FREQUENCY ELECTRONICS INC

The Company maintains short-term incentive bonus programs for certain employees which are based on bookings, revenue, operating income and certain other relevant criteria of the Company or the individual subsidiaries to which the employees are assigned. The Company provides bonus opportunities to certain other employees, including its other Named Executive Officers based on various criteria (see “President and Chief Executive Officer Employment Arrangement,” “Senior Vice President, Business Development Employment Agreement,” and “Chief Financial Officer Employment Arrangement” ). These bonus programs are designed to create incentives for superior performance and to reward certain Company employees for their contributions to the Company’s success. Focused on short-term or annual business results, these bonus programs enable the Company to award designated executives with cash bonuses based on their contributions to the Company. The Board, in its sole discretion, determines the actual amounts paid to the Named Executive Officers pursuant to these bonus programs, if any.