FRIEDMAN INDUSTRIES INC
REVOLVING PROMISSORY NOTE
<DOCUMENT>
<TYPE>EX-10.15
<SEQUENCE>3
<FILENAME>h47583exv10w15.htm
<DESCRIPTION>REVOLVING PROMISSORY NOTE
<TEXT>
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<TITLE>exv10w15</TITLE>
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    <B>EXHIBIT&#160;10.15</B>
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    <B><FONT style="font-family: Arial, Helvetica">REVOLVING
    PROMISSORY NOTE<BR>
    (</FONT></B><FONT style="font-family: Arial, Helvetica">this
    <B>&#147;<U>Note</U>&#148;</B>)
    </FONT>
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<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

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<TR valign="top">
    <TD nowrap align="left">    <FONT style="font-family: Arial, Helvetica">U.S.&#160;$10,000,000.00
    </FONT></TD>
    <TD nowrap align="right">    <FONT style="font-family: Arial, Helvetica">May&#160;18, 2007
    (<B>&#147;<U>Date</U>&#148;</B>)
    </FONT></TD>
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    FOR VALUE RECEIVED, FRIEDMAN INDUSTRIES, INC.
    (<B>&#147;<U>Borrower</U></B>),&#148; a Texas corporation,
    promises to pay to the order of JPMORGAN CHASE BANK, N.A.
    (<B>&#147;<U>Bank</U>&#148;</B>) on or before April&#160;1, 2010
    (the <B>&#147;<U>Termination Date</U>&#148;</B>), at its banking
    house at 712&#160;Main Street, P. O.&#160;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)&#160;the principal sum of TEN MILLION AND NO/100THS UNITED
    STATES DOLLARS (U.S.&#160;$10,000,000.00) or (ii)&#160;the
    aggregate unpaid principal amount of all loans made by Bank
    (each such loan being a <B>&#147;<U>Loan</U>&#148;</B>), 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 <B>&#147;<U>Maturity
    Date</U>&#148;</B>). In no event shall any Maturity Date fall on
    a date after the Termination Date.
</DIV>

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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    This Note is the Revolving Note referenced in Section&#160;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.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B>&#147;<U>Adjusted LIBOR Rate</U>&#148; </B>means a per annum
    interest rate determined by Bank by <U>dividing</U>:
    (i)&#160;the LIBOR Rate by (ii)&#160;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. <B>&#147;<U>LIBOR Rate</U>&#148; </B>means with respect to
    any LIBOR Loan for any Interest Period the interest rate
    determined by Bank by reference to Page&#160;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&#160;a.m.&#160;London time, two Business Days prior to the
    commencement of such Interest Period for the offering by
    Bank&#146;s London office, of dollar deposits in an amount
    comparable to such LIBOR Loan with a maturity comparable to such
    Interest Period.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B>&#147;<U>Board</U>&#148; </B>means the Board of Governors of
    the Federal Reserve System of the United States.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B>&#147;<U>Borrowing Date</U>&#148; </B>means any Business Day
    on which Bank shall make or continue a Loan hereunder;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B>&#147;<U>Business Day</U>&#148; </B>means a day: (i)&#160;on
    which Bank and commercial banks in New York City are generally
    open for business; and (ii)&#160;with respect to LIBOR Loans, on
    which dealings in United States Dollar deposits are carried out
    in the London interbank market.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B>&#147;<U>Highest Lawful Rate</U>&#148; </B>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&#160;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.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B>&#147;<U>Interest Period</U>&#148; </B>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)&#160;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)&#160;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&#146;s choice of Interest Period is subject
    to the following limitations: (i)&#160;No Interest Period shall
    end on a date after the Termination Date; and (ii)&#160;If the
    last day of an Interest Period would be a day other than a
    Business
</DIV>
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    Page 1 of 6 Pages
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<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    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).
</DIV>

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<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B><U>&#147;Letter Agreement</U>&#148; </B>means the Amended and
    Restated Letter Agreement dated as of April&#160;1, 1995 by and
    between Borrower and Bank, as amended by a First Amendment dated
    as of April&#160;1, 1997, a Second Amendment dated as of
    July&#160;21, 1997, a Third Amendment dated as of April&#160;1,
    1999, a Fourth Amendment dated as of June&#160;1, 2001, a Fifth
    Amendment dated as of April&#160;1,2003, a Sixth Amendment dated
    as of April&#160;1, 2005, a Seventh Amendment dated as of the
    Date of this Note, and as it may be further amended from time to
    time.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B>&#147;<U>LIBOR Loan</U>&#148; </B>means a Loan which bears
    interest at a rate determined by reference to the Adjusted LIBOR
    Rate.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B>&#147;<U>Loan Documents</U>&#148; </B>means this Note, the
    Letter Agreement and any other document or instrument
    evidencing, securing, guaranteeing or given in connection with
    this Note.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B>&#147;<U>Obligations</U>&#148; </B>means all principal,
    interest and other amounts which are or become owing under this
    Note or any other Loan Document.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B>&#147;<U>Obligor</U>&#148; </B>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.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B>&#147;<U>Prime Rate</U>&#148; </B>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&#146;S LOWEST RATE.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B>&#147;<U>Prime Rate Loan</U>&#148; </B>means a Loan which
    bears interest at a rate determined by reference to the Prime
    Rate.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B>&#147;<U>Statutory Reserves</U>&#148; </B>means the
    <U>difference</U> (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&#160;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&#160;D. Statutory Reserves
    shall be adjusted automatically on and as of the effective date
    of any change in any reserve percentage.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Loans may be either Prime Rate Loans or LIBOR Loans.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    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)&#160;the Prime Rate in effect from time to time (the
    <B>&#147;<U>Effective Prime Rate</U>&#148;</B>); or
    (ii)&#160;the Highest Lawful Rate. Accrued interest on each
    Prime Rate Loan is due and payable monthly during the term of
    this Note, commencing June&#160;1, 2007, on the first day of
    each month thereafter and on the Termination Date.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    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)&#160;the Adjusted
    LIBOR Rate plus one and one-half percent (1.50%) (the
    <B>&#147;<U>Effective LIBOR Rate</U>&#148;</B>); or
    (ii)&#160;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.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    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.
</DIV>
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    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&#160;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&#160;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&#160;day year, as the
    case may be.
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    This Note is given in renewal, increase, modification and
    replacement of the revolving promissory note dated April&#160;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.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Loans shall be made on Borrower&#146;s irrevocable notice to
    Bank, given not later than 10:00&#160;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 <B>&#147;<U>Notice of
    Requested Borrowing</U>&#148;</B>) under this paragraph may be
    oral or written, and shall specify: (i)&#160;the requested
    amount; (ii)&#160;proposed Borrowing Date; (iii)&#160;whether
    the requested Loan is to be a Prime Rate Loan or LIBOR Loan; and
    (iv)&#160;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.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    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.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    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.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    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.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    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
    <B>&#147;<U>LIBOR Event</U>&#148;</B>), 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.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    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&#146;s
    capital below the level&#160;Bank could have achieved but for
    such change or compliance (taking into consideration Bank&#146;s
    policies with respect to capital adequacy), then Borrower will
    pay to Bank from time to time, within 15&#160;days of
    Bank&#146;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
</DIV>
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    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.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    If any domestic or foreign law, treaty, rule or regulation
    (whether now in effect or hereinafter enacted or promulgated,
    including Regulation&#160;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)&#160;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)&#160;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.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    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)&#160;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)&#160;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)&#160;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.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    All past-due principal and interest on this Note, will, at
    Bank&#146;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%).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In addition to all principal and accrued interest on this Note,
    Borrower agrees to pay: (a)&#160;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)&#160;reasonable
    attorney&#146;s fees if and when this Note is placed in the
    hands of an attorney for collection.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    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.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    If any Event of Default occurs under the Letter Agreement, then
    Bank may do any or all of the following: (i)&#160;cease making
    Loans hereunder; (ii)&#160;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)&#160;exercise any and all other rights under the Loan
    Documents, at law, in equity or otherwise.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    No waiver of any default is a waiver of any other default.
    Bank&#146;s delay in exercising any right or power under any
    Loan Document is not a waiver of such right or power.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Each Obligor severally waives notice, demand, presentment for
    payment, notice of nonpayment, notice of intent to &#146;
    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)&#160;extensions of the time of
</DIV>
<P>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Page 4 of 6 Pages
</DIV>

<P align="left" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV><!-- END LOGICAL PAGE -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    payment; (ii)&#160;renewals; (iii)&#160;acceptances of partial
    payments; (iv)&#160;releases or substitutions of any collateral
    or any Obligor; and (v)&#160;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&#160;9.602
    of the Texas Business and Commerce Code.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Where appropriate the neuter gender includes the feminine and
    the masculine and the singular number includes the plural number.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    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:&#160;<FONT face="Wingdings">&#111;</FONT>&#160;<FONT style="word-spacing: 100pt; white-space: nowrap; font-size: 1pt"><U>_
    _</U></FONT><!-- callerid=128 iwidth=455 length=48 -->&#160;<FONT style="word-spacing: 100pt; white-space: nowrap; font-size: 1pt"><U>_
    _</U></FONT><!-- callerid=128 iwidth=455 length=48 -->
    No advances will be used for the purpose of purchasing or
    carrying any margin stock as that term is defined in
    Regulation&#160;U of the Board.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    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&#146;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)&#160;SUBMITS TO THE NONEXCLUSIVE
    JURISDICTION OF SUCH COURTS, AND (B)&#160;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.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <U>JURY TRIAL WAIVER.</U>&#160;&#160;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&#160;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.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    For purposes of this Note, any assignee or subsequent holder of
    this Note will be considered the &#147;Bank,&#148; and each
    successor to Borrower will be considered the
    &#147;Borrower.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B>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&#160;OR ANY OTHER LOAN DOCUMENT.</B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B>THIS NOTE&#160;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</B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B>THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
    PARTIES.</B>
</DIV>
<P>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Page 5 of 6 Pages
</DIV>

<P align="left" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV><!-- END LOGICAL PAGE -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    IN WITNESS WHEREOF, Borrower has executed this Note effective
    the day, month and year first aforesaid.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 49%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    FRIEDMAN INDUSTRIES, INCORPORATED
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="49%"></TD>
    <TD width="4%"></TD>
    <TD width="47%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    By:&#160;
</TD>
    <TD align="left">
    <DIV style="display:inline; text-align:left;">/s/&#160;&#160;<FONT style="font-variant: SMALL-CAPS">Ben
    Harper</FONT></DIV>
</TD>
</TR>

</TABLE>

<DIV style="font-size: 2pt; margin-left: 53%; width: 100%; align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=455 length=0 -->

<DIV align="left" style="margin-left: 49%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Name:&#160;Ben Harper
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="49%"></TD>
    <TD width="8%"></TD>
    <TD width="43%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    Title:&#160;
</TD>
    <TD align="left">
    Senior Vice President&#160;&#151; Finance
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    (Bank&#146;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.)
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    JPMORGAN CHASE BANK, N.A.
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="48%"></TD>
    <TD width="49%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>    By:&#160;
</TD>
    <TD align="left">
    <DIV style="display:inline; text-align:left;">/s/&#160;&#160;<FONT style="font-variant: SMALL-CAPS">Kevin
    K. Rech</FONT></DIV>
</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

<DIV style="font-size: 2pt; margin-right: 49%; width: 100%; align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=455 length=0 -->

<DIV align="left" style="margin-left: 0%; margin-right: 49%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Name:&#160;Kevin Rech
</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 49%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Title:&#160;Senior Vice President
</DIV>
<P>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Page 6 of 6 Pages
</DIV>

<P align="left" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV><!-- END LOGICAL PAGE -->
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