Document:

exv10w1

 

Exhibit 10.1

STOCK PURCHASE AGREEMENT

     This Stock Purchase Agreement (this “Agreement”) is made and entered into this 8th
day of February, 2006, by and among Jack Friedman (“Seller”), and Friedman Industries,
Incorporated, a Texas corporation (“Buyer”).

W I T N E S S E T H:

     WHEREAS, Seller desires to sell, and Buyer desires to acquire, an aggregate of 551,248 shares
of common stock, par value $1.00, of Buyer (the “Shares”), in consideration of an aggregate of
$2,707,179 (the “Purchase Price”), all upon the terms and conditions set forth herein; and

     WHEREAS, the parties hereto desire to set forth certain representations, warranties and
agreements, all as more fully set forth below;

     NOW, THEREFORE, in consideration of the premises and the respective covenants and agreements
contained herein, the parties hereto agree as follows:

ARTICLE 1

PURCHASE AND SALE OF SHARES

     1.1 Purchase and Sale. Subject to the terms and conditions of this Agreement, Buyer
herewith has purchased from Seller, and Seller herewith has sold to Buyer, the Shares, for the
Purchase Price.

     1.2 Delivery of Shares. Seller has herewith delivered and surrendered to Buyer
certificates representing the Shares, duly endorsed in blank and accompanied by appropriate stock
powers, assignments and such instruments of conveyance as have been reasonably requested by Buyer
to evidence the sale and purchase of the Shares hereunder.

     1.3 Delivery of Purchase Price. In reliance on the representations and warranties of
Seller set forth in this Agreement and in full consideration of the transfer by Seller to Buyer of
the Shares, Buyer has delivered the Purchase Price to Seller by wire transfer of $2,707,179 to a
bank account specified by Seller.

ARTICLE 2

CLOSING

     The consummation of the transactions contemplated by this Agreement (the “Closing”) took place
at the offices of Fulbright & Jaworski L.L.P., 1301 McKinney, Houston, Texas, at 1:00 p.m. (Houston
time) on the date hereof (the “Closing Date”). All transactions contemplated by this Agreement to
be consummated at the Closing shall be deemed to have occurred simultaneously.

 

 

ARTICLE 3

REPRESENTATIONS, WARRANTIES AND COVENANTS 

OF SELLER

     Seller represents and warrants to Buyer and covenants and agrees as follows:

     3.1 Ownership. Seller is the record and beneficial owner of the Shares and owns the
Shares free and clear of any liens, pledges, mortgages, claims, charges, security interests or
other encumbrances, options, defects or other rights of any third person of any nature whatsoever
(individually, a “Lien and collectively, “Liens”). Seller has full authority to transfer the
Shares and, upon Buyer’s purchase of the Shares, Buyer will acquire the Shares free and clear of
all Liens.

     3.2 Validity of Agreement and Conflict with Other Agreements.

     (a) Seller has all requisite legal right, power, capacity and authority to execute and
deliver this Agreement and to perform fully his obligations hereunder. This Agreement has
been duly executed and delivered by Seller and is the valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms except as may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance or other similar laws
affecting the enforcement of creditors’ rights generally and general equitable principles.

     (b) The execution, delivery and performance of this Agreement by Seller and the
consummation of the transactions contemplated hereby by Seller will not, with or without the
passage of time or the giving of notice or both:

     (i) conflict with, constitute a breach, violation or termination of any
provision of, or constitute a default or require any consent, approval or other
third party action under, any contract, agreement, indenture, note, lease, mortgage,
license, commitment or other binding arrangement to which Seller is a party or by
which Seller or the Shares may be bound;

     (ii) result in an acceleration or increase of any amounts due from Seller to
any Person;

     (iii) result in the creation or imposition of any Lien on the Shares;

     (iv) violate any provision of law, judgment, rule, order, decree or any other
restriction applicable to Seller; or

     (v) require any consent or approval of, or filing with or notice to, any public
or governmental body or authority, under any provision of law applicable to Seller,
other than those required to be filed pursuant to the Securities Exchange Act of
1934 and the rules and regulations promulgated pursuant thereto.

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     3.3 No Violations.

     (a) The consummation of the transactions contemplated hereby will not cause any
violation of any order of any governmental entity or any law, ordinance, regulation, order,
requirement, statute, rule, permit, concession, grant, franchise, license or other
governmental authorization relating or applicable to Seller or to any of Seller’s properties
or assets.

     (b) There is no currently pending proceedings nor to the knowledge of Seller have any
proceedings been filed or threatened against either Seller or Seller’s properties or assets,
at law or in equity, before or by any governmental entity that, if adversely determined,
might jeopardize or materially adversely affect the transactions contemplated by this
Agreement or materially and adversely affect the use of or value of the Shares.

     3.4 No Bankruptcy. Seller has: not (i) filed for voluntary bankruptcy (or have
commenced against him an involuntary bankruptcy) under any chapter or section of the United States
Bankruptcy Code; (ii) been adjudged bankrupt or insolvent in proceedings filed under any section or
chapter of the United States Bankruptcy Code; (iii) made any general assignment for the benefit of
creditors; (iv) been unable, or stated that he is unable, to pay his debts as they become due or
(v) taken any preliminary action with respect to the matters described in clauses (i) or (iii).

     3.5 Finder’s Fees. Seller has not employed nor retained any investment banker,
broker, agent, finder or other party, or incurred any obligation for brokerage fees, finder’s fees
or commissions, with respect to the sale by Seller of the Shares or with respect to the
transactions contemplated by this Agreement, or otherwise dealt with anyone purporting to act in
the capacity of a finder or broker with respect thereto whereby any party hereto may be obligated
to pay such a fee or commission.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF BUYER

     Buyer represents and warrants to Seller as follows:

     4.1 Corporate Matters. Buyer is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Texas.

     4.2 Validity of Agreement and Conflict with Other Instruments.

     (a) Buyer has all requisite corporate power and authority to enter into this Agreement
and to perform its obligations hereunder.

     (b) The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all requisite corporate action
of Buyer. This Agreement has been duly executed and delivered by Buyer and is the valid and
binding obligation of Buyer, enforceable against Buyer in accordance with

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its terms, except as may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance or other similar laws affecting the enforcement of creditors’ rights
generally and general equitable principles.

     (c) The execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby by Buyer will not, with or without the passage of time
or the giving of notice or both:

     (i) conflict with, constitute a breach, violation or termination of any
provision of, or constitute a default under, any contract, agreement, indenture,
note, lease, mortgage, license, commitment or other binding arrangement to which
Buyer is a party or by which Buyer may be bound;

     (ii) conflict with or violate the articles of incorporation or the bylaws of
Buyer;

     (iii) violate any provision of law, judgment, rule, order, decree or any other
restriction applicable to Buyer; or

     (iv) require any consent or approval of, or filing with or notice to, any
public or governmental body or authority, under any provision of law applicable to
Buyer other than those required to be filed pursuant to the Securities Exchange Act
of 1934 and the rules and regulations promulgated pursuant thereto.

     4.3 No Violations or Litigation.

     (a) The consummation of the transactions contemplated hereby will not cause any
violation of any order of any governmental entity or any law, ordinance, regulation, order,
requirement, statute, rule, permit, concession, grant, franchise, license or other
governmental authorization relating or applicable to Buyer or to any of Buyer’s properties
or assets.

     (b) There is no currently pending proceedings nor to the knowledge of Buyer have any
proceedings been filed or threatened against Buyer, at law or in equity, before or by any
governmental entity that, if adversely determined, might jeopardize or materially adversely
affect the transactions contemplated by this Agreement.

     4.4 No Bankruptcy. Buyer has not: (i) filed for voluntary bankruptcy (or have
commenced against it an involuntary bankruptcy) under any chapter or section of the United States
Bankruptcy Code; (ii) been adjudged bankrupt or insolvent in proceedings filed under any section or
chapter of the United States Bankruptcy Code; (iii) made any general assignment for the benefit of
creditors; (iv) been unable, or stated that it is unable, to pay its debts as they become due or
(v) taken any preliminary action with respect to the matters described in clauses (i) or (iii).

     4.5 Finder’s Fees. Other than GulfStar Group, Buyer has not employed or retained any
investment banker, broker, agent, finder or other party, or incurred any obligation for

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brokerage fees, finder’s fees or commissions, with respect to the sale by Seller of the Shares
or with respect to the transactions contemplated by this Agreement, or otherwise dealt with anyone
purporting to act in the capacity of a finder or broker with respect thereto whereby any party
hereto may be obligated to pay such a fee or commission.

ARTICLE 5

INDEMNIFICATION

     5.1 Seller’s Indemnity. Subject to the provisions of this Article 5, Seller agrees to
indemnify and hold Buyer and its officers, directors, shareholders, agents, employees,
representatives, successors and assigns (said Persons being sometimes referred to in this Section
5.1 as “Buyer’s Indemnitees”) harmless from and against and in respect of any loss, cost, claim,
demand, assessment, judgment, liability, damage or expense (including interest, penalties and
attorneys’ and accountants’ fees) (collectively “Buyer’s Damages”), arising out of or resulting
from, and shall pay Buyer’s Indemnitees the full amount of Buyer’s Damages that Buyer’s Indemnitees
may be obligated to pay on account of any breach of any representation or warranty or failure to
perform any covenant or agreement made or undertaken by Seller in this Agreement.

     5.2 Buyer’s Indemnity. Subject to the provisions of this Article 5, Buyer agrees to
indemnify and hold Seller, his agents, representatives, successors and assigns (said Persons being
sometimes referred to in this Section 5.2 as “Seller’s Indemnitees”) harmless from and against and
in respect of any loss, cost, claim, demand, assessment, judgment, liability, damage or expense
(including interest, penalties, and attorney’s and accountant’s fees) (collectively “Seller’s
Damages”) arising out of or resulting from, and shall pay Seller’s Indemnitees the full amount
thereof that Seller’s Indemnitees may be obligated to pay on account of any breach of any
representation or warranty or failure to perform any covenant or agreement made or undertaken by
Buyer in this Agreement.

     5.3 Procedure. All claims for indemnification by a party under this Article 5 (the
party claiming indemnification and the party against whom such claims are asserted being
hereinafter called the “Indemnified Party” and the “Indemnifying Party”, respectively) shall be
asserted and resolved as follows:

     (a) In the event that any claim or demand for which an Indemnifying Party would be
liable to an Indemnified Party hereunder is asserted against or sought to be collected from
such Indemnified Party by a third party, such Indemnified Party shall, promptly but in any
event within 30 days of the receipt thereof, give notice (the “Claim Notice”) to the
Indemnifying Party of such claim or demand, specifying the nature of and specific basis for
such claim or demand and the amount or the estimated amount thereof to the extent then
feasible, which estimate shall not be binding upon either party in its effort to collect the
final amount of such claim or demand. To the extent the Indemnifying Party is prejudiced
thereby, the failure to so notify the Indemnifying Party of any such claims or action shall
relieve the Indemnifying Party from liability that it may have to the Indemnified Party
under the indemnification provisions contained in this

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Article 5, but only to the extent of the actual loss incurred, and shall not relieve
the Indemnifying Party from any liability that it may have to the Indemnified Party
otherwise than under this Article 5. In any case, if any such actions shall be brought
against the Indemnified Party and the Indemnified Party shall notify the Indemnifying Party
of the commencement thereof, the Indemnifying Party shall be entitled to assume the defense
thereof at its own expense with counsel reasonably acceptable to the Indemnified Party. If
the Indemnifying Party does not assume such defense by written notice to the Indemnified
Party within 15 days of a request from the Indemnified Party to the Indemnifying Party
asking if it intends to assume such defense, the Indemnified Party shall, in its sole
discretion, conduct such defense with counsel of its choice. If the Indemnifying Party
assumes the defense, the Indemnified Party shall be entitled to participate in the defense
at its expense. The settlement of any claim hereunder by the Indemnifying Party may only be
made upon the prior approval by the Indemnified Party of the terms of the settlement, which
approval shall not be unreasonably withheld, conditioned or delayed, unless the sole relief
provided is monetary damages that are paid in full by the Indemnifying Party. If the
Indemnifying Party has assumed the defense of a claim in accordance with this Section
5.3(a), the Indemnified Party shall not settle the claim except with the written consent of
the Indemnifying Party or upon the waiver of any claim for indemnity hereunder with respect
to such claim.

     (b) If requested by the Indemnifying Party, the Indemnified Party agrees, at the
Indemnifying Party’s expense, to cooperate with the Indemnifying Party and its counsel in
contesting any claim or demand that the Indemnifying Party elects to contest, or, if
appropriate and related to the claim in question, in making any counterclaim against the
Person asserting the third party claim or demand, or any cross-complaint against any Person
other than an affiliate of the Indemnified Party.

     (c) If any Indemnified Party should have a claim against the Indemnifying Party
hereunder that does not involve a claim or demand being asserted against or sought to be
collected from it by a third party, the Indemnified Party shall send a Claim Notice with
respect to such claim to the Indemnifying Party.

     5.4 Failure to Pay Indemnification. If and to the extent the Indemnified Party shall
make written demand upon the Indemnifying Party for indemnification authorized pursuant to this
Article 5 and the Indemnifying Party shall refuse or fail to pay in full within ten business days
of such written demand the amounts demanded pursuant hereto and in accordance herewith, then the
Indemnified Party may utilize any legal or equitable remedy to collect from the Indemnifying Party
the amount of its Damages plus all costs, including reasonable attorneys’ fees incurred in
connection with such collection efforts. Nothing contained herein is intended to limit or
constrain the Indemnified Party’s rights against the Indemnifying Party for indemnity, the remedies
herein being cumulative and in addition to all other rights and remedies of the Indemnified Party.

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ARTICLE
6

NATURE OF STATEMENTS AND SURVIVAL 

OF COVENANTS, REPRESENTATIONS, 

WARRANTIES AND AGREEMENTS

     All representations and warranties made by the parties in this Agreement or pursuant hereto
shall survive the Closing Date, notwithstanding any investigation heretofore or hereafter made by
or on behalf of any of them and shall not be deemed merged into any instruments or agreements
delivered at Closing and shall remain in full force and effect for a period of two years following
the Closing Date (the period during which the representations and warranties shall survive being
referred to herein with respect to such representations and warranties as the “Survival Period”),
except as to representations and warranties as to title to the Shares which shall not terminate.
Any claim for indemnification made during the Survival Period shall be valid and the
representations and warranties relating thereto shall remain in effect for purposes of such
indemnification notwithstanding such claim may not be resolved within the Survival Period.

ARTICLE 7

MISCELLANEOUS

     7.1 Notices. All notices, requests, consents, directions and other instruments and
communications required or permitted to be given under this Agreement shall be in writing and shall
be deemed to have been duly given if delivered personally, if mailed first-class, postage prepaid,
registered or certified mail, or if sent by telegram, telex, facsimile, telecommunication or other
similar form of communication (with receipt confirmed), as follows:

If to Sellers to:

Jack Friedman

14 Stonegate

Longview, Texas 75601

Copies to:

Phil Brin

P.O. Box 106

Longview, Texas 75606

Attention:       Phil Brin

Facsimile:                                               

Confirm:       903-753-8067

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If to Buyer, to:

Friedman Industries, Incorporated

1121 Judson Road, Suite 124

Longview, TX 75601

Attention:     President

Facsimile:     (903) 758-2265

Confirm:       (903) 758-3431

Copies to:

Fulbright & Jaworski L.L.P.

1301 McKinney, Suite 5100

Houston, TX 77010

Attention:     Laura Ann Smith

Facsimile:     (713) 651-5246

Confirm:       (713) 651-5304

or to such other address and to the attention of such other person(s) or officer(s) as any party
may designate by written notice. Any notice shall be effective upon delivery.

     7.2 Assignment. No party to this Agreement may sell, transfer, assign, pledge or
hypothecate its, his or her rights, interests or obligations under this Agreement.

     7.3 Successors. This Agreement shall inure to the benefit of, be binding upon, and be
enforceable by the parties hereto and their respective successors and assigns.

     7.4 Expenses. Except as otherwise set forth herein, and whether or not the
transactions contemplated by this Agreement shall be consummated, each party agrees to pay, without
right of reimbursement from any other party, the costs incurred by such party incident to the
preparation and execution of this Agreement and performance of its obligations hereunder, including
without limitation the fees and disbursements of legal counsel, accountants and consultants
employed by such party in connection with the transactions contemplated by this Agreement.

     7.5 Entire Agreement. This Agreement constitutes the entire agreement and
understanding between the parties relating to the subject matter hereof and thereof and supersedes
all prior representations, communications and arrangements, whether oral, written or inferred,
between the parties relating to the subject matter hereof. This Agreement may not be modified or
amended, except upon a written instrument executed by Seller and by a duly authorized
representative of Buyer.

     7.6 Governing Law. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Texas.

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     7.7 Waiver. The waiver of any breach of any term or condition of this Agreement shall
not be deemed to constitute the waiver of any other breach of the same or any other term or
condition.

     7.8 Headings. The headings of the Articles and Sections of this Agreement have been
inserted for convenience of reference only and shall in no way restrict or otherwise modify any of
the terms or provisions hereof or affect in any way the meaning or interpretation of this
Agreement.

     7.9 Definition of Person. As used in this Agreement, “Person” shall mean a
corporation, an association, a partnership, an organization, a business, an individual, a
government or political subdivision thereof or a government agency.

     7.10 Severability. Any provision hereof that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.

     7.11 Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original, but all of which together shall constitute one and the same
instrument.

     7.12 Negotiated Transaction. The provisions of this Agreement were negotiated by the
parties hereto, and this Agreement shall be deemed to have been drafted by all of the parties
hereto.

     7.13 Spousal Consent. Seller is an individual and is married, therefore, Seller’s
spouse is also executing this Agreement. By executing this Agreement, Seller’s spouse (i)
acknowledges that she knows of the contents of this Agreement, (ii) consents to the entering into
this Agreement by Sellers and (iii) agrees that this Agreement shall be binding upon her to the
extent of her community property interest and/or any other interest.

[SIGNATURES ON FOLLOWING PAGES]

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     IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date
first above written.

	 	 	 	 	 
	 	 	SELLERS:
	 
	 	 	 	 
	 	 	/s/ JACK FRIEDMAN
	 	 	 
	 	 	Jack Friedman
	 
	 	 	 	 
	 	 	SELLER’S SPOUSE:
	 
	 	 	 	 
	 	 	/s/ NAOMI FRIEDMAN
	 	 	 
	 	 	Naomi Friedman
	 
	 	 	 	 
	 

	 	BUYER:	 	 
	 
	 	 	 	 
	 	 	FRIEDMAN INDUSTRIES, INCORPORATED
	 
	 	 	 	 
	 

	 	By:
	 	/s/ WILLIAM E. CROW
	 

	 	 	 	 
	 

	 	Name:
	 	William E. Crow
	 

	 	Title:
	 	President and Chief Operating Officer

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Exhibit 10.2

Mr. Jack Friedman

14 Stonegate

Longview, Texas 75601

February 8, 2006

The Board of Directors of

Friedman Industries, Incorporated

1121 Judson Road, Suite 124

Longview, Texas 75601

Gentlemen:

     Effective as of the close of business on the date hereof, I hereby resign my position (i) as
Chairman of the Board and Chief Executive Officer of Friedman Industries, Incorporated, a
Texas corporation (the “Company”), from any other officer position I may hold with the Company
and from any director or officer position I may hold with any subsidiary of the Company and (ii)
retire from full-time employment with the Company.

     It is my understanding that, following my resignation, the Company will continue to provide me
with office facilities and secretarial assistance on the same basis as has been provided to me
during the period of my full-time employment.

     If the foregoing correctly sets forth our understanding, please sign the enclosed copy of this
letter in the space provided.

	 	 	 
	 

	 	Sincerely,
	 
	 

	 	/s/ JACK FRIEDMAN
	 

	 	Jack Friedman

Agreed and accepted:

FRIEDMAN INDUSTRIES, INCORPORATED

By: /s/ WILLIAM E. CROW

Name: William E. Crow

Title: President and COO

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