Exhibit
10.1


 


INTERCREDITOR AGREEMENT


 


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


 


RECITALS


 


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


 


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


 


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


 


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


 


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


 


NOW, THEREFORE, the Parties hereby agree as follows:


 


ARTICLE I

DEFINITIONS


 


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


 

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


“Party” means any signatory to this
Agreement.


 


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


 


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


 


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


 


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


 


“Trigger Event” means:


 


(a)                      the occurrence of an Event of
Default,


 


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


 


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


 


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


 


Section
1.3                                   Miscellaneous.  All definitions herein (whether set forth
herein directly or by reference to definitions in other documents) shall be
equally applicable to both the singular and the plural forms of the terms
defined.  The words “hereof,” “herein”
or “hereunder” and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement.  The term “including” (and
similar terms) means “including without limitation.”


 


ARTICLE II

LIEN PRIORITY


 


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


 


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


 


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Section
2.3                                   Exercise
of Rights.


 


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


 


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


 


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


 


ARTICLE III

ACTIONS OF THE PARTIES


 


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


 


Section
3.2                                   Standstill
Period.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(a)            FIRST:


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


ARTICLE IV

ENFORCEMENT OF PRIORITIES


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


ARTICLE V

MISCELLANEOUS


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


U.S. Bank National Association

60 Livingston Avenue

St. Paul, MN  55107

Facsimile:  (651) 495-8097

Attention:  Corporate Trust Department


 


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


 


Texas State Bank

3900 North 10th Street

McAllen, TX  78501

Facsimile:  (956) 926-7872

Attention:  Glen Roney


 


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


 


The Wornick Company

3900 North 10th Street, Suite 900

McAllen, TX  78501

Facsimile:  (958) 882-7816

Attention:  Chief Executive Officer


 


Veritas Capital Management II, L.L.C.


660 Madison Avenue


New York, New York  10022


Facsimile: 
(212) 688-9411


Attention: 
Robert B. McKeon


 


Schulte, Roth & Zabel LLP


919 Third Avenue


New York, New York  10022


Facsimile: 
(212) 593-5955


Attention: 
Benjamin M. Polk, Esq.


 


Winston & Strawn LLP


200 Park Avenue


New York, New York  10166


Facsimile: 
(212) 294-4700


Attention: 
David A. Sakowitz, Esq


 


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


 


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


 


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


 


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


 


10

















 


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


 


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


 


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


 


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


 


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


 


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


 


[signature
page follows]


 


11

















 


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


 


 


	
   

  	
  Senior Creditor:

  
	
   

  	
   

  	
   

  
	
   

  	
  TEXAS STATE BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Douglas G. Bready

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Douglas G. Bready

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Trustee:

  
	
   

  	
   

  	
   

  
	
   

  	
  U.S. BANK NATIONAL ASSOCIATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard H. Prokosch

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Richard H. Prokosch

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
					



 

















 


ACKNOWLEDGMENT


 


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


 


Dated as of June 30, 2004.


 


 


	
   

  	
  Issuer:

  
	
   

  	
   

  	
   

  
	
   

  	
  THE WORNICK COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert B. McKeon

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Robert B. McKeon

  
	
   

  	
   

  	
  Title:

  	
  Chairman of the Board

  
	
   

  	
   

  	
   

  
	
   

  	
  Guarantors:

  
	
   

  	
   

  	
   

  
	
   

  	
  RIGHT AWAY MANAGEMENT

  CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert B. McKeon

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Robert B. McKeon

  
	
   

  	
   

  	
  Title:

  	
  Chairman of the Board

  
	
   

  	
   

  	
   

  
	
   

  	
  THE WORNICK COMPANY RIGHT AWAY

  DIVISION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert B. McKeon

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Robert B. McKeon

  
	
   

  	
   

  	
  Title:

  	
  Chairman of the Board

  
	
   

  	
   

  	
   

  
	
   

  	
  THE WORNICK COMPANY RIGHT AWAY

  DIVISION, L.P.

  
	
   

  	
  By:

  	
  Right Away Management Corporation,

  its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert B. McKeon

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Robert B. McKeon

  
	
   

  	
   

  	
  Title:

  	
  Chairman of the Board

  
					



 

















ACKNOWLEDGMENT


 


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


 


	
  Dated as of June 30, 2004.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THE ISSUER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THE WORNICK COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  /s/ Robert B. McKeon

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Robert B. McKeon

  
	
   

  	
   

  	
   

  	
  Title:   Chairman of the Board

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  GUARANTORS:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  RIGHT AWAY
  MANAGEMENT CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Robert B. McKeon

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Robert B. McKeon

  
	
   

  	
   

  	
   

  	
  Title:   Chairman of the Board

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THE WORNICK COMPANY
  RIGHT AWAY DIVISION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Robert B. McKeon

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Robert B. McKeon

  
	
   

  	
   

  	
   

  	
  Title:   Chairman of the Board

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THE WORNICK COMPANY
  RIGHT AWAY DIVISION, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Right Away Management Corporation, its General Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Robert B. McKeon

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name: Robert B. McKeon

  
	
   

  	
   

  	
   

  	
   

  	
  Title:   Chairman of the Board