EXHIBIT 10.4

 

RETIREMENT AND CONSULTING AGREEMENT 

 

This Retirement and Consulting Agreement (this “Agreement”) is made and entered
by and among Robert Sparkman (“Executive”), and Friedman Industries, Inc. and
its affiliated companies, corporations, partnerships, business associations,
parents, and subsidiaries (collectively, “Friedman Industries”). Executive
understands that in order to receive the consideration set forth herein, he must
(i) execute and return to Friedman Industries this Agreement; and (ii) the
seven-day revocation period has passed and Executive has not revoked. Executive
understands that this Agreement is void ab initio if he fails to return the
executed Agreement by 5:00 p.m. on March 27, 2019. Executive and Friedman
Industries are sometimes referred to herein as a “party” and collectively as the
“parties.”

 

RECITALS

 

WHEREAS, Executive is the Chief Executive Officer executive of Friedman
Industries and holds certain other positions with Friedman Industries; and

 

WHEREAS, the parties now desire to enter into this Agreement for the purpose of
providing for the orderly retirement of Executive and securing the future
services of Executive as a consultant.

 

NOW, THEREFORE, in consideration of the promises and mutual agreements set forth
in this Agreement, the receipt and sufficiency of which are hereby acknowledged,
the parties agree as follows:

 

RETIREMENT

 

1.           Retirement. Executive and Friedman Industries acknowledge and
agree:

 

a.     This Agreement is effective at 12:01 a.m. of the Effective Date specified
in paragraph 22 below.

 

b.     Executive’s service as a Director and the Chief Executive Officer of
Friedman Industries and from all other positions he may hold with Friedman
Industries and any of its subsidiaries and affiliates (whether as an officer,
manager, director, managing director, employee, or otherwise) ended as of
February 12, 2019 pursuant to Executive’s written resignation.

 

c.     Executive’s employment with Friedman Industries shall end on March 31,
2019.

 

d.     Friedman Industries’ payment to Executive of the amounts described in
paragraph 3 of this Agreement is not required by Friedman Industries policies or
procedures or by any contractual obligation of Friedman Industries, is new
consideration to which Executive was not already otherwise entitled to, and is
offered by Friedman Industries solely as consideration for this Agreement.

 

e.     This Agreement supersedes and replaces any previously entered employment
contracts or agreements between Friedman Industries and Executive.

 

f.     For the avoidance of doubt, beginning on the Effective Date, Executive
shall be eligible to elect COBRA continuation coverage under the group health
insurance plan (medical, dental and vision) of Friedman Industries in which the
Executive participated immediately prior to the Effective Date.

 

 

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CONSULTING AND COOPERATION

 

2.     Consulting Services. For a period of two (2) years immediately following
the Effective Date, Executive agrees to provide consulting services to, and
cooperation with, Friedman Industries on an as requested basis. Executive’s
services shall include, but are not limited to, taking phone calls to answer
reasonable questions about Executive’s former duties or business matters,
locating files and documents, and making himself available to meet with Friedman
Industries if necessary. To the extent the Executive has pertinent information,
the Executive agrees to cooperate with any internal or external investigation,
as well as the prosecution or defense of any claims or disputes brought by or
against Friedman Industries, whether administrative, civil or criminal in
nature, in which, and to the extent Friedman Industries deems the Executive’s
cooperation necessary.

 

CONSIDERATION AND RELEASE

 

3.     Retirement Payments. In consideration of Executive’s execution of this
Agreement, and his other agreements contained herein, Friedman Industries will
pay Executive the following (collectively referred to the “Retirement and
Separation Payments”):

 

a.     Cash Payment. Continued payment of Executive’s existing base salary until
March 31, 2019, less applicable withholdings and deductions in accordance with
Friedman Industries’ normal payroll practices.

 

b.     Restricted Stock. Friedman Industries shall grant Executive 20,000 shares
of restricted stock of Friedman Industries (the “Restricted Shares”) pursuant to
the Restricted Stock Award Agreement in the form attached hereto as Exhibit A.
The Restricted Shares shall vest on the second anniversary of the Effective Date
if and only if Executive complies with and does not breach the provisions
contained herein as determined by the Board of Directors of Friedman Industries
in its sole discretion. Executive acknowledges and agrees that the outstanding
grant of 50,000 unvested shares of restricted stock to Executive will expire by
its terms upon execution of this Agreement.

 

c.     Executive acknowledges that but for this Agreement he would not otherwise
be entitled to the Retirement and Separation Payments and further acknowledges
and agrees that the Retirement and Separation Payments are in lieu of any other
payments that he would otherwise have been entitled to under any employment
agreement or other contract.

 

4.     Executive’s Release and Covenant Not to Sue: For and in consideration of
the actions by Friedman Industries in paragraph 3 of this Agreement, the receipt
and sufficiency of which is hereby acknowledged, Executive hereby irrevocably
and unconditionally releases and forever discharges, and covenants not to sue or
bring any other legal action against Friedman Industries, with respect to any
and all claims and causes of action of any nature, both past and present, known
and unknown, foreseen and unforeseen, at law or in equity, which Executive has
or which could be asserted on his behalf by any person, government authority, or
entity, resulting from or relating to any act or omission of any kind occurring
on or before the date of the execution of this Agreement. Executive understands
and agrees that this release includes, but is not limited to, the following
claims and causes of action resulting from or relating to acts or omissions on
or before the date of the execution of this Agreement:

 

a.     All claims and causes of action arising under contract, tort, or other
common law, including, without limitation, breach of contract (including, but
not limited to, a breach of any employment agreement or other contract that he
may have signed during his employment), promissory estoppel, detrimental
reliance, wrongful discharge, discrimination on the basis of race, sex, age,
national origin, religion, disability or any other characteristic protected
under federal or state law, retaliation, failure to accommodate, negligence,
gross negligence, negligent hiring, negligent supervision, negligent retention,
false imprisonment, assault and battery, intentional infliction of emotional
distress, slander, libel, fraud, misrepresentation, and invasion of privacy;

 

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b.     All claims and causes of action arising under any federal, state, or
local law, regulation, or ordinance, including, without limitation, the
Sarbanes-Oxley Act, as amended, Dodd Frank Wall Street Reform and Consumer
Protection Act, Title VII of the Civil Rights Act of 1964, as amended, Age
Discrimination in Employment Act, as amended, Chapter 21 of the Texas Labor
Code, the Employee Retirement Income Security Act of 1974, as amended, the Civil
Rights Act of 1991, the Family and Medical Leave Act of 1993, and the Americans
with Disabilities Act of 1990, as amended;

 

c.     All claims and causes of action for past or future loss of pay or
benefits, expenses, damages for pain and suffering, emotional distress damages,
liquidated damages, punitive/exemplary damages, compensatory damages, attorney’s
fees, interest, court costs, physical or mental injury, damage to reputation,
damage to credit, and any other injury, loss, damage or expense or any other
legal or equitable remedy of any kind whatsoever; and

 

d.     All claims and causes of action arising out of or in any way connected
with, directly or indirectly, Executive’s employment with Friedman Industries,
including, without limitation, Friedman Industries’ treatment of him, the terms
and conditions of his employment, the termination of his employment, or the
compensation, benefits or payments received or that should have been received
during or subsequent to this employment except any future claims relating to
COBRA and/or retirement benefits.

 

e.     Executive represents that neither he nor anyone acting for him or on his
behalf or at his request has initiated any action, charge, or other proceeding
against Friedman Industries or any of its predecessors successors, parents,
subsidiaries, affiliates, agents, assigns, representatives or their present or
former directors, officers, employees or agents with any federal, state or local
court or administrative agency. Executive expressly waives any right to damages
or other legal or equitable relief awarded by any governmental agency or court
relating to any action, charge, or other proceeding (regardless by whom filed),
that is pending or that is filed in the future and which is based on events
occurring prior to this Agreement.

 

f.     For the avoidance of doubt, Executive will be entitled to all
indemnification rights provided for Friedman Industries’ officers and directors
liability insurance policy as in effect as of the Effective Date inuring to
Executive’s benefit as a result of his employment with Friedman Industries
(except as may be limited by law). Such indemnification rights shall survive
after the Effective Date in accordance with their applicable terms.

 

NON-COMPETITION AND NON-SOLICITATION AGREEMENT

 

5.     Non-competition and non-solicitation. As an inducement for the parties to
enter into this Agreement, the parties hereof agree as follows:

 

a.     For a period of two (2) years immediately following the Effective Date
(the “Restricted Period”), Executive agrees that he will not engage in any
business directly competitive with the business conducted by Friedman
Industries; or render advice or services similar to those provided for Friedman
Industries to any other person, association, or entity who is engaged in any
business directly competitive with the business conducted by Friedman
Industries.

 

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b.     Executive and Friedman Industries agree and acknowledge that the
limitations as to time, geographical area and scope of activity to be restrained
as set forth in this paragraph 5 are reasonable and do not impose any greater
restraint than is necessary to protect Friedman Industries and its subsidiaries
and affiliates, and their legitimate business interests, including protecting
the confidential information provided by Friedman Industries to Executive.
Executive and Friedman Industries also acknowledge that money damages would not
be sufficient remedy for any breach of this paragraph 5, and Friedman Industries
and its subsidiaries and affiliates, as applicable, shall be entitled to enforce
the provisions of this paragraph 5 by obtaining specific performance and
injunctive relief as remedies for such breach or any threatened breach. Such
remedies shall not be deemed the exclusive remedies for a breach of paragraph 5,
but shall be in addition to all remedies available at law or in equity,
including the recovery of damages from Executive and his agents. Executive and
Friedman Industries further acknowledge and agree that, in the event of any
breach by Executive of the provisions of this paragraph 5, the Restricted Period
shall be extended by the length of such period of breach.

 

c.     For the Restricted Period, Executive agrees he shall not, directly or
indirectly, on behalf of himself or another company or entity:

 

 

i.

interfere with the relationship of Friedman Industries or any affiliate with, or
endeavor to entice away from Friedman Industries or any affiliate, any
individual, company, or entity that contracts with or has a business
relationship with Friedman Industries or its affiliates;

 

 

ii.

establish a business with, or cause or attempt to cause others to establish, a
business with, any employee or agent of Friedman Industries or any of its
affiliates, if such business is or will compete with Friedman Industries or any
of its affiliates; or

 

 

iii.

employ, engage as a consultant or adviser, or solicit the employment, engagement
as a consultant or adviser, of any employee or agent of Friedman Industries or
any of its affiliates, or cause or attempt to cause any individual or entity to
do any of the foregoing.

 

ADDITIONAL PROVISIONS AND COVENANTS

 

6.     Tax Consequences: Executive hereby releases Friedman Industries from, and
agrees to assume full responsibility to any federal, state, or local taxing
authorities for any tax consequences, by Friedman Industries under paragraph 3
of this Agreement. Executive COVENANTS AND AGREES TO DEFEND AND INDEMNIFY AND
HOLD HARMLESS Friedman Industries FROM AND AGAINST ANY TAXES, FINES, PENALTIES,
INTEREST, SUITS, CLAIMS, DEMANDS, LIENS, PROCEEDINGS, AND ANY OTHER LIABILITY
ARISING OUT OF SUCH TAX CONSEQUENCES. Executive acknowledges and agrees that
Friedman Industries and its legal counsel have made no representations regarding
the proper tax treatment of the payments set out in paragraph 3.

 

7.     IRS Code Section 409A. Executive certifies, acknowledges and agrees that
he has been provided the opportunity to consult with legal counsel and that in
no event whatsoever shall Friedman Industries be liable for any additional tax,
interest or penalty that may be imposed on Executive by Code Section 409A or
damages for failing to comply with Code Section 409A in connection with this
Agreement.

 

8.     Confidentiality of Agreement. Executive and Friedman Industries agree to
keep this Agreement and each of its terms completely confidential; however, any
party may disclose the terms of this Agreement to such party’s attorneys,
accountant, spouse, or as otherwise required by law.

 

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9.     Non-Disparagement. Executive agrees not to, directly or indirectly,
disclose, communicate, or publish any intentionally negative, harmful, or
disapproving information, written communications, oral communications,
electronic or magnetic communications, writings, oral or written statements,
comments, opinions, facts, or remarks, of any kind or nature whatsoever,
concerning or related to Friedman Industries or any of its senior executives,
management, or members of the board of trustees, except as required by
applicable law. Nothing in this Section is intended to preclude Executive from
providing truthful testimony in response to a lawful subpoena or as otherwise
required by law.

 

10.     Confidentiality of Company Information. Notwithstanding anything to the
contrary in this Agreement, Executive shall continue to abide by his existing
confidentiality agreements with and obligations to Friedman Industries,
including any confidentiality policies. Confidential information specifically
includes information and data known to Executive by virtue of his employment
with Friedman Industries and any of its subsidiaries and affiliates, to the
extent such information is not otherwise publicly known or available other than
as a result of Executive’s breach of his confidentiality obligations. Executive
acknowledges his obligations not to disclose confidential information.

 

11.     Acknowledgement. Executive acknowledges that he has fully informed
himself of the terms, contents, conditions and effects of this Agreement and
that, in executing this Agreement, he does not rely and has not relied upon any
representation (oral or written) or statement made by Friedman Industries any of
its subsidiaries and affiliates, or any of its representatives, including, but
not limited to, any representation or statement with regard to the subject
matter, basis, or effect of this Agreement. Executive further acknowledges the
following: that he has been advised to consult with an attorney prior to
executing this Agreement; that he is of sound mind and otherwise competent to
execute this Agreement; and that he is entering into this Agreement knowingly
and voluntarily and without any undue influence or pressures.

 

12.     Reporting. Nothing in this Agreement shall prohibit Executive from
reporting possible violations of federal law or regulation to any governmental
agency or entity, including but not limited to the Department of Justice, the
Equal Employment Opportunity Commission, the Securities and Exchange Commission,
Congress, and any agency Inspector General, or making other disclosures that are
protected under the whistleblower provisions of federal law or regulation.
Executive further agrees this Agreement does not limit Executive’s right to
receive an award for information provided to the Securities and Exchange
Commission or any other securities regulatory agency or authority. However,
Executive represents that he is unaware of any act or omission on his part or
the part of Friedman Industries or anyone acting or purporting to act for or on
behalf of Friedman Industries that may constitute a violation of any law, nor
does he know of any basis on which any third party or governmental entity could
assert such a claim.

 

13.     Notices. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given (a) when received if delivered personally or by courier,
(b) on the date receipt is acknowledged if delivered by certified mail, postage
prepaid, return receipt requested, or (c) one day after transmission if sent by
facsimile transmission or electronic mail with confirmation of transmission, to
Michael Taylor, CEO, 1121 Judson Road, Suite 124, Longview, TX 75601.

 

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14.     Applicable Law; Arbitration. This Agreement is entered into under, and
shall be governed for all purposes by, the laws of the State of Texas, without
regard to conflicts of laws principles thereof. Any dispute, controversy or
claim arising out of or related to this Agreement or any breach of this
Agreement shall be submitted to and decided by binding arbitration to take place
in Harris County, Texas. Arbitration shall be administered exclusively by the
American Arbitration Association in accordance with its Commercial Arbitration
Rules then in affect and shall be conducted consistent with the rules,
regulations and requirements thereof as well as any requirements imposed by
state law. The American Arbitration Association Commercial Arbitration Rules
require all temporary, preliminary, and permanent injunctive or other equitable
relief, including, without limitation, specific performance, to be brought in
arbitration. Any arbitral award determination shall be final and binding upon
the parties.

 

As the sole exception to the exclusive and binding nature of the arbitration
commitment set forth above, the parties agree that Friedman Industries shall
have the right to initiate an action in a court of competent jurisdiction
located in Harris County, Texas regarding enforceability of this Section.
However, nothing in this Section should be construed to constitute a waiver of
the parties’ rights and obligations to arbitrate.

 

15.     No Waiver. No failure by a party at any time to give notice of any
breach by another party of, or to require compliance with, any condition or
provision of this Agreement shall be deemed to be a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time.

 

16.     Severability. If any provision of this Agreement is determined to be
invalid or unenforceable, then (a) the invalidity or unenforceability of such
provision shall not affect the validity or enforceability of any other provision
of this Agreement, and all other provisions shall remain in full force and
effect and (b) the provision held to be invalid or unenforceable will be limited
or modified in its application to the minimum extent necessary to avoid the
invalidity or unenforceability, and, as so limited or modified, the provision
and the balance of this Agreement will be enforceable in accordance with its
terms.

 

17.     Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together will constitute one and the same Agreement.

 

18.     Headings. The section and paragraph headings in this Agreement have been
inserted for purposes of convenience and shall not be used for interpretive
purposes.

 

19.     Successors; Assigns. This Agreement shall be binding upon and inure to
the benefit of Friedman Industries and any successor or assign thereof. This
Agreement is personal to Executive and shall not be assigned by Executive
without the explicit written consent of the other parties hereto.

 

20.     Entire Agreement, Amendment, Binding Effect. This Agreement constitutes
the entire agreement of the parties with regard to the subject matter hereof.
Any amendment to this Agreement must be signed by all parties to this Agreement.
This Agreement supersedes (a) any prior agreements between any of the parties
concerning the subject matter of this Agreement, and (b) all other agreements
between or among the parties, unless specifically modified or incorporated by
reference by this Agreement.

 

21.     Injunctive Relief. Each party acknowledges and agrees that the
covenants, obligations and agreements of such party contained in this Agreement
concern special, unique and extraordinary matters and that a violation of any of
the terms of these covenants, obligations or agreements will cause the
non-breaching party irreparable injury for which adequate remedies at law are
not available. Therefore, each party agrees that all parties to this Agreement
will be entitled to an injunction, restraining order, or all other equitable
relief (without the requirement to post bond) as an arbitration tribunal may
deem necessary or appropriate to restrain such party from committing any
violation of the covenants, obligations or agreements referred to in this
Agreement in accordance with the Commercial Arbitration Rules then in affect
with the American Arbitration Association, including but not limited to
Commercial Arbitration Rule 38, Emergency Measures of Protection.

 

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22.     Time for Acceptance, Revocation, Effective Date: Executive acknowledges
and agrees that he voluntarily and with the advice of counsel agrees to waive
any time periods for acceptance. Executive further acknowledges that: (i) he may
revoke his acceptance of this Agreement by notifying Friedman Industries in
writing (by delivery of written notice to person listed above) within seven (7)
days after he signs and returns this Agreement; (ii) if Executive timely revokes
his acceptance, he will not be eligible for and will not receive the Retirement
and Separation Payments; and (iii) if Executive does not timely revoke his
acceptance, this Agreement will become effective and enforceable on the eighth
(8th) day after Executive signs and returns this Agreement (the “Effective
Date”).

 

 

[Remainder of Page Intentionally Left Blank; Signature Page Follows]

 

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year set forth below.

 

 

Friedman Industries, Inc.

 

 

 

 

 

 

 

 

 

 

By:

/s/ Michael Taylor

 

 

 

Michael Taylor, CEO 

 

 

Date: 

March 13, 2019 

 

                    /s/ Robert Sparkman                  Robert Sparkman    
Date: March 13, 2019  

 

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Exhibit A

 

FRIEDMAN INDUSTRIES, INCORPORATED
2016 RESTRICTED STOCK PLAN

RESTRICTED STOCK AWARD AGREEMENT

 

This Restricted Stock Award Agreement (this “Agreement”) is made by and between
Friedman Industries, Incorporated, a Texas corporation (the “Company”), and
Robert Sparkman (the “Participant”) effective as of March 13, 2019 (the “Grant
Date”), pursuant to the Friedman Industries, Incorporated 2016 Restricted Stock
Plan (the “Plan”), a copy of which previously has been made available to the
Participant and the terms and provisions of which are incorporated by reference
herein.

Whereas, the Company desires to grant to the Participant the shares of the
Company’s common stock, $1.00 par value per share, specified herein (the
“Shares”), subject to the terms and conditions of this Agreement; and
Whereas, the Participant desires to have the opportunity to hold the Shares
subject to the terms and conditions of this Agreement.
Now, Therefore, in consideration of the premises, mutual covenants and
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound hereby, agree as follows:

1.     Definitions. For purposes of this Agreement, the following terms shall
have the meanings indicated below:

 

(a)     “Forfeiture Restrictions” means the prohibitions and restrictions set
forth herein with respect to the sale or other disposition of the Shares issued
to the Participant hereunder and the obligation to forfeit and surrender such
Shares to the Company in accordance with the terms and conditions of the Plan
and this Agreement.

 

(b)     “Period of Restriction” means the period during which Restricted Shares
are subject to Forfeiture Restrictions and during which Restricted Shares may
not be sold, assigned, transferred, pledged or otherwise encumbered.

 

(c)     “Restricted Shares” means the Shares that are subject to the Forfeiture
Restrictions under this Agreement.

 

Capitalized terms not otherwise defined in this Agreement shall have the
meanings given to such terms in the Plan.

2.     Grant of Restricted Shares. Effective as of the Grant Date, the Company
shall cause to be issued in the Participant’s name 20,000 shares of the
Company’s common stock, $1.00 par value, as Restricted Shares. The Company shall
cause certificates or electronic book entries evidencing the Restricted Shares,
and any shares of Stock or rights to acquire shares of Stock distributed by the
Company in respect of Restricted Shares during any Period of Restriction (the
“Retained Distributions”), to be issued in the Participant’s name. During the
Period of Restriction such electronic book entries and certificates shall bear a
restrictive legend to the effect that ownership of such Restricted Shares (and
any Retained Distributions), and the enjoyment of all rights appurtenant
thereto, are subject to the restrictions, terms, and conditions provided in the
Plan and this Agreement. The Participant shall have the right to vote the
Restricted Shares awarded to the Participant and to receive and retain all
regular dividends paid in cash or property (other than Retained Distributions),
and to exercise all other rights, powers and privileges of a holder of shares of
the Stock, with respect to such Restricted Shares, with the exception that
(a) the Participant shall not be entitled to delivery of the stock certificate
or certificates or electronic book entries representing such Restricted Shares
until the Forfeiture Restrictions applicable thereto shall have expired, (b) the
Company shall retain custody of all Retained Distributions made or declared with
respect to the Restricted Shares (and such Retained Distributions shall be
subject to the same restrictions, terms and conditions as are applicable to the
Restricted Shares) until such time, if ever, as the Restricted Shares with
respect to which such Retained Distributions shall have been made, paid, or
declared shall have become vested, and such Retained Distributions shall not
bear interest or be segregated in separate accounts and (c) the Participant may
not sell, assign, transfer, pledge, exchange, encumber, or dispose of the
Restricted Shares or any Retained Distributions during the Period of
Restriction. Upon issuance any certificates shall be delivered to such
depository as may be designated by the Compensation Committee as a depository
for safekeeping until the forfeiture of such Restricted Shares occurs or the
Forfeiture Restrictions lapse, together with stock powers or other instruments
of assignment, each endorsed in blank, which will permit transfer to the Company
of all or any portion of the Restricted Shares and any securities constituting
Retained Distributions which shall be forfeited in accordance with the Plan and
this Agreement. In accepting the award set forth in this Agreement the
Participant accepts and agrees to be bound by all the terms and conditions of
the Plan and this Agreement.

 

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3.     Transfer Restrictions. The Shares awarded hereby may not be sold,
assigned, pledged, exchanged, hypothecated or otherwise transferred, encumbered
or disposed of, to the extent then subject to the Forfeiture Restrictions. Any
such attempted sale, assignment, pledge, exchange, hypothecation, transfer,
encumbrance or disposition in violation of this Agreement shall be void and the
Company shall not be bound thereby. Further, the Shares awarded hereby that are
no longer subject to Forfeiture Restrictions may not be sold or otherwise
disposed of in any manner that would constitute a violation of any applicable
securities laws. The Participant also agrees that the Company may (a) refuse to
cause the transfer of the Shares to be registered on the applicable stock
transfer records of the Company if such proposed transfer would, in the opinion
of counsel satisfactory to the Company, constitute a violation of any applicable
securities law and (b) give related instructions to the transfer agent, if any,
to stop registration of the transfer of the Shares. On or prior to the Grant
Date, the Shares granted hereby will be registered with the Securities and
Exchange Commission under a Registration Statement on Form S-8. A Prospectus
describing the Plan and the Shares is available from the Company.

 

4.     Vesting/Lapse of Period of Restriction. The Restricted Shares awarded
hereby are subject to the Forfeiture Restrictions. The Forfeiture Restrictions
will lapse as to the Restricted Shares as provided below.

 

(a)     Vesting in General. The Forfeiture Restrictions will lapse as to the
Restricted Shares that are awarded hereby, and the Participant’s right to sell
or other dispose of the Restricted Shares shall vest as follows:

 

100% of the Restricted Shares shall vest on the second anniversary of the Grant
Date, provided that Participant has fulfilled all of his obligations under and
at no time since the Grant Date breached that certain Retirement and Consulting
Agreement by and between Participant and the Company dated as of the Grant Date,
in each case as determined by the Company’s Board of Directors in its sole
discretion.

 

(b)     Issuance of Shares Upon Vesting. Upon the lapse of the Forfeiture
Restrictions with respect to Shares awarded hereby the Company shall cause to be
delivered to the Participant a stock certificate or electronic book entry
representing such Shares, and such Shares shall be transferable by the
Participant (except to the extent that any proposed transfer would, in the
opinion of counsel satisfactory to the Company, constitute a violation of
applicable securities law).

 

5.     Capital Adjustments and Reorganizations. The existence of the Restricted
Shares shall not affect in any way the right or power of the Company or any
company the stock of which is awarded pursuant to this Agreement to make or
authorize any adjustment, recapitalization, reorganization or other change in
its capital structure or its business, engage in any merger or consolidation,
issue any debt or equity securities, dissolve or liquidate, or sell, lease,
exchange or otherwise dispose of all or any part of its assets or business, or
engage in any other corporate act or proceeding.

 

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6.     Tax Withholding. To the extent that the receipt of the Restricted Shares
or the lapse of any Forfeiture Restrictions results in income to the Participant
for federal, state, local or foreign income, employment or other tax purposes
with respect to which the Company or its subsidiaries or any Affiliate has a
withholding obligation, the Participant shall deliver to the Company at the time
of such receipt or lapse, as the case may be, such amount of money as the
Company or its subsidiaries or any Affiliate may require to meet its obligation
under applicable tax laws or regulations, and, if the Participant fails to do
so, the Company or its subsidiaries or any Affiliate is authorized to withhold
from the Shares granted hereby or from any cash or stock remuneration then or
thereafter payable to the Participant in any capacity any tax required to be
withheld by reason of such resulting income, sufficient to satisfy the
withholding obligation. The Company shall have no obligation to deliver a stock
certificate or electronic book entry for the Shares granted hereby on lapse of
the Forfeiture Restrictions until the Company, a proper subsidiary or other
Affiliate has received payment sufficient to cover the withholding tax
obligations described in this section.

 

7.     Section 83(b) Election. The Participant shall not exercise the election
permitted under section 83(b) of the Internal Revenue Code of 1986, as amended,
with respect to the Restricted Shares without the prior written approval of the
Chief Financial Officer of the Company. If the Chief Financial Officer of the
Company permits the election, the Participant shall timely pay the Company the
amount necessary to satisfy the Company’s attendant tax withholding obligations,
if any.

 

8.     No Fractional Shares. All provisions of this Agreement concern whole
shares. If the application of any provision hereunder would yield a fractional
share, such fractional share shall be rounded down to the next whole share if it
is less than 0.5 and rounded up to the next whole share if it is 0.5 or more.

 

9.     Employment Relationship. For purposes of this Agreement, the Participant
shall be considered to be in the employment of the Company and its Affiliates as
long as the Participant has an employment relationship with the Company and its
Affiliates. The Compensation Committee shall determine any questions as to
whether and when there has been a termination of such employment relationship,
and the cause of such termination, for purposes of the Plan and the Compensation
Committee’s determination shall be final and binding on all persons.

 

10.     Not an Employment Agreement. This Agreement is not an employment
agreement, and no provision of this Agreement shall be construed or interpreted
to create an employment relationship between the Participant and the Company,
its subsidiaries or any of its Affiliates, to guarantee the right to remain
employed by the Company, its subsidiaries or any of its Affiliates for any
specified term or to require the Company, its subsidiaries or any of its
Affiliates to employ the Participant for any period of time.

 

11.     Legend. The Participant consents to the placing on the certificate or
electronic book entry for the Shares an appropriate legend restricting resale or
other transfer of the Shares except in accordance with all applicable securities
laws and rules thereunder.

 

12.     Notices. Any notice, instruction, authorization, request, demand or
other communications required hereunder shall be in writing, and shall be
delivered either by personal delivery, by telecopy or similar facsimile means,
by certified or registered mail, return receipt requested, or by courier or
delivery service, addressed to the Company at the Company’s principal business
office and addressed to the attention of the Compensation Committee and to the
Participant at the Participant’s residential address indicated in the records of
the Company, or at such other address and number as a party shall have
previously designated by written notice given to the other party in the manner
hereinabove set forth. Notices shall be deemed given when received, if sent by
facsimile means (confirmation of such receipt by confirmed facsimile
transmission being deemed receipt of communications sent by facsimile means);
and when delivered (or upon the date of attempted delivery where delivery is
refused), if hand-delivered, sent by express courier or delivery service, or
sent by certified or registered mail, return receipt requested.

 

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13.     Amendment and Waiver. Except as otherwise provided herein or in the Plan
or as necessary to implement the provisions of the Plan, this Agreement may be
amended, modified or superseded only by written instrument executed by the
Company and the Participant. Only a written instrument executed and delivered by
the party waiving compliance hereof shall waive any of the terms or conditions
of this Agreement. Any waiver granted by the Company shall be effective only if
executed and delivered by a duly authorized executive officer of the Company
other than the Participant. The failure of any party at any time or times to
require performance of any provisions hereof shall in no manner affect the right
to enforce the same. No waiver by any party of any term or condition, or the
breach of any term or condition contained in this Agreement, in one or more
instances, shall be construed as a continuing waiver of any such condition or
breach, a waiver of any other condition, or the breach of any other term or
condition.

 

14.     Dispute Resolution. In the event of any difference of opinion concerning
the meaning or effect of the Plan or this Agreement, such difference shall be
resolved by the Compensation Committee.

 

15.     Governing Law and Severability. The validity, construction and
performance of this Agreement shall be governed by the laws of the State of
Texas, excluding any conflicts or choice of law rule or principle that might
otherwise refer construction or interpretation of this Agreement to the
substantive law of another jurisdiction. The invalidity of any provision of this
Agreement shall not affect any other provision of this Agreement, which shall
remain in full force and effect.

 

16.     Headings. Headings of Sections are included for convenience of reference
only and do not constitute part of this Agreement and shall not be used in
construing the terms and provisions of this Agreement.

 

17.     Gender and Number. If the context requires, words of one gender when
used in this Agreement will include the other genders, and words used in the
singular or plural will include the other.

 

18.     Successors and Assigns. Subject to the limitations which this Agreement
imposes upon the transferability of the Shares awarded hereby, this Agreement
shall bind, be enforceable by and inure to the benefit of the Company and its
successors and assigns, and the Participant, the Participant’s permitted
assigns, executors, administrators, agents, legal and personal representatives.

 

19.     Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original for all purposes but all of
which taken together shall constitute but one and the same instrument.

 

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In Witness Whereof, the Company has caused this Agreement to be duly executed by
an officer thereunto duly authorized, and the Participant has executed this
Agreement, all effective as of the date first above written.

 

 

FRIEDMAN INDUSTRIES, INCORPORATED 

 

 

 

 

 

 

 

 

 

 

By:

/s/ Michael Taylor

 

 

Michael Taylor, CEO 

 

 

 

 

 

                  PARTICIPANT:             /s/ Robert Sparkman          Name:
Robert Sparkman