Frequency Electronics Inc. (FEI) has acquired an approximate 20 percent interest in Elcom Technologies Inc., a privately-held company located in Rockleigh, NJ. Elcom designs and manufactures high switching speed, low phase noise microwave synthesizers, up-down converters, receivers, ceramic resonant oscillators and dielectric resonant oscillators up to 40 GHz. These instruments and components are critical for communication, surveillance, signal intelligence, automatic testing, satellite ground stations and satellite payloads.

Frequency and Elcom entered into a mutual business and facilities support agreement and Frequency obtained an exclusive license to use Elcom's technology in space-borne applications. Frequency received preferred stock, a convertible note and 10-year warrant to purchase additional stock in exchange for an undisclosed amount of cash and shares of Frequency common stock. Cadwalader, Wickersham & Taft LLP advised Frequency on the transaction.

Commenting on this transaction, Martin Bloch, president and CEO, said: "We are very pleased to establish this strategic and mutually beneficial relationship with the team at Elcom. We have acquired a significant ownership participation in a company with excellent technology and prospects for growth. In addition, Elcom provides FEI with added technology and resources to design and build microwave frequency generators, up-down converters and synthesizers for our expanding space business. Our agreement facilitates Elcom, in conjunction with FEI, to pursue larger programs where the capabilities of both companies are critical for best performance and affordability. The combined companies will pursue systems requiring low phase noise, excellent short-term stability, fast switching speed, low g-sensitivity, small size and low power in airborne and other severe mobile environments."