Exhibit 10.2
 
Line of Credit Note
 
 
$25,000,000.00
 
Date: June 6, 2013

Promise to Pay. On or before June 5, 2018 (the “Maturity Date”), for value
received, FREQUENCY ELECTRONICS, INC. (the “Borrower”) promises to pay to
JPMorgan Chase Bank, N.A., whose address is 395 North Service Rd., 3rd Floor,
Melville, NY 11747 (the “Bank”) or order, in lawful money of the United States
of America, the sum of Twenty Five Million and 00/100 Dollars ($25,000,000.00)
(the “Note Principal Amount”) or so much thereof as may be advanced and
outstanding under Tranche A and Tranche B plus interest thereon as set forth
below.

Credit Facility. The Bank has approved a credit facility of even date herewith
(the “Credit Facility”) to the Borrower in a principal amount not to exceed the
face amount of this Note. The credit facility is in the form of advances made
from time to time by the Bank to the Borrower. This Note evidences the
Borrower’s obligation to repay those advances. The aggregate principal amount of
debt that may be advanced under and evidenced by this Note is the lesser of the
(a) the Note Principal Amount or (b) the amount set forth in the Credit Facility
as reflected from time to time in the records of the Bank. Until the earliest to
occur of the Maturity Date, or an Event of Default, or any event that would
constitute an Event of Default but for the giving of notice, the lapse of time
or both, the Borrower may borrow, pay down and reborrow under this Note subject
to the terms of the Related Documents

Tranche A.  Subject to the satisfaction by the Borrower of the conditions set
forth in Section 3 of the Credit Agreement, the Bank shall advance amounts to
the Borrower under Tranche A (the “Tranche A Borrowings”), from time to time, in
an aggregate amount not exceeding the lesser of (a) (i) the Note Principal
Amount, less (ii) the unpaid principal amount under Tranche B, or (b) such
lesser amount as set forth in the Credit Facility.

Tranche B. Subject to the satisfaction by the Borrower of the conditions set
forth in Section 3 of the Credit Agreement, the Bank shall advance amounts to
the Borrower under Tranche B (the “Tranche B Borrowings”), from time to time, in
an aggregate amount not exceeding the lesser of (a) Fifteen Million Dollars
($15,000,000.00) or (b) such lesser amount as set forth in the Credit Facility.

Minimum Borrowing Limit.  Advances under either Tranche A or Tranche B must be
made in amounts not less than $500,000.00 (the “Minimum Borrowing Limit”) except
where the Borrower elects to advance amounts under either Tranche A or Tranche B
as an Alternate Rate Borrowing, in which case the minimum borrowing limit shall
be $100,000.00 (the “Alternate Borrowing Limit”).
 
Interest.  Except with respect to any election by the Borrower to pay interest
at the Alternate Note Rate, the Borrower hereby agrees to pay interest on the
outstanding unpaid principal balance of the Note Principal Amount as follows:
(a) interest at a rate equal to the LIBOR Rate plus 0.75% (the “Tranche A Note
Rate”) on the unpaid principal balance of Tranche A Borrowings, and
(b)  interest at a rate equal to the LIBOR Rate plus 1.75% (the “Tranche B Note
Rate”) on the unpaid principal balance of Tranche B Borrowings.  Interest shall
be computed on the basis of the actual number of days elapsed in a year of 360
days.

Alternate Note Rate.  The Borrower may elect to pay interest at the CB Floating
Rate (the “Alternate Note Rate”) on any advance requested under either Tranche A
or Tranche B until such time as such advances are paid in full by the Borrower
(the “Alternate Rate Borrowing”).  The Alternate Borrowing Limit, not the
Minimum Borrowing Limit, shall apply to any advances made as an Alternate Rate
Borrowing.

Default Rate.  The Tranche A Note Rate, the Tranche B Note Rate and the
Alternate Note Rate shall be increased by 2.00% Per Annum, at the Bank’s option,
upon the occurrence of any default under this Note, whether or not the Bank
elects to accelerate the maturity of this Note, from the date such increased
rate is imposed by the Bank.

In no event shall the interest rate exceed the maximum rate allowed by law. Any
interest payment that would for any reason be unlawful under applicable law
shall be applied to principal.

Interest will be computed on the unpaid principal balance from the date of each
borrowing.

The Borrower will make monthly interest payments on Tranche A and Tranche B with
the initial interest payment due and payable on June 30, 2013 and, thereafter,
on the last day of each succeeding calendar month until all amounts due
hereunder are paid in full.

The Borrower shall make all payments on this Note and the other Related
Documents, without setoff, deduction, or counterclaim, to the Bank at the Bank’s
address above or at such other place as the Bank may designate in writing. If
any payment of principal or interest on this Note shall become due on a day that
is not a Business Day, the payment will be made on the next succeeding Business
Day. Payments shall be allocated among principal, interest and fees as directed
by Borrower unless otherwise required by applicable law, except upon the
occurrence of and during the continuance of an Event of Default, in which case
payment shall be allocated among principal, interest and fees at the discretion
of the Bank. Acceptance by the Bank of any payment that is less than the payment
due at that time shall not constitute a waiver of the Bank’s right to receive
payment in full at that time or any other time.
 
 
 

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Interest Rate Definitions. As used in this Note, the following terms have the
following meanings:

1.  
“Adjusted One Month LIBOR Rate” means, for any day, the sum of (i) 2.50% Per
Annum plus (ii) the quotient of (a) the interest rate determined by the Bank by
reference to the Page to be the rate at approximately 11:00 a.m. London time, on
such date or, if such date is not a Business Day, on the immediately preceding
Business Day for dollar deposits with a maturity equal to one (1) month, divided
by (b) one minus the Reserve Requirement (expressed as a decimal) applicable to
dollar deposits in the London interbank market with a maturity equal to one (1)
month.

2.  
“Business Day” means (i) with respect to the Adjusted One Month LIBOR Rate, a
day (other than a Saturday or Sunday) on which banks generally are open in New
York for the conduct of substantially all of their commercial lending activities
and on which dealings in United States dollars are carried on in the London
interbank market and (ii) for all other purposes, a day other than a Saturday,
Sunday or any other day on which national banking associations are authorized to
be closed.

3.  
“CB Floating Rate” means the Prime Rate; provided that the CB Floating Rate
shall, on any day, not be less than the Adjusted One Month LIBOR Rate. The CB
Floating Rate is a variable rate and any change in the CB Floating Rate due to
any change in the Prime Rate or the Adjusted One Month LIBOR Rate is effective
from and including the effective date of such change in the Prime Rate or the
Adjusted One Month LIBOR Rate, respectively.

4.  
“Interest Period” means, a period of one (1), two (2) or three (3) month(s)
commencing on a Business Day selected by the Borrower pursuant to this Note.
Such Interest Period shall end on the day which corresponds numerically to such
date one (1), two (2) or three (3) month(s) thereafter, as applicable, provided,
however, that if there is no such numerically corresponding day in such first,
second or third succeeding month(s), as applicable, such Interest Period shall
end on the last Business Day of such first, second or third succeeding month(s),
as applicable. If an Interest Period would otherwise end on a day which is not a
Business Day, such Interest Period shall end on the next succeeding Business
Day, provided, however, that if said next succeeding Business Day falls in a new
calendar month, such Interest Period shall end on the immediately preceding
Business Day

5.  
“LIBOR Rate” means, for any Interest Period, the interest rate determined by the
Bank by reference to the Page at approximately 11:00 a.m. London time, two
Business Days prior to the commencement of the Interest Period for dollar
deposits with a maturity equal to such Interest Period. If no LIBOR Rate is
available to the Bank, the applicable LIBOR Rate for the relevant Interest
Period shall instead be the rate determined by the Bank to be the rate at which
the Bank offers to place U.S. dollar deposits having a maturity equal to such
Interest Period with first-class banks in the London interbank market at
approximately 11:00 a.m. (London time) two Business Days prior to the first day
of such Interest Period.

6.  
“Page” means Reuters Screen LIBOR01, formerly known as Page 3750 of the
Moneyline Telerate Service (together with any successor or substitute, the
“Service”) or any successor or substitute page of the Service providing rate
quotations comparable to those currently provided on such page of the Service,
as determined by the Bank from time to time for purposes of providing quotations
of interest rates applicable to dollar deposits in the London interbank market.

7.  
“Prime Rate” means the rate of interest Per Annum announced from time to time by
the Bank as its prime rate. The Prime Rate is a variable rate and each change in
the Prime Rate is effective from and including the date the change is announced
as being effective. THE PRIME RATE IS A REFERENCE RATE AND MAY NOT BE THE BANK’S
LOWEST RATE.

8.  
“Regulation D” means Regulation D of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor thereto or other
regulation or official interpretation of said Board of Governors relating to
reserve requirements applicable to member banks of the Federal Reserve System.

9.  
“Reserve Requirement” means the maximum aggregate reserve requirement (including
all basic, supplemental, marginal and other reserves) which is imposed under
Regulation D.

Authorization for Direct Payments (ACH Debits). To effectuate any payment due
under this Note or under any other Related Documents, the Borrower hereby
authorizes the Bank to initiate debit entries to Account Number 202659306
maintained by the Borrower at the Bank (or such other account numbers maintained
by the Borrower with the Bank as reasonably agreed to by the Bank) and to debit
the same to such account. This authorization to initiate debit entries shall
remain in full force and effect until the Liabilities have been paid in
full.  The Borrower represents that the Borrower is and will be the owner of all
funds in such account. The Borrower acknowledges: (1) that such debit entries
may cause an overdraft of such account which may result in the Bank’s refusal to
honor items drawn on such account until adequate deposits are made to such
account; (2) that the Bank is under no duty or obligation to initiate any debit
entry for any purpose; and (3) that if a debit is not made because the
above-referenced account does not have a sufficient available balance, or
otherwise, the payment may be late or past due.
 
 
 

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Late Fee. Any principal or interest which is not paid within 10 days after its
due date (whether as stated, by acceleration or otherwise) shall be subject to a
late payment charge of five percent (5.00%) of the total payment due, in
addition to the payment of interest, up to the maximum amount of One Thousand
Five Hundred and 00/100 Dollars ($1,500.00) per late charge. The Borrower agrees
to pay and stipulates that five percent (5.00%) of the total payment due is a
reasonable amount for a late payment charge. The Borrower shall pay the late
payment charge upon demand by the Bank or, if billed, within the time specified.

Purpose of Loan. The Borrower acknowledges and agrees that this Note evidences a
loan for a business, commercial, agricultural or similar commercial enterprise
purpose, and that no advance shall be used for any personal, family or household
purpose. The proceeds of the loan shall be used by the Borrower only for working
capital and to finance acquisitions..

Inability to Determine Interest Rate. With respect to any Alternate Rate
Borrowing, if the Bank determines on any day that quotations of interest rates
for the relevant deposits referred to in the definition of Adjusted One Month
LIBOR Rate are not being provided for purposes of determining the interest rate
on any advance on any day, then each advance evidenced by this Note shall bear
interest at the Prime Rate until the Bank determines that quotations of interest
rates for the relevant deposits referred to in the definition of Adjusted One
Month LIBOR Rate are being provided.

Per Annum. In this Note the term “Per Annum” means for a year deemed to be
comprised of 360 days.

Miscellaneous. This Note binds the Borrower and its successors, and benefits the
Bank, its successors and assigns. Any reference to the Bank includes any holder
of this Note. This Note is subject to that certain Credit Agreement by and
between the Borrower and the Bank, dated June 6, 2013, and all amendments,
restatements and replacements thereof (the “Credit Agreement”) to which
reference is hereby made for a more complete statement of the terms and
conditions under which the loan evidenced hereby is made and is to be repaid.
The terms and provisions of the Credit Agreement are hereby incorporated and
made a part hereof by this reference thereto with the same force and effect as
if set forth at length herein. No reference to the Credit Agreement and no
provisions of this Note or the Credit Agreement shall alter or impair the
absolute and unconditional obligation of the Borrower to pay the principal and
interest on this Note as herein prescribed. Capitalized terms not otherwise
defined herein shall have the meanings assigned to such terms in the Credit
Agreement. If any one or more of the obligations of the Borrower under this Note
or any provision hereof is held to be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
obligations of the Borrower and 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
obligations or provisions in any other jurisdiction. Time is of the essence
under this Note and in the performance of every term, covenant and obligation
contained herein.

     
Borrower:
Address:
55 Charles Lindbergh Boulevard
Uniondale, NY 11553
 
FREQUENCY ELECTRONICS, INC.
     
By:
/s/ Alan Miller
       
Alan Miller,
Secretary/Treasurer and CFO
       
Printed Name
Title
 
Date Signed:
  June 6, 2013

Outside Counsel Prepared

 
 

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