Document:

Exhibit 10.01

FORBEARANCE
AGREEMENT

This FORBEARANCE AGREEMENT (this “Agreement”),
is dated as of May 7, 2007, is entered into by and among DDJ Total Return Loan
Fund, L.P., as the Lender (as defined in the Loan Agreement referred to below),
The Wornick Company, a Delaware corporation (the “Company”),
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 (each, a “Subsidiary”,
and, collectively, the “Subsidiaries”).

RECITALS:

A.            The Company, the Lender (as assignee of Texas State Bank)
and the Subsidiaries are parties to that certain Loan Agreement, dated as of
June 30, 2004 (as amended by the First Amendment thereto dated as of March 16,
2007 and as further amended, modified, supplemented or amended and restated
from time to time, the “Loan Agreement”).

B.            As of the date hereof, the Events of Default referred to
herein as the “Specified Defaults” have occurred and are continuing.

C.            At the Company’s request, the Lender has agreed to
forbear from exercising those of its rights and remedies under the Loan
Agreement, the other Loan Documents and/or applicable law that have arisen due
to the occurrence and continuance of the Specified Defaults on the terms and
conditions set forth herein.

NOW, THEREFORE, in consideration of the premises and
the respective representations, warranties, covenants and agreements set forth
in this Agreement, and intending to be legally bound, the parties hereto agree
as follows:

ARTICLE I

DEFINITIONS

1.1          Defined
Terms.

(a)           Capitalized
terms that are defined in this Agreement shall have the meanings ascribed to
such terms in this Agreement. All other capitalized terms shall have the meanings
ascribed in the Loan Agreement. Unless the context of this Agreement clearly
requires otherwise, references to the plural include the singular; references
to the singular include the plural; the words “include,” “includes,” and “including”
will be deemed to be followed by “without limitation”; and the term “or” has,
except where otherwise indicated, the inclusive meaning represented by the
phrase “and/or”.

(b)           This
Agreement constitutes a “Loan Document” as defined in the Loan Agreement.

(c)           References in
this Agreement to the Lender shall constitute references to DDJ Total Return
Loan Fund, L.P. solely in its capacity as the Lender.

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ARTICLE II

FORBEARANCE AND AMENDMENT TO LOAN AGREEMENT

2.1          Forbearance;
Forbearance Default Rights and Remedies.

(a)           Effective as
of the Forbearance Effective Date (as defined below), the Lender agrees that
until the expiration of the “Forbearance Period” (as defined below), it will
forbear from exercising its rights and remedies against the Company or the
Subsidiaries under the Loan Agreement, the other Loan Documents and/or
applicable law solely with respect to the Specified Defaults (excluding,
however, its right to charge interest on any Obligations during the Forbearance
Period at the default interest rate specified in the Revolving Note and the
Term Note); provided, however, (i) each of the
Company and the Subsidiaries shall comply, except to the extent such compliance
is expressly excused by the terms of this Agreement, with all explicit
restrictions or prohibitions triggered by the existence and/or continuance of
any Event of Default under the Loan Agreement, this Agreement or any of the
other Loan Documents, (ii) nothing herein shall restrict, impair or otherwise
affect the Lender’s rights and remedies under any agreements containing
subordination provisions in favor of the Lender (including, without limitation,
any rights or remedies available to the Lender as a result of the occurrence or
continuation of the Specified Defaults), and (iii) nothing herein shall restrict,
impair or otherwise affect the exercise of the Lender’s rights under this
Agreement.  As used herein, the term “Specified Defaults” shall
mean the Events of Default listed on Annex I hereto.  During the Forbearance Period, any condition
to the making of an Advance under the Loan Agreement that would not be met
solely because of the occurrence and continuance of any Specified Default is
hereby waived.

(b)           As used
herein, the term “Forbearance
Period” shall mean the period beginning on the Forbearance Effective
Date (as defined below) and ending upon the occurrence of a Termination
Event.  As used herein, “Termination Event” shall mean
the earlier to occur of (i) the delivery by the Lender to the Company of a
written notice terminating the Forbearance Period, which notice may be
delivered at any time upon or after the occurrence of any Forbearance Default
(as defined below), and (ii) the earlier of (x) 11:00 a.m. (Eastern Daylight
Time) on July 2, 2007 and (y) if the 45-day standstill period under Section 3.2(b)(i)(A)
of the Intercreditor Agreement has come into effect, 11:00 a.m. (Eastern
Daylight Time) on the date that is two (2) Business Days prior to the
termination of such standstill period. 
As used herein, the term “Forbearance
Default” shall mean: (A) the occurrence of any Event of Default
that is not a Specified Default, (B) the failure of the Company or any
Subsidiary to comply with any term, condition, covenant or agreement set forth
in this Agreement, (C) the failure of any representation or warranty made by
the Company or any Subsidiary under this Agreement to be true and correct in
all material respects as of the date when made, (D) any occurrence, event or
change in facts or circumstances occurring on or after the Forbearance
Effective Date that would result in a Material Adverse Change, (E) the
occurrence of any violation or breach of, or other failure to observe, perform
or comply with, the terms of the Intercreditor Agreement by the Trustee (as
defined in the Intercreditor Agreement), or (F) the commencement by or against
the Company or any Subsidiary of a proceeding under any Debtor Relief
Laws.  Any Forbearance Default shall
constitute an immediate Event of Default under the Loan Agreement.

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(c)           Upon a
Termination Event, the agreement of the Lender hereunder to forbear from
exercising its rights and remedies in respect of the Specified Defaults shall
immediately terminate without the requirement of any demand, presentment,
protest, or notice of any kind, all of which each of the Company and the
Subsidiaries hereby waives.  The Company
and the Subsidiaries agree that the Lender may at any time after the occurrence
of a Termination Event proceed to exercise any or all of its rights and
remedies under the Loan Agreement, any other Loan Document and/or applicable
law, including, without limitation, its rights and remedies on account of the
Specified Defaults.  Without limiting the
generality of the foregoing, upon the occurrence of a Termination Event, the
Lender may, upon such notice or demand as is specified by the Loan Agreement
and any other Loan Documents or applicable law, collect and/or commence any
legal or other action to collect any or all of the Obligations from the Company
and the Subsidiaries, (ii) foreclose or otherwise realize on any or all of the
Collateral, and/or appropriate, setoff or apply to the payment of any or all of
the Obligations, any or all of the Collateral or proceeds thereof, and (iii)
take any other enforcement action or otherwise exercise any or all rights and
remedies provided for by under the Loan Agreement, any other Loan Documents
and/or applicable law, all of which rights and remedies are fully reserved by
the Lender.

(d)           Any agreement
by the Lender to extend the Forbearance Period or enter into any other
forbearance or similar arrangement must be set forth in writing and signed by a
duly authorized signatory of the Lender. 
The Company and each of the Subsidiaries acknowledges that the Lender
has made no assurances whatsoever concerning any possibility of any extension
of the Forbearance Period, any other forbearance or similar arrangement or any
other limitations on the exercise of its rights, remedies and privileges under
or otherwise in connection with the Loan Agreement, the other Loan Documents
and/or applicable law.

(e)           The Company
and each of the Subsidiaries acknowledges and agrees that any forbearance,
waiver, consent or other financial accommodation (including the funding of any
borrowing request under the Revolving Loan) which the Lender may make on or
after the date hereof has been made by the Lender in reliance upon, and is
consideration for, among other things, the general releases and reaffirmation
of indemnities contained in Article 4 hereof and the other covenants,
agreements, representations and warranties of the Company and each of the
Subsidiaries hereunder.

2.2          Amendment
to Section 8.02. 
Section 8.02 of the Loan Agreement is hereby amended by deleting the
first sentence thereof in its entirety and replacing it with the following:

“Borrower will not permit the aggregate rentals
payable under all non-cancelable operating leases entered into after Closing to
which Borrower or Subsidiary is a party to exceed (a) $500,000 during any
fiscal year ending with fiscal year 2006, (b) $1,250,000 during the fiscal year
2007, and (c) $1,500,000 thereafter. 
Without the prior written consent of the Lender in its sole discretion,
no such operating lease entered into after May 1, 2007 and having a term
greater than one year shall contain any restriction on the Borrower’s or
applicable Subsidiary’s right to grant a lien to the Lender on such Person’s
leasehold interest in the subject property, and the lessor in respect of each
such lease shall have agreed to provide upon request a collateral access
agreement substantially in the

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form provided by the Lender with such modifications
therein as shall be reasonably acceptable to the Lender.”

2.3          Modification of Certain Reporting Requirements.  Until instructed to the
contrary by the Lender, the Company shall not deliver to the Lender the
cash budgets contemplated in Section 7.11 of the Loan Agreement or the written
reports contemplated in Section 7.21 of the Loan Agreement.  The Company’s compliance with this Section
2.3 shall constitute compliance with Sections 7.11 and 7.21 of the Loan
Agreement and the Company’s failure to comply with this Section 2.3 shall
constitute an Event of Default.

2.4          Effectiveness.  This Agreement shall become effective as of
the first date (the “Forbearance
Effective Date”) on which each of the following conditions is
satisfied:

(a)           there shall
have been delivered to the Lender in accordance with Section 6.5 herein,
counterparts of this Agreement executed by each of the Lender, the Company and
each of the Subsidiaries;

(b)           the Lender
shall have received all accrued and unpaid costs and expenses (including legal
fees and expenses) required to be paid pursuant hereto or the Loan Agreement on
or prior to the Forbearance Effective Date; and

(c)           this
Agreement shall have been filed with the United States Securities and Exchange
Commission as an exhibit to a filing by the Company on Form 8-K pursuant to the
Securities Exchange Act of 1934, as amended.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

3.1          Representations
and Warranties of the Company and the Subsidiaries.  To induce the Lender to enter into this
Agreement, each of the Company and the Subsidiaries hereby represents and
warrants to the Lender that:

(a)           The
representations and warranties of each of the Company and the Subsidiaries in
the Loan Documents are on the date of execution and delivery of this Agreement,
and will be on the Forbearance Effective Date, true, correct and complete in
all material respects with the same effect as though made on and as of such
respective date (or, to the extent such representations and warranties
expressly relate to an earlier date, on and as of such earlier date), except to
the extent of any inaccuracy resulting solely from the Specified Defaults.

(b)           Except for
the Specified Defaults or as otherwise expressly provided herein, the Company
and each of the Subsidiaries is in compliance with all the terms and provisions
set forth in the Loan Agreement and the other Loan Documents on its part to be
observed or performed, and no Event of Default has occurred and is continuing.

(c)           The
execution, delivery and performance by each of the Company and the Subsidiaries
of this Agreement:

(i)            are within its corporate or limited
partnership powers;

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(ii)           have been duly authorized by all
necessary corporate or limited partnership action, including the consent of the
holders of its equity interests where required;

(iii)          do not and will not (A) contravene its
certificate of incorporation or by-laws or limited partnership or other
constituent documents, (B) violate any applicable requirement of law or any
order or decree of any governmental authority or arbitrator applicable to it,
(C) conflict with or result in the breach of, or constitute a default under, or
result in or permit the termination or acceleration of, any contractual obligation
of the Company or any of the Subsidiaries, or (D) result in the creation or
imposition of any lien or encumbrance upon any of the property of the Company
or any of the Subsidiaries; and

(iv)          do not and will not require the
consent of, authorization by, approval of, notice to, or filing or registration
with, any governmental authority or any other Person, other than those which
prior to the Forbearance Effective Date will have been obtained or made and
copies of which prior to the Forbearance Effective Date will have been
delivered to the Lender and each of which on the Forbearance Effective Date
will be in full force and effect.

(d)           This
Agreement has been duly executed and delivered by the Company and each of the
Subsidiaries.  Each of this Agreement,
the Loan Agreement and the other Loan Documents constitutes the legal, valid
and binding obligation of the Company and the Subsidiaries, enforceable against
each such Person in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or limiting creditors’ rights generally or by equitable principles
relating to enforceability.

3.2          Survival.  The representations and warranties in Section
3.1 shall survive the execution and delivery of this Agreement and the
Forbearance Effective Date.

ARTICLE IV

GENERAL RELEASE; REAFFIRMATION OF INDEMNITY

(a)           In
consideration of, among other things, the Lender’s execution and delivery of
this Agreement, each of the Company and the Subsidiaries, on behalf of itself
and its successors and assigns (collectively, “Releasors”), hereby forever agrees and covenants not to
sue or prosecute against any Releasee (as defined below) and hereby forever
waives, releases and discharges to the fullest extent permitted by law, each
Releasee from, any and all claims (including, without limitation, crossclaims,
counterclaims, rights of set-off and recoupment), actions, causes of action,
suits, debts, accounts, interests, liens, promises, warranties, damages and consequential
and punitive damages, demands, agreements, bonds, bills, specialties,
covenants, controversies, variances, trespasses, judgments, executions, costs,
expenses or claims whatsoever (collectively, the “Claims”), that such Releasor now has or hereafter may
have, of whatsoever nature and kind, whether known or unknown, whether now
existing or hereafter arising, whether arising at law or in equity, against the
Lender in any capacity and its affiliates, shareholders and “controlling
persons” (within the meaning of the federal securities laws), and their
respective successors and assigns and each and all of the officers, directors,
employees, agents, attorneys, advisors, auditors, consultants and other
representatives of each of the

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foregoing (collectively, the “Releasees”),
based in whole or in part on facts whether or not now known, existing on or
before the Forbearance Effective Date, that relate to, arise out of or
otherwise are in connection with (i) any aspect of the business, operations,
assets, properties, affairs or any other aspect of any of the Company or the
Subsidiaries, (ii) any aspect of the dealings or relationships between or among
the Company, the Subsidiaries and their respective affiliates, on the one hand,
and the Lender, on the other hand, or (iii) any or all of the Loan Agreement or
the other Loan Documents, or any transactions contemplated thereby or any acts
or omissions in connection therewith; provided, however, that the foregoing shall not release the Lender
from its express obligations under this Agreement, the Loan Agreement and the
other Loan Documents.  The receipt by the
Company of any of the Revolving Loan or other financial accommodations made by
the Lender on or after the date hereof shall constitute a ratification, adoption,
and confirmation by the Company and the Subsidiaries of the foregoing general
release of all Claims against the Releasees which are based in whole or in part
on facts, whether or not now known or unknown, existing on or prior to the date
of receipt of any of the Revolving Loan or other financial accommodations.  In entering into this Agreement, each of the
Company and the Subsidiaries consulted with, and has been represented by, legal
counsel and expressly disclaims any reliance on any representations, acts or
omissions by any of the Releasees and each hereby agrees and acknowledges that
the validity and effectiveness of the releases set forth herein do not depend
in any way on any such representations, acts and/or omissions or the accuracy,
completeness or validity hereof.  The
provisions of this Article 4(a) shall survive the expiration of the Forbearance
Period and the termination of this Agreement, the Loan Agreement, the other
Loan Documents and payment in full of the Obligations.

(b)           Without in
any way limiting their reaffirmations and acknowledgements set forth in Article
5 hereof, each of the Company and the Subsidiaries hereby expressly
acknowledges, agrees and reaffirms its indemnification and other obligations to
and agreements with the Indemnified Parties set forth in Article 13 of the Loan
Agreement.  Each of the Company and the
Subsidiaries further acknowledges, agrees and reaffirms that all of such
indemnification and other obligations and agreements set forth in Article 13 of
the Loan Agreement shall survive the expiration of the Forbearance Period and
the termination of this Agreement, the Loan Agreement, the other Loan Documents
and the payment in full of the Obligations.

ARTICLE V

RATIFICATION OF LIABILITY

Each of the Company and the Subsidiaries hereby
ratifies and reaffirms all of its payment and performance obligations and
obligations to indemnify, contingent or otherwise, under each of such Loan
Documents to which it is a party, and hereby ratifies and reaffirms its grant
of liens on or security interests in its properties pursuant to such Loan
Documents to which it is a party as security for the Obligations, and confirms
and agrees that such liens and security interests hereafter secure all of the
Obligations, including, without limitation, all additional Obligations
hereafter arising or incurred pursuant to or in connection with this Agreement,
the Loan Agreement or any other Loan Document.

 6

ARTICLE VI

MISCELLANEOUS

6.1          No
Other Amendments; Reservation of Rights; No Waiver.  Other than as otherwise expressly provided
herein, this Agreement shall not be deemed to operate as an amendment or waiver
of, or to prejudice, any right, power, privilege or remedy of the Lender under
the Loan Agreement, any other Loan Document or applicable law, nor shall the
entering into of this Agreement preclude the Lender from refusing to enter into
any further amendments or forbearances with respect to the Loan Agreement or
any other Loan Document.  Other than as
otherwise expressly provided herein, this Agreement shall not constitute a
forbearance with respect to (i) any failure by the Company or any of the
Subsidiaries to comply with any covenant or other provision in the Loan
Agreement or any other Loan Document or (ii) the occurrence or continuance of
any present or future Event of Default.

6.2          Ratification
and Confirmation. 
Except as expressly set forth in this Agreement, the terms, provisions
and conditions of the Loan Agreement and the other Loan Documents are hereby
ratified and confirmed and shall remain unchanged and in full force and effect
without interruption or impairment of any kind.

6.3          Governing
Law.  This
Agreement will be governed by and construed in accordance with the laws of the
State of New York, without regard to conflict of laws principles thereof.

6.4          Headings.  The article and section headings contained in
this Agreement are inserted for convenience only and will not affect in any way
the meaning or interpretation of this Agreement.

6.5          Counterparts.  This Agreement may be executed in two or more
counterparts, each of which will be deemed an original but all of which
together will constitute one and the same instrument.  This Agreement may be delivered by exchange
of copies of the signature page by facsimile transmission or electronic mail.

6.6          Severability.  The provisions of this Agreement will be
deemed severable and the invalidity or unenforceability of any provision will
not affect the validity or enforceability of the other provisions hereof; provided that if any provision of this
Agreement, as applied to any party or to any circumstance, is judicially
determined not to be enforceable in accordance with its terms, the parties
agree that the court judicially making such determination may modify the
provision in a manner consistent with its objectives such that it is
enforceable, and/or to delete specific words or phrases, and in its modified
form, such provision will then be enforceable and will be enforced.

6.7          Agreement.  This Agreement may not be amended or modified
except in the manner specified for an amendment of or modification to the Loan
Agreement in Section 12.10 of the Loan Agreement.

6.8          Costs;
Expenses.  Each
of the Company and the Subsidiaries hereby agrees to pay to DDJ Total Return
Loan Fund, L.P., DDJ Capital Management, LLC and their respective affiliates on
demand all costs and expenses (including the fees and expenses of legal
counsel) of

 7
 

such Person incurred in connection with the Company
and the Subsidiaries.  The provisions of
this Section 6.8 shall survive the termination of this Agreement provided, however, that
the Obligations under this Section 6.8 shall terminate upon the payment in full
of the Obligations and the termination of the Loan Agreement.

6.9          Assignment;
Binding Effect. 
Neither the Company nor any Subsidiary may assign either this Agreement
or any of its rights, interests or obligations hereunder.  All of the terms, agreements, covenants, representations,
warranties and conditions of this Agreement are binding upon, and inure to the
benefit of and are enforceable by, the parties and their respective successors
and permitted assigns.

6.10        Entire
Agreement.  This
Agreement, the Loan Agreement, the other Loan Documents and the Intercreditor
Agreement, together with any and all Annexes, Exhibits and Schedules thereto
that are or have been delivered pursuant thereto, constitute the entire
agreement and understanding of the parties in respect of the subject matter of
the Loan Agreement and supersede all prior understandings, agreements or
representations by or among the parties, written or oral, to the extent they
relate in any way with respect thereto.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the parties
hereto have caused this Agreement to be executed by their respective officers
thereunto duly authorized, as of the date first above written.

	
  

  	
  COMPANY

  
	
   

  	
   

  
	
   

  	
  THE WORNICK COMPANY

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JON P. GEISLER

  
	
   

  	
   

  	
  Name: Jon P. Geisler

  
	
   

  	
   

  	
  Title: President & CEO

  
	
   

  	
   

  
	
   

  	
  SUBSIDIARIES

  
	
   

  	
   

  
	
   

  	
  THE WORNICK COMPANY RIGHT AWAY

  DIVISION, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JON P. GEISLER

  
	
   

  	
   

  	
  Name: Jon P. Geisler

  
	
   

  	
   

  	
  Title: President & CEO

  
	
   

  	
   

  
	
   

  	
  RIGHT AWAY MANAGEMENT CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JON P. GEISLER

  
	
   

  	
   

  	
  Name: Jon P. Geisler

  
	
   

  	
   

  	
  Title: President & CEO

  
	
   

  	
   

  
	
   

  	
  THE WORNICK COMPANY RIGHT AWAY

  DIVISION

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ JON P. GEISLER

  
	
   

  	
   

  	
  Name: Jon P. Geisler

  
	
   

  	
   

  	
  Title: President & CEO

  
	
   

  	
   

  
	
   

  	
  LENDER

  
	
   

  	
   

  
	
   

  	
  DDJ TOTAL RETURN LOAN FUND, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  GP Total Return, LP, its General Partner

  
	
   

  	
  By:

  	
  GP Total Return, LLC, its General Partner

  
	
   

  	
  By:

  	
  DDJ Capital Management, LLC, Manager

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J. Breazzano

  
	
   

  	
   

  	
  Name:

  	
  David J. Breazzano

  
	
   

  	
   

  	
  Title:

  	
  Member

  

 

 9

ANNEX I

SPECIFIED DEFAULTS

The Events of Default:

1.                                       under
Section 10.01(a) as a result of the failure to make the interest payment under
the Loan Agreement due on March 31, 2007 until April 20, 2007.

2.                                       under
Section 10.01(b) as a result of a breach of Section 7.12 resulting solely from
the failure to make payments under or perform covenants and agreements in
material Contracts with trade creditors or vendors occurring at any time prior
to or during the Forbearance Period.

3.                                       under
Section 10.01(c) based solely upon the inaccuracy of any representation and
warranty in Section 6.03 with respect to any financial statements delivered
prior to the Forbearance Effective Date resulting solely from the failure to
characterize amounts owed under the notes issued under the Indenture as current
liabilities.

4.                                       under
Section 10.01(c) based solely upon the inaccuracy of any representation and
warranty in any Draw Request resulting solely from the occurrence of any of the
other Specified Defaults.

5.                                       under
Section 10.01(j) arising from the default occurring under the Indenture that
either (i) is specified in the notice to the Company from U.S. Bank National
Association, as trustee, dated April 18, 2007 pertaining to requirements to
deliver certain annual financial statements and an opinion of counsel or (ii)
is a default or an Event of Default (as defined in the Indenture) under Section
6.1(3) of the Indenture resulting from breaches of Sections 4.4(a) (such breach
consisting of the failure to deliver the compliance certificate specified
therein in respect of the Company’s fiscal year ended December 31, 2006) and,
in respect of the Company’s fiscal years ended December 31, 2004 and December
31, 2005, 4.22 of the Indenture.

6.                                       under
Section 10.01(l) based on the failure to maintain in effect Government
Contracts on MREs representing at least 20% of the total case volume of all
outstanding MREs Government Contracts.

7.                                       under
Section 10.01(r) based solely upon the occurrence of any of the other Specified
Defaults.

8.             under Section 10.01(b) or (c) based solely upon the
occurrence of the other Specified Defaults.

 10EXHIBIT
10.01

[FORMFACTOR LOGO]

KEY EMPLOYEE BONUS PLAN

As adopted on April 10, 2006

As amended on February 15, 2007

I.          PURPOSE

This Key Employee Bonus Plan (this “Plan”) is designed to enable FormFactor, Inc. (the “Company”) to be competitive with the rest of the industry in
attracting and retaining key talent and to provide an incentive, in addition to
base salary compensation, to those key professionals of the Company who have
substantial opportunity to influence achievement of important corporate objectives
and subsequent Company growth.  In
addition, this Plan (1) more closely aligns personal interests of such key
professionals with Company and stockholder interests, (2) encourages such key
professionals to continue as employees of the Company, and (3) positions the
Company as a company that provides better-than-market rewards for
better-than-market performance.

Participants in this Plan may include the Company’s
chief executive officer, president, senior vice presidents, vice presidents,
senior directors and other full-time employees as determined by the
Compensation Committee of the Board of Directors of the Company (the “Committee”).  

II.        BONUS AWARDS

Bonus awards under
this Plan are payable in cash, less any applicable withholdings.  Actual bonus awards are based on a
combination of specific percentage achievement of corporate objectives and
specific percentage achievement of personal objectives, as applicable.  The Committee shall determine the period
during which the corporate and personal objectives are to be measured, which
may be an annual period, a six month period or such other period approved by
the Committee (the “Measurement Period”).  Bonus awards are payable during the next
fiscal quarter following the completion of the applicable Measurement Period.  Corporate and personal objectives are designed to
reflect both long and short-term performance targets and goals.  The split between corporate objectives and personal
objectives is established for participants based on job grade, level of responsibility
and scope of work in the Company’s organization.   Specific bonus target percentages, expressed
as a percentage of annual base salary (as defined below), and actual bonus
awards for the chief executive officer and participants directly reporting to
the chief executive officer (the “Executive Staff”)
will be determined for each Measurement Period by the Committee.  Specific bonus target percentages, expressed
as a percentage of annual base salary, and actual bonus awards for participants
other than those referenced in the prior sentence will be determined for each Measurement
Period by the Committee’s authorized designee, which shall initially be the
chief executive officer.  The bonus
target percentages may be different for each participant.     

III.       CORPORATE OBJECTIVES

The corporate objectives for this Plan, including, if
applicable, threshold, target and maximum levels for each corporate objective,
shall be determined by the Committee for each Measurement Period.  Corporate objectives may include various
financial, operational and other measures of corporate performance, all as
determined and as defined by the Committee. 

The weight of each
corporate objective shall be determined by the Committee.  The Committee may 

 1
 

require that the Company
must achieve certain minimum performance in an applicable Measurement Period in
order for bonus awards under this Plan to be payable in such Measurement Period.  Participants may have the potential to
receive increasing bonus amounts if the Company exceeds certain performance
targets as determined by the Committee.

The Committee
shall determine as soon as practicable after the end of each Measurement Period
whether the corporate objectives for such period were achieved and, if so, the
level of achievement of such corporate objectives. 

IV.       PERSONAL OBJECTIVES

The Committee is
responsible for establishing personal objectives for the Company’s chief
executive officer.  The chief executive
officer will work with participants who directly report to the chief executive
officer to identify personal objectives for their participation in this Plan,
and such personal objectives shall be approved by the chief executive
officer.  In addition, the Committee
shall review the personal objectives of all participants who are members of the
Executive Staff and who are officers within the meaning of Section 16 of the
Securities Exchange Act of 1934.  Other
participants will work with their immediate supervisors to identify personal
objectives for their participation in this Plan, and such personal objectives
shall be approved by the participant’s management.  Participants may be required to achieve
certain minimum performance in an applicable Measurement Period in order for
bonus awards under this Plan to be payable in such Measurement Period, and each
personal objective may have a maximum payout limit.

The level of
achievement of personal objectives for the Company’s chief executive officer,
if established in an applicable Measurement Period, and for the Executive Staff
shall be reviewed and approved by the Committee.  The level of achievement of personal
objectives for participants other than those referenced in the prior sentence
shall be reviewed and approved by the chief executive officer.

V.         ANNUAL BASE SALARY

The annual base
salary (exclusive of overtime, shift premiums, housing or car allowances,
bonuses, equity compensation, benefits, etc.) earned by a participant in the
applicable Measurement Period will be used for calculating the bonus award payment
in such Measurement Period.  Participants
who enter this Plan during a Measurement Period will, therefore, receive a
pro-rated payout based on the date they become eligible to participate in this Plan.  

VI.       MISCELLANEOUS PROVISIONS

A.        Administration

The Committee has full power and authority to
administer and interpret this Plan and to adopt such rules and regulations
consistent with the terms of this Plan as such committee may deem necessary or
advisable to carry out the provisions of this Plan.  All determinations and interpretations of the
Committee or its authorized designees with respect to the exercise of their
respective responsibilities shall be binding on the participants.  

B.        Eligibility;
Termination of Employment

In order to be eligible for a bonus award under this Plan,
an employee must be a full-time employee, in good performance standing at the
end of the applicable Measurement Period and employed with the Company on the
last day of the applicable Measurement Period. 
Bonus awards for any participant on a 

 2
 

paid or unpaid leave of absence will be adjusted to
reflect time on leave.  If prior to the
end of the applicable Measurement Period a participant’s employment terminates
by way of retirement, normal retirement date, death, or total and permanent
disability (as determined under the Company’s Long-Term Disability Plan), and
the participant would have been entitled to the payment of the award if his/her
employment had not so terminated, payment of the award shall be pro-rated based
on the number of completed weeks of the award period during which the
participant was an employee.  If a
participant’s employment terminates by reason of death, payment of the award
shall be made to the participant’s beneficiary under the Company’s 401(k)
Retirement Plan, and if there is none, to the participant’s estate.

C.        Change
in Control of Company

In the event of (1) a merger or consolidation in
which the Company is not the surviving corporation (other than a merger or
consolidation with a wholly-owned subsidiary or a reincorporation of the Com­pany
in a different jurisdiction), (2) a merger in which the Company is the
surviving corporation but after which the stockholders of the Company
immediately prior to such merger (other than any stockholder that merges, or
which owns or controls another corporation that merges, with the Company in
such merger) cease to own their shares or other equity interest in the Company,
(3) the sale of substantially all of the assets of the Company, or (4) the
acquisition, sale, or transfer of more than 50% of the outstanding shares of
the Company by tender offer or similar transaction, all bonus awards will be
deemed to have been earned at 100% of the target value for the Measurement
Period (and for the next consecutive Measurement Period if it falls within the
same fiscal year) in which such change of control of the Company is consummated
and will be paid to the applicable participant immediately prior to the change
of control.

D.        Transfer
of Rights

The rights and
interests of a participant under this Plan may not be assigned or transferred,
except for bonus awards that are payable to a participant under this Plan,
which may be assigned or transferred by will and the laws of descent or
distribution.

E.         Right
to Employment

Employment at the
Company is at-will.  Participation in this
Plan shall not confer on any employee the right to continued employment in the
same or any other capacity, nor shall this Plan interfere with the right of the
Company to discharge any participant at any time for any reason.

F.         Rights
to Plan

No employee or
other person shall have any claim or right to be granted a bonus award under this
Plan, nor shall participation in this Plan in one Measurement Period grant any
right to participate in this Plan in any subsequent Measurement Period.  Notwithstanding anything in this Plan to the
contrary, the Committee shall have the power, in its sole discretion, to terminate
any individual’s participation in this Plan or to reduce the bonus award
payable to any participant (or to determine that no bonus award shall be
payable to such participant) prior to the time the amount otherwise would have
become payable under this Plan.  

G.        Withholding

The Company shall
have the right to deduct from each bonus award paid under this Plan any taxes
or other withholdings required by law, or any 401(k), employee stock purchase
plan or other benefit elections previously approved in writing by a participant
to be withheld with respect to such awards.

 

 3
 

H.        Unallocated
Funds

Monies that are
unallocated due to the corporate objectives, or the personal objectives not
being satisfactorily achieved by one or more participants, as determined by the
Committee, will remain part of the Company’s operating funds.

I.          Duration,
Amendment, Suspension and Termination

This Plan is
applicable for plan years beginning on and after January 1, 2006.  Each plan year shall be the Company’s fiscal
year.  The Committee may amend or suspend
this Plan, in whole or in part, or terminate this Plan at any time with respect
to the current or any subsequent Measurement Period. 

 

 4

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