EXHIBIT 4.6
INTERCREDITOR AGREEMENT
INTERCREDITOR AGREEMENT dated as of May 22, 1998, between FIRST
NATIONAL BANK OF COMMERCE ("FNBC"), as (i) trustee (in such capacity, the
"TRUSTEE") under the Indenture, dated as of May 22, 1998 (as amended,
supplemented or otherwise modified from time to time, the "INDENTURE"), among
the Trustee, Bayou Steel Corporation (the "COMPANY") and the subsidiaries of the
Company parties thereto and (ii) collateral agent (in such capacity, the
"COLLATERAL AGENT") under certain of the Security Documents (as defined in the
Indenture) (FNBC, in its capacities as Trustee and Collateral Agent, shall be
referred to herein as the "TRUSTEE"), and THE CHASE MANHATTAN BANK, a New York
banking corporation, as agent (in such capacity, the "BANK AGENT") under the
Amended and Restated Credit Agreement, dated as of May 22, 1998, among the
Company, the lenders listed therein (the "BANKS") and the Bank Agent (as
amended, supplemented or otherwise modified from time to time, the "CREDIT
AGREEMENT"). FNBC and the Bank Agent are each hereinafter sometimes referred to
individually as a "COLLATERAL AGENT" and collectively as the "COLLATERAL
AGENTS."
The Banks will make loans (collectively, the "REVOLVING LOANS") to
the Company, secured principally by accounts receivable arising in the ordinary
course of business, inventory and the proceeds thereof, as more particularly
described in the Security Agreement, dated as of May 22, 1998 (as amended,
supplemented or otherwise modified from time to time, the "BANK SECURITY
AGREEMENT"), between the Company, Bayou Steel Corporation (Tennessee) ("BAYOU
(TENNESSEE)") and the Bank Agent for the benefit of the Banks. The Credit
Agreement and the Bank Security Agreement are collectively referred to herein as
the "LOAN AGREEMENTS". The Company issued $110,000,000 9 1/2% First Mortgage
Notes due 2008 (together with any other securities from time to time issued
under the Indenture, the "SECURITIES") under the Indenture. The Securities are
secured by the Indenture and the Security Documents (excluding this
Intercreditor Agreement) (the "FIRST MORTGAGE NOTE SECURITY DOCUMENTS"). The
Indenture and the First Mortgage Note Security Documents are collectively
referred to herein as the "FNBC SECURITY DOCUMENTS."
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the parties hereto hereby agree as follows:
43. DESCRIPTION OF COLLATERAL; PRIORITIES IN COLLATERAL.
(a) The Bank Agent's security interest in the following described
collateral in which it is granted a security interest pursuant to the Loan
Agreements shall take priority over any right, title or interest of the Trustee,
if any, in or to the following collateral: the Company's and Bayou (Tennessee)'s
Accounts Receivable, Inventory and Proceeds in
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Accounts Receivable and Inventory (collectively, the "COLLATERAL"), as such
terms are defined in the Loan Agreements and below:
(i) "ACCOUNTS RECEIVABLE" shall mean all Accounts (as defined in the
Bank Security Agreement) and all rights in any returned goods, together
with all rights, titles, securities and guarantees with respect thereto,
including any rights to stoppage in transit, replevin, reclamation and
resales, and all related security interests, liens and pledges, whether
voluntary or involuntary.
(ii) "INVENTORY" shall mean all merchandise intended for sale by the
Company or Bayou (Tennessee), or consumed in the Company's or Bayou
(Tennessee)'s business, together with all raw materials, including,
without limitation, scrap, billets, shapes, additives, alloys, fluxes,
electrodes and refractories, whether now owned or hereafter acquired or
arising, and all such property the sale or other disposition of which has
given rise to Accounts and which has been returned to, repossessed or
stopped in transit by or on behalf of the Company or Bayou (Tennessee);
PROVIDED that Inventory, as used herein, shall not include all properties,
rights and interests that the Company has granted the Trustee a security
interest in pursuant to the FNBC Security Documents, including, without
limitation, (1) all bearings, rolls, guides and stores that relate to
machinery and equipment in which the Trustee has a security interest
pursuant to the FNBC Security Documents and which are classified on the
balance sheet of the Company or Bayou (Tennessee) as inventory and (2) all
Proceeds and Products (as such term is defined in the FNBC Security
Documents) of all the foregoing excepted properties, rights and interests
referred to in clause (1) above.
(iii) "PROCEEDS" shall mean any consideration received from the sale,
exchange, lease or other disposition of any asset or property that
constitutes Collateral, any value received as a consequence of the
possession of any Collateral and any payment received from any insurer or
other person or entity as a result of the destruction, loss, theft, damage
or other involuntary conversion of whatever nature of any asset or
property which constitutes Collateral.
(b) The Trustee's security interest in all the collateral subject to
the FNBC Security Documents (except collateral with respect to which the Bank
Agent has priority pursuant to Paragraph 1(a) above) shall take priority over
any right, title or interest of the Bank Agent, if any, in or to such
collateral.
44. AGREEMENTS WITH RESPECT TO COLLATERAL.
(a) The Bank Agent shall not exercise any right or remedy or assert
any claim with respect to collateral as to which the Trustee has priority under
Paragraph 1(b) and the Trustee will not exercise any right or remedy, or assert
any claim with respect to collateral as to which the Bank Agent has priority
under Paragraph 1(a).
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(b) If either Collateral Agent shall receive any proceeds or other
amounts payable with respect to any collateral (including, without limitation,
any proceeds of a sale, foreclosure, loss, damage or otherwise with respect to
such collateral), which collateral, pursuant hereto, is subject to a prior
security interest in favor of the other Collateral Agent, the Collateral Agent
receiving such proceeds shall promptly remit the same to the other Collateral
Agent.
(c) Each of the Collateral Agents will, upon request of the other,
from time to time execute and deliver or cause to be executed and delivered such
further instruments and do and cause to be done such further acts as may be
necessary or proper to carry out more effectively the provisions of this
Agreement, provided that the Trustee need only execute or furnish such documents
as the Trustee is required to furnish under the FNBC Security Documents.
(d) The Trustee will send to the Bank Agent a copy of each notice of
default it sends to holders of any Securities pursuant to Section 9.2 of the
Indenture.
(e) The Trustee agrees that, at any time when it has physical
possession or control of the premises subject to the FNBC Security Documents or
any collateral in which the Bank Agent has a security interest, it will at all
times allow the Bank Agent the right, at the cost, risk and expense of the Bank
Agent and so long as such right is exercised in a manner which does not damage
the collateral in which the Trustee has a security interest or interfere with
the other operations or the other business of the Company, to enter such
premises for the purpose of repossessing, removing, selling or preparing for
shipment any Inventory which is subject to the Bank Agent's security interest.
In addition, the Trustee will allow the Bank Agent to store any such collateral
or take the actions referred to in the preceding sentence on the Company's
premises for up to six months after the date, if ever, on which the Trustee
gains physical possession or control of said premises. The rights of the Bank
Agent enumerated in this Paragraph (e) are effective notwithstanding any default
of the Company under the Indenture or any other agreement relating thereto
between the Trustee and the Company.
45. APPLICABILITY OF PRIORITIES. The priorities provided for in
Section 1 of this Agreement shall apply:
(a) without regard to the time or order of attachment or perfection
of the security interests and other liens to secure either the Revolving
Loans or the Securities, and without regard to the giving or failure to
give notice of the acquisition of any such security interest or lien; and
(b) with respect to the relative priority and attachment of the
security interests and liens perfected by any party hereto, or with
respect to the attachment of such security interests or liens to the
proceeds of the collateral in question or to the proceeds of the proceeds
thereof, notwithstanding anything to the contrary in the provisions of the
Uniform Commercial Code or the Bankruptcy Code of 1978, as
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amended, or any state bankruptcy or creditors act, and notwithstanding the
giving or failure to give notice of the acquisition or expected
acquisition of any property or security interest.
46. NOTICE OF DEFAULT. Each Collateral Agent agrees that if it
declares the Company to be in default under its agreements, or makes demand for
payment of all obligations thereunder, such Collateral Agent will promptly
notify the other Collateral Agent of any such declaration.
47. NO EFFECT ON OTHERS. This Agreement shall not affect the rights
of the Collateral Agents relative to the rights of any other creditors of the
Company. Nothing in this Agreement shall be construed in any way to modify or
relieve the Company's or Bayou (Tennessee)'s obligations to perform its
obligations under the Loan Agreements or the FNBC Security Documents or to
modify the obligations and liabilities of the Company or Bayou (Tennessee)
contained therein.
48. CONFIDENTIALITY. Each of the Collateral Agents agrees to keep
confidential (and to cause its respective officers, directors, employees, agents
and representatives to keep confidential) all information, materials and
documents furnished to either Collateral Agent (the "INFORMATION").
Notwithstanding the foregoing, each Collateral Agent shall be permitted to
disclose Information (i) to such of its officers, directors, employees, agents
and representatives as need to know such Information in connection with its
participation in any of the Loan Agreements or FNBC Security Documents,
respectively; (ii) to the extent required by applicable laws and regulations or
by any subpoena or similar legal process, or requested by any governmental
agency or authority; (iii) to the extent such Information (A) becomes publicly
available other than as a breach of this Agreement or (B) becomes available to
such Collateral Agent on a non-confidential basis from a source other than the
other Collateral Agent; (iv) to the extent the other Collateral Agent shall have
consented to such disclosure in writing, or (v) as necessary in connection with
an assignment or participation contemplated by Sections 10.04(b) and 10.04(f) of
the Credit Agreement or as necessary in connection with Sections 9.10, 9.11 and
9.12 of the Indenture.
49. AMENDMENTS. The Bank Agent may amend the Loan Agreements, and
the Trustee may amend the FNBC Security Documents, without the consent of the
other Collateral Agent; PROVIDED, that for the purposes of this Agreement, the
capitalized terms contained in Paragraph 1(a) hereof shall have the meanings
given to them on the date of this Agreement; PROVIDED, HOWEVER, that any
amendment to the Loan Agreements that adversely affects the interests of the
Trustee and any amendment to the FNBC Security Documents that adversely affects
the interests of the Banks shall not be effected without the consent of the
other Collateral Agent.
50. BOOKS AND RECORDS. In the event the Bank Agent elects to
exercise its right to remove the Company's books and records (whether pursuant
to its security interest therein or otherwise) it will do so only for the
purpose of copying such books and records,
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and it will return the originals for the benefit of the Company (to the extent
required under the Loan Agreements) or the Trustee, as the case may be.
51. MISCELLANEOUS.
(a) NOTICES. All notices, requests, demands and other communications
required or permitted to be given hereunder shall be deemed to have been duly
given or made when delivered or telecopied or if deposited in the United States
mail, three days after the day of deposit, first class postage prepaid,
addressed, in the case of the Bank Agent, as provided in the Loan Agreements
and, in the case of the Trustee, as provided in the Indenture, or to such other
address as such party may hereafter specify in a written notice to the other
parties named herein.
(b) AMENDMENTS AND SUCCESSORS. No agreement shall be effective to
amend, supplement or discharge in whole or in part this Agreement unless such
agreement is in writing, signed by the Collateral Agents. This Agreement shall
be binding upon and shall inure to the benefit of the successors and assigns of
the parties hereto.
(c) SEVERABILITY. Any provision of this Agreement which 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.
(d) TERMINATION. This Agreement shall terminate upon the payment in
full of all amounts outstanding under the Loan Agreements and other obligations
of the Company and Bayou (Tennessee) incurred thereunder or the satisfaction and
discharge of the Indenture.
(e) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not define or limit the terms thereof.
52. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK.
53. SUBMISSION TO JURISDICTION; WAIVERS. Each of the Collateral
Agents hereby irrevocably and unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Agreement to which it is a party, or for
recognition and enforcement of any judgement in respect thereof, to the
non-exclusive general jurisdiction of the Courts of the State of New York,
the courts of the United States of America for the Southern District of
New York, and appellate courts from any thereof;
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(ii) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not
to plead or claim the same;
(iii) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to the Collateral Agent at its address set forth in the Indenture
or the Loan Agreements, respectively, or at such other address of which
the other Collateral Agent shall have been notified pursuant hereto;
(iv) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to xxx in any other jurisdiction; and
(v) waives, to the maximum extent not prohibited by law, any right
it may have to claim or recover in any legal action or proceeding referred
to in this subsection any special, exemplary, punitive or consequential
damages.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officers as of the date first above
written.
THE CHASE MANHATTAN BANK, as Agent
By___________________________
Title:
FIRST NATIONAL BANK OF COMMERCE,
as Trustee
By___________________________
Title:
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