Exhibit 10.4
 
Continuing Pledge Agreement

Dated as of June 6, 2013

Pledge. FREQUENCY ELECTRONICS, INC., whose address is 55 Charles Lindbergh
Boulevard, Uniondale, New York 11553 (the “Borrower”), pledges, assigns,
transfers and grants to JPMorgan Chase Bank, N.A., whose address is 395 North
Service Rd., 3rd Floor, Melville, NY 11747 (together with its successors and
assigns, the “Bank”) a continuing security interest in the property listed below
under the heading “Schedule of Collateral” (the “Collateral”) owned by the
Borrower, all Collateral in which the Borrower has rights or power to transfer
rights and all Collateral in which the Borrower later acquires ownership, other
rights or the power to transfer rights to secure the payment and performance of
the Liabilities. If the Collateral consists of “investment property” or
“financial assets,” as such terms are defined in the Uniform Commercial Code of
New York, as in effect from time to time (the “UCC”), the grant includes any
stock rights, stock dividends, liquidating dividends, new securities, financial
assets and other property to which the Borrower may become entitled because it
owns the Collateral and such property delivered to the Bank or to an
intermediary designated by the Bank subject to the control of the Bank to
satisfy the requirements of the paragraph captioned “Loan Value of Collateral”.
The Borrower has transferred the applicable securities to the Bank or to an
other intermediary, as directed by the Bank, that has entered or will hereafter
enter into one or more control agreements in form and substance satisfactory to
the Bank (collectively, “Control Agreement”). In the event the transfer is not
complete, the Borrower will complete it within ten (10) days. Collateral shall
not include any common trust funds of the Bank in which the Bank is prohibited
by applicable law from taking a security interest.

Bank Affiliates Appointed as Agents; Master Control Agreements. Affiliates of
the Bank and its parent, J.P.Morgan Chase & Co., now existing or hereafter
created or acquired, may now or hereafter provide custody, distribution, trading
and/or other services related to the Bank’s Collateral, whether or not the Bank
such Affiliates are acting in the capacity of “security intermediary” (such term
being used herein is defined in the UCC) or otherwise (“Affiliates”). The Bank
hereby appoints such Affiliates as its agent(s) for and on behalf of the Bank as
secured party and for purposes of perfecting the Bank’s Collateral held at the
Bank or its Affiliates, to hold the Bank’s Collateral and to provide related
services for the Bank as secured party. Any master control agreement(s) existing
among the Bank and Affiliates is(are) hereby incorporated by reference,
including any amendments, supplements and restatements now or hereafter
existing. The Borrower consents to such appointment of Affiliates as the Bank’s
agents by the Bank and to such master control agreement(s) among the Bank and
Affiliates. If any Collateral is held by an Affiliate, the Borrower directs such
Affiliate to comply with orders of the Bank without the consent of the Borrower
or any other person or entity.

SCHEDULE OF COLLATERAL. Collateral includes all of the Borrower’s “Investment
Property” of every type and description, described in the Control Agreement and
on the customer statement, if any, attached to the Control Agreement which shall
include without limitation, all of the Borrower’s “Securities Accounts”,
“Securities Entitlements”, “Securities”, “Investment Property” and “Financial
Assets” (such terms being used herein are defined in the UCC), now or hereafter
be maintained, held in or credited in any of the accounts with the account
numbers described in the Control Agreement (including any subaccounts and any
successor account(s) and/or subaccount(s), howsoever numbered, “Account”), and
all substitutions, additions, renewals, investments, reinvestments, free credit
balances, cash proceeds, general intangibles, insurance, products and supporting
obligations including but not limited to all interest, dividends, other
proceeds, instruments and other property now or hereafter received, receivable
or otherwise distributed in connection with the sale, lease, license, exchange
or other disposition of any Collateral.

Credit Agreement.  “Credit Agreement” means that certain Credit Agreement dated
as of the date hereof by and between the Borrower and the Bank.  All terms used
but not otherwise defined herein shall have the meanings ascribed to such terms
in the Credit Agreement.
 
Liabilities. “Liabilities” means all debts, obligations, indebtedness and
liabilities of every kind and character of the Borrower, whether individual,
joint and several, contingent or otherwise, now or hereafter existing, in favor
of the Bank and its Affiliates, including, without limitation, all liabilities,
interest, costs and fees, arising under or from any note, open account,
overdraft, credit card, lease, Rate Management Transaction, letter of credit
application, endorsement, surety agreement, guaranty, acceptance, foreign
exchange contract or depository service contract, whether payable to the Bank or
to a third party and subsequently acquired by the Bank, any monetary obligations
(including interest) incurred or accrued during the pendency of any bankruptcy,
insolvency, receivership or other similar proceedings, regardless of whether
allowed or allowable in such proceeding, and all renewals, extensions,
modifications, consolidations, rearrangements, restatements, replacements or
substitutions of any of the foregoing.  “Rate Management Transaction” means (1)
any transaction (including an agreement with respect thereto) which is a rate
swap, swap option, basis swap, forward rate transaction, commodity swap,
commodity option, equity or equity index swap, equity or equity index option,
bond option, interest rate option, foreign exchange transaction, cap, floor,
collar, currency swap, cross-currency rate swap, currency option, credit
protection transaction, credit swap, credit default swap, credit default option,
total return swap, credit spread, repurchase transaction, reverse repurchase
transaction, buy/sell-back transaction, securities lending transaction, weather
index transaction or forward purchase or sale of a security, commodity or other
financial instrument or interest (including an option with respect to any of
these transactions), or (2) any type of transaction that is similar to any
transaction referred to in clause (1) above that is currently, or in the future
becomes, recurrently entered into in the financial markets and which is a
forward, swap, future, option or other derivative on one or more rates,
currencies, commodities, equity securities or other equity instruments, debt
securities or other debt instruments, economic indices or measures of economic
risk or value, or other benchmarks against which payments or deliveries are to
be made, or any combination of the foregoing transactions.
 
 
 

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Representations, Warranties and Covenants. The Borrower represents, warrants and
agrees with the Bank that until this Pledge terminates and all Liabilities are
paid in full, except as otherwise permitted in the Credit Agreement, it owns and
it will own the Collateral free and clear of any liens, security interests,
assignments or other encumbrances (other than the Permitted Liens).  Except as
otherwise permitted in the Credit Agreement, the Borrower will not attempt to
sell or assign the Collateral or create any lien, security interest, assignment
or other encumbrance or claim (other than the Permitted Liens) against it. The
Borrower agrees to reimburse the Bank, on demand, for any amounts paid or
advanced by the Bank for the purpose of preserving all or any part of the
Collateral. The Bank shall exercise reasonable care in the custody and
preservation of the Collateral to the extent required by applicable law.

The Borrower represents, warrants and covenants with the Bank that until this
Pledge terminates and all Liabilities are paid in full no financing statement or
similar record covering all or any part of the Collateral is on file in any
public office, and no person or entity other than the Bank has control of the
Collateral unless the Bank has approved that filing and/or control in writing.
From time to time at the Bank’s reasonable request, the Borrower will execute
one or more financing statements and control agreements in form and substance
satisfactory to the Bank and will pay the cost of filing them in all public
offices or recording them with any intermediary where filing or recording is
deemed by the Bank to be necessary or desirable. In addition, the Borrower shall
execute and deliver, or cause to be executed and delivered, such other documents
as the Bank may from time to time reasonably request to create, to perfect, to
assure the continuing first priority of or to further evidence, the security
interest created in the Collateral by this Pledge, including: (a) a notice of
security interest and/or a control agreement with respect to any Collateral from
persons or entities considered necessary or desirable by the Bank, all in form
and substance satisfactory to the Bank; (b) a notice to and acknowledgement from
and control agreement with any bailee or other person who maintains, possesses
or controls any of the Collateral, all in form and substance satisfactory to the
Bank; and (c) any consent to the assignment of proceeds of any letter of credit,
all in form and substance satisfactory to the Bank.

The Bank shall have the right now and at any time in the future, in its sole and
absolute discretion and without notice to the Borrower: to (a) prepare, file and
sign the Borrower’s name on any proof of claim in bankruptcy or similar document
against any owner of the Collateral and (b) to prepare, file and sign the
Borrower’s name on any financing statement or similar record, notice of lien,
control agreement, assignment or satisfaction of lien or similar document in
connection with the Collateral.

Bank Appointed Attorney-in-Fact. The Borrower authorizes and irrevocably
appoints the Bank as the Borrower’s attorney-in-fact, to do any of the following
without notice to the Borrower or any other person or entity: to take any action
and to execute or otherwise authenticate any record or other documentation that
the Bank considers necessary or advisable to accomplish the purposes of this
Pledge, to exercise any rights under this Pledge and to perform any of the
undersigned’s obligations under this Pledge including but not limited to the
following: (a) to endorse and collect all checks, drafts, other payment orders
and instruments representing or included in, the Collateral or representing any
payment, dividend or distribution relating to any Collateral; (b) to direct any
securities or commodity intermediary or issuer of any Collateral to comply with
instructions originated by the Bank directing distribution of the Collateral
without the undersigned’s further consent; (c) to transfer to or restyle any
Collateral into the name of the Bank or the Bank’s nominee or any broker-dealer
that may be an affiliate of the Bank (including converting physical certificates
to book-entry holdings); (d) to transfer to the account of the Bank with any
Federal Reserve Bank as Collateral held in book entry form with any Federal
Reserve Bank; (e) to execute any control agreement or stock powers or other
document of transfer; and (f) to execute any record reasonably believed
necessary or appropriate by the Bank for compliance with laws, rules or
regulations applicable to any Collateral (including any documentation reasonably
believed necessary by the Bank for compliance with Rule 144 or any other
restrictions, laws, rules or regulations applicable to any Collateral hereunder
that constitutes restricted securities under the applicable securities laws) and
to vote any and all securities or exercise any similar right with respect to any
Collateral and the Bank is granted an irrevocable proxy to so vote on the
undersigned’s behalf. The Borrower’s signature on this Pledge or other
authentication of this Pledge shall constitute an irrevocable direction by the
Borrower to any bank, custodian, broker-dealer, any other securities
intermediary or commodity intermediary or other financial intermediary holding
any Collateral or any issuer of any letters of credit to comply with the
instructions or entitlement orders, as applicable of the Bank, without the
further consent of the Borrower or any other person or entity. This appointment
is irrevocable and coupled with an interest and shall survive the death or
disability of the Borrower.

Registration Rights. If any of the Collateral consists of securities not
registered under the Securities Act of 1933, and the issuer proposes to register
any of its securities, the Borrower will give the Bank notice of that fact. In
addition, and at no cost to the Bank, the Borrower will use its best efforts to
induce the issuer to register the pledged securities so that they may be
disposed of by public sale or other public disposition. Upon the completion of
registration, the Borrower will deliver certificates without any restrictive
legend in exchange for the unregistered securities. The Borrower indemnifies and
holds the Bank harmless against any loss, claim, damage or liability arising out
of the registration process, and will reimburse the Bank for any legal or other
expenses incurred by the Bank as a result.
 
 
 

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Voting Rights. Until the occurrence of an Event of Default with respect to any
Liabilities or any agreement related to the Liabilities, the Borrower may
exercise all voting and consensual powers and rights pertaining to any
Collateral for all purposes not inconsistent with the terms of this Pledge and
may receive and retain all dividends (other than stock or liquidating dividends)
on the Collateral prior to any event of default or default. All dividends in
stock or property representing stock, and all subscription rights, warrants or
other rights or options, all liquidating dividends or distributions, and all
securities or other property received as a result of a merger or consolidation,
will be Collateral and must be delivered to the Bank or as instructed by the
Bank.

Instructions Regarding the Collateral. The Bank may act upon any instructions
given by the Borrower whether in writing or not, with regard to additions or
substitutions or sale or other disposition of the Collateral and its proceeds.
The Borrower agrees that any additions to, substitutions for or proceeds of the
Collateral that it receives will be held for the Bank’s benefit and turned over
to the Bank. The Borrower also gives the Bank permission to have the Collateral
or any part of it transferred to or registered in the Bank’s name or in the name
of any other person or business entity with or without designation of the
capacity of that nominee, and will hold the Bank harmless from any liability or
responsibility that might result. A carbon, photographic or other reproduction
of this Pledge is sufficient as, and can be filed as, a financing statement or
other similar record. The Bank is irrevocably appointed the Borrower’s
attorney-in-fact to execute any financing statement or similar record on the
Borrower’s behalf covering the Collateral. The Borrower authorizes the Bank to
file one or more financing statements or similar records related to the security
interests created by this Pledge, and further authorizes the Bank, instead of
the Borrower, to sign such financing statements.

Remedies. The Borrower agrees and acknowledges that because of applicable
securities laws, the Bank may not be able to effect a public sale of the
Collateral, and sales at a private sale may be on terms and at a price less
favorable than if the securities were sold at a public sale. The Borrower agrees
that all private sales made under these circumstances shall be construed to have
been made in a commercially reasonable manner. The Bank’s compliance with any
applicable state or federal law requirements in connection with the disposition
of the Collateral will not adversely affect the commercial reasonableness of any
sale of the Collateral. These rights and remedies shall be cumulative and not
exclusive. If the Borrower is entitled to notice, that requirement will be met
if the Bank sends notice at least ten (10) days prior to the date of sale,
disposition or other event requiring notice, and such notice shall be deemed
commercially reasonable. The proceeds of any sale shall be applied first to
costs, then toward payment of the Liabilities in any order of application,
whether or not the Liabilities have been declared to be due and owing; provided
that, to the extent any Liabilities consist of extensions of credit by the
issuance of letters of credit or other like obligations of the Bank to third
parties which have not been utilized, such proceeds shall be held by the Bank in
a cash collateral account as security for the Liabilities.

Miscellaneous. The Borrower’s obligations to the Bank under this Pledge are not
subject to any condition, precedent or subsequent, and shall not be released or
affected by any change in the composition or structure of the Borrower,
including a merger or consolidation with any other person or entity. If more
than one person or entity signs this Pledge as Borrower, their obligations,
covenants, representations and warranties are joint and several and the
Collateral includes any property that is owned by any one or more of the
undersigned, individually or jointly with any other person or entity. If more
than one person or entity signs as the Borrower, their obligations are joint and
several arising out of or relating to this Pledge or the Collateral and each
agreement representation, warranty and covenant shall be individual, joint and
several and the “Collateral” includes any property that is owned by any Borrower
individually or jointly with any other. This Pledge is binding on the Borrower
and its heirs, successors and assigns, and is for the benefit of the Bank and
its successors and assigns. The use of section headings does not limit the
provisions of this Pledge. The provisions of this Pledge are severable, and if
any one or more of the provisions of this Pledge are held to be invalid, illegal
or unenforceable in any jurisdiction, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired; and
the invalidity, illegality or unenforceability in one jurisdiction shall not
affect the validity, legality or enforceability of such provision(s) in any
other jurisdiction. Time is of the essence under this Pledge and in the
performance of every term, covenant and obligation contained herein.
 

   
Borrower:

     
FREQUENCY ELECTRONICS, INC.
     
By:
/s/ Alan Miller
       
Alan Miller
Secretary/Treasuer and CFO
       
Printed Name
Title
 
Date Signed:
June 6, 2013
 

 
 
 
 

 
 
 

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