Exhibit
10.3


 


 


THE WORNICK
COMPANY,

THE WORNICK COMPANY RIGHT AWAY DIVISION,

RIGHT AWAY MANAGEMENT CORPORATION, and

THE WORNICK COMPANY RIGHT AWAY DIVISION, L.P.

(as Grantors)


 










 


SECURITY AGREEMENT


 


Dated as of
June 30, 2004


 










 


 


U.S. BANK NATIONAL
ASSOCIATION

(as Collateral Agent)


 


 
















 


TABLE OF CONTENTS


 


	
  SECTION 1

  	
  DEFINITIONS AND INTERPRETATION

  	
   

  
	
  1.1

  	
  Definitions

  	
  1

  
	
  1.2

  	
  Interpretation

  	
  1

  
	
   

  	
   

  	
  4

  
	
  SECTION 2

  	
  GRANT OF SECURITY, SECURED OBLIGATIONS,
  AND RELATED PROVISIONS

  	
  4

  
	
  2.1

  	
  Grant of
  Security

  	
  4

  
	
  2.2

  	
  Secured
  Obligations

  	
  5

  
	
  2.3

  	
  Continuing
  Liability Under Collateral

  	
  5

  
	
  2.4

  	
  Continuing
  Security Interest

  	
  5

  
	
   

  	
   

  	
   

  
	
  SECTION 3

  	
  REPRESENTATIONS AND WARRANTIES

  	
  5

  
	
  3.1

  	
  Title; Accurate Information

  	
  5

  
	
  3.2

  	
  Organizational
  Matters

  	
  5

  
	
  3.3

  	
  Authority and Enforceability

  	
  6

  
	
  3.4

  	
  Third-Party Authorizations and Approvals

  	
  6

  
	
  3.5

  	
  Attachment and Perfection

  	
  6

  
	
  3.6

  	
  No Encumbrances

  	
  6

  
	
  3.7

  	
  Accounts

  	
  6

  
	
  3.8

  	
  Deposit Accounts

  	
  7

  
	
  3.9

  	
  Investment Property.

  	
  7

  
	
  3.10

  	
  Intellectual Property

  	
  7

  
	
  3.11

  	
  Commercial Tort
  Claims

  	
  8

  
	
   

  	
   

  	
   

  
	
  SECTION 4

  	
  COVENANTS AND AGREEMENTS

  	
  8

  
	
  4.1

  	
  Encumbrances

  	
  8

  
	
  4.2

  	
  Use of Collateral

  	
  8

  
	
  4.3

  	
  Taxes and
  Claims

  	
  8

  
	
  4.4

  	
  Materially Adverse Changes

  	
  8

  
	
  4.5

  	
  Inventory

  	
  8

  
	
  4.6

  	
  Bailees; Landlords

  	
  8

  
	
  4.7

  	
  Accounts

  	
  9

  
	
  4.8

  	
  Limitations
  on Issuers of Pledged Capital Stock

  	
  9

  
	
  4.9

  	
  Deposit
  Accounts and Securities Accounts.

  	
  9

  
	
  4.10

  	
  After-Acquired Collateral

  	
  9

  
	
  4.11

  	
  Certain
  Proceeds

  	
  10

  
	
  4.12

  	
  Certain
  Non-U.S. Collateral

  	
  10

  
	
  4.13

  	
  Certificated
  Collateral

  	
  10

  
	
  4.14

  	
  Voting
  and Distributions

  	
  10

  
	
  4.15

  	
  Intellectual
  Property

  	
  11

  
	
  4.16

  	
  Commercial
  Tort Claims

  	
  11

  
	
  4.17

  	
  Insurance

  	
  11

  
	
  4.18

  	
  Additional
  Grantors

  	
  11

  
	
  4.19

  	
  Further
  Assurances

  	
  12

  
	
   

  	
   

  	
   

  
	
  SECTION 5

  	
  REMEDIES

  	
  12

  
	
  5.1

  	
  Generally

  	
  12

  
	
  5.2

  	
  Sale of
  Collateral

  	
  13

  



 


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  5.3

  	
  Marshalling; Payments Set Aside

  	
  14

  
	
  5.4

  	
  Application
  of Proceeds

  	
  14

  
	
  5.5

  	
  Accounts

  	
  14

  
	
  5.6

  	
  Investment
  Property.

  	
  14

  
	
  5.7

  	
  Deposit
  Accounts

  	
  15

  
	
  5.8

  	
  Intellectual
  Property.

  	
  15

  
	
  5.9

  	
  Cash Proceeds

  	
  16

  
	
  5.10

  	
  Certain Rights Respecting Contracts

  	
  17

  
	
   

  	
   

  	
   

  
	
  SECTION 6

  	
  RIGHTS AND OBLIGATIONS OF COLLATERAL
  AGENT

  	
  17

  
	
  6.1

  	
  Appointment, Resignation and Removal

  	
  17

  
	
  6.2

  	
  Standard of
  Care; Collateral Agent May Perform

  	
  17

  
	
  6.3

  	
  Attorney-In-Fact

  	
  18

  
	
  6.4

  	
  Access; Right of Inspection

  	
  19

  
	
  6.5

  	
  Authorizations

  	
  19

  
	
  6.6

  	
  Expenses

  	
  19

  
	
  6.7

  	
  Indemnity

  	
  20

  
	
  6.8

  	
  Release
  of Collateral

  	
  20

  
	
   

  	
   

  	
   

  
	
  SECTION 7

  	
  MISCELLANEOUS

  	
  20

  
	
  7.1

  	
  Notices

  	
  20

  
	
  7.2

  	
  Amendment and Waivers

  	
  20

  
	
  7.3

  	
  No Waiver; Remedies Cumulative

  	
  20

  
	
  7.4

  	
  Successors and Assigns

  	
  21

  
	
  7.5

  	
  Independence of Covenants

  	
  21

  
	
  7.6

  	
  Survival of
  Representations, Warranties and Agreements

  	
  21

  
	
  7.7

  	
  Severability

  	
  21

  
	
  7.8

  	
  Governing Law

  	
  21

  
	
  7.9

  	
  Counterparts

  	
  21

  
	
  7.10

  	
  Effectiveness

  	
  21

  
	
  7.11

  	
  Entire
  Agreement

  	
  21

  
	
  7.12

  	
  Limitation
  on Collateral Agent’s Liability

  	
  21

  
	
  7.13

  	
  Rights
  and Obligations Subject to Intercreditor

  	
  22

  
	
   

  	
   

  	
   

  
	
  SCHEDULES

  	
   

  	
   

  
	
  3.2

  	
  Organizational Matters

  	
   

  
	
  3.5

  	
  UCC Filing Offices

  	
   

  
	
  3.8

  	
  Deposit Accounts

  	
   

  
	
  3.9

  	
  Investment Property

  	
   

  
	
  3.10

  	
  Intellectual Property

  	
   

  
	
  3.11

  	
  Commercial Tort Claims

  	
   

  
	
  7.1

  	
  Addresses for Notices;
  Contact Information

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBITS

  	
   

  	
   

  
	
  A

  	
  Security Agreement Supplement

  	
   

  



 


ii
















 


This SECURITY AGREEMENT,
dated as of June 30, 2004 (this “Agreement”),
is between The Wornick Company, a Delaware corporation (“TWC”), and the Subsidiaries of TWC listed
on the signature pages hereto (the “Subsidiary
Grantors”), and each Additional Grantor that from time to time
becomes a party by executing a Security Agreement Supplement (together with TWC
and the Subsidiary Grantors, the “Grantors”),
and U.S. Bank National Association, as collateral agent for the Secured Parties
(in such capacity, the “Collateral Agent”).


 


RECITALS


 


WHEREAS, reference is
made to that certain Indenture, dated as of the date hereof (as amended,
restated, supplemented or otherwise modified from time to time, the “Indenture”), by and among the Grantors and
U.S. Bank National Association, as trustee (in such capacity, the “Trustee”) and Collateral Agent; and


 


WHEREAS, in consideration
of the extension of credit set forth in the Indenture, each Grantor has agreed
to secure all obligations under the Indenture and the Notes issued in
connection therewith.


 


NOW, THEREFORE, in
consideration of the premises and the agreements, provisions and covenants
herein contained, each Grantor and the Collateral Agent agree as follows,
intending to be legally bound:


 


SECTION 1                                                      
DEFINITIONS AND INTERPRETATION


 


1.1                              
Definitions.  Undefined capitalized terms used herein have the meanings
assigned to them in the Indenture, or, if not defined therein, in the
UCC.  The following terms have the meanings assigned to them in
Article 9 of the UCC:  “Account,”
“Account Debtor,” “Authenticate,” “Cash Proceeds,” “Chattel
Paper,” “Commercial Tort Claim,”
“Deposit Account,” “Document,” “Equipment,” “Fixtures,”
“General Intangible,” “Goods,” “Instruments,”
“Inventory,” “Letter-of-Credit Right,” “Proceeds,” “Record,” and “Supporting
Obligation.”


 


In addition to the
foregoing terms and the terms defined in the preamble and recitals hereto, in
this Agreement:


 


“Additional Grantors” has the meaning set
forth in Section 4.18.


 


“Collateral” has the meaning set forth in Section 2.1.


 


“Collateral Documents” means this Agreement
and all other instruments, documents and agreements delivered by any of the
parties to the Indenture Documents pursuant to this Agreement or any other
Indenture Document to grant or perfect a Lien in favor of the Collateral Agent
on any real, personal or mixed property of such party as security for the
Secured Obligations.


 


“Collateral Records” means books, records,
ledger cards, files, correspondence, customer lists, blueprints, technical
specifications, manuals, computer software, computer printouts, tapes, disks
and other electronic storage media and related data processing software and
similar items that at any time evidence or contain information relating to any
of the Collateral or are otherwise necessary or helpful in the collection
thereof or realization thereon.


 
















 


“Collateral Support” means all property
(real or personal) assigned, hypothecated or otherwise securing any Collateral
and includes any security agreement or other agreement granting a lien or
security interest in such real or personal property.


 


“Copyrights” means all United States, state
and foreign copyrights, including copyrights in software and databases, and all
Mask Works (as defined under 17 U.S.C. 901 of the U.S. Copyright Act), whether
registered or unregistered, and, with respect to the foregoing, (i) all
registrations and applications therefor, (ii) all extensions and renewals thereof,
(iii) all rights corresponding thereto throughout the world, (iv) all rights to
sue for past, present and future infringements thereof, (v) all licenses,
claims, damages and proceeds of suit arising therefrom, and (vi) all payments
and rights to payments arising out of the sale, lease, license, assignment, or
other disposition thereof.


 


“Credit Agreement” means the Loan Agreement,
dated as of the date hereof, among the Grantors and Texas State Bank, as
amended, restated, refinanced, supplemented or otherwise modified from time to
time.


 


“Indemnitee” means any of the Collateral
Agent and its Affiliates’ officers, partners, directors, trustees, employees
and agents.


 


“Indenture Document” means any of the
Indenture, the Notes, the Collateral Agreements, and any other agreement,
document or instrument entered into or issued in connection with any of the
foregoing.


 


“Insurance” means (i) all insurance policies
covering any portion of the Collateral (regardless of whether the Collateral
Agent is the loss payee thereof) and (ii) any key man life insurance policies.


 


“Intellectual Property” means, collectively,
any Grantor’s Copyrights, Patents, Trademarks, and Trade Secrets, and any
agreement granting any right in, to or under Copyrights, Patents, Trademarks or
Trade Secrets, where such Grantor is licensee or licensor under such agreement.


 


“Intercreditor” means that certain
Intercreditor Agreement, dated as of the date hereof, among the Collateral
Agent and Texas State Bank (and acknowledged by the Grantors), as amended,
restated, supplemented or otherwise modified from time to time.


 


“Investment Property” has the meaning
assigned to the term “investment property” in Article 9 of the UCC, and
also means Instruments, Pledged Debt, and Pledged Capital Stock.


 


“IP Security Agreement” means an IP Security
Agreement, in form and substance reasonably satisfactory to the Collateral
Agent.


 


“Patents” means all United States and
foreign patents and certificates of invention, or similar industrial property
rights, (i) all applications therefore, (ii) all reissues, divisions,
continuations, continuations-in-part, extensions, renewals, and reexaminations
thereof, (ii) all rights corresponding thereto throughout the world, (ii) all
inventions and improvements described therein, (iv) all rights to sue for past,
present and future infringements thereof, (v) all licenses, claims, damages,
and proceeds of suit arising therefrom, and (v) all payments and rights to
payments arising out of the sale, lease, license, assignment, or other disposition
thereof.


 


2
















 


“Pledged Debt” means, with respect to any
Grantor, Indebtedness for borrowed money owed to such Grantor, whether or not
evidenced by any instrument or promissory note, all monetary obligations owing
to such Grantor from any other Person, the Instruments evidencing any of the
foregoing, and all interest, cash, Instruments and other property or proceeds
from time to time received, receivable or otherwise distributed in respect of
or in exchange for any of the foregoing.


 


“Pledged Capital Stock” means, with respect
to any Grantor, the Capital Stock of any other Person owned by such Grantor,
and the certificates, if any, representing such Capital Stock and any interest
of such Grantor in the entries on the books of the Person issuing such Capital
Stock or on the books of any securities intermediary pertaining to such Capital
Stock, and all dividends, distributions, cash, warrants, rights, options,
instruments, securities and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any such Capital Stock, and any other warrant, right or option to acquire any
of the foregoing.


 


“Secured Obligations” has the meaning
assigned to the term “Obligations” in the Indenture, and also means all
interest that, but for the filing of a petition in bankruptcy with respect to
any Grantor, would have accrued on any Obligation, whether or not a claim is
allowed against such Grantor for such interest in the related bankruptcy
proceeding).


 


“Secured Parties” means the Trustee, the
Collateral Agent, the Holders, and any future party to which Secured
Obligations are owed under the Indenture Documents.


 


“Security Agreement Supplement” means a
supplement to this agreement substantially in the form of Exhibit A,
whereby an Additional Grantor becomes a party hereto.


 


“Trade Secrets” means all trade secrets and
all other confidential or proprietary information and know-how, whether or not
reduced to a writing or other tangible form, including with respect to the
foregoing, (i) all documents and things embodying or incorporating the
foregoing, (ii) all rights to sue for past, present and future infringement
thereof, and (iii) all licenses, claims, damages, and proceeds of suit arising
therefrom, and (iv) all payments and rights to payments arising out of the
sale, lease, license, assignment, or other dispositions thereof.


 


“Trademarks” means all United States, state
and foreign trademarks, service marks, certification marks, collective marks,
trade names, corporate names, d/b/as, business names, fictitious business
names, Internet domain names, trade styles, logos, other source or business
identifiers, designs and General Intangibles of a like nature, rights of
publicity and privacy pertaining to the names, likeness, signature and
biographical data of natural persons, and, with respect to the foregoing, (i)
all registrations and applications therefor, (ii) the goodwill of the business
symbolized thereby, (iii) all rights corresponding thereto throughout the
world, (iv) all rights to sue for past, present and future infringement or
dilution thereof or for any injury to goodwill, (v) all licenses, claims,
damages, and proceeds of suit arising therefrom, and (vi) all payments and
rights to payments arising out of the sale, lease, license assignment or other
disposition thereof.


 


“UCC” means the Uniform Commercial Code as
in effect from time to time in the State of New York; provided that, if by reason of mandatory provisions of law,
the perfection or the effect of perfection or nonperfection of the security
interest in any Collateral is governed by the Uniform Commercial Code as in
effect in a jurisdiction other than the State of New York, “UCC”


 


3
















 


also means the Uniform Commercial Code as in effect in
such other jurisdiction for purposes of the provisions hereof relating to such
perfection or effect of perfection or nonperfection.


 


1.2                              
Interpretation.  Unless otherwise specifically provided, references to
“Sections,” “Exhibits” and “Schedules” are to sections, exhibits and schedules,
as the case may be, of this Agreement.  Section headings in this
Agreement are included for convenience only and do not constitute a part of
this Agreement for any other purpose or be given any substantive effect. 
Unless the context otherwise requires, defined terms may be used in the
singular or the plural.  The use of the word “include” or any derivative
thereof is not limiting or restrictive.  If any conflict or inconsistency
exists between this Agreement and the Indenture, the Indenture governs. 
All references to provisions of the UCC include all successor provisions under
any subsequent version or amendment to any Article of the UCC.


 


SECTION 2                                                      
GRANT OF SECURITY, SECURED OBLIGATIONS, AND RELATED PROVISIONS


 


2.1                              
Grant of Security.  Each Grantor hereby grants to the Collateral
Agent for the benefit of the Secured Parties a security interest in and
continuing lien on all of such Grantor’s right, title and interest in, to and
under all personal property of such Grantor (except for the Excluded Assets),
including the following, in each case whether now owned or existing or
hereafter acquired or arising and wherever located (collectively, the “Collateral”):


 


(i)                      
all Accounts,


 


(ii)                   
all Chattel Paper,


 


(iii)                
all Commercial Tort
Claims,


 


(iv)               
all Deposit Accounts
(and any money, cash or cash equivalents, checks or other property credited
thereto),


 


(v)                  
all Documents,


 


(vi)               
all General
Intangibles,


 


(vii)            
all Goods (including
all Equipment, Fixtures, and Inventory),


 


(viii)          all Insurance,


 


(ix)                 
all Investment
Property (including the Investment Property listed on Schedule 3.9),


 


(x)                    
all Intellectual
Property (including the Intellectual Property listed on Schedule 3.10),


 


(xi)                 
all Letter-of-Credit
Rights, and


 


(xii)              
to the extent not
otherwise included above, all tangible and intangible personal property, and
all Collateral Records, Collateral


 


4
















 


Support, Records, Supporting Obligations, Proceeds,
products, accessions, rents and profits of or relating to any of the foregoing.


 


2.2                              
Secured Obligations.  This Agreement secures, and the Collateral is
collateral security for, the prompt and complete payment or performance in full
when due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise including the payment of amounts that would
become due but for the operation of the automatic stay under the Bankruptcy
Code, 11 U.S.C. §362(a) (and any successor provision thereof), of all the
Secured Obligations.


 


2.3                              
Continuing Liability Under Collateral.  Notwithstanding anything herein
to the contrary, (a) each Grantor remains liable for its obligations under the
Collateral and nothing contained herein is intended to or constitutes a
delegation of duties to the Collateral Agent or any Secured Party, (b) each
Grantor remains liable under each of the agreements to which it is a party
included in the Collateral, including any agreements relating to any Investment
Property, to perform all of the obligations undertaken by it thereunder in
accordance with and pursuant to the terms and provisions thereof, and neither
the Collateral Agent nor any Secured Party has any obligation or liability
under any of such agreements by reason of or arising out of this Agreement or
any other document related hereto, and neither the Collateral Agent nor any
Secured Party has any obligation to make any inquiry as to the nature or
sufficiency of any payment received by it or have any obligation to take any
action to collect or enforce any rights under any agreement included in the
Collateral, including any agreements relating to any Investment Property, and
(c) the exercise by the Collateral Agent of any of its rights hereunder will
not release any Grantor from any of its duties or obligations under the
contracts and agreements included in the Collateral.


 


2.4                              
Continuing Security Interest.  This Agreement creates a
continuing security interest in the Collateral and will remain in full force
and effect until the payment in full of all of the Secured Obligations, be
binding on each Grantor, its successors and assigns, and inure, together with
the rights and remedies of the Collateral Agent hereunder, to the benefit of
the Collateral Agent and its successors, transferees and assigns.  Upon
the payment in full of all of the Secured Obligations, the security interest
granted hereby will terminate and all rights to the Collateral will revert and
be deemed reassigned to the Grantors.  Upon any such termination, the
Collateral Agent will, at the Grantors’ request and expense, execute and
deliver to Grantors such documents as the Grantors will reasonably request to
evidence such termination reversions or reassignment, without recourse,
representation, or warranty of any kind.


 


SECTION 3                                                      
REPRESENTATIONS AND WARRANTIES


 


Each Grantor hereby
represents and warrants as follows:


 


3.1                              
Title; Accurate Information.  Each Grantor owns the Collateral
purported to be owned by it or otherwise has the rights it purports to have in
each item of Collateral and, as to all Collateral whether now existing or
hereafter acquired, will continue to own or have such rights in each item of
Collateral, in each case free and clear of all Liens, rights or claims of any
Person, other than Permitted Liens.  All information supplied by or on
behalf of any of the Grantors with respect to any of the Collateral (in each
case taken as a whole with respect to any particular Collateral) is accurate
and complete in all material respects.


 


3.2                              
Organizational Matters.  Each Grantor is duly organized
and validly existing under the laws of the jurisdiction of its organization and
has not filed any certificates of


 


5
















 


domestication, transfer or continuance in any other
jurisdiction.  The full legal name of each Grantor is set forth on Schedule 3.2,
and such Grantor has not done in the last five years, and does not do, business
under any other name (including any trade-name or fictitious business name)
except for those names set forth on such schedule.  Each Grantor has
further indicated on Schedule 3.2 the type of organization of such
Grantor, its mailing address, its jurisdiction of organization, and its
organizational identification number.  Except as provided on Schedule 3.2,
it has not changed its name or jurisdiction of organization, or its corporate
structure in any way (e.g., by
merger, consolidation, change in corporate form or otherwise) within the past
five years.


 


3.3                              
Authority and Enforceability.  Each Grantor has all requisite
power and authority to enter into this Agreement and to carry out its obligations
hereunder, and has duly executed and delivered this Agreement.  This
Agreement and each other document, statement, or instrument relating hereto,
when executed and delivered by the Grantors, will constitute legal, valid and
binding obligations of each Grantor, enforceable in accordance with their
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
or other laws affecting creditors’ rights generally and general principles of
equity.


 


3.4                              
Third-Party Authorizations and Approvals.  No authorization, approval or
other action by, and no notice to or filing, registration or recording with,
any governmental authority or regulatory body (in each case that has not been
obtained as of the date hereof) is required for either (i) the grant by each
Grantor of the Liens purported to be created in favor of the Collateral Agent
hereunder, or (ii) the exercise by the Collateral Agent of any rights or
remedies in respect of any Collateral (whether specifically granted or created
hereunder or created or provided for by applicable law), except for the filings
contemplated hereunder, as may be required in connection with the disposition
of any Investment Property, and as may be required under federal laws
pertaining to Intellectual Property.


 


3.5                              
Attachment and Perfection.  This Agreement is effective to
create a valid and continuing security interest in all of the Collateral in
favor of the Collateral Agent for the benefit of the Secured Parties. 
With respect to each Grantor, upon the filing of all UCC financing statements
describing the Collateral and naming such Grantor as debtor and the Collateral
Agent as secured party in the filing offices set forth opposite such Grantor’s
name on Schedule 3.5, the security interests granted to the
Collateral Agent hereunder will constitute perfected Liens with respect to that
portion of the Collateral on which a Lien can be perfected by such methods,
subject in the case of priority only to Permitted Liens.


 


3.6                              
No Encumbrances.  No effective UCC financing statement, fixture filing or other
instrument similar in effect under any applicable law covering all or any part
of the Collateral is on file in any filing or recording office except for (x)
financing statements for which proper termination statements have been
delivered to the Collateral Agent and (y) financing statements, fixture filings
and other instruments similar in effect filed in connection with Permitted
Liens.


 


3.7                              
Accounts.  Each Account is the legal, valid
and binding obligation of the Account Debtor in respect thereof, representing
an unsatisfied obligation of such Account Debtor, is enforceable in accordance
with its terms, to the knowledge of the applicable Grantor, is not subject to
any set-offs, defenses, taxes, or counterclaims (except with respect to
refunds, returns and allowances in the ordinary course of business with respect
to damaged merchandise), and is in compliance in all material respects with all
applicable laws, whether federal, state, local or foreign.


 


6
















 


3.8                              
Deposit Accounts.  Schedule 3.8 sets
forth under the heading “Deposit Accounts” all of the Deposit Accounts in which
the Grantors have an interest and each Grantor listed thereunder is the sole
account holder of the Deposit Accounts listed next to its name.  No such
Grantor has consented to or is otherwise aware of, any Person (other than the
Collateral Agent or Texas State Bank (or its successor or assign)) having
either sole dominion and control (within the meaning of common law) or
“control” (within the meaning of Section 9-104 of the UCC) over, or any
other interest in, any such Deposit Account or any money or other property
deposited therein.


 


3.9                              
Investment Property.


 


(a)                     
Pledged Capital
Stock.  Schedule 3.9
sets forth under the heading “Pledged Capital Stock” all of the Pledged Capital
Stock owned by the Grantors and such Pledged Capital Stock constitutes the
percentage of issued and outstanding Capital Stock of the respective issuers
thereof indicated on such schedule.  Each Grantor listed thereunder is the
record and beneficial owner of such Pledged Capital Stock listed next to its
name on such schedule, free and clear of all Liens, rights or claims of any
Person, other than Permitted Liens, and there are no outstanding warrants,
options or other rights to purchase, or shareholder, voting trust or similar
agreements outstanding with respect to, or property that is convertible into,
or that requires the issuance or sale of, such Pledged Capital Stock.


 


(b)                    
Pledged Debt.  Schedule 3.9 sets
forth under the heading “Pledged Debt” all of the Pledged Debt owned by the
Grantors and all of such Pledged Debt has been duly authorized, Authenticated
or issued, and delivered, is the legal, valid and binding obligation of the
issuers thereof, and is not in default, and Schedule 3.9 includes
all of the issued and outstanding intercompany Indebtedness evidenced by an
Instrument or certificated security of the respective issuers thereof owing to
the Grantors.


 


(c)                     
Securities
Accounts.  Schedule 3.9
sets forth under the heading “Securities Accounts,” all of the Securities
Accounts in which any Grantor has an interest.  Such Grantor is the sole
entitlement holder of each such Securities Account, and such Grantor has not
consented to, and is not otherwise aware of, any Person (other than the Collateral
Agent or Texas State Bank (or its successor or assign)) having “control”
(within the meanings of Sections 8-106 and 9-106 of the UCC) over, or any other
interest in, any such Securities Account or any securities or other property
credited thereto.


 


3.10                       
Intellectual Property.  Schedule 3.10 sets
forth a true and complete list of all United States, state and foreign
registrations of and applications for Patents, Trademarks, and Copyrights owned
by each Grantor.  With respect to each Grantor listed on Schedule 3.10,
such Grantor (i) is the sole and exclusive owner of the entire right, title,
and interest in and to all Intellectual Property on Schedule 3.10,
and (ii) owns or has the right to use all other Intellectual Property used in
the conduct of its business free and clear of all Liens, claims, encumbrances,
and material licenses granted by such Grantor, in each case except for
Permitted Liens and such licenses set forth on Schedule 3.10. 
To each Grantor’s knowledge, the conduct of such Grantor’s business does not
infringe on any Trademark, Patent, Copyright, Trade Secret or other
intellectual property right of any third party; no claim is pending, or to such
Grantor’s knowledge, threatened or has been made that the conduct of such Grantor’s
business or the use of any Intellectual Property owned or used by such Grantor
violates the intellectual property rights of any third party.  There is no
effective financing statement or other document or instrument now executed, or
on file or recorded in any public office, granting a security interest in or
otherwise encumbering any


 


7
















 


part of the Intellectual Property owned by any
Grantor, other than in favor of the Collateral Agent or Texas State Bank (or
its successor or assign).


 


3.11                       
Commercial Tort Claims.  Schedule 3.11 sets
forth all Commercial Tort Claims of the Grantors.


 


SECTION 4                                                      
COVENANTS AND AGREEMENTS


 


Each Grantor hereby
covenants and agrees as follows:


 


4.1                              
Encumbrances.  Except for the security interest created by this Agreement, no
Grantor will create or suffer to exist any Lien on or with respect to any of
the Collateral, except Permitted Liens, and such Grantor will defend the
Collateral against all Persons at any time claiming any such interest therein.


 


4.2                              
Use of Collateral.  Except where any such actions, individually or
in the aggregate, would not have a material adverse effect on the Collateral as
a whole, no Grantor will produce, use or permit any Collateral to be used in
violation of any provision of this Agreement, or to be knowingly used
unlawfully or in violation of any applicable statute, regulation or ordinance
or any policy of insurance covering the Collateral.


 


4.3                              
Taxes and Claims.  Each Grantor will promptly pay when due all property and other
taxes, assessments and governmental charges or levies imposed on, and all
claims (including claims for labor, materials and supplies) against, the
Collateral, except to the extent the validity thereof is being contested in
good faith; provided that, such
Grantor will in any event pay such taxes, assessments, charges, levies or
claims not later than five days prior to the date of any proposed sale under
any judgment, writ or warrant of attachment entered or filed against such
Grantor or any of the Collateral as a result of the failure to make such
payment.


 


4.4                              
Materially Adverse Changes.  Upon any Grantor or any officer
of any Grantor obtaining knowledge thereof, such Grantor will promptly notify
the Collateral Agent in writing of any event that may materially adversely
affect the value of the Collateral, the ability of any Grantor or the
Collateral Agent to dispose of the Collateral or any portion thereof, or the
rights and remedies of the Collateral Agent in relation thereto, including the
levy of any legal process against the Collateral or any portion thereof. 
Subject to the Intercreditor, no Grantor will take or permit any action that
could impair the Collateral Agent’s rights in the Collateral.  No Grantor
will sell, transfer or assign (by operation of law or otherwise) any Collateral
except as permitted under the Indenture and the Intercreditor.


 


4.5                              
Inventory.  Each
applicable Grantor will keep correct and accurate records of its Inventory as
are customarily maintained under similar circumstances by Persons of
established reputation engaged in similar business, and in any event in
conformity with GAAP.


 


4.6                              
Bailees; Landlords.  If material Equipment or
Inventory is in possession or control of any third party, including any
warehouseman, bailee or agent, the applicable Grantor will notify the third
party of the Collateral Agent’s security interest and will use commercially
reasonable efforts to obtain an Authenticated acknowledgment from such third
party that it is holding the Equipment and Inventory for the benefit of the
Collateral Agent.  With respect to any material Collateral located on real
property that is not owned by any Grantor, the applicable Grantor will use
commercially reasonable efforts to obtain and deliver to the Collateral Agent a
landlord waiver in form and substance reasonably satisfactory to the Collateral
Agent.


 


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4.7                              
Accounts.  Except
as otherwise provided in this Section 4.7, each Grantor will
continue to collect all amounts due or to become due to such Grantor under the
Accounts and any Supporting Obligation and, in the exercise of its reasonable
business judgment, diligently exercise each material right it may have under
any Account, Supporting Obligation or Collateral Support.  Upon the
occurrence and during the continuance of an Event of Default, at such Grantor’s
expense and in connection with the foregoing collections and exercises, such
Grantor will take such action as the Collateral Agent may deem necessary or
advisable.  Notwithstanding the foregoing, the Collateral Agent will have
the right at any time, subject to the Intercreditor, to notify or require any
Grantor to notify any Account Debtor of the Collateral Agent’s security
interest in the Accounts and any Supporting Obligation.


 


4.8                              
Limitations on Issuers of Pledged Capital
Stock. 
Without the prior written consent of the Collateral Agent, no Grantor will
permit any issuer of any Pledged Capital Stock to merge or consolidate, unless (i) such merger or consolidation is
permitted under the Indenture, (ii) such issuer creates a security interest
that is perfected by a filed financing statement (that is not effective solely
under Section 9-508 of the UCC) in collateral in which such new debtor has
or acquires rights, and (iii) all the outstanding Capital Stock of the
surviving or resulting Person that is owned by such Grantor (except any such
Capital Stock constituting Excluded Assets) is, upon such merger or
consolidation, pledged hereunder and no cash, securities or other property is
distributed in respect of the outstanding equity interests of any other
constituent Grantors.


 


4.9                              
Deposit Accounts and Securities Accounts.


 


(a)                     
With respect to any
Investment Property consisting of Securities Accounts or Securities
Entitlements having a value (with respect to each such account) in excess of
$100,000, each Grantor will, subject to the Intercreditor, cause the securities
intermediary maintaining such Securities Account or Securities Entitlement to
enter into an agreement reasonably acceptable to the Collateral Agent pursuant
to which, upon the occurrence and during the continuance of an Event of
Default, it will agree to comply with the Collateral Agent’s “entitlement
orders” without further consent by such Grantor or any other Person.  With
respect to each Deposit Account (subject to Section 4.9(b)), such
Grantor will, subject to the Intercreditor, cause the depositary institution
maintaining such account to enter into an agreement reasonably acceptable to
the Collateral Agent, pursuant to which, upon the occurrence and during the
continuance of an Event of Default, the Collateral Agent will have “control”
(within the meaning of Section 9-104 of the UCC) over such Deposit
Account.


 


(b)                    
Deposit Accounts may
be maintained at any bank without having to obtain a control agreement as
provided in the foregoing Section 4.9(a) so long as the balances of
such Deposit Accounts are used exclusively for (i) petty cash needs, or (ii)
employee payroll, employee benefits, or taxes.  All control agreements
required pursuant to this Section 4.9 shall be effective with
respect to the applicable Deposit Accounts within 30 days after the date hereof
or after the date established, if later.


 


4.10                    
After-Acquired Collateral.  Subject to the Intercreditor, if
any Grantor acquires rights in any Investment Property, Letter-of-Credit Rights
or Deposit Accounts after the date hereof, such Grantor will deliver to the
Collateral Agent a completed Security Agreement Supplement, together with all
supplements to schedules thereto, reflecting such newly acquired rights. 
Notwithstanding the foregoing, it is understood and agreed that the security
interest of the Collateral Agent will attach to all after-acquired property
immediately upon any Grantor’s


 


9
















 


acquisition of rights therein and will not be affected
by the failure of any Grantor to deliver a Security Agreement Supplement as
required hereby.


 


4.11                       
Certain Proceeds.  Except as provided in the next sentence, in
the event any Grantor receives any dividends, interest or distributions on any
Investment Property, or any securities or other property upon the merger,
consolidation, liquidation or dissolution of any issuer of any such Proceeds,
then (a) such dividends, interest or distributions and securities or other
property will be included in the definition of Collateral without further
action, and (b) subject to the Intercreditor, such Grantor will immediately
take all steps, if any, reasonably necessary or advisable to ensure the
validity, perfection, priority and, if applicable, control of the Collateral
Agent over such Proceeds (including delivery thereof to the Collateral Agent)
and pending any such action such Grantor will be deemed to hold such dividends,
interest, distributions, securities or other property in trust for the benefit
of the Collateral Agent and will be segregated from all other property of such
Grantor.  Notwithstanding the foregoing, so long as no Event of Default
will have occurred and be continuing, the Collateral Agent authorizes each
Grantor to retain all ordinary cash dividends and distributions paid in the
normal course of the business of the issuer and consistent with the past practice
of the issuer and all scheduled payments of principal and interest.


 


4.12                       
Certain Non-U.S. Collateral.  If any issuer of any Investment
Property is located in a jurisdiction outside of the United States, the
applicable Grantor will, to the extent commercially reasonable as determined by
the Collateral Agent in consultation with such Grantor, take such additional
actions, including causing the issuer to register the grant of security
hereunder on its books and records or making such filings or recordings, in
each case as may be necessary or advisable, under the laws of such issuer’s
jurisdiction to insure the validity, perfection and priority of the security
interest of the Collateral Agent, subject to the Intercreditor.  Upon the
occurrence and continuation of an Event of Default, the Collateral Agent will
have the right, subject to the Intercreditor and without notice to any Grantor,
to transfer all or any portion of such Collateral to its name or the name of
its nominee or agent.  In addition, the Collateral Agent will have the
right at any time, without notice to any Grantor, to exchange any certificates
or instruments representing any of such Collateral for certificates or
instruments of smaller or larger denominations.


 


4.13                       
Certificated Collateral.  With respect to any Collateral that is
represented by a certificate or that is an Instrument (other than any such
Collateral credited to a Securities Account) and subject to the Intercreditor,
the applicable Grantor will cause such certificate or instrument to be
delivered to the Collateral Agent, indorsed in blank by an “effective
indorsement” (as defined in Section 8-107 of the UCC), regardless of
whether such certificate constitutes a “certificated security” for purposes of
the UCC.  With respect to any such Collateral that is an “uncertificated
security” for purposes of the UCC (other than any “uncertificated securities”
credited to a Securities Account) and subject to the Intercreditor, the
applicable Grantor will cause the issuer of such uncertificated security to
either (i) register the Collateral Agent as the registered owner thereof on the
books and records of the issuer or (ii) execute an agreement reasonably
acceptable to the Collateral Agent, pursuant to which, upon the occurrence and
continuation of an Event of Default, such issuer agrees to comply with the
Collateral Agent’s instructions with respect to such uncertificated security
without further consent by such Grantor or any other Person.


 


4.14                       
Voting and Distributions.  So long as no Event of Default has occurred
and is continuing, (a) except as otherwise provided under the covenants and
agreements relating to Investment Property in this Agreement or elsewhere
herein or in the Indenture, each Grantor


 


10
















 


will be entitled to exercise or refrain from
exercising its voting and other consensual rights pertaining to such Collateral
or any part thereof for any purpose not inconsistent with the terms of this
Agreement, the Indenture and the Intercreditor; provided that, no Grantor will exercise or refrain from
exercising any such right if such action would have a material adverse effect
on the value of such Collateral; and (b) the Collateral Agent will promptly
execute and deliver (or cause to be executed and delivered) to each Grantor all
proxies and other instruments as such Grantor may from time to time reasonably
request for the purpose of enabling such Grantor to exercise the voting and
other consensual rights when and to the extent that it is entitled to exercise
pursuant to clause (a) above.


 


4.15                       
Intellectual Property.  Each Grantor will promptly report to the
Collateral Agent all of the following:  (i) the filing by such Grantor or
on its behalf of any application to register any Intellectual Property owned by
such Grantor in whole or in part with the United States Patent and Trademark
Office, the United States Copyright Office, or any foreign counterpart of the
foregoing, (ii) the registration of any Intellectual Property owned by such
Grantor in whole or in part by any such office, and (iii) the acquisition by
such Grantor of any issued Patent, or application or registration of any other
Patent, Copyright, Trademark, or Trade Secret.  In each event, such
Grantor will execute and deliver to the Collateral Agent a completed Security
Agreement Supplement, together with all supplements to schedules thereto, and,
if requested, signed counterparts of an IP Security Agreement, as applicable,
or any other agreement reasonably acceptable to the Collateral Agent having the
same operative effect, together with all supplements to the schedules thereto.


 


4.16                       
Commercial Tort Claims.  With respect to all Commercial
Tort Claims hereafter arising, each Grantor will deliver to the Collateral
Agent a completed Security Agreement Supplement, together with all supplements
to schedules thereto, identifying such new Commercial Tort Claims.


 


4.17                       
Insurance.  Each
Grantor will maintain, with financially sound and reputable companies,
insurance policies (i) insuring the Inventory and Equipment against loss by
fire, explosion, theft and such other casualties as may be reasonably
satisfactory to the Collateral Agent, and (ii) insuring such Grantor and the
Collateral Agent against liability for personal injury and property damage
relating to such Inventory and Equipment, such policies to be in such amounts
and covering such risks as is commercially reasonable and prudent with respect
to the business and properties of the Grantors and that are usually carried by
companies engaged in similar businesses and owning similar properties in the
same general areas in which the Grantors operate.  All such insurance
shall (i) provide that no cancellation, material reduction in amount or
material change in coverage thereof will be effective until at least 30 days
after notice to the Collateral Agent thereof, (ii) name the Collateral Agent as
an additional insured party or loss payee, as its interests may appear, and,
(iii) if reasonably requested by the Collateral Agent, include a breach of
warranty clause.


 


4.18                       
Additional Grantors.  From time to time subsequent to the date
hereof, additional Persons may become parties hereto as additional grantors
(each, an “Additional Grantor”) by
executing a Security Agreement Supplement, together with all supplements to
schedules thereto.  Upon delivery of any such Security Agreement
Supplement to the Collateral Agent, notice of which is hereby waived by each of
the Grantors, each Additional Grantor will be a grantor and will be as fully a
party hereto as if such Additional Grantor were an original signatory
hereto.  Each Grantor expressly agrees that its obligations arising
hereunder will not be affected or diminished by the addition or release of any
other Grantor, nor by any election of the Collateral Agent not to cause any
subsidiary of any Grantor to become an Additional Grantor.


 


11
















 


This Agreement will be fully effective as to any Grantor
that is or becomes a party hereto regardless of whether any other Person
becomes or fails to become or ceases to be a Grantor.


 


4.19                       
Further Assurances.  Each Grantor agrees that from time to time, at
the expense of such Grantor, it will promptly Authenticate, execute and deliver
all further agreements, instruments, certificates and documents, and take all
further action, that may be necessary or desirable, or that the Collateral
Agent may reasonably request, to create or maintain the validity, perfection or
priority of and protect any security interest granted or purported to be
granted hereby or to enable the Collateral Agent to exercise and enforce its
rights and remedies hereunder with respect to any Collateral.  Without
limiting the generality of the foregoing, each Grantor shall:


 


(a)                     
file such financing
or continuation statements, or amendments thereto, and execute and deliver such
other agreements, instruments, endorsements, powers of attorney or notices, as
may be necessary or desirable, or as the Collateral Agent may reasonably
request, to perfect and preserve the security interests granted or purported to
be granted hereby;


 


(b)                    
take all actions
necessary to ensure the recordation of appropriate evidence of the Liens and
security interest granted hereunder in Intellectual Property with any
intellectual property registry in which such Intellectual Property is
registered or in which an application for registration of such Intellectual Property
is pending;


 


(c)                     
at any reasonable
time, upon request by the Collateral Agent, allow inspection of the Collateral
by the Collateral Agent, or Persons designated by the Collateral Agent; and


 


(d)                    
at the Collateral
Agent’s reasonable request, appear in and defend any action or proceeding that
may affect such Grantor’s title to or the Collateral Agent’s security interest
in all or any part of the Collateral.


 


SECTION 5                                                      
REMEDIES


 


5.1                              
Generally.  If any
Event of Default will have occurred and be continuing, the Collateral Agent may
exercise in respect of the Collateral, subject to the Intercreditor and in
addition to all other rights and remedies provided for herein or otherwise
available to it at law or in equity, all the rights and remedies of the
Collateral Agent on default under the UCC (whether or not the UCC applies to
the affected Collateral) to collect, enforce or satisfy any Secured Obligations
then owing, whether by acceleration or otherwise, and also may pursue any of
the following separately, successively or simultaneously:


 


(a)                     
require any Grantor
to, and each Grantor hereby agrees that it will at its expense and promptly
upon request of the Collateral Agent, forthwith assemble all or part of the
Collateral as directed by the Collateral Agent and make it available to the
Collateral Agent at a place to be designated by the Collateral Agent that is reasonably
convenient to both parties;


 


(b)                    
enter onto the
property where any Collateral is located and take possession thereof with or
without judicial process;


 


(c)                     
prior to the
disposition of the Collateral, store, process, repair or recondition the
Collateral or otherwise prepare the Collateral for disposition in any manner to
the extent the Collateral Agent deems appropriate; and


 


12
















 


(d)                    
without notice,
except as specified below or under the UCC, sell, assign, lease, license (on an
exclusive or nonexclusive basis, to the extent the Grantor has the lawful right
to do so), or otherwise dispose of the Collateral or any part thereof in one or
more parcels at public or private sale, at any of the Collateral Agent’s
offices or elsewhere, for cash, on credit or for future delivery, at such time
or times and at such price or prices and on such other terms as the Collateral
Agent may deem commercially reasonable.


 


5.2                              
Sale of Collateral.  The Collateral Agent or any Secured Party may
be the purchaser of any portion of the Collateral at any public or private (to
the extent that the portion of the Collateral being privately sold is of a kind
that is customarily sold on a recognized market or the subject of widely
distributed standard price quotations) sale in accordance with the UCC, and the
Collateral Agent, as collateral agent for and representative of the Secured
Parties, will be entitled, for the purpose of bidding and making settlement or
payment of the purchase price for all or any portion of the Collateral sold at
any such sale, to use and apply any of the Secured Obligations as a credit on
account of the purchase price for any Collateral payable by the Collateral
Agent at such sale.  Each purchaser at any such sale will hold the
property sold absolutely free from any claim or right on the part of any
Grantor, and each Grantor hereby waives (to the extent permitted by applicable
law) all rights of redemption, stay or appraisal that it now has or may at any
time in the future have under any rule of law or statute now existing or
hereafter enacted.  Each Grantor agrees that, to the extent notice of sale
will be required by law, at least ten days notice to such Grantor of the time
and place of any public sale or the time after which any private sale is to be
made will constitute reasonable notification.  The Collateral Agent will
not be obligated to make any sale of Collateral regardless of notice of sale
having been given.  The Collateral Agent may adjourn any public or private
sale from time to time by announcement at the time and place fixed therefor,
and such sale may, without further notice, be made at the time and place to
which it was so adjourned.  Each Grantor agrees that it would not be
commercially unreasonable for the Collateral Agent to dispose of the Collateral
or any portion thereof by using Internet sites that provide for the auction of
assets of the types included in the Collateral or that have the reasonable capability
of doing so, or that match buyers and sellers of assets.  The Collateral
Agent may sell the Collateral without giving any warranties as to the
Collateral, and may specifically disclaim or modify any warranties of title or
the like, which procedure will not be considered to adversely effect the
commercial reasonableness of any sale of the Collateral.  Each Grantor
hereby waives any claims against the Collateral Agent arising by reason of the
fact that the price at which any Collateral may have been sold at such a
private sale was less than the price that might have been obtained at a public
sale, even if the Collateral Agent accepts the first offer received and does
not offer such Collateral to more than one offeree.  If the proceeds of
any sale or other disposition of the Collateral are insufficient to pay all the
Secured Obligations, each Grantor will be liable for the deficiency and the
fees of any attorneys employed by the Collateral Agent to collect such
deficiency.  Each Grantor further agrees that a breach of any of the
covenants contained in this Section 5.2 will cause irreparable
injury to the Collateral Agent, that the Collateral Agent has no adequate
remedy at law in respect of such breach and, as a consequence, that each and
every covenant contained in this Section will be specifically enforceable
against such Grantor, and such Grantor hereby waives and agrees not to assert
any defenses against an action for specific performance of such covenants
except for a defense that no default has occurred giving rise to the Secured
Obligations becoming due and payable prior to their stated maturities.  If
the Collateral Agent sells any of the Collateral on credit, the applicable
Grantors will be credited only with payments actually made by purchaser and
received by the Collateral Agent and applied to indebtedness of the
purchaser.  In the event the purchaser fails to pay for the Collateral,
the Collateral Agent may resell the Collateral and the applicable Grantors will
be credited with proceeds of the sale.  Nothing in this Section 5.2
will in any way alter the rights of the Collateral Agent hereunder.


 


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5.3                              
Marshalling; Payments Set Aside.  Subject to the Intercreditor, the
Collateral Agent will have no obligation to marshall any assets in favor of any
Grantor or any other Person or against or in payment of any of the Secured
Obligations.


 


5.4                              
Application of Proceeds.  Except as expressly provided elsewhere in this
Agreement or in the Intercreditor, all proceeds received by the Collateral
Agent in respect of any sale, collection from, or other realization on all or
any part of the Collateral shall be applied in full or in part by the
Collateral Agent against the Secured Obligations in the following order of
priority:  first, to the
payment of all costs and expenses of such sale, collection or other
realization, including reasonable compensation to the Collateral Agent and its
agents and counsel, and all other expenses, liabilities and advances made or
incurred by the Collateral Agent in connection therewith, and all amounts for
which the Collateral Agent is entitled to indemnification hereunder and all
advances made by the Collateral Agent hereunder for the account of the
applicable Grantor, and to the payment of all costs and expenses paid or
incurred by the Collateral Agent in connection with the exercise of any right
or remedy hereunder or under any Indenture Document, all in accordance with the
terms hereof or thereof; second,
to the extent of any excess of such proceeds, to the payment of all other
Secured Obligations for the ratable benefit of each Secured Party; and third, to the extent of any excess of such
proceeds, to the payment to or upon the order of such Grantor or to whosoever
may be lawfully entitled to receive the same or as a court of competent
jurisdiction may direct.


 


5.5                              
Accounts.  Subject
to the Intercreditor, at any time following the occurrence and during the
continuation of an Event of Default, the Collateral Agent may:  (a) direct
the Account Debtors under any Accounts to make payment of all amounts due or to
become due to such Grantor thereunder directly to the Collateral Agent, (b)
notify, or require any Grantor to notify, each Person maintaining a lockbox or
similar arrangement to which Account Debtors under any Accounts have been
directed to make payment to remit all amounts representing collections on
checks and other payment items from time to time sent to or deposited in such
lockbox or other arrangement directly to the Collateral Agent, or (c) enforce
collection, at the Grantors’ expense, of any such Accounts and to adjust,
settle or compromise the amount or payment thereof, in the same manner and to
the same extent as any applicable Grantor might have done.  If the
Collateral Agent notifies any Grantor that it has elected to collect the
Accounts in accordance with the preceding sentence, any payments of Accounts
received by such Grantor will be forthwith (and in any event within two Business
Days) deposited by such Grantor in the exact form received, duly indorsed by
such Grantor to the Collateral Agent if required, in a collateral account
maintained under the sole dominion and control of the Collateral Agent, and
until so turned over, all amounts and proceeds (including checks and other
instruments) received by such Grantor in respect of the Accounts, any
Supporting Obligation or Collateral Support will be received in trust for the
benefit of the Collateral Agent hereunder and will be segregated from other
funds of such Grantor and such Grantor will not adjust, settle or compromise
the amount or payment of any Account, or release wholly or partly any Account
Debtor or obligor thereof, or allow any credit or discount thereon.


 


5.6                              
Investment Property.


 


(a)                     
Each Grantor
recognizes that, by reason of certain prohibitions contained in the Securities
Act and applicable state securities laws, the Collateral Agent may be
compelled, with respect to any sale of all or any part of the Investment
Property conducted without prior registration or qualification of such
Investment Property under the Securities Act or such state securities laws, to
limit purchasers to those who will agree, among other things, to acquire the
Investment Related Property for their own account, for investment and not with
a


 


14
















 


view to the distribution or resale thereof.  Each
Grantor acknowledges that any such private sale may be at prices and on terms
less favorable than those obtainable through a public sale without such
restrictions (including a public offering made pursuant to a registration
statement under the Securities Act) and, notwithstanding such circumstances,
each Grantor agrees that any such private sale will be deemed to have been made
in a commercially reasonable manner and that the Collateral Agent will have no
obligation to engage in public sales and no obligation to delay the sale of any
Investment Property for the period of time necessary to permit the issuer
thereof to register it for a form of public sale requiring registration under
the Securities Act or under applicable state securities laws, even if such
issuer would, or should, agree to so register it.  If the Collateral Agent
determines to exercise its right to sell any of the Investment Property, upon
written request, each Grantor will and will use commercially reasonable efforts
to cause each issuer of any Pledged Capital Stock or Pledged Debt to be sold
hereunder from time to time to furnish to the Collateral Agent all such
information as the Collateral Agent may request to determine the number and
nature of interest, shares or other instruments included in the Investment
Property that may be sold by the Collateral Agent in exempt transactions under
the Securities Act and the rules and regulations of the SEC thereunder, as the
same are from time to time in effect.


 


(b)                
Upon the occurrence
and during the continuation of an Event of Default and subject to the
Intercreditor, (i) all rights of each Grantor to exercise or refrain from
exercising the voting and other consensual rights that it would otherwise be
entitled to exercise pursuant hereto will cease and all such rights will
thereupon become vested in the Collateral Agent, who will thereupon have the
sole right to exercise such voting and other consensual rights; (ii) all rights
of each Grantor to receive dividends and other distributions that it would
otherwise be entitled to receive pursuant hereto will cease and all such rights
will thereupon become vested in the Collateral Agent, who will thereupon have
the sole right to receive such dividends and other distributions; and (iii) to
permit the Collateral Agent to exercise the voting and other consensual rights
that the Grantors would otherwise be entitled to exercise pursuant hereto and
to receive all dividends and other distributions that the Grantors would
otherwise be entitled to receive, each Grantor will promptly execute and
deliver (or cause to be executed and delivered) to the Collateral Agent all
proxies, dividend payment orders and other instruments as the Collateral Agent
may from time to time reasonably request, and each Grantor acknowledges that
the Collateral Agent may utilize the power of attorney set forth in Section 6.3.


 


5.7                              
Deposit Accounts.  Upon the occurrence and during the
continuation of an Event of Default and subject to the Intercreditor, the
Collateral Agent will have the right to apply the balance from any Deposit
Account or instruct the bank at which any Deposit Account is maintained to pay
the balance of any Deposit Account to or for the benefit of the Collateral
Agent.


 


5.8                              
Intellectual Property.


 


(a)                     
Upon the occurrence
and during the continuation of an Event of Default and subject to the
Intercreditor:


 


(i)                      
the Collateral Agent
will have the right (but not the obligation) to bring suit or otherwise
commence any action or proceeding in the name of any Grantor, the Collateral
Agent or otherwise, in the Collateral Agent’s sole discretion, to enforce any
Intellectual Property included in the Collateral, in which event, such Grantor
will, at the request of the Collateral Agent, do all lawful acts and execute all
documents reasonably required by the Collateral Agent in aid of such
enforcement, and such Grantor will promptly,


 


15
















 


upon demand, reimburse and indemnify the Collateral
Agent as provided in Sections 6.6 and 6.7 in connection
therewith;


 


(ii)                   
upon written demand
from the Collateral Agent, each Grantor will assign, convey or otherwise
transfer to the Collateral Agent or its designee all of such Grantor’s right,
title and interest in and to the Intellectual Property included in the Collateral,
and will execute and deliver to the Collateral Agent such documents as are
necessary to effectuate and record such assignment, conveyance, or transfer of,
or other evidence of foreclosure on, such Intellectual Property;


 


(iii)                
in the event of any
assignment, conveyance or other transfer of any of the Trademarks included in
the Collateral, the goodwill symbolized by any such Trademarks will be included
in such sale or transfer, and the applicable Grantor will supply to the
Collateral Agent or its designee such Grantor’s manufacturing, advertising, and
distribution know-how, and copies of records embodying such know-how, relating
to products and services theretofore sold under such Trademarks;


 


(iv)               
each Grantor agrees that
an assignment, conveyance, or transfer of any Intellectual Property included in
the Collateral will be applied to reduce the Secured Obligations outstanding
only to the extent that the Collateral Agent receives cash proceeds in respect
of such assignment, conveyance, or other transfer of the Intellectual Property;
and


 


(v)                  
the Collateral Agent
will have the right to notify, or require each Grantor to notify, any obligors
with respect to payments due or to become due to such Grantor in respect of the
Intellectual Property, of the existence of the security interest created
herein, to direct such obligors to make payment of all such amounts directly to
the Collateral Agent, and, upon such notification and at the expense of such
Grantor, to enforce collection of any such amounts and to adjust, settle or
compromise the amount of such payment, to the same extent as such Grantor could
have done.


 


(b)                    
Solely for the
purpose of enabling the Collateral Agent to exercise rights and remedies under
this Section 5.8, at such time as the Collateral Agent will be
lawfully entitled to exercise such rights and remedies, each Grantor hereby
grants to the Collateral Agent, to the extent it has the lawful right to do so,
an irrevocable, nonexclusive worldwide license (exercisable without payment of
royalty or other compensation to such Grantor), to use, operate under, or
sublicense any Intellectual Property now or hereafter owned by such Grantor,
subject, in the case of Trademarks, to the maintenance by or on behalf of the
Collateral Agent of quality standards with respect to the products and services
sold under such Trademarks at a level at least substantially comparable to that
prevailing at the time of Event of Default.  The foregoing license grant
to the Collateral Agent is in addition to, and not in limitation of, the
Collateral Agent’s rights under Section 6.


 


5.9                              
Cash Proceeds.  In addition to the rights of the Collateral Agent specified in Section 5.5,
upon the occurrence and during the continuation of an Event of Default and
subject to the Intercreditor, Cash Proceeds will be held by such Grantor in
trust for the Collateral Agent, segregated from other funds of such Grantor,
and will, forthwith upon receipt by such Grantor, unless otherwise provided in Section 5.5
or in the Intercreditor, be turned over


 


16
















 


to the Collateral Agent in the exact form received by
such Grantor (duly indorsed by such Grantor to the Collateral Agent, if
required) and held by the Collateral Agent in a designated collateral
account.  Any Cash Proceeds received by the Collateral Agent (whether from
a Grantor or otherwise), if an Event of Default has occurred and is continuing,
may, in the sole discretion of the Collateral Agent, (A) be held by the
Collateral Agent for the ratable benefit of the Secured Parties, as collateral
security for the Secured Obligations (whether matured or unmatured), or (B)
then or at any time thereafter may be applied by the Collateral Agent against the
Secured Obligations then due and owing.


 


5.10                       
Certain Rights Respecting Contracts.  Upon the occurrence and during
the continuation of an Event of Default and subject to the Intercreditor, the
Collateral Agent may assume any Grantor’s rights under any or all contracts of
such Grantor, it being in the Collateral Agent’s sole discretion whether to do
so and which Contracts are to be assumed.  Without limiting the generality
of the foregoing, in such event the Collateral Agent may notify (or require the
applicable Grantor to notify) other parties to any such contract that it has
assumed the applicable Grantor’s rights thereunder, may perform and discharge
any or all such Grantor’s obligations thereunder, and, in the exercise of such
rights, may pay any costs and expenses and employ agents and legal counsel, all
at the sole cost and expense of the Grantors.  The Collateral Agent will
not be obligated to perform or discharge any obligation or duty to be performed
or discharged by any Grantor under any contract, and each Grantor hereby agrees
to indemnify the Collateral Agent, its nominee and each other principal for,
and hold each such Person harmless from, any and all liability arising from
such contracts, except to the extent that such liability results from such
Person’s gross negligence or willful misconduct.  Nothing herein shall be
construed to place responsibility for the control, care, management, or repair
of any property to which any Grantor has rights under the contracts on the Collateral
Agent or make it liable for any negligence in the management, operation,
upkeep, repair or control of such property.


 


SECTION 6                                                      
RIGHTS AND OBLIGATIONS OF COLLATERAL AGENT


 


6.1                              
Appointment, Resignation and Removal.  The Collateral Agent has been
appointed to act as Collateral Agent hereunder by each Secured Party pursuant
to the Indenture.  The Collateral Agent will be obligated, and will have
the right hereunder, to make demands, to give notices, to exercise or refrain
from exercising any rights, and to take or refrain from taking any action
(including the release or substitution of Collateral), solely in accordance
with this Agreement, the Indenture and the Intercreditor.  The Collateral
Agent may resign and a successor Collateral Agent may be appointed in the
manner provided in the Indenture.  Upon the acceptance of any appointment
as Collateral Agent under the terms of the Indenture by a successor Collateral
Agent, that successor Collateral Agent will thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring or
removed Collateral Agent under this Agreement, and the retiring or removed
Collateral Agent under this Agreement will be discharged from its duties and
obligations hereunder.  After any retiring or removed Collateral Agent’s
resignation or removal, the provisions of this Agreement will inure to its
benefit as to any actions taken or omitted to be taken by it under this
Agreement while it was the Collateral Agent hereunder.


 


6.2                              
Standard of Care; Collateral Agent May
Perform. 
The powers conferred on the Collateral Agent hereunder are solely to protect
the Secured Parties’ interest and does not impose any duty on it to exercise
any such powers.  Except for the exercise of reasonable care in the
custody of any Collateral in its possession and the accounting for moneys
actually received by it hereunder, the Collateral Agent will have no duty as to
any Collateral or as to the taking of any necessary steps to preserve rights
against prior parties, subject to the


 


17
















 


Intercreditor, or any other rights pertaining to any
Collateral.  The Collateral Agent will be deemed to have exercised reasonable
care in the custody and preservation of Collateral in its possession if such
Collateral is accorded treatment substantially equal to that which the
Collateral Agent accords its own property.  Neither the Collateral Agent
nor any of its directors, officers, employees or agents will be liable for
failure to demand, collect or realize on all or any part of the Collateral or
for any delay in doing so or will be under any obligation to sell or otherwise
dispose of any Collateral upon the request of any Grantor or otherwise. 
If any Grantor fails to perform any agreement contained herein, the Collateral
Agent may itself perform, or cause performance of, such agreement, and the
expenses of the Collateral Agent incurred in connection therewith will be payable
by each Grantor pursuant to Section 6.6.


 


6.3                              
Attorney-In-Fact.  Each Grantor hereby irrevocably appoints the Collateral Agent
(such appointment being coupled with an interest), subject to the
Intercreditor, as such Grantor’s attorney-in-fact, with full authority in the
place and stead of such Grantor and in the name of such Grantor, the Collateral
Agent or otherwise, from time to time to take any action and to execute any
instrument reasonably necessary or advisable or that the Collateral Agent may
deem reasonably necessary or advisable to accomplish the purposes of this
Agreement, including the following:


 


(a)                     
to prepare, sign, and
file for recordation in any Intellectual Property registry, appropriate evidence
of the lien and security interest granted herein in the Intellectual Property
in the name of such Grantor as assignor or pledgor;


 


(b)                    
to take or cause to
be taken all actions necessary to perform or comply or cause performance or
compliance with the terms of this Agreement, including access to pay or
discharge taxes or Liens (other than Permitted Liens) levied or placed on or
threatened against the Collateral, any such payments made by the Collateral
Agent to become part of the Secured Obligations of such Grantor (Collateral
Agent agrees to give reasonable notice to such Grantor of such payments) to the
Collateral Agent, due and payable immediately without demand; and


 


(c)                     
Upon the occurrence
and during the continuance of any Event of Default and subject to the
Intercreditor:


 


(i)                      
to obtain and adjust
insurance required to be maintained by such Grantor or paid to the Collateral
Agent pursuant to the Indenture Documents;


 


(ii)                   
to ask for, demand,
collect, sue for, recover, compound, receive and give acquittance and receipts
for moneys due and to become due under or in respect of any of the Collateral;


 


(iii)                
to receive, endorse
and collect any drafts or other Instruments, Documents and Chattel Paper in
connection with Section 6.3(b);


 


(iv)               
to file any claims or
take any action or institute any proceedings that the Collateral Agent may deem
necessary or desirable for the collection of any of the Collateral or otherwise
to enforce the rights of the Collateral Agent with respect to any of the
Collateral;


 


18
















 


(v)                  
to sell, transfer,
assign, lease, license, pledge, make any agreement with respect to or otherwise
deal with any of the Collateral as fully and completely as though the
Collateral Agent were the absolute owner thereof for all purposes, and to do,
at the Collateral Agent’s option and such Grantor’s expense, at any time or
from time-to-time, all acts and things reasonably necessary or advisable or
that the Collateral Agent reasonably deems necessary to protect, preserve, or
realize on the Collateral and the Collateral Agent’s security interest therein
as fully and effectively as such Grantor might do.


 


6.4                              
Access; Right of Inspection.  The Collateral Agent will at all
times upon reasonable prior notice have full and free access during normal
business hours to all the books, correspondence and records of each Grantor,
and the Collateral Agent and its representatives may examine the same, take
extracts therefrom and make photocopies thereof, and each Grantor agrees to
render to the Collateral Agent, at such Grantor’s cost and expense, such
clerical and other assistance as may be reasonably requested with regard
thereto.  The Collateral Agent and its representatives will during normal
business hours upon reasonable prior notice also have the right to enter any
premises of each Grantor and inspect any property of each Grantor where any of
such Grantor’s Collateral is located for the purpose of inspecting the same,
observing its use or otherwise protecting its interests therein.


 


6.5                              
Authorizations.  Each Grantor hereby authorizes the Collateral Agent to take all
steps reasonably necessary or that it deems reasonably necessary to maintain
and preserve the Collateral, consistent with the Grantor’s obligations to do so
hereunder and under the Intercreditor, all at the Grantor’s expense. 
Without limiting the foregoing, each Grantor hereby authorizes the filing of
any financing statements or continuation statements, and amendments to
financing statements, or any similar document in any jurisdictions and with any
filing offices as are necessary or advisable to perfect the security interest
granted to the Collateral Agent hereunder.  Such financing statements may
describe the Collateral in the same manner as described herein or may contain
an indication or description of collateral that describes such property in any
other manner as is necessary, advisable or prudent to ensure the perfection of
the security interest in the Collateral granted to the Collateral Agent
hereunder, including describing such property as “all assets” or “all personal
property, whether now owned or hereafter acquired.”  Each Grantor will
from time to time furnish to the Collateral Agent statements and schedules
further identifying and describing the Collateral and such other reports in
connection with the Collateral as the Collateral Agent may reasonably request,
all in reasonable detail.


 


6.6                              
Expenses.  Each Grantor will promptly pay to
the Collateral Agent the amount of any and all costs and expenses, including
the reasonable fees and expenses of its counsel and the fees and expenses of
any experts and agents, that the Collateral Agent may incur in connection with
this Agreement, including all costs and expenses relating to (a) any and all
filings and other actions taken to ensure the attachment, perfection and
priority of, and the ability of the Collateral Agent to enforce, the Collateral
Agent’s security interest in the Collateral; (b) any action, suit or other
proceeding affecting the Collateral or any part thereof commenced, in which
action, suit or proceeding the Collateral Agent is made a party or participates
or in which the right to use the Collateral or any part thereof is threatened,
or in which it becomes necessary or in the reasonable judgment of the
Collateral Agent becomes reasonably necessary to defend or uphold the Lien
hereof (including any action, suit or proceeding to establish or uphold the
compliance of the Collateral with any requirements of any governmental
authority or law); (c) the collection of the Secured Obligations; (d) the
enforcement and administration hereof; (e) the custody or preservation of, or
the sale of, collection from, or other realization on, any of the Collateral;
(f) the exercise or enforcement of any of the rights of the Collateral Agent or
any


 


19
















 


Secured Party hereunder; or (g) the failure by any
Grantor to perform or observe any of the provisions hereof.  All amounts
expended by the Collateral Agent and payable by any Grantor under this Section 6.6
will be due upon demand (together with interest thereon accruing at the
applicable default rate during the period from and including the date on which
such funds were so expended to the date of repayment) and will be part of the
Secured Obligations.  Each Grantor’s obligations under this Section 6.6
will survive the termination hereof and the discharge of such Grantor’s other
obligations under this Agreement, the Indenture and the Notes.


 


6.7                              
Indemnity.  Each
Grantor jointly and severally agrees to (a) defend (subject to Indemnitees’
selection of counsel), indemnify, pay and hold harmless each Indemnitee, from
and against all claims, losses and liabilities in any way relating to, growing
out of or resulting from this Agreement and the transactions contemplated
hereby (including enforcement of this Agreement), except to the extent such
claims, losses or liabilities result from such Indemnitee’s gross negligence or
willful misconduct; and (b) to pay to the Collateral Agent promptly following
written demand the amount of all reasonable costs and reasonable expenses,
including the reasonable fees and expenses of its counsel and of any experts
and agents in accordance with the terms and conditions of the Indenture. 
The obligations of each Grantor under this Section 6.7 will survive
the termination of this Agreement and the discharge of such Grantor’s other
obligations under this Agreement, the Indenture and Notes.


 


6.8                              
Release of Collateral.  Upon the payment in full of all Secured
Obligations (other than contingent indemnification obligations to the extent
any unsatisfied claims giving rise thereto have not been asserted), and in
connection with any sale or other disposition of any portion of the Collateral
permitted by the Indenture, the security interests granted hereunder in such
Collateral will terminate and all rights to such Collateral will revert to the
applicable Grantor (or other Person entitled thereto) in accordance with
Section 10.4 of the Indenture.  Upon such termination, the Collateral
Agent will, at the Grantors’ expense, execute and deliver to the applicable
Grantor such documents as such Grantor may reasonably request to evidence such
termination and release of such security interest.


 


SECTION 7                                                      
MISCELLANEOUS


 


7.1                              
Notices.  Unless otherwise specifically
provided herein, any notice or other communication herein required or permitted
to any Grantor shall be sent to such Grantor’s address as set forth on Schedule 7.1. 
Any notice or other communication herein required or permitted to the
Collateral Agent shall be sent to the Collateral Agent’s address set forth in
Section 12.2 of the Indenture.  Each notice hereunder shall be in
writing and may be personally served or sent by facsimile, United States mail
or courier service and will be deemed to have been given when delivered in
person or by courier service and signed for against receipt thereof, upon
receipt of facsimile, or three Business Days after depositing it in the United
States mail with postage prepaid and properly addressed; provided that, no notice to the Collateral
Agent will be effective until received by the Collateral Agent.


 


7.2                              
Amendment and Waivers.  No amendment, modification,
termination or waiver of any provision of this Agreement, or consent to any
departure by any Grantor therefrom, will in any event be effective without the
written concurrence of the Collateral Agent.


 


7.3                              
No Waiver; Remedies Cumulative.  No failure or delay on the part
of the Collateral Agent in the exercise of any power, right or privilege
hereunder or under any other Indenture Document will impair such power, right
or privilege or be construed to be a waiver of any default or acquiescence
therein, nor will any single or partial exercise of any such power,


 


20
















 


right or privilege preclude other or further exercise
thereof or of any other power, right or privilege.  All rights, powers and
remedies existing under this Agreement and the other Indenture Documents are
cumulative, and not exclusive of, any rights or remedies otherwise
available.  Any forbearance or failure to exercise, and any delay in
exercising, any right, power or remedy hereunder will not impair any such
right, power or remedy or be construed to be a waiver thereof, nor will it
preclude the further exercise of any such right, power or remedy.


 


7.4                              
Successors and Assigns.  This Agreement will be binding on
the parties hereto and their respective successors and assigns including all
persons who become bound as debtor to this Agreement.  No Grantor may,
without the prior written consent of the Collateral Agent, assign any right,
duty or obligation hereunder.


 


7.5                              
Independence of Covenants.  All covenants hereunder shall be
given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or would otherwise be within the limitations of, another covenant
will not avoid the occurrence of a Default or an Event of Default if such
action is taken or condition exists.


 


7.6                              
Survival of Representations, Warranties and
Agreements. 
All representations, warranties and agreements made herein will survive the
execution and delivery hereof.  Notwithstanding anything herein or implied
by law to the contrary, the agreements of each Grantor set forth in Sections
6.6 and 6.7 will survive the payment of the Secured Obligations and
the termination hereof.


 


7.7                              
Severability.  If any provision in or obligation hereunder will be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such provision
or obligation in any other jurisdiction, will not in any way be affected or
impaired thereby.


 


7.8                              
Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.


 


7.9                              
Counterparts.  This Agreement may be executed in any number of counterparts,
each of which when so executed and delivered will be deemed an original, but
all such counterparts together will constitute but one and the same instrument.


 


7.10                       
Effectiveness.  This Agreement will become effective upon the execution of a
counterpart hereof by each of the parties and receipt by the Grantors and the
Collateral Agent of written or telephonic notification of such execution and
authorization of delivery thereof.


 


7.11                       
Entire Agreement.  This Agreement and the other Indenture
Documents embody the entire agreement and understanding between the Grantors and
the Collateral Agent, and supersede all prior agreements and understandings
between such parties relating to the subject matter hereof and thereof. 
Accordingly, the Indenture Documents may not be contradicted by evidence of
prior, contemporaneous or subsequent oral agreements of the parties. 
There are no unwritten oral agreements between the parties.


 


7.12                       
Limitation on Collateral Agent’s Liability.  Notwithstanding anything to the
contrary contained herein, the Collateral Agent shall not be responsible for
filing any


 


21
















 


financing or continuation statements or recording any
documents or instruments in any public office at any time or times or otherwise
perfecting or maintaining the perfection of any security interest in the Collateral,
nor shall the Collateral Agent be liable or responsible for any loss or
diminution in the value of any of the Collateral, by reason of the act or
omission of any carrier, forwarding agency or other agent or bailee selected by
the Collateral Agent in good faith.  The Collateral Agent shall not be
responsible for the existence, genuineness or value of any of the Collateral or
for the validity, perfection, priority or enforceability of the Liens in any of
the Collateral, whether impaired by operation of law or by reason of any action
or omission to act on its part hereunder, except to the extent such action or
omission constitutes gross negligence, bad faith or willful misconduct on the
part of the Collateral Agent.  Nor shall the Collateral Agent be responsible
for the validity or sufficiency of the Collateral or any agreement or
assignment contained therein, for the validity of the title of any Grantor to
the Collateral, for insuring the Collateral or for the payment of taxes,
charges, assessments or Liens on the Collateral or otherwise as to the
maintenance of the Collateral.


 


7.13                       
Rights and Obligations Subject to
Intercreditor. 
All rights and remedies provided herein to the Collateral Agent, and all
obligations of the Grantors hereunder, are subject to the applicable terms and
provisions of the Intercreditor.  So long as the Intercreditor is
effective, if any inconsistency exists or arises between the terms hereof and
the Intercreditor, the Intercreditor controls.


 


[signature pages follow]


 


22
















 


IN WITNESS WHEREOF, each
Grantor and the Collateral Agent have caused this Agreement to be duly executed
and delivered by their respective officers thereunto duly authorized as of the
date first written above.


 


 


	
   

  	
  GRANTORS:

  
	
   

  	
   

  	
   

  
	
   

  	
  THE WORNICK COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert B. McKeon

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Robert B. McKeon

  
	
   

  	
   

  	
  Title:

  	
  Robert B. McKeon

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  RIGHT AWAY MANAGEMENT

  CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert B. McKeon

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Robert B. McKeon

  
	
   

  	
   

  	
  Title:

  	
  Robert B. McKeon

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THE WORNICK COMPANY
  RIGHT AWAY

  DIVISION

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert B. McKeon

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Robert B. McKeon

  
	
   

  	
   

  	
  Title:

  	
  Robert B. McKeon

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  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:    
  Robert B. McKeon

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 
















 


	
   

  	
  THE COLLATERAL AGENT:

  
	
   

  	
   

  
	
   

  	
  U.S. BANK NATIONAL
  ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard H. Prokosch

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Richard H. Prokosch

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  	
   

  



 
















 


EXHIBIT A


 


[Form of]


SECURITY
AGREEMENT SUPPLEMENT


 


This SECURITY AGREEMENT
SUPPLEMENT, dated as of
[           ],
200[   ] (this “Supplement”),
is made by the Persons listed on the signature pages hereof (collectively, the
“[Additional] Grantors”) in favor
of U.S. Bank National Association, as collateral agent for the Secured Parties
(in such capacity, the “Collateral Agent”). 
Undefined capitalized terms used in this Agreement have the meanings assigned
to them in that certain Security Agreement, dated as of
June [    ], 2004 (as amended, restated, supplemented
or otherwise modified from time to time, the “Security
Agreement”), between The Wornick Company, the other Grantors party thereto
and the Collateral Agent.


 


Section 1.  Affirmation and Grant of Security.  Each [Additional]
Grantor hereby [For existing Grantors add: 
affirms its grant to the Collateral Agent for the benefit of the Secured
Parties set forth in the Security Agreement of, and] grants to the Collateral
Agent for the benefit of the Secured Parties, a security interest in and
continuing lien on all of such [Additional] Grantor’s right, title and interest
in, to and under the Collateral to secure the Secured Oligations.


 


Section 2. 
Representation and Warranties.  Each [Additional] Grantor represents and
warrants that the attached schedules supplement the schedules to the Security
Agreement, and that each such supplemental schedule accurately and
completely sets forth all additional information required pursuant to the
Security Agreement, and such Grantor hereby agrees that such supplemental
schedules constitutes part of the schedules to the Security Agreement.


 


[The following
bracketed section is for Additional Grantors only:]


 


[Section 3.  Additional Grantor Provisions. 
Pursuant to Section 4.18 of the Security Agreement, each Additional
Grantor hereby:


 


(a)                                 
agrees that by the
execution and delivery hereof, such Additional Grantor becomes a Grantor under
the Security Agreement and agrees to be bound by all of the terms thereof as if
it were an original signatory thereto, and all of the property pledged hereby
shall be deemed to be part of the Collateral and hereafter subject to each of the
terms and conditions of the Security Agreement;


 


(b)                                
represents and
warrants that, except as set forth on the schedules hereto, each of the
representations and warranties set forth in the Security Agreement and
applicable to such Additional Grantor is true and correct both before and after
giving effect to this Supplement, except to the extent that any such
representation and warranty relates solely to any earlier date, in which case
such representation and warranty is true and correct as of such earlier date;


 


(c)                                 
agrees that from time
to time, at such Additional Grantor’s expense, it will promptly Authenticate,
execute and deliver all further agreements, instruments, certificates and documents,
and take all further action, that may be necessary or desireable, or that the
Collateral Agent may reasonably request, to create or maintain the validity,
perfection or priority of and protect any security interest granted or
purported to be granted hereby or to enable the Collateral Agent to exercise
and enforce its rights and remedies hereunder with respect to any Collateral;
and


 


A-1
















 


(d)                                
agrees that any
notice or other communication herein required or permitted to be given shall be
given in accordance with Section 7.1 of the Security Agreement, and all
for purposes thereof, the notice address of the undersigned shall be the
address as set forth on the applicable schedule hereto.]


 


Section [3][4]. 
Miscellaneous. 
Each [Additional] Grantor agrees that neither this Supplement nor any term
hereof may be changed, waived, discharged or terminated, except by an
instrument in writing signed by the party (including, if applicable, any party
required to evidence its consent to or acceptance of this Supplement) against
whom enforcement of such change, waiver, discharge or termination is
sought.  If any provision in or obligation hereunder will be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such provision
or obligation in any other jurisdiction, will not in any way be affected or
impaired thereby.  This Supplement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.


 


Section [4][5]. 
Governing Law. 
THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK.


 


IN WITNESS WHEREOF, each
[Additional] Grantor has caused this Supplement to be duly executed and
delivered by its officer thereunto duly authorized as of the date first above
written.


 


	
   

  	
  [Name of Subsidiary],

  as a[n Additional] Grantor

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Acknowledged and
  Accepted:

  
	
   

  	
   

  
	
   

  	
  U.S. BANK NATIONAL
  ASSOCIATION,

  as Collateral Agent

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  



 


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