Document:

exv10w14

 

 

    Exhibit 10.14

 

    SEVENTH AMENDMENT
    TO AMENDED AND RESTATED LETTER AGREEMENT

 

    THIS SEVENTH AMENDMENT TO AMENDED AND RESTATED LETTER AGREEMENT
    (this “Amendment”) dated, effective as of May 18,
    2007 (the “Effective Date”) is by and between FRIEDMAN
    INDUSTRIES, INCORPORATED (“Borrower”) and JPMORGAN
    CHASE BANK, N.A. (“Bank”).

 

    PRELIMINARY STATEMENT.  The Bank and the
    Borrower are parties to an Amended And Restated Letter Agreement
    dated as of April 1, 1995, as amended by a First Amendment
    dated as of April 1, 1997, a Second Amendment dated as of
    July 21, 1997, a Third Amendment dated as of April 1,
    1999, a Fourth Amendment dated as of June 1, 2001, a Fifth
    Amendment dated as of April 1, 2003 and a Sixth Amendment
    dated as of April 1, 2005 (collectively, “Letter
    Agreement”). All capitalized terms defined in the Letter
    Agreement and not otherwise defined in this Amendment shall have
    the same meanings in this Amendment as assigned to them in the
    Letter Agreement. The Bank and the Borrower have agreed to amend
    the Letter Agreement to the extent set forth herein, and in
    order to, among other things, renew and increase the Revolving
    Line of Credit.

 

    NOW THEREFORE, in consideration of the premises and other good
    and valuable consideration, the receipt and sufficiency of which
    are hereby acknowledged by the parties hereto, the Bank and the
    Borrower hereby agree as follows:

 

    1. Section 1 of the Letter Agreement is amended and
    restated in its entirety to read as follows:

 

    “SECTION 1 —
    THE LINE
    

 

    Section 1.1  Revolving Line of
    Credit  Subject to the terms and conditions
    hereof, the Bank agrees to make upon the request of the
    Borrower, loans (the “Loan” or “Loans”) to
    the Borrower from time to time before the Termination Date, not
    to exceed at any one time outstanding $10,000,000.00 (the
    “Revolving Line of Credit” or the “Line”)).
    The Borrower shall have the right to borrow, repay and reborrow.
    The Bank and the Borrower agree that Chapter 346 of the
    Texas Finance Code shall not apply to this Agreement, the Note
    or any Loan. The Loans shall be evidenced by, shall bear
    interest and shall be payable as provided in the promissory note
    of Borrower dated May 18, 2007 executed by the Borrower and
    payable to the order of the Bank in the principal amount of
    $10,000,000.00 on or before April 1, 2010 (together with
    any renewals, modifications and replacements thereof, the
    “Note”), which is given in renewal, increase and
    modification of the revolving promissory note dated
    April 1, 2005 executed by the Borrower and payable to the
    order of the Bank in the principal amount of $6,000,000.00. The
    purpose of the Loans made under the Revolving Line of Credit is
    to provide the Borrower with working capital support.
    “Termination Date” means the earlier of:
    (a) April 1, 2010; or (b) the date specified by
    Bank in accordance with Section 5 of the Credit
    Agreement.

 

    Section 1.2  Collateral  The
    Line is unsecured, but is subject to a negative pledge of real
    property and improvements of the warehouse/distribution facility
    as further described in Section 4.4 of this Letter
    Agreement. The term “Loan Documents” as used herein
    shall refer to the Note, this Letter Agreement and any other
    document, instrument, agreement and writing that may be required
    executed, or to be executed, and delivered, or previously
    delivered, by the Borrower to the Bank to properly complete the
    above described transactions and any renewal, extension,
    modification, supplement, replacement, rearrangement, increase,
    or substitution of any of the foregoing.”

 

    2. The minimum working capital requirement that the
    Borrower has been required to maintain is deleted in its
    entirety. The minimum tangible net worth as adjusted that the
    Borrower is required to maintain is increased from
    $27,000,000.00 to $33,000,000.00. To reflect these changes,
    Exhibit A of the Letter Agreement is amended by and
    replaced with the Exhibit A attached to this
    Amendment for all purposes.

 

    3. The Borrower hereby represents and warrants to the Bank
    that after giving effect to the execution and delivery of this
    Amendment: (a) the representations and warranties set forth
    in the Letter Agreement are true and correct on the date hereof
    as though made on and as of such date; and (b) no Event of
    Default, or event which with passage of time, the giving of
    notice or both would become an Event of Default, has occurred
    and is continuing as of the date hereof.

    Page 1 of 2 Pages

 

    4. This Amendment shall become effective as of the
    Effective Date upon its execution and delivery by each of the
    parties named in the signature lines below, and the term
    “Agreement” as used in the Letter Agreement shall also
    refer to the Letter Agreement as amended by this Amendment and
    all previous amendments.

 

    5. The Borrower further acknowledges that each of the other
    Loan Documents is in all other respects ratified and confirmed,
    and all of the rights, powers and privileges created thereby or
    thereunder are ratified, extended, carried forward and remain in
    full force and effect except as the Credit Agreement is amended
    by this Amendment.

 

    6. This Amendment may be executed in any number of
    counterparts and by different parties hereto in separate
    counterparts, each of which when so executed shall be deemed an
    original and all of which taken together shall constitute but
    one and the same agreement.

 

    7. This Amendment shall be included within the definition
    of “Loan Documents” as used in the Agreement.

 

    8. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN
    ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND AS
    APPLICABLE, THE LAWS OF THE UNITED STATES OF AMERICA.

 

    THIS WRITTEN AMENDMENT AND THE OTHER LOAN DOCUMENTS REPRESENT
    THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
    CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
    ORAL AGREEMENTS OF THE PARTIES.

 

    THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

    IN WITNESS WHEREOF, the parties hereto have caused this
    Amendment to be executed effective as of the Effective Date.

 

	 	 	 	 	 
	

    BORROWER:
    

	
 
	
    FRIEDMAN INDUSTRIES, INCORPORATED
    
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	

    By: /s/  Ben
    Harper

    

    

	
 
	
 

	
 
	
 
	
    Name: Ben Harper
    
	
 
	
 

	
 
	
 
	
    Title:   Senior
    Vice President — Finance
    
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	

    BANK:
    

	
 
	
    JPMORGAN CHASE BANK, N.A.
    
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	

    By: /s/  Kevin
    K. Rech

    

    

	
 
	
 

	
 
	
 
	
    Name: Kevin K. Rech
    
	
 
	
 

	
 
	
 
	
    Title:   Senior
    Vice President
    
	
 
	
 

    Page 2 of 2 Pages

 

 

    EXHIBIT A to
    the Amended and Restated Letter Agreement dated as of
    April 1, 1995 by and between

    FRIEDMAN INDUSTRIES, INCORPORATED (“Borrower”) and
    JPMORGAN CHASE BANK, N.A. (“Bank”)

    (as the same may be amended, restated and supplemented in
    writing, the “Letter Agreement”)
    

 

    REPORTING
    REQUIREMENTS, FINANCIAL COVENANTS AND COMPLIANCE CERTIFICATE

    FOR CURRENT REPORTING PERIOD ENDING
                   ,
    20      (“END
    DATE”)

 

    A. REPORTING PERIOD. THIS EXHIBIT WILL BE IN
    PROPER FORM AND WILL BE SUBMITTED QUARTERLY.

 

	 	 	 	 	 	 	 	 	 	 	 	 
	
    B. FINANCIAL REPORTING.
    The Borrower will provide the following financial information
    within the times indicated:
    
	
 
	
 
	
    Compliance

    Certificate

    

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	

     

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	

    WHO

	
 
	
 
	
    WHEN DUE
	
 
	
 
	
    WHAT
	
 
	
 
	
    Compliance

    Circle)
    

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
    Yes
    
	
 
	
    No
    

	

    BORROWER
    

	
 
	
 
	
    (i) Quarterly at such time as
    this statement is submitted to the Securities and Exchange
    Commission (“SEC”)
    
	
 
	
 
	
    The Borrower’s 10-Q together
    with this Certificate of Compliance duly executed by an officer
    of the Borrower
    
	
 
	
 
	
    Yes
    
	
 
	
    No
    

	
 
	
 
	
 
	
    (ii) On an annual basis at
    such time as this statement is submitted to the Securities and
    Exchange Commission (“SEC”)
    
	
 
	
 
	
    The Borrower’s 10-K together
    with this Certificate of Compliance duly executed by an officer
    of the Borrower
    
	
 
	
 
	
    Yes
    
	
 
	
    No
    

	

     

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 
	

    C. FINANCIAL
    COVENANTS. The Borrower will comply with the following
    financial covenants, defined in accordance with GAAP,
    incorporating the calculation adjustments indicated on this
    Compliance Certificate:
    

	
 
	
 
	
    COMPLIANCE CERTIFICATE
	
 
	
 
	
 
	
 
	
 

	

    REOUIRED

	
 
	
 
	
    ACTUAL REPORTED
	
 
	
 
	
    Compliance

    (Circle)
    

	
    Except as specified otherwise, each
    covenant will be maintained at all times and reported for each
    Reporting Period or as of each Reporting Period End Date, as
    appropriate:
    
	
 
	
 
	
    For Current Reporting Period/as of
    the End Date
    
	
 
	
 
	
    Yes
    
	
 
	
    No
    

	
    I. Maintain a Tangible Net Worth
    (“TNW”) as adjusted of at
    
	
 
	
 
	
    Stockholders’ Equity
    
	
 
	
    $            
    
	
 
	
 
	
    Yes
    
	
 
	
    No
    

	

    least $33,000,000.00.
    

	
 
	
 
	
    Minus:  Goodwill
    
	
 
	
    $            
    
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
            Other
    Intangible Assets
    
	
 
	
    $            
    
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
    Plus:    Subordinated
    Debt
    
	
 
	
    $            
    
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
    Equals: TNW as adjusted.
    
	
 
	
    $            
 
    
	
 
	
 
	
 
	
 
	
 

	

    2. Maintain a Current Ratio of
    at least 2.00 to 1.00.
    

	
 
	
 
	
    $                   /
    
	
 
	
    $                 
    
	
 
	
    =
                
 
    
	
 
	
 
	
    Yes
    
	
 
	
    No
    

	
 
	
 
	
 
	
    Current Assets
    
	
 
	
    Current Liabilities
    
	
 
	
    Current Ratio
    
	
 
	
 
	
 
	
 
	
 

	
    3. Maintain a ratio of Total
    Indebtedness to Tangible Net
    
	
 
	
 
	
    $                   /
    
	
 
	
    $                 
    
	
 
	
    =
                
 
    
	
 
	
 
	
    Yes
    
	
 
	
    No
    

	

    Worth as adjusted of no more than
    1.10 to 1.00.
    

	
 
	
 
	
    Total Indebtedness
    
	
 
	
    TNW as adjusted
    
	
 
	
    Ratio
    
	
 
	
 
	
 
	
 
	
 

	

     

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

 

    THE ABOVE SUMMARY REPRESENTS SOME OF THE COVENANTS AND
    AGREEMENTS CONTAINED IN THE LETTER AGREEMENT AND DOES NOT IN ANY
    WAY RESTRICT OR MODIFY THE TERMS AND CONDITIONS OF THE LETTER
    AGREEMENT. IN CASE OF CONFLICT BETWEEN THIS EXHIBIT A AND
    THE LETTER AGREEMENT, THE LETTER AGREEMENT SHALL CONTROL.

 

    The undersigned hereby certifies that the above information and
    computations are true and correct and not misleading as of the
    date hereof, and that since the date of the Borrower’s most
    recent Compliance Certificate (if any):

 

		
	    o  
	    No default or Event of Default has occurred under the Note
    during the current Reporting Period, or been discovered from a
    prior period, and not reported.

	 
	    o  
	    A default or Event of Default (as described below) has occurred
    during the current Reporting Period or has been discovered from
    a prior period and is being reported for the first time and:

    

    EXHIBIT A - Page 1 of 2 Pages

 

    o was cured
    on                          ,
    20     .

 

    o was waived by Bank in
    writing
    on                          ,
    20     .

 

			
	 	    o 
	
    is continuing.

 

 

    Description of Event of
    Default: _
    _

 

 

 

    Executed
    this             day
    of                          ,
    200     .
    

 

 

    BORROWER:    FRIEDMAN
    INDUSTRIES, INCORPORATED
    

 

 

    SIGNATURE: _
    _

 

    NAME: _
    _

 

    TITLE: _
    _

 

    ADDRESS: _
    _

 

           _
    _exv10w15

 

    EXHIBIT 10.15

 

    REVOLVING
    PROMISSORY NOTE

    (this
    “Note”)
    

 

		
	    U.S. $10,000,000.00
    	    May 18, 2007
    (“Date”)
    

 

    FOR VALUE RECEIVED, FRIEDMAN INDUSTRIES, INC.
    (“Borrower),” a Texas corporation,
    promises to pay to the order of JPMORGAN CHASE BANK, N.A.
    (“Bank”) on or before April 1, 2010
    (the “Termination Date”), at its banking
    house at 712 Main Street, P. O. Box 2558, Houston,
    Texas, or at such other location as Bank may designate, in
    lawful money of the United States of America, the lesser of:
    (i) the principal sum of TEN MILLION AND NO/100THS UNITED
    STATES DOLLARS (U.S. $10,000,000.00) or (ii) the
    aggregate unpaid principal amount of all loans made by Bank
    (each such loan being a “Loan”), which
    may be outstanding on the Termination Date. Each Loan shall be
    due and payable on the maturity date agreed to by Bank and
    Borrower with respect to such Loan (the “Maturity
    Date”). In no event shall any Maturity Date fall on
    a date after the Termination Date.

 

    This Note is the Revolving Note referenced in Section 1.1
    of the Letter Agreement (as defined below). Capitalized terms
    used but not otherwise defined in this Note shall have the same
    meanings here as assigned to them in the Letter Agreement.
    Subject to the terms and conditions of this Note and the Letter
    Agreement, Borrower may borrow, repay and reborrow all or any
    part of the credit provided for herein at any time before the
    Termination Date, there being no limitation on the number of
    Loans made so long as the total unpaid principal amount at any
    time outstanding does not exceed the Revolving Line of Credit.

 

    “Adjusted LIBOR Rate” means a per annum
    interest rate determined by Bank by dividing:
    (i) the LIBOR Rate by (ii) Statutory Reserves provided
    that Statutory Reserves is greater than zero, otherwise Adjusted
    LIBOR Rate means a per annum interest rate equal to the LIBOR
    Rate. “LIBOR Rate” means with respect to
    any LIBOR Loan for any Interest Period the interest rate
    determined by Bank by reference to Page 3756 of the Dow
    Jones Market Service (or on any successor or substitute page of
    such service, or any successor to or substitute for such
    service, providing rate quotations comparable to those currently
    provided on such page of such service, as determined by Bank
    from time to time for purposes of providing quotations of
    interest rates applicable to dollar deposits in the London
    interbank market) to be the rate at approximately
    11:00 a.m. London time, two Business Days prior to the
    commencement of such Interest Period for the offering by
    Bank’s London office, of dollar deposits in an amount
    comparable to such LIBOR Loan with a maturity comparable to such
    Interest Period.

 

    “Board” means the Board of Governors of
    the Federal Reserve System of the United States.

 

    “Borrowing Date” means any Business Day
    on which Bank shall make or continue a Loan hereunder;

 

    “Business Day” means a day: (i) on
    which Bank and commercial banks in New York City are generally
    open for business; and (ii) with respect to LIBOR Loans, on
    which dealings in United States Dollar deposits are carried out
    in the London interbank market.

 

    “Highest Lawful Rate” means the maximum
    nonusurious rate of interest from time to time permitted by
    applicable law. To the extent that Texas law determines the
    Highest Lawful Rate, the Highest Lawful Rate is the weekly rate
    ceiling as defined in the Texas Finance Code Chapter 303.
    Bank may from time to time, as to current and future balances,
    elect and implement any other ceiling under such statutes and/or
    revise the index, formula or provisions of law used to compute
    the rate on this open-end account by notice to Borrower, if and
    to the extent permitted by, and in the manner provided in
    applicable law.

 

    “Interest Period” means the period
    commencing on the Borrowing Date and ending on the Maturity
    Date, consistent with the following provisions. The duration of
    each Interest Period shall be: (a) in the case of a Prime
    Rate Loan, a period of up to the Termination Date unless any
    portion thereof is converted to a LIBOR Loan hereunder; and
    (b) in the case of a LIBOR Loan, a period of up to one, two
    or three months; in each case as selected by Borrower and agreed
    to by Bank. Borrower’s choice of Interest Period is subject
    to the following limitations: (i) No Interest Period shall
    end on a date after the Termination Date; and (ii) If the
    last day of an Interest Period would be a day other than a
    Business

    Page 1 of 6 Pages

 

    Day, the Interest Period shall end on the next succeeding
    Business Day (unless the Interest Period relates to a LIBOR Loan
    and the next succeeding Business Day is in a different calendar
    month than the day on which the Interest Period would otherwise
    end, in which case the Interest Period shall end on the next
    preceding Business Day).

 

    “Letter Agreement” means the Amended and
    Restated Letter Agreement dated as of April 1, 1995 by and
    between Borrower and Bank, as amended by a First Amendment dated
    as of April 1, 1997, a Second Amendment dated as of
    July 21, 1997, a Third Amendment dated as of April 1,
    1999, a Fourth Amendment dated as of June 1, 2001, a Fifth
    Amendment dated as of April 1,2003, a Sixth Amendment dated
    as of April 1, 2005, a Seventh Amendment dated as of the
    Date of this Note, and as it may be further amended from time to
    time.

 

    “LIBOR Loan” means a Loan which bears
    interest at a rate determined by reference to the Adjusted LIBOR
    Rate.

 

    “Loan Documents” means this Note, the
    Letter Agreement and any other document or instrument
    evidencing, securing, guaranteeing or given in connection with
    this Note.

 

    “Obligations” means all principal,
    interest and other amounts which are or become owing under this
    Note or any other Loan Document.

 

    “Obligor” means Borrower and any
    guarantor, surety, co-signer, general partner or other person
    who may now or hereafter be obligated to pay all or any part of
    the Obligations.

 

    “Prime Rate” means the rate determined
    from time to time by Bank as its prime rate. The Prime Rate
    shall change automatically from time to time without notice to
    Borrower or any other person. THE PRIME RATE IS A REFERENCE RATE
    AND MAY NOT BE BANK’S LOWEST RATE.

 

    “Prime Rate Loan” means a Loan which
    bears interest at a rate determined by reference to the Prime
    Rate.

 

    “Statutory Reserves” means the
    difference (expressed as a decimal) of the number one
    minus the aggregate of the maximum reserve percentages
    (including, without limitation, any marginal, special,
    emergency, or supplemental reserves) expressed as a decimal
    established by the Board and any other banking authority to
    which Bank is subject to, with respect to the LIBOR Rate, for
    Eurocurrency Liabilities (as defined in Regulation D of the
    Board). Such reserve percentages shall include, without
    limitation, those imposed under such Regulation D. LIBOR
    Loans shall be deemed to constitute Eurocurrency Liabilities and
    as such shall be deemed to be subject to such reserve
    requirements without benefit of or credit for proration,
    exceptions or offsets which may be available from time to time
    to any bank under such Regulation D. Statutory Reserves
    shall be adjusted automatically on and as of the effective date
    of any change in any reserve percentage.

 

    Loans may be either Prime Rate Loans or LIBOR Loans.

 

    Borrower shall pay interest on the unpaid principal amount of
    each Prime Rate Loan at a rate per annum equal to the lesser of:
    (i) the Prime Rate in effect from time to time (the
    “Effective Prime Rate”); or
    (ii) the Highest Lawful Rate. Accrued interest on each
    Prime Rate Loan is due and payable monthly during the term of
    this Note, commencing June 1, 2007, on the first day of
    each month thereafter and on the Termination Date.

 

    Borrower shall pay interest on the unpaid principal amount of
    each LIBOR Loan for the Interest Period with respect thereto at
    a rate per annum equal to the lesser of: (i) the Adjusted
    LIBOR Rate plus one and one-half percent (1.50%) (the
    “Effective LIBOR Rate”); or
    (ii) the Highest Lawful Rate. Accrued interest on each
    LIBOR Loan is due on the last day of each Interest Period
    applicable thereto on any prepayment (on the amount prepaid),
    and on the Termination Date.

 

    If at any time the effective rate of interest which would
    otherwise be payable on any Loan evidenced by this Note exceeds
    the Highest Lawful Rate, the rate of interest to accrue on the
    unpaid principal balance of such Loan during all such times
    shall be limited to the Highest Lawful Rate, but any subsequent
    reductions in such interest rate shall not become effective to
    reduce such interest rate below the Highest Lawful Rate until
    the total amount of interest accrued on the unpaid principal
    balance of such Loan equals the total amount of interest which
    would have accrued if the Effective Prime Rate, or Effective
    LIBOR Rate, whichever is applicable, had at all times been in
    effect.

    Page 2 of 6 Pages

 

    Each LIBOR Loan shall be in an amount not less than $10,000.00
    and an integral multiple of $10,000.00. Each Prime Rate Loan
    shall be in an amount not less than $10,000.00 and an integral
    multiple of $10,000.00. Interest on each Prime Rate Loan shall
    be computed on the basis of the actual number of days elapsed
    and a year comprised of 365 or 366 days, as the case may
    be. Interest on each LIBOR Loan shall be computed on the basis
    of the actual number of days elapsed and a year comprised of
    360 days, unless such calculation would result in a
    usurious interest rate, in which case such interest shall be
    calculated on the basis of a 365 or 366 day year, as the
    case may be.

 

    This Note is given in renewal, increase, modification and
    replacement of the revolving promissory note dated April 1,
    2005 executed by Borrower and payable to the order of Bank in
    the principal amount of $6,000,000.00. The unpaid principal
    balance of this Note at any time will be the total amount
    advanced by Bank less the amount of all payments or prepayments
    of principal. Absent manifest error, the records of Bank will be
    conclusive as to amounts owed.

 

    Loans shall be made on Borrower’s irrevocable notice to
    Bank, given not later than 10:00 A.M. (Houston time) on, in
    the case of LIBOR Loans, the third Business Day prior to the
    proposed Borrowing Date or, in the case of Prime Rate Loans, the
    first Business Day prior to the proposed Borrowing Date. Each
    notice of a requested borrowing (a “Notice of
    Requested Borrowing”) under this paragraph may be
    oral or written, and shall specify: (i) the requested
    amount; (ii) proposed Borrowing Date; (iii) whether
    the requested Loan is to be a Prime Rate Loan or LIBOR Loan; and
    (iv) Interest Period for the LIBOR Loan. If any Notice of
    Requested Borrowing shall be oral, Borrower shall deliver to
    Bank prior to the Borrowing Date a confirmatory written Notice
    of Requested Borrowing.

 

    Borrower may on any Business Day prepay the outstanding
    principal amount of any Prime Rate Loan, in whole or in part.
    Partial prepayments shall be in an aggregate principal amount of
    $10,000.00 or a greater integral multiple of $10,000.00.
    Borrower shall have no right to prepay any LIBOR Loan.

 

    Provided that no Event of Default has occurred and is
    continuing, Borrower may elect to continue all or any part of
    any LIBOR Loan beyond the expiration of the then current
    Interest Period relating thereto by providing Bank at least
    three Business Days written or telecopy notice of such election,
    specifying the Loan or portion thereof to be continued and the
    Interest Period therefor and whether it is to be a Prime Rate
    Loan or LIBOR Loan provided that any continuation as a LIBOR
    Loan shall not be less than $10,000.00 and shall be in an
    integral multiple of $10,000.00. If an Event of Default shall
    have occurred and be continuing, the Borrower shall not have the
    option to elect to continue any such LIBOR Loan.

 

    Provided that no Event of Default has occurred and is
    continuing, Borrower may elect to convert any Prime Rate Loan at
    any time or from time to time to a LIBOR Loan by providing Bank
    at least three Business Days written or telecopy notice of such
    election, specifying each Interest Period therefor. Any
    conversion of Prime Rate Loans shall not result in a borrowing
    of LIBOR Loans in an amount less than $10,000.00 and in integral
    multiples of $10,000.00. If an Event of Default shall have
    occurred and be continuing, the Borrower shall not have the
    option to elect to convert Prime Rate Loans into LIBOR Loans.

 

    If at any time Bank determines in good faith (which
    determination shall be conclusive) that any change in any
    applicable law, rule or regulation or in the interpretation,
    application or administration thereof makes it unlawful, or any
    central bank or other governmental authority asserts that it is
    unlawful, for Bank or its foreign branch or branches to maintain
    any LIBOR Loan by means of dollar deposits obtained in the
    London interbank market (any of the above being described as a
    “LIBOR Event”), then, at the option of
    Bank, the aggregate principal amount of all LIBOR Loans
    outstanding shall be prepaid; however the prepayment may be made
    at the sole option of the Bank with a Prime Rate Loan. Upon the
    occurrence of any LIBOR Event, and at any time thereafter so
    long as such LIBOR Event shall continue, the Bank may exercise
    its aforesaid option by giving written notice thereof to
    Borrower.

 

    If Bank determines after the date of this Note that any change
    in applicable laws, rules or regulations regarding capital
    adequacy, or any change in the interpretation or administration
    thereof by any appropriate governmental agency, or compliance
    with any request or directive to Bank regarding capital adequacy
    (whether or not having the force of law) of any such agency,
    increases the capital required to be maintained with respect to
    any Loan and therefore reduces the rate of return on Bank’s
    capital below the level Bank could have achieved but for
    such change or compliance (taking into consideration Bank’s
    policies with respect to capital adequacy), then Borrower will
    pay to Bank from time to time, within 15 days of
    Bank’s request, any additional amount required to
    compensate Bank for such reduction. Bank will request any
    additional amount by delivering to Borrower a certificate of
    Bank setting forth the amount

    Page 3 of 6 Pages

 

    necessary to compensate Bank. The certificate will be conclusive
    and binding, absent manifest error. Bank may make any
    assumptions, and may use any allocations of costs and expenses
    and any averaging and attribution methods, which Bank in good
    faith finds reasonable.

 

    If any domestic or foreign law, treaty, rule or regulation
    (whether now in effect or hereinafter enacted or promulgated,
    including Regulation D of the Board) or any interpretation
    or administration thereof by any governmental authority charged
    with the interpretation or administration thereof (whether or
    not having the force of law): (a) changes, imposes,
    modifies, applies or deems applicable any reserve, special
    deposit or similar requirements in respect of any Loan or
    against assets of, deposits with or for the account of, or
    credit extended or committed by, Bank; or (b) imposes on
    Bank or the interbank eurocurrency deposit and transfer market
    or the market for domestic bank certificates or deposit any
    other condition affecting any such Loan; and the result of any
    of the foregoing is to impose a cost to Bank of agreeing to
    make, funding or maintaining any such Loan or to reduce the
    amount of any sum receivable by Bank in respect of any such
    Loan, then Bank may notify Borrower in writing of the happening
    of such event and Borrower shall upon demand pay to Bank such
    additional amounts as will compensate Bank for such costs as
    determined by Bank. Without prejudice to the survival of any
    other agreement of Borrower under this Note, the obligations of
    Borrower under this paragraph shall survive the termination of
    this Note.

 

    Borrower will indemnify Bank against, and reimburse Bank on
    demand for, any loss, cost or expense incurred or sustained by
    Bank (including without limitation any loss, cost or expense
    incurred by reason of the liquidation or reemployment of
    deposits or other funds acquired by Bank to fund or maintain
    LIBOR Loans) as a result of: (a) any payment or prepayment
    (whether permitted by Bank or required hereunder or otherwise)
    of all or a portion of any LIBOR Loan on a day other than the
    Maturity Date of such Loan; (b) any payment or prepayment,
    whether required hereunder or otherwise, of any LIBOR Loan made
    after the delivery of a Notice of Requested Borrowing but before
    the applicable Borrowing Date if such payment or prepayment
    prevents the proposed Loan from becoming fully effective; or
    (c) the failure of any LIBOR Loan to be made by Bank due to
    any action or inaction of Borrower. Such funding losses and
    other costs and expenses shall be calculated and billed by Bank
    and such bill shall, as to the costs incurred, be conclusive
    absent manifest error.

 

    All past-due principal and interest on this Note, will, at
    Bank’s option, bear interest at the Highest Lawful Rate, or
    if applicable law does not provide for a maximum nonusurious
    rate of interest, at a rate per annum equal to the Prime Rate
    plus five percent (5%).

 

    In addition to all principal and accrued interest on this Note,
    Borrower agrees to pay: (a) all reasonable costs and
    expenses incurred by Bank and all owners and holders of this
    Note in collecting this Note through probate, reorganization,
    bankruptcy or any other proceeding; and (b) reasonable
    attorney’s fees if and when this Note is placed in the
    hands of an attorney for collection.

 

    Borrower and Bank intend to conform strictly to applicable usury
    laws. Therefore, the total amount of interest (as defined under
    applicable law) contracted for, charged or collected under this
    Note will never exceed the Highest Lawful Rate. If Bank
    contracts for, charges or receives any excess interest, it will
    be deemed a mistake. Bank will automatically reform the contract
    or charge to conform to applicable law, and if excess interest
    has been received, Bank will either refund the excess to
    Borrower or credit the excess on the unpaid principal amount of
    this Note. All amounts constituting interest will be spread
    throughout the full term of this Note in determining whether
    interest exceeds lawful amounts.

 

    If any Event of Default occurs under the Letter Agreement, then
    Bank may do any or all of the following: (i) cease making
    Loans hereunder; (ii) declare the Obligations to be
    immediately due and payable, without notice of acceleration or
    of intention to accelerate, presentment and demand or protest or
    notice of any kind, all of which are hereby expressly waived;
    and (iv) exercise any and all other rights under the Loan
    Documents, at law, in equity or otherwise.

 

    No waiver of any default is a waiver of any other default.
    Bank’s delay in exercising any right or power under any
    Loan Document is not a waiver of such right or power.

 

    Each Obligor severally waives notice, demand, presentment for
    payment, notice of nonpayment, notice of intent to ’
    accelerate, notice of acceleration, protest, notice of protest,
    and the filing of suit and diligence in collecting this Note and
    all other demands and notices, and consents and agrees that its
    liabilities and obligations will not be released or discharged
    by any or all of the following, .whether with or without notice
    to it or any other Obligor, and whether before or after the
    stated maturity hereof: (i) extensions of the time of

    Page 4 of 6 Pages

 

    payment; (ii) renewals; (iii) acceptances of partial
    payments; (iv) releases or substitutions of any collateral
    or any Obligor; and (v) failure, if any, to perfect or
    maintain perfection of any security interest in any collateral.
    Each Obligor agrees that acceptance of any partial payment will
    not constitute a waiver and that waiver of any default will not
    constitute waiver of any prior or subsequent default. Nothing in
    this Agreement is intended to waive or vary the duties of Bank
    or the rights of any Obligor in violation of Section 9.602
    of the Texas Business and Commerce Code.

 

    Where appropriate the neuter gender includes the feminine and
    the masculine and the singular number includes the plural number.

 

    Borrower represents and agrees that: all Loans evidenced by this
    Note are and will be for business, commercial, investment,
    agricultural or other similar purpose and not primarily for
    personal, family, or household use. Borrower represents and
    agrees that the following statement is true unless the box
    preceding that statement is checked and initialed by Borrower
    and
    Bank: o _
    _ _
    _
    No advances will be used for the purpose of purchasing or
    carrying any margin stock as that term is defined in
    Regulation U of the Board.

 

    This Note is governed by Texas law. If any provision of this
    Note is illegal or unenforceable, that illegality or
    unenforceability will not affect the remaining provisions of
    this Note. BORROWER AND BANK AGREE THAT THE COUNTY IN WHICH
    BANK’S PRINCIPAL OFFICE IN TEXAS IS LOCATED IS PROPER VENUE
    FOR ANY ACTION OR PROCEEDING BROUGHT BY BORROWER OR BANK,
    WHETHER IN CONTRACT, TORT, OR OTHERWISE. ANY ACTION OR
    PROCEEDING AGAINST BORROWER MAY BE BROUGHT IN ANY STATE OR
    FEDERAL COURT IN SUCH COUNTY TO THE EXTENT NOT PROHIBITED BY
    APPLICABLE LAW. TO THE EXTENT PERMITTED BY APPLICABLE LAW
    BORROWER HEREBY IRREVOCABLY (A) SUBMITS TO THE NONEXCLUSIVE
    JURISDICTION OF SUCH COURTS, AND (B) WAIVES ANY OBJECTION
    IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH ACTION
    OR PROCEEDING BROUGHT IN ANY SUCH COURT OR THAT ANY SUCH COURT
    IS AN INCONVENIENT FORUM. BORROWER AGREES THAT SERVICE OF
    PROCESS UPON IT MAY BE MADE BY CERTIFIED OR REGISTERED MAIL,
    RETURN RECEIPT REQUESTED, AT ITS ADDRESS SPECIFIED BELOW. BANK
    MAY SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW AND MAY
    BRING ANY ACTION OR PROCEEDING AGAINST BORROWER OR WITH RESPECT
    TO ANY OF ITS PROPERTY IN COURTS IN OTHER PROPER JURISDICTIONS
    OR VENUES.

 

    JURY TRIAL WAIVER.  TO THE EXTENT NOT
    PROHIBITED BY APPLICABLE LAW, BORROWER AND BANK HEREBY
    KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHT TO
    TRIAL BY JURY THAT BORROWER OR BANK MAY HAVE IN ANY ACTION OR
    PROCEEDING, IN LAW OR IN EQUITY, IN CONNECTION WITH THIS
    NOTE OR THE OBLIGATIONS. BORROWER REPRESENTS. AND WARRANTS
    THAT NO REPRESENTATIVE OR AGENT OF BANK HAS REPRESENTED,
    EXPRESSLY OR OTHERWISE, THAT BANK WILL NOT, IN THE EVENT OF
    LITIGATION, SEEK TO ENFORCE THIS RIGHT TO JURY TRIAL WAIVER.
    BORROWER ACKNOWLEDGES THAT BANK HAS BEEN INDUCED TO ENTER INTO
    THIS AGREEMENT BY, AMONG OTHER THINGS, THE PROVISIONS OF THIS
    WAIVER.

 

    For purposes of this Note, any assignee or subsequent holder of
    this Note will be considered the “Bank,” and each
    successor to Borrower will be considered the
    “Borrower.”

 

    NO COURSE OF DEALING BETWEEN BORROWER AND BANK, NO COURSE OF
    PERFORMANCE, NO TRADE PRACTICES, AND NO EXTRINSIC EVIDENCE OF
    ANY NATURE MAY BE USED TO CONTRADICT OR MODIFY ANY TERM OF THIS
    NOTE OR ANY OTHER LOAN DOCUMENT.

 

    THIS NOTE AND THE OTHER WRITTEN LOAN DOCUMENTS REPRESENT
    THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
    CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
    SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES

 

    THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
    PARTIES.

    Page 5 of 6 Pages

 

    IN WITNESS WHEREOF, Borrower has executed this Note effective
    the day, month and year first aforesaid.

 

    FRIEDMAN INDUSTRIES, INCORPORATED

 

			
	 	    By: 
	
    /s/  Ben
    Harper

    Name: Ben Harper

			
	 	    Title: 
	
    Senior Vice President — Finance

 

    (Bank’s signature is provided as its acknowledgment of the
    above as the final written agreement between the parties and its
    agreement with the Jury Trial Waiver.)

 

    JPMORGAN CHASE BANK, N.A.

 

			
	    By: 
	
    /s/  Kevin
    K. Rech

	 

    Name: Kevin Rech

    Title: Senior Vice President

    Page 6 of 6 Pages

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