EX-10.1










Exhibit 10.1 



AGREEMENT



     
        This
Agreement (this “Agreement”), dated as of June 15, 2004, is by and
between Bayou Steel Corporation, a Delaware corporation (the
“Company”) and Black Diamond Capital Management, L.L.C., an Illinois
limited liability company (“Black Diamond”). 



RECITALS



     
        WHEREAS,
the Company’s Board of Directors adopted a Stockholder Rights Agreement
(the “Rights Agreement”) effective as of May 28, 2004 (the
“Effective Date”), and declared a dividend distribution of one Stock
Purchase Right on each outstanding share of the Company’s Common Stock as
of the record date of May 28, 2004; 



     
        WHEREAS,
as of the Effective Date, Black Diamond beneficially owned 462,983 shares of the
Company’s Common Stock, representing a 22.7% ownership interest in the
Company; 



     
        WHEREAS,
in reliance upon the representations and warranties made by Black Diamond in
this Agreement, and subject to the terms and conditions hereof, the Board of
Directors of the Company is willing to amend the Rights Agreement to permit
Black Diamond to own up to 585,316 shares of the Company’s Common Stock,
such amendment to be effective upon the execution of this Agreement; and 



     
        WHEREAS,
in consideration of the Board’s undertaking to amend the Rights Agreement,
the Company and Black Diamond have agreed to enter into this Agreement. 



     
        NOW,
THEREFORE, in consideration of the foregoing and the respective representations,
warranties, covenants and agreements set forth in this Agreement, the parties
hereto agree as follows: 



     
        Section
1.Representations  and  Warranties of Black  Diamond.  Black Diamond  represents  and
warrants to the Company, as of the date hereof, as follows: 




             
             (a)
      Black Diamond is the beneficial owner,  either directly or indirectly  through one
of its affiliates, of not more than 585,316 shares of Common Stock, $.01 par value, of
the Company (the “Shares”).  




             
             (b)
      Except for any  agreements  that may exist between Black Diamond and any affiliate
 under its control, Black Diamond is not a party to any voting trust, proxy or other
agreement, arrangement, undertaking or understanding with respect to the voting of the
Shares, nor does it have the power to vote or direct the voting of any shares of the
Company’s Common Stock other than the Shares.  




             
             (c)
      All of the Shares now owned by Black Diamond were acquired for  investment
 purposes only and without any intention of changing, exercising or influencing control
of the Company, and there has been no change in that intention since the date of the
acquisition of such Shares. All statements contained in Item 4 of the Schedule 13D filed
by Black Diamond with the Securities Exchange Commission on March 8, 2004, continue to be
true and correct in all respects as of the date of this Agreement.  




             
             (d)
      All  shares  of  Company  Common  Stock now  owned by Black  Diamond,  or now owned
by an affiliate of Black Diamond, are owned solely for the account of Black Diamond or
such affiliate, respectively, and neither Black Diamond nor any of its affiliates has
acted as an agent, broker, or dealer for any unaffiliated third party with respect to the
Shares. Neither Black Diamond nor any of its affiliates has at any time acted in concert
with any third party with respect to the acquisition, disposition or voting of any shares
of the Company’s Common Stock for any purpose, including without limitation for the
purpose of changing, exercising or influencing control of or over the Company.  




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        Section
2.Covenants of Black Diamond. Black Diamond covenants and agrees as follows: 




             
             (a)
      So long as the Rights  Agreement  remains in effect,  Black  Diamond  will not,
 and will cause its affiliates not to, directly or indirectly, acquire any shares of the
Company’s Common Stock in addition to the 585,316 shares of Common Stock that it
owns as of the date of this Agreement, except for any shares of Common Stock it may
acquire by way of stock split, stock dividend or other distributions (including any
additional shares acquired by participation in a rights offering or other offering by the
Company) made available generally to all holders of the Company’s Common Stock. In
addition, in the event the Company issues (other than issuances of Common Stock pursuant
to options issued prior to May 31, 2004), in one or more transactions, Common Stock or
securities convertible into Common Stock, Black Diamond and its affiliates shall be
permitted to purchase additional shares of Common Stock in order to increase its
percentage ownership (on a fully diluted basis assuming conversion and exercise of all
securities convertible or exercisable into Common Stock) up to the percentage ownership
level of the Common Stock held by Black Diamond and its affiliates immediately prior to
any such issuance of Common Stock (a “Pre-Issuance Percentage”); provided,
that Black Diamond agrees, in the event Black Diamond or its affiliates purchases
additional shares of Common Stock pursuant to this sentence in connection with the
issuance of convertible securities by the Company, that Black Diamond agrees not to vote
and to cause its affiliates not to vote, a number of shares of Common Stock in excess of
Pre-Issuance Percentage in effect at the time of such vote. Neither Black Diamond nor any
of its affiliates shall take any action which would cause it or such affiliate, either
individually or in association with others, to become an Acquiring Person under the
Rights Agreement or for a Stock Acquisition Date to have occurred, in each case, as such
terms are defined in the Rights Agreement in effect as of the date hereof after giving
effect to the amendment.  




             
             (b)
      Black  Diamond  will not  confer  any proxy to any third  party to vote any shares
of the Company’s Common Stock, and the Company shall be entitled to disregard any
proxy so granted, to the extent that the aggregate number of shares voted by Black
Diamond and the holder of such proxy would exceed 462,983 shares of the Company’s
Common Stock, provided, however, that this covenant shall not be deemed to be violated to
the extent that Black Diamond solely grants a revocable proxy or consent to another
person in response to a public proxy or consent solicitation conducted by such person
that is made pursuant to the applicable rules and regulations under the Securities and
Exchange Act of 1934.  



     
        Section
3. Amendment  to Rights  Plan.  Within ten days of the date of this  Agreement,  the
Company will amend the Rights Agreement, effective as of the date hereof, to revise the
definition of Exempt Person to conform with the definition set forth in Appendix A to
this Agreement.  



     
        Section
4. Governing Law. This Agreement shall be governed by Delaware law. 



* * * * * * * 



     
        IN
WITNESS WHEREOF, the Company and Black Diamond have caused this Agreement to be
signed as of the date first written above. 






			BAYOU STEEL
      CORPORATION

      

      

      By: /s/ Charles W. McQueary

             ——————————————

      Name: Charles W. McQueary

      Title: Chairman





			BLACK DIAMOND CAPITAL
MANAGEMENT, L.L.C.

      

      

      By: /s/ S. A. Deckoff

             ——————————————

      Name: S. A. Deckoff

      Title: Principal







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Appendix A 



     
        ”Exempt
Person” shall mean each of the following: (i) the Company or any Subsidiary
of the Company, in each case including, without limitation, in its fiduciary
capacity, or any employee benefit plan of the Company or of any Subsidiary of
the Company, or any entity or trustee holding Common Stock for or pursuant to
the terms of any such plan or for the purpose of funding any such plan or
funding other employee benefits for employees of the Company or of any
Subsidiary of the Company and (ii) any stockholder (but not any transferee or
successor to such stockholder) who on the date of the adoption of this Rights
Agreement beneficially owns a number of shares of Common Stock that equals or
exceeds the Threshold Percentage of shares of Common Stock of the Company, (iii)
in the case of Black Diamond Capital Management, L.L.C. and any of its
affiliates that it controls (collectively, “Black Diamond”) (but not
any transferee or successor to Black Diamond), Black Diamond shall be permitted,
subject to the terms and conditions of the Agreement dated June 14, 2004 between
the Company and Black Diamond, to beneficially own not more than 585,316 shares
of Common Stock (except as permitted in Section 2(a) of an Agreement between
Black Diamond and the Company dated June 16, 2004) provided in the case of (ii)
above that if such stockholder acquires any additional shares of Common Stock of
the Company on or after the Effective Date of this Rights Agreement, such
stockholder will no longer be an Exempt Person, and further provided in the case
of (iii) above that if Black Diamond acquires or becomes the Beneficial Owner of
any additional shares of Common Stock of the Company (except as permitted by
Section 2(a) of the Agreement between Black Diamond and the Company dated June
16, 2004) it will no longer be an Exempt Person. 




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