Exhibit
10.5


 


REVOLVING
LINE OF CREDIT


PROMISSORY
NOTE


 


June 30, 2004


 


Promise to Pay:                  
For value received,
The Wornick Company, a Delaware corporation, promises to pay to the order of
Lender the Principal Amount, to the extent the same is advanced by Lender and
remains unpaid, together with interest on the unpaid balance of such amount, in
lawful money of the United States of America, in accordance with all the terms,
conditions and covenants set forth below.  Capitalized terms in this Promissory
Note not otherwise defined herein shall have the meaning assigned such terms in
a Loan Agreement of even date herewith by and among Lender, Borrower, Right
Away Management Corporation, a Delaware corporation, The Wornick Company Right
Away Division, a Delaware corporation, The Wornick Company Right Away Division,
L.P., a Delaware limited partnership, and TWC Holding LLC, a Delaware limited
liability company


 


Borrower:            
The Wornick Company,
a Delaware corporation


 


Borrower’s
Address for Notice:


 


The Wornick Company


Attention: Larry L. Rose


President and CEO


10825 Kenwood Road


Cincinnati, OH 45242


Fax: (513) 791-4148


With copy to: Robert B.
McKeon


Veritas Capital
Management II, L.L.C.


660 Madison Avenue


New York, New York 10021


Fax: (212) 688-9411


 


Lender:                 
Texas State Bank, a
Texas banking corporation


 


Lender’s
Address for Payment:


 


3900 N. 10th Street


McAllen, Texas 78501


 


Principal Amount:             
Fifteen Million
and 00/100 Dollars ($15,000,000.00)


 


Permitted Borrowings:             
The least of the: (i)
Principal Amount; or (ii) Borrowing Base; or (iii) Maximum Amount


 





















 


Interest Rate:                     
Applicable Rate
(hereinafter defined)


 


Default
Interest Rate:                
Applicable Rate plus
two percent (2%) per annum based on the actual number of days elapsed over a
360 day year


 


Payment Terms:


 


(a)          
Interest, computed at
the Interest Rate on the unpaid balance of the Principal Amount from time to
time outstanding, is due and payable monthly as it accrues on the last day of
each calendar month, beginning July 31, 2004, and continuing regularly on
the last day of each calendar month thereafter until June 30, 2009, when
all accrued, but unpaid, interest shall be due and payable.


 


(b)          
If at any time the
outstanding principal balance of all Obligations shall exceed the lesser of (i)
the Borrowing Base or (ii) the Maximum Amount, Borrower shall immediately upon
receipt of written notice from Lender pay to Lender the entire amount of such
excess, which amount will be credited by Lender to the unpaid Principal Amount
or to unpaid principal on such other outstanding Obligations as Lender may
elect.


 


(c)          
The entire unpaid
Principal Amount owing on this Promissory Note shall be due and payable on
June 30, 2009.


 


Interest
Provisions:


 


(a)          
Rate: The Principal Amount of this Promissory
Note advanced from time to time and remaining unpaid prior to maturity shall
bear interest at a varying or fluctuating rate per annum based on the actual
number of days elapsed over a 360 day year (the “Applicable Rate”) that is
equal to the “Prime Rate” as that term is defined and stated in this Promissory
Note, but never greater than the “Maximum Lawful Rate”, as defined below. The
term “Prime Rate” as used in this Promissory Note means a per annum interest
rate equal to the “Prime Rate” as published each day by The Wall Street
Journal in its “Money Rates” section, and if more than one such rate is
published, then the highest such rate. On any day when The Wall Street
Journal is not published or a Prime Rate is not published under the Money
Rates section thereof, then the Prime Rate published for the preceding
publication date of The Wall Street Journal shall apply. Should the
method of establishing the Prime Rate, or the publication of such Prime Rate,
cease or be abolished, then the Prime Rate used for the balance of the term of
this Promissory Note shall be that interest rate, established, adopted or used
by holder as its prime or base interest rate. The Applicable Rate will
automatically fluctuate upward or downward with changes to the Prime Rate,
without notice to Borrower or any other person. Interest shall be calculated on
the amount of each Advance of the Principal Amount of this Promissory Note from
the date of each Advance.


 


(b)          
Maximum Lawful
Rate: The term
“Maximum Lawful Rate” means the maximum lawful contractual rate of interest,
and the term “Maximum Lawful Amount” means the maximum lawful contractual
amount of interest, that are permissible and nonusurious under


 


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applicable state or federal law for the type of loan
evidenced by this Promissory Note and the other Loan Documents. To the extent
that the Texas Finance Code, as amended, is applicable to this Promissory Note,
the “Weekly Ceiling” defined in Chapter 303, Texas Finance Code, shall be the
basis for determining the Maximum Lawful Rate in effect from time to time.


 


(c)          
Usury Disclaimer:  All agreements between Lender and
Borrower, whether now existing or hereafter arising and whether written or
oral, are hereby limited so that in no contingency, whether by reason of demand
for payment or acceleration of the maturity hereof or any other circumstance
whatsoever, shall the interest contracted for, charged or received by Lender
exceed the Maximum Lawful Amount. If, from any circumstance whatsoever,
interest would otherwise be payable to Lender in excess of the Maximum Lawful
Amount, the interest payable to Lender shall be reduced to the Maximum Lawful
Amount; and if from any circumstance Lender shall ever receive any interest in
excess of the Maximum Lawful Amount, an amount equal to any excessive interest
shall be applied to the reduction of the Principal Amount and not to the
payment of interest, or if such excessive interest exceeds the unpaid Principal
Amount such excess shall be refunded to Borrower. All interest paid or agreed
to be paid to Lender shall, to the extent permitted by applicable law, be
amortized, prorated, allocated, and spread throughout the full period until
payment in full of the Principal Amount (including the period of any renewal or
extension hereof) so that the interest hereon for such full period shall not
exceed the Maximum Lawful Amount. For purposes of this paragraph, the term
interest shall include all considerations and amounts that constitute interest
under applicable usury law. This paragraph shall control all agreements between
Borrower and Lender.


 


(d)          
Interest After
Default: 
All past due installments of principal and interest on this Promissory Note,
and the unpaid principal balance during the existence of any default and after
maturity, shall bear interest at a per annum rate equal to the lesser of (i)
the Default Interest Rate stated above or (ii) the Maximum Lawful Rate. Where
no Maximum Lawful Rate is applicable and a Default Interest Rate is not
specified, the interest rate on such amounts shall be the Applicable Rate
stated above.


 


Revolving
Line of Credit:


 


(a)          
Indebtedness and
Liens: This
Promissory Note shall evidence principal indebtedness of Borrower to Lender up
to the Principal Amount based on Advances requested and funded from time to
time under a $25,000,000.00 revolving credit line established under the Loan
Agreement.  Subject to the Permitted Borrowings limitations, the
indebtedness outstanding from time to time pursuant to this Promissory Note may
be decreased, increased, paid in full and then renewed.  This Promissory
Note and all Loan Documents securing it and the liens and security interests
thereunder with respect to the Collateral shall remain in effect until this
Promissory Note is formally terminated in writing, and this Promissory Note and
such other Loan Documents, and liens and security interests shall not otherwise
be terminated by payment of all or any part of the indebtedness hereby
represented.  All Advances requested under this Promissory Note are
subject to, and shall be made pursuant to the terms of this Promissory Note,
the Loan Agreement and the other Loan Documents.


 


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(b)          
Evidence of Amount
Outstanding: The
books and records of Lender relating to this Promissory Note will be evidence
of the amounts advanced, paid and owing hereunder. Without limiting the
foregoing, all advances and all payments made on account of the principal
hereof may be endorsed by Lender on the back of or on an attachment to this
Promissory Note, and when endorsed thereon shall become a part hereof and
evidence of the amounts due hereunder.


 


Default
Provisions:


 


(a)          
Definitions: The term “Monetary Default” shall mean
a party’s failure, in whole or in part, to pay any amounts due on any
Obligation, including Obligations pursuant to this Promissory Note, or to pay
any amount necessary to repair, maintain, replace or insure the Collateral, or
to pay taxes on the Collateral.  The term “Non-Monetary Default” shall
mean any Event of Default other than a Monetary Default.  The term
“Selected Enforcement Activities” shall mean: (i) acceleration of maturity of
the indebtedness evidenced by the Promissory Note; (ii) advancing funds to
repair, maintain, replace or insure the Collateral, or to pay taxes on the
Collateral; or (iii) exercising collection rights or foreclosure rights with
respect to any Collateral.


 


(b)          
Event of Default:  The occurrence of any:


 


(i)  Non-Monetary Default listed in
Section 10.01 (d), (e), (f), (g), (h), (i), (k), (m), (n), (o) or (p) of
the Loan Agreement; or Borrower’s failure to make any interest or principal
payment on the $125,000,000 aggregate principal amount, 10 7/8% Senior Secured
Notes due 2011, owed by Borrower to the holders of such notes on the due date
(“Notes Debt”); or if there is not sufficient availability under the Borrowing
Base from which to fund an Advance pursuant to the terms of the Loan
Agreement,  Borrower’s failure to have sufficient cash on hand at least
five (5) calendar days prior to a required Notes Debt payment date in order to
make the required Notes Debt payment; or to pay amounts required of tenants
under the Leases; shall constitute an Event of Default immediately upon the
occurrence of the event constituting such default;


 


(ii)  Monetary Default, and/or the occurrence of
any Non-Monetary Default listed in Section 10.01 (j) or (l) of the Loan
Agreement shall constitute an Event of Default hereunder if Lender shall
declare such occurrence as a default, and Lender notifies the parties in
default in writing of same, and the parties in default fail to remedy such
default within eight (8) calendar days following notice from Lender; and


 


(iii) Non-Monetary Defaults listed in
Section 10.01 of the Loan Agreement which are not otherwise included in
sub-items (i) or (ii) of this sub-section (b) shall constitute an Event of
Default hereunder if Lender shall declare such occurrence as a default and
notifies the parties in default in writing of same, and such parties in default
fail to remedy such default within fifteen (15) calendar days following notice
from Lender, provided, within five (5) days after the delivery or mailing of
the notice of default, the parties in default commence to remedy such default
and


 


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at the time such parties commence the remedy of such
default they submit to Lender in writing their plan to remedy the default, and
said cure is thereafter continuously pursued by the defaulting parties with due
diligence and is remedied within such fifteen (15) calendar day period. If such
Non-Monetary Default is not reasonably capable of being remedied within fifteen
(15) calendar days, the defaulting parties, on written request to Lender, shall
have such additional time as is reasonable under the circumstances to complete
the cure of such default, but in no event more than thirty (30) calendar days
after the delivery or mailing of the original notice of default;


 


however, if in Lender’s
reasonable judgment: (x) the Monetary Default or Non-Monetary Default otherwise
subject to notice and an opportunity to remedy default listed in sub-items (ii)
and (iii) of this sub-section are not capable of being remedied by the
defaulting parties during the period otherwise permitted herein for the cure of
such default; or (y) allowing the parties in default an opportunity to remedy
the default will likely result in the Collateral being damaged or destroyed, uninsured
or rendered unavailable to Lender; or (z) allowing the parties in default an
opportunity to remedy the default will likely result in the Collateral being
materially and adversely affected; then Lender will notify the parties in
default of such determination (“Lender Determination”), and if such
determination is made, no notice and opportunity to remedy default is available
for such Monetary Default or Non-Monetary Default.  In addition, in no
event is Lender obligated to provide the parties in default notice and
opportunity to cure any default of the same type or nature which is repeated
more than twice in any one (1) calendar year.  The provisions of
sub-section (b) shall apply to Events of Default under all Loan Documents
applicable to this Promissory Note, and unless expressly stated to the contrary
in such documents, any notice and opportunity to remedy default period referred
to therein shall be deemed to incorporate said provisions. If any of the Loan
Documents applicable to this Promissory Note are inconsistent with this
paragraph,  the terms of this Promissory Note shall be controlling, unless
the other Loan Document expressly provides otherwise.  Nothing in this
sub-section (b) shall be construed as extending the term of this Promissory
Note or the date upon which a default occurs, and no decision to forego any
remedy for any given Event of Default shall be deemed a waiver on the part of
the holder hereof of any right relating to any other Event of Default.


 


(c)          
Remedies for an
Event of Default:
Provided a Lender Determination has not been made with respect to an Event of
Default, Lender will not initiate a Selected Enforcement Activity with respect
to an Event of Default during any applicable notice and cure period described
in sub-section (b) hereof.  Except as provided in the preceding
sentence, if an Event of Default exists and is continuing, Lender may, without
notice or demand, declare the entire unpaid Principal Amount and all accrued
and earned but unpaid interest at once due and payable, and exercise all rights
and remedies available to Lender under the Loan Documents.  The limitation
on Lender’s rights with respect to initiating a Selected Enforcement Activity
following certain Events of Default shall be strictly construed, and such
limitation shall not impair the exercise of any remedy not referred to in such
definition, including, without limitation, the seeking of any mandatory or
prohibitive injunction or restraining order.


 


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(d)          
Waiver by Borrower: Except as provided in this Promissory
Note, Borrower and all other parties liable for this Promissory Note waive
demand, presentment for payment, notice of nonpayment, protest, notice of
protest, grace, notice of dishonor, notice of intent to accelerate, notice of
acceleration, and diligence in collection.


 


(e)          
Non-Waiver by
Lender: Any
previous extension of time, forbearance, failure to pursue some remedy, or
acceptance of partial payment by Lender, before or after maturity, does not
constitute a waiver by Lender of the existence of any Event of Default nor of
its right to strictly enforce the collection of this Promissory Note according
to its terms.


 


(f)           
Other Remedies Not
Required: Lender
shall not be required to first file suit, exhaust all remedies, or enforce its
rights against any security in order to enforce payment of this Promissory
Note.


 


(g)          
Joint and Several
Liability: Each
Borrower who signs this Promissory Note, and all of the other parties liable
for the payment of this Promissory Note, such as guarantors, endorsers, and
sureties, are jointly and severally liable for the payment of this Promissory
Note.


 


(h)          
Attorney’s Fees: If Lender requires the services of an
attorney to enforce the payment of this Promissory Note or the performance of
the other Loan Documents, or if this Promissory Note is collected through any
lawsuit, probate, bankruptcy, or other judicial proceeding, Borrower agrees to
pay Lender an amount equal to its reasonable attorney’s fees and other
collection costs. This provision shall be limited by any applicable statutory
restrictions relating to the collection of attorney’s fees.


 


Miscellaneous
Provisions:


 


(a)          
Collateral: This Promissory Note is secured by a
lien and security interest in all the Collateral.


 


(b)          
Application of
Payments: All
payments on the indebtedness evidenced by this Promissory Note and by any
documents securing or governing this Promissory Note, other than regularly
scheduled payments, shall be applied to such indebtedness in such order and
manner as Lender may from time to time determine in its absolute discretion.


 


(c)          
Prepayment: Borrower may prepay this Promissory
Note in whole or in part at any time, without penalty. Any prepayment shall be
applied to the last maturing installments of principal due on this Promissory
Note, that is in the inverse order of maturity and without reducing the amount
or time of payment of the remaining obligatory installments until the
indebtedness evidenced by this Promissory Note is fully paid.


 


(d)          
Subsequent Holder: All references to Lender in this
Promissory Note shall also refer to any subsequent owner or holder of this
Promissory Note by transfer, assignment, endorsement or otherwise.


 


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(e)          
Transfer or
Participation: 
Borrower acknowledges and agrees that Lender may, from time to time, transfer
or sell this Promissory Note to one or more transferees or participants.
Borrower authorizes Lender to disseminate any information it has pertaining to
the loan evidenced by this Promissory Note, including, without limitation,
credit information on Borrower, any of its principals and any guarantor of this
Promissory Note, to any such transferee or participant or prospective transferee
or participant.


 


(f)           
Set-Off: Borrower agrees that Lender may
exercise Lender’s right of set-off to pay all or any part of the outstanding
Principal Amount and accrued interest, costs, attorney’s fees, and advances
owed on this Promissory Note against any obligation Lender may have, now or
hereafter, to pay money, securities or other property to Borrower. This
includes, without limitation:


 


(i)            any deposit account balance, securities
account balance or certificate of deposit balance (whether matured or
unmatured) Borrower has with Lender, whether general, special, time, savings,
checking or NOW account;


 


(ii)           any money owing to Borrower on an item
presented to Lender or in Lender’s possession for collection or exchange; and


 


(iii)          any repurchase agreement or any other
non-deposit obligation or credit in Borrower’s favor.


 


Lender’s right of set-off may be exercised upon
Borrower’s default:


 


(i)            without prior demand or notice;


 


(ii)           without regard to the existence or value
of any Collateral securing this Promissory Note; and


 


(iii)          without regard to the number or
creditworthiness of any other persons who have agreed to pay this Promissory
Note.


 


Lender will not be liable
for dishonor of a check or other request for payment where there are
insufficient funds in the account (or other obligation) to pay such request
because of Lender’s exercise of Lender’s right of set-off. Borrower agrees to
indemnify and hold Lender harmless from any person’s claims and the costs and
expenses, including without limitation, attorneys’ fees, incurred as a result
of such claims or arising as the result of Lender’s exercise of Lender’s right
of set-off.


 


If any such money,
securities or other property is also owned by some other person who has not
agreed to pay this Promissory Note (such as another depositor on a joint
account) Lender’s right of set-off will extend to the amount which could be
withdrawn or paid directly to Borrower on Borrower’s request, endorsement or
instruction alone. In addition, where Borrower may obtain payment from Lender
only with the endorsement or consent of someone who has not agreed to pay this
Promissory Note, Lender’s right of set-off will extend to Borrower’s interest
in


 


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the obligation. Lender’s right of set-off will not
apply to an account or other obligation if it clearly appears that Borrower’s
rights in the obligation are solely as a fiduciary for another or to an
account, which by its nature and applicable law (for example an IRA or other
tax deferred retirement account), must be exempt from the claims of creditors.
Borrower hereby appoints Lender as Borrower’s attorney-in-fact and authorizes
Lender to redeem or obtain payment of any certificate of deposit in which
Borrower has an interest in order to exercise Lender’s right of set-off. Such
authorization applies to any certificate of deposit even if not matured.
Borrower further authorizes Lender to withhold any early withdrawal penalty
without liability against Lender in the event such penalty is applicable as a
result of Lender’s set-off against a certificate of deposit prior to its
maturity.


 


(g)          
Successors and
Assigns: The
provisions of this Promissory Note shall be binding upon and for the benefit of
the successors, assigns, heirs, executors and administrators of Lender and
Borrower.


 


(h)          
Other Parties
Liable:  All
promises, waivers, agreements and conditions applicable to Borrower shall
likewise be applicable to and binding upon any other parties primarily or
secondarily liable for the payment of this Promissory Note, including all
guarantors, endorsers and sureties.


 


(i)           
Modifications: Any modifications agreed to by Lender
relating to the release of liability of any of the parties primarily or
secondarily liable for the payment of this Promissory Note, or relating to the
release, substitution, or subordination of all or part of the security for this
Promissory Note, shall in no way constitute a release of liability with respect
to the other parties or security not covered by such modification.


 


(j)           
Borrower’s Address
for Notice: 
All notices required to be sent by Lender to Borrower shall be sent by United
States Mail, postage prepaid, to Borrower’s Address for Notice stated on the
first page of this Promissory Note, until Lender shall receive written
notification from Borrower of a new address for notice.


 


(k)          
Lender’s Address
for Payment: All
sums payable by Borrower to Lender shall be paid at Lender’s Address for
Payment stated on the first page of this Promissory Note, until Lender shall
notify Borrower of a new address for payment.


 


(1)          
Applicable Law: This Promissory Note has been executed
and delivered, and shall be construed, in accordance with the applicable laws
of the State of Texas and the United States of America. This Promissory Note is
payable in Hidalgo County, Texas, and venue shall lie in Hidalgo County, Texas,
with respect to any action brought with respect to this Promissory Note. 
All disputes associated with this Promissory Note shall be resolved by binding
arbitration in accordance with the procedures set forth in the Loan Agreement.


 


(m)         
Time of Essence: Time is of the essence in Borrower’s
performance of all duties and obligations imposed by this Promissory Note.


 


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(n)          
Business Use: Borrower represents and warrants to
Lender that the proceeds of this Promissory Note will be used solely for the
purposes permitted in the Loan Agreement.


 


(o)          
Chapter 346 Not
Applicable: It is
understood that Chapter 346, Texas Finance Code,  relating to certain
revolving credit loan accounts and tri-party accounts is not applicable to this
Promissory Note, and any applicability thereof is hereby expressly waived.


 


	
   

  	
  THE WORNICK COMPANY, a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert B. McKeon

  	
   

  
	
   

  	
   

  	
  Robert B. McKeon

  
	
   

  	
   

  	
  Chairman of the Board

  
	
   

  	
   

  	
  Address:  c/o
  Veritas Capital Management II, L.L.C.

  
	
   

  	
   

  	
  660 Madison Avenue

  
	
   

  	
   

  	
  New York, New York
  10021

  



 


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