Exhibit
10.2


 


INTERCREDITOR
AGREEMENT


 


This INTERCREDITOR
AGREEMENT, dated as of June 30, 2004 (this “Agreement”),
is made by and between U.S. BANK NATIONAL ASSOCIATION, in its capacity as
trustee under the Indenture (as defined below) and as secured party under the
Security Agreement (as defined in the Indenture) (together with its successors
in such capacities, the “Trustee”),
and TEXAS STATE BANK, as the lender (the “Bank”)
under the Credit Agreement (as defined below).


 


RECITALS


 


WHEREAS, The Wornick
Company, a Delaware corporation (the “Issuer”),
the Guarantors (as defined in the Indenture referred to below) and the Trustee
entered into that certain Indenture, dated as of the date hereof (as amended,
restated, supplemented, or otherwise modified from time to time, the “Indenture”), whereby indebtedness was
incurred by the Issuer, the repayment of which is guaranteed by the Guarantors
and secured by a continuing security interest in and lien on substantially all
of the assets of the Issuer and the Guarantors (other than the Excluded Assets
(defined therein)) (the “Collateral”);


 


WHEREAS, the Issuer, the
Guarantors and the Bank entered into that certain Loan Agreement, dated as of
the date hereof (as amended, restated, supplemented or otherwise modified from
time to time, the “Credit Agreement”), whereby the Bank
agreed, upon the terms and conditions stated therein, to make loans and
advances to, or to issue letters of credit (or guaranties in respect thereof)
for the account of the Issuer, the repayment of which is secured by a
continuing security interest in and lien on the Collateral in accordance with
the Credit Agreement and all other Loan Documents (as defined in the Credit
Agreement) (collectively, the “Credit
Documents”);


 


WHEREAS, one of the conditions
of the Credit Agreement is that the security interest in the Collateral under
the Credit Documents be senior in priority to the security interest in the
Collateral under the Indenture Documents (defined below) in the manner and to
the extent provided for in this Agreement;


 


WHEREAS, the Trustee and
the Bank desire to enter into this Agreement concerning their respective rights
with respect to the priority of their respective security interests in the
Collateral; and


 


WHEREAS, the terms of the
Indenture permit the Issuer and the Guarantors to enter into the Credit
Agreement, and in connection therewith, authorize and direct the Trustee to
enter into an intercreditor agreement in the form of this Agreement.


 


NOW, THEREFORE, the
Parties hereby agree as follows:


 


ARTICLE
I

DEFINITIONS


 


Section
1.1                                  
Definitions.  In addition to the capitalized
terms defined above, as used in this Agreement, the following capitalized terms
are used:


 
















 


“Credit Facility Indebtedness” means all
present and future Obligations (as defined in the Credit Agreement), contingent
or otherwise, of the Issuer and the Guarantors to the Senior Creditor arising
under or pursuant to the Credit Documents, including, in each case, interest,
fees, and expenses accruing after the initiation of any Insolvency Proceeding
(irrespective of whether allowed as a claim in such proceeding), and also
including the secured claims of the Senior Creditor in respect of the
Collateral in any Insolvency Proceeding.


 


“Enforcement Action” means, with respect to
the Trustee or the Senior Creditor, (a) the commencement of any action, whether
judicial or otherwise, for the enforcement of such Party’s rights and remedies
as a secured creditor with respect to the Collateral, including the
commencement of any receivership or foreclosure proceedings against, or any
other sale of, collection on, or disposition of, any Collateral, or any
exercise of remedies with respect to the Collateral under the Indenture
Documents or the Credit Documents; (b) notifying any third-party account
debtors of the Issuer, any Guarantor or any of their respective subsidiaries to
make payment directly to such Party or to any of its agents or other Persons
acting on its behalf; or (c) following the commencement of an Insolvency
Proceeding against the Issuer or any Guarantor, exercising any rights afforded
to secured creditors in a case under the Bankruptcy Code that directly relates
to or directly affects any of the Collateral.


 


“Enforcement Event” means the occurrence and
continuance of an Event of Default.


 


“Enforcement Event Notice” has the meaning
set forth in Section 3.2(a).


 


“Entitled Party” has the meaning set forth
in Section 4.1(a).


 


“Event of Default” has the meaning set forth
in the Financing Documents.


 


“Expiry Date” has the meaning set forth in Section
3.2(b)(i).


 


“Financing Documents” means the Indenture
Documents and the Credit Documents.


 


“Fully Paid” means the payment in cash or
cash equivalents in full of all obligations (other than inchoate indemnity
obligations that survive payment in full) under the Credit Documents or the
Indenture Documents, as the case may be, and in the case of the Credit
Documents, at such time when there shall no longer be any obligation to make
loans or advances or issue letters of credit (or guaranties in respect thereof)
thereunder and there shall no longer be any letter of credit (or guaranty in
respect thereof) outstanding thereunder or such letter of credit (or guaranty
in respect thereof) shall have been fully cash collateralized (in accordance
with the provisions of the Credit Documents).


 


“Indenture Documents” means the Indenture,
the Notes, the Security Documents and the Registration Rights Agreement, and
such other agreements, instruments and certificates executed and delivered (or
issued) by the Issuer or the Guarantors pursuant to the Indenture, as any or
all of the same may be amended, restated, supplemented or otherwise modified
from time to time.


 


“Insolvency Proceeding” means any proceeding
for the purposes of dissolution, winding up, liquidation, arrangement or
reorganization of the Issuer, any Guarantor, or any other subsidiary of the
Issuer, or its successors or assigns, whether in bankruptcy, insolvency,
arrangement, reorganization or receivership proceedings, or upon an assignment
for the benefit of


 


2
















 


creditors or any other marshaling of the assets and
liabilities of the Issuer, any Guarantor, or any other subsidiary of the
Issuer, or its successors or assigns.


 


“Lien Priority” means, with respect to any
Lien in and to the Collateral, the order of priority of such Lien as specified
in Sections 2.1 and 2.2.


 


“Maximum Amount” means an aggregate amount
of Credit Facility Indebtedness incurred and outstanding at any time (plus any Refinancing Indebtedness incurred
to retire, defease, refinance, replace or refund such Indebtedness) of up to
the greater of (a) $15.0 million, plus
any Indebtedness owing to the Senior Creditor certified by the Issuer to the
Senior Creditor at the time of incurrence to be permitted under the Indenture
pursuant to clause (ii) of paragraph (g) or paragraph (h) of the definition of
“Permitted Indebtedness,” minus the
amount of any such Indebtedness certified by the Issuer to the Senior Creditor
to be (1) retired with the Net Cash Proceeds from any Asset Sale or Event of
Loss applied to permanently reduce the outstanding amounts or the commitments
with respect to such Indebtedness pursuant to Section 4.13 of the Indenture, or
(2) assumed by a transferee in an Asset Sale, and (b) the sum of (i) 85% of the
net book value of accounts receivable of the Issuer and the Subsidiaries, and
(ii) 65% of the net book value of inventory of the Issuer and the Subsidiaries,
in the case of each of clauses (b)(i) and (ii), as determined by the Issuer in
accordance with GAAP as of the date or dates of incurrence of such Indebtedness
under the Credit Agreement, and which Indebtedness is certified by the Issuer
to the Senior Creditor at the time of incurrence as permitted under the Indenture,
and including accounts receivable and inventory acquired with the proceeds of
the substantially concurrent incurrence of Indebtedness under the Credit
Agreement, plus in the instance
of either clause (a) or (b), all related interest, fees, indemnities, costs and
expenses.


 


“Notes” means the senior secured notes
issued under the Indenture.


 


“Party” means any signatory to this
Agreement.


 


“Secured Liability” means the Subordinated
Lien Indebtedness and the Credit Facility Indebtedness.


 


“Senior Creditor” means the Bank or, if
applicable, the administrative agent (or similar designation, if the Credit
Facility Indebtedness is syndicated among a group of lenders) under the Credit
Agreement.


 


“Subordinated Lien Indebtedness” means all
present and future obligations, contingent or otherwise, of the Issuer and the
Guarantors to the Trustee or the Holders arising under or pursuant to the
Indenture Documents, including, in each case, interest, fees and expenses
accruing after the initiation of any Insolvency Proceeding (irrespective of
whether allowed as a claim in such proceeding), and including the secured
claims of the Trustee or the Holders in respect of the Collateral in any
Insolvency Proceeding.


 


“Trigger Date” means the earlier of (i) the
date on which an event contemplated by clause (b) or (c) of the definition of
Trigger Event occurs, (ii) the date on which an Enforcement Event Notice is
delivered, and (iii) the final maturity date of the Credit Facility
Indebtedness (after giving effect to any extensions granted thereunder).


 


“Trigger Event” means:


 


(a)                     
the occurrence of an
Event of Default,


 


3
















 


(b)                    
the acceleration of
the maturity of the Credit Facility Indebtedness by the Senior Creditor pursuant
to the Credit Agreement, or


 


(c)                     
the commencement of
any action or proceeding by the Senior Creditor, whether judicial or otherwise
(but excluding demands for payment or notices of default), for the enforcement
of the Senior Creditor’s rights and remedies under any of the Credit Documents,
including (i) commencement of any Enforcement Action against or any other sale
of, collection on or disposition of any Collateral, including any notification
to third parties to make payment directly to the Senior Creditor; (ii) exercise
of any right of set-off; (iii) commencement of any Insolvency Proceeding; and
(iv) commencement of any judicial action or proceeding against the Issuer or
any Guarantor to recover all or any part of the Credit Facility Indebtedness.


 


Section
1.2                                  
Indenture
Definitions. 
Undefined capitalized terms have the meanings assigned to them in the
Indenture.


 


Section
1.3                                  
Miscellaneous.  All definitions herein (whether
set forth herein directly or by reference to definitions in other documents)
shall be equally applicable to both the singular and the plural forms of the
terms defined.  The words “hereof,” “herein” or “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.  The term
“including” (and similar terms) means “including without limitation.”


 


ARTICLE
II

LIEN PRIORITY


 


Section
2.1                                  
Agreement to
Subordinate Liens. 
The Trustee hereby agrees that the Liens of the Trustee for the benefit of
itself and the Holders in and to the Collateral are and shall be subordinate in
priority to the Liens of the Senior Creditor in and to the Collateral securing
the Credit Facility Indebtedness up to, but not in excess of, the Maximum
Amount; provided that, the rights
of the Senior Creditor under this Agreement shall be void and of no further
force and effect if, and only to the extent that, the Liens of the Senior
Creditor in and to the Collateral are avoided, disallowed, set aside or
otherwise invalidated in any action or proceeding by a court, tribunal or
administrative agency of competent jurisdiction.  The subordination of the
Liens of the Trustee for the benefit of itself and the Holders in and to the
Collateral in favor of the Senior Creditor provided for herein shall not be
deemed to (a) subordinate the Liens of the Trustee to the Liens of any other
Person, or (b) subordinate the Subordinated Lien Indebtedness to any
Indebtedness of the Issuer or any of the Guarantors, including the Credit
Facility Indebtedness.


 


Section
2.2                                  
No Contest;
Excluded Assets. 
Each Party agrees that it will not attack or contest the validity, perfection,
priority or enforceability of the Liens of the other Party (and the Trustee
agrees that it will not contest the Senior Creditor’s good faith reliance on
any certification referenced in the definition of “Maximum Amount” made by the
Issuer to the Senior Creditor), or finance or urge any other Person to do so; provided that, either Party may enforce
its rights and privileges hereunder without being deemed to have violated this
provision.  Any provision contained in this Agreement to the contrary
notwithstanding, the terms and conditions of this Agreement shall not apply to
any property or assets (including property or assets that do not constitute
Collateral) that one Party has a Lien on and the other Party does not.


 


4
















 


Section
2.3                                  
Exercise of
Rights.


 


(a)                     
The Trustee may
exercise, and nothing herein shall constitute a waiver of, any right it may
have at law or in equity to receive notice of, or to commence or join with any
creditor in commencing any Insolvency Proceeding; provided that, the exercise of any such right by the Trustee
shall be (i) subject to the Lien Priority and the application of proceeds of
Collateral under Section 3.4, and (ii) subject to the provisions of Sections
3.1 and 3.2.


 


(b)                    
Notwithstanding any
other provision hereof, the Trustee may make such demands or file such claims
as may be necessary to prevent the waiver or bar of such claims under
applicable statutes of limitations or other statutes, court orders or rules of
procedure.


 


Section
2.4                                  
Priority of
Liens. 
Irrespective of the order of recording of mortgages, financing statements,
security agreements or other instruments, and irrespective of the descriptions
of Collateral contained in the Financing Documents, including any financing
statements, the Parties agree among themselves that their respective Liens in
the Collateral shall be governed by the Lien Priority, which shall be controlling
in the event of any conflict between this Agreement and any of the Financing
Documents.


 


ARTICLE
III

ACTIONS OF THE PARTIES


 


Section
3.1                                  
Limitation on
Certain Actions. 
Subject to Section 3.2, until the earlier of (a) the date on which all
Credit Facility Indebtedness is Fully Paid, and (b) the first date following
the date on which the Maximum Amount of Credit Facility Indebtedness is Fully
Paid, the Trustee will not, without the prior written consent of the Senior
Creditor, take any Enforcement Action.


 


Section
3.2                                  
Standstill
Period.


 


(a)                     
If an Enforcement
Event with respect to the Indenture Documents has occurred and is continuing,
the Trustee, on behalf of the Holders, will give the Senior Creditor written
notice thereof (an “Enforcement Event Notice”).


 


(b)                    
The Trustee may,
subject to the Lien Priority and the application of all proceeds of the
Collateral in accordance with Section 3.4, take one or more Enforcement
Actions so long as:


 


(i)            
(A) an Enforcement
Event is continuing for more than 45 consecutive days after the delivery of an
Enforcement Event Notice (the “Expiry Date”);
(B) the Senior Creditor has not, on or before the Expiry Date, commenced one or
more Enforcement Actions, and (C) the Issuer or the Guarantor against which the
Trustee’s proposed Enforcement Action is to be taken is not the subject of an
Insolvency Proceeding; or


 


(ii)          (A) the Senior Creditor has commenced any
Enforcement Action on or prior to the Expiry Date and, at any time after the
Expiry Date, is no longer pursuing any Enforcement Actions, (B) no Insolvency
Proceeding is pending against the Issuer or any Guarantor against which the Trustee’s
proposed Enforcement Action is to be taken, and (C) the Enforcement


 


5
















 


Event that was the subject of, or existing on the date
of, the Enforcement Event Notice is then continuing.


 


(c)                     
Except as expressly
provided for in this Agreement, nothing in this Agreement shall prevent the
Parties hereto from exercising any other remedy, or taking any other action,
under any of the Financing Documents.


 


Section
3.3                                  
Foreclosure.  Any Party taking a permitted
Enforcement Action may enforce its Financing Documents independently as to the
Issuer and each Guarantor and independently of any other remedy or security
such Party at any time may have or hold in connection with the Secured
Liabilities owing to it, and it shall not be necessary for such Party to
marshal assets in favor of the other Party or any other Person or to proceed
upon or against or exhaust any other security or remedy before proceeding to
enforce the Financing Documents.  Each of the Trustee (for so long as the
Credit Facility Indebtedness is not Fully Paid) and the Senior Creditor (for so
long as the Trustee and the Holders are owed any Subordinated Lien
Indebtedness) expressly waives any right to require the other Party to marshal
assets in its favor or to proceed against any Collateral provided by the Issuer
or any Guarantor, or any other property, assets, or collateral provided by the
Issuer, any Guarantor, or any other Person, and agrees that the Party taking
such permitted Enforcement Action may proceed against the Issuer, any
Guarantor, any Collateral or other property, assets, or other collateral
provided by any of them or by any other Person, in such order as it shall
determine in its sole and absolute discretion.  The foregoing notwithstanding: 
(a) with respect to the sale or other disposition of any Collateral, the Party
conducting such sale or other disposition agrees in favor of the other Party
that such sale or other disposition shall be conducted in a commercially reasonable
manner in accordance with any applicable law, including Article 9 of the
Uniform Commercial Code, and (b) the Senior Creditor agrees that, at such time
as all Credit Facility Indebtedness is Fully Paid, it shall thereupon promptly
cease all further Enforcement Actions.


 


Section
3.4                                  
Distribution.  Each Party agrees that, upon any
distribution as a result of an Enforcement Action, or the receipt of any other
payment or distribution with respect to the Collateral, the proceeds thereof
shall be distributed in the order of, and in accordance with, the following
priorities:


 


(a)           
FIRST:


 


(i)            
if the Enforcement
Action is taken by the Senior Creditor, to the payment of all reasonable costs
and expenses, commissions and taxes of the Senior Creditor incurred in
connection with taking any such Enforcement Action or other realization,
including all reasonable expenses (including attorneys’ fees and expenses),
liabilities and advances made or incurred by the Senior Creditor in connection
therewith;


 


(ii)          if the Enforcement Action is taken by the
Trustee, to the payment of all reasonable costs and expenses, commissions and
taxes of the Trustee incurred in connection with taking any such Enforcement
Action or other realization, including all reasonable expenses (including
attorneys’ fees and expenses), liabilities and advances made or incurred by the
Trustee in connection therewith;


 


6
















 


(b)                    
SECOND, to the Senior
Creditor, until the earlier of (i) the Credit Facility Indebtedness being Fully
Paid, and (ii) the first time following the date at which the Maximum Amount of
Credit Facility Indebtedness is Fully Paid;


 


(c)                     
THIRD, to the
Trustee, until all Subordinated Lien Indebtedness is Fully Paid;


 


(d)                    
FOURTH, to the Senior
Creditor until all outstanding Credit Facility Indebtedness in excess of the
Maximum Amount is Fully Paid; and


 


(e)                     
FIFTH, to the Issuer
or the Guarantors, as applicable, or as a court of competent jurisdiction may
otherwise direct.


 


Section
3.5                                  
Notice of
Certain Events. 
Each Party agrees that it will notify the other Party, in writing, (a) if it
receives actual notice of the occurrence of a Trigger Event or Enforcement
Event, not later than seven days after the date of any such occurrence, and (b)
prior to its first exercising any remedies with respect to any portion of the
Collateral in connection with one or more Events of Default, provided that, if all such Events of
Default are cured or waived, such notice under this clause (b) will be given on
each other occasion that remedies are first exercised with respect to one or
more other Events of Default.  Notwithstanding the foregoing, (x) the
Senior Creditor shall not be obligated to provide such prior written notice if
exigent circumstances require that it act immediately to preserve, protect, or
obtain possession or control over the Collateral; provided that, in such event the Senior Creditor agrees to
provide the Trustee with written notice as soon as practicable following the
Senior Creditor first exercising any remedies with respect to the Collateral;
and (y) no Party shall incur any liability to the other under this Section
3.5 as a result of the failure
of such Party to provide any such notice so long as the failure to so provide
such notice was not the result of willful misconduct, bad faith or gross
negligence.


 


ARTICLE
IV

ENFORCEMENT OF PRIORITIES


 


Section
4.1                                  
In Furtherance
of Lien Priorities. 
Each Party agrees as follows:


 


(a)                     
All payments or
distributions of or with respect to the Collateral that are received by any
Party contrary to the provisions of this Agreement shall be segregated from
other funds and property held by such Party and shall be held in trust for the
Party entitled thereto (the “Entitled Party”)
in accordance with the provisions of Section 3.4 and such Party shall
forthwith pay over such remaining proceeds to the Entitled Party in the same
form as so received (with any necessary endorsement) to be applied (in the case
of cash) or held as Collateral (in the case of noncash property or securities)
in accordance with the provisions hereof and the provisions of the applicable
Financing Documents.


 


(b)                    
After the earlier of
(i) the date on which all Credit Facility Indebtedness is Fully Paid, and (ii)
the first date following the Trigger Date on which the Maximum Amount of Credit
Facility Indebtedness is Fully Paid, the Senior Creditor will promptly execute
and deliver all further instruments and documents, and take all further actions
that may be necessary, or that the Trustee may reasonably request, to permit
the Trustee to evidence the termination of the Lien Priority hereunder, or in
furtherance thereof; provided that,
(x) the Senior Creditor shall not be required to pay over any payment or
distribution, execute any


 


7
















 


instruments or documents, or take any other action
referred to in this Section 4.1(b) to the extent that such action would
contravene any law, order or other legal requirement, and in the event of a
controversy or dispute, the Senior Creditor may interplead any payment or
distribution in any court of competent jurisdiction; and (y) the Senior
Creditor shall not incur any liability to the Trustee for failure to provide
any such further instruments and documents or take any further acts, so long as
the failure to provide any such further instruments and documents or take any
such further act was not the result of malfeasance, willful misconduct or gross
negligence.


 


(c)                     
Each Party is hereby
authorized to demand specific performance of this Agreement, whether or not the
Issuer or any Guarantor shall have complied with any of the provisions hereof
applicable to it, at any time when either Party shall have failed to comply
with the provisions of this Agreement applicable to it.  Each Party hereby
irrevocably waives any defense based on the adequacy of a remedy at law, which
might be asserted as a bar to such remedy of specific performance.


 


(d)                    
This Agreement shall
continue to be effective or be reinstated, as the case may be, if at any time
any payment of any of the Secured Liabilities is, other than as a result of any
intentional fraud or gross negligence of the applicable Party, rescinded or
must otherwise be returned by the applicable Party upon the insolvency,
bankruptcy or reorganization of the Issuer or any Guarantor or otherwise, all
as though such payment had not been made.


 


Section
4.2                                  
Perfection of
Possessory Security Interests.  For the limited purpose of perfecting the
security interests of the Parties in those types or items of Collateral in
which a security interest only may be perfected by possession or control, each
Party hereby appoints the other as its representative for the limited purpose
of possessing on its behalf any such Collateral that may come into the possession
or control of such other Party from time to time, and each Party agrees to act
as the other’s representative for such limited purpose of perfecting the
other’s security interest by possession or control through a representative; provided that, neither Party shall incur
any liability to the other by virtue of acting as the other’s representative
hereunder.  In this regard, any Party that is in possession or control of
any such item of Collateral agrees that if it elects to relinquish possession
or control of such item of Collateral it shall deliver possession or control
thereof to the other Party; provided
that, no Party shall be required to deliver any such item of Collateral or take
any other action referred to in this Section 4.2 to the extent that such
action would contravene any law, order or other legal requirements, and in the
event of a controversy or dispute, such Party may interplead any item of
Collateral in any court of competent jurisdiction.


 


Section
4.3                                  
Control of
Dispositions of Collateral and Effect thereof on Junior Liens.


 


(a)                     
Each Party hereby
agrees that any collection, sale, or other disposition of Collateral (whether
under the applicable Uniform Commercial Code or otherwise) by the Senior
Creditor shall be free and clear of any Lien of the Trustee in such Collateral;
provided that, the Trustee shall
retain a Lien (having the same priority as the Lien it previously had on the
item of Collateral that was collected, sold or otherwise disposed of) on the
proceeds of such collection, sale, or other disposition (except to the extent
such proceeds are applied to the Credit Facility Indebtedness in accordance
with Section 3.4).


 


(b)                    
To the extent
reasonably requested by the Senior Creditor, the Trustee will cooperate in
providing any necessary or appropriate releases to permit a collection,


 


8
















 


sale, or other disposition of Collateral, as provided
in Section 4.3(a), by the Senior Creditor therein free and clear of the
Trustee’s junior Lien.


 


ARTICLE
V

MISCELLANEOUS


 


Section
5.1                                  
Rights of
Subrogation. 
The Trustee agrees that no payment or distribution received by the Trustee on
account of the Subordinated Lien Indebtedness, which payment or distribution is
applied against the Subordinated Indebtedness and is paid over to the Senior
Creditor pursuant to Section 4.1, shall entitle the Trustee to exercise
any rights of subrogation in respect thereof until the earlier of (a) the date
on which all Credit Facility Indebtedness is Fully Paid, and (b) the date on
which the Maximum Amount of Credit Facility Indebtedness shall have been Fully
Paid.


 


Section
5.2                                  
Further
Assurances. 
The Parties will, at their own expense and at any time and from time to time,
promptly execute and deliver all further instruments and documents, and take
all further reasonable action (including the recordation of a subordination
agreement in the appropriate recorder’s office), that may be necessary or
desirable, or that either Party may reasonably request, to protect any right or
interest granted or purported to be granted hereby or to enable such Party to
exercise and enforce its rights and remedies hereunder; provided that, no Party shall be required
to pay over any payment or distribution, execute any instruments or documents,
or take any other action referred to in this Section 5.2 to the extent
that such action would contravene any law, order or other legal requirement
binding on such Party, and in the event of a controversy or dispute, any Party
may interplead any payment or distribution in any court of competent
jurisdiction, without further responsibility in respect of such payment or
distribution under this Section 5.2.


 


Section
5.3                                  
Defenses
Similar to Suretyship Defenses.  All rights, interests, agreements and
obligations of each of the Parties under this Agreement shall remain in full
force and effect irrespective of:


 


(a)                     
any change in the
time, manner or place of payment of, or in any other term of, all or any of the
Secured Liabilities, or any other amendment or waiver of or any consent to
departure from the Financing Documents; provided
that, this Section 5.3(a) shall not apply to, and the
Trustee’s Liens on the Collateral shall not be subordinated in priority by
virtue of this Agreement to, the Senior Creditor’s Liens thereon if and to the
extent that the Credit Facility Indebtedness is increased, without the express
written consent of the Trustee, to an amount in excess of the Maximum Amount;


 


(b)                    
any exchange,
release, nonenforcement or nonperfection of any Party’s Liens with respect to
any Collateral, or any release, amendment or waiver of or consent to departure
from any guaranty, for all or any of the Secured Liabilities; or


 


(c)                     
any failure by any
Party to marshal assets in favor of any other Party or any other Person or to
proceed upon or against or exhaust any security or remedy before proceeding to
enforce the Financing Documents.


 


Section
5.4                                  
Amendments,
Etc.  No
amendment or waiver of any provision of this Agreement and no consent to any
departure by any Party shall be effective unless the same is


 


9
















 


in writing and signed by each Party, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.


 


Section
5.5                                  
Addresses for
Notices. 
All demands, notices and other communications provided for hereunder shall be
in writing, and if to the Trustee, mailed, sent by facsimile or delivered to it
at the following address:


 


U.S. Bank National Association

60 Livingston Avenue

St. Paul, MN  55107

Facsimile:  (651) 495-8097

Attention:  Corporate Trust Department


 


and if to the Senior Creditor, mailed, sent by
facsimile or delivered to it at the following address:


 


Texas State Bank

3900 North 10th Street

McAllen, TX  78501

Facsimile:  (956) 926-7872

Attention:  Glen Roney


 


with copies to the Issuer, mailed, sent by facsimile
or delivered to it at the following addresses:


 


The Wornick Company

3900 North 10th Street, Suite 900

McAllen, TX  78501

Facsimile:  (958) 882-7816

Attention:  Chief Executive Officer


 


Veritas Capital Management II, L.L.C.


660 Madison Avenue


New York, New York  10022


Facsimile:  (212) 688-9411


Attention:  Robert B. McKeon


 


Schulte, Roth & Zabel LLP


919 Third Avenue


New York, New York  10022


Facsimile:  (212) 593-5955


Attention:  Benjamin M. Polk, Esq.


 


Winston & Strawn LLP


200 Park Avenue


New York, New York  10166


Facsimile:  (212) 294-4700


Attention:  David A. Sakowitz, Esq


 


or as to any Party at such other address designated by
such Party in a written notice to the other Party complying as to delivery with
the terms of this Section 5.5.  All such demands, notices and other
communications shall be effective:  (a) if mailed, two business days after
deposit in the mails, postage prepaid; (b) if sent by facsimile, when receipt
is acknowledged by the receiving facsimile equipment (or at the opening of the
next business day if receipt is after normal business hours); or (c) if by
other means, when delivered.


 


Section
5.6                                  
No Waiver of
Remedies. 
No failure on the part of any Party to exercise, and no delay in exercising,
any right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right.  The remedies herein provided
are cumulative and not exclusive of any remedies provided by law.


 


Section
5.7                                  
Termination of
Agreement. 
This Agreement shall (x) be binding on the Parties and their successors and
assigns; (y) inure to the benefit of and be enforceable by the Parties and
their respective successors, transferees and assigns; and (z) terminate upon
the Credit Facility Indebtedness or the Subordinated Lien Indebtedness being Fully
Paid; provided that, the
obligations of the Parties under Sections 4.1 and 5.2 shall
survive this Agreement.


 


Section
5.8                                  
Governing Law;
Entire Agreement. 
This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York. 
This Agreement constitutes the entire agreement and understanding among the
Parties with respect to


 


10
















 


the subject matter hereof and supersedes any prior
agreements, written or oral, with respect thereto.


 


Section
5.9                                  
Counterparts.  This Agreement may be executed in
any number of counterparts, and it is not necessary that the signatures of all
Parties be contained on any one counterpart hereof, each counterpart (including
counterparts delivered by facsimile) will be deemed to be an original, and all
together shall constitute one and the same document.


 


Section
5.10                           
No Third Party
Beneficiary. 
This Agreement is solely for the benefit of the Parties (and their successors
and assigns) and the holders of the Secured Liabilities (including the lenders
under the Credit Agreement, the Senior Creditor, the Trustee and the
Holders).  No other Person (including the Issuer, any Guarantor or any
subsidiary or affiliate of the Issuer or any Guarantor) shall be deemed to be a
third party beneficiary of this Agreement or shall have any rights to enforce
any provisions hereof.


 


Section
5.11                           
Headings.  The headings of the articles and
sections of this Agreement are inserted for purposes of convenience only and
shall not be construed to affect the meaning or construction of any of the
provisions hereof.


 


Section
5.12                           
Severability.  If any of the provisions in this
Agreement shall, for any reason, be held invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement and shall not invalidate the Lien
Priority or any other priority set forth in this Agreement.


 


Section
5.13                           
Trustee Status.  Notwithstanding any term herein
to the contrary, it is hereby expressly agreed and acknowledged that the
subordination and related agreements set forth herein by the Trustee are made
solely in its capacity as trustee and secured party under the Indenture
Documents and with respect to the Notes (and not in its individual commercial
capacity, except to the extent that it is or becomes a Holder).  The
Trustee shall not have any duties, obligations, or responsibilities to the
Senior Creditor under this Agreement except as expressly set forth
herein.  Nothing in this Agreement shall be construed to operate as a
waiver by the Trustee, with respect to the Issuer or any holder of any
Subordinated Lien Indebtedness, of the benefit of any exculpatory provisions,
presumptions, indemnities, protections, benefits, immunities or reliance rights
contained in the Indenture, and, by their acknowledgment hereof, the Issuer
expressly agrees that as between it and the Trustee, the Trustee shall have
such benefit with respect to all actions or omissions by the Trustee pursuant
to this Agreement.  For all purposes of this Agreement, the Trustee may
(a) rely in good faith, as to matters of fact, on any representation of fact
believed by Trustee to be true (without any duty of investigation) and that is
contained in a written certificate of any authorized representative of the
Issuer or of the Senior Creditor; (b) rely in good faith, as to matters of law,
on any advice received from its legal counsel or an opinion of its counsel,
counsel to the Issuer or counsel to the Senior Creditor, and shall have no
liability for any action or omission taken in reliance thereon; and (c) assume
in good faith (without any duty of investigation), and rely upon, the
genuineness, due authority, validity, and accuracy of any certificate,
instrument, notice, or other document believed by it in good faith to be
genuine and presented by the proper person.


 


[signature page follows]


 


11
















 


IN WITNESS WHEREOF, each
Party has caused this Agreement to be duly executed and delivered as of the
date first above written.


 


 


	
   

  	
  Senior Creditor:

  
	
   

  	
   

  	
   

  
	
   

  	
  TEXAS STATE BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Douglas G. Bready

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Douglas G. Bready

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Trustee:

  
	
   

  	
   

  	
   

  
	
   

  	
  U.S. BANK NATIONAL
  ASSOCIATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard H. Prokosch

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Richard H. Prokosch

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  	
   

  



 
















 


ACKNOWLEDGMENT


 


Each of the undersigned
hereby acknowledges that (a) it has received a copy of the foregoing
Intercreditor Agreement and consents thereto, and agrees to recognize all
rights granted hereby to the parties thereto, and will not do any act or
perform any obligation which is not in accordance with the agreements set forth
in such Intercreditor Agreement, and (b) it is not an intended beneficiary or
third-party beneficiary under the Intercreditor Agreement.


 


Dated as of June 30, 2004.


 


 


	
   

  	
  Issuer:

  
	
   

  	
   

  	
   

  
	
   

  	
  THE WORNICK COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert B. McKeon

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Robert B. McKeon

  
	
   

  	
   

  	
  Title:

  	
  Chairman of the Board

  
	
   

  	
   

  	
   

  
	
   

  	
  Guarantors:

  
	
   

  	
   

  	
   

  
	
   

  	
  RIGHT AWAY MANAGEMENT

  CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert B. McKeon

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Robert B. McKeon

  
	
   

  	
   

  	
  Title:

  	
  Chairman of the Board

  
	
   

  	
   

  	
   

  
	
   

  	
  THE WORNICK COMPANY
  RIGHT AWAY

  DIVISION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert B. McKeon

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Robert B. McKeon

  
	
   

  	
   

  	
  Title:

  	
  Chairman of the Board

  
	
   

  	
   

  	
   

  
	
   

  	
  THE WORNICK COMPANY
  RIGHT AWAY

  DIVISION, L.P.

  
	
   

  	
  By:

  	
  Right Away Management
  Corporation,

  its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert B. McKeon

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Robert B. McKeon

  
	
   

  	
   

  	
  Title:

  	
  Chairman of the Board

  
	
   

  	
   

  	
   

  	
   

  	
   

  



 
















ACKNOWLEDGMENT


 


Each of the undersigned
hereby acknowledges that (a) it has received a copy of the foregoing
Intercreditor Agreement and consents thereto, and agrees to recognize all
rights granted hereby to the parties thereto, and will not do any act or
perform any obligation which is not in accordance with the agreements set forth
in such Intercreditor Agreement, and (b) it is not an intended beneficiary or
third-party beneficiary under the Intercreditor Agreement.


 


	
  Dated as of June
  30, 2004.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THE
  ISSUER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THE
  WORNICK COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  /s/ Robert B.
  McKeon

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Robert B.
  McKeon

  
	
   

  	
   

  	
   

  	
  Title:  
  Chairman of the Board

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  GUARANTORS:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  RIGHT
  AWAY MANAGEMENT CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Robert B.
  McKeon

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Robert B.
  McKeon

  
	
   

  	
   

  	
   

  	
  Title:  
  Chairman of the Board

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THE
  WORNICK COMPANY RIGHT AWAY DIVISION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Robert B.
  McKeon

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Robert B.
  McKeon

  
	
   

  	
   

  	
   

  	
  Title:  
  Chairman of the Board

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THE
  WORNICK COMPANY RIGHT AWAY DIVISION, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Right Away
  Management Corporation, its General Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Robert B.
  McKeon

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name: Robert B.
  McKeon

  
	
   

  	
   

  	
   

  	
   

  	
  Title:  
  Chairman of the Board