Exhibit
10.4


 


LOAN AGREEMENT


 


THIS LOAN AGREEMENT
(“Agreement”) is made and entered into as of June 30, 2004, by and among
TEXAS STATE BANK (“Lender”), THE WORNICK COMPANY, a Delaware corporation
(“Borrower”), RIGHT AWAY MANAGEMENT CORPORATION, a Delaware corporation, THE
WORNICK COMPANY RIGHT AWAY DIVISION, a Delaware corporation, and THE WORNICK
COMPANY RIGHT AWAY DIVISION, L.P., a Delaware limited partnership.


 


RECITALS


 


WHEREAS, Borrower has
requested Lender to make the Revolving Loan (hereinafter defined) and the other
loans to Borrower as described below, the proceeds of which shall be applied by
Borrower for working capital and other general corporate purposes; and


 


WHEREAS, Lender is
willing to make the Revolving Loan and the other loans to Borrower on the
condition that (i) Lender will  have valid and enforceable first, superior
and senior liens and security interests in the Collateral (hereinafter defined)
securing the Obligations (hereinafter defined) until the Obligations have been
fully satisfied and (ii) Borrower complies strictly with the terms and
conditions of this Agreement.


 


NOW, THEREFORE, in
consideration of the mutual covenants and agreements contained herein,
Lender,  Borrower and the Subsidiaries (hereinafter defined) do hereby agree
as follows:


 


ARTICLE 1.


 


Definition of
Terms


 


Section 1.01                               
Definitions. As used in this Agreement, and unless
the context otherwise requires, the following terms shall have the respective
meanings indicated below:


 


(a)                                 
“Accounts Receivable”
shall mean all accounts and accounts receivable now and hereafter owned or
acquired by Borrower and the Subsidiaries, all of which shall be pledged to
Lender as Collateral for the Obligations.


 


(b)                                
“Advance” or
“Advances” shall mean the disbursement or disbursements of a sum or sums loaned
or to be loaned by Lender to Borrower pursuant to the Obligations.


 


(c)                                 
“Annual Commitment
Fee” shall mean $37,500.


 


(d)                                
“Asset Transaction”
shall mean the transactions contemplated by the December 3, 2003, Assets
Purchase and Sale Contract between The Wornick Company, a Nevada corporation,
and its subsidiaries, The Wornick Company Right Away Division, a Nevada
corporation, The Wornick Company Right Away Division, L.P., a Texas limited
partnership,  and Right Away Management Corporation, a Texas corporation,
as sellers, and Borrower, as amended.


 





















 


(e)                                 
“Borrower” shall mean
The Wornick Company, a Delaware corporation.


 


(f)                                   
“Borrowing Base”
shall mean the sum of: (i) ninety percent (90%) of Eligible Accounts Receivable
that arise from Government Contracts; and (ii) eighty percent (80%) of Eligible
Accounts Receivable that arise from sources other than Government Contracts;
and (iii) eighty percent (80%) of Eligible Inventory that are attributable to
Government Contracts; and (iv) sixty percent (60%) of Eligible Inventory that
are attributable to sources other than Government Contracts; and (v) fifty
percent (50%) of the value of all Parts Inventory; and (vi) twenty-five percent
(25%) of the agreed value of all Fixed Assets (subject to the limitations in
Section 2.08 of this Agreement).


 


(g)                                
“Borrowing Date”
shall mean a date upon which an Advance is to be made pursuant to an
Obligation.


 


(h)                                
“Business Day” shall
mean a day when Lender is open for business, excluding Saturdays.


 


(i)                                    
“Cash” shall mean any
and all cash balances of Borrower and the Subsidiaries, all of which shall be
pledged by Borrower and the Subsidiaries to secure the Obligations.


 


(j)                                    
“Collateral” shall
mean all collateral now or hereafter securing the Obligations including,
without limitation, all of Borrower’s and the Subsidiaries’ assets, including
Cash, Deposit Accounts, Accounts Receivable, Contracts, Inventory, Equipment,
Fixed Assets, Parts Inventory, instruments, documents, chattel paper (whether
tangible or electronic), letter-of-credit rights (whether or not the letter of
credit is evidenced by a writing), commercial tort claims, securities and all
other investment property, supporting obligations, Fixtures, Intangibles,
leasehold interest in the Property, and insurance claims and proceeds, 
and  the Ownership Interests held by Borrower, its Subsidiaries and TWC.


 


(k)                                 
“Computation Date”
shall mean : (i) the date reflected in any Draw Request, or (ii) any other date
on which Lender elects to value those components of the Collateral included in
the calculation of the Borrowing Base or the Maximum Amount.


 


(l)                                    
“Contracts” shall
mean any and all contracts of the Borrower and the Subsidiaries with third
parties for the sale of goods or services, and shall include specifically but
without limitation any and all Government Contracts, all of which shall be
pledged by Borrower and the Subsidiaries to secure the Obligations.


 


(m)                              
“Daily Administrative
Fee” shall mean a daily administrative fee payable by Borrower to Lender
associated with the unfunded portion (“Unfunded Portion”) of the $10,000,000
loan commitment granted by Lender to Borrower under the terms of this Loan
Agreement which is unrelated to any unfunded portion of the Revolving
Loan.  The daily administrative fee shall be computed by multiplying the
Unfunded Amount by .00125 and dividing the result by 360.


 


(n)                                
“Debtor Relief Laws”
shall mean any applicable liquidation, conservatorship, bankruptcy, moratorium,
rearrangement, insolvency, reorganization, or similar laws affecting the rights
or remedies of creditors generally, as in effect from time to time.


 


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(o)                                
“Default” or “Event
of Default” shall mean the occurrence of any such event set forth in
Article 10 hereof.


 


(p)                                
“Deposit Accounts”
shall mean any and all deposit accounts of Borrower and the Subsidiaries, all
of which shall be pledged to secure the Obligations.


 


(q)                                
“Eligible Accounts
Receivable” shall mean all Accounts Receivable evidenced by invoices issued by
Borrower and the Subsidiaries for performance of services or delivery of
products fully and satisfactorily performed to account debtor’s acceptance,
less: (i) any account outstanding more than ninety (90) days from the invoice
date; (ii) any account in dispute, including accounts in dispute due to the
United States Government’s suspension or denial of payment based on the pending
novations of the Government Contracts required of the Prior Wornick Parties
(hereinafter defined) under the Asset Transaction; and (iii) any related,
intercompany or affiliate accounts, unless the account is otherwise acceptable
to Lender (in writing and at Lender’s sole discretion) for inclusion as an
Eligible Account Receivable. Eligible Accounts Receivable shall specifically
exclude any amounts contractually owing to Borrower and the Subsidiaries but
which have not been invoiced.


 


(r)                                   
“Eligible Inventory”
shall mean all raw materials, work-in-progress and finished goods or packaging
materials of Borrower and the Subsidiaries valued at the lower of cost or
market value, which are subject, in Lender’s sole judgment, to a valid,
existing prior lien in favor of Lender.


 


(s)                                 
“Equipment” shall
mean, collectively, all trucks, tractors, trailers, buses, automobiles,
replacement parts, related equipment and accessories, fork lifts, tools,
furniture, advertising equipment (including signs, racks and shelves in the trade),
assembly line and manufacturing equipment and machinery, sales training
equipment, office equipment, computer hardware and software, office supplies,
sales of literature and other promotional goods and materials, and, other
tangible personal property located on the Property or used in Borrower’s and
the Subsidiaries’ business in which Borrower or the Subsidiaries hereafter own
an interest, but shall not include any such aforementioned items leased to
Borrower by any person or entity, all of which shall be pledged to secure the
Obligations.


 


(t)                                   
“Financing
Statements” shall mean the Form UCC-1 financing statements securing the
Obligations, to be filed with the appropriate offices for the perfection of a
security interest in the Collateral.


 


(u)                                
“Fixed Assets” shall
mean all tangible personal property of Borrower and the Subsidiaries, such as
Equipment and Fixtures, all of which shall be pledged to secure the
Obligations.  Initially, the agreed value of Fixed Assets will be based on
the information prepared by Standard and Poor’s Corporate Value Consulting,
dated as of May 1, 2004, and delivered to Lender on or prior to the Closing
Date.    At least once each year,  on the anniversary date
of this Agreement, the Fixed Assets portion of the Borrowing Base will be
adjusted to reflect the value, as mutually agreed by Lender and Borrower;
however,


 


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nothing herein shall prohibit the adjustment of the
Fixed Assets value as mutually agreed to by Lender and Borrower at any other
time during the term of this Agreement.


 


(v)                                
“Fixtures” shall mean
any and all fixtures now or hereafter owned by Borrower and the Subsidiaries,
all of which shall be pledged to secure the Obligations.


 


(w)                              
“GAAP” shall mean
generally accepted accounting principles and practices consistently applied.


 


(x)                                  
“Government
Contracts” shall have the definition assigned to it in Section 6.08 below.


 


(y)                                
“Guaranty” shall mean
the guaranty agreements of even date herewith executed by the Subsidiaries for
the benefit of Lender.


 


(z)                                  
“Indenture” shall
mean an indenture among  Borrower, the Guarantors named therein and U. S.
Bank National Association, as trustee, providing for the issuance of notes by
Borrower in the maximum aggregate principal amount of $125,000,000, which 
notes shall be secured by subordinate liens and security interests in the
Collateral, subject to certain exceptions.


 


(aa)                           
“Intangibles” shall
mean all intangible and intellectual property rights of Borrower and the
Subsidiaries, including the rights in and to the names and any and all other
intangibles now or hereafter used by Borrower and the Subsidiaries in
connection with their respective businesses, all of which shall be pledged to
Lender to secure the Obligations.


 


(bb)                         
“Inventory” shall mean
all raw materials, work in process and finished goods inventory now or
hereafter owned or acquired by Borrower and the Subsidiaries, all of which
shall be pledged to Lender as Collateral for the Obligations.


 


(cc)                           
“Intercreditor
Agreement” shall mean that certain agreement of even date herewith between
Lender and U.S. Bank National Association, as the trustee under the Indenture.


 


(dd)                         
“Leasehold Deed of
Trust” shall collectively refer to the Leasehold Deed of Trust (With Security
Agreement - Financing Statement and Assignment of Rents and Leases) of even
date herewith executed by The Wornick Company Right Away Division, L.P. 
to Paul S. Moxley, Trustee, describing certain liens and security interests
against certain property in Hidalgo County, Texas, and the Open-Ended Leasehold
Mortgage and Security Agreement executed by Borrower of even date herewith
describing liens and security interests against certain property in Hamilton
County, Ohio, in each case given to secure the payment of the Obligations.


 


(ee)                           
“Leases” shall
collectively refer to those leases on the Property now or hereafter entered
into, or assigned to, Borrower and any Subsidiary, and any other real property
leases hereafter entered into by Borrower or any Subsidiary.


 


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(ff)                               
“Lender” shall mean
the party named as Lender in the first paragraph of this Agreement, or any
successor or assign of said Lender, it being acknowledged and agreed by
Borrower that Lender shall have the right to assign all or any part of the
Obligations and the Collateral, including participation interests therein.


 


(gg)                         
“Loan Documents”
shall mean this Agreement, the Revolving Note, the Leasehold Deed of Trust, the
Security Agreement, the Pledge Agreement, the Financing Statements, the
Guaranty, and such other and all instruments (whether executed prior to,
contemporaneously with or subsequent to the date hereof) evidencing, securing
or pertaining to the Revolving Loan, and any other  Obligations and
extensions of credit by Lender to Borrower pursuant to this Agreement, as the
same shall from time to time be executed and delivered by Borrower, the
Subsidiaries, TWC (hereinafter defined) or any other party to Lender pursuant
to such extension of credit, and all amendments, modifications, renewals,
extensions, increases and rearrangements of, and substitutions for, any of the
foregoing.


 


(hh)                         
“Maximum Amount”
shall have the meaning assigned to such term in the Intercreditor Agreement.


 


(ii)                                 
“Obligations” shall
mean all present and future extensions of credit, obligations and indebtedness,
and all renewals and extensions thereof or any part thereof, of Borrower and
the Subsidiaries to Lender arising pursuant to this Agreement or any other Loan
Documents, including extensions of credit, obligations and indebtedness
incurred pursuant to the Revolving Note, the Guaranty, and any documents
evidencing additional credit facilities permitted under Section 2.01
hereof, all interest accruing thereon, all attorneys’ fees and costs incurred
in the enforcement or collection thereof, and all amounts advanced by Lender
for the protection of the Collateral (including taxes, insurance and repairs),
regardless of whether such obligations and indebtedness are direct, indirect,
fixed, contingent, liquidated, unliquidated, joint, several, or joint and
several.


 


(jj)                                 
“Ownership Interests”
shall mean: all issued and outstanding shares of the common capital stock of
Borrower; all issued and outstanding shares of the common capital stock of
Right Away Management Corporation; all issued and outstanding shares of the common
capital stock of The Wornick Company Right Away Division; and all general and
limited partnership interests of The Wornick Company Right Away Division, L.P.


 


(kk)                           
“Parts Inventory”
shall mean all Equipment consisting of replacement parts only, now or hereafter
owned or acquired by Borrower and the Subsidiaries, all of which shall be
pledged to Lender as Collateral for the Obligations.


 


(ll)                                 
“Pledge Agreement”
shall mean one or more agreements between TWC,  Borrower, Right Away
Management Corporation and The Wornick Company Right Away Division as the
“pledgors” and Lender wherein the pledgors have pledged all Ownership
Interests  to secure the Obligations.


 


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(mm)                     
“Prior Wornick
Parties” shall have the meaning assigned to such term in Section 4.01(g)
hereof.


 


(nn)                         
“Property” shall mean
the real property described in Schedule 1(nn) attached hereto and
incorporated herein by reference, together with all improvements located
thereon and all rights and appurtenances pertaining thereto, which real
property is leased by Borrower and certain of the Subsidiaries for use in their
respective businesses and which real property leases have been pledged as
Collateral to secure the Obligations pursuant to the Leasehold Deed of Trust.


 


(oo)                         
“Revolving 
Loan” shall mean a $15,000,000 revolving line of credit Obligation approved by
Lender for Borrower under the terms of this Agreement.


 


(pp)                         
“Revolving Note”
shall mean that certain five year adjustable interest rate revolving line of
credit promissory note of even date herewith in the original principal amount
of $15,000,000, executed by Borrower and payable to the order of Lender,
maturing on June 30, 2009, and all renewals, extensions, modifications and
increases, if any, thereof.


 


(qq)                         
“Security Agreement”
shall mean any security agreement executed by Borrower and the Subsidiaries granting
a security interest in any of the Collateral.


 


(rr)                               
Intentionally
Omitted.


 


(ss)                           
“Subsidiaries” shall
mean The Wornick Company Right Away Division, L.P., a Delaware limited
partnership, Right Away Management Corporation, a Delaware corporation, and The
Wornick Company Right Away Division, a Delaware corporation.


 


(tt)                               
“Tribunal” shall mean
any state, commonwealth, federal, foreign, territorial, or other court or
governmental department, commission, board, bureau, agency, or instrumentality.


 


(uu)                         
“TWC” shall mean TWC
Holding LLC, a Delaware limited liability company, the owner of all the issued
and outstanding shares of common stock of Borrower.


 


ARTICLE 2.


 


Loans


 


Section 2.01                               
Loans. Subject to the terms and conditions of
this Agreement, Lender agrees to make the Revolving Loan, and for a period of
five (5) years from the date hereof,  to enter into other revolving loan
credit facilities with Borrower and Advance funds to Borrower pursuant to such
additional credit facilities so long as such additional revolving loan credit
facilities: (i) do not violate the terms of the Indenture; (ii) conform to the
terms of this Agreement;  (iii) are secured by the Collateral; (iv) are
secured by a first lien priority on the Collateral pursuant to the terms of the
Intercreditor Agreement; and (v) do not exceed


 


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$10,000,000 in the aggregate.   The
outstanding principal balance of all Obligations from time to time may not
exceed the lesser of (i) $25,000,000 or the (ii) lesser of (x) the amount of
the Borrowing Base available as of a Computation Date,  or (y) the Maximum
Amount available as of a Computation Date.  Each Advance associated with
an Obligation will be accompanied by a Draw Request (hereinafter defined), duly
tendered as required by Section 2.03 hereof, and accompanied by such
documentation as Lender may require.     At the time of
each Advance made under or pursuant to this Agreement, Borrower shall
immediately become indebted to Lender for the amount of such Advance and
interest shall accrue on such Advance from the date of the Advance.  The
form of the promissory note executed to evidence an Advance with regard to any
additional Obligation not represented by the Revolving Note shall be conformed
to the form of the Revolving Note.


 


Section 2.02                               
Loan Account. A Loan Account (herein so called) will
be established by Lender for each loan Obligation, in which will be recorded
(i) as a debit, the amount of all Advances under such loan Obligation, plus all
accrued interest under such loan Obligation, and all other amounts owing in
connection with such loan Obligation, and (ii) as a credit, the amount of all
payments on such loan Obligation.


 


Section 2.03                               
Draw Request. As a condition to making an Advance,
Borrower shall submit a draw request (“Draw Request”) in substantially the form
of Schedule 2.03 attached hereto or another form acceptable to Lender,
identifying the Obligation to be funded by the Advance, and delivered at least
one (1) Business Day  prior to the date the requested Advance is to be
funded, with the blanks completed so as to accurately reflect the facts as of
the date thereof, signed by an officer of Borrower who shall certify to Lender
the accuracy of the information in, and any documentation submitted with, the
Draw Request. Lender shall lend to Borrower the amount of the requested Advance
shown on the Draw Request associated with an unfunded Obligation, but only if,
with respect to all Advances, at the time of  such Advance:


 


(a)                                 
The outstanding
principal balance of all Obligations, plus the amount of the requested Advance,
does not exceed the lesser of:  (i) $25,000,000; or (ii) the  lesser
of (x) the amount of the Borrowing Base available as of a Computation
Date,  or (y) the Maximum Amount available as of a Computation Date; as permitted
under Section 2.01 above;


 


(b)                                
Lender’s obligation
to lend hereunder has not been terminated pursuant to any provision hereof;


 


(c)                                 
No Event of Default
exists, and no event has occurred and no condition exists which, with the lapse
of time or notice or both, could become an Event of Default;


 


(d)                                
No legal proceeding
is pending or threatened against Borrower  or any Subsidiary by or before
any Tribunal which might, in the reasonable opinion of Lender, have a material
adverse effect upon the business, operations, or financial condition of
Borrower  or any Subsidiary;


 


(e)                                 
All conditions
precedent to the obligations of Lender to make the Advance have been complied
with; and


 


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(f)                                   
The consummation of
such Advance shall not violate any applicable provision of any law, the
Intercreditor Agreement or the Indenture.


 


Lender, at its option, may waive any condition
precedent to an Advance.


 


Section 2.04                               
Optional
Prepayments.
Borrower may at any time pay or prepay without premium or penalty all or a part
of any Obligation. Partial prepayments shall be applied first to accrued unpaid
interest and then to the principal balance outstanding on the Obligation for
which the voluntary prepayment is tendered.  Principal amounts prepaid on
any revolving line of credit Obligation, including the Revolving Loan, can be
re-borrowed by Borrower, subject to Section 2.03 hereof.


 


Section 2.05                               
Use of Proceeds. The proceeds of the Advances shall be
used for working capital and other general corporate purposes of Borrower and
its Subsidiaries, including without limitation, the purchase of Equipment,
Inventory and other assets necessary to Borrower’s and its Subsidiaries’ 
businesses, as well as for the payment of wages to salaried and hourly
employees.


 


Section 2.06                               
Interest Rate on
the Obligations. 
The principal amount of all Obligations, including the Revolving Note, advanced
from time to time remaining unpaid prior to maturity shall bear interest at a
varying or fluctuating rate per annum (computed on the actual number of days elapsed
over a 360 day year) that is equal to the “Prime Rate” as published each day by
the Wall Street Journal in its “Money Rates” section, and if more than
one such rate is published, then the highest such rate.  On any day when
the Wall Street Journal is not published or a Prime Rate is not
published under the Money Rates section thereof, then the Prime Rate
published for the preceding publication date of the Wall Street Journal
shall apply.  Should the method of establishing the Prime Rate or the
publication of such Prime Rate cease or be abolished, then the Prime Rate used
for the balance of the term of  an Obligation will be the interest rate
established, adopted or used by Lender as its prime or base interest
rate.  The principal  amount of all Obligations advanced from time to
time remaining unpaid after maturity or after default will bear interest at the
Prime Rate plus  two percent (2%) per annum (computed on the actual number
of days elapsed over a 360 day year).  In no event shall interest on the Revolving
Note or any other Obligation ever exceed the maximum lawful contractual amount
of interest that is permissible and nonusurious under applicable state or
federal law for the type of loan evidenced by such Obligation.


 


Section 2.07   
Payment Terms – Obligations.  Subject to all terms of this
Agreement and the other Loan Documents, including the mandatory prepayment
provisions,  unless Lender and Borrower agree otherwise at the time an
instrument evidencing an Obligation is executed, each Obligation (including the
Revolving Note Obligation) shall be payable as follows: (i)  All unpaid
principal shall be due and payable on June 30, 2009; and (ii) Interest,
computed on the unpaid principal outstanding from time to time, shall be due
and payable monthly as it accrues, on the  last day of each calendar
month, beginning on the last calendar day of the month in which the instrument
evidencing an Obligation is executed by Borrower,  and monthly thereafter
until June 30, 2009, when all remaining accrued, but unpaid, interest
shall be due and payable.


 


Section 2.08.  Limitations
on Fixed Assets Component of the Borrowing Base.  As of the date of
this Agreement, the agreed value of all Fixed Assets Collateral is $28,500,000,
so that


 


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under the Borrowing Base, up to $7,125,000 in Advances
could be requested and funded by Borrower based on the Fixed Assets component
of the Borrowing Base.  Notwithstanding the foregoing, except during the
period July 1, 2004, through September 30, 2004, the value of the Fixed
Assets and Parts Inventory components of the Borrowing Base may not exceed 25%
of the total combined value of all components of the Borrowing Base.  For
example, on and after October 1, 2004, if the outstanding Obligations are
$1,000,000, then the actual make-up of the Borrowing Base must, at a minimum,
consist of other assets (Eligible Accounts Receviable and Eligible Inventory)
with a Borrowing Base value not less than $750,000, and the Fixed Assets and
Parts Inventory components of the Borrowing Base may not exceed $250,000 of the
actual make-up of  such Borrowing Base associated with the outstanding
$1,000,000 Obligation.  In addition, until the Leasehold Deed of Trust is
executed, delivered and recorded: in Hidalgo County, Texas, the Fixed Assets component
of the Borrowing Base shall exclude leasehold improvements valued, as of the
date of this Agreement, at $1,440,770; and in Hamilton County, Ohio,  the
Fixed  Assets component of the Borrowing Base shall exclude leasehold
improvements valued, as of the date of this Agreement, at $542,050.


 


ARTICLE 3.


 


Obligation to Pay
Obligations


 


Section 3.01                               
Exclusivity of
Agreement. The
duties of Borrower to pay and perform the Obligations shall be governed
exclusively by the terms of this Agreement and the other Loan Documents
evidencing any Obligation.


 


Section 3.02                               
Obligation to
Repay Excess. If
at any time the outstanding principal balance of all Obligations shall exceed
the least  of (i) the Borrowing Base or (ii) the Maximum Amount or (iii)
$25,000,000, Borrower shall notify Lender, in writing, of such fact within one
(1) Business Day of acquiring such knowledge, accompanied by a tender of the
amount necessary to pay the entire amount of such excess, to be credited to the
Obligations in such order as Lender may elect.


 


Section 3.03                               
Obligation to
Repay Upon Default.
Except for those circumstances set forth in any Loan Document where notice and
opportunity to remedy default is applicable, upon the occurrence of an Event of
Default, Borrower shall, immediately upon demand, pay to Lender all amounts
represented by the Obligations.


 


Section 3.04                               
Payment of
Interest and Principal on Obligations. Borrower shall pay to Lender interest on the
aggregate unpaid principal balance of all Obligations from time to time
outstanding, for the actual period funds represented by the Obligations are
outstanding, at the  annual interest rate (computed based on the actual
number of days elapsed over a 360 day year) provided for in Section 2.06
above, and calculated in accordance with the terms of Section 2.06, unless
otherwise provided for in the instrument governing such Obligation, provided
that (notwithstanding anything therein to the contrary) the rate from time to
time in effect shall not exceed the Weekly Ceiling rate from time to time in
effect under the Texas Finance Code, as amended. All payments of interest and
principal associated with an Obligation shall be made at the time or times
provided for in Section 2.07 above, unless otherwise provided for in the
instrument governing each Obligation.


 


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Section 3.05  Payment
of Annual Commitment Fee and Daily Administrative Fee.  Borrower shall
pay Lender an Annual Commitment Fee on June 30 of each calendar year,
beginning June 30, 2004, and annually thereafter through and including
June 30, 2008.  Borrower shall also pay Lender a Daily Administrative
Fee, on a quarterly basis, due and payable as follows:  For the
period  January 1 through March 31 in each calendar year, on the
following April 15; For the period April 1 through June 30 in
each calendar year, on the following July 15; For the period July 1 through
September 30 in each calendar year, on the following October 15; and
for the period October 1 through December 31, on the following
January 15.


 


Section 3.06                               
Manner and Place
of Payments. All
payments and prepayments of principal and/or interest on the Obligations and
all payments of fees and other obligations hereunder shall be made in
immediately available funds, and shall be made to Lender at its office at 3900
North Tenth Street, McAllen, Texas, or at such other addresses as Lender may
notify Borrower in writing.  Borrower and  the Subsidiaries hereby
authorize Lender to debit from time to time against all Deposit Accounts of
Borrower and the Subsidiaries with Lender the amount (in the aggregate)
necessary  to fund any amount due from Borrower on any of the Obligations. 
Whenever payment is to be made on a day other than a Business Day, such payment
shall be made on the next succeeding Business Day, and such extension of time
shall in such case be included in the computation of payment of interest.


 


ARTICLE 4.


 


Conditions to
Advances


 


Section 4.01 Conditions
to Initial Advance under Revolving Note. The obligation of Lender to make
the initial Advance pursuant to this Agreement under the Revolving Note is
subject to the accuracy of all covenants, representations, warranties, terms
and conditions herein contained or otherwise made by Borrower and each
Subsidiary in connection with this Agreement and the other Loan Documents; to
the performance by Borrower and each Subsidiary of all of its agreements to be
performed hereunder and thereunder; and to the fulfillment to the satisfaction
of Lender of the following further conditions on or before the Closing:


 


(a)                                 
Borrower shall have
delivered to Lender in form and substance acceptable to Lender (i) resolutions
of the Board of Directors or other governing authority of Borrower, its
Subsidiaries and TWC certified by their respective  secretary, assistant
secretary or other authorized signatory, which resolutions shall authorize the execution,
delivery and performance by Borrower, its Subsidiaries and TWC, as contemplated
hereby, of this Agreement and the other Loan Documents and which shall
authorize the transactions contemplated hereby by Borrower, its Subsidiaries
and TWC; (ii) certificates of incumbency certified by the president and
secretary or assistant secretary of Borrower and each Subsidiary with specimen
signatures of the president or vice president and secretary or other officers
of Borrower and  each Subsidiary who will sign this Agreement or the other
Loan Documents signed and delivered pursuant hereto on behalf of Borrower
and  its Subsidiaries; (iii) certificate of incorporation, 
organization or formation of Borrower and  its Subsidiaries certified as
of a recent date by the Secretary of State of its state of incorporation or
formation; (iv) bylaws, regulations or limited


 


10





















 


partnership agreement of Borrower and its
Subsidiaries, as applicable, certified by its secretary, assistant secretary or
other authorized signatory;  and (v)  certificates  of the 
appropriate  governmental  officials  of such jurisdictions as
Lender may request, each bearing a recent date, to the effect that Borrower,
its Subsidiaries and TWC is a corporation, limited liability company or limited
partnership, as applicable, duly incorporated,  organized or formed,
validly existing, and in good standing under the laws of its incorporation or
organization, and is duly qualified to transact business and is in good
standing in each other jurisdiction where the nature and extent of its business
and property require it to be so qualified, accompanied by the certificate of
the secretary,  assistant secretary or authorized signatory of Borrower,
its Subsidiaries and TWC, as applicable, dated the date hereof, that such
certificates are true and correct.


 


(b)                                
Borrower shall have
delivered to Lender a Draw Request for an Advance signed by a duly authorized
officer of Borrower in accordance with Section 2.03 hereof, and Lender
shall be satisfied as to the accuracy of Borrower’s computation of the
Borrowing Base and the Maximum Amount.


 


(c)                                 
Borrower shall have
delivered, or cause to be delivered, to Lender the fully executed Loan
Documents, including without limitation, this Agreement, the Revolving
Note,  the Security Agreement,  the Leasehold Deed of Trust,
the  Pledge Agreement, the Financing Statements,  and the Guaranty.


 


(d)                                
Borrower shall have
delivered, or cause to be delivered, to Lender copies of the Leases.


 


(e)                                 
Borrower shall have
delivered, or cause to be delivered, to Lender a listing of the Fixed Assets of
Borrower and its Subsidiaries, certified by an officer of Borrower, and an
appraisal on the Fixed Assets of Borrower and its Subsidiaries, in a form
reasonably acceptable to Lender.


 


(f)                                   
Borrower, TWC and the
Subsidiaries shall have delivered, or cause to be delivered to Lender, evidence
of insurance on the tangible Collateral with Lender named additional insured,
mortgagee and loss payee.


 


(g)                                
Borrower and the
Subsidiaries shall have delivered, or cause to be delivered to Lender: 
(i)  an agreement between the sellers under the Asset Transaction
(collectively, the “Prior Wornick Parties”) and Borrower and the Subsidiaries:
(x) acknowledging that Borrower and the Subsidiaries, on and after July 1,
2004, will perform all further obligations of the Prior Wornick Parties under
the Government Contracts; (y) obligating the Prior Wornick Parties to continue
their assistance to Borrower and the Subsidiaries in their obtaining the United
States Government novations required under the Asset Transaction and will not
act in any manner that will interfere with the continuation and satisfaction of
the Government Contracts; and (z) providing that the Prior Wornick Parties, on
and after July 1, 2004, will immediately deliver to Lender, for deposit
into Borrower’s Deposit Accounts maintained with Lender, any payments actually
received by any Prior Wornick Party on Accounts Receivable on Government
Contracts invoiced by Borrower or its Subsidiaries to the United States
Government on or after July 1, 2004;


 


11





















 


(ii) a grant by the Prior Wornick Parties of a
security interest in favor of Lender, to further secure Lender in the payment
of the Obligations, in all of the Prior Wornick Parties’ right, title and
interest in and to all Government Contracts assigned, assignable or to be
assigned, to  Borrower and the Subsidiaries pursuant to the Asset
Transaction, all Inventory associated with Government Contracts transferred to
Borrower and the Subsidiaries pursuant to the Asset Transaction, and all
Government Contracts Accounts Receivable invoiced by  Borrower and the
Subsidiaries, on and after July 1, 2004, to the United States Government
prior to the United States Government’s approval of the novations required of
the Prior Wornick Parties under the Asset Transaction; and (iii) a written
confirmation from the administrative contracting officer responsible for
Borrower confirming that the novation process contemplated by the Asset
Transaction and associated with the assignment of the Government Contracts from
the Prior Wornick Parties to Borrower and its Subsidiaries will not result in
an interruption in payment by the United States Government, subject to
compliance with all other applicable terms of the Government Contracts.


 


(h)                                
Borrower and the Subsidiaries
shall have executed an assignment of rights in Government Contracts on each
Government Contract listed on Schedule 7. 18A in form and substance
satisfactory to Lender.


 


(i)                                    
Borrower and the
Subsidiaries shall have delivered to Lender such documentation as is required
by the United States Government for submission with the notifications to the
United States Government of the assignment of rights in each Government
Contract listed on Schedule 7. 18A in form and substance satisfactory to
Lender.


 


(j)                                    
Borrower shall have
delivered, or cause to be delivered to Lender, a fully executed copy of the
Intercreditor Agreement, the Indenture and all other documents granting a lien
or security interest in any of the Collateral executed by Borrower, TWC and any
Subsidiary in conjunction with the execution of the Indenture.


 


(k)                                 
Lender shall have
received the original certificates evidencing the Ownership Interests of
Borrower, Right Away Management Corporation, and The Wornick Company Right Away
Division, with transfer powers, endorsed in blank.


 


(l)                                    
Intentionally
Omitted.


 


(m)                              
Lender shall have
received written evidence, in a form reasonably satisfactory to Lender, that
Lender’s liens and security interests on the Collateral, represent a first lien
and security interest in the Collateral.


 


(n)                                
The transactions
contemplated by the Asset Transaction shall have been consummated.


 


(o)                                
Borrower shall have
paid Lender the Annual Commitment Fee due on June 30, 2004.


 


(p)                                
Borrower shall have
paid all expenses of the type described in Section 7.15 hereof;


 


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(q)                                
Borrower shall have
delivered, or cause to be delivered to Lender, budgets of Borrower and its
Subsidiaries for the period from July 1 through December 31, 2004.


 


(r)                                   
Borrower, TWC and the
Subsidiaries shall have delivered to Lender such other documents, instruments
and certificates as Lender may reasonably require.


 


(s)                                 
All indebtedness of
the Prior Wornick Parties to Lender secured by a lien or security interest in
any Collateral shall have been paid by the Prior Wornick Parties at Closing
from the proceeds of sale received by them under the terms of the Asset
Transaction.


 


(t)                                   
All proceedings to be
taken in connection with the transactions contemplated by this Agreement, and
all documents incident thereto, except where otherwise provided, shall be
satisfactory in form and substance to Lender and its legal counsel, and Lender
shall have received copies of all documents which it may reasonably request in
connection with such transactions and all corporate proceedings with respect
thereto, in form and substance satisfactory to Lender and its legal counsel.


 


Section 4.02                               
Conditions to
Subsequent Advances.
The obligations of Lender to make each Advance under any unfunded loan
Obligation on any Borrowing Date subsequent to the initial Advance hereunder
shall be subject to the fulfillment of the following conditions precedent:


 


(a)                                 
Borrower, its
Subsidiaries and TWC shall have executed and delivered to Lender appropriate
Loan Documents with respect to any new loan Obligations, and with respect to all
Obligations, Borrower shall have executed and delivered to Lender an
appropriate Draw Request signed by a duly authorized officer of Borrower in
accordance with Section 2.03 hereof, and Lender shall be satisfied as to
the accuracy of Borrower’s computation of the Borrowing Base and the Maximum
Amount.


 


(b)                                
If requested by
Lender, Borrower and  its Subsidiaries shall have delivered to Lender a
Certificate of No Default, an Insurance Report and a Government Contracts Status
Report and Certification, each executed by a duly authorized officer of
Borrower and its Subsidiaries, to the extent applicable,  in the form
required by Lender.


 


(c)                                 
The representations
and warranties contained in Article 6 hereof and any other document
executed and delivered in connection herewith are and shall be true and correct
in all material respects as though made on and as of such Borrowing Date
(except as not materially affected by transactions hereafter occurring in the
ordinary course of business, and except as may be waived by or cured to the
satisfaction of Lender), and no event has or will have occurred, and is or will
be continuing, or would result from such Advance, which constitutes or would
constitute an Event of Default (as defined in Article 10 hereof), or which
with notice or lapse of time or both will or would constitute an Event of
Default (unless waived by or cured to the satisfaction of Lender).


 


(d)                                
The making of the
proposed Advance will not violate or contravene any applicable provision of any
law or any regulation, demand, decree, order, writ, or injunction of any
Tribunal.


 


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(e)                                 
Borrower, TWC and the
Subsidiaries shall have delivered to Lender such other documents, instruments
and certificates as Lender may reasonably require.


 


ARTICLE 5.


 


The Closing


 


Section 5.01 Closing.
The closing (the “Closing”) of the transaction contemplated by this Agreement
and Asset Transaction, and the delivery of all documents and instruments
required hereunder to be delivered at the Closing in connection with this
Agreement, including the delivery of the Intercreditor Agreement and all Loan
Documents, shall occur on or before June 30, 2004 (the “Closing Date”), at
the offices of Schulte Roth & Zabel LLP, 919 Third Avenue, New York, New
York 10022. All Advances shall be made at the banking offices of Lender at 3900
North Tenth Street, McAllen, Texas (or at such other address as Lender may notify
Borrower in writing) upon such Borrowing Dates as Borrower may request in
accordance with Section 2.03 hereof.


 


Section 5.02  Lender’s
Delivery of Releases of Lien and Termination Statements on Certain Collateral
Transferred by the Prior Wornick Parties.  Borrower and the
Subsidiaries, in consideration of Lender’s agreement to include the value of
Inventory and Accounts Receivable on Government Contracts in the Borrowing Base
prior to the time that the United States Government actually approves the requested
novations on the Government Contracts as required under the Asset
Transaction,  agree that Lender is not required to release its liens and
security interests held by Lender in the name of the Prior Wornick Parties in
any Collateral described in Section 4.01 (g) (ii) hereof until Lender
receives written evidence, in a form reasonably acceptable to Lender, that the
novations required of the Prior Wornick Parties under the Asset Transaction on
the Government Contracts have been approved by the United States Government. 


 


ARTICLE 6.


 


Representations,
Warranties and Covenants


 


Representations.
Warranties and Covenants. Borrower and  its Subsidiaries represent and warrant to Lender,
and covenant with Lender, as follows:


 


Section 6.01   
Organization. Authority and Qualifications.


 


(a)                                 
Borrower is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and is duly qualified to do business as a foreign
corporation under the laws of the State of Ohio and any other state in which
the Borrower is required to be qualified as a result of the business activity
undertaken by Borrower in such state;  The Wornick Company Right Away
Division, L.P. is a limited partnership duly organized, validly existing and in
good standing under the laws of the State of Delaware and is duly qualified to
do business as a foreign limited partnership under the laws of the State of
Texas, and any other state in which The Wornick Company Right Away Division,
L.P. is required to be qualified as a result of the business activity
undertaken by The Wornick Company Right Away Division, L.P. in such state;
Right


 


14





















 


Away Management Corporation is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is duly qualified to do business as a foreign corporation  in
any state in which Right Away Management Corporation is required to be
qualified as a result of the business activity undertaken by Right Away
Management Corporation in such state; The Wornick Company Right Away Division
is a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware and is duly qualified to do business as a
foreign corporation  in any other state in which The Wornick Company Right
Away Division is required to be qualified as a result of the business activity
undertaken by The Wornick Company Right Away Division in such state; and TWC is
a limited liability company duly organized, validly existing and in good
standing under the laws of the State of Delaware and is duly qualified to do
business as a foreign limited liability company in any state in which TWC is
required to be qualified as a result of the business activity undertaken by TWC
in such state.


 


(b)                                
Borrower has the
corporate power and authority to execute, deliver and perform this Agreement
and the other Loan Documents it is a party to,  to borrow hereunder, and
to pledge its Collateral to secure the Obligations hereunder; each
Subsidiary  has the requisite power and authority to execute, deliver and
perform this Agreement and the other Loan Documents to which it is a party and
to pledge its  Collateral to secure the Obligations hereunder; and TWC has
the requisite power and authority to execute, deliver and perform the Pledge
Agreement to which it is a party and to pledge its Collateral to secure the
Obligations hereunder.


 


(c)                                 
The person signing
this Agreement and the other Loan Documents on behalf of Borrower has full
authority to execute the same on behalf of Borrower and to bind it to the terms
thereof; the person signing this Agreement and the other Loan Documents on
behalf of the Subsidiaries has full authority to execute the same on behalf of
the Subsidiaries and to bind it to the terms thereof; and the person signing
the Pledge Agreement on behalf of TWC has full authority to execute the same on
behalf of TWC and to bind it to the terms thereof.


 


Section 6.02                               
Authorization and
Compliance with Laws and Material Agreements. The execution, delivery and performance of this
Agreement and the other Loan Documents to which it is a party,  the
borrowing hereunder and the pledge of its Collateral for the Obligations, by
Borrower has been duly authorized by all requisite corporate action on the part
of Borrower and will not violate the Certificate of Incorporation or Bylaws of
Borrower and will not violate any provision of law, or order of any court or
governmental agency affecting it in any respect, and will not conflict with,
result in a breach of the provisions of, constitute a default under, or result
in the imposition of any lien, charge, or encumbrance upon any assets of Borrower
pursuant to the provisions of any indenture, mortgage, deed of trust,
franchise, permit, license, note or other agreement or instrument to which
Borrower may be bound. No approval or consent from any Tribunal or other third
party is required in connection with the execution of or performance by
Borrower under this Agreement and the other Loan Documents to which Borrower is
a party other than the Leasehold Deed of Trust other than the Leasehold Deed of
Trust.  The execution, delivery and performance of this Agreement and the
other Loan Documents to which The Wornick Company Right Away Division, L.P. is
a party, and the providing of Collateral


 


15





















 


thereunder for the borrowing hereunder, by such
Subsidiary has been duly authorized by all requisite action on the part of such
Subsidiary and will not violate the Certificate of Limited Partnership or the
Limited Partnership Agreement of The Wornick Company Right Away Division, L.P.
and will not violate any provision of law, or order of any court or governmental
agency affecting it in any respect, and will not conflict with, result in a
breach of the provisions of, constitute a default under, or result in the
imposition of any lien, charge or encumbrance of any assets of such 
Subsidiary pursuant to the provisions of any indenture, mortgage, deed of
trust, franchise, permit, license, note or other agreement or instrument to
which such Subsidiary may be bound.  No approval or consent from any
Tribunal or other third party is required in connection with the execution of
or performance by The Wornick Company Right Away Division, L.P.  under
this Agreement and the other Loan Documents to which such Subsidiary is a
party.  The execution, delivery and performance of this Agreement and the
other Loan Documents to which TWC, Right Away Management Corporation and The
Wornick Company Right Away Division is a party, and the providing of Collateral
thereunder for the borrowing hereunder, including without limitation the
assignment of monies due under the Government Contracts, by TWC and such
Subsidiaries has been duly authorized by all requisite action on the part of
TWC and such Subsidiaries and will not violate the Certificate of Formation or
operating agreement of TWC and the Certificate of Incorporation or Bylaws of
such Subsidiaries and will not violate any provision of law, or order of any
court or governmental agency affecting them in any respect, and will not
conflict with, result in a breach of the provisions of, constitute a default
under, terminate, or result in the imposition of any lien, charge, or
encumbrance upon any assets of TWC, Right Away Management Corporation and The
Wornick Company Right Away Division pursuant to the provisions of any
indenture, mortgage, deed of trust, franchise, permit, license, note or other
agreement or instrument to which TWC or such Subsidiaries may be bound. No
approval or consent from any Tribunal or other third party is required in
connection with the execution of or performance by TWC, Right Away Management
Corporation and The Wornick Company Right Away Division under this Agreement
and the other Loan Documents to which they are a party.


 


Section 6.03                               
Financial
Statements. Any
financial statements of Borrower furnished to Lender shall be true and correct
and will be prepared on a consolidated basis with all Subsidiaries in
accordance with GAAP, and will fairly and accurately reflect the financial
condition of Borrower and its Subsidiaries, and the results of their 
operations as of the period then ended, subject, in the case of unaudited
financial statements, to changes resulting from audit and normal year-end
adjustments.


 


Section 6.04                               
Litigation and
Judgments. Except
as set forth in Schedule 6.04, neither Borrower nor any Subsidiary, nor
TWC is involved in, nor is either the Subsidiaries, TWC or Borrower aware of,
any action, suit, or proceeding, at law or in equity, or by or before any
Tribunal or other governmental authority (collectively, “Litigation”), pending,
or to the knowledge of Borrower, TWC or the Subsidiaries, threatened, against
or affecting Borrower, TWC or the Subsidiaries or involving the validity or
enforceability of the Loan Documents, which in the reasonable opinion of
Borrower, TWC or the Subsidiaries, respectively, if adversely determined, would
materially adversely affect the financial condition of Borrower, TWC or the
Subsidiaries, or the ability of Borrower, TWC or the Subsidiaries to perform
its obligations as contemplated by this Agreement or the other Loan Documents
to which they are parties. There are no outstanding judgments (final or
otherwise) against Borrower, TWC or the Subsidiaries.


 


16





















 


Section 6.05                               
No Materially
Adverse Agreements.
Except as may be provided in the Intercreditor Agreement or the Indenture,
neither Borrower, TWC nor the Subsidiaries is a party to any agreement which in
the opinion of Borrower, TWC or the Subsidiaries, respectively, does or will
materially and adversely affect the business, operations or condition,
financial or otherwise, of Borrower, TWC or the Subsidiaries.


 


Section 6.06                               
Ownership of
Properties; Liens.
Each of Borrower and the Subsidiaries  has good and marketable title to or
valid leasehold interests in all the Collateral, and in all of its other
significant or material properties and assets, real and personal, which are
owned or used in connection with the production and distribution of its
products or services, and, except as may be provided in this Agreement, the
other Loan Documents, the Intercreditor Agreement and the Indenture, none of
such properties or assets or leasehold interests of Borrower or the
Subsidiaries is subject to any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind which would materially restrict the
manner in which Borrower or the Subsidiaries uses or intends to use such
property.


 


Section 6.07                               
Taxes. Each of Borrower, TWC and the
Subsidiaries has filed all federal and state tax returns or reports required of
it, including but not limited to income, franchise, employment and sales taxes,
and has paid or made adequate provision for the payment of all taxes which have
become due pursuant to such returns or reports or pursuant to any assessment
which has been received, none of such being outstanding and unpaid, and neither
Borrower, TWC nor the Subsidiaries knows of pending investigations of Borrower,
TWC or the Subsidiaries by any taxing authority, nor of any material pending
but unassessed tax liability.


 


Section 6.08                               
Default and
Pending Actions.
Neither Borrower, TWC nor any Subsidiary is in default in any material respect
under the provisions of any instrument evidencing any material obligation,
indebtedness or liability of Borrower, TWC or the Subsidiaries or of any
agreement relating thereto, or under any order, writ, injunction, or decree of
any court, or in default under or in violation of any order, regulation, or
demand of any governmental instrumentality which default or violation might
have consequences which would materially and adversely affect the business,
financial condition, or properties of Borrower, TWC or the Subsidiaries. 
Without limiting the generality of the foregoing, neither Borrower, TWC
nor  any Subsidiary is in default in any material respect under the
provisions of any contracts with the United States Government or any agency or
instrumentality thereof (“Government Contracts”), and there is no proceeding
pending or threatened for the renegotiation of price, terms or performance of
any such Government Contracts, and no audit or investigation not in the regular
course of Borrower’s, TWC’s or the Subsidiaries’ business is in process,
pending or scheduled.


 


Section 6.09                               
Guarantees. Except as may be provided in the
Intercreditor Agreement and the Indenture,  neither Borrower, TWC
nor  any Subsidiary has guaranteed any dividend or any obligation of any
other person, corporation or entity, including any unconsolidated subsidiary,
and neither TWC nor any Subsidiary has guaranteed any dividend, obligation or
indebtedness of Borrower other than to Lender and pursuant to the Indenture.


 


Section 6.10                               
Title to and
Perfection of Security Interest in Certain Collateral. Each of Borrower and each Subsidiary is
and will be the owner of all of its Accounts Receivable, Contracts (subject to
Section 6.11 hereof), Deposit Accounts, Equipment, Fixed Assets, Fixtures,


 


17





















 


Intangibles, Ownership Interests, and Parts Inventory,
and TWC is and will be the owner of its Ownership Interests, in each case, free
and clear of all liens, security interests, and encumbrances other than those
in favor of Lender hereunder and except as provided in the Intercreditor
Agreement and the security documents under the Indenture, and Lender will have
a valid and perfected first lien security interest therein and in the products
or proceeds thereof, and Borrower, TWC and  each Subsidiary will each
execute all such financing statements or other documents and take such actions
as Lender may deem necessary or desirable to evidence or perfect its first and
prior security interest and lien in its respective Collateral described in this
Section.


 


Section 6.11                               
Title to and
Perfection of Security Interest in Government Contracts. Subject to the rights of the United
States Government under Government Contracts, upon novation of the Government
Contracts to Borrower and the Subsidiaries, respectively, each of Borrower and
each Subsidiary is and will be the owner of all right, title and interest in
and to all of its respective Government Contracts, free and clear of all liens,
security interests, and encumbrances other than those in favor of Lender and
except as provided in the Intercreditor Agreement and the security documents
under the Indenture, and Lender will have a valid and perfected first lien
security interest therein and in the products or proceeds thereof, and Borrower
and  each Subsidiary will each execute all consents, assignments, pledges,
financing statements or other documents and take such actions as Lender may
deem necessary or desirable to evidence or perfect its first and prior security
interest and lien in any Government Contracts now held or hereafter acquired
and entered into.


 


Section 6.12                               
Title to and
Perfection of Security Interest in Inventory. Subject to the rights of the United States
Government in components owned by the United States Government and included
within Inventory, ownership of which is not claimed by either Borrower or the
Subsidiaries, each of the Subsidiaries and Borrower is and will be the owner of
all of its Inventory, free and clear of all liens, security interests, and
encumbrances other than those in favor of Lender and except as provided in the
Intercreditor Agreement and the security documents under the Indenture, and
Lender will have a valid and perfected first lien security interest therein and
in the products or proceeds thereof, and Borrower and  each Subsidiary
will each execute all such financing statements or other documents and take
such actions as Lender may deem necessary or desirable to evidence or perfect
its first and prior security interest and lien in Inventory under the Loan
Documents.


 


Section 6.13                               
Title to and
Perfection of Security Interest in Leasehold Estates. Each of Borrower and  each
Subsidiary is and will be the lessee of all of its real properties used in the
conduct of its business, and such leasehold interests will be held by them free
and clear of all liens, security interests, and encumbrances other than those
in favor of Lender and except as provided in the Intercreditor Agreement and the
security documents under the Indenture, and Lender will have a valid and
perfected first lien security interest therein, and Borrower and  each
Subsidiary will each execute all such deeds of trust or other documents and
take such actions as Lender may deem necessary or desirable to evidence or
perfect its first and prior security interest and lien in such leasehold
estates, including leasehold interests in the Property.


 


18





















 


Section 6.14                               
Purpose of
Borrower; Use of Proceeds. Borrower and its Subsidiaries have entered into this Agreement for
legitimate purposes, and Borrower will use the proceeds of the loans
exclusively as required hereby.


 


Section 6.15                               
Environmental
Matters. 
Except as disclosed in the Phase I environmental site assessment reports
heretofore made available to Lender, neither Borrower nor any Subsidiary has
received notice of, nor know of, nor suspect facts which might constitute any
violations of any federal, state, or local environmental, health, or safety
laws, codes or ordinances, and any rules or regulations promulgated thereunder
with respect to the Property.  Except in accordance with a valid
governmental permit, license, certificate, or approval, there has been no emission,
spill, release, or discharge of any toxic or hazardous substances or wastes, in
amounts requiring investigation or cleanup under applicable environmental
laws,  at or from the Property into or upon:


 


(a)                                 
the air;


 


(b)                                
soils, or any
improvements located thereon;


 


(c)                                 
surface water or
groundwater; or


 


(d)                                
the sewer, septic
system or waste treatment, storage or disposal system servicing the Property;


 


and accordingly the Property is free of all such toxic
or hazardous substances or wastes.  Except as disclosed in the Phase I
environmental site assessment reports heretofore made available to Lender,
there has been no complaint, order, directive, claim, citation, or notice by
any Tribunal or otherwise with respect to:


 


(a)                                 
air emissions;


 


(b)                                
spills, releases, or
discharges to soils or improvements located thereon, surface water, groundwater
or the sewer, septic system or waste treatment, storage or disposal systems
servicing the Property;


 


(c)                                 
noise emissions;


 


(d)                                
solid or liquid waste
disposal;


 


(e)                                 
the use, generation,
storage, transportation, or disposal of toxic or hazardous substances or waste;
or


 


(f)                                   
other environmental,
health, or safety matters affecting Borrower, its Subsidiaries,  or their
businesses, operations, assets, equipment, property, leaseholds, or other
facilities.


 


Except as disclosed in
the Phase I environmental site assessment reports previously made available to
Lender, neither Borrower nor any Subsidiary  has any indebtedness,
obligations, or


 


19





















 


liability, absolute or contingent, matured or not
matured, with respect to the storage, treatment, cleanup, or disposal of any
solid wastes, hazardous wastes, or other toxic or hazardous substances affecting
the Property (including without limitation any such indebtedness, obligation,
or liability with respect to any current regulations, law, or statute regarding
such storage, treatment, cleanup or disposal).  Borrower and the Subsidiaries hereby agree to defend, indemnify and hold
the Lender harmless from and against any and all claims, damages, judgments,
penalties, cost, and expenses (including attorneys’ fees and court costs now or
hereafter arising from the aforesaid enforcement of this Section) arising
directly or indirectly from the activities of any party on the Property, or
arising directly or indirectly from the violation of any environmental
protection, health, or safety law, whether such claims are asserted by any
Tribunal or any other party.  This indemnity shall survive the
termination of this Agreement.  The Leasehold Deed of Trust will also
contain Lender’s standard form of environmental warranties, representations and
indemnities.


 


ARTICLE 7.


 


Positive Covenants


 


Positive Covenants.                                    
Borrower and 
each Subsidiary covenant and agree that, as long as the Obligations or any part
thereof is outstanding, unless otherwise allowed by written instrument of
Lender:


 


Section 7.01                               
Performance of
Obligations.
Borrower will duly and punctually pay and perform or cause the payment or
performance of each of the Obligations, including without limitation its
obligations under this Agreement and each of the Loan Documents, as the same
may at any time be amended or modified, and each Subsidiary will, and Borrower
will cause each of TWC and the Prior Wornick Parties to, duly and punctually
perform its obligations under this Agreement and each of the other Loan
Documents to which it is a party.


 


Section 7.02                               
Preservation of
Existence and Franchises and Conduct of Business. Borrower will do or cause to be done, and will
cause  each Subsidiary and TWC to do or cause to be done,  all things
necessary to preserve and keep in full force and effect the organizational
existence, rights, leases, patents, franchise agreements, and all other
licenses or rights necessary to comply with all laws, regulations, rules,
statutes, or other provisions applicable to Borrower, TWC and each Subsidiary,
the loss of which would have a material adverse effect in the operation of its
business, in a prudent and businesslike manner.


 


Section 7.03                               
Maintenance of
Properties.
Borrower will cause, and will cause the Subsidiaries and TWC to cause, 
each of Borrower’s, TWC’s and the Subsidiaries’ properties used or useful in
the conduct of its business to be maintained and kept in good condition,
repair, and working order, and supplied with all necessary equipment, and cause
to be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in the prudent judgment of Borrower, each
Subsidiary and TWC, as applicable, may be necessary so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times.


 


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Section 7.04                               
Payment of Taxes
and Other Charges.
Borrower and each Subsidiary will promptly pay and discharge, or cause to be
paid and discharged, all lawful taxes, assessments, and other governmental
charges imposed upon Borrower and each  Subsidiary or upon the property,
real, personal or mixed, belonging to Borrower  and  each Subsidiary,
or upon any part thereof, before the payment thereof shall become in default,
as well as all lawful claims for labor, materials and supplies, which, if
unpaid, might become a lien or charge upon such property, or upon any part
thereof, provided, however, that Borrower and the Subsidiaries shall not be
required to pay and discharge, or cause to be paid and discharged, any such
tax, assessment, charge, levy or claim, so long as the validity or amount
thereof shall be contested in good faith by appropriate proceedings diligently
pursued, if appropriate reserves have been provided therefor by Borrower 
or the Subsidiaries.


 


Section 7.05                               
Insurance. Borrower will maintain, and will cause
each Subsidiary to maintain, insurance with such insurance companies, in such
amounts, and covering such risks (including products liability and business
interruption insurance) as shall be satisfactory to Lender with respect to the
Collateral, deliver to Lender certificates evidencing such insurance and, at
Closing and within 60 days after the close of each fiscal year of Borrower, a
report (“Insurance Report”) certified by the chief financial officer of
Borrower describing all insurance policies on Equipment, Fixed Assets,
Fixtures, Inventory, Parts Inventory and leasehold improvements on the Property
to which liens or security interests in favor of Lender have attached, showing
Lender as additional insured, mortgagee and loss payee, as its interest may
appear, and in such event deliver certificates evidencing such insurance to
Lender. All such certificates shall provide that the coverage so evidenced may
not be terminated, canceled or reduced except upon 30 days written notice to
Lender by the insurer.


 


Section 7.06                               
Maintenance of
Books and Records.
Borrower will, and will cause each Subsidiary to, maintain proper books of
record and account in which full, true and correct entries will be made of all
dealings and transactions in relation to its business and activities.


 


Section 7.07                               
Inspection of Properties.
Books and Records.
Borrower will, and will cause each Subsidiary to, permit Lender and its
representatives to visit and inspect any of the properties of Borrower and
each  Subsidiary, to examine and make copies of the books and accounts of
Borrower and each  Subsidiary, and to discuss the affairs, finances and
accounts of Borrower and each  Subsidiary with the officers of Borrower
and  each Subsidiary, all at such reasonable times as Lender may request
upon reasonable notice. Lender may, at its option, perform or arrange for
periodic audits of Borrower’s and the Subsidiaries’ assets, books and records,
the results of which must be acceptable to Lender in its reasonable discretion.


 


Section 7.08                               
Audited Annual
Financial Statements.
As soon as available, and in any event within 120 days after the end of each
fiscal year, beginning with its fiscal year ending December 31, 2004,
Borrower will furnish to Lender a copy of the annual audited financial
statements of Borrower and the Subsidiaries for such fiscal year containing, on
a consolidated  basis, balance sheets, statements of income, statements of
stockholders’ equity, and statements of changes in financial position,
accompanied by the report of one of the six largest national firms of
independent certified public accountants, accompanied by (i) a copy of the
management letter prepared by the accounting firm auditing and reporting upon
such financial statements, and (ii) a compliance certificate certified by the
President or the Chief Financial Officer of Borrower.


 


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Section 7.09                               
Unaudited
Quarterly Financial Statements and Compliance Certification. As soon as available, and in any event
within 45 days after the end of each calendar quarter, Borrower will furnish to
Lender a copy of the unaudited financial statements of Borrower and its
Subsidiaries as of the end of such quarter and for the period then ended, on a
consolidated basis, containing balance sheets and statements of income, all in
reasonable detail and prepared in accordance with GAAP, compiled by a certified
public accountant reasonably acceptable to Lender, and certified by the
President or the Chief Financial Officer of Borrower to fairly present the
financial condition and results of the operations of Borrower and its
Subsidiaries at the date and for the period indicated therein, subject to
changes resulting from audit and normal year-end adjustments. The quarterly
financial statements shall be accompanied by (i) comparison to current year
projections and comparison to prior year comparable period; and (ii) a
Certificate of No Default executed by the President or the Chief Financial
Officer of Borrower, in form and content satisfactory to the Lender in its sole
discretion.


 


Section 7.10                               
Monthly Aging of
Accounts Receivable and Report of Equipment, etc. As soon as available, and in any event within 15
days after the end of each month, Borrower will, and will cause each 
Subsidiary to, furnish to Lender (or will cause to be furnished to Lender) a
monthly report of (i) an aging of all its Accounts Receivable identifying such
Accounts Receivable upon the basis of a 30 day, 60 day, 90 day and beyond 90
day schedule; and (ii) a report of the status of the Borrowing Base
(consolidated with the Subsidiaries) and the Maximum Amount as of the month end
next preceding the date of the report.  A list of all Equipment owned by
Borrower and the Subsidiaries will be furnished to Lender on Lender’s request,
and annually at the time  the audited financial statements provided for in
Section 7.08 are furnished to Lender.


 


Section 7.11                               
Projections; Other
Reports and Information. Within 30 days following each fiscal year end, Borrower will provide
to Lender updated financial projections of financial status and performance for
the Borrower and its Subsidiaries (accompanied by a statement of the
assumptions underlying such projections) covering the following fiscal
year.  The financial projections shall be in such format, and shall
contain such level of detail and supporting documentation as Lender may
reasonably request.  Borrower shall also furnish to Lender from time to
time such further information regarding the business, affairs, and financial
condition of Borrower and its Subsidiaries as Lender may reasonably request.


 


Section 7.12                               
Performance of
Contracts and the Indenture. Borrower will, and Borrower will cause its
Subsidiaries to,  punctually pay all amounts due, and observe and perform
or cause to be observed and performed all covenants and agreements in the
Indenture and in each material Contract, agreement, order, lease or other
commitment to which Borrower or any  Subsidiary is a party, including specifically
but without limitation any Government Contracts, so as not to give rise to any
event of default or defense to payment or performance on the part of any other
party thereto or to any right on the part of any other party thereto of setoff,
counterclaim, recoupment, rescission,  termination, or enforcement of
rights against Borrower,  any Subsidiary or the Collateral.


 


Section 7.13  
Performance of Leases on the Property.  Borrower and each tenant
Subsidiary will punctually pay all amounts due, and observe and perform, or
cause to be observed and performed, all agreements, obligations and covenants
in the Leases so as not to


 


22





















 


give rise to any tenant event of default or defense to
landlord’s performance under the Leases, or permit landlord take any
enforcement action against the tenant under the Leases.


 


Section 7.14                               
Compliance with
Laws. Borrower
will, and Borrower will cause its Subsidiaries to, comply or cause compliance
with the requirements of all applicable laws, rules, regulations and orders of
any Tribunal materially affecting the operation of Borrower’s  and the
Subsidiaries’ business.


 


Section 7.15                               
Expenses and Legal
Fees. Borrower
and the Subsidiaires will pay all reasonable out-of-pocket expenses arising in
connection with this Agreement and the other Loan Documents, the enforcement
hereof and thereof, any amendment of this Agreement or any Loan Documents, and
the Closing of the transactions contemplated hereby including, but not limited
to, all legal fees and expenses incurred by Lender in connection with the
Revolving Loan and any Advances on any Borrowing Date hereunder with respect to
any Obligation. All such expenses shall be paid by Borrower and its Subsidiaries
within 30 days after written demand by Lender. Any and all payments made
hereunder, or under any instruments evidencing the Obligations,  shall be
made free and clear of any present or future taxes, withholdings, or other
deductions whatsoever.


 


Section 7.16                               
Notice of
Litigation, Material Adverse Changes, and Events of Default. Borrower and the Subsidiaries will
promptly give to Lender a notice in writing of (i) any litigation or any
proceeding before any Tribunal which involves an amount in controversy in
excess of $500,000.00, or which, if adversely determined, would in the
reasonable opinion of Borrower or any Subsidiary, materially adversely affect
Borrower’s or such Subsidiaries’ financial condition, affairs or operations,
(ii) any other matter which in the reasonable opinion of Borrower or any
Subsidiary might materially adversely affect Borrower’s or such Subsidiaries’
financial condition, affairs, or operations, (iii) any notice of landlord or
tenant default under the Leases, and (iv) the occurrence of any Event of
Default.


 


Section 7.17   
Ratios.


 


(a)                                 
Current
Ratio:   During the term of this Agreement, Borrower shall not allow
its ratio of Current Assets to Current Liabilities to be less than 1.5 to 1 on
an aggregate and consolidated basis. For purposes hereof, “Current Assets”
shall mean at any date the aggregate amount of the current assets of Borrower
(excluding the cash collateral pledged to the  Lender other than the 
operating account of Borrower) determined on a consolidated basis in accordance
with GAAP after deducting adequate reserves in each case where a reserve is
proper in accordance with GAAP; and “Current Liabilities” shall mean (i) all
indebtedness of Borrower which by its terms is payable on demand or matures not
more than one year from such date and (ii) all other items which in accordance
with GAAP on a consolidated basis would be included as current liabilities of
Borrower, except for trade payables.


 


(b)                                
Quick Ratio: During
the term of this Agreement, Borrower shall not allow its ratio of Quick Assets
to Current Liabilities, on an aggregate and consolidated basis, to be less than
0.65 to 1. For purposes hereof, “Quick Assets” shall mean Current Assets (as
defined in Section 7. 17(a) above) less inventory (other than 80% of
Eligible Inventory


 


23





















 


attributable to Government Contracts); and “Current
Liabilities” shall have the same meaning as in Section 7. 17(a) above.


 


(c)                                 
Minimum
Profitability:  As of the end of each fiscal year during the term of this
Agreement, Borrower shall have operating profits, computed on a consolidated
basis in accordance with GAAP, consistently applied, of not less than zero,
thereby resulting in positive cash flow for Borrower and its Subsidiaries as of
the end of such fiscal year.   “Operating profits” for purposes of
this Agreement shall mean gross profits less operating expenses.  For
purposes of this Agreement, “positive cash flow” shall mean an amount greater
than zero, which amount is the sum of net income (loss) for Borrower and its
Subsidiaries  as of the end of the applicable fiscal year and all non-cash
expenses of Borrower and its Subsidiaries for such fiscal year.


 


(d)                                
Minimum Net Worth: At
all times during the term of this Agreement, Borrower shall maintain a minimum
net worth, on a consolidated basis, equal to not less than $10,000,000.


 


Section 7.18                               
Government
Contracts.
Borrower will provide Lender  notice of any  awards related to
Government Contracts or notices related to Government Contracts now or
hereafter entered into between Borrower or any  Subsidiary and the United
States, or between Borrower or any  Subsidiary and any other person as a
subcontract involving ultimate sale of product to the United States, or
assigned, assignable or to be assigned to Borrower or any Subsidiary pursuant
to the Asset Transaction, regarding any contract awards, contract revocations,
or any material changes in contracted volume, pricing or delivery schedules, or
any material changes in cost components of products sold or any other material
change in contract terms for any prime contract or subcontract with the Borrower,
in each case within seven days of receipt of such notice. Attached as
Schedule 7.18A is a list of all Government Contracts in effect as
of the date hereof. As often as requested by Lender, Borrower shall provide to
Lender a report as to the status of the novations on Government Contracts
required of the Prior Wornick Parties under the Asset Transaction, Government
Contracts entered into between Borrower or any Subsidiary and the United
States, or between Borrower or any Subsidiary and any other person as a
subcontract involving ultimate sale of product to the United States, and if
requested,  a copy of  such Government Contracts. Immediately upon
execution of any Government Contracts entered into between the Borrower or any
Subsidiary and the United States, or between Borrower or any Subsidiary and any
other person as a subcontract involving ultimate sale of product to the United
States, Borrower and any Subsidiary as applicable shall execute and deliver to
Lender its rights under such contracts pursuant to an assignment in the form of
Schedule 7. 18B attached hereto and incorporated herein by reference for
all relevant purposes and shall give Lender such documentation as is required
by the United States Government for submission to the United States Government
with the notification of such assignment and obtain confirmation of such
assignment in the forms also attached as Schedule 7. 18C or in such other
form as may be approved by Lender.


 


Section 7.19                               
Minimum Working Capital. Borrower shall at all times maintain a
minimum of $2,000,000.00 in current working capital on an aggregate and
consolidated basis. Current working capital shall be defined as all Current
Assets,  less all Current Liabilities.


 


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Section 7.20  
Depository.  Borrower and each Subsidiary will maintain all their
Deposit Accounts and Cash with Lender.


 


Section 7.21  Report
on Indenture Payments.  At least 45 days prior to the date:  an
interest payment is due under the Indenture; or a permitted or mandatory
redemption of principal on the notes associated with the Indenture is due;
Borrower shall provide Lender a written report detailing the source of funds
Borrower will use to make such payment, evidence that such payment will not
result in an Event of Default under this Agreement or the other Loan Documents,
and such other information and documentation as Lender may reasonably request.


 


Section 7.22  Title
Equipment.  Within forty-five (45) days after the Closing Date, Lender
shall have received the original certificates of title on all titled Equipment
owned by Borrower and the Subsidiaries, and during the term of this Agreement,
Borrower and its Subsidiaries shall deliver to Lender the original certificates
of title on all subsequently acquired titled Equipment within thirty (30) days
of acquiring possession of such titled Equipment.  Borrower and its
Subsidiaries shall cooperate with Lender in having new certificates of title
issued on all titled Equipment reflecting Lender’s first lien and security
interest in such Collateral.


 


ARTICLE 8.


 


Negative Covenants


 


Negative Covenants. Each of Borrower and the Subsidiaries
covenants and agrees that, as long as the Obligations or any part thereof are
outstanding, without the prior written consent of Lender:


 


Section 8.01                               
Liens. Neither Borrower nor any Subsidiary
will directly or indirectly create, incur, assume, or permit to exist any
mortgage, lien, charge or encumbrance on, or security interest in, any property
or asset now or hereafter acquired by Borrower  or any Subsidiary;
provided, however, that the restrictions in this Section 8.01 shall not
prohibit the following (“Permitted Liens”):


 


(a)                                 
Purchase money
secured indebtedness incurred in connection with the acquisition by Borrower or
any Subsidiary, respectively, in the ordinary course of business of any
property or asset, whether real, personal or mixed (but not acquired in
replacement of equipment included in the Collateral), up to a maximum aggregate
of $2,000,000.00 so long as such acquisition does not result in an Event of
Default under the Indenture;


 


(b)                                
Liens, security
interests, charges or other encumbrances in favor of Lender or otherwise contemplated
by this Agreement;


 


(c)                                 
Liens for taxes,
assessments, or other governmental charges or claims of any nature, the payment
of which is not at the time required or which are being contested in good faith
by appropriate proceedings diligently prosecuted;


 


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(d)                                
Liens of carriers,
warehousemen, mechanics and materialmen incurred in the ordinary course of
business for sums not yet due or being contested in good faith by appropriate
proceedings diligently prosecuted;


 


(e)                                 
Liens incurred or
deposits made in the ordinary course of business in connection with Workers’
Compensation, unemployment insurance and other types of social security, or to
secure the performance of surety and appeal bonds, bids, leases, performance
bonds and other similar obligations; or


 


(f)                                   
Liens provided for in
the Intercreditor Agreement and the security documents under the Indenture so
long as such liens do not result in an Event of Default under the Indenture.


 


Section 8.02                               
Limitation on
Leases. Borrower
will not permit the aggregate rentals payable under all non-cancelable
operating leases entered into after Closing to which Borrower or a Subsidiary
is a party to exceed $500,000 during any fiscal year. Lender acknowledges and
consents to the Leases pledged to Lender by Leasehold Deed of Trust to secure
the Obligations and the other existing leases on other real property disclosed
to Lender. Borrower agrees not to amend the Leases in any material respect
without the prior written consent of the Lender.  At Lender’s request,
Borrower and its Subsidiaries will grant Lender first liens on the leasehold interest
in all real property leases to the extent Borrower and its Subsidiaries are
permitted to grant liens on their leasehold interest under such leases.


 


 Section 8.03                            
Limitations on
Dividends and Similar Payments. Except as allowed under the terms of the Indenture,
Borrower will not declare or pay any dividends on any class of stock, or
directly or indirectly make any payment on account of the purchase, redemption
or other retirement of any shares of such stock, or any warrants, rights, or
options to purchase, or otherwise acquire any shares of its stock of any class
or make any distribution in respect to its stock, either directly or
indirectly, whether in cash or property or in obligations of Borrower.


 


Section 8.04                               
Mergers, Etc. Except as allowed under the terms of
the Indenture, Borrower and its Subsidiaries will not (i) consolidate with or
merge into any other corporation, (ii) permit any other corporation to merge
into Borrower and its Subsidiaries, (iii) acquire all or any substantial part
of the capital stock, property or assets of any other corporation, partnership,
or other entity, or (iv) sell or otherwise dispose of any investment (including
any ownership of common stock, partnership interest, or other securities,
interest, or other evidence of indebtedness or any ownership interest of any
kind) in any other business or company.


 


Section 8.05                               
Acquisition of
Equipment.
Borrower and its Subsidiaries will not purchase or otherwise acquire any
additional Equipment (including any substitutions for Equipment owned on the
Closing Date) or make any other capital expenditures in violation of the
Indenture, or which would cause Borrower and its Subsidiaries to be in default
under the terms of this Agreement or any other Loan Document.


 


Section 8.06                               
No Materially
Adverse Management Changes.  Except in the case of death, disability,
resignation,  or retirement in the normal course of business, and except
as otherwise determined by the board of directors of Borrower or any Subsidiary
in the exercise of


 


26





















 


its fiduciary obligations, there shall not be any
change in the office of  president of Borrower or any  Subsidiary
which would materially adversely affect Borrower’s or a Subsidiary’s financial
condition, affairs or operations.


 


Section 8.07 Changes
in Certain Management.  Borrower will provide Lender written notice of
any change in the office of president, chief financial officer or vice
president of operations or manufacturing of Borrower or any Subsidiary as soon
as practical under the circumstances, and whenever possible, at least ten days
prior to the effective date of any change in the office of president, chief
financial officer or vice president of operations or manufacturing of Borrower
or any Subsidiary.


 


Section 8.08  Obligations
under Indenture. Neither Borrower nor any Subsidiary shall take any action,
or refrain from taking any action, under the terms of the Indenture, which
would cause Borrower or any Subsidiary to default on their obligations to
Lender under this Agreement or under any other Loan Document, or which would
result in any change in priority or reduction in Lender’s liens and security
interests on any of the Collateral.


 


Section 8.09 Issuance
of Additional Interests.  Neither Borrower nor any Subsidiary will
issue any additional stock, membership interest, and/or partnership interest of
any class without informing Lender of the issuance of such interests, and the
party acquiring such stock, membership interest and/or partnership interest
pledges such interests to Lender as security for the Obligations.


 


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ARTICLE 9.


 


Collateral
for Obligations


 


Section 9.01                               
Security Interest
in Property. In
order to increase the Borrowing Base through inclusion of leasehold
improvements, Borrower and The Wornick Company Right Away Division, L.P. shall
have granted to Lender a first and superior lien upon, and a first and superior
security interest in, the interest of Borrower and The Wornick Company Right
Away Division, L.P., respectively, under the Leases,  for the Property,
the granting of such liens to be subject to consent by the landlord, and a
first and superior lien against or a first and superior security interest in
any other real property now leased, or hereafter leased or acquired, by
Borrower or any Subsidiary to the extent permitted under the applicable lease.
On each anniversary date of this Agreement, Borrower and the Subsidiaries will
provide Lender a listing of all real property leases in existence as of 
the date of the report, and if requested by Lender, copies of such
leases.  Each of Borrower and, to the extent applicable, each Subsidiary
agrees to notify Lender of Borrower’s and each Subsidiary’s entry into leases
on real property simultaneously with the entry of such leases by Borrower or
its Subsidiaries, and to execute and deliver to Lender, upon request by Lender,
, a Leasehold Deed of Trust on such other real property.  Unless otherwise
agreed, the form of the instrument granting such lien or mortgage shall be in
substantially the same form as the Leasehold Deed of Trust on the Property
conformed to the applicable jurisidiction if the other real property is located
in a state other than the State of Texas or the State of Ohio.


 


Section 9.02                               
Security Interest
in Equipment. In
order to secure payment and performance of the Obligations, each of Borrower
and each Subsidiary hereby grants to Lender a first and superior lien upon, and
a first and superior security interest in, all Equipment now owned and
hereafter acquired by Borrower and each Subsidiary. Each of Borrower and
each  Subsidiary agrees to execute and deliver to Lender, as a condition
to the obligations of Lender hereunder, a duly and validly executed security
agreement creating a first and superior security interest in its Equipment.


 


Section 9.03                               
Security Interest
in Ownership Interests. In order to secure payment and performance of the Obligations, each
of Borrower, Right Away Management Corporation and The Wornick Company Right
Away Division hereby grants to Lender a first and superior lien upon, and a
first and superior security interest in, all Ownership Interests now owned and
hereafter acquired by each of them. Each of Borrower, Right Away Management
Corporation and The Wornick Company Right Away Division agrees to execute and
deliver to Lender, as a condition to the obligations of Lender hereunder, a
duly and validly executed security agreement creating a first and superior
security interest in the Ownership Interests.  Borrower shall cause TWC,
in order to secure the payment and performance of the Obligations, to grant
Lender a first and superior lien upon, and a first and superior security
interest in, all Ownership Interests of The Wornick Company, a Delaware
corporation, and to execute a pledge agreement creating a first and superior
security interest in such Ownership Interests.


 


Section 9.04                               
Security Interest
in Other Assets.
In order to secure payment and performance of the Obligations, each of Borrower
and each  Subsidiary hereby grants to Lender a first and superior lien
upon, and a first and superior security interest in, all other personal


 


28





















 


property, including Accounts Receivable, Contract
rights (to the extent assignable, or to the extent which interests therein or
in the proceeds thereof are assignable to Lender), Deposit Accounts, chattel
paper, Intangibles, Inventory, Parts Inventory, Fixed Assets, Fixtures, and
such other assets now owned or hereafter acquired by Borrower and each 
Subsidiary, and agrees to execute and deliver to Lender, as a condition to the
obligations of Lender hereunder, a duly and validly executed security agreement
which further sets forth the first and superior lien granted herein.


 


Section 9.05                               
Execution of
Further Documentation. Promptly after acquisition by Borrower or the Subsidiaries of any
Inventory, Parts Inventory, Equipment or other Collateral subsequent to
Closing, Borrower will, if requested by Lender, confirm to Lender that Lender
has a first and superior security interest therein, shall deliver such
Collateral for which perfection is accomplished by possession and, for
Collateral for which perfection is accomplished by notation on a certificate of
title or similar documentation, shall cause the security interest to be noted,
where applicable, upon the certificate of title or other documentation related
thereto. Each of Borrower and each Subsidiary shall, upon request by Lender,
execute, acknowledge and deliver such further chattel mortgages, assignments,
financing statements, title certificates, security agreements and other documents
as may be requested by Lender to more fully evidence and perfect the first and
superior security interest in the Collateral. In addition, each of Borrower,
TWC and each Subsidiary agrees to execute, acknowledge, and deliver any and all
instruments, mortgages, agreements, certificates, applications, transfers,
assignments, financing statements, and other documents of every nature, with
such covenants, warranties, indemnities and other provisions, and to do all
other acts and things to be done by Borrower, TWC and each Subsidiary as may
from time to time, in the opinion of Lender, be necessary or proper to fully
effectuate the purposes of this Article 9 and the intentions of the
parties hereto.


 


ARTICLE 10.


 


Default


 


Section 10.01 Events
of Default. As used herein, the term “Event of Default” means any one or
more of the following events:


 


(a)                                 
The failure of any
portion of the Obligations, including interest thereon, or any part thereof, to
be paid when due.


 


(b)                                
The breach or other
failure of Borrower, TWC and each Subsidiary to punctually and properly
observe, keep and perform each of its covenants and agreements contained in
this Agreement, or the failure by Borrower, TWC and each Subsidiary to comply
with any of the other terms or conditions specified herein or in any of the
other Loan Documents.


 


(c)                                 
Any representation or
warranty made by Borrower, TWC and each Subsidiary in this Agreement, any
instrument evidencing an Obligation,  any of other Loan Documents, or the
Indenture is untrue in any material respect, or any schedule, statement,
report, notice or writing furnished by Borrower, TWC and each Subsidiary to
Lender is untrue in any material respect on the date as of which the facts set
forth therein are stated or


 


29





















 


certified, or information is omitted from such
schedules, statements, reports, notices, or writings and the omission of such
information would cause the representations and warranties contained therein to
be misleading in any material respect.


 


(d)                                
An inability of
Borrower and each Subsidiary to satisfy any condition specified herein as
precedent to the obligation of Lender to make an Advance after a Draw Request
for an Advance has been submitted by Borrower to Lender, provided that a Draw
Request for an Advance by Borrower in an amount in excess of the amounts that
may be advanced pursuant to this Agreement shall not be an Event of Default,
but Lender shall have no obligation to make such Advance.


 


(e)                                 
The  
appointment of a receiver, trustee, custodian, conservator, or liquidator, or
other similar official for Borrower or any Subsidiary, any of the Collateral,
or any other property of Borrower or any Subsidiary.


 


(f)                                   
Borrower or any
Subsidiary shall generally not pay its debts as they become due or shall admit
in writing its inability to pay its debts, or Borrower or any Subsidiary shall
make a general assignment for the benefit of creditors.


 


(g)                                
Borrower or any
Subsidiary shall commence any case, proceeding or other action seeking
reorganization, arrangement, adjustment, liquidation, dissolution or
composition of Borrower or any Subsidiary or its debts under any Debtor Relief
Laws.


 


(h)                                
Any case, proceeding
or other action commenced against Borrower or any Subsidiary seeking to have an
order for relief entered against Borrower or any Subsidiary as debtor, or
seeking a reorganization, arrangement, adjustment, liquidation, dissolution or
composition of Borrower or any Subsidiary or its debts under Debtor Relief
Laws, or seeking an appointment of a receiver, trustee, custodian or other
similar official for Borrower or any Subsidiary or for all or any of the
Collateral, or any other property of Borrower or any Subsidiary and such case,
proceeding or other action (i) results in the entry of an order for relief
against Borrower or any Subsidiary or (ii) remains undismissed for a period of
60 days.


 


(i)                                    
Borrower or any
Subsidiary shall have concealed, removed, or permitted to be concealed or
removed, any part of its property, with intent to hinder, delay or defraud its
creditors or any of them, or made or suffered a transfer of any of its property
which may be fraudulent under any bankruptcy, fraudulent conveyance or similar
law; or shall have made any transfer of its property to or for the benefit of a
creditor at a time when other creditors similarly situated have not been paid;
or shall have suffered or permitted, while insolvent, any creditor to obtain a
lien upon any of its property through legal proceedings or distraint which is
not vacated within 60 days from the date thereof.


 


(j)                                    
An occurrence of any
event or condition which results in, or with notice or lapse of time could
result in, a default in the payment of any indebtedness or performance of any
obligation of Borrower or any Subsidiary to Lender or any other party,
including any obligation of Borrower  or any Subsidiary under the
Indenture.


 


(k)                                 
The liquidation,
termination or dissolution of Borrower or any Subsidiary.


 


30





















 


(l)                                    
Borrower or any
Subsidiary fails to be awarded (including failure to obtain novation of any
Government Contracts to be assigned or assignable under the Asset Transaction),
or following an award, fails to maintain in effect, Government Contracts on
MREs (meals ready to eat) representing at least 20% of the total case volume of
all outstanding MREs (meals ready to eat) Government Contracts.


 


(m)                              
A final judgment or
judgments where the amount not paid by insurance is material, if collected,
against Borrower or any Subsidiary, and the same shall remain undischarged for
a period of thirty (30) days during which execution shall not be effectively
stayed.


 


(n)                                
Any claim is
asserted, or any court shall find or rule, or Lender shall determine, that
Lender does not have a valid first lien on the Collateral.


 


(o)                                
The sale, encumbrance
or abandonment (except as otherwise expressly permitted by this Agreement, any
other Loan Documents or the Indenture) of the Collateral and/or any other
property now or hereafter subject to any of the Loan Documents; or the making
of any levy, seizure or attachment thereof or thereon; or the loss, theft,
substantial damage, or destruction of any material portion of the Collateral
and such loss, theft, substantial damage or destruction is not covered by
casualty and hazard insurance in accordance with the terms of this Agreement,
the other Loan Documents or the Indenture, or, if so insured, the issuer of
such insurance does not promptly compensate the Borrower or the Subsidiaries
for such loss, theft, substantial damage or destruction.


 


(p)                                
Any default by the
Prior Wornick Parties under the security agreement evidencing the security
interest referenced in Section 4.01(g)(ii) above, provided, that Lender
has provided Borrower written notice of such default and Borrower has failed to
diligently prosecute against the Prior Wornick Parties any rights relating to
such default that Borrower may have under the Asset Transaction.


 


ARTICLE 11.


 


Rights and
Remedies of Lender


 


Section 11.01                         
Remedies Upon
Default. Subject
to compliance by Lender with any requirement of notice and opportunity to cure
as may be contained in this Agreement or any instrument evidencing an
Obligation (which notices and cure provisions are incorporated by reference
into this Agreement, with the qualification that in no event or circumstance
shall more than one notice and opportunity for cure be required for the same
default), upon the occurrence of an Event of Default, Lender shall have, in
addition to any and all other rights, remedies and recourses available to it under
any of the Loan Documents or otherwise available at law or in equity, including
specifically, but without limitation, the right to declare immediately due and
payable all or any part of the outstanding Obligations and accrued but unpaid
interest thereon and to foreclose any and all liens and security interests in
all Collateral securing the repayment of same, the right (a) to take exclusive
possession of the Collateral, (b) to prosecute and defend all actions or
proceedings relating to the Collateral, (c) to pay, settle or compromise all
existing bills and claims which are or may be liens against the Collateral, (d)
to execute in Borrower’s and


 


31





















 


each Subsidiary’s name all applications, certificates
and other instruments which may be required to preserve and protect the
Collateral, and (e) to employ such contractors, subcontractors, agents,
attorneys, accountants and inspectors as Lender may deem desirable to
accomplish any of the above purposes. For these purposes, Borrower and each
Subsidiary hereby constitutes and appoints Lender its true and lawful
attorney-in-fact with full power of substitution to take any and all of the
above described actions, which power of attorney shall be deemed to be coupled
with an interest and shall be irrevocable. All sums expended by Lender for any
of the above purposes shall be deemed to be Advances hereunder and shall be
secured by the Loan Documents. With respect to each and every right of Lender
enumerated in this Section 11.01, Borrower and each Subsidiary hereby
expressly waives demand, presentment, notice of dishonor, notice of intent to
demand or accelerate payment, notice of acceleration, diligence in collecting,
grace, notice and protest, except as set forth in this Agreement or any
instrument evidencing an Obligation.


 


Section 11.02                         
Cessation of
Lender’s Obligations.
Upon the occurrence of any Event of Default hereunder or under any other Loan
Document, all obligations (if any) of Lender hereunder, including specifically
any obligation to make Advances hereunder, shall immediately cease and
terminate.


 


Section 11.03                         
Acceleration. Subject to Section 11.01, upon the
occurrence of an Event of Default, Lender may, at its option, declare the
Obligations, together with accrued but unpaid interest, immediately due and
payable without notice of any kind.


 


Section 11.04                         
Additional
Remedies. Right of Set-Off. In addition to any other security required or
permitted hereunder, Lender is hereby given a lien, security interest, mortgage
and/or pledge for the payment of all debts and liabilities of Borrower or any
Subsidiary to Lender upon all monies, securities, or other property of Borrower
and each Subsidiary, now or hereafter held by Lender (including Cash and
property held in Deposit Accounts or for safekeeping, in custodial accounts or
by pledge, or any items received for collection or transmission and the
proceeds thereof). Lender shall have (to the extent not prohibited or limited
by statutory or common law), upon the occurrence of an Event of Default, and
provided that such Event of Default is continuing and is not waived by or
remedied to the satisfaction of Lender, (i) the right to withhold payment of
the balance of any Deposit Account (whether general or special, time or demand,
provisional or final) of Borrower and each Subsidiary with Lender or pledged by
any other party as Collateral for the Obligations; (ii) the right to
appropriate and apply to the payment of any liabilities of the Borrower and
each Subsidiary to Lender, whether or not then due, any security therefor and
any monies, Deposit Accounts, claims, securities, or other property or proceeds
thereof, (iii) the right to sell, assign, give options to purchase, and deliver
the whole or any part thereof in one or more parcels, at public or private
sale, at Lender’s offices, or at any exchange or brokers’ board, or elsewhere,
for cash, upon credit, or for future delivery, without demand, advertisement,
or notice, which are hereby expressly waived by Borrower and each Subsidiary;
and upon any such sale Lender may become the purchaser of any such property
free from any right of redemption, which is hereby waived and released by
Borrower and each Subsidiary.


 


Section 11.05                         
Funds of Lender. Any funds of Lender used for any
purpose referred to in Section 11.01 shall constitute Advances secured by
the Loan Documents and, subject to Section


 


32





















 


12.05, shall bear interest at the greater of the rate
specified in this Agreement or the instrument evidencing the Obligation to be
applicable after default thereunder.


 


Section 11.06                         
No Waiver or
Exhaustion. No
waiver by Lender of any of its rights or remedies hereunder, in the other Loan
Documents, or otherwise, shall be considered a waiver of any other or
subsequent right or remedy of Lender; no delay or omission in the exercise or
enforcement by Lender of any rights or remedies shall ever be construed as a
waiver of any right or remedy of Lender; and no exercise or enforcement of any
such rights or remedies shall ever be held to exhaust any right or remedy of
Lender.


 


ARTICLE 12.


 


Miscellaneous


 


Section 12.01                         
Notices. All notices or other communications
required or permitted to be given pursuant to the provisions of this Agreement
shall be in writing and shall be considered properly given upon deposit into
the care and custody of the United States Postal Service, if mailed by first
class United States mail, postage prepaid, by registered or certified with
return receipt requested. Notice given in any other manner shall be effective
only if and when received by the addressee. For purposes of notice, the
addresses of the parties shall be as set forth below the signature lines at the
end of this Agreement; provided, however, that any party to this Agreement
shall have the right to change its address for notice hereunder to any other
location within the continental United States by the giving of 30 days’ written
notice to the other party in the manner set forth hereinabove.


 


Section 12.02                         
Waiver. Any failure by Lender to insist, or any
election by Lender not to insist, upon Borrower’s,  and each Subsidiary’s
strict performance of any of the terms, provisions or conditions of the Loan
Documents shall not be deemed to be a waiver of same or of any other term,
provision or condition thereof; and Lender shall have the right at any time
thereafter to insist upon strict performance by Borrower and each Subsidiary of
any and all of same. Specifically, no Advance by Lender when there exists an
Event of Default under Article 10 hereinabove shall in any way preclude
Lender from thereafter declaring such failure to comply to be an Event of
Default hereunder.


 


Section 12.03                         
Survival. The representations, warranties and
covenants of Borrower, TWC and each Subsidiary contained in this Agreement
shall survive the Closing.


 


Section 12.04                         
Participations. Lender may, at any time, sell,
transfer, assign or grant participations in the Obligations described in or
evidenced by this Agreement; and Lender may forward to each participant and
prospective participant all documents and information relating to such loan,
whether furnished by Borrower, any Subsidiary or otherwise, as Lender
determines necessary or desirable.


 


Section 12.05                         
Limitations on
Interest. All
agreements between Lender and Borrower and Lender and each Subsidiary, whether
now existing or hereafter arising and whether written or oral, are hereby
limited so that in no contingency, whether by reason of demand for payment or
acceleration of the maturity hereof or otherwise, shall the interest contracted
for, charged or received by Lender exceed the maximum amount permissible under
applicable law. If, from any


 


33





















 


circumstance whatsoever, interest would otherwise be
payable to Lender in excess of the maximum lawful amount, the interest payable
to Lender shall be reduced to the maximum amount permitted under applicable
law; and if from any circumstance Lender shall ever receive anything of value
deemed interest by applicable law in excess of the maximum lawful amount, an
amount equal to any excessive interest shall be applied to the reduction of the
principal obligation and not to the payment of interest, or if such excessive
interest exceeds the principal obligation such excess shall be refunded. All
interest paid or agreed to be paid to Lender shall, to the extent permitted by
applicable law, be amortized, prorated, allocated, and spread throughout the
full period until payment in full of the principal so that the interest hereon
for such full period shall not exceed the maximum amount permitted by
applicable law. This paragraph shall control all agreements between Lender and
Borrower and between Lender and each Subsidiary.


 


Section 12.06                         
Applicable Law. This Agreement and the Loan Documents
shall be governed by and construed in accordance with the laws of the State of
Texas and the laws of the United States applicable to transactions within the
State of Texas. Subject to Article 13, the parties hereto stipulate and
agree that any action, suit or proceeding brought to enforce any obligation or
covenant under this Agreement or the Loan Documents shall be brought
exclusively in Hidalgo County, Texas, it being stipulated and agreed that such
county is the exclusive county for venue for any such suit or proceeding.


 


Section 12.07                         
Rights. Remedies
and Recourses Cumulative. All rights, remedies and recourses afforded Lender in the Loan
Documents or otherwise available at law or in equity, including specifically,
but without limitation, those granted by the Uniform Commercial Code in effect
in the State of Texas (a) shall be deemed cumulative and concurrent, (b) may be
pursued separately, successively or concurrently against Borrower and the
Subsidiaries or anyone else obligated under any or all of the Loan Documents,
or against any Collateral secured by the Loan Documents, or against any one or
more of them, at the sole discretion of Lender, (c) may be exercised as often
as the occasion therefor shall arise, it being understood by Borrower and each
Subsidiary that the exercise, failure to exercise or election not to exercise
any of the same shall in no event be construed as a waiver of same or of any
other right, remedy or recourse available to Lender and (d) are intended to be,
and shall be, nonexclusive.


 


Section 12.08                         
Severability. If any provision hereof or of any of
the other Loan Documents or the application thereof to any person or
circumstance shall, for any reason and to any extent, be invalid or
unenforceable, neither the application of such provision to any other person or
circumstance nor the remainder of the instrument in which such provision is
contained shall be affected thereby, but rather shall be enforced to the
greatest extent permitted by law.


 


Section 12.09                         
Construction. The parties acknowledge that each party
and its counsel have reviewed this Agreement and the Loan Documents and that
the normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation
of this Agreement, the Loan Documents or any amendments or exhibits hereto.


 


Section 12.10                         
Modification. This Agreement and any obligation
undertaken herein shall not be amended, waived, discharged or terminated orally
but only by an instrument executed by


 


34





















 


the party against which enforcement of the amendment,
waiver, discharge or termination is sought, which instrument may be in the form
of a letter agreement.


 


Section 12.11                         
Lender’s Discretion. In any instance under this Agreement or
any other of the Loan Documents (including any Exhibits, Schedules, Annexes or
Addenda hereto or thereto) where Lender’s approval or consent is required, the
granting or denial of such approval or consent shall be within the reasonable
discretion of Lender.


 


Section 12.12                         
No Third Party
Beneficiary. This
Agreement is for the sole benefit of Lender, Borrower and the Subsidiaries, and
is not for the benefit of any third party.


 


Section 12.13                         
Borrower and
Subsidiaries In Control; No Partnership. In no event shall Lender’s rights and interests
under the Loan Documents be construed to give Lender the right to, or be deemed
to indicate that Lender is in control of, the business, management or
properties of Borrower, or the Subsidiaries or to indicate that Lender has
power over the daily management functions and operating decisions made by
Borrower and the  Subsidiaries. Nothing contained herein or in any of the
other Loan Documents shall be construed as creating a joint venture,
partnership, tenancy-in-common or joint tenancy arrangement between Lender and
Borrower,  or between Lender and the Subsidiaries. The relationship of
Lender, Borrower and the Subsidiaries is and at all times shall be solely that
of debtor and creditor. However, if Lender becomes the owner of any stock of
Borrower or any Subsidiary, whether through foreclosure or otherwise, Lender
shall be entitled to exercise such legal rights as it may have by virtue of
being a shareholder of Borrower or a Subsidiary.


 


Section 12.14                         
Successors and
Assigns. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their heirs, successors, legal representatives and assigns. However,
neither Borrower, nor any Subsidiary shall not assign or encumber this
Agreement or any rights herein, it being expressly understood and agreed that
Borrower’s’s and the Subsidiaries’ rights hereunder are not assignable.


 


Section 12.15                         
Number and Gender. Whenever used herein, the singular
number shall include the plural and the plural the singular, and the use of any
gender shall be applicable to all genders. The duties, covenants, obligations,
and warranties of Borrower and the Subsidiaries in this Agreement shall be
joint and several obligations of Borrower and the Subsidiaries and of each
Borrower and each Subsidiary if more than one.


 


Section 12.16                         
Captions. The captions, headings, and
arrangements used in this Agreement are for convenience only and do not in any
way affect, limit, amplify, or modify the terms and provisions hereof.


 


Section 12.17                         
Time of the
Essence. Time is
of the essence with respect to each and every matter pertaining to performance
under this Agreement and of each provision hereof.


 


Section 12.18                         
Executed Copies. This Agreement may be executed in any
number of counterpart copies, each of which counterparts shall be deemed an
original for all purposes.


 


Section 12.19  
List of Schedules.  The following schedules are attached to this
Agreement:


 


35





















 


Schedule 1(nn) –
Legal Description of Property


 


Schedule 2.03 – Draw
Request


 


Schedule 6.04 –
Listing of Litigation and Administrative Proceedings


 


Schedule 7.18A –
Listing of Government Contracts


 


Schedule 7.18B –
Form of Assignment of Rights in Government Contracts


 


Schedule 7.18C –
Notice of Assignment of Rights in Government Contracts


 


ARTICLE 13


 


ARTICLE 13 
ARBITRATION


 


Section 13.01                    
Binding Arbitration.  Except to the extent
prohibited by law, upon the request of any party to this Agreement, whether
made before or after the institution of any legal proceeding, any action, dispute,
claim or controversy of any kind (e.g., whether in contract or in tort,
statutory or common law, legal or equitable, or otherwise), now existing or
hereafter arising between the parties,  shall be resolved by binding
arbitration in accordance with the terms of this Article.  The foregoing
matters shall be collectively referred to as “Disputes.”  Any party hereto
may, by summary proceedings, bring an action in court to compel arbitration of
any Disputes.


 


Section 13.02  
Governing Rules.  Except to the extent the parties involved in a
Dispute may otherwise agree, Disputes shall be resolved by binding arbitration
administered by the American Arbitration Association (the “AAA”) in accordance
with the terms of this Article, the Commercial Arbitration Rules of the AAA,
and, to the maximum extent applicable, the Federal Arbitration Act (Title 9 of
the United States Code).  The parties hereto acknowledge and agree that
the relationship between the parties, including the transaction contemplated
herein, involves interstate commerce.  If it is determined that the
Federal Arbitration Act is inapplicable, Disputes shall be resolved in
accordance with the provisions of the Texas General Arbitration Act, Texas
Civil Practices and Remedies Code, Section 171.001, et seq.  In the
event of any inconsistency between this Article and such statutes and
rules, this Article shall control.  Judgment upon the award rendered
by the arbitrators may be entered in any court having jurisdiction; provided,
however, that nothing contained herein shall be deemed to be a waiver by Lender
of the protections afforded to it under 12 U.S.C. §91 or Texas Finance Code,
Section 31.008.


 


Section 13.03  
Preservation of Remedies; No Waiver.


 


(a)                                 
No provision of, nor the exercise of any rights under, this
Article shall limit the right of any party, and the parties shall have the
right during any Dispute, to seek, use and employ ancillary or preliminary
remedies, judicial or otherwise, for the purposes of realizing upon,
preserving, protecting, or foreclosing upon any


 


36





















 


Collateral which is involved in a
Dispute or which is subject to, or described in, the Loan Documents, including,
without limitation, rights and remedies relating to:  (i) foreclosing
against any real or personal property Collateral or other security by the
exercise of a power of sale under a deed of trust, mortgage or other security
agreement or instrument, or applicable law; (ii) exercising self-help remedies
(including setoff rights); or (iii) obtaining provisional or ancillary remedies
such as injunctive relief, sequestration, attachment, garnishment or the
appointment of a receiver by a court having jurisdiction, before, during or
after the pendency of any arbitration.  The institution and maintenance of
an action for judicial relief or pursuit of provisional or ancillary remedies
or exercise of self-help remedies shall not constitute a waiver of the right of
any party to submit the Dispute to arbitration nor render inapplicable the compulsory
arbitration provisions hereof.  Without limitation of the foregoing, the
parties shall be entitled to the benefits of each and all of the remedies and
assistance provided for by applicable law.


 


(b)                                 
In Disputes involving indebtedness or other monetary obligations, each
party agrees that the other parties may proceed against all liable Persons,
jointly and severally, or against one or more of them, without impairing rights
against other liable Persons.  Nor shall a party be required to join the
principal obligor or any other liable Persons (including, without limitation,
sureties and guarantors) in any proceeding against a particular Person.  A
party may release or settle with one or more liable Persons as the party deems
appropriate without releasing or impairing rights to proceed against any
Persons not so released.


 


Section 13.04  
Statute of Limitations.  All statutes of limitation that would
otherwise be applicable shall apply to any arbitration proceeding.


 


Section 13.05  
Scope of Award; Modification or Vacation of Award; Qualifications. 
The arbitrators shall resolve all Disputes in accordance with applicable
substantive law.  Any arbitrator shall be knowledgeable in the subject
matter of the Dispute.  With respect to a Dispute in which the claim or
amount in controversy does not exceed $1,000,000.00, a single arbitrator (who
shall have authority to render a maximum award of $1, 000,000.00, including all
damages of any kind, costs and fees) shall be chosen and shall decide the
Dispute.  With respect to a Dispute in which the claim or amount in
controversy exceeds $1,000,000.00, the Dispute shall be decided by a majority
vote of three (3) arbitrators.  The arbitrators may grant any remedy or
relief that the arbitrators deem just and equitable and within the scope of
this Article.  The arbitrators may also grant such ancillary relief as is
necessary to make effective the award.  In all arbitration proceedings in
which the amount in controversy exceeds $1, 000,000.00 in the aggregate, the
arbitrators shall make specific, written findings of fact and conclusions of
law.  In all arbitration proceedings in which the amount in controversy
exceeds $1, 000,000.00 in the aggregate, the parties shall have, in addition to
the limited statutory right to seek vacation or modification of an award
pursuant to applicable law, the right to seek vacation or modification of any
award that is based, in whole or in part, on an incorrect ruling of law;
provided, however, that any such application for vacation or modification of an
award based on an incorrect ruling of law must be filed in a court having
jurisdiction over the Dispute within fifteen (15) days from


 


37





















 


the date
the award is rendered.  The arbitrators’ findings of fact shall be binding
on all parties and shall not be subject to further review except as otherwise
allowed by applicable law.


 


Section 13.06   
Discovery.  Arbitrators shall have the discretion to order a
pre-hearing exchange of information by the parties, including, without
limitation, production of requested documents, exchange of summaries of
testimony of proposed witnesses, and examination by deposition of
parties.  All time limitations and all issues regarding conformation with
discovery requests shall be decided by the arbitrator(s).


 


Section 13.07  
Confidentiality.  Each party agrees to keep all Disputes and
arbitration proceedings strictly confidential, except for disclosures of
information required in the ordinary course of business of the parties or by
applicable law or regulation.  No party nor any arbitrator may disclose
the existence, content or results of any arbitration hereunder without the
prior written consent of all parties.


 


Section 13.08  
Other Matters.  To the maximum extent practicable, an arbitration
proceeding brought hereunder shall be concluded within one hundred eighty (180)
days of the filing of the Dispute with the AAA.  Arbitration proceedings
hereunder shall be conducted at a location in Hidalgo County, Texas, agreed to
in writing by the parties, or, in the absence of such an agreement, selected by
the AAA.  Arbitrators shall be empowered to impose sanctions and to take
such other actions as the arbitrators deem necessary to the same extent as a
judge would be allowed pursuant to the Federal Rules of Civil Procedure, the
Texas Rules of Civil Procedure and applicable law.  To the extent
permitted by applicable law, the arbitrator(s) shall have the power to award
and allocate recovery of all costs and fees (including attorneys’ fees,
administrative fees and arbitrators’ fees) between the parties.  The
provisions of this Article shall survive any termination, amendment or
expiration of the Loan Documents, unless the parties otherwise expressly agree
in writing.  This Article may be amended, changed or modified only by
the express provisions of a writing which specifically refers to this
Article and which is signed by all of the parties hereto.


 


THIS AGREEMENT PROVIDES
FOR INDEMNITIES IN SECTION 6.15 AND FOR ARBITRATION OF DISPUTES IN ARTICLE 13.


 


 


THIS WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES HERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES
HERETO.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES
HERETO.


 


 


EXECUTED and DELIVERED as of the date first recited
above.


 


[Signature Pages
Follow]


 


38





















 


	
   

  	
  Lender:

  
	
   

  	
   

  
	
   

  	
  TEXAS STATE BANK

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Douglas G. Bready

  	
   

  
	
   

  	
   

  	
  Name: Douglas G. Bready

  	
   

  
	
   

  	
   

  	
  Title:  
  President

  	
   

  
	
   

  	
   

  	
  Address:  
  3900 North 10th Street

  McAllen, Texas 78501

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Borrower:

  
	
   

  	
   

  
	
   

  	
  THE WORNICK COMPANY, a
  Delaware

  corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert B. McKeon

  	
   

  
	
   

  	
   

  	
  Robert B. McKeon,

  
	
   

  	
   

  	
  Chariman of the Board

  
	
   

  	
   

  	
  Address:  c/o
  Veritas Capital

  Management II, L.L.C.

  660 Madison Avenue

  New York, New York 10021

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Subsidiary/Guarantor:

  
	
   

  	
   

  
	
   

  	
  THE WORNICK COMPANY
  RIGHT

  AWAY DIVISION, L.P., a Delaware

  limited partnership

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Right Away Management
  Corporation,

  	
   

  
	
   

  	
   

  	
  its general partner

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Robert B. McKeon

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Robert B. McKeon

  	
   

  
	
   

  	
   

  	
   

  	
  Title:  
  Chairman of the Board

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  	
  c/o Veritas Capital
  Management II,

  L.L.C.

  
	
   

  	
   

  	
  660 Madison Avenue

  
	
   

  	
   

  	
  New York, New York
  10021

  



 


39





















 


	
   

  	
  RIGHT AWAY MANAGEMENT

  CORPORATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert B. McKeon

  	
   

  
	
   

  	
   

  	
  Name: Robert B. McKeon

  	
   

  
	
   

  	
   

  	
  Title:  
  Chairman of the Board

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
  Address:  c/o
  Veritas Capital

  Management II, L.L.C.

  	
   

  
	
   

  	
   

  	
  660 Madison Avenue

  	
   

  
	
   

  	
   

  	
  New York, New York
  10021

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  THE WORNICK COMPANY
  RIGHT

  AWAY DIVISION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert B. McKeon

  	
   

  
	
   

  	
   

  	
  Name: Robert B. McKeon

  	
   

  
	
   

  	
   

  	
  Title:  
  Chairman of the Board

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
  Address:  c/o
  Veritas Capital

  Management II, L.L.C.

  	
   

  
	
   

  	
   

  	
  660 Madison Avenue

  	
   

  
	
   

  	
   

  	
  New York, New York
  10021

  	
   

  



 


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