EXHIBIT 10.31
SECURITY AGREEMENT
AMENDED AND RESTATED SECURITY AGREEMENT, dated as of May 22, 1998,
made by BAYOU STEEL CORPORATION, a Delaware corporation (the "BORROWER"), and
BAYOU STEEL CORPORATION (TENNESSEE), a Delaware corporation ("BAYOU
(TENNESSEE)"; and collectively with the Borrower, the "GRANTORS"), in favor of
THE CHASE MANHATTAN BANK, a New York banking corporation ("CHASE"), as
collateral agent (in such capacity, the "COLLATERAL AGENT") for the several
banks and other financial institutions (the "LENDERS") from time to time parties
to the Amended and Restated Credit Agreement, dated as of May 22, 1998 (as
further amended, supplemented or otherwise modified from time to time, the
"CREDIT AGREEMENT") among the Borrower, the Lenders and Chase, as administrative
agent (in such capacity, the "ADMINISTRATIVE AGENT").
W I T N E S S E T H:
WHEREAS, the Borrower and the Collateral Agent are parties to the
Security Agreement dated as of June 28, 1989, as amended and restated through
June 1, 1995 and as in effect immediately prior to the effectiveness of this
Agreement (the "ORIGINAL SECURITY AGREEMENT");
WHEREAS, the Borrower and the Collateral Agent wish to amend and
restate the Original Security Agreement pursuant to this Agreement in accordance
with the terms and subject to the conditions set forth herein;
WHEREAS, Bayou (Tennessee) is party to the Subsidiary Guarantee,
dated as of May 22, 1998 (the "SUBSIDIARY GUARANTEE"), pursuant to which it has
guaranteed the obligations of the Borrower under the Credit Agreement;
WHEREAS, the Borrower and the Collateral Agent have elected to amend
and restate the Original Security Agreement pursuant to this Agreement rather
than amend the Original Security Agreement or enter into a new security
agreement for their convenience and intend that all indebtedness, obligations
and liens created under the Original Security Agreement be continued hereunder
and remain in full force and effect and not be discharged, paid, satisfied or
cancelled;
WHEREAS, in order to secure its obligations under the Subsidiary
Guarantee, Bayou (Tennessee) shall become a party to this Agreement;
WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed
to make their respective Loans to, and the Issuing Bank has agreed to issue
Letters of Credit for the account of, the Borrower upon the terms and subject to
the conditions set forth therein; and
WHEREAS, it is a condition precedent to the obligation of the
Lenders to make their respective Loans to, and the Issuing Bank to issue Letters
of Credit for the account of, the Borrower under the Credit Agreement that the
Borrower and Bayou (Tennessee) shall have executed and delivered this Agreement
to the Collateral Agent for the ratable benefit of the Lenders.
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NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their respective Loans to, and the Issuing Bank to
issue Letters of Credit for the account of, the Borrower thereunder, the
Grantors hereby agree with the Collateral Agent, for the benefit of the Lenders,
as follows:
1. DEFINITION OF TERMS USED HEREIN. All capitalized terms used herein but
not defined herein shall have the meanings set forth in the Credit Agreement. As
used herein, the following terms shall have the following meanings:
(a) "Accounts" shall mean any and all rights of any Grantor to
payment for goods and services sold, leased or otherwise provided, including any
such right evidenced by chattel paper, whether due or to become due, whether or
not it has been earned by performance, and whether now or hereafter acquired or
arising in the future, including, without limitation, accounts receivable from
Affiliates or employees of any Grantor.
(b) "Accounts Receivable" shall mean all Accounts 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.
(c) "Borrower Obligations" shall mean the collective reference to
the unpaid principal of and interest on the Loans, any reimbursement obligations
in respect of any Letter of Credit and all other obligations and liabilities of
the Borrower to the Administrative Agent, the Collateral Agent or the Lenders
(including, without limitation, interest accruing at the then applicable rate
provided in the Credit Agreement after the maturity of the Loans and the Letters
of Credit and interest accruing at the then applicable rate provided in the
Credit Agreement after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding), whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred, which
may arise under, out of, or in connection with, the Credit Agreement, the Loans,
any reimbursement obligations in respect of any Letter of Credit, this
Agreement, the other Loan Documents or any Letter of Credit or any other
document made, delivered or given in connection therewith, in each case whether
on account of principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses or otherwise (including, without limitation, all fees and
disbursements of counsel to the Administrative Agent or to the Lenders that are
required to be paid by the Borrower pursuant to the terms of any of the
foregoing agreements).
(d) "Collateral" shall mean all (i) Accounts Receivable, (ii)
Inventory and (iii) Proceeds.
(e) "Guarantor Obligations" shall mean, with respect to Bayou
(Tennessee), the collective reference to (i) the Borrower Obligations and (ii)
all obligations and liabilities of Bayou (Tennessee) which may arise under or in
connection with this Agreement or any other Loan Document to which Bayou
(Tennessee) is a party, in each case whether on account of guarantee
obligations, reimbursement obligations, fees, indemnities, costs, expenses or
otherwise (including, without limitation, all fees and disbursements of counsel
to the Administrative Agent or to the Lenders that are
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required to be paid by Bayou (Tennessee) pursuant to the terms of this Agreement
or any other Loan Document).
(f) "Inventory" shall mean, subject to the provisions of Section 28,
all merchandise intended for sale by any Grantor, or consumed in any Grantor'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 any Grantor.
(g) "Obligations" shall mean (i) in the case of the Borrower, the
Borrower Obligations and (ii) in the case of Bayou (Tennessee), its Guarantor
Obligations.
(h) "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.
2. SECURITY INTEREST. (a) As security for the payment or
performance, as the case may be, of such Grantor's Obligations, each Grantor
hereby creates and grants to the Collateral Agent, its successors and its
assigns, for the benefit of the Lenders, their successors and their assigns, a
security interest in the Collateral (the "SECURITY INTEREST").
(b) Without limiting the foregoing, the Collateral Agent is hereby
authorized to file one or more financing statements, continuation statements or
other documents for the purpose of perfecting, confirming, continuing, enforcing
or protecting the Security Interest without the signature of the relevant
Grantor, naming such Grantor as debtor and the Collateral Agent as secured
party; PROVIDED, HOWEVER, that the Collateral Agent will attempt in each
instance to obtain the signature of such Grantor before filing any such document
and, in the event that the Collateral Agent is unable to obtain such signature,
it shall promptly deliver to such Grantor copies of any such documents filed
without the signature of such Grantor.
Each Grantor agrees at all times to keep accurate and complete
accounting records with respect to the Collateral, including, but not limited
to, a record of all payments and Proceeds received.
3. FURTHER ASSURANCES. Each Grantor agrees, at its expense, to
execute, acknowledge, deliver and cause to be duly filed all such further
instruments and documents and take all such actions as the Collateral Agent may
from time to time request for the better assuring and preserving of the Security
Interest and the rights and remedies created hereby, including, without
limitation, the payment of any fees and taxes required in connection with the
execution and delivery of this Agreement, the granting of the security interests
created hereby and the filing of any financing statements or other documents in
connection herewith. If any amount payable under or in connection with any of
the Collateral shall be or become evidenced by any promissory note or other
instrument, such note or instrument shall be immediately pledged and delivered
to the Collateral Agent, duly endorsed in a manner satisfactory to the
Collateral Agent. Each Grantor agrees promptly to notify the Collateral Agent of
any change (a) in its corporate name, (b) in the location of its chief executive
office, (c) in its chief place of business or (d) in the office where it keeps
its records relating to the Collateral owned by it. The Borrower agrees not to
change its registered office in the State of Louisiana from 8550 United
00
Xxxxx Xxxxxxxxx, Xxxxx Xxxxx, Xxxxxxxxx 00000 except following thirty days'
prior written notice to the Collateral Agent. Bayou (Tennessee) agrees not to
change its registered office in the State of Tennessee from 000 Xxxxxx Xxxxxx
Xxxxx, 0000 Xxxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxxx 00000-0000 except following
thirty days' prior written notice to the Collateral Agent. Each Grantor agrees
promptly to notify the Collateral Agent if any material portion of the
Collateral is damaged or destroyed.
4. INSPECTION AND VERIFICATION. The Collateral Agent and such
persons as the Collateral Agent may reasonably designate shall have the right,
at any reasonable time or times during any Grantor's usual business hours, to
inspect the Collateral of such Grantor, all records related thereto (and to make
extracts and copies from such records), and the premises upon which any of the
Collateral is located, to discuss such Grantor's affairs with the officers of
such Grantor and its independent accountants (with a representative of such
Grantor present if such Grantor is not in default) and to verify under
reasonable procedures the validity, amount, quality, quantity, value, and
condition of, or any other matter relating to, the Collateral, including, in the
case of Accounts or Collateral in the possession of a third person, upon not
less than one business day's notice to such Grantor contacting account debtors
or a third person possessing such Collateral for the purpose of making such a
verification. The Collateral Agent shall have the absolute right to share any
information it gains from such inspection or verification with any or all of the
Lenders subject in any event to the provisions of Section 10.16 of the Credit
Agreement.
5. TAXES; ENCUMBRANCES. At its option, the Collateral Agent, upon
one Business Day's notice to any Grantor, may discharge past due taxes, liens,
security interests or other encumbrances at any time levied or placed on the
Collateral of such Grantor and not permitted under the Credit Agreement, and may
pay for the maintenance and preservation of the Collateral to the extent such
Grantor fails to do so as required by the Credit Agreement, and such Grantor
agrees to reimburse the Collateral Agent on demand for any payment made or any
expense incurred by it pursuant to the foregoing authorization; PROVIDED,
HOWEVER, that nothing in this Section 5 shall be interpreted as excusing any
Grantor from the performance of any covenants or other promises with respect to
taxes, liens, security interests or other encumbrances and maintenance as set
forth herein or in the Credit Agreement.
6. ASSIGNMENT OF SECURITY INTEREST. If at any time any Grantor shall
take and perfect a security interest in any property of an account debtor or any
other person to secure payment and performance of an Account, such Grantor shall
promptly assign such security interest to the Collateral Agent. Such assignment
need not be filed of public record unless necessary to continue the perfected
status of the security interest against creditors of and transferees from the
account debtor or other person granting the security interest.
7. REPRESENTATIONS AND WARRANTIES. Each Grantor represents and
warrants to the Collateral Agent that:
(a) TITLE AND AUTHORITY. Such Grantor has rights in and good title
to its Collateral and has full corporate power and authority to grant to the
Collateral Agent the Security Interest in its Collateral pursuant hereto and to
execute, deliver and perform its obligations in accordance with the terms of
this Agreement, without the consent or approval of any other person other than
any consent or approval that has been obtained.
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(b) FILINGS. Fully executed Uniform Commercial Code financing
statements containing a description of such Grantor's Collateral have been filed
of record in every governmental, municipal or other office in every jurisdiction
in which any portion of such Collateral is located necessary to publish notice
of and protect the validity of and to establish a valid, legal and perfected
security interest in favor of the Collateral Agent in respect of such Collateral
in which a security interest may be perfected by filing in the United States and
its territories and possessions, and no further or subsequent filing, refiling,
recording, rerecording, registration or reregistration is necessary in any such
jurisdiction, except as provided under applicable law with respect to the filing
of continuation statements.
(c) VALIDITY OF SECURITY INTEREST. The Security Interest in such
Grantor's Collateral constitutes a valid, legal and perfected security interest
in all of the Collateral of such Grantor for payment and performance of the
Obligations of such Grantor and the Collateral of such Grantor is subject to no
liens, other than liens permitted by Section 7.02 of the Credit Agreement.
(d) INFORMATION REGARDING NAMES AND LOCATIONS. Such Grantor has
disclosed in writing to the Collateral Agent any trade names used to identify it
in its business or in the ownership of its properties and each location where it
maintains any Collateral.
(e) ABSENCE OF OTHER LIENS. Such Grantor has not filed any Financing
Statement under the Uniform Commercial Code covering any Collateral other than
as contemplated by the Credit Agreement or hereby, other than Financing
Statements of which copies have been delivered to the Collateral Agent, and such
Grantor has not filed any notices of assignment of any of the Accounts
Receivable located in Louisiana or Tennessee other than in favor of the
Collateral Agent.
(f) SCHEDULE OF ACCOUNTS. Each schedule of Accounts will be an
accurate description of the Accounts in all material respects.
(g) SCHEDULES. The information contained on Schedules I and II
hereof is accurate and complete in all respects.
(h) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties of each Grantor contained in this Agreement shall survive the
execution, delivery and performance of this Agreement until the termination of
this Agreement pursuant to Section 33.
8. RECORDS AND SCHEDULES OF ACCOUNTS. Each Grantor shall keep or
cause to be kept records of Accounts that are accurate in all material respects.
9. DOCUMENTS OF TITLE. Each Grantor agrees, upon written request of
the Collateral Agent, immediately to deliver all documents of title (as such
term is defined in the Uniform Commercial Code) to the Collateral Agent or its
designee upon the creation and issuance of such documents of title to maintain a
valid, legal and perfected security interest in favor of the Collateral Agent in
respect of any and all Inventory. The Collateral Agent agrees immediately to
deliver, or cause to be delivered, such documents of title to such Grantor or
their designees upon the creation of Accounts Receivable relating to its
Inventory covered by such documents of title.
10. Intentionally Omitted.
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11. PROTECTION OF SECURITY. Each Grantor shall, at its own cost and
expense, take any and all actions necessary to defend title to the Collateral
against all persons and to defend the Security Interest of the Collateral Agent
in the Collateral and the priority thereof, against any adverse mortgage,
pledge, security interest, lien, charge or other encumbrance of any nature
whatsoever not permitted under the Credit Agreement.
12. INSURANCE. (a) Each Grantor, at its own expense, shall maintain
insurance covering physical loss or damage to its Inventory in accordance with
the provisions of Section 6.02 of the Credit Agreement. All such policies of
insurance shall be endorsed or otherwise amended to include a lender's loss
payable endorsement, in form and substance satisfactory to the Collateral Agent,
which shall provide that from and after the date, if any, on which the insurance
carrier receives written notice from the Collateral Agent that an Event of
Default has occurred, all proceeds otherwise payable to such Grantor under such
policies shall be payable directly to the Collateral Agent. Such endorsement or
an independent instrument furnished to the Collateral Agent shall provide that
the insurance companies will give the Collateral Agent at least 30 days' prior
written notice before any such policy or policies of insurance shall be
materially altered or canceled and that no act or default of such Grantor or any
other person shall affect the right of the Collateral Agent to recover under
such policy or policies of insurance in case of loss or damage.
(b) Following the occurrence of and during the continuance of an
Event of Default, each Grantor irrevocably makes, constitutes, and appoints the
Collateral Agent (and all officers, employees, or agents designated by the
Collateral Agent) as such Grantor's true and lawful agent (and attorney-in-fact)
for the purpose of making, settling and adjusting claims under policies of
insurance, endorsing the name of such Grantor on any check, draft, instrument,
or other item of payment for the proceeds of such policies of insurance and for
making all determinations and decisions with respect thereto. In the event that
any Grantor at any time or times shall fail to obtain or maintain any of the
policies of insurance required hereby or to pay any premium in whole or part
relating thereto, the Collateral Agent may, without waiving or releasing any
obligation or liability of such Grantor hereunder or any Event of Default, in
its sole discretion, obtain and maintain such policies of insurance and pay such
premium and take any other action with respect thereto as the Collateral Agent
deems advisable. All such sums so disbursed by the Collateral Agent, including
reasonable attorney's fees, court costs, expenses and other charges relating
thereto, shall be payable, upon demand, by such Grantor to the Collateral Agent
and shall be additional obligations secured hereby.
13. CONTINUING OBLIGATIONS OF EACH GRANTOR. Each Grantor shall
remain liable to observe and perform in all material respects all the material
conditions and obligations to be observed and performed by it under each
contract, agreement, interest or obligation relating to the Collateral, all in
accordance with the terms and conditions thereof, and shall indemnify and hold
harmless the Collateral Agent and the Lenders and each of them severally, from
any and all such liabilities.
14. USE AND DISPOSITION OF COLLATERAL. Except as permitted under
Sections 7.02 and 7.05 of the Credit Agreement, no Grantor (a) shall make or
permit to be made an assignment, pledge or hypothecation of the Collateral, or
grant any other security interest in the Collateral, or (b) shall make or permit
to be made any transfer of the Collateral. Each Grantor shall remain at all
times in possession of its Collateral other than transfers to the Collateral
Agent pursuant to the provisions hereof; except that so long as no Event of
Default shall have occurred and be continuing, any Grantor may use and dispose
of the Collateral in any lawful manner not inconsistent with the provisions of
this Agreement and of the Credit Agreement and in the event an Event of Default
has occurred and is
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continuing any Grantor may, unless it is otherwise notified by the Collateral
Agent, sell Inventory in the ordinary course of business.
15. LIMITATION ON MODIFICATIONS OF ACCOUNTS. No Grantor will,
without the Collateral Agent's prior written consent, grant any extension of the
time of payment of any of the Accounts Receivable, compromise, compound or
settle the same for less than the full amount thereof, release, wholly or
partly, any person liable for the payment thereof, or allow any credit or
discount whatsoever thereon other than extensions, credits, discounts,
compromises or settlements granted or made in the ordinary course of business.
16. COLLECTIONS. So long as no Event of Default shall have occurred,
each Grantor shall have the right to collect its Accounts Receivable in the
ordinary course of its business. Upon the occurrence and during the continuance
of any Event of Default, the Collateral Agent shall have the right, as the true
and lawful agent of each Grantor, with power of substitution for each Grantor
and in each Grantor's name, the Collateral Agent's name or otherwise, for the
use and benefit of the Collateral Agent and the Lenders (a) to receive, endorse,
assign and/or deliver any and all notes, acceptances, checks, drafts, money
orders or other evidences of payment relating to the Collateral or any part
thereof; (b) to demand, collect, receive payment of, give receipt for and give
discharges and releases of all or any of the Collateral; (c) to sign the name of
each Grantor on any invoice or xxxx of lading relating to any of the Collateral;
(d) to send verifications of Accounts Receivable to any account debtor; (e) to
commence and prosecute any and all suits, actions or proceedings at law or in
equity in any court of competent jurisdiction to collect or otherwise realize on
all or any of the Collateral or to enforce any rights in respect of any
Collateral; (f) to settle, compromise, compound, adjust or defend any actions,
suits or proceedings relating to or pertaining to all or any of the Collateral;
(g) to notify, or to require each Grantor to notify, the account debtors
obligated on any or all of the Accounts Receivable to make payment thereof
directly to the Collateral Agent; and (h) to use, sell, assign, transfer,
pledge, make any agreement with respect to or otherwise deal with all or any of
the Collateral, and to do all other acts and things necessary to carry out the
purposes of this Agreement, as fully and completely as though the Collateral
Agent were the absolute owner of the Collateral for all purposes; provided,
however, that nothing herein contained shall be construed as requiring or
obligating the Collateral Agent to make any commitment or to make any inquiry as
to the nature or sufficiency of any payment received by the Collateral Agent, or
to present or file any claim or notice, or to take any action with respect to
the Collateral or any part thereof or the moneys due or to become due in respect
thereof or any property covered thereby, and no action taken by the Collateral
Agent or omitted to be taken with respect to the Collateral or any part thereof
shall give rise to any defense, counterclaim or offset in favor of any Grantor
or to any claim or action against the Collateral Agent except the gross
negligence or willful misconduct of the Collateral Agent. Upon taking of
possession of any Collateral hereunder, the Collateral Agent shall deal with
such Collateral in substantially the same manner as it deals with similar
property for its own account and shall account for property actually received by
it. It is understood and agreed that the appointment of the Collateral Agent as
the agent of each Grantor for the purposes set forth above in this Section 16 is
coupled with an interest and is irrevocable. The provisions of this Section 16
shall in no event relieve any Grantor of any of its obligations hereunder or
under the Credit Agreement with respect to the Collateral or any part thereof or
impose any obligation on the Collateral Agent or the Lenders to proceed in any
particular manner with respect to the Collateral or any part thereof, or in any
way limit the exercise by the Collateral Agent or any Lender of any other or
further right that it may have on the date of this Agreement or hereafter,
whether hereunder, under the Credit Agreement or by law or otherwise.
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17. REMEDIES UPON DEFAULT. (a) Upon the occurrence and during the
continuance of an Event of Default, each Grantor agrees to deliver each item of
such Grantor's Collateral to the Collateral Agent on demand, and it is agreed
that the Collateral Agent shall have the right to take any or all of the
following actions at the same or different times: with or without legal process
and with or without previous notice or demand for performance, to take
possession of the Collateral and without liability for trespass to enter any
premises where the Collateral may be located for the purpose of taking
possession of or removing the Collateral and, generally, to exercise any and all
rights afforded to a secured party under the Uniform Commercial Code or other
applicable law. Without limiting the generality of the foregoing, each Grantor
agrees that the Collateral Agent shall have the right, subject to the mandatory
requirements of current law, to sell or otherwise dispose of all or any part of
the Collateral, at public or private sale or at any broker's board or on any
securities exchange, for cash, upon credit or for future delivery as the
Collateral Agent shall deem appropriate. The Collateral Agent shall be
authorized at any such sale (if it deems it advisable to do so) to restrict the
prospective bidders or purchasers to persons who will represent and agree that
they are purchasing the Collateral for their own account for investment and not
with a view to the distribution or sale thereof, and upon consum mation of any
such sale the Collateral Agent shall have the right to assign, transfer and
deliver to the purchaser or purchasers thereof the Collateral so sold. Each such
purchaser at any such sale shall hold the property sold absolutely, free from
any claim or right on the part of any Grantor, and each Grantor hereby waives
(to the extent permitted by law) all rights of redemption, stay and appraisal
that each Grantor now has or may at any time in the future have under any rule
of law or statute now existing or hereafter enacted.
The Collateral Agent shall give the relevant Grantor 10 days'
written notice (which such Grantor agrees is reasonable notice within the
meaning of Section 9-504(3) of the Uniform Commercial Code as in effect in the
State of New York or its equivalent in other jurisdictions) of the Collateral
Agent's intention to make any sale of Collateral of such Grantor. Such notice,
in the case of a public sale, shall state the time and place for such sale and,
in the case of a sale at a broker's board or on a securities exchange, shall
state the board or exchange at which such sale is to be made and the day on
which such Collateral, or portion thereof, will first be offered for sale at
such board or exchange. Any such public sale shall be held at such time or times
within ordinary business hours and at such place or places as the Collateral
Agent may fix and state in the notice (if any) of such sale. At any such sale,
such Collateral, or portion thereof, to be sold may be sold in one lot as an
entirety or in separate parcels, as the Collateral Agent may (in its sole and
absolute discretion) determine. The Collateral Agent shall not be obligated to
make any sale of such Collateral if it shall determine not to do so, regardless
of the fact that notice of sale of such Collateral shall have been given. The
Collateral Agent may, without notice or publication, adjourn any public or
private sale or cause the same to be adjourned from time to time by announcement
at the time and place fixed for sale, and such sale may, without further notice,
be made at the time and place to which the same was so adjourned. In case any
sale of all or any part of such Collateral is made on credit or for future
delivery, such Collateral so sold may be retained by the Collateral Agent until
the sale price is paid by the purchaser or purchasers thereof, but the
Collateral Agent shall not incur any liability in case any such purchaser or
purchasers shall fail to take up and pay for such Collateral so sold and, in
case of any such failure, such Collateral may be sold again upon like notice. At
any public sale made pursuant to this Section 17, any Lender may bid for or
purchase, free (to the extent permitted by law) from any right of redemption,
stay, valuation or appraisal on the part of any Grantor (all said rights being
also hereby waived and released to the extent permitted by law), such Collateral
or any part thereof offered for sale and may make payment on account thereof by
using any claim then due and payable to such Lender from any Grantor as a credit
against the purchase price, and such Lender may, upon compliance with the terms
of sale, hold, retain and dispose of such property without further
accountability to any Grantor therefor. For
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purposes hereof, a written agreement to purchase such Collateral or any portion
thereof shall be treated as a sale thereof; the Collateral Agent shall be free
to carry out such sale pursuant to such agreement, and no Grantor shall be
entitled to the return of such Collateral or any portion thereof subject
thereto, notwithstanding the fact that after the Collateral Agent shall have
entered into such an agreement all Events of Default shall have been remedied
and the Obligations paid in full. As an alternative to exercising the power of
sale herein conferred upon it, the Collateral Agent may proceed by a suit or
suits at law or in equity to foreclose this Agreement and to sell such
Collateral or any portion thereof pursuant to a judgment or decree of a court or
courts having competent jurisdiction or pursuant to a proceeding by a
court-appointed receiver.
(b) For purposes of executory process under applicable Louisiana
law, each Grantor hereby acknowledges the indebtedness owed under such Grantor's
Obligations, CONFESSES JUDGMENT thereon and consents that judgment be rendered
and signed, whether during the court's term or during vacation, in favor of the
Collateral Agent, for the benefit of the Lenders, for the full amount of its
Obligations in principal, interest, and attorneys' fees, together with all
charges and expenses whatsoever pursuant to this Agreement and the Credit
Agreement. Upon the occurrence and during the continuance of an Event of
Default, and in addition to all of its rights, powers and remedies under this
Agreement and applicable law, the Collateral Agent may, at its option, cause all
or any part of the Collateral to be seized and sold under executory process or
under writ of fieri facias issued in execution of an ordinary judgment obtained
upon the Obligations of any Grantor, without appraisement to the highest bidder,
for cash or under such terms as the Collateral Agent deems acceptable. Each
Grantor hereby waives all and every appraisement of the Collateral and waives
and renounces the benefit of appraisement and the benefit of all laws relative
to the appraisement of the Collateral seized and sold under executory or other
legal process. Each Grantor agrees to waive, and does hereby specifically waive:
(i) the benefit of appraisement provided for in Articles 2332,
2336, 2723 and 2724, Louisiana Code of Civil Procedure, and
all other laws conferring such benefits;
(ii) the demand and three (3) days delay accorded by Articles 2639
and 2721, Louisiana Code of Civil Procedure;
(iii) the notice of seizure required by Articles 2293 and 2721,
Louisiana Code of Civil Procedure;
(iv) the three (3) days delivery provided by Articles 2331 and
2722, Louisiana Code of Civil Procedure;
(v) the benefit of the other provisions of Articles 2331, 2722 and
2723, Louisiana Code of Civil Procedure;
(vi) the benefit of the provisions of any other articles of the
Louisiana Code of Civil Procedure not specifically mentioned
above; and,
(vii) all rights of divisions and discussion with respect to the
Obligations.
In the event the Collateral Agent elects, at its option, to enter suit via
ordinaria on the Obligations, in addition to the foregoing confession of
judgment, each Grantor hereby waives citation, other legal
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process and legal delays and hereby consents that judgment for the unpaid
principal due on the Obligations, together with interest, attorneys' fees, costs
and other charges that may be due on the Obligations, be rendered and signed
immediately.
Pursuant to the authority contained in La.R.S. 9:5136 through
9:5140.1, each Grantor and the Collateral Agent do hereby expressly designate
the Collateral Agent or its designee to be keeper or receiver ("Keeper") for the
benefit of the Collateral Agent or any assignee of the Collateral Agent, such
designation to take effect immediately upon any seizure of any of the Collateral
under writ of executory process or under writ of sequestration or fieri facias
as an incident to an action brought by the Collateral Agent. The fees of the
Keeper are hereby fixed at 5% of the amount due or sued for or claimed or sought
to be protected, preserved or enforced in the proceeding for the recognition of
the Security Interest, and the payment of such fees shall be secured by the
Security Interest.
18. APPLICATION OF PROCEEDS. (a) The Collateral Agent shall apply
the proceeds of any collection or sale of the Accounts Receivable or the
Inventory as follows:
FIRST, to the payment of all costs and reasonable expenses incurred
by the Collateral Agent in connection with such collection or sale or
otherwise in connection with this Agreement or any of the Obligations of
any Grantor, including, but not limited to, all court costs and the
reasonable fees and expenses of its agents and legal counsel, the
repayment of all advances made by the Collateral Agent hereunder on behalf
of such Grantor and any other costs or expenses incurred in connection
with the exercise of any right or remedy hereunder.
SECOND, to the payment in full of the Obligations of any Grantor to
the extent such proceeds secure the Obligations of any Grantor, pro rata
as among the Lenders in accordance with the amounts of the Loans made by
them and outstanding.
THIRD, to the payment and discharge in full of the Obligations of any
Grantor (other than those referred to above), pro rata as among the
Lenders in accordance with the amount of their respective Commitments.
FOURTH, to the relevant Grantor, its successors or assigns, or as a
court of competent jurisdiction may otherwise direct.
(b) The Collateral Agent shall have absolute discretion as to the
time of application of any such proceeds, moneys or balances in accordance with
this Agreement. Upon any sale of the Collateral by the Collateral Agent
(including, without limitation, pursuant to a power of sale granted by statute
or under a judicial proceeding), the receipt of the Collateral Agent or of the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of such Collateral so sold and such purchaser or purchasers shall not
be obligated to see to the application of any part of the purchase money paid
over to the Collateral Agent or such officer or be answerable in any way for the
misapplication thereof.
(c) Each Lender may apply any such proceeds to any Obligations owed
to it in any manner it determines in its sole discretion.
19. LOCATIONS OF COLLATERAL; PLACE OF BUSINESS. (a) Each Grantor
hereby represents and warrants that all its Collateral is located at the
locations listed on Schedule I hereto. Each Grantor agrees not to establish, or
permit to be established, any other location for its Collateral, unless all
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filings under the Uniform Commercial Code or otherwise that are required by the
Credit Agreement to be made with respect to its Collateral have been made and
the Collateral Agent has a valid, legal and perfected security interest in such
Collateral subject to no liens, other than liens permitted by Section 7.02 of
the Credit Agreement.
(b) Each Grantor agrees, at such time or times as the Collateral
Agent may request, promptly to prepare and deliver to the Collateral Agent a
duly certified schedule or schedules in form satisfactory to the Collateral
Agent, showing the identity, amount and location of any and all of its material
Collateral.
(c) Each Grantor agrees that its chief executive office and its
registered office in Louisiana are located as indicated on Schedule II hereto
and that its federal employer identification number is as set forth on Schedule
II. Each Grantor agrees not to change, or permit to be changed, the location of
its chief executive office or of its registered office in Louisiana or its
federal employer identification number unless all filings under the Uniform
Commercial Code or otherwise that are required by the Credit Agreement to be
made have been made and the Collateral Agent has a valid, legal and perfected
security interest in the Collateral subject to no liens, other than liens
permitted by Section 7.02 of the Credit Agreement.
20. SECURITY INTEREST ABSOLUTE. All rights of the Collateral Agent
hereunder, the Security Interest and all obligations of each Grantor hereunder,
shall be absolute and unconditional irrespective of (a) any lack of validity or
enforceability of the Credit Agreement or any other Loan Document, any other
agreement with respect to any of the Obligations of any Grantor or any other
agreement or instrument relating to any of the foregoing, (b) any change in the
time, manner or place of payment of, or in any other term of, all or any of the
Obligations of any Grantor, or any other amendment or waiver of or any consent
to any departure from the Credit Agreement or any other Loan Document or any
other agreement or instrument, (c) any exchange, release or non-perfection of
any other Collateral, or any release or amendment or waiver of or consent to or
departure from any guaranty, for all or any of the Obligations, or (d) any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, any Grantor in respect of its Obligations or in respect of this
Agreement.
21. NO WAIVER. No failure on the part of the Collateral Agent to
exercise, and no delay in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy by the Collateral Agent preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
All remedies hereunder are cumulative and are not exclusive of any other
remedies provided by law. The Collateral Agent and the Lenders shall not be
deemed to have waived any rights hereunder or under any other agreement or
instrument unless such waiver shall be in writing and signed by such parties.
22. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT. Except as otherwise
provided herein, each Grantor hereby appoints the Collateral Agent the
attorney-in-fact of such Grantor for the purpose of carrying out the provisions
of this Agreement and taking any action and executing any instrument that the
Collateral Agent may deem necessary or advisable to accomplish the purposes
hereof, which appointment is irrevocable and coupled with an interest.
23. COLLATERAL AGENT'S FEES AND EXPENSES. Each Grantor agrees to pay
upon demand to the Collateral Agent the amount of any and all reasonable
expenses, including the fees and expenses of its counsel and of any experts or
agents, that the Collateral Agent may incur in connection with (a)
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the administration of this Agreement, (b) the custody or preservation of, or the
sale of, collection from, or other realization upon, any of the Collateral, (c)
the exercise or enforcement of any of the rights of the Collateral Agent
hereunder or (d) the failure by any Grantor to perform or observe any of the
provisions hereof. In addition, each Grantor will upon demand pay to the
Collateral Agent such reasonable fees (in addition to its expenses) for its
service as Collateral Agent as may be agreed from time to time between the
Collateral Agent and the Borrower. Any such amounts payable as provided
hereunder or thereunder shall be additional Obligations secured hereby.
24. Intentionally Omitted.
25. Intentionally Omitted.
26. BINDING AGREEMENT; ASSIGNMENTS. This Agreement, and the terms,
covenants and conditions hereof, shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns, except that
no Grantor shall be permitted to assign this Agreement or any interest herein or
in the Collateral, or any part thereof, or otherwise pledge, encumber or grant
any option with respect to the Collateral, or any part thereof, or any cash or
property held by the Collateral Agent as Collateral under this Agreement, except
as contemplated by this Agreement or the Credit Agreement.
27. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO PRINCIPLES OF CONFLICTS OF LAW.
28. LIMITATIONS ON INVENTORY. The Grantors and the Collateral Agent
agree that the term, Inventory, as used herein, does not include, and shall
never be deemed or construed to include, any of the properties, rights or
interests (a) that have been mortgaged to First National Bank of Commerce, as
Trustee (the "Trustee"), pursuant to the Senior Secured Note Indenture,
including (i) all bearings, rolls, guides and stores that relate to machinery
and equipment mortgaged to the Trustee pursuant to the Senior Secured Note
Indenture, (ii) all licenses, franchises, permits, patents, patent rights,
formulae, processes, compounds, drawings, designs, blueprints, surveys, reports,
manuals and operating standards relating to or used in the operation of the
Grantors' business and all trade secret rights, rights in works of authorship
and contract rights relating to computer software programs in whatever form
created or maintained, and (iii) all proceeds of the properties, rights and
interests referred to in clauses (i) and (ii) above, or (b) that have been
granted to the Trustee pursuant to the Senior Secured Note Indenture.
29. NOTICES. All communications and notices hereunder shall be in
writing and given as provided in Section 10.01 of the Credit Agreement and
Section 11 of the Subsidiary Guarantee.
30. SEVERABILITY. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable in any
respect, no party hereto shall be required to comply with such provision for so
long as such provision is held to be invalid, illegal or unen forceable and the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired. The parties shall endeavor
in good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions, the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.
31. SECTION HEADINGS. Section headings used herein are for
convenience only and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
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32. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument. This Agreement shall be
effective when counterparts which bear the signature of each Grantor shall have
been delivered to the Collateral Agent.
33. TERMINATION. This Agreement and the Security Interest shall
terminate when all the Obligations of the Grantors have been indefeasibly paid
in full, when the Lenders have no further commitment to lend or issue any Letter
of Credit under the Credit Agreement and all amounts payable under the
Subsidiary Guarantee have been indefeasibly paid in full, at which time the
Collateral Agent shall execute and deliver to each Grantor all Uniform
Commercial Code termination statements and similar documents prepared by any
Grantor which such Grantor shall reasonably request to evidence such
termination.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
BAYOU STEEL CORPORATION
By:
Name:
Title:
BAYOU STEEL CORPORATION (TENNESSEE)
By:
Name:
Title:
THE CHASE MANHATTAN BANK, as Collateral
Agent
By:
Name:
Title:
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Schedule I
LOCATIONS OF COLLATERAL OF THE BORROWER
River Road Receivables and
Xx Xxxxx, XX 00000 Inventory
108 & The Calumet River Inventory
Xxxxxxx, XX 00000
Leetsdale Industrial Park Inventory
Xxxxxxxxx, XX 00000
000 Xx.Xxxxxx Xxxx Xxxxxxxxx
Xxxxxxx, XX 00000
LOCATIONS OF COLLATERAL OF BAYOU (TENNESSEE)
0000 X. Xxxxx Xxxxxx Xxxxxxxxxxx
Xxxxxxxx, XX 00000 and Inventory
Xxxxx Xxxx Xxxxxxxxxxx
XxXxxxx, XX 00000
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Schedule II
THE BORROWER
CHIEF EXECUTIVE OFFICES
X.X. Xxx 0000
Xx Xxxxx, XX 00000-0000
Xxxxx Xxxx
Xx Xxxxx, XX 00000
REGISTERED OFFICE
0000 Xxxxxx Xxxxx Xxxxxxxxx
Xxxxx Xxxxx, Xxxxxxxxx 00000
FEDERAL EMPLOYER IDENTIFICATION NUMBER
00-0000000
BAYOU (TENNESSEE)
CHIEF EXECUTIVE OFFICES
X.X.Xxx 0000
XxXxxxx, XX 00000-0000
Xxxxx Xxxx
XxXxxxx, XX 00000
REGISTERED OFFICE
000 Xxxxxx Xxxxxx North
0000 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000-0000
FEDERAL EMPLOYER IDENTIFICATION NUMBER
00-0000000
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