EXHIBIT 10.4
EXECUTION COPY
TERM LOAN AGREEMENT

among

BAYOU STEEL CORPORATION (TENNESSEE)

The Several Term Loan Lenders
from Time to Time Parties Hereto,

and

CHEMICAL BANK,
as Agent

Dated as of June 1, 1995

TABLE OF CONTENTS
PAGE
----
SECTION 1. DEFINITIONS.................................................... 1
1.1 Defined Terms............................................... 1
1.2 Other Definitional Provisions............................... 6

SECTION 2. AMOUNT AND TERMS OF TERM LOANS................................. 6
2.1 Term Loan Commitments....................................... 6
2.2 Term Notes.................................................. 6
2.3 Procedure for Term Loan Borrowing........................... 7
2.4 Conversion and Continuation Options......................... 8
2.5 Prepayment.................................................. 9
2.6 Interest on Term Loans...................................... 9
2.7 Default Interest............................................ 10
2.8 Alternate Rate of Interest.................................. 10
2.9 Reserve Requirements; Change in Circumstances............... 10
2.10 Change in Legality.......................................... 12
2.11 Indemnity................................................... 13
2.12 Pro Rata Treatment.......................................... 13
2.13 Sharing of Setoffs.......................................... 14
2.14 Payments.................................................... 14
2.15 Taxes....................................................... 15

SECTION 3. [INTENTIONALLY OMITTED]........................................ 17

SECTION 4. REPRESENTATIONS AND WARRANTIES................................. 17

SECTION 5. CONDITIONS PRECEDENT........................................... 17
5.1 Conditions to Term Loans.................................... 17

SECTION 6. AFFIRMATIVE COVENANTS.......................................... 18
6.1 Term Loan Borrowing Base.................................... 18
6.2 Financial Statements, Reports, Etc.......................... 18

SECTION 7. NEGATIVE COVENANTS............................................. 19

SECTION 8. EVENTS OF DEFAULT.............................................. 19

SECTION 9. THE AGENT...................................................... 19

SECTION 10. MISCELLANEOUS................................................. 20
10.1 Incorporation............................................... 20
10.2 Survival of Agreement....................................... 20
10.3 Binding Effect.............................................. 20
10.4 Successors and Assigns...................................... 20
10.5 Expenses; Indemnity......................................... 23
10.6 Right of Setoff............................................. 24
10.7 Waiver of Jury Trial........................................ 25
10.8 Counterparts................................................ 25
10.9 Applicable Law.............................................. 25
10.10 Headings.................................................... 25
10.11 Jurisdiction; Consent to Service of Process................. 25
10.12 Confidentiality............................................. 26

- i -
References

Exhibit A Form of Term Note
Exhibit B Form of Term Loan Guarantee

Schedule 2.2 Term Loan Lenders and Term Loan Commitments
Schedule 6.1(a) Term Loan Borrowing Base Certificate

- ii -

TERM LOAN AGREEMENT, dated as of June 1, 1995, among BAYOU STEEL
CORPORATION (TENNESSEE), a Delaware corporation (the "BORROWER"), the several
banks and other financial institutions from time to time parties to this
Agreement (the "TERM LOAN LENDERS"), and CHEMICAL BANK, a New York banking
corporation, as agent for the Term Loan Lenders hereunder (in such capacity, the
"AGENT").

NOW THEREFORE, the parties hereto hereby agree as follows:

SECTION 1. DEFINITIONS

1.1 DEFINED TERMS. As used in this Agreement, capitalized terms
shall have the meanings given in the Revolving Credit Agreement unless the
context otherwise requires and the following terms shall have the following
meanings:

"ABR TERM LOAN BORROWING": a Term Loan Borrowing comprised of ABR
Term Loans.

"ABR TERM LOANS": that portion of the Term Loans the rate of
interest applicable to which is based upon the Alternate Base Rate.

"ADJUSTED LIBO RATE": with respect to any Eurodollar Term Loan for
any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the product of (a) the LIBO
Rate in effect for such Interest Period and (b) Statutory Reserves. For
purposes hereof, the term "LIBO RATE" shall mean the rate (rounded
upwards, if necessary, to the next 1/16 of 1%) at which dollar deposits
approximately equal in principal amount to Chemical's portion of such
Eurodollar Term Loan and for a maturity comparable to such Interest Period
are offered to the principal London office of Chemical in immediately
available funds in the London interbank market at approximately 11:00
a.m., London time, two Business Days prior to the commencement of such
Interest Period.

"AGREEMENT": this Term Loan Agreement, as amended, supplemented or
otherwise modified from time to time.

"APPLICABLE BAYOU ACCOUNTS RECEIVABLE": at any time the product of
(a) 80% multiplied by (b) that portion of the Collateral consisting of
Accounts of Bayou listed on the most recent Borrowing Base Certificate the
book value of which equals 5% of the aggregate book value of Bayou's
Consolidated total assets after the Closing Date as shown on any
Consolidated balance sheet of Bayou prepared after the Closing Date.

"APPLICABLE MARGIN": the Applicable Margin, as defined in the
Revolving Credit Agreement. All references to "Eurodollar Loans" and "ABR
Loans", respectively, in such definition shall be interpreted as
references to "Eurodollar Term Loans" and "ABR Term Loans", respectively,
for purposes of this Agreement.

"BAYOU": Bayou Steel Corporation, a Delaware corporation and the
parent of the Borrower.

"BAYOU (TENNESSEE) ELIGIBLE INVENTORY": Bayou (Tennessee) Inventory
that consists of raw materials, billets and finished goods, valued at the
lower of cost (prior to the LIFO reserve) or market on a basis consistent
with the Borrower's current and historical accounting practice, LESS (i)
any goods returned or rejected by the Borrower's customers for reasons
relating to the quality of such goods and (ii) any goods in transit to
third parties. The valuation of Bayou (Tennessee) Eligible Inventory shall
also be reduced by the amount of transportation costs. Unless otherwise
approved in writing by the Agent, no Bayou (Tennessee) Inventory shall be
deemed Bayou (Tennessee) Eligible Inventory if:

(a) the Bayou (Tennessee) Inventory is not owned solely by the
Borrower or is leased or on consignment or the Borrower does not
have good, valid and marketable title thereto; or

(b) the Bayou (Tennessee) Inventory is not located at or is
not in transit to property that is owned by the Borrower;

(d) the Bayou (Tennessee) Inventory is more than 24 months old
or is otherwise aged according to the Borrower's accounting policies
(other than Bayou (Tennessee) Inventory that is raw materials or
semifinished Bayou (Tennessee) Inventory that, in accordance with
such accounting policies, is not aged) or the Inventory does not
otherwise conform to the representations and warranties contained in
the Loan Documents; PROVIDED, HOWEVER, that (i) the Borrower shall
not be required to test the Bayou (Tennessee) Inventory for aging in
accordance with such accounting policies more often than once in any
period of 12 consecutive months and (ii) if the results of such test
reveal that less than 2.5% of the Borrower's Bayou (Tennessee)
Inventory is so aged, then all of such Bayou (Tennessee) Inventory
shall, subject to the other provisions of this definition, be deemed
Bayou (Tennessee) Eligible Inventory; or

(e) the Bayou (Tennessee) Inventory is classified under the
heading "miscellaneous" in accordance with the accounting policies
of the Borrower.

"BAYOU (TENNESSEE) INVENTORY": all merchandise intended for sale by
the Borrower, or consumed in the Borrower'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
Borrower; PROVIDED, HOWEVER, that Bayou (Tennessee) Inventory shall not
include (i) all bearings, rolls, guides and stores that relate to
machinery and equipment mortgaged to First National Bank of Commerce, as
Trustee (the "Trustee"), pursuant to the First Mortgage 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 Borrower's 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, (iii) all proceeds of the properties,
rights and interests referred to in clauses (i) and (ii) above and (iv)
any other properties, rights or interests granted to the Trustee pursuant
to the First Mortgage Indenture, and thereafter assumed by the Borrower.

"CHEMICAL": Chemical Bank.

"EURODOLLAR TERM LOAN BORROWING": a Term Loan Borrowing Comprised of
Eurodollar Term Loans.

"EURODOLLAR TERM LOANS": that portion of the Term Loans the rate of
interest applicable to which is based upon the Adjusted LIBO Rate.

"EXCESS CASH FLOW": of Bayou, for any period, the excess of (a) the
sum, without duplication, of (i) Consolidated EBITDA for such period, (ii)
the amount of returned surplus assets of any pension plan during such
fiscal year to the extent not included in Consolidated Net Income to
determine Consolidated EBITDA for such period, (iii) extraordinary cash
gains to the extent subtracted or otherwise not included in Consolidated
Net Income to determine Consolidated EBITDA for such period and (iv)
extraordinary non-cash losses during such period subtracted in the
determination of Consolidated Net Income for such period, OVER (b) the
sum, without duplication, of (i) the aggregate amount of permitted cash
Capital Expenditures made by Bayou and its Recourse Subsidiaries during
such period,

(ii) the aggregate amount of payments of principal in respect of any
Indebtedness (excluding Indebtedness under the Revolving Credit Agreement)
not prohibited by the Revolving Credit Agreement during such period, (iii)
Interest Expense of Bayou determined on a Consolidated basis for such
period, (iv) taxes actually paid in such period or to be paid subsequently
on account of such period to the extent added to Consolidated Net Income
to determine Consolidated EBITDA for such period, (v) extraordinary cash
losses to the extent added to Consolidated Net Income to determine
Consolidated EBITDA for such period, (vi) non-cash currency exchange gains
during such period included in Consolidated Net Income of Bayou for such
period, (vii) all expenses, costs and fees incurred for such period in
connection with the Acquisition (such expenses, costs and fees not to
exceed $1,200,000 for each of fiscal years 1995, 1996 and 1997) and (viii)
dividends actually paid by Bayou in accordance with Section 7.06 of the
Revolving Credit Agreement.

"INTEREST PAYMENT DATE": with respect to any Term Loan, the last day
of each Interest Period and, in the case of Eurodollar Term Loans with an
Interest Period of more than three months' duration, each day that would
have been an Interest Payment Date had successive Interest Periods of
three months duration been applicable to such Term Loans, and, in
addition, the date of any refinancing or conversion of such Term Loans
with or to Term Loans of a different Type.

"INTEREST PERIOD": (a) as to any Eurodollar Term Loans, the period
commencing on the Term Loan Borrowing Date or on the last day of the
immediately preceding Interest Period applicable to such Term Loans, as
the case may be, and ending on the numerically corresponding day (or, if
there is no numerically corresponding day, on the last day) in the
calendar month that is 1, 2, 3 or 6 months thereafter, as the Borrower may
elect, and (b) as to any ABR Term Loans, the period commencing on the Term
Loan Borrowing Date or on the last day of the immediately preceding
Interest Period applicable to such Term Loans, as the case may be, and
ending on the earliest of (i) the next succeeding March 31, June 30,
September 30 or December 31, (ii) the Term Loan Final Maturity Date and
(iii) the date such Term Loans are converted to Term Loans of a different
Type in accordance with subsection 2.4 or repaid or prepaid in accordance
with subsection 2.5; PROVIDED, HOWEVER, that if any Interest Period would
end on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless, in the case of
Eurodollar Term Loans only, such next succeeding Business Day would fall
in the next calendar month, in which case such Interest Period shall end
on the next preceding Business Day. Interest shall accrue from and
including the

first day of an Interest Period to but excluding the last day of such
Interest Period.

"REGISTER": as defined in subsection 10.4(d).

"REVOLVING CREDIT AGREEMENT": the Credit Agreement, dated as of June
28, 1989, as amended and restated through June 1, 1995, among Bayou, the
lenders from time to time party thereto, and the Agent, as the same may be
amended, modified or supplemented from time to time.

"TERM LOAN BORROWING": a group of Term Loans of a single Type made
by the Term Loan Lenders on the Term Loan Closing Date and as to which a
single Interest Period is in effect.

"TERM LOAN BORROWING BASE": the sum of (i) Unencumbered Cash PLUS
(ii) Bayou (Tennessee) Eligible Inventory PLUS (iii) Applicable Bayou
Accounts Receivable. For purposes of the calculation of the Borrowing
Base, Inventory of the Borrower will be valued on a LIFO basis, computed
in accordance with GAAP, as consistently applied.

"TERM LOAN BORROWING BASE CERTIFICATE": a certificate in the form of
Schedule 6.1(a), duly completed and executed by a Financial Officer of the
Borrower.

"TERM LOAN BORROWING DATE": the Term Loan Closing Date.

"TERM LOAN CLOSING DATE": the date on which the conditions precedent
set forth in subsection 5.1 shall be satisfied and the Term Loan Lenders
shall make the Term Loans.

"TERM LOAN COMMITMENT": as to any Term Loan Lender, the obligation
of such Term Loan Lender to make Term Loans to the Borrower hereunder in a
principal amount not to exceed the amount set forth opposite such Term
Loan Lender's name on Schedule 2.2.

"TERM LOAN COMMITMENT PERCENTAGE": as to any Term Loan Lender at any
time, the percentage which such Term Loan Lender's Term Loan Commitment
then constitutes of the aggregate Term Loan Commitments (or, at any time
after the Term Loan Commitments shall have expired or terminated, the
percentage which the aggregate principal amount of such Term Loan Lender's
Term Loans then outstanding constitutes of the aggregate principal amount
of the Term Loans then outstanding).

"TERM LOAN FINAL MATURITY DATE": the fifth anniversary of the Term
Loan Closing Date (or if such date is not a Business Day, the immediately
preceding Business Day).

"TERM LOANS": as defined in subsection 2.1.

"TERM NOTE": as defined in subsection 2.2.

"TYPE": as to any Term Loan, its nature as an ABR Term Loan or a
Eurodollar Term Loan.

"UNENCUMBERED CASH": cash owned or held by or on behalf of the
Borrower which is not subject to the Lien of another Person, it being
agreed that any such cash subject to any depositary bank set-off rights or
any depositary agreements with such bank shall be deemed "unencumbered"
for purposes of this Agreement.

1.2 OTHER DEFINITIONAL PROVISIONS. (a) Unless otherwise specified
therein, all terms defined in this Agreement shall have the defined meanings
when used in the Term Notes.

(b) As used herein and in the Term Notes and the other Loan
Documents, and any certificate or other document made or delivered pursuant
hereto, accounting terms relating to the Borrower and its Subsidiaries not
defined in subsection 1.1 and accounting terms partly defined in subsection 1.1,
to the extent not defined, shall have the respective meanings given to them
under GAAP.

(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
subsection, Schedule and Exhibit references are to this Agreement unless
otherwise specified.

(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.

SECTION 2. AMOUNT AND TERMS OF TERM LOANS

2.1 TERM LOAN COMMITMENTS. Subject to the terms and conditions
hereof, each Term Loan Lender severally agrees to make a term loan (a "TERM
LOAN") to the Borrower on the Term Loan Closing Date in an aggregate principal
amount not to exceed the amount of the Term Loan Commitment of such Term Loan
Lender. The Term Loans may from time to time be (a) Eurodollar Term Loans, (b)
ABR Term Loans or (c) a combination thereof, as determined by the Borrower and
notified to the Agent in accordance with subsections 2.3 and 2.4.

2.2 TERM NOTES. (a) The Term Loan made by each Term Loan Lender
shall be evidenced by a promissory note of the Borrower, substantially in the
form of Exhibit A (each, as amended, supplemented, replaced or otherwise
modified from time to time, a "TERM NOTE"), with appropriate insertions therein
as

to payee, date and principal amount, payable to the order of such Term Loan
Lender and in a principal amount equal to the amount set forth opposite such
Term Loan Lender's name on Schedule 2.2 under the heading "Term Loan
Commitment". Each Term Loan Lender is hereby authorized to record the date and
amount of each payment or prepayment of principal of its Term Loan, each
continuation thereof, each conversion of all or a portion thereof to another
Type and, in the case of Eurodollar Term Loans, the length of each Interest
Period and the Adjusted LIBO Rate plus the Applicable Margin with respect
thereto, on its internal books and records and/or on the schedule annexed to and
constituting a part of its Term Note, and any such recordation on such schedule
shall constitute PRIMA FACIE evidence of the accuracy of the information so
recorded, PROVIDED that the failure by any Term Loan Lender to make any such
recordation or any error in such recordation shall not affect the obligations of
the Borrower under this Agreement and the Term Notes. The Term Note of each Term
Loan Lender shall (i) be dated the Term Loan Closing Date, (ii) be payable as
provided in subsection 2.2(b) and (iii) provide for the payment of interest in
accordance with subsections 2.6 and 2.7.

(b) The Term Loans shall be payable on each date set forth below in
the amount set forth opposite such date (or, if less, the aggregate amount of
the Term Loans then outstanding) along with accrued interest on such amounts
repaid:

PRINCIPAL
DATES AMOUNT
----- ---------
June 30, 1997 $750,000
September 30, 1997 750,000
December 31, 1997 750,000
March 31, 1998 750,000

June 30, 1998 $750,000
September 30, 1998 750,000
December 31, 1998 750,000
March 31, 1999 750,000

June 30, 1999 $1,000,000
September 30, 1999 1,000,000
December 31, 1999 1,000,000
Term Loan Final
Maturity Date 1,000,000

2.3 PROCEDURE FOR TERM LOAN BORROWING. The Borrower shall give the
Agent irrevocable notice (which notice must be received by the Agent prior to
12:00 Noon, New York City time, at least (a) three Business Days prior to the
requested Term Loan Borrowing Date, if all or any part of the requested Term
Loans are to be initially Eurodollar Term Loans or (b) one Business Day prior to
the requested Term Loan Borrowing Date, otherwise) requesting that the Term Loan
Lenders make the requested Term

Loans on the Term Loan Closing Date and specifying (i) the amount to be
borrowed, (ii) whether the requested Term Loans are to be initially Eurodollar
Term Loans, ABR Term Loans or a combination thereof, and (iii) if the requested
Term Loans are to be entirely or partly Eurodollar Term Loans, the respective
amounts of each such Type of Loan and the respective lengths of the initial
Interest Periods therefor. Upon receipt of such notice the Agent shall promptly
notify each Term Loan Lender thereof. Each Term Loan Lender will make the amount
of its pro rata share of the requested Term Loans available to the Agent for the
account of the Borrower at the office of the Agent specified in subsection 2.14
prior to 12:00 Noon, New York City time, on the requested Borrowing Date in
Dollars and in funds immediately available to the Agent. The Agent shall on such
date credit the account of the Borrower on the books of such office of the Agent
with the aggregate of the amounts made available to the Agent by the Term Loan
Lenders and in like funds as received by the Agent.

2.4 CONVERSION AND CONTINUATION OPTIONS. (a) The Borrower may elect
from time to time to convert outstanding Term Loans from Eurodollar Term Loans
to ABR Term Loans by giving the Agent at least two Business Days' prior
irrevocable notice of such election, PROVIDED that any such conversion of
Eurodollar Term Loans may only be made on the last day of an Interest Period
with respect thereto. The Borrower may elect from time to time to convert
outstanding Term Loans from ABR Term Loans to Eurodollar Term Loans by giving
the Agent at least three Business Days' prior irrevocable notice of such
election. Any such notice of conversion to Eurodollar Term Loans shall specify
the length of the initial Interest Period or Interest Periods therefor. Upon
receipt of any such notice the Agent shall promptly notify each affected Lender
thereof. All or any part of outstanding Eurodollar Term Loans and ABR Term Loans
may be converted as provided herein, PROVIDED that (i) no Term Loan may be
converted into a Eurodollar Loan when any Default or Event of Default has
occurred and is continuing and the Agent or the Required Lenders have given
notice to the Borrower that no such conversions may be made and (ii) no Term
Loan may be converted into a Eurodollar Term Loan after the date that is one
month prior to the date of the final installment of principal of the Term Loans.

(b) Any Eurodollar Term Loans may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
Borrower giving notice to the Agent of the length of the next Interest Period to
be applicable to such Term Loans, determined in accordance with the applicable
provisions of the term "Interest Period" set forth in subsection 1.1, PROVIDED
that no Eurodollar Term Loan may be continued as such (i) when any Default or
Event of Default has occurred and is continuing and the Agent or the Required
Lenders have given notice to the Borrower that no such continuations may be made
or (ii) after the date that is one month prior to the date of the final
installment of principal of the Term Loans, and PROVIDED, FURTHER, that if the
Borrower shall fail to give any required notice as described above in this
paragraph or if such continuation is not permitted pursuant to the preceding
proviso such Term Loans shall be

automatically converted to ABR Term Loans on the last day of such then expiring
Interest Period.

2.5 PREPAYMENT. (a) The Borrower shall have the right at any time
and from time to time to prepay the Term Loans, in whole or in part, upon
written (including by telecopy) notice (or telephone notice promptly confirmed
by written notice) to the Agent, which notice, in the case of a prepayment of a
Eurodollar Term Loan, shall be received by the Agent one Business Day prior to
such prepayment; PROVIDED, HOWEVER, that each partial prepayment shall be in an
amount which is, if (a) an ABR Term Loan, an integral multiple of $100,000 and
not less than $200,000 and (b) if a Eurodollar Term Loan, an integral multiple
of $250,000 and not less than $1,000,000. Partial prepayments of the Term Loans
pursuant to this paragraph 2.5(a) shall be applied to the remaining scheduled
installments of the Term Loans in the direct order of maturity.

(b) No later than 90 days after the end of the 1996 fiscal year of
the Borrower, the Borrower shall prepay the Term Loans in an amount equal to 50%
of the sum of (i) the Excess Cash Flow of Bayou and its Recourse Subsidiaries,
computed on a Consolidated basis, for that portion of fiscal year 1995 from and
including the Closing Date to the last day of fiscal year 1995 PLUS (ii) the
Excess Cash Flow of Bayou and its Recourse Subsidiaries, computed on a
Consolidated basis, for fiscal year 1996 of the Borrower. Commencing with the
1997 fiscal year of the Borrower, no later than 90 days after the end of each
fiscal year of the Borrower, the Borrower shall prepay the Term Loans in an
amount equal to 50% of the Excess Cash Flow of Bayou and its Recourse
Subsidiaries, computed on a Consolidated basis, for such fiscal year. Any
prepayment pursuant to this subsection 2.5(b) shall be applied to the remaining
scheduled installments of Term Loans in the inverse order of maturity.

(c) Each notice of prepayment shall specify the prepayment date, the
principal amount of the Term Loans to be prepaid, and the Type of Term Loans to
be prepaid, shall be irrevocable and shall commit the Borrower to prepay such
Term Loans in the amount stated therein on the date stated therein. All
prepayments under this subsection 2.5 shall be subject to subsection 2.11 but
otherwise without premium or penalty. All prepayments under this subsection 2.5
shall be accompanied by accrued interest on the principal amount being prepaid
to the date of payment.

(d) Amounts prepaid pursuant to this subsection 2.5 may not be
reborrowed.

2.6 INTEREST ON TERM LOANS. (a) Subject to the provisions of
subsection 2.7, the ABR Term Loans shall bear interest (computed on the basis of
the actual number of days elapsed over a year of (i) 365 or 366 days, as the
case may be, during any period in which the Alternate Base Rate is based on the
Prime Rate and (ii) 360 days during any period in which the Alternate Base Rate
is based on the Base CD Rate or the Federal

Funds Effective Rate) at a rate per annum equal to the Alternate Base Rate plus
the Applicable Margin.

(b) Subject to the provisions of subsection 2.7, the Eurodollar Term
Loans shall bear interest (computed on the basis of the actual number of days
elapsed over a year of 360 days) at a rate per annum equal to the Adjusted LIBO
Rate for the Interest Period in effect for such Term Loan Borrowing plus the
Applicable Margin.

(c) Interest on each Term Loan shall be payable on the Interest
Payment Dates applicable to such Term Loan except as otherwise provided in this
Agreement. The applicable Alternate Base Rate or Adjusted LIBO Rate for each
Interest Period or day within an Interest Period, as the case may be, shall be
determined by the Agent, and such determination shall be conclusive absent
manifest error.

2.7 DEFAULT INTEREST. If the Borrower shall default in the payment
of the principal of or interest on any Term Loan or any other amount becoming
due hereunder, by acceleration or otherwise, the Borrower shall on demand from
time to time pay interest, to the extent permitted by law, on such defaulted
amount up to (but not including) the date of actual payment (after as well as
before judgment) at a rate per annum (computed on the basis of the actual number
of days elapsed over a year of (i) 365 or 366 days, as the case may be, during
any period in which the Alternate Base Rate is based on the Prime Rate and (ii)
360 days during any period in which the Alternate Base Rate is based on the Base
CD rate or the Federal Funds Effective Rate) equal to the rate at the time
applicable to ABR Term Loan Borrowings plus 2%.

2.8 ALTERNATE RATE OF INTEREST. In the event, and on each occasion,
that on the day two Business Days prior to the commencement of any Interest
Period for Eurodollar Term Loans the Agent shall have determined that dollar
deposits in the principal amounts of such Eurodollar Term Loans are not
generally available in the London interbank market, or that the rates at which
such dollar deposits are being offered will not adequately and fairly reflect
the cost to any Term Loan Lender of making or maintaining its Eurodollar Term
Loan during such Interest Period, or that reasonable means do not exist for
ascertaining the Adjusted LIBO Rate, the Agent shall, as soon as practicable
thereafter, give written or telecopy notice of such determination to the
Borrower and the Term Loan Lenders. In the event of any such determination, any
request by the Borrower for conversion to, or continuation of, Eurodollar Term
Loans pursuant to subsection 2.4 shall, until the Agent shall have advised the
Borrower and the Term Loan Lenders that the circumstances giving rise to such
notice no longer exist, be deemed to be a request for ABR Term Loans. Each
determination by the Agent hereunder shall be conclusive absent manifest error.

2.9 RESERVE REQUIREMENTS; CHANGE IN CIRCUMSTANCES. (a)
Notwithstanding any other provision herein, if after the date of this Agreement
any change in applicable law or regulation

or in the interpretation or administration thereof by any governmental authority
charged with the interpretation or administration thereof (whether or not having
the force of law) shall change the basis of taxation of payments to any Term
Loan Lender of the principal of or interest on any Eurodollar Term Loan made by
such Term Loan Lender or any fees or other amounts payable hereunder (other than
changes in respect of taxes imposed on the overall net income of such Term Loan
Lender by the jurisdiction in which such Term Loan Lender has its principal
office or by any political subdivision or taxing authority therein), or shall
impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of or credit
extended by such Term Loan Lender (except any such reserve requirement which is
reflected in the Adjusted LIBO Rate) or shall impose on such Term Loan Lender or
the London interbank market any other condition affecting this Agreement or
Eurodollar Term Loans made by such Term Loan Lender, and the result of any of
the foregoing shall be to increase the cost to such Term Loan Lender of making
or maintaining any Eurodollar Term Loan or to reduce the amount of any sum
received or receivable by such Term Loan Lender hereunder or under the Term
Notes (whether of principal, interest or otherwise) by an amount deemed by such
Term Loan Lender to be material, then the Borrower will pay to such Term Loan
Lender upon demand such additional amount or amounts as will compensate such
Term Loan Lender for such additional costs incurred or reduction suffered. The
Agent and each Term Loan Lender agree to give notice to the Borrower of any such
change in law, regulation, interpretation or administration with reasonable
promptness after becoming actually aware thereof and of the applicability
thereof to the Transactions.

(b) If any Term Loan Lender shall have determined that the
applicability of any law, rule, regulation or guideline adopted pursuant to or
arising out of the July 1988 report of the Basle Committee on Banking
Regulations and Supervisory Practices entitled "International Convergence of
Capital Measurement and Capital Standards", or the adoption after the date
hereof of any other law, rule, regulation or guideline regarding capital
adequacy, or any change in any of the foregoing or in the interpretation or
administration of any of the foregoing by any governmental authority, central
lender or comparable agency charged with the interpretation or administration
thereof, or compliance by any Term Loan Lender (or any lending office of such
Term Loan Lender) or any Term Loan Lender's holding company with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central lender or comparable agency, has or would have the
effect of reducing the rate of return on such Term Loan Lender's capital or on
the capital of such Term Loan Lender's holding company, if any, as a consequence
of this Agreement or the Term Loans made by such Term Loan Lender pursuant
hereto to a level below that which such Term Loan Lender or such Term Loan
Lender's holding company could have achieved but for such adoption, change or
compliance (taking into consideration such Term Loan Lender's policies and the
policies of such Term Loan Lender's holding company with respect to capital
adequacy) by an amount deemed by such Term

Loan Lender to be material, then from time to time the Borrower shall pay to
such Term Loan Lender such additional amount or amounts as will compensate such
Term Loan Lender or such Term Loan Lender's holding company for any such
reduction suffered. The Agent and each Term Loan Lender agree to give notice to
the Borrower of any such change in law, regulation, interpretation or
administration with reasonable promptness after becoming actually aware thereof
and of the applicability to the transactions.

(c) A certificate of each Term Loan Lender setting forth such amount
or amounts, supported by calculations in reasonable detail, as shall be
necessary to compensate such Term Loan Lender or its holding company as
specified in paragraph (a) or (b) above, as the case may be, shall be delivered
to the Borrower and shall be conclusive absent manifest error. The Borrower
shall pay each Term Loan Lender the amount shown as due on any such certificate
delivered by it within 10 days after its receipt of the same.

(d) Failure on the part of any Term Loan Lender to demand
compensation for any increased costs or reduction in amounts received or
receivable or reduction in return on capital with respect to any period shall
not constitute a waiver of such Term Loan Lender's right to demand such
compensation with respect to such period or any other period. The protection of
this subsection shall be available to each Term Loan Lender regardless of any
possible contention of the invalidity or inapplicability of the law, rule,
regulation, guideline or other change or condition which shall have occurred or
been imposed.

2.10 CHANGE IN LEGALITY. (a) Notwithstanding any other provision
herein, if any change in any law or regulation or in the interpretation thereof
by any Governmental Authority charged with the administration or interpretation
thereof shall make it unlawful for any Term Loan Lender to make or maintain any
Eurodollar Term Loan or to give effect to its obligations as contemplated hereby
with respect to any Eurodollar Loan, then, by written notice to the Borrower and
to the Agent, such Term Loan Lender may:

(i) declare that Term Loans will not thereafter be converted to, or
continued as, Eurodollar Term Loans by such Term Loan Lender hereunder,
whereupon any request by the Borrower for conversion or continuation of a
Term Loan shall, as to such Term Loan Lender only, be deemed a request for
conversion to or continuation of an ABR Term Loan unless such declaration
shall be subsequently withdrawn; and

(ii) require that all outstanding Eurodollar Term Loans made by it
be converted to ABR Term Loans, in which event all such Eurodollar Term
Loans shall be automatically converted to ABR Term Loans as of the
effective date of such notice as provided in paragraph (b) below.

In the event any Term Loan Lender shall exercise its rights under (i) or (ii)
above, all payments and prepayments of principal which would otherwise have been
applied to repay the Eurodollar

Term Loans that would have been made by such Term Loan Lender or the converted
Eurodollar Term Loans of such Term Loan Lender shall instead be applied to repay
the ABR Term Loans made by such Term Loan Lender in lieu of, or resulting from
the conversion of, such Eurodollar Term Loans.

(b) For purposes of this subsection 2.10, a notice to the Borrower
by any Term Loan Lender shall be effective as to each Eurodollar Term Loan, if
lawful, on the last day of the Interest Period currently applicable to such
Eurodollar Loan; in all other cases such notice shall be effective on the date
of receipt by the Borrower.

2.11 INDEMNITY. The Borrower shall indemnify each Term Loan Lender
against any loss or reasonable expense which such Term Loan Lender may sustain
or incur as a consequence of (a) any failure by the Borrower to fulfill on the
date of any borrowing hereunder the applicable conditions set forth in Section
5, (b) any failure by the Borrower to borrow or to refinance, convert or
continue any Term Loan hereunder after irrevocable notice of such borrowing,
refinancing, conversion or continuation has been given pursuant to subsection
2.3 or 2.4, (c) any payment, prepayment or conversion of a Eurodollar Term Loan
required by any other provision of this Agreement or otherwise made on a date
other than the last day of the Interest Period applicable thereto, (d) any
default in payment or prepayment of the principal amount of any Term Loan or any
part thereof or interest accrued thereon, as and when due and payable (at the
due date thereof, by irrevocable notice of prepayment or otherwise) or (e) the
occurrence of any Event of Default, including, in each such case, any loss or
reasonable expense sustained or incurred or to be sustained or incurred in
liquidating or employing deposits from third parties acquired to effect or
maintain such Term Loan or any part thereof as a Eurodollar Term Loan. Such loss
or reasonable expense shall include an amount equal to the excess, if any, as
reasonably determined by such Term Loan Lender, of (i) its cost of obtaining the
funds for the Term Loan being paid, prepaid, converted or not borrowed,
converted or continued (based on the Adjusted LIBO Rate applicable thereto) for
the period from the date of such payment, prepayment, conversion or failure to
borrow, convert or continue to the last day of the Interest Period for such Term
Loan (or, in the case of a failure to borrow, convert or continue, the Interest
Period for such Term Loan which would have commenced on the date of such
failure) over (ii) the amount of interest (as reasonably determined by such Term
Loan Lender) that would be realized by such Term Loan Lender in reemploying the
funds so paid, prepaid, converted or not borrowed, converted or continued for
such period or Interest Period, as the case may be. A certificate of any Term
Loan Lender setting forth any amount or amounts, supported by calculations in
reasonable detail, which such Term Loan Lender is entitled to receive pursuant
to this subsection shall be delivered to the Borrower and shall be conclusive
absent manifest error.

2.12 PRO RATA TREATMENT. Except as required under subsection 2.10,
each Term Loan Borrowing, each payment or

prepayment of principal of any Term Loans, each payment of interest on the Term
Loans, and any conversion of any Term Loans to or continuation of any Term Loans
as Term Loans of any Type shall be allocated pro rata among the Term Loan
Lenders in accordance with their respective Term Loan Commitment Percentages.
Each Term Loan Lender agrees that in computing such Term Loan Lender's portion
of any Term Loan Borrowing to be made hereunder, the Agent may, in its
discretion, round each Term Loan Lender's percentage of such Term Loan
Borrowing, computed in accordance with subsection 2.1, to the next higher or
lower whole dollar amount.

2.13 SHARING OF SETOFFS. Each Term Loan Lender agrees that if it
shall, through the exercise of a right of banker's lien, setoff or counterclaim
against the Borrower, or pursuant to a secured claim under Section 506 of Title
11 of the United States Code or other security or interest arising from, or in
lieu of, such secured claim, received by such Term Loan Lender under any
applicable bankruptcy, insolvency or other similar law or otherwise, or by any
other means, obtain payment (voluntary or involuntary) in respect of any Term
Loans as a result of which the unpaid principal portion of its Term Loans shall
be proportionately less than the unpaid principal portion of the Term Loans of
any other Term Loan Lender, it shall be deemed simultaneously to have purchased
from such other Term Loan Lender at face value, and shall promptly pay to such
other Term Loan Lender the purchase price for, a participation in the Term Loans
of such other Term Loan Lender, so that the aggregate unpaid principal amount of
the Term Loans and participation in Term Loans held by each Term Loan Lender
shall be in the same proportion to the aggregate unpaid principal amount of all
Term Loans then outstanding as the principal amount of its Term Loans prior to
such exercise of banker's lien, setoff or counterclaim or other event referred
to above was to the principal amount of all Term Loans outstanding prior to such
exercise of banker's lien, setoff or counterclaim or other event; PROVIDED,
HOWEVER, that, if any such purchase or purchases or adjustments shall be made
pursuant to this subsection and the payment giving rise thereto shall thereafter
be recovered, such purchase or purchases or adjustments shall be rescinded to
the extent of such recovery and the purchase price or prices or adjustment
restored without interest. The Borrower expressly consents to the foregoing
arrangements and agrees that any Term Loan Lender holding a participation in a
Term Loan deemed to have been so purchased may exercise any and all rights of
banker's lien, setoff or counterclaim with respect to any and all moneys owing
by the Borrower to such Term Loan Lender by reason thereof as fully as if such
Term Loan Lender had made a Loan directly to the Borrower in the amount of such
participation.

2.14 PAYMENTS. (a) The Borrower shall make each payment (including
principal of or interest on any Term Loans or other amounts) hereunder and under
any other Loan Document not later than 12:00 (noon), New York City time, on the
date when due in dollars to the Agent at its offices at 270 Park Avenue, New
York, New York, in immediately available funds.

(b) Whenever any payment (including principal of or interest on any
Term Loans or other amounts provided for in this Agreement) hereunder or under
any other Loan Document shall become due, or otherwise would occur, on a day
that is not a Business Day, such payment may be made on the next succeeding
Business Day, and such extension of time shall in such case be included in the
computation of interest, if applicable.

2.15 TAXES. (a) Any and all payments by the Borrower hereunder shall
be made, in accordance with subsection 2.14, free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto, EXCLUDING
taxes imposed on the Agent's or any Term Loan Lender's income and franchise
taxes imposed on the Agent or any Term Loan Lender by the United States or any
jurisdiction under the laws of which the Agent or any such Term Loan Lender is
organized or any political subdivision thereof (all such nonexcluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "TAXES"). If the Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder to the Term
Loan Lenders or the Agent (i) the sum payable shall be increased by the amount
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this subsection 2.15) such Term Loan
Lender or the Agent (as the case may be) shall receive an amount equal to the
sum it would have received had no such deductions been made, (ii) the Borrower
shall make such deductions and (iii) the Borrower shall pay the full amount
deducted to the relevant taxing authority or other Governmental Authority in
accordance with applicable law.

(b) In addition, the Borrower agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement or any other Loan Document to which it is a party (hereinafter
referred to as "OTHER TAXES").

(c) The Borrower will indemnify each Term Loan Lender and the Agent
for the full amount of Taxes and Other Taxes (including any Taxes or Other Taxes
imposed by any jurisdiction or amounts payable under this subsection 2.15) paid
by such Term Loan Lender or the Agent, as the case may be, and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted. Such indemnification shall be made within 30 days after the date any
Term Loan Lender or the Agent, as the case may be, makes written demand
therefor. If a Term Loan Lender or the Agent shall become aware that it is
entitled to receive a refund in respect of Taxes or Other Taxes, it shall
promptly notify the Borrower of the availability of such refund and shall,
within 30 days after receipt of a request by the Borrower, apply for such refund
at the Borrower's expense. If any Term Loan Lender or the Agent receives a
refund in respect of any Taxes or Other Taxes for which such Term Loan Lender or

the Agent has received payment from the Borrower hereunder it shall promptly
notify the Borrower of such refund and shall, within 30 days after receipt of a
request by the Borrower (or promptly upon receipt, if the Borrower has requested
application for such refund pursuant hereto), repay such refund to the Borrower
without interest; PROVIDED that the Borrower, upon the request of such Term Loan
Lender or the Agent, agrees to return such refund (plus penalties, interest or
other charges) to such Term Loan Lender or the Agent in the event such Term Loan
Lender or the Agent is required to repay such refund.

(d) Within 30 days after the date of any payment of Taxes or Other
Taxes withheld by the Borrower in respect of any payment to any Term Loan Lender
or the Agent, the Borrower will furnish to the Agent, at its address referred to
in Section 10.1 of the Revolving Credit Agreement, the original or a certified
copy of a receipt evidencing payment thereof.

(e) Without prejudice to the survival of any other agreement
contained herein, the agreements and obligations contained in this subsection
2.15 shall survive the payment in full of principal and interest hereunder.

(f) Each Term Loan Lender which is organized outside the United
States shall promptly notify the Borrower of any change in its funding office
and upon written request of the Borrower shall, prior to the immediately
following due date of any payment by the Borrower hereunder, deliver to the
Borrower such certificates, documents or other evidence, as required by the Code
or Treasury Regulations issued pursuant thereto, including Internal Revenue
Service Form 4224 and 1001 and any other certificate or statement or exemption
required by Treasury Regulation Section 1.1441-1(a) or Section 1.1441-6(c) or
any subsequent version thereof, properly completed and duly executed by such
Term Loan Lender establishing that such payment is (i) not subject to
withholding under the Code because such payment is effectively connected with
the conduct by such Term Loan Lender of a trade or business in the United States
or (ii) totally exempt from United States tax under a provision of an applicable
tax treaty. Unless the Borrower and the Agent have received forms or other
documents satisfactory to them indicating that payments hereunder or under the
Term Notes are not subject to United States withholding tax or are subject to
such tax at a rate reduced by an applicable tax treaty, the Borrower or the
Agent shall withhold taxes from such payments at the applicable statutory rate
in the case of payments to or for any Term Loan Lender or assignee organized
under the laws of a jurisdiction outside the United States.

(g) Any Term Loan Lender claiming any additional amounts payable
pursuant to this subsection 2.15 shall use reasonable efforts (consistent with
legal and regulatory restrictions) to file any certificate or document requested
by the Borrower or to change the jurisdiction of its applicable lending office
if the making of such a filing or change would avoid the need for or reduce the
amount of any such additional amounts which may thereafter accrue and would not,
in the sole

determination of such Term Loan Lender, be otherwise disadvantageous to such
Term Loan Lender.

SECTION 3. [INTENTIONALLY OMITTED]

SECTION 4. REPRESENTATIONS AND WARRANTIES

The provisions of Article IV of the Revolving Credit Agreement
(together with related defined terms), as amended, modified and waived from time
to time in accordance with the terms thereof but without giving effect to any
cancellation or discharge of the Revolving Credit Agreement, are incorporated by
reference herein as if set forth at length herein, MUTATIS MUTANDIS, as if the
representations and warranties made therein are made by the Borrower. Such
representations and warranties shall be deemed to be made on the Term Loan
Closing Date.

SECTION 5. CONDITIONS PRECEDENT

5.1 CONDITIONS TO TERM LOANS. The obligations of each Term Loan
Lender to make its Term Loan is subject to the satisfaction of the following
conditions precedent:

(a) TERM LOAN DOCUMENTS. The Agent shall have received (i) this
Agreement, executed and delivered by a Responsible Officer of the
Borrower, with a counterpart for each Term Loan Lender, (ii) for the
account of each Term Loan Lender, a Term Note conforming to the
requirements hereof and executed by a Responsible Officer of the Borrower
and (iii) the Term Loan Guarantee and the Security Agreement, each
executed and delivered by a Responsible Officer of Bayou.

(b) CONDITIONS IN REVOLVING CREDIT AGREEMENT. All of the conditions
precedent set forth in Sections 5.01 and 5.02 of the Revolving Credit
Agreements shall have been satisfied or waived with the consent of the
Required Lenders.

(c) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties made by the Borrower and the other Loan Parties in or pursuant
to the Loan Documents shall be true and correct in all material respects
on and as of the Term Loan Closing Date as if made on and as of the Term
Loan Closing Date (except for changes permitted by the Revolving Credit
Agreement).

(d) NO DEFAULT. No Default or Event of Default shall have occurred
and be continuing on the Term Loan Closing Date or after giving effect to
the Term Loans requested to be made on the Term Loan Closing Date.

(e) NOTICE OF TERM LOAN BORROWING. The Agent shall
have received a notice of Term Loan Borrowing as required by
subsection 2.3.

SECTION 6. AFFIRMATIVE COVENANTS

The provisions of Article VI of the Revolving Credit Agreement
(together with related defined terms), as amended, modified and waived from time
to time in accordance with the terms thereof but without giving effect to any
cancellation or discharge of the Revolving Credit Agreement, are incorporated by
reference herein as set forth at length herein to the extent applicable to the
Borrower and shall apply hereto MUTATIS MUTANDIS. The Borrower covenants and
agrees not to take any action that would result in a violation of the covenants
set forth in Article VI of the Revolving Credit Agreement. Additionally, the
Borrower covenants and agrees with each Term Loan Lender that so long as this
Agreement shall remain in effect or the principal of or interest on any Term
Loan or any other expenses or amounts payable under this Agreement shall be
unpaid, unless the Required Lenders shall otherwise consent in writing, the
Borrower will:

6.1 TERM LOAN BORROWING BASE. (a) Maintain the Term Loan Borrowing
Base at all times in a dollar amount not less than the aggregate principal
amount of the Term Loans outstanding at such time PLUS interest payable
hereunder for the next fiscal quarter; and

(b) within 15 Business Days after the last day of each fiscal month
(each such last day being called a "TERM LOAN DETERMINATION DATE"), furnish (i)
a Term Loan Borrowing Base Certificate to the Agent setting forth the Term Loan
Borrowing Base as of such Term Loan Determination Date, (ii) a certificate of a
Financial Officer of the Borrower setting forth in reasonable detail the
Unencumbered Cash and the amounts and types of Bayou (Tennessee) Inventory of
the Borrower as of such Determination Date and (iii) a copy of the Borrowing
Base Certificate certified by a Financial Officer of Bayou; PROVIDED, HOWEVER,
that the Term Loan Determination Date shall be the last day of each fiscal
quarter, and the foregoing certificates shall be required only on a quarterly
basis, as long as the aggregate amount of all Term Loans outstanding on the date
that would otherwise be the Term Loan Determination Date is less than
$3,000,000.

6.2 FINANCIAL STATEMENTS, REPORTS, ETC. Within 30 days after the
last day of each of the eighteen fiscal months of the Borrower commencing with
fiscal June, 1995, its consolidated and consolidating (if applicable) balance
sheets (which shall include its non-recourse subsidiaries) and related
statements of income and changes in cash flows, showing the financial condition
of the Borrower and its subsidiaries, if any, as of the close of such fiscal
month and the results of its operations and the operations of such subsidiaries,
if any, during such fiscal month and the then elapsed portion of the fiscal
year, all certified by one of its Financial Officers as fairly presenting the
financial condition and results of operations of the Borrower on a consolidated
basis in accordance with GAAP consistently applied, subject to normal year-end
adjustments.

SECTION 7. NEGATIVE COVENANTS

The provisions of Article VII of the Revolving Credit Agreement
(together with related defined terms), as amended, modified and waived from time
to time in accordance with the terms thereof but without giving effect to any
cancellation or discharge of the Revolving Credit Agreement, are incorporated by
reference herein as set forth at length herein to the extent applicable to the
Borrower and shall apply MUTATIS MUTANDIS hereto. The Borrower covenants and
agrees not to take any action that would result in a violation of the covenants
set forth in Article VII of the Revolving Credit Agreement.

SECTION 8. EVENTS OF DEFAULT

The provisions of Article VIII of the Revolving Credit Agreement
(together with related defined terms), as amended, modified and waived from time
to time in accordance with the terms thereof but without giving effect to any
cancellation or discharge of the Revolving Credit Agreement, are incorporated by
reference herein as if set forth at length herein. Additionally, there shall be
an Event of Default if one or more Persons has demanded payment of amounts in
excess of $500,000 in the aggregate under Section 7.01 of the Preferred Stock
and Warrant Purchase Agreement or Section 5.13 of the Shareholder Agreement and
the Borrower or any of its Subsidiaries shall have made such payment(s) or shall
have agreed that such amounts are due. Additionally, if any Event of Default
under the Revolving Credit Agreement shall occur and be continuing then, and in
any such event, (A) if such event is an Event of Default specified in paragraph
(i) or (j) of Article VIII of the Revolving Credit Agreement automatically the
Term Loan Commitments shall immediately terminate and the Term Loans hereunder
(with accrued interest thereon) and all other amounts owing under this Agreement
and the Term Notes shall immediately become due and payable, and (B) if such
event is any other Event of Default, either or both of the following actions may
be taken: (i) with the consent of the Required Lenders, the Agent may, or upon
the request of the Required Lenders, the Agent shall, by notice to the Borrower
declare the Term Loan Commitments to be terminated forthwith, whereupon the Term
Loan Commitments shall immediately terminate; and (ii) with the consent of the
Required Lenders, the Agent may, or upon the request of the Required Lenders,
the Agent shall, by notice to the Borrower, declare the Term Loans hereunder
(with accrued interest thereon) and all other amounts owing under this Agreement
and the Term Notes to be due and payable forthwith, whereupon the same shall
immediately become due and payable.

Except as expressly provided above in this Section, presentment,
demand, protest and all other notices of any kind are hereby expressly waived.

SECTION 9. THE AGENT

The provisions of Article IX of the Revolving Credit Agreement
(together with related defined terms), as amended, modified and waived from time
to time in accordance with the terms thereof but without giving effect to any
cancellation or discharge of the Revolving Credit Agreement, are incorporated by
reference herein as set forth at length herein, MUTATIS MUTANDIS, with
references therein to Bayou being references to the Borrower, references therein
to the Notes being references to the Term Notes and references therein to
Lenders being references to the Term Loan Lenders, INTER ALIA.

SECTION 10. MISCELLANEOUS

10.1 INCORPORATION. The provisions of Sections 10.01, 10.02, 10.08,
10.09, 10.10 and 10.12 of the Revolving Credit Agreement (together with related
defined terms), as amended, modified and waived from time to time in accordance
with the terms thereof but without giving effect to any cancellation or
discharge of the Revolving Credit Agreement, are incorporated by reference
herein as set forth at length herein, MUTATIS MUTANDIS.

10.2 SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made by the Borrower herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Term Loan Lenders and shall survive the making by
the Term Loan Lenders of the Term Loans, and the execution and delivery to the
Term Loan Lenders of the Term Notes evidencing such Term Loans, regardless of
any investigation made by the Term Loan Lenders or on their behalf, and shall
continue in full force and effect as long as the principal of or any accrued
interest on any Term Loan or any other amount payable under this Agreement or
any other Loan Document is outstanding and unpaid and so long as the Term Loan
Commitments have not been terminated.

10.3 BINDING EFFECT. This Agreement shall become effective when it
shall have been executed by the Borrower and the Agent and when the Agent and
the Borrower shall have received copies hereof which, when taken together, bear
the signatures of each Term Loan Lender, and thereafter shall be binding upon
and inure to the benefit of the Borrower, and Agent and each Term Loan Lender
and their respective successors and assigns, except that the Borrower shall not
have the right to assign its rights hereunder or any interest herein without the
prior consent of all the Term Loan Lenders.

10.4 SUCCESSORS AND ASSIGNS. (a) Whenever in this Agreement any of
the parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party; and all covenants, promises and agreements
by or on behalf of the Borrower, the Agent or the Term Loan Lenders that are
contained in this Agreement shall bind and inure to the benefit of their
respective successors and assigns.

(b) Each Term Loan Lender may assign to one or more assignees all or
a portion of its interests, rights and obligations under this Agreement
(including all or a portion of its Term Loan Commitment and the Term Loans at
the time owing to it and the Term Notes held by it); PROVIDED, HOWEVER, that (i)
except in the case of an assignment to a Term Loan Lender or an Affiliate of a
Term Loan Lender, the Borrower and the Agent must give their prior written
consent to such assignment (which consent shall not be unreasonably withheld),
(ii) each such assignment shall be of a constant, and not a varying, percentage
of all the assigning Term Loan Lender's rights and obligations under this
Agreement, (iii) the parties to each such assignment shall execute and deliver
to the Agent an Assignment and Acceptance, together with the Term Note or Term
Notes subject to such assignment and (iv) no such assignment shall be permitted
or effective unless such Term Loan Lender concurrently assigns a ratable
interest in the Revolving Credit Agreement to its assignee. Upon acceptance and
recording pursuant to paragraph (e) of this subsection 10.4, from and after the
effective date specified in each Assignment and Acceptance, which effective date
shall be at least five Business Days after the execution thereof, (A) the
assignee thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Term Loan Lender
under this Agreement and (B) the assigning Term Loan Lender thereunder shall, to
the extent provided in such assignment, be released from its obligations under
this Agreement (and, in the case of an Assignment and Acceptance covering all or
the remaining portion of an assigning Term Loan Lender's rights and obligations
under this Agreement, such Term Loan Lender shall cease to be a party hereto).

(c) By executing and delivering an Assignment and Acceptance, the
assigning Term Loan Lender thereunder and the assignee thereunder shall be
deemed to confirm to and agree with each other and the other parties hereto as
follows: (i) other than the representation and warranty that it is the legal and
beneficial owner of the interest being assigned thereby free and clear of any
adverse claim, such assigning Term Loan Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement, any other Loan Document or any other instrument or
document furnished pursuant hereto; (ii) such assigning Term Loan Lender makes
no representation or warranty and assumes no responsibility with respect to the
financial condition of Bayou, the Borrower or any of their Subsidiaries or the
performance or observance by Bayou or the Borrower of any of its obligations
under this Agreement, any other Loan Document or any other instrument or
document furnished pursuant hereto; (iii) such assignee confirms that it has
received a copy of this Agreement, together with copies of the most recent
financial statements delivered pursuant to Section 6.04 of the Revolving Credit
Agreement and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into such Assignment and
Acceptance; (iv) such assignee

will independently and without reliance upon the Agent, such assigning Term Loan
Lender or any other Term Loan Lender and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement; (v) such assignee
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers under this Agreement as are delegated to the Agent by
the terms hereof, together with such powers as are reasonably incidental
thereto; and (vi) such assignee agrees that it will perform in accordance with
their terms all the obligations which by the terms of this Agreement are
required to be performed by it as a Term Loan Lender.

(d) The Agent shall maintain at one of its offices in The City of
New York a copy of each Assignment and Acceptance delivered to it and a register
for the recordation of the names and addresses of the Term Loan Lenders, and the
Term Loan Commitment of, and principal amount of the Term Loans owing to, each
Term Loan Lender pursuant to the terms hereof from time to time (the
"Register"). The entries in the Register shall be conclusive in the absence of
manifest error and the Borrower, the Agent and the Term Loan Lenders may treat
each person whose name is recorded in the Register pursuant to the terms hereof
as a Term Loan Lender hereunder for all purposes of this Agreement. The Register
shall be available for inspection by the Borrower and any Term Loan Lender, at
any reasonable time and from time to time upon reasonable prior notice and
copies shall be made available to the Borrower upon request.

(e) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Term Loan Lender and an assignee together with the Term
Note or Term Notes subject to such assignment and, if required, the written
consent of the Borrower to such assignment, the Agent shall (subject to the
consent of the Agent to such assignment, if required), (i) accept such
Assignment and Acceptance, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to the Term Loan Lenders. Within
five Business Days after receipt of notice, the Borrower, at its own expense,
shall execute and deliver to the Agent, in exchange for the surrendered Term
Note or Term Notes, a new Term Note or Term Notes to the order of such assignee
in a principal amount equal to the applicable Term Loans purchased by it
pursuant to such Assignment and Acceptance and, if the assigning Term Loan
Lender has retained any Term Loans, a new Term Note to the order of such
assigning Term Loan Lender in a principal amount equal to the Term Loans
retained by it. Such new Term Note or Term Notes shall be in an aggregate
principal amount equal to the aggregate principal amount of such surrendered
Term Note; such new Term Notes shall be dated the date of the surrendered Term
Notes which they replace and shall otherwise be in substantially the form of
Exhibit A hereto. Canceled Term Notes shall be returned to the Borrower.

(f) Each Term Loan Lender may without the consent of the Borrower or
the Agent sell participations to one or more Term

Loan Lenders or other financial institutions in all or a portion of its rights
and obligations under this Agreement (including all or a portion of its Term
Loan Commitment and the Term Loans owing to it and the Term Notes held by it);
PROVIDED, HOWEVER, that (i) such Term Loan Lender's obligations under this
Agreement shall remain unchanged, (ii) such Term Loan Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) the participating lenders or other entities shall be entitled to the
benefit of the cost protection provisions contained in subsections 2.9 and 2.11
to the same extent that the Term Loan Lender from which such participating
lender or other entity acquired its participation would be entitled to the
benefit of such cost protection provisions, (iv) no such sale of a participating
interest shall be effective or permitted unless such Term Loan Lender
concurrently sells a ratable participating interest in the Revolving Credit
Agreement to its assignee and (v) the Borrower, the Agent and the other Term
Loan Lenders shall continue to deal solely and directly with such Term Loan
Lender in connection with such Term Loan Lender's rights and obligations under
this Agreement, and such Term Loan Lender shall retain the sole right to enforce
the obligations of the Borrower relating to the Term Loans and their right to
approve any amendment, modification or waiver of any provision of this Agreement
(other than amendments, modifications or waivers with respect to any fees
payable hereunder or the amount of principal of or the rate at which interest is
payable on the Term Loans, or the dates fixed for payments of principal of or
interest on the Term Loans).

(g) Any Term Loan Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this
subsection 10.4, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Loan Parties furnished to such Term
Loan Lender by or on behalf of either Loan Party; PROVIDED that, prior to any
such disclosure, each such assignee or participant or proposed assignee or
participant shall execute an agreement whereby such assignee or participant
shall agree (subject to customary exceptions) to preserve the confidentiality of
any confidential information relating to the Loan Parties received from such
Term Loan Lender.

(h) Nothing herein shall prohibit any Term Loan Lender from pledging
or assigning any Term Note to any Federal Reserve Bank in accordance with
applicable law.

(i) The Borrower shall not assign or delegate any of its rights or
duties hereunder.

10.5 EXPENSES; INDEMNITY. (a) The Borrower agrees to pay all
reasonable out-of-pocket expenses incurred by the Agent in connection with the
preparation of this Agreement and the other Loan Documents to which the Borrower
is a party or in connection with any amendments, modifications or waivers of the
provisions hereof or thereof (whether or not the transactions hereby
contemplated shall be consummated) or incurred by the Agent or any Term Loan
Lender in connection with the enforcement

or protection of their rights in connection with this Agreement and the other
Loan Documents to which the Borrower is a party or in connection with the Term
Loans made or the Term Notes issued hereunder, including the reasonable fees and
disbursements of Simpson Thacher & Bartlett, counsel for the Agent, and, in
connection with any such amendment, modification or waiver or any such
enforcement or protection, the reasonable fees and disbursements of any other
counsel for the Agent or any Term Loan Lender. The Borrower further agrees that
it shall indemnify the Term Loan Lenders from and hold them harmless against any
documentary taxes, assessments or charges made by any Governmental Authority by
reason of the execution and delivery of this Agreement or any of the other Loan
Documents to which it is a party.

(b) The Borrower agrees to indemnify the Agent, each Term Loan
Lender and its directors, officers, employees and agents (each such person being
called an "Indemnitee") against, and to hold each Indemnitee harmless from, any
and all losses, claims, damages, liabilities and related expenses, including
reasonable counsel fees and expenses, incurred by or asserted against any
Indemnitee arising out of, in any way connected with, or as a result of (i) the
execution or delivery of this Agreement or any other Loan Document to which it
is a party or any agreement or instrument contemplated thereby, the performance
by the parties thereto of their respective obligations thereunder or the
consummation of the transactions contemplated thereby, (ii) the use of the
proceeds of the Term Loans or the Acquisition, (iii) any claim, litigation,
investigation or proceeding relating to any of the foregoing, whether or not any
Indemnitee is a party thereto; PROVIDED that such indemnity shall not, as to any
Indemnitee, be available to the extent that such indemnified party's losses are
the result of any unexcused breach by an indemnified party of its obligations
under the Agreement or the result of its gross negligence or willful misconduct
of such Indemnitee or (iv) the noncompliance or asserted noncompliance with, or
liability or asserted liability under, any Environmental Law that is or is
asserted to be applicable to the Borrower or any Subsidiary, or to any property
owned or operated by any of them; PROVIDED that such indemnity shall not, as to
any Indemnitee, be available to the extent that such indemnified party's losses
are the result of any unexcused breach by an indemnified party of its
obligations under this Agreement or any other Loan Document or the result of the
gross negligence or willful misconduct of such Indemnitee.

(c) The provisions of this subsection 10.5 shall remain operative
and in full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Term Loans, the invalidity or unenforceability of any
term or provision of this Agreement or any other Loan Document to which the
Borrower is a party, or any investigation made by or on behalf of the Agent or
any Term Loan Lender. All amounts due under this subsection 10.5 shall be
payable on written demand therefor.

10.6 RIGHT OF SETOFF. If an Event of Default shall have occurred and
be continuing and any Term Loan Lender shall have requested the Agent to declare
the Term Loans immediately due and payable pursuant to Section 8, such Term Loan
Lender is hereby authorized at any time and from time to time, to the fullest
extent permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Term Loan Lender to or for the credit or
the account of the Borrower against any of and all the obligations of the
Borrower now or hereafter existing under this Agreement and other Loan Documents
to which it is a party held by such Lender, irrespective of whether or not such
Term Loan Lender shall have made any demand under this Agreement or such other
Loan Document and although such obligations may be unmatured. The rights of each
Term Loan Lender under this subsection are in addition to other rights and
remedies (including other rights of setoff) which such Lender may have.

10.7 WAIVER OF JURY TRIAL. Each party hereto hereby waives, to the
fullest extent permitted by applicable law, any right it may have to a trial by
jury in respect of any litigation directly or indirectly arising out of, under
or in connection with this Agreement or any of the other Loan Documents. Each
party hereto (a) certifies that no representative, agent or attorney of any
other party has represented, expressly or otherwise, that such other party would
not, in the event of litigation, seek to enforce the foregoing waiver and (b)
acknowledges that it and the other parties hereto have been induced to enter
into this Agreement and the other Loan Documents, as applicable, by, among other
things, the mutual waivers and certifications in this subsection 10.7.

10.8 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 contract, and shall become effective as
provided herein.

10.9 APPLICABLE LAW. THIS AGREEMENT, THE TERM NOTES AND THE OTHER
LOAN DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK.

10.10 HEADINGS. Section and subsection headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.

10.11 JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a) The Borrower
hereby irrevocably and unconditionally submits, for itself and its property, to
the non-exclusive jurisdiction of any New York State court or Federal court of
the United States of America sitting in New York City, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement or the other Loan Documents, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that

all claims in respect of any such action or proceeding may be heard and
determined in such New York State or, to the extent permitted by law, in such
Federal court. Each of the parties hereto agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that any Term Loan Lender may
otherwise have to bring any action or proceeding relating to this Agreement or
the other Loan Documents against the Borrower or its properties in the courts of
any jurisdiction.

(b) The Borrower hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this agreement or the other Loan
Documents in any New York State or Federal court. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.

(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 10.1 of the Revolving
Credit Agreement. Nothing in this Agreement will affect the right of any party
to this Agreement to serve process in any other manner permitted by law.

10.12 CONFIDENTIALITY. The Agent and the Term Loan Lenders agree to
keep confidential (and to cause their respective officers, directors, employees,
agents and representatives to keep confidential) all information, materials and
documents concerning the Loan Parties furnished to the Agent or any Term Loan
Lender (the "INFORMATION") by or on behalf of the Loan Parties. Notwithstanding
the foregoing, the Agent and each Term Loan Lender 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 Transactions or the administration of this
Agreement; (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, (B) becomes available to the
Agent or such Term Loan Lender on a non-confidential basis from a source other
than a Loan Party or any Subsidiary thereof or (C) was available to the Agent or
such Term Loan Lender on a non-confidential basis prior to its disclosure to the
Agent or such Lender by a Loan Party or a Subsidiary thereof; (iv) to the extent
a Loan Party or a Subsidiary shall have consented to such disclosure in writing;
(v) in connection with the sale of any Collateral pursuant to the provisions of
the Security Agreement; or (vi) as necessary in connection with an assignment or
participation contemplated by subsections 10.4(b) and 10.4(f) hereof.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.

BAYOU STEEL CORPORATION (TENNESSEE)