This AGREEMENT, dated as of June 4, 2015 (this “Agreement”), is by and among Frequency Electronics, Inc., a Delaware corporation (the “Company”), Privet Fund L.P., a Delaware limited partnership, Privet Fund Management L.L.C., a Delaware limited liability company and Ryan Levenson (collectively, the “Privet Group”).

 WHEREAS, the Privet Group Economically Owns (as defined below) shares of common stock of the Company (the “Common Stock”) totaling, in the aggregate, 848,855 shares, or approximately 9.8% of the Common Stock issued and outstanding on the date hereof; and

WHEREAS, the Company and the Privet Group have agreed that it is in their mutual interest to enter into this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

ARTICLE I

REPRESENTATIONS

SECTION 1.2                                        Representations and Warranties of the Company.  The Company represents and warrants that this Agreement and the performance by the Company of its obligations hereunder (i) has been duly authorized, executed and delivered by the Company, and is a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, (ii) does not require the approval of the shareholders of the Company and (iii) does not and will not violate any law, any order of any court or other agency of government, the charter or other organizational documents of the Company, as amended, or any

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provision of any agreement or other instrument to which the Company or any of its properties or assets is bound, or conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any such agreement or other instrument, or result in the creation or imposition of, or give rise to, any lien, charge, restriction, claim, encumbrance or adverse penalty of any nature whatsoever pursuant to any such agreement or instrument.

ARTICLE II

COVENANTS

SECTION 2.1                           Business Discussions.  The Company agrees that, from time to time when there is material information to report regarding the Company’s business and, in any event, no less than once per week, Martin Bloch, the Company’s Chief Executive Officer or a mutually acceptable designee and, if available, the Company’s financial advisor, together will meet with Ryan Levenson in person or by telephone to discuss the Company’s business. From the date of this Agreement until such time as the Privet Group Designee is appointed to the Board of Directors of the Company (the “Board”), the Company also will provide Mr. Levenson or his Representatives access to all written information provided to the Board (and copies of all such information that is not Classified Information), including but not limited to business combination and capital transaction proposals (including, to the extent requested, historical proposals; provided, that the Company shall not be required to provide any proposals made prior to January 1, 2012); provided, however, Mr. Levenson understands and acknowledges that certain information or documents that the Company has identified as classified under applicable regulations and requirements governing national security information promulgated by the U.S. government or any agency or department thereof (“Classified Information”) will not be shared with Mr. Levenson or his Representatives unless he or they, as the case may be, obtain(s) from the Defense Security Service of the U.S. Department of Defense (and maintains) the Security Clearance (as defined below).

SECTION 2.2                           Directors. At any time during the term of this Agreement, the Privet Group shall be entitled to designate two (2) individuals (one of which will be Ryan Levenson) to serve as a member of the Company’s Board and the Company shall have three (3) business days to evaluate the qualifications of the designees in good faith and select one (1) designee that is acceptable to the Company (the “Privet Group Designee”) as set forth in this Section 2.2.  As promptly as practicable following written notice from the Company identifying the Privet Group Designee to be appointed to the Board, and in any event within ten calendar days of receipt of such notice, the Board shall, if necessary, increase the size of the Board by one and appoint the Privet Group Designee to serve as a director of the Company subject to such Privet Group Designee obtaining from the Defense Security Service of the U.S. Department of Defense (or other appropriate agency) a security clearance at the “Secret” level which is the clearance level maintained by the Company’s other directors presently serving on the Board (the “Security Clearance”).  Prior to his or her appointment to the Board, the Privet Group Designee shall irrevocably agree in writing to tender his or her resignation on the earlier of (i) the date this Agreement terminates or (ii) the date on which any member of the Privet Group proposes (or joins a group that proposes) any nominee(s) to stand for election as director(s) at an annual meeting of the Company’s stockholders (or any special meeting of the Company’s stockholders).

 

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ARTICLE III

OTHER PROVISIONS

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Company. In consideration for, and as a condition of, the Confidential Frequency Information being furnished to the Privet Group, the Privet Group shall, and shall cause each member, officer, director and/or employee of the Privet Group and, subject to the restrictions in Section 3.1(c), each agent, representative, attorney and advisor of the Privet Group (collectively, “Representatives”) to, treat any and all Confidential Frequency Information that is furnished to it or its Representatives , in accordance with the provisions of this Section 3.1, and to take or abstain from taking the other actions hereinafter set forth.

(c)

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jointly and severally responsible for any violation of this Agreement by its Representatives as if such Representatives were parties hereto and will use best efforts to cause its Representative to comply with such obligations.

(iii) No member of the Privet Group shall knowingly take or intentionally fail to take any action with respect to Confidential Frequency Information that has been provided to the Privet Group under circumstances that causes such Confidential Frequency Information to be protected by the attorney-client privilege with the effect of or for the express purpose of causing the attorney client privilege to be waived with respect to such Confidential Frequency Information or disclose to its Representatives or any other member of the Privet Group any Legal Advice (as defined below) that may be included in the Confidential Frequency Information with respect to which such disclosure would constitute waiver of the Company’s attorney client privilege or attorney work-product. “Legal Advice” as used herein shall be solely and exclusively limited to the legal advice provided by legal counsel and shall not include factual information or the formulation or analysis of business strategy.

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Each member of the Privet Group agrees that for a period beginning on the execution date of this Agreement and ending on the earliest of (x) 30 days prior to the last date on which a stockholder may timely submit to the Company notice of its intention to nominate a director or propose another item of business at the 2016 Annual Meeting, (y) the termination of this Agreement in accordance with its terms, or (z) (i) the date upon which the Arbitrator determines that there has been a material breach of this Agreement by the Company, or, (ii) if the Company notifies the Privet Group in writing that it has waived its right to avail itself of the arbitration procedure set

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forth in Section 3.4(b), ten days after the date on which the Company received from the Privet Group written notice that the Company has materially breached this Agreement; provided, that, on such 10^th day, the Company is still in material breach of this Agreement (such period, the “Standstill Period”), unless specifically invited in writing by the Company, no member of the Privet Group nor any of its Affiliates or Representatives acting on its behalf or on behalf of other persons acting in concert with any member of the Privet Group will in any manner, directly or indirectly: (i) effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other person to effect or seek, offer or propose (whether publicly  or  otherwise)  to  effect or  participate  in,  (A)  any  acquisition  of  any  securities  (or beneficial  ownership  thereof), or  rights  or  options  to  acquire  any  securities  (or  Beneficial Ownership thereof), or any assets, indebtedness or businesses of the Company or any of its subsidiaries or Affiliates,  (B) any tender or exchange offer, merger or other business combination involving the Company, any of the subsidiaries or Affiliates or assets of the Company or the subsidiaries  or  Affiliates  constituting  a  significant  portion  of  the  consolidated  assets  of  the Company and its subsidiaries or Affiliates, (C) any recapitalization, restructuring, liquidation, dissolution  or  other  extraordinary  transaction  with  respect  to  the  Company  or  any  of  its subsidiaries or Affiliates, or (D) any “solicitation” of “proxies” (as such terms are used in the proxy  rules  of  the  SEC)  or  consents  to  vote  any  voting securities of the Company or any of its Affiliates or otherwise act alone or in concert with others to take action to elect a director or directors to the Company’s board of directors through a proxy contest; (ii) form, join or in any way participate in a “group” (as defined in Section 13(d) under the Exchange Act) (other than the Privet Group) with respect to the Company or otherwise act in concert with any person in respect of any such securities; (iii) take any action which would or would reasonably be expected to force the Company to make a public announcement regarding any of the types of matters set forth in (i) above; or (iv) enter into any discussions or arrangements with any third party with respect to any of the matters set forth in (i) through (iii) above.  Each member of the Privet Group also agrees during such period not to request that the Company or any of its Representatives, directly or indirectly, amend or waive any provision of this paragraph (including this sentence), unless such request is made to the Board.  Each member of the Privet Group further agrees that, if at any time during such period, any member of the Privet Group or (to the knowledge of the Privet Group) any of its Affiliates or Representatives are approached by any third party, seeking to co-invest or partner with any member of the Privet Group in a possible negotiated acquisition, business combination, or similar transaction involving the Company, the Privet Group will (unless prohibited by law or contract) promptly inform the Company of the nature of such transaction and the parties involved.

 

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in writing executed by the Parties.  No rights under this Agreement shall be deemed waived absent a written waiver by the Party granting the waiver.

if to the Company:

Frequency Electronics, Inc.
55 Charles Lindbergh Blvd.
Mitchel Field, New York 11553

Attention: Alan Miller, Treasurer and Chief Financial Officer

with a copy to:

Greenberg Traurig, LLP
200 Park Ave.
New York, New York 10166
Facsimile: (212) 805-5555
Attention: Dennis J. Block

 

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if to the Privet Group:

Privet Fund LP
79 West Paces Ferry Rd
Suite 200B
Atlanta, GA 30305
Attention: Ryan Levenson
Telephone: (404) 419-2670
Facsimile: (678) 999-5908

with a copy to:

Bryan Cave LLP
One Atlantic Center, 14^th Floor
1201 W. Peachtree Street, NW
Atlanta, GA 30309
Attention: Rick Miller
Telephone: (404)572-6600
Facsimile: (404) 420-0787

SECTION 3.12                       Counterparts; Miscellaneous.  This Agreement may be executed and delivered (including by facsimile transmission or .pdf) in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same

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instrument.  The headings used herein are for convenience only and the Parties agree that such headings are not to be construed to be part of this Agreement or to be used in determining the meaning or interpretation of this Agreement.  Unless the context otherwise requires, whenever used in this Agreement the singular shall include the plural, the plural shall include the singular, and the masculine gender shall include the neuter or feminine gender and vice versa.  Except as otherwise expressly provided herein, no failure on the part of any Party to exercise, and no delay in exercising, any right, power or remedy hereunder, or otherwise available in law or in equity, shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power or remedy by such Party preclude any other or further exercise thereof or the exercise of any other right, power or remedy.  If any provision of this Agreement or the application thereof becomes or is declared by a court of competent jurisdiction to be illegal, void or unenforceable, then the remainder of this Agreement will continue in full force and effect so long as the remaining provisions do not fundamentally alter the relations among the Parties.

SECTION 3.13 Interpretation.  Each of the Parties acknowledges that it has been represented by counsel of its choice throughout all negotiations that have preceded the execution of this Agreement, and that it has executed the same with the advice of such counsel.  Each Party and its counsel cooperated and participated in the drafting and preparation of this Agreement and the documents referred to herein, and any and all drafts relating thereto exchanged among the Parties shall be deemed the work product of all of the Parties and may not be construed against any Party by reason of its drafting or preparation.  Accordingly, any rule of law or any legal decision that would require interpretation of any ambiguities in this Agreement against any Party that drafted or prepared it is of no application and is hereby expressly waived by each of the Parties.

[Remainder of Page Intentionally Left Blank]

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As of April 23, 2015 the Privet Group Economically Owns, in the aggregate, 848,855 shares of Common Stock.

The persons and entities that own such shares and the number of shares that they Economically Own are set forth below.