Document:

exv10w1

 

EXHIBIT 10.1

SIXTH AMENDMENT TO AMENDED AND RESTATED LETTER AGREEMENT

(with Borrowing Base)

THIS SIXTH AMENDMENT TO AMENDED AND RESTATED LETTER AGREEMENT (this “Amendment”)
dated effective as of
April 1, 2005 (the “Effective Date”), is by and between FRIEDMAN INDUSTRIES,
INCORPORATED (“Borrower”) and
JPMORGAN CHASE BANK, N.A., formerly known as JPMorgan Chase Bank
(“Bank”).

PRELIMINARY
STATEMENT. Bank and Borrower have entered into 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, and a Fifth Amendment dated as of April 1,
2003 (collectively, “Credit Agreement”). All capitalized terms defined in the Credit Agreement
and not otherwise defined herein shall have the same meanings herein as in the Credit
Agreement. Bank and Borrower have agreed to amend the Credit Agreement to the extent set forth
herein, and in order to, among other things, renew, modify and extend the Revolving Credit
Note.

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, Bank and
Borrower hereby agree as follows:

1. Section 1.1 of the Credit Agreement is amended to read as follows:

“Subject to the terms and conditions hereof, the Bank agrees to make loans (“Loan” or
“Loans”) to Borrower from time
to time before the Termination Date, not to exceed at any one time outstanding
$6,000,000.00 (the “Commitment”).
Borrower shall have the right to borrow, repay and reborrow. Bank and 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 April
1, 2005 (together with any and
all renewals, extensions, modifications, replacements, and rearrangements thereof and
substitutions therefor, the “Note”),
which is given in renewal, modification and extension of that certain promissory note
dated April 1, 2003, in the original
principal amount of $6,000,000.00, maturing April 1, 2006. The purpose of the Loans made
under the Commitment is to
provide the Borrower with working capital support.
“Termination Date” means the earlier
of: (a) April 1, 2008; or (b)
the date specified by Bank in accordance with Section 5
of the Credit Agreement.

2.
Exhibit A of the Credit Agreement is amended by and
replaced with the Exhibit A attached
hereto for all purposes.

3. 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 Credit 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.

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 Credit Agreement shall also
refer to the Credit Agreement as amended by this Amendment.

5. 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 CONSTITUTE A “LOAN AGREEMENT” AS DEFINED
IN SECTION 26.02(a) OF THE TEXAS BUSINESS & COMMERCE CODE, AND REPRESENTS 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:	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 

Page 1 of 2 Pages

 

EXHIBIT A to Agreement between

FRIEDMAN INDUSTRIES, INCORPORATED (“Borrower”) and JPMORGAN CHASE
BANK, N.A. (“Bank”)
 dated as of April 1, 1995, as same may be
amended, restated and supplemented in writing

REPORTING
REQUIREMENTS, FINANCIAL COVENANTS

AND

COMPLIANCE CERTIFICATE FOR CURRENT REPORTING PERIOD ENDING
                    ,
200_(“END DATE”)

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

B. 

			
	Financial
Reporting. Borrower will provide the following financial
information within the times indicated:

	Compliance

Certificate

	 	 	 	 	 	 	 
	 	 	 	 	 	 	Compliance
	 	 	 	 	 	 	(Circle)
	WHO	 	when due	 	what	 	Yes No
	BORROWER

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

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

 C.

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

	 	COMPLIANCE CERTIFICATE

	 	 	 	 	 
	 	 	 	 	Compliance
	REQUIRED	 	ACTUAL REPORTED	 	(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

	 	 	 	 	 	 	 	 	 
	1. Maintain a Working Capital of at least $10,000,000.00

	 	$
                                   
  -
	 	$
                                    
  =
	 	$
	 	 Yes No
	 

	 	Current Assets
	 	Current Liabilities
	 	Working Capital	 	 
	 
	2. Maintain a Tangible Net Worth as adjusted of at

	 	Stockholder’s Equity
	 	 	 	$ 	 	 Yes No
	least $27,000,000.00.
	 	Minus:
	 	Goodwill
	 	$ 	 	 
	 

	 	 	 	Other Intangible Assets
	 	$ 	 	 
	 

	 	Plus:
	 	Subordinated Debt
	 	$ 	 	 
	 

	 	Equals:
	 	Tangible Net Worth
	 	$ 	 	 
	 
	3. Maintain a Current Ratio of at least 2.00 to 1.00.

	 	$
                                    
  /
	 	$
                                    
  -
	 	$
	 	 Yes No
	 

	 	Current Assets
	 	Current Liabilities
	 	Current Ratio	 	 
	 
	4. Maintain a ratio of Total Indebtedness to Tangible
Net Worth plus
Subordinated Debt of no more than 1.10 to 1.00.

	 	Total Indebtedness (GAAP)
	 	$
	 	 Yes No
	 
	 

	 	Tangible Net Worth
	 	 	 	$ 	 	 
	 
	 

	 	$
                                    
  /
	 	$
                                    
  -	 	$	 	 
	 

	 	Total Indebtedness
	 	Tangible Net Worth
	 	Ratio	 	 

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

	 	 	 
	o

	 	was cured on                                         .
	 
	o

	 	was waived by Bank in writing on                                          .
	 
	o

	 	is continuing.

	 	 	 
	Description of Event of Default:

	 	 

	 
	 	 
	 
	 
	 	 
	 

EXHIBIT A Page 1 of 2 Pages

 

Executed this                      day of                     , 2000__.

BORROWER:     FRIEDMAN
INDUSTRIES, INCORPORATED

	 	 	 
	SIGNATURE:
	 	 
	 

	 	 
	NAME:
	 	 
	 

	 	 
	TITLE:
	 	 
	 

	 	 
	ADDRESS:
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 

EXHIBIT A Page 2 of 2 Pagesexv10w2

 

EXHIBIT 10.2

REVOLVING PROMISSORY NOTE

(this “Note”)

			
	U.S. $6,000,000.00
	 	April 1, 2005 (“Date”)

FOR VALUE
RECEIVED, FRIEDMAN INDUSTRIES, INC. (“Borrower”), a Texas corporation, promises to pay to
the order of JPMORGAN CHASE BANK, N.A., formerly known as JPMorgan Chase Bank (“Bank”) on or before
April 1, 2008 (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 SIX MILLION AND NO/100THS UNITED STATES
DOLLARS (U.S. $6,000,000.00 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 Commitment.

	 	 	“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 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, 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 May 1, 2005, on the same 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.

     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,

Page 1 of 3 Pages

 

 

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.

     The unpaid principal balance of this Note at any time will be the total amounts 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 than 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 or to convert Prime Rate Loans into LIBOR Loans.
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 that $10,000.00 and in integral multiples of $10,000.00.

     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 therefor 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
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 (iii) 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 payment; (ii) renewals; (iii) acceptances
of partial payments; (iv) releases or substitutions of any collateral or any Obligor; and (v)
failure, if any, perfect or maintain perfection of any security interest in any collateral. Each
Obligor agrees

Page 2 of 3 Pages

 

 

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.

     Chapter 346 of the Finance Code (which regulates certain revolving loan accounts) shall not
apply to this Note or to any Loan evidenced by this Note.

     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.”

     Borrower represents that it is duly organized and validly existing and in good standing under
the laws of the state of its incorporation or organization; has full power to own its properties
and to carry on its business as now conducted; is duly qualified to do business and is in good
standing in each jurisdiction in which the nature of the business conducted by it makes such
qualification desirable; and has not commenced any dissolution proceedings. Each Borrower and
cosigner that is subject to the Texas Revised Partnership Act (“TRPA”) agrees that Bank is not
required to comply with Section 3.05(d) of the TRPA and agrees that Bank may proceed directly
against one or more partners or their property without first seeking satisfaction from partnership
property. Each of the persons signing below as Borrower represents that he/she has full requisite
power and authority to execute and deliver this Note to Bank on behalf of the Borrower and to bind
Borrower to the terms and conditions of this Note and that this Note is enforceable against
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.

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.)

JPMORGAN CHASE BANK, N.A.

	 	 	 
	By:

	 	/s/ KEVIN K. RECH

 

	 
	 	 
	Name:

	 	Kevin K. Rech

 

	 
	 	 
	Title:

	 	Senior Vice President

 

Page 3 of 3 Pages

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