of Closing any judicial, administrative, or other condemnation
proceedings are instituted or threatened in which a taking of the Parcel is
proposed that exceeds Two Hundred Fifty Thousand and 00/100 Dollars
($250,000.00) in
value, including any consequential damages to the Parcel, then within a
reasonable time of receipt by it or notice of the institution of any judicial,
administrative, or other condemnation proceedings involving the Parcel, Seller
shall give a written notice to Buyer.  Within ten (10) business days
after Buyer has received the written notice described in the preceding sentence,
Buyer may elect to terminate this Agreement, by delivery of written notice to
Seller.  If Buyer elects to consummate the purchase despite the
institution of condemnation proceedings, or if it appears that the value of the
proposed taking, including any consequential damages to the Property, shall
total less than Two Hundred Fifty Thousand and 00/100 Dollars
($250,000.00), there shall be no
reduction in or abatement of the Purchase Price, and the parties shall treat
such condemnation as having occurred during the term of the Lease.

    

    18.           Assignment.  Buyer
may not assign this Agreement without prior written consent of Seller, except
that Buyer may assign this Agreement to SunTrust Equity Funding, LLC, or a
wholly owned subsidiary of, or other entity controlled by, SunTrust Equity
Funding, LLC.

    

    19.           Notices.  Any
notice, demand, communication or election required or permitted to be given or
served upon either party shall be deemed given or served in accordance with the
provisions of this Agreement, if the notice or election is delivered by (i)
facsimile which shall be deemed received if a confirmation is received by the
sender during normal business hours, (otherwise deemed to be received during the
next business day), (ii) overnight air courier, or (iii) personal delivery to or
by mailing the notice or election in a sealed wrapper by United States
registered or certified mail, return receipt requested, postage prepaid,
properly addressed as follows:

    

    

    
      	 
      	
              If
      to Buyer:

            	
              c/o
      SunTrust Equity Funding, LLC

            	 
      
	 
      	 
      	
              303
      Peachtree Street, 24th
      Floor

            	 
      
	 
      	 
      	
              Mail
      Code 3951

            	 
      
	 
      	 
      	
              Atlanta,
      GA 30308

            	 
      
	 
      	 
      	
              Attention:  Allison
      McLeod

            	 
      
	 
      	 
      	
              Facsimile:  404-230-1344

            	 
      

    

    

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    
      	 
      	
              With
      a copy to:

            	
              Greenberg
      Traurig, LLP

            	 
      
	 
      	 
      	
              77
      West Wacker Drive, Suite 2500

            	 
      
	 
      	 
      	
              Chicago,
      IL  60601

            	 
      
	 
      	 
      	
              Attention:  Julia
      Sarron

            	 
      
	 
      	 
      	
              Facsimile:
      312-899-0396

            	 
      
	 
      	 
      	 
      	 
      
	 
      	
              If
      to Seller:

            	
              Covenant
      Transport, Inc.

            	 
      
	 
      	 
      	
              400
      Birmingham Highway

            	 
      
	 
      	 
      	
              Chattanooga,
      TN  37419

            	 
      
	 
      	 
      	
              Attention:  Joey
      B. Hogan

            	 
      
	 
      	 
      	
              Facsimile:  423-821-5442

            	 
      
	 
      	 
      	 
      	 
      
	 
      	
              With
      a copy to:

            	
              Scudder
      Law Firm, P.C., L.L.O.

            	 
      
	 
      	 
      	
              411
      S. 13th
      Street

            	 
      
	 
      	 
      	
              Lincoln,
      NE  68508

            	 
      
	 
      	 
      	
              Attention:  Mark
      Scudder

            	 
      
	 
      	 
      	
              Facsimile:  402-435-4239

            	 
      

    

    

    Each such
mailed notice or communication shall be deemed to have been given to or served
upon the party to which addressed within three business days after the date the
notice is deposited in the United States registered or certified mail, return
receipt requested, postage prepaid, properly addressed in the manner provided
above.  Each such delivered notice or communication shall be deemed to
have been given to or served upon the party to whom delivered, upon the delivery
thereof in the manner provided above.  Either party may change its
address for the service of notice by delivering written notice of the change to
the other party, in the manner provided above at least five (5) business days
prior to the effective date of the change.

    

    20.           Time of the
Essence.  Time shall be of the essence in the performance of
all obligations under this Agreement.  If the time period by which any
right, option or election provided under this Agreement must be exercised, or by
which any act required under this Agreement must be performed, or by which
Closing must be held, expires on a Saturday, Sunday or a holiday, then such time
period shall be automatically extended to the next business day, except as
otherwise provided herein.

    

    21.           Captions.  The
paragraph headings or captions appearing in this Agreement are for convenience
only, are not a part of this Agreement and are not to be considered in
interpreting this Agreement.

    

    22.           Entire Agreement,
Modification.  This Agreement and its Exhibits constitute the
entire and complete agreement between the parties and supersedes any prior oral
or written agreements between the parties with respect to the
Property.  It is expressly agreed that there are no verbal
understandings or agreements which in any way change the terms, covenants and
conditions set forth in this Agreement, and that no modification of this
Agreement and no waiver of any of its terms and conditions shall be effective
unless it is made in writing and duly executed by both parties
hereto.

    

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    23.           Binding
Effect.  All covenants, agreements and provisions of this
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and permitted assigns.

    

    24.           Controlling
Law.  This Agreement has been made and entered into under the
laws of the State of Tennessee, and those laws shall control the interpretation
of this Agreement.

    

    25.           Counterpart and
Facsimile.  This Agreement may be executed and delivered with
the exchange by facsimile or overnight air courier of separate signature
pages.

    

    26.           Waiver of
Jury Trial.   SELLER AND BUYER HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL UNDER THE LAWS OF THE STATE OF TENNESSEE OR
OTHERWISE OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY
OR INDIRECTLY, THIS AGREEMENT, ANY OF THE RELATED DOCUMENTS, ANY DEALINGS AMONG
BUYER OR SELLER RELATING TO THE SUBJECT MATTER OF THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT OR ANY RELATED TRANSACTIONS, AND/OR THE RELATIONSHIP THAT IS
BEING ESTABLISHED AMONG BUYER AND SELLER.  THE SCOPE OF THIS WAIVER IS
INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY
COURT (INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF
DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS).  THIS
WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, ANY RELATED DOCUMENTS, OR TO ANY
OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT OR ANY RELATED TRANSACTIONS.  IN THE EVENT OF LITIGATION,
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.

    
      
        
           

        

         

      

      
        11

        
          

        

      

      
         

      

    

         IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be executed as of the day and year
first above written.

    

    
      	 
      	
              SELLER:

            
	 
      	 
      
	 
      	
              COVENANT TRANSPORT, INC.,
      a Tennessee corporation

            
	 
      	 
      
	 
      	
              By:

            	
              /s/
      Joey B. Hogan

            
	 
      	
              Name:

            	
              Joey
      B. Hogan

            
	 
      	
              Title:

            	
              EVP/CFO

            

    

    

     

    
      
         

      

      
        S-1

        
          

        

      

      
         

      

    

     

    
      	 
      	
              BUYER:

            
	 
      	 
      
	 
      	
              CT CHATTANOOGA TN, LLC,
      a Delaware limited liability company

            
	 
      	 
      
	 
      	
              By:

            	
              SunTrust
      Equity Funding, LLC, its manager

            
	 
      	 
      	 
      
	 
      	
              By:

            	
              /s/R.
      Todd Shutley

            
	 
      	
              Name:

            	
              R.
      Todd Shutley

            
	 
      	
              Title:

            	
              Senior
      Vice President and Manager

            

    

    

     

    
      
         

      

      
        S-2

        
          

        

      

      
         

      

    

    EXHIBIT
A

     

    PROPERTY
DESCRIPTION

     

    BEING A
PART of the Covenant Transport, Inc. property described in Deed Book 4443, Page
260, of the Register’s Office of Hamilton County, Tennessee, located in the City
of Chattanooga, Hamilton County, Tennessee, and being more particularly
described as follows:

    

    BEGINNING
AT AN OLD PIPE, said point being in the line dividing Sections Thirteen (13) and
Fourteen (14), Township Two (2) South, Range Five (5), West of the Basis Line,
Ocoee District, the said iron pipe also marking the Northwestern corner of Lot
24, Interchange City, as shown on plat recorded in Plat Book 34, Page 22, in the
Register’s Office of Hamilton County, Tennessee, said point also being in the
Southern right-of-way of New Cummings Road; thence South 24 degrees 38 minutes
31 seconds West, along the dividing line of said Sections 13 and 14, a distance
of 2,285.13 feet to a 5/8 inch rebar with cap set; thence leaving said Section,
North 46 degrees 32 minutes 46 seconds West, a distance of 1,582.91 feet to an
old rebar found, said point being in the Eastern right-of-way of U.S. Highway
No. 11 (Birmingham Highway); thence, as follows; with a curve to the right, said
curve having a delta angle of 04 degrees 41 minutes 18 seconds, a radius of
5,690.00 feet, a length of 465.58 feet, and a chord of North 43 degrees 11
minutes 06 seconds East, 465.45 feet to a mag nail set; thence South 44 degrees
28 minutes 15 seconds East, a distance of 50.00 feet to a 5/8 inch rebar with
cap set; thence, with a curve to the right, said curve having a delta angle of
05 degrees 41 minutes 23 seconds, a radius of 5,643.85 feet, a length of 560.46
feet to a 5/8 inch rebar with cap set, said point being the end point of said
curve; thence North 51 degrees 13 minutes 15 seconds East, a distance of 60.81
feet to a 5/8 inch rebar with cap set; thence, leaving said right-of-way
crossing the Covenant Transport, Inc. property, South 78 degrees 34 minutes 19
seconds East, a distance of 92.12 feet, to a 5/8 inch rebar with cap set; thence
South 68 degrees 35 minutes 08 seconds East, a distance of 147.50 feet, to a 5/8
inch rebar with cap set; thence South 74 degrees 19 minutes 42 seconds East, a
distance of 225.85 feet, to a 5/8 inch rebar with cap set; thence North 34
degrees 00 minutes 05 seconds East, a distance of 431.88 feet, to a 5/8 inch
rebar with cap set; thence North 72 degrees 56 minutes 18 seconds East, a
distance of 53.57 feet to a 5/8 inch rebar with cap set; thence South 66 degrees
11 minutes 11 seconds East, a distance of 271.94 feet, to a 5/8 inch rebar with
cap set; thence South 85 degrees 56 minutes 14 seconds East, a distance of 56.12
feet, to a 5/8 inch rebar with cap set; thence North 50 degrees 53 minutes 23
seconds East, a distance of 51.03 feet, to a 5/8 inch rebar with cap set; thence
North 29 degrees 48 minutes 32 seconds East, a distance of 193.24 feet, to a 5/8
inch rebar with cap set, said point being in the Southern right-of-way of New
Cummings Road; thence South 63 degrees 18 minutes 12 seconds East, along said
right-of-way, a distance of 116.36 feet, to the POINT OF
BEGINNING.  All as shown on that Survey prepared by Wesley M. James,
R.L.S. Tennessee No. 811, dated January 26, 2006.

    

    Being a
portion of the property conveyed to Covenant Transport, Inc., a Tennessee
Corporation, by Warranty Deed from John C. Grant, Jr., unmarried, only child and
sole heir at law of John C. Grant, recorded December 14, 1994 in Book 4443, Page
260, in the Register’s Office of Hamilton County, Tennessee.

    

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
B

    

    FORM
OF LEASE

     

    (Incorporated
by reference to Exhibit 10.5 to this Form 10-K)

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
C

    

    FORM
OF LEASE GUARANTY

    

    (Incorporated
by reference to Exhibit 10.20 to Covenant Transportation Group,
Inc.'s

    Report on
Form 8-K, filed April 7, 2006 (SEC Commission File No.
0-24960))

    
      
         

      

      
        
        

        
          

        

      

       

    

    SCHEDULE
1

     

    SELLER
INFORMATION DELIVERED BEFORE CONTRACT EXECUTION

     

    None

    

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

    
       

      SCHEDULE
2

       

      PERMITTED
EXCEPTIONS AT CONTRACT EXECUTION

       

       

      
        	
                1.  

              	
                Any
      discrepancies or conflicts in boundary lines, any shortages in area, or
      any encroachment or overlapping of
improvements.

              

      

      

      
        	
                2.  

              	
                Any
      facts, rights, interest or claims which are not shown by the public record
      but which could be ascertained by an accurate survey of the land or by
      making inquiry of persons in possession
thereof.

              

      

      

       

      
        	
                3.  

              	
                Easements,
      liens or encumbrances or claims thereof, which are not shown by the public
      record.

              

      

      

       

      
        	
                4.  

              	
                Any
      lien, or right to a lien, for services, labor or material imposed by law
      and not shown by the public record.

              

      

      

       

      
        	
                5.  

              	
                Taxes
      for the year 2006
      and thereafter for tax parcel number 165-010, not yet due and
      payable.

              

      

      

       

       

      Back to Form 10-K

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00171-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00171-of-00352.parquet"}]]