Document:

Exhibit
10.9

 

PLEDGE
AGREEMENT

 

THIS PLEDGE AGREEMENT
(this “Agreement”), dated as of June 30, 2004, is made and entered into by
and between the entities listed on Schedule 2
attached hereto and made a part hereof for all purposes, and TEXAS STATE BANK, a
Texas banking corporation (“Secured Party”), with reference to the following:

 

WHEREAS, THE WORNICK
COMPANY, a Delaware corporation (“Obligor”), RIGHT AWAY MANAGEMENT CORPORATION,
a Delaware corporation, THE WORNICK COMPANY RIGHT AWAY DIVISION, a Delaware
corporation, THE WORNICK COMPANY RIGHT AWAY DIVISION, L.P., a Delaware limited
partnership, TWC HOLDING, LLC, a Delaware limited liability company, and
Secured Party have entered into a Loan Agreement of even date herewith (as
amended and in effect from time to time, the “Loan Agreement”); and

 

WHEREAS, Obligor, Right
Away Management Corporation, and The Wornick Company Right Away Division
(collectively, “Pledgor”), beneficially own the Equity Interests (as
hereinafter defined) in the Issuers (as hereinafter defined); and

 

WHEREAS, to induce
Secured Party to make the financial accommodations provided to the Obligor
pursuant to the Loan Agreement, Pledgor desires to pledge, grant, transfer, and
assign to Secured Party a security interest in the Collateral to secure all
Obligations.

 

NOW, THEREFORE, in
consideration of the mutual promises, covenants, representations, and
warranties set forth herein and for other good and valuable consideration, the
parties hereto agree as follows:

 

1.            
Definitions and Construction.

 

(a)          
Definitions.

 

All capitalized terms
used herein, not otherwise defined herein, shall have the meaning ascribed
thereto in the Loan Agreement. As used in this Agreement:

 

“Bankruptcy Code” means
United States Bankruptcy Code (11 U.S.C. Section 101 et seq.), as in
effect from time to time, and any successor statute thereto.

 

“Code” means the Uniform
Commercial Code as in effect in the State of Texas from time to time.

 

“Collateral” shall mean
the Pledged Interests, the Future Rights, and the Proceeds, collectively.

 

 

“Equity Interests” means
all securities, shares, units, options, warrants, interests, participations, or
other equivalents (regardless of how designated) of or in a corporation,
partnership, limited liability company, or similar entity, whether voting or
nonvoting, certificated or uncertificated, including general partner
partnership interests, limited partner partnership interests, common stock,
preferred stock, or any other “equity security” (as such term is defined in
Rule 3a11-1 of the General Rules and Regulations promulgated by the Securities
and Exchange Commission under the Securities Exchange Act of 1934)..

 

“Future Rights” shall
mean: (a) all Equity Interests (other than Pledged Interests) of the Issuers,
and all securities convertible or exchangeable into, and all warrants, options,
or other rights to purchase, Equity Interests of the Issuers; and (b) the
certificates or instruments representing such Equity Interests, convertible or
exchangeable securities, warrants, and other rights and all dividends, cash,
options, warrants, rights, instruments, and other property or proceeds from
time to time received, receivable, or otherwise distributed in respect of or in
exchange for any or all of such Equity Interests.

 

“Holder” and “Holders”
shall have the meanings ascribed thereto in Section 3 of this Agreement.

 

“Issuers” shall mean each
of the Persons identified as an Issuer on Schedule 1
attached hereto (or any addendum thereto), and any successors thereto, whether
by merger or otherwise.

 

“Lien” shall mean any
lien, mortgage, pledge, assignment (including any assignment of rights to
receive payments of money), security interest, charge, or encumbrance of any
kind (including any conditional sale or other title retention agreement, any
lease in the nature thereof, or any agreement to give any security interest).

 

“Pledged Interests” shall
mean (a) all Equity Interests of the Issuers identified on Schedule 1; and (b) the certificates
or instruments representing such Equity Interests.

 

“Pledgor” shall have the
meaning ascribed thereto in the preamble to this Agreement.

 

“Proceeds” shall mean all
proceeds (including proceeds of proceeds) of the Pledged Interests and Future
Rights including all: (a) rights, benefits, distributions, premiums, profits,
dividends, interest, cash, instruments, documents of title, accounts, contract
rights, inventory, equipment, general intangibles, payment intangibles, deposit
accounts, chattel paper, and other property from time to time received,
receivable, or otherwise distributed in respect of or in exchange for, or as a
replacement of or a substitution for, any of the Pledged Interests, Future
Rights, or proceeds thereof (including any cash, Equity Interests, or other
securities or instruments issued after any recapitalization, readjustment,
reclassification, merger or consolidation with respect to the Issuers and any
security entitlements, as defined in Section 8-102(a)(17) of the Code,
with respect thereto); (b) “proceeds,” as such term is defined in
Section 9-102(a)(64) of the Code; (c) proceeds of any insurance,
indemnity, warranty, or guaranty (including guaranties of delivery) payable
from time to

 

2

 

time with respect to any of the Pledged Interests,
Future Rights, or proceeds thereof; (d) payments (in any form whatsoever) made
or due and payable to Pledgor from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Pledged Interests, Future Rights, or proceeds thereof; and (e)
other amounts from time to time paid or payable under or in connection with any
of the Pledged Interests, Future Rights, or proceeds thereof.

 

“Secured Party” shall
have the meaning ascribed thereto in the preamble to this Agreement, together
with its successors or assigns.

 

“Securities Act” shall
have the meaning ascribed thereto in Section 9(c) of this Agreement.

 

(b)          
Construction.

 

(i)           
Unless the context of
this Agreement clearly requires otherwise, references to the plural include the
singular and to the singular include the plural, the part includes the whole,
the term “including” is not limiting, and the term “or” has, except where
otherwise indicated, the inclusive meaning represented by the phrase “and/or.”
The words “hereof,” “herein,” “hereby,” “hereunder,” and other similar terms in
this Agreement refer to this Agreement as a whole and not exclusively to any
particular provision of this Agreement. Article, section, subsection, exhibit,
and schedule references are to this Agreement unless otherwise specified.
All of the exhibits or schedules attached to this Agreement shall be deemed
incorporated herein by reference. Any reference to any of the following
documents includes any and all alterations, amendments, restatements,
extensions, modifications, renewals, or supplements thereto or thereof, as
applicable: this Agreement, the Loan Agreement, or any of the other Loan
Documents.

 

(ii)          
Neither this
Agreement nor any uncertainty or ambiguity herein shall be construed or
resolved against Secured Party or Pledgor, whether under any rule of
construction or otherwise. On the contrary, this Agreement has been reviewed by
both of the parties and their respective counsel and shall be construed and
interpreted according to the ordinary meaning of the words used so as to fairly
accomplish the purposes and intentions of the parties hereto.

 

(iii)         
In the event of any
direct conflict between the express terms and provisions of this Agreement and
of the Loan Agreement, the terms and provisions of the Loan Agreement shall
control.

 

2.            
Pledge.

 

As security for the
prompt payment and performance of the Obligations when due, whether at stated
maturity, by acceleration or otherwise (including amounts that would become due
but for the operation of the provisions of the Bankruptcy Code), Pledgor hereby
pledges, grants, transfers, and assigns to Secured Party a security interest in
all of Pledgor’s right, title, and interest in and to the Collateral.

 

3

 

3.            
Delivery and Registration of Collateral.

 

(a)          
All certificates or
instruments representing or evidencing the Collateral shall be promptly
delivered by Pledgor to Secured Party or Secured Party’s designee pursuant
hereto at a location designated by Secured Party and shall be held by or on
behalf of Secured Party pursuant hereto, and shall be in suitable form for
transfer by delivery, or, with respect to Equity Interests in Right Away
Management Corporation and The Wornick Company Right Away Division, shall be
accompanied by duly executed indorsement certificate in the form attached
hereto as Exhibit A and Exhibit B or other instrument of transfer
or assignment in blank, in form and substance satisfactory to Secured Party.

 

(b)          
Upon the occurrence
and during the continuance of an Event of Default, Secured Party shall have the
right, at any time in its discretion and without notice to Pledgor, to transfer
to or to register on the books of the Issuers (or of any other Person
maintaining records with respect to the Collateral) in the name of Secured
Party or any of its nominees any or all of the Collateral. In addition, Secured
Party shall have the right at any time to exchange certificates or instruments
representing or evidencing Collateral for certificates or instruments of
smaller or larger denominations.

 

(c)          
If, at any time and
from time to time, any Collateral (including any certificate or instrument
representing or evidencing any Collateral) is in the possession of a Person
other than Secured Party or Pledgor (a “Holder”), then Pledgor shall
immediately, at Secured Party’s option, either cause such Collateral to be
delivered into Secured Party’s possession, or cause such Holder to enter into a
control agreement, in form and substance satisfactory to Secured Party, and
take all other steps deemed necessary by Secured Party to perfect the security
interest of Secured Party in such Collateral, all pursuant to Sections 9-106
& 9-313 of the Code or other applicable law governing the perfection of
Secured Party’s security interest in the Collateral in the possession of such
Holder.

 

(d)          
Any and all
Collateral (including dividends, interest, and other cash distributions) at any
time received or held by Pledgor shall be so received or held in trust for
Secured Party, shall be segregated from other funds and property of Pledgor and
shall be forthwith delivered to Secured Party in the same form as so received
or held, with any necessary indorsements; provided that cash dividends or
distributions received by Pledgor, may be retained by Pledgor in accordance
with Section 4 and used in the ordinary course of Pledgor’s business.

 

(e)          
If at any time, and
from time to time, any Collateral consists of an uncertificated security or a
security in book entry form, then Pledgor shall immediately cause such
Collateral to be registered or entered, as the case may be, in the name of
Secured Party, or otherwise cause Secured Party’s security interest thereon to
be perfected in accordance with applicable law.

 

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4.            
Voting Rights and Dividends.

 

(a)          
So long as no Event
of Default shall have occurred and be continuing, Pledgor shall be entitled to
exercise any and all voting and other consensual rights pertaining to the
Collateral or any part thereof for any purpose not inconsistent with the terms
of the Loan Documents and shall be entitled to receive and retain any cash
dividends or distributions paid or distributed in respect of the Collateral.

 

(b)          
Upon the occurrence
and during the continuance of an Event of Default, all rights of Pledgor to
exercise the voting and other consensual rights or receive and retain cash
dividends or distributions that it would otherwise be entitled to exercise or
receive and retain, as applicable pursuant to Section 4(a), shall cease,
and all such rights shall thereupon become vested in Secured Party, who shall
thereupon have the sole right to exercise such voting or other consensual
rights and to receive and retain such cash dividends and distributions. Pledgor
shall execute and deliver (or cause to be executed and delivered) to Secured
Party all such proxies and other instruments as Secured Party may reasonably
request for the purpose of enabling Secured Party to exercise the voting and
other rights which it is entitled to exercise and to receive the dividends and
distributions that it is entitled to receive and retain pursuant to the
preceding sentence.

 

5.            
Representations and Warranties.

 

Each Pledgor represents,
warrants, and covenants, as to the Collateral owned by such Pledgor, as
follows:

 

(a)          
Pledgor has taken all
steps it deems necessary or appropriate to be informed on a continuing basis of
changes or potential changes affecting the Collateral (including rights of
conversion and exchange, rights to subscribe, payment of dividends,
reorganizations or recapitalization, tender offers and voting and registration
rights), and Pledgor agrees that Secured Party shall have no responsibility or
liability for informing Pledgor of any such changes or potential changes or for
taking any action or omitting to take any action with respect thereto.

 

(b)          
Pledgor is an
individual or an entity as designated and described on Schedule 2. The Pledgor’s mailing
address, principal place of business address, state of organization,
organization number and taxpayer identification number are set forth on Schedule 2.

 

(c)          
All information
herein or hereafter supplied to Secured Party by or on behalf of Pledgor in
writing with respect to the Collateral is, or in the case of information
hereafter supplied will be, accurate and complete in all material respects.

 

(d)          
Pledgor is and will
be the sole legal and beneficial owner of the Collateral (including the Pledged
Interests and all other Collateral acquired by Pledgor after the date hereof)
free and clear of any adverse claim, Lien, or other right, title, or interest
of any party, other than the Liens in favor

 

5

 

of Secured Party and the Liens granted to the Trustee
as collageral agent under the Indenture and the related security documents.

 

(e)          
This Agreement, and
the delivery to Secured Party of the Pledged Interests representing Collateral
(or the control agreements referred to in Section 3 of this Agreement),
creates a valid, perfected, and first priority security interest in one hundred
percent (100%) of the Pledged Interests in favor of Secured Party securing
payment of the Obligations, and all actions necessary to achieve such
perfection have been duly taken.

 

(f)           
Schedule 1 to this Agreement is true and correct
and complete in all material respects. Without limiting the generality of the
foregoing: (i) except as set forth on Schedule 1,
all the Pledged Interests are in certificated form, and, except to the extent
registered in the name of Secured Party or its nominee pursuant to the
provisions of this Agreement, are registered in the name of Pledgor; and (ii)
the Pledged Interests as to each of the Issuers constitute at least the
percentage of all the fully diluted issued and outstanding Equity Interests of
such Issuer as set forth in Schedule 1
to this Agreement.

 

(g)          
There are no
presently existing Future Rights or Proceeds owned by Pledgor.

 

(h)          
The Pledged Interests
have been duly authorized and validly issued and are fully paid and
nonassessable.

 

(i)           
Neither the pledge of
the Collateral pursuant to this Agreement nor the extensions of credit
represented by the Obligations violates Regulation T, U or X of the Board of
Governors of the Federal Reserve System.

 

6.            
Further Assurances.

 

(a)          
Pledgor agrees that
from time to time, at the expense of Pledgor, Pledgor will promptly execute and
deliver all further instruments and documents, and take all further action that
may be necessary or reasonably desirable, or that Secured Party may request, in
order to perfect and protect any security interest granted or purported to be
granted hereby or to enable Secured Party to exercise and enforce its rights
and remedies hereunder with respect to any Collateral. Without limiting the
generality of the foregoing, Pledgor will: (i) at the request of Secured Party,
mark conspicuously each of its records pertaining to the Collateral with a
legend, in form and substance reasonably satisfactory to Secured Party,
indicating that such Collateral is subject to the security interest granted
hereby; (ii) execute and such instruments or notices, as may be necessary or
reasonably desirable, or as Secured Party may request, in order to perfect and
preserve the first priority security interests granted or purported to be
granted hereby; (iii) allow inspection of the Collateral by Secured Party or
Persons designated by Secured Party; and (iv) appear in and defend any action
or proceeding that may affect Pledgor’s title to or Secured Party’s security
interest in the Collateral.

 

6

 

(b)          
Pledgor hereby
authorizes Secured Party to file one or more financing or continuation
statements, and amendments thereto, relative to all or any part of the
Collateral. A carbon, photographic, or other reproduction of this Agreement or
any financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law.

 

(c)          
Pledgor will furnish
to Secured Party, upon the request of Secured Party: (i) a certificate executed
by an authorized officer of Pledgor, and dated as of the date of delivery to
Secured Party, itemizing in such detail as Secured Party may request, the
Collateral which, as of the date of such certificate, has been delivered to
Secured Party by Pledgor pursuant to the provisions of this Agreement; and (ii)
such statements and schedules further identifying and describing the Collateral
and such other reports in connection with the Collateral as Secured Party may
request.

 

7.            
Covenants of Pledgor.

 

Pledgor shall:

 

(a)          
Perform each and
every covenant in the Loan Documents applicable to Pledgor;

 

(b)          
Not change its
principal residence, if Pledgor is an individual, without giving Secured Party
at least thirty (30) days’ prior written notice thereof;

 

(c)          
Not, if Pledgor is an
entity, change its jurisdiction of organization or cease to be an entity, in
each case, without giving Secured Party at least thirty (30) days’ prior
written notice thereof;

 

(d)          
To the extent it may
lawfully do so, use its best efforts to prevent the Issuers from issuing Future
Rights or Proceeds, except for cash dividends and other distributions to be
paid by any Issuer to Pledgor, unless any new Equity Interests associated with
Future Rights are pledged to Secured Party;

 

(e)          
Upon receipt by
Pledgor of any material notice, report, or other communication from any of the
Issuers or any Holder relating to all or any part of the Collateral, deliver
such notice, report or other communication to Secured Party as soon as
possible, but in no event later than five (5) days following the receipt
thereof by Pledgor.

 

8.            
Secured Party as Pledgor’s Attorney-in-Fact.

 

(a)          
Pledgor hereby
irrevocably appoints Secured Party as Pledgor’s attorney-in-fact, with full
authority in the place and stead of Pledgor and in the name of Pledgor, Secured
Party or otherwise, from time to time at Secured Party’s discretion, to take
any action and to execute any instrument that Secured Party may reasonably deem
necessary or advisable to accomplish the

 

7

 

purposes of this Agreement, including: (i) upon the
occurrence and during the continuance of an Event of Default, to receive,
indorse, and collect all instruments made payable to Pledgor representing any
dividend, interest payment or other distribution in respect of the Collateral
or any part thereof to the extent permitted hereunder and to give full
discharge for the same and to execute and file governmental notifications and
reporting forms; (ii) to enter into any control agreements Secured Party deems
necessary pursuant to Section 3 of this Agreement; or (iii) to arrange for
the transfer of the Collateral on the books of any of the Issuers or any other
Person to the name of Secured Party or to the name of Secured Party’s nominee.

 

(b)          
In addition to the
designation of Secured Party as Pledgor’s attorney-in-fact in
subsection (a), Pledgor hereby irrevocably appoints Secured Party as
Pledgor’s agent and attorney-in-fact to make, execute and deliver any and all
documents and writings which may be necessary or appropriate for approval of,
or be required by, any regulatory authority located in any city, county, state
or country where Pledgor or any of the Issuers engage in business, in order to
transfer or to more effectively transfer any of the Pledged Interests or
otherwise enforce Secured Party’s rights hereunder.

 

9.            
Remedies upon Default.

 

Upon the occurrence and
during the continuance of an Event of Default:

 

(a)          
Secured Party may
exercise in respect of the Collateral, in addition to other rights and remedies
provided for herein or otherwise available to it, all the rights and remedies
of a secured party on default under the Code (irrespective of whether the Code
applies to the affected items of Collateral), and Secured Party may also
without notice (except as specified below) sell the Collateral or any part
thereof in one or more parcels at public or private sale, at any exchange,
broker’s board or at any of Secured Party’s offices or elsewhere, for cash, on
credit or for future delivery, at such time or times and at such price or
prices and upon such other terms as Secured Party may deem commercially
reasonable, irrespective of the impact of any such sales on the market price of
the Collateral. To the maximum extent permitted by applicable law, Secured
Party may be the purchaser of any or all of the Collateral at any such sale and
shall be entitled, for the purpose of bidding and making settlement or payment
of the purchase price for all or any portion of the Collateral sold at any such
public sale, to use and apply all or any part of the Obligations as a credit on
account of the purchase price of any Collateral payable at such sale. Each
purchaser at any such sale shall hold the property sold absolutely free from
any claim or right on the part of Pledgor, and Pledgor hereby waives (to the
extent permitted by law) all rights of redemption, stay, or appraisal that it
now has or may at any time in the future have under any rule of law or statute
now existing or hereafter enacted. Pledgor agrees that, to the extent notice of
sale shall be required by law, at least five (5) Business Days’ notice to
Pledgor of the time and place of any public sale or the time after which a
private sale is to be made shall constitute reasonable notification. Secured
Party shall not be obligated to make any sale of Collateral regardless of
notice of sale having been given. Secured Party may adjourn any public or
private sale from time to time by announcement at the time and place fixed therefor,
and

 

8

 

such sale may, without further notice, be made at the
time and place to which it was so adjourned. To the maximum extent permitted by
law, Pledgor hereby waives any claims against Secured Party arising because the
price at which any Collateral may have been sold at such a private sale was
less than the price that might have been obtained at a public sale, even if
Secured Party accepts the first offer received and does not offer such
Collateral to more than one offeree.

 

(b)          
Pledgor hereby agrees
that any sale or other disposition of the Collateral conducted in conformity
with reasonable commercial practices of banks in the city and state where
Secured Party is located in disposing of property similar to the Collateral
shall be deemed to be commercially reasonable.

 

(c)          
Pledgor hereby
acknowledges that the sale by Secured Party of any Collateral pursuant to the
terms hereof in compliance with the Securities Act of 1933 as now in effect or
as hereafter amended, or any similar statute hereafter adopted with similar
purpose or effect (the “Securities Act”), as well as applicable “Blue Sky” or
other state securities laws, may require strict limitations as to the manner in
which Secured Party or any subsequent transferee of the Collateral may dispose
thereof. Pledgor acknowledges and agrees that in order to protect Secured
Party’s interest it may be necessary to sell the Collateral at a price less
than the maximum price attainable if a sale were delayed or were made in another
manner, such as a public offering under the Securities Act. Pledgor has no
objection to sale in such a manner and agrees that Secured Party shall have no
obligation to obtain the maximum possible price for the Collateral. Without
limiting the generality of the foregoing, Pledgor agrees that, upon the
occurrence and during the continuation of an Event of Default, Secured Party
may, subject to applicable law, from time to time attempt to sell all or any
part of the Collateral by a private placement, restricting the bidders and
prospective purchasers to those who will represent and agree that they are
purchasing for investment only and not for distribution. In so doing, Secured
Party may solicit offers to buy the Collateral or any part thereof for cash, from
a limited number of investors reasonably believed by Secured Party to be
institutional investors or other accredited investors who might be interested
in purchasing the Collateral. If Secured Party shall solicit such offers, then
the acceptance by Secured Party of one of the offers shall be deemed to be a
commercially reasonable method of disposition of the Collateral.

 

(d)          
If Secured Party
shall determine to exercise its right to sell all or any portion of the
Collateral pursuant to this Section, Pledgor agrees that, upon request of
Secured Party, Pledgor will, at its own expense:

 

(i)           
use its best efforts
to execute and deliver, and cause the Issuers and the directors and officers
thereof to execute and deliver, all such instruments and documents, and to do
or cause to be done all such other acts and things, as may be necessary or, in
the opinion of Secured Party, advisable to register such Collateral under the
provisions of the Securities Act, and to cause the registration statement
relating thereto to become effective and to remain effective for such period as
prospectuses are required by law to be furnished, and to make all amendments
and supplements thereto and to the related prospectuses which, in the opinion
of Secured Party, are necessary or

 

9

 

advisable, all in conformity with the requirements of
the Securities Act and the rules and regulations of the Securities and Exchange
Commission applicable thereto;

 

(ii)          
use its best efforts
to qualify the Collateral under the state securities laws or “Blue Sky” laws
and to obtain all necessary governmental approvals for the sale of the
Collateral, as requested by Secured Party;

 

(iii)         
cause the Issuers to
make available to their respective security holders, as soon as practicable, an
earnings statement which will satisfy the provisions of Section 11(a) of
the Securities Act;

 

(iv)         
execute and deliver,
or cause the officers and directors of the Issuers to execute and deliver, to
any person, entity or governmental authority as Secured Party may choose, any
and all documents and writings which, in Secured Party’s reasonable judgment,
may be necessary or appropriate for approval, or be required by, any regulatory
authority located in any city, county, state or country where Pledgor or the
Issuers engage in business, in order to transfer or to more effectively
transfer the Pledged Interests or otherwise enforce Secured Party’s rights
hereunder; and

 

(v)          
do or cause to be
done all such other acts and things as may be necessary to make such sale of
the Collateral or any part thereof valid and binding and in compliance with
applicable law.

 

Pledgor acknowledges that
there is no adequate remedy at law for failure by it to comply with the
provisions of this Section and that such failure would not be adequately
compensable in damages, and therefore agrees that its agreements contained in
this Section may be specifically enforced.

 

(e)          
PLEDGOR EXPRESSLY
WAIVES TO THE MAXIMUM EXTENT PERMITTED BY LAW: (i) ANY CONSTITUTIONAL OR OTHER
RIGHT TO A JUDICIAL HEARING PRIOR TO THE TIME SECURED PARTY DISPOSES OF ALL OR
ANY PART OF THE COLLATERAL AS PROVIDED IN THIS SECTION; (ii) ALL RIGHTS OF
REDEMPTION, STAY, OR APPRAISAL THAT IT NOW HAS OR MAY AT ANY TIME IN THE FUTURE
HAVE UNDER ANY RULE OF LAW OR STATUTE NOW EXISTING OR HEREAFTER ENACTED; AND
(iii) EXCEPT AS SET FORTH IN SUBSECTION (a) OF THIS SECTION 9, ANY
REQUIREMENT OF NOTICE, DEMAND, OR ADVERTISEMENT FOR SALE.

 

10.         
Application of Proceeds.

 

Upon the occurrence and during the continuance of an
Event of Default, any cash held by Secured Party as Collateral and all cash
Proceeds received by Secured Party in respect of any sale of, collection from,
or other realization upon all or any part of the Collateral pursuant to the
exercise by Secured Party of its remedies as a secured creditor as provided in
Section 9 shall be applied from time to time by Secured Party as provided
in the Loan Agreement.

 

10

 

11.         
Indemnity and Expenses.

 

Pledgor agrees:

 

(a)          
To indemnify and hold
harmless the Released Parties (hereinafter defined) from and against any and
all claims, damages, demands, losses, obligations, judgments and liabilities
(including, without limitation, reasonable attorneys’ fees and expenses) in any
way arising out of or in connection with this Agreement or the Obligations,
except to the extent the same shall arise as a result of the gross negligence
or willful misconduct of the party seeking to be indemnified; and

 

(b)          
To pay and reimburse
Secured Party upon demand for all reasonable costs and expenses (including,
without limitation, reasonable attorneys’ fees and expenses) that Secured Party
may incur in connection with (i) the custody, use or preservation of, or the
sale of, collection from or other realization upon, any of the Collateral,
including the reasonable expenses of re-taking, holding, preparing for sale or
lease, selling or otherwise disposing of or realizing on the Collateral, (ii)
the exercise or enforcement of any rights or remedies granted hereunder, under
the Loan Agreement, or under any of the other Loan Documents or otherwise
available to it (whether at law, in equity or otherwise), or (iii) the failure
by Pledgor to perform or observe any of the provisions hereof. The provisions
of this Section shall survive the execution and delivery of this
Agreement, the repayment of any of the Obligations, the termination of the
commitments of Secured Party under the Loan Agreement and the termination of
this Agreement or any other Loan Document.

 

12.         
Duties of Secured Party.

 

The powers conferred on
Secured Party hereunder are solely to protect its interests in the Collateral
and shall not impose on it any duty to exercise such powers. Except as provided
in Section 9-207 of the Code, Secured Party shall have no duty with
respect to the Collateral or any responsibility for taking any necessary steps
to preserve rights against any Persons with respect to any Collateral.  It
is also expressly understood and agreed that except for the obligation of
“honesty in fact” as provided in Section 1.203 of the Texas Business and
Commerce Code (to the extent applicable), the Secured Party, in exercising its
rights and performing its obligations under any of the Loan Documents, owes no
duty of good faith and/or fair dealing to Pledgor, Obligor, any guarantor of
the Obligations, or any shareholder of Obligor, and no fiduciary duty exists
between or among Pledgor, Obligor, any guarantor of the Obligations, any shareholder
of Obligor, and the Secured Party.

 

13.         
Choice of Law.

 

The validity of this
Agreement, its construction, interpretation, and enforcement, and the rights of
the parties hereto shall be determined under, governed by, and construed in accordance
with

 

11

 

the laws of the State of Texas (without reference to
the choice of law principles thereof).  The Pledgor and Secured Party
agree that any action or claim arising out of, or any dispute in connection
with, this Agreement, any rights, remedies, obligations, or duties hereunder,
or the performance or enforcement hereof or thereof, shall be decided by
binding arbitration as set forth in the Loan Agreement.

 

14.         
Amendments; etc.

 

No amendment or waiver of
any provision of this Agreement nor consent to any departure by Pledgor
herefrom shall in any event be effective unless the same shall be in writing
and signed by Secured Party, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given. No
failure on the part of Secured Party to exercise, and no delay in exercising
any right under this Agreement, any other Loan Document, or otherwise with
respect to any of the Obligations, shall operate as a waiver thereof; nor shall
any single or partial exercise of any right under this Agreement, any other
Loan Document, or otherwise with respect to any of the Obligations preclude any
other or further exercise thereof or the exercise of any other right. The
remedies provided for in this Agreement or otherwise with respect to any of the
Obligations are cumulative and not exclusive of any remedies provided by law.

 

15.         
Notices.

 

Unless otherwise
specifically provided herein, all notices shall be in writing and either (i)
delivered against a written receipt therefor; or (ii) mailed by registered or
certified mail, return receipt requested; in each case addressed as follows:

 

(a)           If to Obligor, to:

 

The Wornick Company

Attention: Larry L. Rose, President and CEO

10825 Kenwood Road

Cincinnati, Ohio 45242

with copy to: Robert B. McKeon

Veritas Capital Management II L.L.C.

660 Madison Avenue

New York, New York 10021

 

(b)                                
If to Pledgor, to:

 

The respective address set forth on Schedule 2 hereto.

 

12

 

(c)                                 
If to Lender, to:

 

Texas State Bank

3900 North 10th Street

McAllen, Texas 78501

 

Attention: G. E. Roney, Chairman of the Board

 

or to such other address as a party may hereafter
designate by notice to the other parties in accordance herewith.  Notices
shall be deemed to have been given (whether actually received or not) when
delivered or, if mailed, on the next Business Day.  All time references
used herein refer to Central Standard Time or Central Daylight Savings Time, as
then applicable in McAllen, Hidalgo County, Texas.

 

16.         
Continuing Security Interest.

 

This Agreement shall
create a continuing security interest in the Collateral and shall: (a) remain
in full force and effect until the indefeasible payment in full of the
Obligations, including the cash collateralization, expiration, or cancellation
of all Obligations, if any, consisting of letters of credit, and the full and
final termination of any commitment to extend any financial accommodations
under the Loan Agreement; (b) be binding upon Pledgor and its successors and
assigns; and (c) inure to the benefit of Secured Party and its successors,
transferees, and assigns. Upon the indefeasible payment in full of the
Obligations, including the cash collateralization, expiration, or cancellation
of all Obligations, if any, consisting of letters of credit, and the full and
final termination of any commitment to extend any financial accommodations
under the Loan Agreement, the security interests granted herein shall
automatically terminate and all rights to the Collateral shall revert to
Pledgor. Upon any such termination, Secured Party will, at Pledgor’s expense,
execute and deliver to Pledgor such documents as Pledgor shall reasonably
request to evidence such termination. Such documents shall be prepared by
Pledgor and shall be in form and substance reasonably satisfactory to Secured
Party.

 

17.         
Security Interest Absolute.

 

To the maximum extent
permitted by law, all rights of Secured Party, all security interests
hereunder, and all obligations of Pledgor hereunder, shall be absolute and
unconditional irrespective of:

 

(a)          
any lack of validity
or enforceability of any of the Obligations or any other agreement or instrument
relating thereto, including any of the Loan Documents;

 

(b)          
any change in the
time, manner, or place of payment of, or in any other term of, all or any of
the Obligations, or any other amendment or waiver of or any consent to any departure
from any of the Loan Documents, or any other agreement or instrument relating
thereto;

 

13

 

(c)          
any exchange,
release, or non-perfection of any other collateral, or any release or amendment
or waiver of or consent to departure from any guaranty for all or any of the
Obligations; or

 

(d)          
any other
circumstances that might otherwise constitute a defense available to, or a
discharge of, Pledgor.

 

18.         
Headings.

 

Section and
subsection headings in this Agreement are included herein for convenience
of reference only and shall not constitute a part of this Agreement or be given
any substantive effect.

 

19.         
Severability.

 

In case any provision in
or obligation under this Agreement shall be invalid, illegal or unenforceable
in any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.

 

20.         
Counterparts; Telefacsimile Execution.

 

This Agreement may be
executed in one or more counterparts, each of which shall be deemed an original
and all of which together shall constitute one and the same Agreement. Delivery
of an executed counterpart of this Agreement by telefacsimile shall be equally
as effective as delivery of an original executed counterpart of this Agreement.
Any party delivering an executed counterpart of this Agreement by telefacsimile
also shall deliver an original executed counterpart of this Agreement but the
failure to deliver an original executed counterpart shall not affect the
validity, enforceability, or binding effect hereof.

 

21.         
Waiver of Marshaling.

 

Each of Pledgor and
Secured Party acknowledges and agrees that in exercising any rights under or
with respect to the Collateral: (a) Secured Party is under no obligation to
marshal any Collateral; (b) may, in its absolute discretion, realize upon the
Collateral in any order and in any manner it so elects; and (c) may, in its absolute
discretion, apply the proceeds of any or all of the Collateral to the
Obligations in any order and in any manner it so elects. Pledgor and Secured
Party waive any right to require the marshaling of any of the Collateral.

 

14

 

NOTICE:
THIS AGREEMENT CONTAINS AN OBLIGATION FOR BINDING ARBITRATION.

 

THIS
WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL

AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY

EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL

AGREEMENTS OF THE PARTIES.

 

THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

IN WITNESS WHEREOF,
Pledgor and Secured Party have caused this Agreement to be duly executed and
delivered by their officers thereunto duly authorized as of the date first
written above.

 

[SIGNATURE PAGES
FOLLOW]

 

15

 

	
   

  	
  PLEDGOR:

  
	
   

  	
   

  
	
   

  	
  THE
  WORNICK COMPANY,
  a Delaware

  corporation

  
	
   

  	
   

  
	
   

  	
  /s/ Robert B. McKeon

  	
   

  
	
   

  	
  By:  Robert B.
  McKeon

  
	
   

  	
  Its: Chairman of the
  Board

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE
  WORNICK COMPANY RIGHT

  AWAY DIVISION,
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
  /s/ Robert B. McKeon

  	
   

  
	
   

  	
  By:  Robert B.
  McKeon

  
	
   

  	
  Its: Chairman of the
  Board

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  RIGHT
  AWAY MANAGEMENT

  CORPORATION, a
  Delaware corporation

  
	
   

  	
   

  
	
   

  	
  /s/ Robert B. McKeon

  	
   

  
	
   

  	
  By:  Robert B.
  McKeon

  
	
   

  	
  Its: Chairman of the
  Board

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SECURED
  PARTY:

  
	
   

  	
   

  
	
   

  	
  TEXAS STATE BANK

  
	
   

  	
   

  
	
   

  	
  /s/ Douglas G. Bready

  	
   

  
	
   

  	
  By:  Douglas G.
  Bready

  
	
   

  	
  Its:  President

  

 

16Exhibit
10.10

 

 

THE WORNICK
COMPANY

 

 

Assets Purchase
and Sale Contract

 

 

Table of Contacts

 

	
  PARTIES:

  	
  1

  
	
   

  	
   

  
	
  PREMISES:

  	
  1

  
	
   

  	
  1.

  	
   

  	
  SUBJECT.

  	
  1

  
	
   

  	
  2.

  	
   

  	
  DEFINITIONS.

  	
  1

  
	
   

  	
  3.

  	
   

  	
  EXHIBITS.

  	
  1

  
	
   

  	
  4.

  	
   

  	
  WORNICK.

  	
  2

  
	
  THIS CONTRACT:

  	
  2

  
	
   

  	
  1.

  	
   

  	
  EFFECTIVE DATE

  	
  2

  
	
   

  	
  2.

  	
   

  	
  SALE AND TRANSFER
  OF ASSETS; CLOSING

  	
  2

  
	
   

  	
   

  	
  2.1.

  	
  ASSETS TO BE
  SOLD

  	
  2

  
	
   

  	
   

  	
  2.2.

  	
  EXCLUDED ASSETS

  	
  4

  
	
   

  	
   

  	
  2.3.

  	
  CONSIDERATION

  	
  4

  
	
   

  	
   

  	
  2.4.

  	
  LIABILITIES

  	
  5

  
	
   

  	
   

  	
  2.5.

  	
  ALLOCATION

  	
  7

  
	
   

  	
   

  	
  2.6.

  	
  CLOSING

  	
  8

  
	
   

  	
   

  	
  2.7.

  	
  CLOSING
  OBLIGATIONS

  	
  8

  
	
   

  	
   

  	
  2.8.

  	
  ADJUSTMENT AMOUNT AND
  PAYMENT

  	
  10

  
	
   

  	
   

  	
  2.9.

  	
  ADJUSTMENT
  PROCEDURE

  	
  10

  
	
   

  	
   

  	
  2.10.

  	
  CONSENTS

  	
  11

  
	
   

  	
  3.

  	
   

  	
  REPRESENTATIONS
  AND WARRANTIES OF SELLERS

  	
  12

  
	
   

  	
   

  	
  3.1.

  	
  ORGANIZATION AND GOOD
  STANDING

  	
  12

  
	
   

  	
   

  	
  3.2.

  	
  ENFORCEABILITY;
  AUTHORITY; NO CONFLICT

  	
  13

  
	
   

  	
   

  	
  3.3.

  	
  FINANCIAL
  STATEMENTS

  	
  14

  
	
   

  	
   

  	
  3.4.

  	
  BOOKS AND
  RECORDS

  	
  15

  
	
   

  	
   

  	
  3.5.

  	
  SUFFICIENCY
  OF ASSETS

  	
  15

  
	
   

  	
   

  	
  3.6.

  	
  DESCRIPTION OF
  LEASED REAL PROPERTY

  	
  15

  
	
   

  	
   

  	
  3.7.

  	
  TITLE TO ASSETS;
  ENCUMBRANCES

  	
  16

  
	
   

  	
   

  	
  3.8.

  	
  CONDITION
  OF FACILITIES

  	
  16

  
	
   

  	
   

  	
  3.9.

  	
  INVENTORIES

  	
  16

  
	
   

  	
   

  	
  3.10.

  	
  NO UNDISCLOSED LIABILITIES

  	
  17

  
	
   

  	
   

  	
  3.11.

  	
  NO MATERIAL ADVERSE CHANGE

  	
  17

  
	
   

  	
   

  	
  3.12.

  	
  EMPLOYEE
  BENEFITS

  	
  17

  
	
   

  	
   

  	
  3.13.

  	
  COMPLIANCE
  WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS

  	
  18

  
	
   

  	
   

  	
  3.14.

  	
  LEGAL
  PROCEEDINGS; ORDERS

  	
  20

  
	
   

  	
   

  	
  3.15.

  	
  ABSENCE OF
  CERTAIN CHANGES AND EVENTS

  	
  21

  
	
   

  	
   

  	
  3.16.

  	
  CONTRACTS;
  NO DEFAULTS

  	
  22

  
	
   

  	
   

  	
  3.17.

  	
  INSURANCE

  	
  24

  
	
   

  	
   

  	
  3.18.

  	
  ENVIRONMENTAL
  MATTERS

  	
  26

  
	
   

  	
   

  	
  3.19.

  	
  EMPLOYEES

  	
  27

  
	
   

  	
   

  	
  3.20.

  	
  LABOR DISPUTES; COMPLIANCE

  	
  28

  
	
   

  	
   

  	
  3.21.

  	
  INTELLECTUAL PROPERTY
  ASSETS

  	
  29

  
	
   

  	
   

  	
  3.22.

  	
  COMPLIANCE
  WITH THE FOREIGN CORRUPT PRACTICES ACT AND EXPORT CONTROL AND ANTIBOYCOTT
  LAWS

  	
  30

  
	
   

  	
   

  	
  3.23.

  	
  RELATIONSHIPS WITH
  RELATED PERSONS

  	
  31

  
	
   

  	
   

  	
  3.24.

  	
  BROKERS OR
  FINDERS

  	
  31

  
	
   

  	
   

  	
  3.25.

  	
  SOLVENCY

  	
  31

  
	
   

  	
   

  	
  3.26.

  	
  DISCLOSURE

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

i

 

	
   

  	
   

  	
  3.27.

  	
  S CORP STATUS

  	
  32

  
	
   

  	
  4.

  	
   

  	
  REPRESENTATIONS
  AND WARRANTIES OF BUYER

  	
  32

  
	
   

  	
   

  	
  4.1.

  	
  ORGANIZATION
  AND GOOD STANDING

  	
  32

  
	
   

  	
   

  	
  4.2.

  	
  AUTHORITY;
  NO CONFLICT

  	
  32

  
	
   

  	
   

  	
  4.3.

  	
  CERTAIN
  PROCEEDINGS

  	
  33

  
	
   

  	
   

  	
  4.4.

  	
  BROKERS OR FINDERS

  	
  33

  
	
   

  	
   

  	
  4.5.

  	
  INSURANCE

  	
  33

  
	
   

  	
   

  	
  4.6.

  	
  BUYER’S
  DUE DILIGENCE

  	
  34

  
	
   

  	
  5.

  	
   

  	
  COVENANTS OF
  SELLERS PRIOR TO CLOSING

  	
  34

  
	
   

  	
   

  	
  5.1.

  	
  ACCESS
  AND INVESTIGATION

  	
  34

  
	
   

  	
   

  	
  5.2.

  	
  OPERATION OF THE
  BUSINESS OF SELLERS

  	
  34

  
	
   

  	
   

  	
  5.3.

  	
  NEGATIVE
  COVENANT

  	
  36

  
	
   

  	
   

  	
  5.4.

  	
  REQUIRED
  APPROVALS

  	
  36

  
	
   

  	
   

  	
  5.5.

  	
  NOTIFICATION

  	
  36

  
	
   

  	
   

  	
  5.6.

  	
  NO NEGOTIATION

  	
  36

  
	
   

  	
   

  	
  5.7.

  	
  BEST EFFORTS

  	
  37

  
	
   

  	
   

  	
  5.8.

  	
  INTERIM FINANCIAL
  STATEMENTS

  	
  37

  
	
   

  	
   

  	
  5.9.

  	
  CHANGE OF NAME

  	
  37

  
	
   

  	
   

  	
  5.10.

  	
  PAYMENT
  OF LIABILITIES

  	
  37

  
	
   

  	
   

  	
  5.11.

  	
  TRANSFERRING SUBSIDIARIES

  	
  37

  
	
   

  	
   

  	
  5.12.

  	
  S CORP STATUS

  	
  38

  
	
   

  	
   

  	
  5.13.

  	
  IDENTIFICATION OF TEXAS
  ASSET

  	
  38

  
	
   

  	
  6.

  	
   

  	
  COVENANTS OF BUYER
  PRIOR TO CLOSING

  	
  38

  
	
   

  	
   

  	
  6.1.

  	
  REQUIRED APPROVALS

  	
  38

  
	
   

  	
   

  	
  6.2.

  	
  BEST EFFORTS

  	
  38

  
	
   

  	
  7.

  	
   

  	
  CONDITIONS
  PRECEDENT TO BUYER’S OBLIGATION TO CLOSE

  	
  38

  
	
   

  	
   

  	
  7.1.

  	
  ACCURACY OF REPRESENTATIONS

  	
  38

  
	
   

  	
   

  	
  7.2.

  	
  SELLERS’
  PERFORMANCE

  	
  39

  
	
   

  	
   

  	
  7.3.

  	
  CONSENTS

  	
  39

  
	
   

  	
   

  	
  7.4.

  	
  ADDITIONAL
  DOCUMENTS

  	
  39

  
	
   

  	
   

  	
  7.5.

  	
  GOVERNMENTAL AUTHORIZATIONS

  	
  40

  
	
   

  	
   

  	
  7.6.

  	
  ENVIRONMENTAL
  REPORT

  	
  40

  
	
   

  	
   

  	
  7.7.

  	
  WARN ACT NOTICE
  PERIODS AND EMPLOYEES

  	
  40

  
	
   

  	
   

  	
  7.8.

  	
  ESOT
  TRUSTEE APPROVAL

  	
  40

  
	
   

  	
   

  	
  7.9.

  	
  NON-COMPETITION AGREEMENTS

  	
  41

  
	
   

  	
   

  	
  7.10.

  	
  MATERIAL
  ADVERSE CHANGE

  	
  41

  
	
   

  	
   

  	
  7.11.

  	
  NO INJUNCTION

  	
  41

  
	
   

  	
   

  	
  7.12.

  	
  EQUITY
  CONTRIBUTION

  	
  41

  
	
   

  	
  8.

  	
   

  	
  CONDITIONS
  PRECEDENT TO SELLERS’ OBLIGATION TO CLOSE

  	
  41

  
	
   

  	
   

  	
  8.1.

  	
  ACCURACY OF REPRESENTATIONS

  	
  41

  
	
   

  	
   

  	
  8.2.

  	
  BUYER’S
  PERFORMANCE

  	
  41

  
	
   

  	
   

  	
  8.3.

  	
  CONSENTS

  	
  42

  
	
   

  	
   

  	
  8.4.

  	
  ADDITIONAL
  DOCUMENTS

  	
  42

  
	
   

  	
   

  	
  8.5.

  	
  NO INJUNCTION

  	
  42

  
	
   

  	
   

  	
  8.6.

  	
  ESOT
  TRUSTEE APPROVAL

  	
  42

  
	
   

  	
   

  	
  8.7.

  	
  WARN ACT
  COMPLIANCE

  	
  42

  
	
   

  	
  9.

  	
   

  	
  TERMINATION

  	
  42

  
	
   

  	
   

  	
  9.1.

  	
  TERMINATION
  EVENTS

  	
  42

  
	
   

  	
   

  	
  9.2.

  	
  EFFECT
  OF TERMINATION

  	
  43

  
	
   

  	
  10.

  	
   

  	
  ADDITIONAL
  COVENANTS

  	
  43

  
	
   

  	
   

  	
  10.1.

  	
  EMPLOYEES AND EMPLOYEE
  BENEFITS

  	
  43

  
	
   

  	
   

  	
  10.2.

  	
  PAYMENT
  OF ALL TAXES RESULTING FROM SALE OF ASSETS BY SELLERS

  	
  46

  
	
   

  	
   

  	
  10.3.

  	
  PAYMENT OF OTHER
  RETAINED LIABILITIES

  	
  46

  
	
   

  	
   

  	
  10.4.

  	
  RESTRICTIONS
  ON SELLER DISSOLUTION AND DISTRIBUTIONS

  	
  46

  
	
   

  	
   

  	
  10.5.

  	
  REMOVING
  EXCLUDED ASSETS

  	
  47

  
	
   

  	
   

  	
  10.6.

  	
  REPORTS
  AND RETURNS

  	
  47

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

ii

 

	
   

  	
   

  	
  10.7.

  	
  ASSISTANCE IN PROCEEDINGS

  	
  47

  
	
   

  	
   

  	
  10.8.

  	
  NONCOMPETITION,
  NONSOLICITATION AND NONDISPARAGEMENT

  	
  47

  
	
   

  	
   

  	
  10.9.

  	
  CUSTOMER AND
  OTHER BUSINESS RELATIONSHIPS

  	
  48

  
	
   

  	
   

  	
  10.10.

  	
  RETENTION OF AND
  ACCESS TO RECORDS

  	
  49

  
	
   

  	
   

  	
  10.11.

  	
  FURTHER
  ASSURANCES

  	
  49

  
	
   

  	
   

  	
  10.12.

  	
  NOTICES
  OF CERTAIN EVENTS

  	
  49

  
	
   

  	
  11.

  	
   

  	
  INDEMNIFICATION; REMEDIES

  	
  50

  
	
   

  	
   

  	
  11.1.

  	
  SURVIVAL

  	
  50

  
	
   

  	
   

  	
  11.2.

  	
  INDEMNIFICATION
  AND REIMBURSEMENT BY SELLER

  	
  50

  
	
   

  	
   

  	
  11.3.

  	
  INDEMNIFICATION AND
  REIMBURSEMENT BY SELLER—ENVIRONMENTAL MATTERS

  	
  51

  
	
   

  	
   

  	
  11.4.

  	
  INDEMNIFICATION
  AND REIMBURSEMENT BY BUYER

  	
  52

  
	
   

  	
   

  	
  11.5.

  	
  LIMITATIONS ON
  AMOUNT—SELLER

  	
  53

  
	
   

  	
   

  	
  11.6.

  	
  LIMITATIONS ON AMOUNT—BUYER

  	
  53

  
	
   

  	
   

  	
  11.7.

  	
  TIME AND OTHER
  LIMITATIONS ON LIABILITY

  	
  53

  
	
   

  	
   

  	
  11.8.

  	
  RIGHT OF SETOFF

  	
  54

  
	
   

  	
   

  	
  11.9.

  	
  THIRD-PARTY
  CLAIMS

  	
  54

  
	
   

  	
   

  	
  11.10.

  	
  OTHER CLAIMS

  	
  56

  
	
   

  	
   

  	
  11.11.

  	
  INDEMNIFICATION
  IN CASE OF STRICT LIABILITY

  	
  56

  
	
   

  	
  12.

  	
   

  	
  CONFIDENTIALITY

  	
  56

  
	
   

  	
   

  	
  12.1.

  	
  DEFINITION OF
  CONFIDENTIAL INFORMATION

  	
  56

  
	
   

  	
   

  	
  12.2.

  	
  RESTRICTED
  USE OF CONFIDENTIAL INFORMATION

  	
  57

  
	
   

  	
   

  	
  12.3.

  	
  EXCEPTIONS

  	
  58

  
	
   

  	
   

  	
  12.4.

  	
  LEGAL
  PROCEEDINGS

  	
  58

  
	
   

  	
   

  	
  12.5.

  	
  RETURN
  OR DESTRUCTION OF CONFIDENTIAL INFORMATION

  	
  59

  
	
   

  	
   

  	
  12.6.

  	
  ATTORNEY-CLIENT PRIVILEGE

  	
  59

  
	
   

  	
  13.

  	
   

  	
  GENERAL
  PROVISIONS

  	
  59

  
	
   

  	
   

  	
  13.1.

  	
  EXPENSES

  	
  59

  
	
   

  	
   

  	
  13.2.

  	
  PUBLIC
  ANNOUNCEMENTS

  	
  60

  
	
   

  	
   

  	
  13.3.

  	
  NOTICES

  	
  60

  
	
   

  	
   

  	
  13.4.

  	
  JURISDICTION; SERVICE
  OF PROCESS

  	
  61

  
	
   

  	
   

  	
  13.5.

  	
  ENFORCEMENT
  OF CONTRACT

  	
  62

  
	
   

  	
   

  	
  13.6.

  	
  WAIVER; REMEDIES CUMULATIVE

  	
  62

  
	
   

  	
   

  	
  13.7.

  	
  ENTIRE CONTRACT AND
  MODIFICATION

  	
  62

  
	
   

  	
   

  	
  13.8.

  	
  ASSIGNMENTS,
  SUCCESSORS AND NO THIRD-PARTY RIGHTS

  	
  62

  
	
   

  	
   

  	
  13.9.

  	
  SEVERABILITY

  	
  63

  
	
   

  	
   

  	
  13.10.

  	
  CONSTRUCTION;
  USAGE

  	
  63

  
	
   

  	
   

  	
  13.11.

  	
  TIME OF ESSENCE

  	
  64

  
	
   

  	
   

  	
  13.12.

  	
  GOVERNING LAW

  	
  64

  
	
   

  	
   

  	
  13.13.

  	
  EXECUTION
  OF CONTRACT

  	
  64

  
	
   

  	
   

  	
  13.14.

  	
  ATTORNEYS’ FEES

  	
  65

  
	
   

  	
   

  	
  13.15.

  	
  WAIVER
  OF JURY TRIAL

  	
  65

  
	
   

  	
   

  	
  13.16.

  	
  VERITAS

  	
  65

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

iii

 

Assets Purchase
and Sale Contract

 

PARTIES:

 

The parties to this Contract (“this Contract”) are:

 

(i)                                    
The Wornick Company,
a Nevada business corporation qualified to do business in Ohio (herein called
“Wornick”);

 

(ii)                                 
The Wornick Company
Right Away Division, a Nevada corporation (herein called “TWCRAD”);

 

(iii)                              
The Wornick Company
Right Away Division, L.P., a Texas limited partnership (herein called
“TWCRADLP”);

 

(iv)                             
Right Away Management
Corporation, a Texas business corporation (herein called “RAMCO”);

 

(v)                                
The Wornick Company,
a Delaware corporation (herein called “Buyer”); and

 

(vi)                             
Veritas Capital
Management II, LLC (“Veritas”), a Related Person of Buyer.

 

(Wornick, TWCRAD, TWCRADLP and RAMCO shall each be
individually referred to herein as a “Seller” and shall be collectively referred
to herein as “Sellers”.)

 

PREMISES:

 

1.                                      
Subject.

 

The subject of this
Contract is the purchase by Buyer from Sellers, and the sale by Sellers to
Buyer, of Sellers’ business as a going concern including substantially all
operating assets of Sellers.

 

2.                                      
Definitions.

 

Certain terms when
capitalized in this Contract shall have the meanings defined in the
“Schedule of Definitions” attached hereto as Schedule 1.

 

3.                                      
Exhibits.

 

All Schedules and
Exhibits listed in the “Index of Schedules and Exhibits” attached hereto are a
part of this Contract.

 

1

 

 

4.                                      
Wornick.

 

All of the issued and
outstanding capital stock of Wornick is owned by First Bankers Trust Company,
Trustee of The Wornick Company Employee Stock Ownership Trust (“ESOT”). 
Wornick has elected “S Corp” status for federal income tax purposes. 
Wornick has three subsidiaries, each of which has elected to be a “Qualified S
Corp Subsidiary” (“QSSS”) The existence of each subsidiary is disregarded for
federal income tax purposes.

 

THIS CONTRACT:

 

1.                                      
Effective
Date

 

The effective date of
this Contract is the date upon which all parties shall have executed this
Contract, as indicated by the later of the respective dates below the
respective signature blocks.

 

2.                                      
Sale and Transfer of Assets; Closing

 

2.1.                             
ASSETS
TO BE SOLD

 

Upon the terms and subject to the conditions set forth
in this Contract, at the Closing, but effective as of the Effective Time,
Sellers shall sell, convey, assign, transfer and deliver to Buyer, and Buyer
shall purchase and acquire from Sellers, free and clear of any Encumbrances
other than Permitted Encumbrances, all of Sellers’ right, title and interest in
and to all of Sellers’ property and assets, real, personal or mixed, tangible
and intangible, of every kind and description, wherever located, which relate
to the business of Sellers as a going concern, including the following (but
excluding the Excluded Assets):

 

(a)                                 
all Leasehold Real
Property, including the leasehold estates (i) of Wornick described in Schedule 3.6(a) and (ii) of
TWCRADLP described in Schedule 3.6(b);

 

(b)                                
all Tangible Personal
Property, including those items of Wornick and TWCRADLP respectively described
in Schedule 2.1(b);

 

(c)                                 
all Inventories;

 

(d)                                
all Seller Contracts,
including those listed in Schedule 3.16(a)
and the Non-compete Contracts listed in Schedule 3.19(a),
and all outstanding offers or solicitations made by or to Sellers to enter into
any Contract and all of the foregoing entered into by Sellers after the date
hereof and on or prior to the Closing Date;

 

(e)                                 
all Governmental
Authorizations and all pending applications therefor or renewals thereof, in
each case to the extent transferable to Buyer, including those listed in Schedule 3.13(b);

 

(f)                                   
all data and Records
related to the operations of Sellers, including client and customer lists and
Records, referral sources, research and development reports

 

2

 

and Records, production reports and Records, service
and warranty Records, equipment logs, operating guides and manuals, financial
and accounting Records, creative materials, advertising materials, promotional
materials, studies, reports, correspondence and other similar documents and
Records and, subject to Legal Requirements, copies of all personnel Records and
other Records described in Section 2.2(h);

 

(g)                                
all of the intangible
rights and property of Sellers, including Intellectual Property Assets, going
concern value, goodwill, telephone, telecopy and e-mail addresses and listings
and those items listed in Schedule 3.21(d);

 

(h)                                
all insurance
benefits, including rights and proceeds, arising from or relating to the Assets
or the Assumed Liabilities prior to the Effective Time, unless expended in
accordance with this Contract;

 

(i)                                    
all claims of Sellers
against third parties relating to the Assets, whether choate or inchoate, known
or unknown, contingent or noncontingent, including all such claims listed in Schedule 2.1(i), except as
excluded in Section 2.2(a), 2.2(b), 2.2(e) and 2.2(i);

 

(j)                                    
all rights of Sellers
relating to deposits and prepaid expenses, claims for refunds and other
economic benefits and rights to offset in respect thereof that are not listed
in Schedule 2.2(e) and
that are not excluded under Section 2.2(i);

 

(k)                                 
all management
information systems, including hardware and software, research material,
technical information, trade secrets, technology, know-how, specifications,
designs, drawings and processes and quality control data;

 

(l)                                    
all of the goodwill
and going concern value of Sellers’ business; and

 

(m)                              
all other properties,
tangible and intangible, not otherwise referred to above, which are owned by
Sellers or in which Sellers have an interest or which are used or useful in the
operation of Sellers’ business or relate to the Assets, other than those, if
any, which constitute Excluded Assets or relate exclusively to the Excluded
Assets.

 

All of the property and assets to be transferred to
Buyer hereunder are herein referred to collectively as the “Assets.”

 

Notwithstanding the foregoing, the transfer of the
Assets pursuant to this Contract shall not include the assumption of any
Liability related to the Assets unless Buyer expressly assumes that Liability
pursuant to Section 2.4(a).

 

3

 

2.2.                             
EXCLUDED
ASSETS

 

Notwithstanding anything to the contrary contained in
Section 2.1 or elsewhere in this Contract, the following assets of Sellers
(collectively, the “Excluded Assets”) are not part of the sale and purchase
contemplated hereunder, are excluded from the Assets, and shall remain the
property of Sellers after the Closing:

 

(a)                                 
all cash, cash bank
accounts, investment accounts, certificates of deposit, treasury notes and
bills, and other cash equivalents;

 

(b)                                
all Accounts
Receivable and notes receivable, together with any collateral securing the
repayment thereof;

 

(c)                                 
all minute books,
stock Records and corporate seals and other corporate records and software
related to Sellers’ corporate affairs, the ESOT, and tax matters;

 

(d)                                
shares of capital
stock of Sellers held in treasury;

 

(e)                                 
those rights relating
to deposits and prepaid expenses and claims for refunds and rights to offset in
respect thereof listed in Schedule 2.2(e);

 

(f)                                   
all insurance
policies and rights thereunder (except to the extent specified in
Section 2.1(h) and 2.1(i));

 

(g)                                
all of the Seller
Contracts listed in Schedule 2.2(g));

 

(h)                                
all personnel Records
and other Records that each Seller is required by law to retain in its
possession;

 

(i)                                    
all claims for refund
of Taxes and other governmental charges of whatever nature;

 

(j)                                    
all rights in
connection with any assets of the Employee Benefit Plans;

 

(k)                                 
all rights of Sellers
under this Contract, the Bill of Sale, and the Assignment and Assumption
Agreement;

 

(l)                                    
the property and
assets expressly designated in Schedule 2.2(l);
and.

 

(m)                              
all of Sellers’
personal property, including office furnishings, furniture, equipment, and
Sellers’ corporate files and records, which is located in Suite 910, 3900 North
Tenth Street, McAllen, Texas 78501.

 

2.3.                             
CONSIDERATION

 

(a)                                 
The consideration for
the Assets (the “Purchase Price”) will be (a) One Hundred Fifty-Five Million
dollars ($155,000,000) plus or minus the Adjustment Amount and (b) the
assumption of the Assumed Liabilities.

 

4

 

(b)                                
In accordance with
Section 2.7(b), at the Closing, the Purchase Price, prior to adjustment on
account of the Adjustment Amount, shall be delivered by Buyer as follows: (i)
One Hundred Forty-Five Million Dollars ($145,000,000) by wire transfer to
Sellers; and (ii)  Ten Million Dollars ($10,000,000) by wire transfer to
an Escrow Agent mutually satisfactory to Sellers and Buyer (the “Escrow Agent”)
to hold in accordance with the terms and conditions of an escrow agreement in
form and substance mutually satisfactory to Sellers and Buyer (the “Escrow
Agreement”), providing for, among other things, termination of the Escrow
Agreement on October 31, 2005.

 

(c)                                 
In the event the
Closing does not occur within ten (10) business days of the receipt of the
required approvals described in Sections 7.8 and 8.6 of this Contract, Veritas
shall cause Buyer to deposit the sum of Five Million Dollars ($5,000,000) (the
“Deposit”) in escrow with an escrow agent mutually satisfactory to Sellers and
Buyer to hold in accordance with the terms and conditions of an escrow agreement
in form and substance mutually satisfactory to Sellers and Buyer.  Unless
this Contract shall be terminated pursuant to Section 9.1, on the Closing
Date the Deposit shall be released to Sellers as partial payment of the
Purchase Price and the amount payable by Buyer to Sellers at the Closing
pursuant to Section 2.3(b) shall be reduced by the amount of the
Deposit.  In the event the Closing does not occur as a result of the
Breach by Buyer of its obligations under this Contract, Sellers shall be entitled
to receive the Deposit as liquidated damages.  Buyer and Sellers hereby
acknowledge that the amount of damages which would be incurred by Sellers as a
result of Buyer’s Breach of this Contract are difficult to ascertain and that
the amount of liquidated damages provided for by this Section 2.3(c) are
reasonable.  Notwithstanding anything to the contrary contained in this
Contract (including, without limitation, Sections 9.2 and 13.5), Buyer shall
have no other liability to Sellers in the event the Closing does not
occur.  In the event the Closing does not occur other than as a result of
the Breach by Buyer of its obligations under this Contract, the Deposit shall
be returned to Buyer.

 

2.4.                             
LIABILITIES

 

(a)                                 
Assumed Liabilities.
On the Closing Date, but effective as of the Effective Time, Buyer shall assume
and agree to discharge only the following Liabilities of Sellers, in each case,
to the extent related exclusively or primarily to the business of Sellers or
the Assets and subject to the contrary provisions of Section 2.4(b) 
(the “Assumed Liabilities”):

 

(i)                                    
any Liability to
Sellers’ customers incurred by Sellers in the Ordinary Course of Business for nondelinquent
orders outstanding as of the Effective Time reflected on Sellers’ books (other
than any Liability arising out of or relating to a Breach that occurred prior
to the Effective Time);

 

(ii)                                 
any Liability to
Sellers’ customers under written warranty agreements in the forms disclosed in Schedule 2.4(a)(ii) given by
Sellers to their customers in the Ordinary Course of Business prior to the
Effective Time

 

5

 

(other than any Liability arising out of or relating to
a Breach that occurred prior to the Effective Time);

 

(iii)                              
any Liability arising
after the Effective Time under the Seller Contracts (but not including the
Seller Contracts in Items Nos. 25, 26 and 27 in Schedule 3.16(a) or any other Seller Contracts
relating exclusively to the Excluded Assets or the Retained Liabilities) and
the Seller Non-compete Contracts described in Schedule 3.19(a) (other than any Liability arising
out of or relating to a Breach that occurred prior to the Effective Time);

 

(iv)                             
any Liability of
Sellers arising after the Effective Time under any Seller Contract included in
the Assets that is entered into by Sellers after the date hereof in accordance
with the provisions of this Contract (other than any Liability arising out of
or relating to a Breach that occurred prior to the Effective Time); and

 

(v)                                
any Liability of
Sellers described in Schedule 2.4(a)(v).

 

(b)                                
Retained Liabilities.
The Retained Liabilities shall remain the sole responsibility of and shall be
retained, paid, performed and discharged solely by Sellers. “Retained
Liabilities” shall mean every Liability of Sellers other than those that
expressly constitute Assumed Liabilities, including:

 

(i)                                    
any Liability arising
out of or relating to products of Sellers to the extent manufactured or sold
prior to the Effective Time other than to the extent assumed under Section 2.4(a)(i),
(ii), (iii) or (iv);

 

(ii)                                 
any Liability under
any Contract assumed by Buyer pursuant to Section 2.4(a) that arises after
the Effective Time but that arises out of or relates to any Breach that
occurred prior to the Effective Time;

 

(iii)                              
any Liability for
Taxes, including (A) any Taxes arising as a result of Sellers’ operation of its
business or ownership of the Assets prior to the Effective Time, (B) any Taxes
that will arise as a result of the sale of the Assets pursuant to this Contract
and (C) any deferred Taxes of any nature;

 

(iv)                             
any Liability under
any Contract not assumed by Buyer under Section 2.4(a), including any
Liability arising out of or relating to Sellers’ credit facilities or any
security interest related thereto;

 

(v)                                
any Environmental,
Health and Safety Liabilities arising out of or relating to the operation of
Sellers’ business or Sellers’ leasing, ownership or operation of real property;

 

(vi)                             
any Liability under
the Employee Benefit Plans or relating to payroll, vacation, sick leave,
workers’ compensation, unemployment benefits, pension benefits, employee stock
option or profit-sharing plans, health care plans or benefits or any other
employee plans or benefits of any kind for Sellers’ employees or former
employees or both;

 

6

 

(vii)                          
any Liability under
any employment, severance, retention or termination agreement with any employee
of Sellers or any of their Related Persons;

 

(viii)                       
any Liability arising
out of or relating to any employee grievance asserted prior to Closing whether
or not the affected employees are hired by Buyer;

 

(ix)                               
any Liability of
Sellers to any shareholder or Related Person of Sellers or any shareholder;

 

(x)                                  
any Liability to
indemnify, reimburse or advance amounts to any officer, director, employee or
agent of Sellers;

 

(xi)                               
any Liability to
distribute to any of Sellers’ shareholders or otherwise apply all or any part
of the consideration received hereunder;

 

(xii)                            
any Liability arising
out of any Proceeding pending as of the Effective Time;

 

(xiii)                         
any Liability arising
out of any Proceeding commenced after the Effective Time and arising out of or
relating to any occurrence or event happening, existing or arising prior to the
Effective Time;

 

(xiv)                        
any Liability arising
out of or resulting from Sellers’ compliance or noncompliance with any Legal
Requirement or Order of any Governmental Body;

 

(xv)                           
any Liability of
Sellers under this Contract or any other document executed in connection with
the Contemplated Transactions;

 

(xvi)                        
any Liability of
Sellers based upon Sellers’ acts or omissions occurring after the Effective
Time;

 

(xvii)                     
Liability for all
notes payable, Trade Accounts Payable, other accounts payable, and Accrued
Expenses;

 

(xviii)                  
any Liability that
does not exclusively or primarily arise out of or is not exclusively or
primarily related to the business of Sellers or the Assets; and

 

(xix)                          
any Liability which
is assumed by, or which is otherwise the responsibility of, Sellers pursuant to
this Contract or any other document executed in connection with the
Contemplated Transactions.

 

2.5.                             
ALLOCATION

 

The Purchase Price shall be allocated in accordance
with Schedule 2.5.
After the Closing, the parties shall make consistent use of the allocation,
fair market value and useful lives specified in Schedule 2.5 for all Tax purposes and in all filings,
declarations and reports with the IRS in respect thereof, including the reports
required to be filed under Section 1060 of the Code. Buyer shall prepare
and deliver IRS Form 8594 to Sellers within forty-five (45) days after the
Closing

 

7

 

Date to be filed with the IRS. In any Proceeding
related to the determination of any Tax, neither Buyer nor Sellers shall
contend or represent that such allocation is not a correct allocation.

 

2.6.                             
CLOSING

 

The purchase and sale provided for in this Contract
(the “Closing”) will take place at the offices of Winston & Strawn LLP, 200
Park Avenue, New York, New York 10166, commencing at 10:00 a.m. (local time) on
the later of (a) February 27, 2004, or (b) the date that is five (5)
Business Days following the termination of the applicable waiting period under
the HSR Act, unless Buyer and Sellers otherwise agree. Subject to the
provisions of Article 9, failure to consummate the purchase and sale
provided for in this Contract on the date and time and at the place determined
pursuant to this Section 2.6 will not result in the termination of this
Contract and will not relieve any party of any obligation under this Contract.
In such a situation, the Closing will occur as soon as practicable, subject to
Article 9.

 

2.7.                             
CLOSING OBLIGATIONS

 

In addition to any other documents to be delivered
under other provisions of this Contract, at the Closing:

 

(a)                                 
Sellers shall deliver
to Buyer, together with funds sufficient to pay all Taxes necessary for the
transfer, filing or recording thereof:

 

(i)                                    
a bill of sale for
all of the Assets that are Tangible Personal Property in form and substance
mutually satisfactory to Sellers and Buyer (the “Bill of Sale”) executed by
Sellers;

 

(ii)                                 
an assignment of all
of the Assets that are intangible personal property in form and substance
mutually satisfactory to Sellers and Buyer, which assignment shall also contain
Buyer’s undertaking and assumption of the Assumed Liabilities (the “Assignment
and Assumption Agreement”) executed by Sellers;

 

(iii)                              
for each interest in
Leasehold Real Property identified on Schedule 3.6,
an Assignment and Assumption of Lease in form and substance mutually
satisfactory to Sellers and Buyer or such other appropriate document or
instrument of transfer, as the case may require, each in form and substance
reasonably satisfactory to Buyer and its counsel and executed by Sellers;

 

(iv)                             
assignments of all
Intellectual Property Assets and separate assignments of all registered Marks
in form and substance mutually satisfactory to Sellers and Buyer executed by
Sellers;

 

(v)                                
such other deeds,
bills of sale, assignments, certificates of title, documents and other
instruments of transfer and conveyance as may reasonably be requested by Buyer,
each in form and substance reasonably satisfactory to Buyer and its legal
counsel and executed by Sellers;

 

8

 

(vi)                             
a certificate
executed by each Seller as to the accuracy of its representations and
warranties as of the date of this Contract and as of the Closing in accordance
with Section 7.1 and as to its compliance with and performance of its
covenants and obligations to be performed or complied with at or before the Closing
in accordance with Section 7.2;

 

(vii)                          
a certificate of the
Secretary of each Seller certifying, as complete and accurate as of the
Closing, attached copies of the Governing Documents of such Seller, certifying
and attaching all requisite resolutions or actions of such Seller’s board of
directors and shareholders approving the execution and delivery of this
Contract and the consummation of the Contemplated Transactions and the change
of name contemplated by Section 5.9 and certifying to the incumbency and
signatures of the officers of such Seller executing this Contract and any other
document relating to the Contemplated Transactions and accompanied by the
requisite documents for amending the relevant Governing Documents of such Seller
required to effect such change of name in form sufficient for filing with the
appropriate Governmental Body; and

 

(viii)                       
the Escrow Agreement
executed by Sellers and the Escrow Agent.

 

(b)                                
Buyer shall deliver
to Sellers and the Escrow Agent, respectively, as hereinafter provided:

 

(i)                                    
One Hundred
Forty-Five Million and No/100ths dollars ($145,000,000) by wire transfer to an
account specified by Sellers in a writing delivered to Buyer at least three (3)
business days prior to the Closing Date, and Ten Million and No/100ths dollars
($10,000,000) by wire transfer to the account of the Escrow Agent pursuant to
the Escrow Agreement;

 

(ii)                                 
the Assignment and
Assumption Agreement executed by Buyer;

 

(iii)                              
a certificate
executed by Buyer as to the accuracy of its representations and warranties as
of the date of this Contract and as of the Closing in accordance with
Section 8.1 and as to its compliance with and performance of its covenants
and obligations to be performed or complied with at or before the Closing in
accordance with Section 8.2;

 

(iv)                             
a certificate of the
Secretary of Buyer certifying, as complete and accurate as of the Closing,
attached copies of the Governing Documents of Buyer and certifying and
attaching all requisite resolutions or actions of Buyer’s board of directors
approving the execution and delivery of this Contract and the consummation of
the Contemplated Transactions and certifying to the incumbency and signatures
of the officers of Buyer executing this Contract and any other document
relating to the Contemplated Transactions; and

 

(v)                                
the Escrow Agreement,
executed by Buyer and the Escrow Agent.

 

9

 

2.8.                             
ADJUSTMENT AMOUNT AND PAYMENT

 

The “Adjustment Amount” (which may be a positive or
negative number) will be equal to the amount determined by subtracting the
Closing Inventories and Fixed Assets Capital from the Initial Inventories and
Fixed Assets Capital. If the Adjustment Amount is positive, the Adjustment
Amount shall be paid by wire transfer by Sellers to an account specified by Buyer.
If the Adjustment Amount is negative, the difference between the Closing
Inventories and Fixed Assets Capital and the Initial Inventories and Fixed
Assets Capital shall be paid by wire transfer by Buyer to an account specified
by Sellers. All payments shall be made together with interest at the rate of
The Wall Street Journal “Prime Rate”, as published in its “Money Rates”
section, which interest shall begin accruing on the Closing Date and end on the
date that the payment is made. Within three (3) business days after the
calculation of the Closing Inventories and Fixed Assets Capital becomes binding
and conclusive on the parties pursuant to Section 2.9, Sellers or Buyer,
as the case may be, shall make the wire transfer payment provided for in this
Section 2.8.

 

2.9.                             
ADJUSTMENT PROCEDURE

 

(a)                                 
“Inventories and
Fixed Assets Capital” as of a given date shall mean the combined value of all
Inventories and Fixed Assets of Sellers as of that date. For reference, the
Inventories of Sellers as of November 1, 2003 was Twenty-Seven Million
Five Hundred Twelve Thousand Eight Hundred dollars ($27,512,800) and the Fixed
Assets of Sellers as of November 1, 2003 was Twenty-One Million Seven Hundred
Seventy-Eight Thousand Four Hundred dollars ($21,778,400) for a total of
Forty-Nine Million Two Hundred Ninety-One Thousand Two Hundred dollars
($49,291,200) (the “Initial Inventories and Fixed Assets Capital”).

 

(b)                                
Sellers have prepared
and delivered to Buyer a consolidated statement of the Initial Inventories and
Fixed Assets Capital of Sellers as at November 1, 2003, on the same basis
and applying the same accounting principles, policies and practices that were
used in preparing the Balance Sheet, including the principles, policies and
practices set forth on Schedule 2.9(b). 
Buyer shall determine the Inventories and Fixed Assets Capital as of the
Closing (the “Closing Inventories and Fixed Assets Capital”)  using the
same methodology as was used to calculate the Initial Inventories and Fixed
Assets Capital, except that a sum equal to the deduction for depreciation for
the period November 1, 2003 through November 29, 2003 will be added
back to the Fixed Assets Capital account to determine Closing Inventories and
Fixed Assets Capital for purposes of the adjustment, if any, to be made
pursuant to Section 2.8 above. Buyer shall deliver its determination of
the Closing Inventories and Fixed Assets Capital to Sellers within sixty (60) days
following the Closing Date.

 

(c)                                 
If within thirty (30)
days following delivery of the Closing Inventories and Fixed Assets Capital
calculation Sellers shall not have given Buyer written notice of its objection
as to the Closing Inventories and Fixed Assets Capital calculation (which
notice shall state the basis of Sellers’ objection), then the Closing
Inventories and Fixed Assets Capital calculated by Buyer shall be binding and
conclusive on the parties and be used in computing the Adjustment Amount.

 

10

 

(d)                                
If Sellers duly shall
give Buyer such notice of objection, and if Sellers and Buyer shall fail to
resolve the issues outstanding with respect to the calculation of the Closing
Inventories and Fixed Assets Capital within thirty (30) days of Buyer’s receipt
of Sellers’ objection notice, Sellers and Buyer shall submit the issues
remaining in dispute to a mutually acceptable nationally recognized independent
public accounting firm (the “Independent Accountants”) for resolution applying
the principles, policies and practices referred to in Section 2.9(b). If
issues are submitted to the Independent Accountants for resolution, (i) Sellers
and Buyer shall furnish or cause to be furnished to the Independent Accountants
such work papers and other documents and information relating to the disputed
issues as the Independent Accountants may request and are available to that
party or its agents and shall be afforded the opportunity to present to the
Independent Accountants any material relating to the disputed issues and to
discuss the issues with the Independent Accountants; (ii) the determination by
the Independent Accountants, as set forth in a notice to be delivered to both
Sellers and Buyer within sixty (60) days of the submission to the Independent
Accountants of the issues remaining in dispute, shall be final, binding and
conclusive on the parties and shall be used in the calculation of the Closing
Inventories and Fixed Assets Capital; and (iii) Sellers and Buyer will each
bear fifty percent (50%) of the fees and costs of the Independent Accountants
for such determination.

 

2.10.                       
CONSENTS

 

(a)                                 
If there are any
Material Consents that have not yet been obtained (or otherwise are not in full
force and effect) as of the Closing, in the case of each Seller Contract as to
which such Material Consents were not obtained (or otherwise are not in full
force and effect) (the “Restricted Material Contracts”), Buyer may waive the
closing conditions as to any such Material Consent and either:

 

(i)                                    
elect to have Sellers
continue their efforts to obtain the Material Consents; or

 

(ii)                                 
elect to have Sellers
retain that Restricted Material Contract and all Liabilities arising therefrom
or relating thereto.

 

If Buyer elects to have Sellers continue their efforts
to obtain any Material Consents and the Closing occurs, notwithstanding Sections
2.1 and 2.4, neither this Contract nor the Assignment and Assumption Agreement
nor any other document related to the consummation of the Contemplated
Transactions shall constitute a sale, assignment, assumption, transfer,
conveyance or delivery or an attempted sale, assignment, assumption, transfer,
conveyance or delivery of the Restricted Material Contracts, and following the
Closing, Sellers shall use Best Efforts (at their expense) to obtain the
Material Consent relating to each Restricted Material Contract as quickly as
practicable. Pending the obtaining of such Material Consents relating to any
Restricted Material Contract, the parties shall cooperate with each other in
any reasonable and lawful arrangements designed to provide to Buyer the economic
and operational equivalent of use of the Restricted Material Contract for its
term (or any right or benefit arising thereunder, including the enforcement for
the benefit of Buyer of any and all rights of Sellers against a third party
thereunder). Once a Material Consent for the sale,

 

11

 

assignment, assumption, transfer, conveyance and
delivery of a Restricted Material Contract is obtained, Sellers shall promptly
assign, transfer, convey and deliver such Restricted Material Contract to
Buyer, and Buyer shall assume the obligations under such Restricted Material
Contract assigned to Buyer from and after the date of assignment to Buyer
pursuant to a special-purpose assignment and assumption agreement substantially
similar in terms to those of the Assignment and Assumption Agreement (which
special-purpose agreement the parties shall prepare, execute and deliver in
good faith at the time of such transfer, all at no additional cost to
Buyer).  Specifically, without limitation, the parties recognize that it
will be appropriate to seek and obtain novation of each Seller Contract with
the United States Government after Closing; and Sellers and Buyer will in good
faith cooperate in efforts to promptly obtain government approval of such
novations.

 

(b)                                
If there are any
Consents not listed on Schedule 7.3
necessary for the assignment and transfer of any Seller Contracts to Buyer (the
“Nonmaterial Consents”) which shall not yet have been obtained (or otherwise
are not in full force and effect) as of the Closing, Buyer shall elect at the
Closing, in the case of each of the Seller Contracts as to which such
Nonmaterial Consents were not obtained (or otherwise are not in full force and
effect) (the “Restricted Nonmaterial Contracts”), whether to:

 

(i)                                    
accept the assignment
of such Restricted Nonmaterial Contract, in which case, as between Buyer and
Sellers, such Restricted Nonmaterial Contract shall, to the maximum extent
practicable and notwithstanding the failure to obtain the applicable
Nonmaterial Consent, be transferred at the Closing pursuant to the Assignment
and Assumption Agreement as elsewhere provided under this Contract; or

 

(ii)                                 
reject the assignment
of such Restricted Nonmaterial Contract, in which case, notwithstanding
Sections 2.1 and 2.4, (A) neither this Contract nor the Assignment and
Assumption Agreement nor any other document related to the consummation of the
Contemplated Transactions shall constitute a sale, assignment, assumption,
conveyance or delivery or an attempted sale, assignment, assumption, transfer,
conveyance or delivery of such Restricted Nonmaterial Contract, and (B) Sellers
shall retain such Restricted Nonmaterial Contract and all Liabilities arising
therefrom or relating thereto.

 

3.                                      
Representations and Warranties of Sellers

 

Sellers jointly and severally represent and warrant to
Buyer the following as of the date hereof and as of the Closing Date.

 

3.1.                             
ORGANIZATION AND GOOD STANDING

 

(a)                                 
Schedule 3.1(a) contains a complete and accurate list of Wornick’s
and its QSSS’s jurisdiction of incorporation or other organization, as the case
may be, and any other jurisdictions in which it and they are qualified to do
business.  Wornick,

 

12

 

TWCRAD and RAMCO are corporations duly organized,
validly existing and in good standing under the laws of their respective
jurisdictions of incorporation.  TWCRADLP is a limited partnership duly
organized, validly existing and in good standing under the law of its
jurisdiction of organization.  Each Seller has full power and authority to
conduct its business as it is now being conducted, to own or use the properties
and assets that it purports to own or use, and to perform all its obligations
under this Contract and the Seller Contracts, as applicable.  Each Seller
is duly qualified to do business and is in good standing under the laws of each
state or other jurisdiction in which either the ownership or use of the
properties owned or used by it, or the nature of the activities conducted by
it, requires such qualification.

 

(b)                                
Complete and accurate
copies of the Governing Documents of Wornick, TWCRAD, RAMCO, and TWCRADLP, as
currently in effect, have been delivered to Buyer.

 

(c)                                 
Wornick has no
Subsidiary other than the QSSSs and, except as disclosed in Schedule 3.1(c), does not own any shares
of capital stock or other securities of any other Person.

 

3.2.                             
ENFORCEABILITY; AUTHORITY; NO CONFLICT

 

(a)                                 
Subject to the
required approvals described in Sections 7.8 and 8.6, (i) this Contract
constitutes the legal, valid and binding obligation of each Seller, enforceable
against it in accordance with its terms; (ii) upon the execution and delivery
by Sellers of each agreement to be executed or delivered by any or all of
Sellers at the Closing (collectively, the “Seller’s Closing Documents”), each
of Seller’s Closing Documents will constitute the legal, valid and binding
obligation of each of Sellers enforceable against each of them in accordance
with its terms; and (iii) each Seller has the absolute and unrestricted right,
power and authority to execute and deliver this Contract and the Seller’s
Closing Documents to which it is a party and to perform its obligations under
this Contract and the Seller’s Closing Documents, and such action has been duly
authorized by all necessary action by such Seller’s shareholders and board of
directors.

 

(b)                                
Except as set forth
in Schedule 3.2(b),
neither the execution and delivery of this Contract nor the consummation or
performance of any of the Contemplated Transactions will, directly or
indirectly (with or without notice or lapse of time):

 

(i)                                    
Breach (A) any
provision of any of the Governing Documents of Sellers or (B) any resolution
adopted by the board of directors or the shareholders of Wornick, TWCRAD or
RAMCO;

 

(ii)                                 
Breach, or give any
Governmental Body or other Person the right to challenge, any of the
Contemplated Transactions or to exercise any remedy or obtain any relief under
any Legal Requirement or any Order to which Sellers, or any of the Assets, may
be subject;

 

13

 

(iii)                              
contravene, conflict
with or result in a violation or breach of any of the terms or requirements of,
or give any Governmental Body the right to revoke, withdraw, suspend, cancel,
terminate or modify, any Governmental Authorization that is held by Sellers or
that otherwise relates to the Assets or to the business of Sellers;

 

(iv)                             
cause Buyer to become
subject to, or to become liable for the payment of, any Tax;

 

(v)                                
Breach any provision
of, or give any Person the right to declare a default or exercise any remedy
under, or to accelerate the maturity or performance of, or payment under, or to
cancel, terminate or modify, any Seller Contract identified in
Section 3.16(a) of this Contract;

 

(vi)                             
result in the
imposition or creation of any Encumbrance upon or with respect to any of the
Assets; or

 

(vii)                          
result in any
shareholder or equity owner of Sellers having the right to exercise dissenters’
appraisal rights.

 

(c)                                 
Except as set forth
in Schedule 3.2(c), no
Seller is required to give any notice to or obtain any Consent from any Person
in connection with the execution and delivery of this Contract or the
consummation or performance of any of the Contemplated Transactions, the
absence of which notice or Consent would have a material adverse effect on the
business, operations, assets, condition or prospects of such Seller or its
Assets.

 

3.3.                             
FINANCIAL STATEMENTS

 

Attached hereto as Schedule 3.3 are: (a) an audited consolidated balance
sheet of Wornick as at December 31, 2002 (including the notes thereto, the
“Balance Sheet”), and the related audited statements of income, changes in
shareholders’ equity and cash flows for the fiscal year then ended, including
in each case the notes thereto, together with the report thereon of The Hanke
Group, independent certified public accountants; (b) audited consolidated
balance sheets of Wornick as at December 31 in each of the fiscal years
2000 through 2001, and the related audited statements of income, changes in
shareholders’ equity and cash flows for each of the fiscal years then ended,
including in each case the notes thereto together with the report thereon of
independent certified public accountants; (c) an unaudited consolidated balance
sheet of Wornick as at November 1, 2003 (the “Interim Balance Sheet”) and
the related unaudited statements of income for the ten (10) months then ended,
certified by Wornick’s chief executive officer; and (d) an unaudited consolidated
balance sheet of Wornick as at July 5, 2003 and the related unaudited
statements of income for the six (6) months then ended. Such consolidated
financial statements referred to in clauses (a), (b), (c) and (d) above fairly
present (and the financial statements delivered pursuant to Section 5.8
will fairly present) the financial condition and the results of operations,
changes in shareholders’ equity and cash flows of Sellers as at the respective
dates of and for the periods referred to in such financial statements, and
reflect and provide adequate reserves in respect of all known Liabilities of
the business of Sellers, including all known contingent Liabilities as of their
respective dates, all in accordance with GAAP. The financial statements
referred to in clauses (a) (b), (c) and (d) above and delivered pursuant to

 

14

 

Section 5.8 reflect and will reflect the
consistent application of such accounting principles throughout the periods
involved, except as disclosed in the notes to such financial statements. The
financial statements referred to in clauses (a), (b), (c) and (d) above and to
be delivered pursuant to Section 5.8 have been and will be prepared from
and are in accordance with the accounting Records of Sellers.  Each Seller
has also delivered to Buyer copies of all letters from such Seller’s auditors
to such Seller’s board of directors or the audit committee thereof during the
thirty-six (36) months preceding the execution of this Contract, together with
copies of all responses thereto.

 

3.4.                             
BOOKS
AND RECORDS

 

The books of account and other financial Records of
Sellers, all of which have been made available to Buyer, are complete and
correct and represent actual, bona fide transactions and have been maintained
in accordance with sound business practices and the requirements of
Section 13(b)(2) of the Exchange Act (regardless of whether Sellers are
subject to that Section or not), including the maintenance of an adequate
system of internal controls. The minute books of Wornick, TWCRAD and RAMCO, all
of which have been made available to Buyer, contain accurate and complete
Records of all meetings held of, and corporate action taken by, the
shareholders, the board of directors and committees of the board of directors
of Wornick, TWCRAD and RAMCO, as the case may be, and no meeting of any such
shareholders, board of directors or committee has been held for which minutes
have not been prepared or are not contained in such minute books.

 

3.5.                             
SUFFICIENCY OF ASSETS

 

Except for the Excluded Assets and otherwise as set
forth in Schedule 3.5,
the Assets (a) constitute all of the assets, tangible and intangible, of any
nature whatsoever, necessary to operate Sellers’ business in the manner
presently operated by Sellers and (b) include all of the operating assets of
Sellers.

 

3.6.                             
DESCRIPTION OF LEASED REAL PROPERTY

 

(a)                                 
Schedule 3.6(a)  contains a correct legal description and street
address of all tracts, parcels and subdivided lots in which Wornick has a
leasehold interest and an accurate description (by location, name of lessor,
date of Lease and term expiry date) of all Leasehold Real Property Leases of
Wornick.

 

(b)                                
Schedule 3.6(b) contains a correct legal description, and street
address of all tracts, parcels and subdivided lots in which TWCRADLP has a
leasehold interest and an accurate description (by location, name of lessor,
date of Lease and term expiry date) of all Leasehold Real Property Leases of
TWCRADLP.

 

(c)                                 
Other than these
leasehold interests, no Sellers have any ownership interest in any real
property.  Sellers have made available to Buyer true, correct and complete
copies of the leases and subleases (as amended to date), and other agreements
for occupancy, including all amendments, extensions and modifications thereto
as of the date of this Contract, with respect to each parcel of Leasehold Real
Property.  Each Lease of Leasehold Real Property is a legal, valid and
binding obligation of

 

15

 

Sellers and is in full force and effect.  Neither
Sellers, nor to Sellers’ Knowledge any other party to the Lease of Leasehold
Real Property, is in breach or default, and, to Sellers’ knowledge, no event
has occurred which, with notice or lapse of time, would constitute a breach or
default or permit termination, modification or acceleration thereunder.

 

3.7.                             
TITLE TO ASSETS; ENCUMBRANCES

 

Sellers own good and transferable title to all of the
Assets free and clear of any Encumbrances other than those described in Schedule 3.7. Sellers warrant to
Buyer that, at the time of Closing, all Assets shall be free and clear of all
such Encumbrances other than those identified on Schedule 3.7 (“Permitted Encumbrances”).

 

3.8.                             
CONDITION OF FACILITIES

 

(a)                                 
Use of the Leasehold
Real Property for the various purposes for which it is presently being used is
permitted as of right under all Leases. To Sellers’ knowledge: (i) all
Improvements are in compliance with all applicable Legal Requirements, are in
good repair and in good condition, ordinary wear and tear excepted, and are
free from latent and patent defects; (ii) no part of any Improvement encroaches
on any real property not included in the Leasehold Real Property, and there are
no buildings, structures, fixtures or other Improvements primarily situated on
adjoining property which encroach on any part of the Land; and (iii) there is
no existing or proposed eminent domain proceeding that would result in the
taking of all or any part of any Facility or that would prevent or hinder the
continued use of any Facility as heretofore used in the conduct of the business
of Sellers.  All Leases of Leasehold Real Property with a Related Person
of Sellers contain rent and other terms that represent “fair market rental
terms”.

 

(b)                                
Substantially all
items of Tangible Personal Property are in good repair and good operating
condition, ordinary wear and tear excepted, are suitable for immediate use in
the Ordinary Course of Business and are free from latent and patent defects. No
item of material Tangible Personal Property is in need of repair or replacement
other than as part of routine maintenance in the Ordinary Course of Business.
Except as disclosed in Schedule 3.8(b),
all Tangible Personal Property used in Sellers’ business is in the possession
of Sellers.

 

3.9.                             
INVENTORIES

 

All items included in the Inventories consist of a
quality and quantity usable and, with respect to finished goods, saleable, in
the Ordinary Course of Business of Sellers except for obsolete items and items
of below-standard quality, all of which have been written off or written down
to net realizable value in the Balance Sheet or the Interim Balance Sheet or on
the accounting Records of Sellers as of the Closing Date, as the case may be.
Except for Government Furnished Materials, Sellers are not in possession of any
inventory not owned by Sellers, including goods already sold. All of the
Inventories have been valued at the lower of cost or market value on a first
in, first out basis. Inventories now on hand that were purchased after the date
of the Balance Sheet or the Interim Balance Sheet were purchased in the
Ordinary Course of Business of Sellers

 

16

 

at a cost not exceeding market prices prevailing at
the time of purchase. The quantities of each item of Inventories (whether raw
materials, work-in-process or finished goods) are not excessive but are
reasonable in the present circumstances of Sellers. Work-in-process Inventories
are now valued, and will be valued on the Closing Date, according to GAAP.

 

3.10.                       
NO UNDISCLOSED LIABILITIES

 

Except for the Retained Liabilities or otherwise as
set forth in Schedule 3.10,
Sellers have no Liability except for Liabilities reflected or reserved against
in the Balance Sheet or the Interim Balance Sheet and current liabilities
incurred in the Ordinary Course of Business of Sellers since the date of the
Interim Balance Sheet which do not involve indebtedness for borrowed money.

 

3.11.                       
NO MATERIAL ADVERSE CHANGE

 

Since July 5, 2003, except as indicated by the
Interim Balance Sheet and on Schedule 3.15,
there has not been any material adverse change in the business, operations,
prospects, assets, results of operations or condition (financial or other) of
Sellers, and no event has occurred or circumstance exists that may result in
such a material adverse change; provided, however, that in no event shall any
of the following constitute a material adverse change in the business,
operations, prospects, assets, results of operations or condition of
Sellers:  (i) any change resulting from conditions affecting the industry
in which Sellers operate or from changes in general business or economic
conditions; (ii) any change resulting from the announcement or pendency of any
of the transactions contemplated by this Contract; or (iii) any change
resulting from compliance by Sellers with the terms of, or the taking of any
action contemplated or permitted by, this Contract.

 

3.12.                       
EMPLOYEE BENEFITS

 

(a)                                 
Set forth in Schedule 3.12(a) is a complete and
correct list of all “employee benefit plans” as defined by Section 3(3) of
ERISA, all specified fringe benefit plans as defined in Section 6039D of
the Code, and all other bonus, incentive-compensation, deferred-compensation,
profit-sharing, stock-option, stock-appreciation-right, stock-bonus,
stock-purchase, employee-stock-ownership, savings, severance,
change-in-control, supplemental-unemployment, layoff, salary-continuation,
retirement, pension, health, life-insurance, disability, accident,
group-insurance, vacation, holiday, sick-leave, fringe-benefit or welfare plan,
and any other employee compensation or benefit plan, agreement, policy,
practice, commitment, contract or understanding (whether qualified or
nonqualified, currently effective or terminated, written or unwritten) and any
trust, escrow or other agreement related thereto that (i) is maintained or
contributed to by Sellers or any other corporation or trade or business
controlled by, controlling or under common control with Sellers (within the
meaning of Section 414 of the Code or Section 4001(a)(14) or 4001(b)
of ERISA) (“ERISA Affiliate”) or has been maintained or contributed to in the
last six (6) years by Sellers or any ERISA Affiliate, or with respect to which
Sellers or any ERISA Affiliate has or may have any liability, and (ii) provides
benefits, or describes policies or procedures applicable to any current or
former director, officer, employee or service provider of Sellers or any ERISA
Affiliate, or the dependents of any thereof, regardless of how (or whether)
liabilities for the provision of

 

17

 

benefits are accrued or assets are acquired or
dedicated with respect to the funding thereof (collectively the “Employee
Benefit Plans”).  Schedule 3.12(a)
identifies as such any Employee Plan that is (w) a “Defined Benefit Plan” (as
defined in Section 414(l) of the Code); (x) a plan intended to meet the
requirements of Section 401(a) of the Code; (y) a “Multiemployer Plan” (as
defined in Section 3(37) of ERISA); or (z) a plan subject to Title IV of
ERISA, other than a Multiemployer Plan. Also set forth on Schedule 3.12(a) is a complete and
correct list of all ERISA Affiliates of Sellers during the last six (6) years.

 

(b)                                
Sellers have
delivered or made available to Buyer a true and complete copy of:

 

(i)                                    
Each Employee Benefit
Plan and any related funding agreements (e.g., trust agreements or insurance
contracts), including all amendments (and Schedule 3.12(b)
includes a description of any such amendment that is not in writing);

 

(ii)                                 
The current summary
plan description of each Employee Benefit Plan (if applicable); and

 

(iii)                              
The most recent
Internal Revenue Service determination letter (if applicable) for each Employee
Benefit Plan, which determination letter, except as set for on Schedule 3.12(b), reflects all
amendments that have been made to the Employee Benefit Plan.

 

(c)                                 
No Employee Benefit
Plan or any trust established thereunder has incurred any “accumulated funding
deficiency,” as defined in Section 302 of ERISA and Section 412 of
the Code, whether or not waived, as of the last day of the most recent fiscal
year ended prior to the Effective Time, and all contributions required to be
made with respect thereto (whether pursuant to the terms of any Employee
Benefit Plan or otherwise) on or prior to the Effective Time have been timely
made.

 

3.13.                       
COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL
AUTHORIZATIONS

 

(a)                                 
Except as set forth
in Schedule 3.13(a),
to Sellers’ Knowledge:

 

(i)                                    
Each Seller is, and
at all times since July 5, 2003, has been, in full compliance with each
material Legal Requirement that is or was applicable to it or to the conduct or
operation of its business or the ownership or use of any of its assets;

 

(ii)                                 
no event has occurred
or circumstance exists that (with or without notice or lapse of time) (A) may
constitute or result in a violation by any Seller of, or a failure on the part
of any Seller to comply with, any Legal Requirement or (B) may give rise to any
obligation on the part of any Seller to undertake, or to bear all or any
portion of the cost of, any material remedial action of any nature; and

 

18

 

(iii)                              
Each Seller has not
received, at any time since July 5, 2003, any notice or other
communication (whether oral or written) from any Governmental Body or any other
Person regarding (A) any actual, alleged, possible or potential violation of,
or failure to comply with, any material Legal Requirement or (B) any actual,
alleged, possible or potential obligation on the part of such Seller to
undertake, or to bear all or any portion of the cost of, any material remedial
action of any nature.

 

(b)                                
Schedule 3.13(b) contains a complete and accurate list of each
material Governmental Authorization that is held by Sellers or that otherwise
relates to Sellers’ business or the Assets. Each Governmental Authorization
listed or required to be listed in Schedule 3.13(b)
is valid and in full force and effect. Except as set forth in Schedule 3.13(b):

 

(i)                                    
Each Seller is, and
at all times since July 5, 2003, has been, in full compliance with all of
the material terms and requirements of each Governmental Authorization
identified or required to be identified in Schedule 3.13(b);

 

(ii)                                 
no event has occurred
or circumstance exists that may (with or without notice or lapse of time) (A)
constitute or result directly or indirectly in a violation of or a failure to
comply with any material term or requirement of any Governmental Authorization
listed or required to be listed in Schedule 3.13(b)
or (B) result directly or indirectly in the revocation, withdrawal, suspension,
cancellation or termination of, or any modification to, any Governmental
Authorization listed or required to be listed in Schedule 3.13(b);

 

(iii)                              
No Seller has
received, at any time since July 5, 2003, any notice or other
communication (whether oral or written) from any Governmental Body or any other
Person regarding (A) any actual, alleged, possible or potential violation of or
failure to comply with any material term or requirement of any Governmental
Authorization or (B) any actual, proposed, possible or potential revocation,
withdrawal, suspension, cancellation, termination of or modification to any
material Governmental Authorization; and

 

(iv)                             
all applications
required to have been filed for the renewal of the Governmental Authorizations
listed or required to be listed in Schedule 3.13(b)
have been duly filed on a timely basis with the appropriate Governmental
Bodies, and all other filings required to have been made with respect to such
Governmental Authorizations have been duly made on a timely basis with the
appropriate Governmental Bodies.

 

No Seller shall be deemed to have breached any of the
foregoing representations or warranties as a consequence of the existence of
any fact, event or circumstance inconsistent with such representation or
warranty, unless such fact, event or circumstance could have a material adverse
effect on the Assets or the business of Sellers.

 

19

 

The Governmental Authorizations listed in Schedule 3.13(b) collectively
constitute all of the material Governmental Authorizations necessary to permit
each Seller to lawfully conduct and operate its business in the manner in which
it currently conducts and operates such business and to permit each Seller to
own and use its assets in the manner in which it currently owns and uses such
assets.

 

3.14.                       
LEGAL PROCEEDINGS; ORDERS

 

(a)                                 
Except as set forth
in Schedule 3.14(a),
there is no pending or, to Sellers’ Knowledge, threatened Proceeding:

 

(i)                                    
by or against any
Seller or that otherwise relates to or may affect the business of, or any of
the assets owned or used by, any Seller; or

 

(ii)                                 
that challenges, or
that may have the effect of preventing, delaying, making illegal or otherwise
interfering with, any of the Contemplated Transactions.

 

To the Knowledge of Sellers, no event has occurred or
circumstance exists that is reasonably likely to give rise to or serve as a
basis for the commencement of any such Proceeding. Sellers have delivered to
Buyer copies of all pleadings, correspondence and other documents relating to
each Proceeding listed in Schedule 3.14(a).
There are no Proceedings listed or required to be listed in Schedule 3.14(a) that could have a
material adverse effect on the business, operations, assets, condition or
prospects of Sellers or upon the Assets.

 

(b)                                
Except as set forth
in Schedule 3.14(b):

 

(i)                                    
there is no Order to
which any Seller, its business or any of the Assets is subject, the violation
of which would have a material adverse effect on the business, operations,
assets, condition or prospects of Sellers or upon the Assets; and

 

(ii)                                 
to the Knowledge of
Sellers, no officer, director, agent or employee of Sellers is subject to any
Order that prohibits such officer, director, agent or employee from engaging in
or continuing any conduct, activity or practice relating to the business of
Sellers.

 

(c)                                 
Except as set forth
in Schedule 3.14(c):

 

(i)                                    
Each Seller is, and
at all times since July 5, 2003, has been, in compliance with all of the
material terms and requirements of each Order to which it or any of the Assets
is or has been subject;

 

(ii)                                 
no event has occurred
or circumstance exists that is reasonably likely to constitute or result in
(with or without notice or lapse of time) a violation of or failure to comply
with any material term or requirement of any Order to which any Seller or any
of the Assets is subject; and

 

20

 

(iii)                              
No Seller has
received, at any time since July 5, 2003, any notice or other
communication (whether oral or written) from any Governmental Body or any other
Person regarding any actual, alleged, possible or potential violation of, or
failure to comply with, any material term or requirement of any Order to which
such Seller or any of the Assets is or has been subject.

 

3.15.                       
ABSENCE OF CERTAIN CHANGES AND EVENTS

 

Except as set forth in Schedule 3.15, since July 5, 2003, each Seller
has conducted its business only in the Ordinary Course of Business and there
has not been any:

 

(a)                                 
amendment to the
Governing Documents of such Seller;

 

(b)                                
except in the
Ordinary Course of Business, payment or increase by such Seller of any bonuses,
salaries or other compensation to any shareholder, director, officer or
employee or entry into any employment, severance, profit sharing, bonus,
deferred compensation, savings, insurance, pension, retirement or similar
Contract with any director, officer or employee;

 

(c)                                 
material damage to or
destruction or loss of any Asset, whether or not covered by insurance;

 

(d)                                
entry into,
termination of or receipt of notice of termination of (i) any license,
distributorship, dealer, sales representative, joint venture, credit or similar
Contract to which such Seller is a party, or (ii) any Contract or transaction
involving a total remaining commitment by such Seller of at least $2,000,000;

 

(e)                                 
sale (other than
sales of Inventories in the Ordinary Course of Business), lease or other
disposition of any material Asset or property of such Seller (including the
Intellectual Property Assets) or the creation of any material Encumbrance on
any Asset;

 

(f)                                   
material change in
the accounting methods used by such Seller;

 

(g)                                
adoption of,
amendment to or increase in the payments to or benefits under, any Employee
Benefit Plan;

 

(h)                                
cancellation or
waiver of any claims or rights with a value to such Seller in excess of
$2,000,000;

 

(i)                                    
indication by any
material customer or supplier of an intention to discontinue or change the
terms of its relationship with such Seller;

 

(j)                                    
entry into any
settlement of any material pending or threatened litigation;

 

(k)                                 
incurrence of any
indebtedness, liabilities, claims, commitments or obligations (including
indebtedness for borrowed money) in excess of $2,000,000, except for
liabilities for trade or business obligations incurred in connection with the
purchase of goods or services in the Ordinary Course of Business;

 

21

 

(l)                                    
granting of credit to
any customer or distributor on terms or in amounts materially more favorable
than had been extended to that customer or distributor in the past;

 

(m)                              
revaluation of any
Asset (including writing down the value of the Inventory or writing off notes
or accounts receivable), other than in the Ordinary Course of Business; or

 

(n)                                
any action or
omission to take any action that would result in the occurrence of any of the
foregoing.

 

3.16.                       
CONTRACTS; NO DEFAULTS

 

(a)                                 
Schedule 3.16(a) contains an accurate and complete list, and Sellers
have delivered to Buyer accurate and complete copies, of:

 

(i)                                    
each Seller Contract
that involves performance of services or delivery of goods or materials by
Sellers of an amount or value in excess of Two Million dollars ($2,000,000);

 

(ii)                                 
each Seller Contract
that involves performance of services or delivery of goods or materials to
Sellers of an amount or value in excess of Two Million dollars ($2,000,000);

 

(iii)                              
each Seller Contract
that was not entered into in the Ordinary Course of Business and that involves
expenditures or receipts of any Seller in excess of Two Million dollars
($2,000,000);

 

(iv)                             
each Seller Contract
affecting the ownership of, leasing of, title to, use of or any leasehold or
other interest in any real or personal property (except personal property
leases and installment and conditional sales agreements having a value per item
or aggregate payments of less than One Million dollars ($1,000,000) and with a
term of less than one year);

 

(v)                                
each Seller Contract
with any labor union or other employee representative of a group of employees
relating to wages, hours and other conditions of employment;

 

(vi)                             
each Seller Contract
(however named) involving a sharing of profits, losses, costs or liabilities by
any Seller with any other Person;

 

(vii)                          
each Seller Contract,
identified in Section 3.16(a)(i) or (ii) above, containing covenants that
in any way purport to restrict Sellers’ business activity or limit the freedom
of any Seller to engage in any line of business or to compete with any Person;

 

(viii)                       
each Seller Contract
providing for payments to or by any Person based on sales, purchases or
profits, other than direct payments for goods;

 

(ix)                               
each Seller Contract,
identified in Section 3.16(a)(i) or (ii) above, entered into other than in
the Ordinary Course of Business, that contains or

 

22

 

provides for an express undertaking by any Seller to
be responsible for consequential damages;

 

(x)                                  
each Seller Contract
for capital expenditures in excess of Two Million dollars ($2,000,000);

 

(xi)                               
each Seller Contract
not denominated in U.S. dollars;

 

(xii)                            
each Seller Contract,
identified in Section 3.16(a)(i) above, containing any written warranty,
guaranty and/or other similar undertaking with respect to contractual
performance extended by any Seller other than in the Ordinary Course of
Business;

 

(xiii)                         
each power of
attorney of any Seller that is currently effective and outstanding; and

 

(xiv)                        
each amendment,
supplement and modification (whether oral or written) in respect of any of the
foregoing.

 

Schedule 3.16(a) sets forth reasonably complete details
concerning such Contracts, including the parties to the Contracts and the
location of Sellers’ offices where details relating to the Contracts are
located.

 

(b)                                
Except as set forth
in Schedule 3.16(b),
no shareholder of any Seller has or may acquire any rights under, and no
shareholder of any Seller has or may become subject to any obligation or
liability under, any Contract that relates to the business of such Seller or
any of the Assets.

 

(c)                                 
Except as provided in
Section 3.2(c):

 

(i)                                    
each Contract
identified or required to be identified in Schedule 3.16(a)
and which is to be assigned to or assumed by Buyer under this Contract is in
full force and effect and is valid and enforceable in accordance with its
terms;

 

(ii)                                 
each Contract
identified or required to be identified in Schedule 3.16(a)
and which is being assigned to or assumed by Buyer is assignable by Sellers to
Buyer without the consent of any other Person; and

 

(iii)                              
to the Knowledge of
Sellers, no Contract identified or required to be identified in Schedule 3.16(a) and which is to
be assigned to or assumed by Buyer under this Contract will upon completion or
performance thereof have, on the whole, a material adverse effect on the
business, assets or condition of Sellers or the business to be conducted by
Buyer with the Assets.

 

(d)                                
Except as set forth
in Schedule 3.16(d):

 

23

 

(i)                                    
Each Seller is, and
at all times since July 5, 2003, has been, in compliance with all material
applicable terms and requirements of each Seller Contract set forth in Schedule 3.16(a) which is being
assumed by Buyer;

 

(ii)                                 
each other Person
that has or had any obligation or liability under any Seller Contract set forth
in Schedule 3.16(a)
which is being assigned to Buyer is, and at all times since July 5, 2003,
has been, in full compliance with all material applicable terms and
requirements of such Contract;

 

(iii)                              
no event has occurred
or circumstance exists that (with or without notice or lapse of time) may
contravene, conflict with or result in a Breach of, or give any Seller or other
Person the right to declare a default or exercise any remedy under, or to
accelerate the maturity or performance of, or payment under, or to cancel,
terminate or modify, any Seller Contract set forth in Schedule 3.16(a) that is being
assigned to or assumed by Buyer;

 

(iv)                             
no material event has
occurred or circumstance exists under or by virtue of any Contract set forth in
Schedule 3.16(a) that
(with or without notice or lapse of time) would cause the creation of any
Encumbrance affecting any of the Assets; and

 

(v)                                
Each Seller has not
given to or received from any other Person, at any time since July 5, 2003,
any notice or other communication (whether oral or written) regarding any
actual, alleged, possible or potential material violation or Breach of, or
default under, any Contract set forth in Schedule 3.16(a)
which is being assigned to or assumed by Buyer.

 

(e)                                 
There are no
renegotiations of, attempts to renegotiate or outstanding rights to renegotiate
any material amounts paid or payable to any Seller under current or completed
Contracts set forth in Schedule 3.16(a)
with any Person having the contractual or statutory right to demand or require
such renegotiation and no such Person has made written demand for such
renegotiation.

 

(f)                                   
Each Contract
relating to the sale, design, manufacture or provision of products or services
by each Seller has been entered into in the Ordinary Course of Business of such
Seller and has been entered into without the commission of any act alone or in
concert with any other Person, or any consideration having been paid or
promised, that is or would be in material violation of any Legal Requirement.

 

3.17.                       
INSURANCE

 

(a)                                 
Sellers have
delivered to Buyer:

 

(i)                                    
accurate and complete
copies of all policies of insurance (and correspondence relating to coverage
thereunder) to which each Seller is a party or under which each Seller is or
has been covered at any time since July 5, 2003, a list of which is
included in Schedule 3.17(a);

 

24

 

(ii)                                 
accurate and complete
copies of all pending applications by each Seller for policies of insurance;
and

 

(iii)                              
any statement by the
auditor of Sellers’ financial statements or any consultant or risk management
advisor with regard to the adequacy of Sellers’ coverage or of the reserves for
claims.

 

(b)                                
Schedule 3.17(b) describes:

 

(i)                                    
any self-insurance arrangement
by or affecting Sellers, including any reserves established thereunder;

 

(ii)                                 
any Contract or
arrangement identified in Section 3.16(a), other than a policy of
insurance, for the transfer or sharing of any risk to which any Seller is a
party or which involves the business of Sellers; and

 

(iii)                              
all obligations of
Sellers to provide insurance coverage to Third Parties (for example, under
Leases or service agreements) and identifies the policy under which such
coverage is provided.

 

(c)                                 
Except as set forth
in Schedule 3.17(c):

 

(i)                                    
all policies of
insurance to which any Seller is a party or that provide coverage to any
Seller:

 

(A)                             
are valid,
outstanding and enforceable;

(B)                               
are issued by an
insurer that is financially sound and reputable;

(C)                               
taken together,
provide adequate insurance coverage for the Assets and the operations of
Sellers for all risks to which Sellers are normally exposed; and

(D)                              
are sufficient for
compliance with all material Legal Requirements and Seller Contracts;

 

(ii)                                 
No Seller has
received (A) any refusal of coverage or any notice that a defense will be
afforded with reservation of rights or (B) any notice of cancellation or any
other indication that any policy of insurance is no longer in full force or
effect or that the issuer of any policy of insurance is not willing or able to
perform its obligations thereunder;

 

(iii)                              
Each Seller has paid
all premiums due, and has otherwise performed all of its material obligations,
under each policy of insurance to which it is a party or that provides coverage
to such Seller; and

 

(iv)                             
Each Seller has given
notice to the insurer of all material claims that may be insured thereby.

 

25

 

3.18.                       
ENVIRONMENTAL MATTERS

 

Except as disclosed in Schedule 3.18:

 

(a)                                 
Each Seller is, and
at all times has been, in full compliance with, and has not been and is not in
violation of or liable under, any Environmental Law that would have a material
adverse effect on the Assets or the business of Sellers. Each Seller has no
basis to expect, nor has any Seller or any other Person for whose conduct it is
or may be held to be responsible, received any actual or threatened order,
notice or other communication from (i) any Governmental Body or private citizen
acting in the public interest or (ii) the current or prior owner or operator of
any Facilities, of any actual or potential violation or failure to comply with
any Environmental Law, that would have a material adverse effect on the Assets
or the business of Sellers, or of any actual or threatened obligation to
undertake or bear the cost of any Environmental, Health and Safety Liabilities
with respect to any Facility or other property or asset (whether real, personal
or mixed) in which any Seller has or had an interest, or with respect to any
property or Facility at or to which Hazardous Materials were generated,
manufactured, refined, transferred, imported, used or processed by any Seller
or any other Person for whose conduct it is or may be held responsible, or from
which Hazardous Materials have been transported, treated, stored, handled,
transferred, disposed, recycled or received.

 

(b)                                
There are no pending
or, to the Knowledge of Sellers, threatened claims, Encumbrances, or other
restrictions of any nature resulting from any Environmental, Health and Safety
Liabilities or arising under or pursuant to any Environmental Law with respect
to or affecting any Facility or any other property or asset (whether real,
personal or mixed) in which any Seller has or had an interest, that would have
a material adverse effect on the Assets or the business of Sellers.

 

(c)                                 
Each Seller has no
Knowledge of or any basis to expect, nor has it, or any other Person for whose
conduct it is or may be held responsible, received any citation, directive,
inquiry, notice, Order, summons, warning or other communication that relates to
Hazardous Activity, Hazardous Materials, or any alleged, actual, or potential
violation or failure to comply with any Environmental Law, that would have a
material adverse effect on the Assets or the business of Sellers, or of any
alleged, actual, or potential obligation to undertake or bear the cost of any
Environmental, Health and Safety Liabilities with respect to any Facility or
property or asset (whether real, personal or mixed) in which any Seller has or
had an interest, or with respect to any property or facility to which Hazardous
Materials generated, manufactured, refined, transferred, imported, used or
processed by any Seller or any other Person for whose conduct it is or may be
held responsible, have been transported, treated, stored, handled, transferred,
disposed, recycled or received.

 

(d)                                
Neither any of
Sellers nor any other Person for whose conduct it is or may be held responsible
has any Environmental, Health and Safety Liabilities with respect to any
Facility or, to the Knowledge of Sellers, with respect to any other property or

 

26

 

asset (whether real, personal or mixed) in which
Sellers (or any predecessor) have or had an interest, that would have a
material adverse effect on the Assets or the business of Sellers.

 

(e)                                 
There are no
Hazardous Materials present on or in the Environment at any Facility, including
any Hazardous Materials contained in barrels, aboveground or underground
storage tanks, landfills, land deposits, dumps, equipment (whether movable or
fixed) or other containers, either temporary or permanent, and deposited or
located in land, water, sumps, or any other part of the Facility, or
incorporated into any structure therein or thereon, that would have a material
adverse effect on the Assets or the business of Sellers. Neither any of Sellers
nor any Person for whose conduct it is or may be held responsible, or to the
Knowledge of Sellers, any other Person, has permitted or conducted, or is aware
of, any Hazardous Activity conducted with respect to any Facility or any other
property or assets (whether real, personal or mixed) in which Sellers have or
had an interest except in full compliance with all applicable Environmental
Laws.

 

(f)                                   
There has been no
Release or, to the Knowledge of Sellers, Threat of Release, of any Hazardous
Materials at or from any Facility or at any other location where any Hazardous
Materials were generated, manufactured, refined, transferred, produced,
imported, used, or processed from or by any Facility, or from any other
property or asset (whether real, personal or mixed) in which Sellers have or
had an interest, whether by Sellers or any other Person, that would have a
material adverse effect on the Assets or the business of Sellers.

 

(g)                                
Each Seller has
delivered to Buyer true and complete copies and results of any reports,
studies, analyses, tests, or monitoring possessed or initiated by Sellers pertaining
to Hazardous Materials or Hazardous Activities in, on, or under the Facilities,
or concerning compliance, by Sellers or any other Person for whose conduct it
is or may be held responsible, with Environmental Laws.

 

3.19.                       
EMPLOYEES

 

(a)                                 
Schedule 3.19(a) contains a complete and accurate list of each Active
Employee (excluding employees provided by employee leasing or similar
companies), current director, and current and regularly engaged independent
contractor and consultant of Sellers and information, including : employer;
name; job title; date of hiring or engagement; current compensation paid or
payable and existence of employment, non-compete and/or confidentiality
agreement, if any (the “Non-compete Contracts”).

 

(b)                                
Schedule 3.19(b) contains a complete and accurate list of the
following information for each retired employee or director of Sellers, or
their dependents, receiving benefits or scheduled to receive benefits in the
future: name; pension benefits; pension option election; retiree medical
insurance coverage; retiree life insurance coverage; and other benefits.

 

(c)                                 
Schedule 3.19(c) states the number of employees terminated by Sellers
since July, 2002, and contains a complete and accurate list of the following
information

 

27

 

for each employee of Sellers who has been terminated
or laid off, or whose hours of work have been reduced by more than fifty
percent (50%) by Sellers, in the six (6) months prior to the date of this
Contract: (i) the date of such termination, layoff or reduction in hours; (ii)
the reason for such termination, layoff or reduction in hours and (iii) the
location to which the employee was assigned.

 

(d)                                
Each Seller has not
violated the WARN Act or any similar state or local Legal Requirement. 
During the ninety (90) day period prior to the date of this Contract, Sellers
have terminated forty-three (43) employees.

 

(e)                                 
To the Knowledge of
Sellers, no officer, director, agent, employee, consultant, or contractor of
Sellers is bound by any Contract that purports to limit the ability of such
officer, director, agent, employee, consultant, or contractor (i) to engage in
or continue or perform any conduct, activity, duties or practice relating to
the business of Sellers or (ii) to assign to Sellers or to any other Person any
rights to any invention, improvement, or discovery. To the Knowledge of
Sellers, no former or current employee of Sellers is a party to, or is
otherwise bound by, any Contract that in any way adversely affected, affects,
or will affect the ability of Sellers or Buyer to conduct the business as
heretofore carried on by Sellers.

 

3.20.                       
LABOR DISPUTES; COMPLIANCE

 

(a)                                 
Each Seller has
complied in all respects with all material Legal Requirements relating to
employment practices, terms and conditions of employment, equal employment
opportunity, nondiscrimination, immigration, wages, hours, benefits, collective
bargaining, the payment of social security and similar Taxes and occupational
safety and health.  Each Seller is not liable for the payment of any
Taxes, fines, penalties, or other amounts, however designated, for failure to
comply with any of the foregoing Legal Requirements.

 

(b)                                
Except as disclosed
in Schedule 3.20(b),
(i) no Seller has been, and is not now, a party to any collective bargaining
agreement or other labor contract; (ii) since July 5, 2003, there has not
been, there is not presently pending or existing, and to Sellers’ Knowledge
there is not threatened, any strike, slowdown, picketing, work stoppage or
employee grievance process involving Sellers; (iii) to Sellers’ Knowledge no
event has occurred or circumstance exists that could provide the basis for any
work stoppage or other labor dispute; (iv) there is not pending or, to Sellers’
Knowledge, threatened against or affecting any Sellers any Proceeding relating
to the alleged violation of any Legal Requirement pertaining to labor relations
or employment matters, including any charge or complaint filed with the
National Labor Relations Board or any comparable Governmental Body, and there
is no organizational activity or other labor dispute against or affecting
Sellers or the Facilities; (v) no application or petition for an election of or
for certification of a collective bargaining agent is pending; (vi) no
grievance or arbitration Proceeding exists that might have an adverse effect
upon any Sellers or the conduct of its business; (vii) there is no lockout of
any employees by any Sellers, and no such action is contemplated by any
Sellers; and (viii) to Sellers’ Knowledge there has been no charge of
discrimination filed against or threatened

 

28

 

against any Sellers with the Equal Employment
Opportunity Commission or similar Governmental Body.

 

3.21.                       
INTELLECTUAL PROPERTY ASSETS

 

(a)                                 
The term
“Intellectual Property Assets” means all intellectual property owned or
licensed (as licensor or licensee) by Sellers in which any Seller has a
proprietary interest, including:

 

(i)                                    
Sellers’ names, all
assumed fictional business names, trade names, registered and unregistered
trademarks, service marks and applications (collectively, “Marks”);

 

(ii)                                 
all patents, patent
applications and inventions and discoveries that may be patentable;

 

(iii)                              
all registered and
unregistered copyrights in both published works and unpublished works;

 

(iv)                             
all rights in
internet web sites and internet domain names presently used by any Sellers; and

 

(v)                                
all know-how, trade
secrets, confidential or proprietary information, customer lists, Software,
technical information, data, process technology, plans, drawings and blue
prints (collectively, “Trade Secrets”).

 

(b)                                
Schedule 3.21(b) contains a complete and accurate list and summary
description, including any royalties paid or received by Sellers, and each
Seller has delivered to Buyer accurate and complete copies, of all Seller
Contracts relating to the Intellectual Property Assets, except for any license
implied by the sale of a product and perpetual, paid-up licenses for commonly
available Software programs with a value of less than $2,000,000 under which
such Seller is the licensee. There are no outstanding and, to Sellers’
Knowledge, no threatened disputes or disagreements with respect to any such
Contract.

 

(c)

 

(i)                                    
Except as set forth
in Schedule 3.21(c)(i),
the Intellectual Property Assets are all those necessary for the operation of
Sellers’ business as it is currently conducted. Sellers are the owners or
licensees of all right, title and interest in and to each of the Intellectual
Property Assets, free and clear of all Encumbrances, and have the right to use
without payment to a Third Party all of the Intellectual Property Assets, other
than in respect of licenses listed in Schedule 3.21(c)(i).

 

(ii)                                 
Set forth in Schedule 3.21(c)(ii) is a list of
all former and current employees of each Seller who have executed written
Contracts with such Seller that purport to preserve the confidentiality of
Sellers’ rights to any

 

29

 

inventions, improvements, discoveries or information
relating to the business of such Seller.

 

(d)

 

(i)                                    
Schedule 3.21(d)(i)  contains a complete and accurate list and
summary description of all Marks.

 

(ii)                                 
Except as set forth
in Schedule 3.21(d)(i),
all Marks have been registered with the United States Patent and Trademark
Office, are currently in compliance with all formal Legal Requirements
(including the timely post-registration filing of affidavits of use and
incontestability and renewal applications), are valid and enforceable and are
not subject to any maintenance fees or taxes or actions falling due within
ninety (90) days after the Closing Date.

 

(iii)                              
No Mark has been or
is now involved in any opposition, invalidation or cancellation Proceeding and,
to Sellers’ Knowledge, no such action is threatened with respect to any of the
Marks.

 

(iv)                             
To Sellers’
Knowledge, there is no potentially interfering trademark or trademark application
of any other Person.

 

(v)                                
No Mark is infringed
or, to Sellers’ Knowledge, has been challenged or threatened in any way. None
of the Marks used by Sellers infringes or is alleged to infringe any trade
name, trademark or service mark of any other Person.

 

(vi)                             
All products and
materials containing a Mark bear the proper federal registration notice where
permitted by law.

 

3.22.                       
COMPLIANCE WITH THE FOREIGN CORRUPT PRACTICES ACT AND
EXPORT CONTROL AND ANTIBOYCOTT LAWS

 

(a)                                 
Sellers and their
Representatives have not, to obtain or retain business, directly or indirectly
offered, paid or promised to pay, or authorized the payment of, any money or
other thing of value or any commission payment in any amount, to any individual
or entity, that would be in violation of the Foreign Corrupt Practices Act.

 

(b)                                
Sellers have at all
times been in compliance with all material Legal Requirements relating to
export control and trade embargoes.  No product sold or service provided
by Sellers during the last five (5) years has been, directly or indirectly,
sold to or performed on behalf of Cuba, Iraq, Iran, Libya or North Korea.

 

(c)                                 
Sellers have not
violated the antiboycott prohibitions contained in 50 U.S.C. sect. 2401 et seq.
or taken any action that can be penalized under Section 999 of the
Code.  During the last five (5) years, Sellers have not been a party to,
are not beneficiaries under and have not performed any service or sold any
product under

 

30

 

any Seller Contract (except for Seller Contracts with
the United States Government) under which a product has been sold to customers
in Bahrain, Iraq, Jordan, Kuwait, Lebanon, Libya, Oman, Quatar, Saudi Arabia,
Sudan, Syria, United Arab Emirates or the Republic of Yemen.

 

(d)                                
Each transaction of
each Seller is properly and accurately recorded on the books and Records of
such Seller, and each document upon which entries in such Seller’s books and
Records are based is complete and accurate in all material respects. Each
Seller maintains a system of internal accounting controls adequate to insure
that such Seller maintains no off-the-books accounts and that Sellers’ assets
are used only in accordance with such Seller’s management directives.

 

3.23.                       
RELATIONSHIPS WITH RELATED PERSONS

 

Except as disclosed in Schedule 3.23, neither any Seller nor its
shareholders nor any Related Person of any of them has, or since July 5,
2003, has had, any interest in any property (whether real, personal or mixed
and whether tangible or intangible) used in or pertaining to Sellers’ business.
Neither any Seller nor its shareholders nor any Related Person of any of them
owns, or since July 5, 2003, has owned, of record or as a beneficial owner
an equity interest or any other financial or profit interest in any Person that
has (a) had business dealings or a material financial interest in any
transaction with any Seller other than business dealings or transactions
disclosed in Schedule 3.23,
each of which has been conducted in the Ordinary Course of Business with such
Seller at substantially prevailing market prices and on substantially
prevailing market terms or (b) engaged in competition with any Seller with
respect to any line of the products or services of such Seller (a “Competing
Business”) in any market presently served by such Seller, except for ownership
of less than one percent (1%) of the outstanding capital stock of any Competing
Business that is publicly traded on any recognized exchange or in the
over-the-counter market. Except as set forth in Schedule 3.23, neither any Seller nor any shareholder
nor any Related Person of any of them is a party to any Contract with, or has
any claim or right against, any Seller.

 

3.24.                       
BROKERS OR FINDERS

 

Except as disclosed in Schedule 3.24, neither Sellers nor any of their
Representatives have incurred any obligation or liability, contingent or
otherwise, for brokerage or finders’ fees or agents’ commissions or other
similar payments in connection with the sale of Sellers’ business and Assets or
the Contemplated Transactions.

 

3.25.                       
SOLVENCY

 

(a)                                 
Each Seller is not
now insolvent and will not be rendered insolvent by any of the Contemplated
Transactions. As used in this section, “insolvent” means that the sum of the
debts and other probable Liabilities of each Seller exceeds the present fair
saleable value of such Seller’s assets.

 

(b)                                
Immediately after
giving effect to the consummation of the Contemplated Transactions: (i) each
Seller will be able to pay its Liabilities as they become due in the usual
course of its business; (ii) each Seller will not have unreasonably 

 

31

 

small capital with which to conduct its present or
proposed business; (iii) each Seller will have assets (calculated at fair
market value) that exceed its Liabilities; and (iv) taking into account all
pending and threatened litigation, final judgments against such Seller in
actions for money damages are not reasonably anticipated to be rendered at a
time when, or in amounts such that, each Seller will be unable to satisfy any
such judgments promptly in accordance with their terms (taking into account the
maximum probable amount of such judgments in any such actions and the earliest
reasonable time at which such judgments might be rendered) as well as all other
obligations of such Seller. The cash available to each Seller, after taking
into account all other anticipated uses of the cash, will be sufficient to pay
all such debts and judgments promptly in accordance with their terms.

 

3.26.                       
DISCLOSURE

 

(a)                                 
No representation or
warranty or other statement made by any Seller in this Contract, the
certificates delivered pursuant to Section 2.7(a) or otherwise in
connection with the Contemplated Transactions contains or will contain any
untrue statement or will omit any statement of a material fact necessary in
order to make the statement contained herein or therein, in light of
circumstances in which they were made, not misleading.

 

(b)                                
Each Seller does not
have Knowledge of any fact that has specific application to such Seller (other
than general economic or industry conditions) and that may materially adversely
affect the assets, business, prospects, financial condition or results of
operations of Sellers that has not been set forth in this Contract.

 

3.27.                       
S
CORP STATUS

 

At all times since January 1, 1998, Sellers have
been validly electing “S” Corporations within the meaning of Section 1361
and 1362 of the Code and will be S Corporations up to and including the
Effective Time.

 

4.                                      
Representations and Warranties of Buyer

 

Buyer represents and warrants to Sellers as of the
date hereof and as of the Closing Date as follows:

 

4.1.                             
ORGANIZATION AND GOOD STANDING

 

Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, with
full corporate power and authority to conduct its business as it is now
conducted.

 

4.2.                             
AUTHORITY; NO CONFLICT

 

(a)                                 
This Contract
constitutes the legal, valid and binding obligation of Buyer, enforceable
against Buyer in accordance with its terms. Upon the execution and delivery by
Buyer of the Assignment and Assumption Agreement, and each other

 

32

 

agreement to be executed or delivered by Buyer at
Closing (collectively, the “Buyer’s Closing Documents”), each of the Buyer’s
Closing Documents will constitute the legal, valid and binding obligation of
Buyer enforceable against Buyer in accordance with its respective terms. Buyer
has the absolute and unrestricted right, power and authority to execute and
deliver this Contract and the Buyer’s Closing Documents and to perform its
obligations under this Contract and the Buyer’s Closing Documents, and such
action has been duly authorized by all necessary corporate action.

 

(b)                                
Neither the execution
and delivery of this Contract by Buyer nor the consummation or performance of
any of the Contemplated Transactions by Buyer will give any Person the right to
prevent, delay or otherwise interfere with any of the Contemplated Transactions
pursuant to:

 

(i)                                    
any provision of
Buyer’s Governing Documents;

 

(ii)                                 
any resolution
adopted by the board of directors or the shareholders of Buyer;

 

(iii)                              
any Legal Requirement
or Order to which Buyer may be subject; or

 

(iv)                             
any Contract to which
Buyer is a party or by which Buyer may be bound.

 

Buyer is not and will not be required to obtain any
Consent from any Person in connection with the execution and delivery of this
Contract or the consummation or performance of any of the Contemplated
Transactions.

 

4.3.                             
CERTAIN PROCEEDINGS

 

There is no pending Proceeding that has been commenced
against Buyer and that challenges, or may have the effect of preventing,
delaying, making illegal or otherwise interfering with, any of the Contemplated
Transactions. To Buyer’s Knowledge, no such Proceeding has been threatened.

 

4.4.                             
BROKERS
OR FINDERS

 

Neither Buyer nor any of its Representatives have
incurred any obligation or liability, contingent or otherwise, for brokerage or
finders’ fees or agents’ commissions or other similar payment in connection
with the Contemplated Transactions.

 

4.5.                             
INSURANCE

 

On or before the Closing Date, Buyer will obtain and
have in effect, for a period of at least two (2) years from the Effective Time,
with an insurer that is financially sound and reputable, policies of insurance
that, taken together, provide adequate insurance coverage for the Assets and
the operations of Sellers’ (or Buyer’s after Closing) business for all risks to
which a party operating Sellers’ (or Buyer’s after Closing) business are
normally exposed, naming Sellers as additional insureds at Sellers’ expense for
any incremental premium charge solely attributable to naming Sellers as
additional insureds.

 

33

 

4.6.                             
BUYER’S DUE DILIGENCE

 

Buyer acknowledges that, except for the matters that
are expressly covered by the provisions of this Contract, Buyer is relying on
its own investigation and analysis in entering into the Contract and the
Contemplated Transactions.  Buyer is an informed and sophisticated
participant in the Contemplated Transactions and has undertaken such
investigation, and has been provided with and has evaluated such documents and
information, as it has deemed necessary with the execution, delivery and
performance of this Contract.  Buyer acknowledges that it is acquiring the
Assets without any representation or warranty, express or implied, by Sellers
or any of its Related Parties except as expressly set forth herein.  In
furtherance of the foregoing, and not in limitation thereof, Buyer acknowledges
that no representation or warranty, express or implied, of Sellers or any of
its advisors, including, without limitation, Quarterdeck Investment Partners,
LLC, or any of their representatives, with respect to the Assets, including,
without limitation, any financial projection or forecast delivered to Buyer
with respect to the revenues or profitability which may arise from the
operation of the Assets either before or after the Closing Date, shall form the
basis of any claim against Sellers or any of its advisors with respect thereto
or with respect to any related matter.

 

5.                                      
Covenants of Sellers Prior to Closing

 

5.1.                             
ACCESS AND INVESTIGATION

 

Between the date of this Contract and the Closing Date,
and upon reasonable advance notice received from Buyer, Sellers shall (a)
afford Buyer and its Representatives and prospective lenders and their
Representatives (collectively, “Buyer Group”) full and free access, during
regular business hours, to Sellers’ personnel, properties (including subsurface
testing), Contracts, Governmental Authorizations, books and Records and other
documents and data, such rights of access to be exercised in a manner that does
not unreasonably interfere with the operations of Sellers; (b) furnish Buyer
Group with copies (at Buyer’s expense for all non-employee related copying
costs) of all such Contracts, Governmental Authorizations, books and Records
and other existing documents and data as Buyer may reasonably request; (c) furnish
Buyer Group with such additional financial, operating and other relevant data
and information as Buyer may reasonably request (at Buyer’s expense for all
non-employee related costs to comply with such request); and (d) otherwise
cooperate and assist, to the extent reasonably requested by Buyer, with Buyer’s
investigation of the properties, assets and financial condition related to
Sellers. In addition, Buyer shall have the right to have the Leasehold Real
Property and Tangible Personal Property inspected by Buyer Group, at Buyer’s
sole cost and expense, for purposes of determining the physical condition and
legal characteristics of the Leasehold Real Property and Tangible Personal
Property. In the event subsurface or other destructive testing is recommended
by any of Buyer Group, Buyer shall be permitted to have the same performed at
Buyer’s expense, and Buyer shall be liable for all damages resulting from such
testing.

 

5.2.                             
OPERATION OF THE BUSINESS OF SELLERS

 

Between the date of this Contract and the Closing,
each Seller shall :

 

(a)                                 
conduct its business
only in the Ordinary Course of Business;

 

34

 

(b)                                
except as otherwise
directed by Buyer in writing, and without making any commitment on Buyer’s
behalf, use its Best Efforts to preserve intact its current business
organization, keep available the services of its officers, employees and agents
and maintain its relations and good will with suppliers, customers, landlords,
creditors, employees, agents and others having business relationships with it;

 

(c)                                 
confer with Buyer on
a weekly basis about operational decisions of a material nature;

 

(d)                                
otherwise report
periodically to Buyer concerning the status of its business, operations and
finances;

 

(e)                                 
make no material
changes in management personnel without prior consultation with Buyer;

 

(f)                                   
maintain the Assets
in a state of repair and condition that complies with Legal Requirements and is
consistent with the requirements and normal conduct of such Seller’s business;

 

(g)                                
keep in full force
and effect, without amendment, all material rights relating to such Seller’s
business;

 

(h)                                
comply with all Legal
Requirements and contractual obligations applicable to the operations of such
Seller’s business;

 

(i)                                    
continue in full
force and effect the insurance coverage under the policies set forth in Schedule 3.17 or substantially
equivalent policies;

 

(j)                                    
reasonably cooperate
with Buyer and assist Buyer in identifying the Governmental Authorizations
required by Buyer to operate the business from and after the Closing Date and
either transferring existing Governmental Authorizations of such Seller to
Buyer, where permissible, or obtaining new Governmental Authorizations for
Buyer;

 

(k)                                 
upon request from
time to time, execute and deliver all documents, make all truthful oaths,
testify in any Proceedings and do all other acts that may be reasonably
necessary or desirable in the reasonable opinion of Buyer to consummate the
Contemplated Transactions, all without further consideration; and

 

(l)                                    
maintain all books
and Records of such Seller relating to such Seller’s business in the Ordinary
Course of Business.

 

35

 

5.3.                             
NEGATIVE COVENANT

 

Except as otherwise expressly permitted herein,
between the date of this Contract and the Closing Date, Sellers shall not,
without the prior written Consent of Buyer, (a) take any affirmative action, or
fail to take any reasonable action within its control, as a result of which any
of the changes or events listed in Sections 3.11, 3.13, 3.15 or 3.17 would be
likely to occur; (b) make any modification to any material Contract or
Governmental Authorization without disclosing same to Buyer; (c) allow the
levels of raw materials, supplies or other materials included in the
Inventories to vary materially from the levels customarily maintained; or (d)
enter into any compromise or settlement of any litigation, proceeding or
governmental investigation relating to the Assets, the business of Sellers or
the Assumed Liabilities.

 

5.4.                             
REQUIRED APPROVALS

 

As promptly as practicable after the date of this
Contract, Sellers shall make all filings required by Legal Requirements to be
made by it in order to consummate the Contemplated Transactions (including all
filings under the HSR Act). Sellers also shall cooperate with Buyer and its
Representatives with respect to all filings that Buyer elects to make or,
pursuant to Legal Requirements, shall be required to make in connection with
the Contemplated Transactions. Sellers also shall cooperate with Buyer and its
Representatives in obtaining all Material Consents (including taking all
actions requested by Buyer to cause early termination of any applicable waiting
period under the HSR Act).

 

5.5.                             
NOTIFICATION

 

Between the date of this Contract and the Closing,
Sellers shall promptly notify Buyer in writing if it becomes aware of (a) any
fact or condition that causes or constitutes a Breach of any of Sellers’
representations and warranties made as of the date of this Contract or (b) the
occurrence after the date of this Contract of any fact or condition that
Sellers reasonably believe would or be reasonably likely to (except as
expressly contemplated by this Contract) cause or constitute a Breach of any
such representation or warranty had that representation or warranty been made
as of the time of the occurrence of, or Sellers’ discovery of, such fact or
condition.  During the same period, Sellers also shall promptly notify
Buyer of the occurrence of any Breach of any covenant of Sellers in this
Article 5 or of the occurrence of any event that Sellers reasonably
believe may make the satisfaction of the conditions in Article 7
impossible or unlikely.

 

5.6.                             
NO
NEGOTIATION

 

Between the date of this Contract and the Closing or
until such time as this Contract shall be terminated pursuant to
Section 9.1, Sellers shall not authorize or permit their Representatives
to, directly or indirectly (i) solicit, initiate or encourage the submission of
inquiries, proposals or offers from any Person or a group of Persons relating
to any acquisition or purchase of any assets of, or any equity interest in, any
Seller, or any tender or exchange offer, merger, consolidation, business
combination, recapitalization, restructuring, spin-off, liquidation,
dissolution or similar transaction involving, directly or indirectly, any
Seller, or any of their respective assets, other than transactions contemplated
by this Contract (each a “Transaction Proposal”), (ii) participate in any
discussions or negotiations regarding any Transaction Proposal or furnish
information about any Seller to any Person except to (x) lenders or other
parties to agreements with any of

 

36

 

Sellers (for the specific purpose set forth in such
agreements, which in no event shall include a Transaction Proposal) and (y)
buyer or its Representatives, (iii) otherwise cooperate in any way with, or
assist or participate in, facilitate or encourage, any effort or attempt by any
other Person to make or enter into a Transaction Proposal, or (iv) accept,
approve or authorize, or enter into any agreement concerning any Transaction
Proposal or dispose of any equity interest in any of Sellers.  Sellers
shall use Best Efforts to cause their affiliates, agents, officers, directors,
investment bankers, advisors and representatives to abide by the terms of this
Section 5.6.  In the event that any Seller receives or becomes aware
of any Transaction Proposal, it shall promptly notify Buyer in writing of such
communication and keep Buyer informed of any subsequent developments in connection
therewith.

 

5.7.                             
BEST
EFFORTS

 

Each Seller shall use its Best Efforts to cause the
conditions in Article 7 and Section 8.3 to be satisfied.

 

5.8.                             
INTERIM FINANCIAL STATEMENTS

 

Until the Closing Date, Sellers shall deliver to Buyer
within forty-five (45) days after the end of each month a copy of the operating
statements of Sellers, internally prepared for the use of management consistent
with Sellers historic practice, for such month prepared in a manner and
containing information consistent with Sellers’ current practices and certified
by Sellers’ chief executive officer as to compliance with Section 3.3.

 

5.9.                             
CHANGE
OF NAME

 

On or before the Closing Date, each Seller shall (a)
amend its Governing Documents and take all other actions necessary to change
its name to one sufficiently dissimilar to such Seller’s present name, in
Buyer’s judgment, to avoid confusion and (b) take all actions reasonably
requested by Buyer to enable Buyer to change its name to such Seller’s present
name.

 

5.10.                       
PAYMENT OF LIABILITIES

 

Each Seller shall pay or otherwise satisfy in the
Ordinary Course of Business all of its Liabilities and obligations. Buyer and
each Seller hereby waive compliance with the bulk-transfer provisions of the
Uniform Commercial Code (or any similar law) (“Bulk Sales Laws”) in connection
with the Contemplated Transactions.

 

5.11.                       
TRANSFERRING SUBSIDIARIES

 

To the extent any of the Assets are owned by
Subsidiaries of any Seller, such Seller shall cause such Subsidiaries to sell,
convey, transfer, assign and deliver all of such Subsidiaries’ right, title and
interest to such Assets to Buyer at the Closing.  Each such Subsidiary
shall be deemed a “Seller” for purposes of this Contract.

 

37

 

5.12.                       
S CORP STATUS

 

Until the Closing Date, Sellers will not revoke their
elections to be taxed as S corporations within the meaning of Code Sections
1361 and 1362, and will not take or allow any action that would result in the
termination of their status as validly electing S corporations within the
meaning of Code Sections 1361 and 1362.

 

5.13.                       
IDENTIFICATION OF TEXAS ASSET

 

On or before the Closing Date, Sellers shall identify
all assets of TWCRADLP to the extent Sellers have not already done so.

 

6.                                      
Covenants of Buyer Prior to Closing

 

6.1.                             
REQUIRED
APPROVALS

 

As promptly as practicable after the date of this
Contract, Buyer shall make, or cause to be made, all filings required by Legal
Requirements (including all filings under the HSR Act) to be made by it to
consummate the Contemplated Transactions. Buyer also shall cooperate, and cause
its Related Persons to cooperate, with Sellers (a) with respect to all filings
Sellers shall be required by Legal Requirements to make and (b) in obtaining
all Consents identified in Schedule 3.2(c),
provided, however, that Buyer shall not be required to dispose of or make any
change to its business, expend any material funds or incur any other burden in
order to comply with this Section 6.1.

 

6.2.                             
BEST
EFFORTS

 

Buyer shall use its Best Efforts to cause the
conditions in Article 8 and Section 7.3 to be satisfied; provided
however, Buyer shall not be required to expend any funds in connection with
obtaining the consents or approvals required in Section 7.3.

 

7.                                      
Conditions Precedent to Buyer’s Obligation to Close

 

Buyer’s obligation to purchase the Assets and to take
the other actions required to be taken by Buyer at the Closing is subject to
the satisfaction, at or prior to the Closing, of each of the following
conditions (any of which may be waived by Buyer, in whole or in part):

 

7.1.                             
ACCURACY OF REPRESENTATIONS

 

(a)                                 
All of Sellers’
representations and warranties in this Contract (considered collectively), and
each of these representations and warranties (considered individually), shall
have been accurate in all material respects as of the date of this Contract,
and shall be accurate in all material respects as of the time of the Closing as
if then made.

 

(b)                                
Each of the
representations and warranties in Sections 3.2(a), 3.3 and 3.4, and each of the
representations and warranties in this Contract that contains an express
materiality qualification, shall have been accurate in all respects as of the
date of

 

38

 

this Contract, and shall be accurate in all respects
as of the time of the Closing as if then made.

 

7.2.                             
SELLERS’ PERFORMANCE

 

All of the covenants and obligations that each Seller
is required to perform or to comply with pursuant to this Contract at or prior
to the Closing (considered collectively), and each of these covenants and
obligations (considered individually), shall have been duly performed and
complied with in all material respects.

 

7.3.                             
CONSENTS

 

Each of the Consents identified in Schedule 7.3 (the “Material
Consents”) shall have been obtained and shall be in full force and effect.

 

7.4.                             
ADDITIONAL DOCUMENTS

 

Sellers shall have caused the documents and
instruments required by Section 2.7(a) and the following documents to be
delivered (or tendered subject only to Closing) to Buyer:

 

(a)                                 
an opinion of Gary,
Thomasson, Hall & Marks Professional Corporation, dated the Closing Date,
in form and substance mutually satisfactory to Sellers and Buyer;

 

(b)                                
The organizational
documents of each Seller and all amendments thereto, duly certified as of a
recent date by the Secretary of State of the jurisdiction of such Seller’s
organization ;

 

(c)                                 
If requested by
Buyer, any Consents or other instruments that may be required to permit Buyer’s
qualification in each jurisdiction in which any of Sellers are licensed or
qualified to do business under the name “The Wornick Company” or “The Wornick
Company Right Away Division” or “The Wornick Company Right Away Division, L.P.”
or “Right Away Management Corporation” or any derivative thereof;

 

(d)                                
A statement from the
holder of each note and mortgage listed on Schedule 2.4(a)(v),
if any, dated the Closing Date, setting forth the principal amount then
outstanding on the indebtedness represented by such note or secured by such
mortgage, the interest rate thereon and a statement to the effect that the
applicable Seller, as obligor under such note or mortgage, is not in default
under any of the provisions thereof;

 

(e)                                 
Releases of all
Encumbrances on the Assets, other than Permitted Encumbrances, including
releases of each mortgage of record and reconveyances of each deed of trust
with respect to each parcel of real property included in the Assets;

 

(f)                                   
Certificates dated as
of a date not earlier than the fifteenth business day prior to the Closing as
to the good standing of each Seller and payment of all applicable state Taxes
by such Seller, executed by the appropriate officials of the States of

 

39

 

Nevada and Texas and each jurisdiction in which such
Seller is licensed or qualified to do business as a foreign corporation as
specified in Schedule 3.1(a);

 

(g)                                
Any documents that
may exist pertaining to the manufacturing, processing, packaging and assembly
of food products (whether novel or not), invention disclosures, Trade Secrets,
and lists of personnel who develop food processing packages and techniques,
including the design of packages, the development of assembly techniques, the
development of filling methods, and the development of methods for sealing
packages; and

 

(h)                                
Such other documents
as Buyer may reasonably request for the purpose of:

 

(i)                                    
evidencing the
accuracy of any of Sellers’ representations and warranties;

 

(ii)                                 
evidencing the
performance by Sellers of, or the compliance by Sellers with, any covenant or
obligation required to be performed or complied with by Sellers;

 

(iii)                              
evidencing the
satisfaction of any condition referred to in this Article 7; or

 

(iv)                             
otherwise
facilitating the consummation or performance of any of the Contemplated
Transactions.

 

7.5.                             
GOVERNMENTAL AUTHORIZATIONS

 

Except for post-Closing novations referred to in
Section 2.10(a), Buyer shall have received such Governmental
Authorizations as are necessary to allow Buyer to operate the Assets from and
after the Closing and the applicable waiting period under the HSR Act in
connection with the Contemplated Transactions shall have expired.

 

7.6.                             
ENVIRONMENTAL REPORT

 

Buyer shall have obtained, at its expense, within
sixty (60) days from the Effective Date of this Contract, an environmental site
assessment report with respect to Sellers’ Facilities, which report shall be
reasonably acceptable in form and substance to Buyer.

 

7.7.                             
WARN ACT NOTICE PERIODS AND EMPLOYEES

 

(a)                                 
All requisite notice
periods under the Warn Act shall have expired.

 

(b)                                
Substantially all
employees of Sellers shall be available for hiring by Buyer, in its sole
discretion, on and as of the Closing Date, and Buyer shall have hired or
continued the employment of a sufficient number of such employees to prevent
the applicability of the WARN Act to the Contemplated Transactions.

 

7.8.                             
ESOT TRUSTEE APPROVAL

 

This Contract shall have been approved by the ESOT
Trustee as shareholder of Wornick after receipt of a “fairness opinion” from an
investment advisor acceptable to the ESOT Trustee.

 

40

 

7.9.                             
NON-COMPETITION AGREEMENTS

 

The employees of Sellers listed on Schedule 7.9 shall have entered
into non-competition agreements with Buyer, and/or Buyer’s Related Persons who
purchase Assets from any Seller, reflecting essentially the terms set forth in
Section 10.8 and otherwise in form and substance reasonably acceptable to
Buyer and such employees.

 

7.10.                       
MATERIAL ADVERSE CHANGE

 

Since July 5, 2003, except as indicated by the
Interim Balance Sheet, there has not been any material adverse change in the
business, operations, prospects, assets, results of operations or condition
(financial or other) of Sellers, and no event has occurred or circumstance
exists that may result in such a material adverse change.

 

7.11.                       
NO
INJUNCTION

 

There shall not be in effect any Legal Requirement or
any injunction or other Order that (a) prohibits the consummation of the
Contemplated Transactions and (b) has been adopted or issued, or has otherwise
become effective, since the date of this Contract.

 

7.12.                       
EQUITY CONTRIBUTION

 

The five employee-directors of Sellers shall have
agreed to make an equity contribution in Buyer or Buyer’s holding company of
not less than Two Million Dollars ($2,000,000) in the aggregate.

 

8.                                      
Conditions Precedent to Sellers’ Obligation to Close

 

Sellers’ obligation to sell the Assets and to take the
other actions required to be taken by Sellers at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Sellers in whole or in part):

 

8.1.                             
ACCURACY OF REPRESENTATIONS

 

All of Buyer’s representations and warranties in this
Contract (considered collectively), and each of these representations and
warranties (considered individually), shall have been accurate in all material
respects as of the date of this Contract and shall be accurate in all material
respects as of the time of the Closing as if then made.

 

8.2.                             
BUYER’S PERFORMANCE

 

All of the covenants and obligations that Buyer is
required to perform or to comply with pursuant to this Contract at or prior to
the Closing (considered collectively), and each of these covenants and
obligations (considered individually), shall have been performed and complied
with in all material respects.

 

41

 

8.3.                             
CONSENTS

 

Each of the Consents identified in Schedule 8.3 shall have been
obtained and shall be in full force and effect.  Notwithstanding the
foregoing, if any such Consent shall not be obtained by the Closing Date, Buyer
may waive this condition precedent to Closing, provided Buyer also waives any and
all claims it might have against Sellers for breach of this Contract for
failing to obtain any such Consent, and proceed to close the Contemplated
Transactions in the absence of such Consent.

 

8.4.                             
ADDITIONAL DOCUMENTS

 

Buyer shall have caused the documents and instruments
required by Section 2.7(b) and the following documents to be delivered (or
tendered subject only to Closing) to Sellers:

 

(a)                                 
an opinion of Winston
& Strawn LLP, dated the Closing Date, in form and substance mutually
satisfactory to Sellers and Buyer; and

 

(b)                                
such other documents
as Sellers may reasonably request for the purpose of

 

(i)                                    
evidencing the accuracy
of any representation or warranty of Buyer,

 

(ii)                                 
evidencing the
performance by Buyer of, or the compliance by Buyer with, any covenant or
obligation required to be performed or complied with by Buyer, or

 

(iii)                              
evidencing the
satisfaction of any condition referred to in this Article 8.

 

8.5.                             
NO
INJUNCTION

 

There shall not be in effect any Legal Requirement or
any injunction or other Order that (a) prohibits the consummation of the
Contemplated Transactions and (b) has been adopted or issued, or has otherwise
become effective, since the date of this Contract.

 

8.6.                             
ESOT TRUSTEE APPROVAL

 

This Contract shall have been approved by the ESOT
Trustee as shareholder of Wornick after receipt of a “fairness opinion” from an
investment advisor acceptable to the ESOT Trustee.

 

8.7.                             
WARN ACT COMPLIANCE

 

Buyer shall have hired or continued the employment of a
sufficient number of Sellers’ former employees to prevent the applicability of
the WARN Act to the Contemplated Transactions.

 

9.                                      
Termination

 

9.1.                             
TERMINATION EVENTS

 

By notice given prior to or at the Closing, subject to
Section 9.2, this Contract may be terminated as follows:

 

42

 

(a)                                 
by Buyer if a
material Breach of any provision of this Contract shall have been committed by
any Seller and such Breach shall not have been waived by Buyer;

 

(b)                                
by Sellers if a
material Breach of any provision of this Contract shall have been committed by
Buyer and such Breach shall not have been waived by Sellers;

 

(c)                                 
by Buyer if any
condition in Article 7 shall not have been satisfied as of the date
specified for Closing in the first sentence of Section 2.6 or if
satisfaction of such a condition by such date is or shall have become
impossible (other than through the failure of Buyer to comply with its
obligations under this Contract), and Buyer shall have not waived such
condition on or before such date;

 

(d)                                
by Sellers if any
condition in Article 8 shall not have been satisfied as of the date
specified for Closing in the first sentence of Section 2.6 or if
satisfaction of such a condition by such date is or shall have become
impossible (other than through the failure of Sellers to comply with their
obligations under this Contract), and Sellers shall not have waived such
condition on or before such date;

 

(e)                                 
by mutual consent of
Buyer and Sellers;

 

(f)                                   
by Buyer if the
Closing shall not have occurred on or before March 31, 2004, or such later
date as the parties may agree upon, unless Buyer is in material Breach of this
Contract; or

 

(g)                                
by Sellers if the
Closing shall not have occurred on or before March 31, 2004, or such later
date as the parties may agree upon, unless the Sellers are in material Breach
of this Contract.

 

9.2.                             
EFFECT OF TERMINATION

 

Each party’s right of termination under
Section 9.1 is in addition to any other rights it may have under this
Contract or otherwise, and the exercise of such right of termination will not
be an election of remedies. If this Contract is terminated pursuant to
Section 9.1, all obligations of the parties under this Contract will
terminate, except that the obligations of the parties in this Section 9.2
and Articles 12 and 13 (except for those in Section 13.5) will survive,
provided, however, that, if this Contract is terminated because of a Breach of
this Contract by the nonterminating party or because one or more of the
conditions to the terminating party’s obligations under this Contract is not
satisfied as a result of the party’s failure to comply with its obligations
under this Contract, the terminating party’s right to pursue all legal remedies
will survive such termination unimpaired.

 

10.                                
Additional Covenants

 

10.1.                       
EMPLOYEES AND EMPLOYEE BENEFITS

 

(a)                                 
Information on Active
Employees. For the purpose of this Contract, the term “Active Employees” shall
mean all employees employed on the Closing Date by Sellers for their business
who are employed exclusively in Sellers’ business as

 

43

 

currently conducted, including employees on temporary
leave of absence, including family medical leave, military leave, temporary
disability or sick leave, but excluding employees on long-term disability
leave.

 

(b)                                
Employment of Active
Employees by Buyer.

 

(i)                                    
Buyer is not
obligated to hire any Active Employee but may interview all Active Employees.
Buyer will provide Sellers with a list of Active Employees to whom Buyer has
made an offer of employment that has been accepted to be effective on the Closing
Date (the “Hired Active Employees”). Subject to Legal Requirements, Buyer will
have reasonable access to the Facilities and personnel Records (including
performance appraisals, disciplinary actions, grievances and medical Records)
of Sellers for the purpose of preparing for and conducting employment
interviews with all Active Employees and will conduct the interviews as
expeditiously as possible prior to the Closing Date. Access will be provided by
Sellers upon reasonable prior notice during normal business hours. Effective
immediately before the Closing, Sellers will terminate the employment of all of
their Hired Active Employees.

 

(ii)                                 
Neither Sellers nor
their Related Persons shall solicit the continued employment of any Active
Employee (unless and until Buyer has informed Sellers in writing that the
particular Active Employee will not receive any employment offer from Buyer) or
the employment of any Hired Active Employee after the Closing. Buyer shall
inform Sellers promptly of the identities of those Active Employees to whom it
will not make employment offers, and Buyer shall assist Sellers in complying
with the WARN Act, to the extent applicable, as to those Active Employees.

 

(iii)                              
It is understood and
agreed that (A) Buyer’s expressed intention to extend offers of employment as
set forth in this Section 10.1 shall not constitute any commitment,
contract or understanding (expressed or implied) of any obligation on the part
of Buyer to a post-Closing employment relationship of any fixed term or
duration or upon any terms or conditions other than those that Buyer may
establish pursuant to individual offers of employment, and (B) employment
offered by Buyer is “at will” and may be terminated by Buyer or by an employee
at any time for any reason (subject to any written commitments to the contrary
made by Buyer or an employee and Legal Requirements). Nothing in this Contract
shall be deemed to prevent or restrict in any way the right of Buyer to
terminate, reassign, promote or demote any of the Hired Active Employees after
the Closing or to change adversely or favorably the title, powers, duties,
responsibilities, functions, locations, salaries, other compensation or terms
or conditions of employment of such employees.

 

(c)                                 
Salaries and
Benefits.

 

(i)                                    
Sellers shall be
responsible for (A) the payment of all wages and other remuneration due to
Active Employees with respect to their services as

 

44

 

employees of Sellers through the close of business on
the Closing Date, including pro rata bonus payments and all vacation pay earned
prior to the Closing Date; (B) the payment of any termination or severance
payments and the provision of health plan continuation coverage in accordance
with the requirements of COBRA and Sections 601 through 608 of ERISA; and (C)
any and all payments to employees required under the WARN Act.

 

(ii)                                 
Sellers shall be liable
for any claims made or incurred by Active Employees and their beneficiaries
through the Closing Date under the Employee Benefit Plans. For purposes of the
immediately preceding sentence, a charge will be deemed incurred, in the case
of hospital, medical or dental benefits, when the services that are the subject
of the charge are performed and, in the case of other benefits (such as
disability or life insurance), when an event has occurred or when a condition
has been diagnosed that entitles the employee to the benefit.

 

(d)                                
Sellers’ Retirement
and Savings Plans. All Hired Active Employees who are participants in Sellers’
retirement plans shall retain their accrued benefits under Sellers’ retirement
plans as of the Closing Date, and Sellers (or Sellers’ retirement plans) shall
retain sole liability for the payment of such benefits which have accrued on or
before the Closing Date as and when such Hired Active Employees become eligible
therefor under such plans.  Sellers shall cause the assets of each
Employee Benefit Plan to equal or exceed the benefit liabilities of such
Employee Benefit Plan on a plan-termination basis as of the Effective Time.

 

(e)                                 
No Transfer of
Assets. Neither Sellers nor their respective Related Persons will make any
transfer of pension or other Employee Benefit Plan assets to Buyer.

 

(f)                                   
Collective Bargaining
Matters. Buyer will set its own initial terms and conditions of employment for
the Hired Active Employees and others it may hire, including work rules,
benefits and salary and wage structure, all as permitted by law. Buyer is not
obligated to assume any collective bargaining agreements under this
Contract.  Sellers shall be solely liable for any severance payment
required to be made to its employees due to the Contemplated
Transactions.  No Sellers have entered into or will enter into any
collective bargaining agreements prior to Closing under this Contract. Any
bargaining obligations of Buyer with any union with respect to bargaining unit
employees subsequent to the Closing, whether such obligations arise before or
after the Closing, shall be the sole responsibility of Buyer.

 

(g)                                
General Employee
Provisions.

 

(i)                                    
Sellers and Buyer
shall give any notices required by Legal Requirements and take whatever other
actions with respect to the plans, programs and policies described in this
Section 10.1 as may be necessary to carry out the arrangements described
in this Section 10.1.

 

(ii)                                 
Sellers and Buyer
shall provide each other with such plan documents and summary plan
descriptions, employee data or other information as may be

 

45

 

reasonably required to carry out the arrangements
described in this Section 10.1.

 

(iii)                              
If any of the
arrangements described in this Section 10.1 are determined by the IRS or
other Governmental Body to be prohibited by law, Sellers and Buyer shall modify
such arrangements to as closely as possible reflect their expressed intent and
retain the allocation of economic benefits and burdens to the parties
contemplated herein in a manner that is not prohibited by law.

 

(iv)                             
Sellers shall provide
Buyer with completed I-9 forms and attachments with respect to all Hired Active
Employees, except for such employees Sellers certify in writing to Buyer are
exempt from such requirement.

 

(v)                                
Buyer shall not have
any responsibility, liability or obligation, whether to Active Employees,
former employees, their beneficiaries or to any other Person, with respect to
any Employee Benefit Plans, practices, programs or arrangements (including the
establishment, operation or termination thereof and the notification and
provision of COBRA coverage extension) maintained by Sellers.

 

(h)                                
ESOP.  In accord with this
Section 10.1 and the Escrow Agreement, and notwithstanding any other
provision of this Contract to the contrary, the parties acknowledge that
Sellers intend to terminate the ESOP after closing and distribute their assets
and benefits to ESOP participant-beneficiaries thereof in accordance with all
applicable law.

 

10.2.                       
PAYMENT OF ALL TAXES RESULTING FROM SALE OF ASSETS BY
SELLERS

 

Sellers shall pay in a timely manner all Taxes
resulting from or payable in connection with the sale of the Assets pursuant to
this Contract, regardless of the Person on whom such Taxes are imposed by Legal
Requirements.

 

10.3.                       
PAYMENT OF OTHER RETAINED LIABILITIES

 

In addition to payment of Taxes pursuant to
Section 10.2, Sellers shall pay, or make adequate provision for the
payment, in full all of the Retained Liabilities and other Liabilities of
Sellers under this Contract. If any such Liabilities are not so paid or
provided for, or if Buyer reasonably determines that failure to make any
payments will impair Buyer’s use or enjoyment of the Assets or conduct of the
business previously conducted by Sellers with the Assets, Buyer may, at any
time after the Closing Date, elect to make all such payments directly (but
shall have no obligation to do so).

 

10.4.                       
RESTRICTIONS ON SELLER DISSOLUTION AND DISTRIBUTIONS

 

Sellers shall not dissolve, or make any distribution
of the proceeds received pursuant to this Contract, until the later of (a)
thirty (30) days after the completion of all adjustment procedures contemplated
by Sections 2.8 and 2.9; and (b) ten (10) days after Sellers’ submission of
proof to

 

46

 

Buyer, to Buyer’s reasonable satisfaction, of Sellers’
payment, or adequate provision for the payment, of all of its obligations
pursuant to Sections 10.2 and 10.3.

 

10.5.                       
REMOVING EXCLUDED ASSETS

 

On or before the Closing Date, Sellers shall remove
all Excluded Assets from all Facilities and other Leasehold Real Property to be
occupied by Buyer. Such removal shall be done in such manner as to avoid any
damage to the Facilities and other properties to be occupied by Buyer and any
disruption of the business operations to be conducted by Buyer after the
Closing. Any damage to the Assets or to the Facilities resulting from such removal
shall be paid by Sellers at the Closing. Should Sellers fail to remove the
Excluded Assets as required by this Section, Buyer shall have the right, but
not the obligation, (a) to remove the Excluded Assets at Sellers’ sole cost and
expense; (b) to store the Excluded Assets and to charge Sellers all storage
costs associated therewith; (c) to treat the Excluded Assets as unclaimed and
to proceed to dispose of the same under the laws governing unclaimed property;
or (d) to exercise any other right or remedy conferred by this Contract or
otherwise available at law or in equity. Sellers shall promptly reimburse Buyer
for all costs and expenses incurred by Buyer in connection with any Excluded
Assets not removed by Sellers on or before the Closing Date.

 

10.6.                       
REPORTS AND RETURNS

 

Sellers shall promptly after the Closing prepare and
file all reports and returns required by Legal Requirements relating to the
business of Sellers as conducted using the Assets, to and including the Effective
Time.

 

10.7.                       
ASSISTANCE IN PROCEEDINGS

 

Sellers will reasonably cooperate with Buyer and its
counsel in the contest or defense of, and make available their personnel, if
any, and provide their personnel, if any, for testimony, and provide access to
their books and Records in connection with, any Proceeding involving or
relating to (a) any Contemplated Transaction or (b) any action, activity,
circumstance, condition, conduct, event, fact, failure to act, incident,
occurrence, plan, practice, situation, status or transaction on or before the
Closing Date involving Sellers or their business.

 

10.8.                       
NONCOMPETITION, NONSOLICITATION AND NONDISPARAGEMENT

 

(a)                                 
Noncompetition. For a
period of three (3) years after the Closing Date, Sellers shall not, anywhere
directly or indirectly invest in, own, manage, operate, finance, control,
advise, render services to or guarantee the obligations of any Person engaged
in or planning to become engaged in a business similar to the business
conducted by Sellers on and before the Closing Date (“Competing Business”),
provided, however, that Sellers may purchase or otherwise acquire up to (but
not more than) one percent (1%) of any class of the securities of any Person
(but may not otherwise participate in the activities of such Person) if such
securities are listed on any national or regional securities exchange or have
been registered under Section 12(g) of the Exchange Act.  Sellers acknowledge
and agree that the remedy at law for any breach of this Section 10.8(a)
will be inadequate and that Buyer, in addition to any other relief available to
it, shall be

 

47

 

entitled to temporary and permanent injunctive relief
without the necessity of proving actual damage.

 

(b)                                
Nonsolicitation. For
a period of three (3) years after the Closing Date, Sellers shall not, directly
or indirectly:

 

(i)                                    
solicit the business
of any Person who is a customer of Buyer;

 

(ii)                                 
cause, induce or
attempt to cause or induce any customer, supplier, licensee, licensor,
franchisee, employee, consultant or other business relation of Buyer to cease
doing business with Buyer, to deal with any competitor of Buyer or in any way
interfere with its relationship with Buyer;

 

(iii)                              
cause, induce or
attempt to cause or induce any customer, supplier, licensee, licensor,
franchisee, employee, consultant or other business relation of Sellers on the
Closing Date or within the year preceding the Closing Date to cease doing
business with Buyer, to deal with any competitor of Buyer or in any way
interfere with its relationship with Buyer; or

 

(iv)                             
hire, retain or
attempt to hire or retain any employee or independent contractor of Buyer or in
any way interfere with the relationship between Buyer and any of its employees
or independent contractors.

 

(c)                                 
Nondisparagement.
After the Closing Date, Sellers will not disparage Buyer or any of Buyer’s
shareholders, directors, officers, employees or agents.

 

(d)                                
Modification of
Covenant. If a final judgment of a court or tribunal of competent jurisdiction
determines that any term or provision contained in Section 10.8(a) through
(c) is invalid or unenforceable, then the parties agree that the court or
tribunal will have the power to reduce the scope, duration or geographic area of
the term or provision, to delete specific words or phrases or to replace any
invalid or unenforceable term or provision with a term or provision that is
valid and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision. This Section 10.8 will be
enforceable as so modified after the expiration of the time within which the
judgment may be appealed. This Section 10.8 is reasonable and necessary to
protect and preserve Buyer’s legitimate business interests and the value of the
Assets and to prevent any unfair advantage conferred on Sellers.

 

10.9.                       
CUSTOMER AND OTHER BUSINESS RELATIONSHIPS

 

After the Closing, Sellers will reasonably cooperate
with Buyer in its efforts to continue and maintain for the benefit of Buyer
those business relationships of Sellers existing prior to the Closing and
relating to the business to be operated by Buyer after the Closing, including
relationships with lessors, employees, regulatory authorities, licensors,
customers, suppliers and others, and Sellers will satisfy the Retained
Liabilities in a manner that is not detrimental to any of such relationships.
Sellers will refer to Buyer all inquiries relating to such business. Neither

 

48

 

Sellers nor any of their shareholders or their
Representatives shall take any action that would tend to diminish the value of
the Assets after the Closing or that would interfere with the business of Buyer
to be engaged in after the Closing, including disparaging the name or business
of Buyer.

 

10.10.                 
RETENTION OF AND ACCESS TO RECORDS

 

After the Closing Date, Buyer shall retain for a
period consistent with Buyer’s record-retention policies and practices, or for
so long as Sellers reasonably request, those Records of Sellers delivered to
Buyer. Buyer also shall provide Sellers and their shareholders and their
Representatives reasonable access thereto, during normal business hours and on
reasonable prior written notice, to enable them to prepare financial statements
or tax returns or deal with tax audits, wind up the affairs of Sellers, the
ESOP and the ESOT, or for any other reasonable purpose. After the Closing Date,
Sellers shall provide Buyer and its Representatives reasonable access to
Records that are Excluded Assets, during normal business hours and on at least
three days’ prior written notice, for any reasonable business purpose specified
by Buyer in such notice.

 

10.11.                 
FURTHER ASSURANCES

 

The parties shall cooperate reasonably with each other
and with their respective Representatives in connection with any steps required
to be taken as part of their respective obligations under this Contract, and
shall (a) furnish upon request to each other such further information; (b) execute
and deliver to each other such other documents; and (c) do such other acts and
things, all as the other party may reasonably request for the purpose of
carrying out the intent of this Contract and the Contemplated Transactions,
provided, however, that neither party shall be required to dispose of or make
any change to its business, expend any material funds or incur any other burden
in order to comply with this Section 10.11.

 

10.12.                 
NOTICES OF CERTAIN EVENTS

 

Prior to or after the Closing, Sellers shall notify
Buyer promptly upon becoming aware of:

 

(i)                                    
any notice or other
written communication from any person alleging that the consent of such person
is or may be required in connection with the Contemplated Transactions;

 

(ii)                                 
any notice or other
written communication from any person alleging that the consent of such person
is or may be required in connection with the transactions contemplated by this
Contract which relates to the consummation of the Contemplated Transaction or
that would have a material adverse effect on Buyer’s business;

 

(iii)                              
any actions, suits,
charges, complaints, claims, investigations or proceedings commenced or threatened
against, relating to, involving or otherwise affecting Sellers or the business
of Sellers or any of their respective assets or properties, which relate to the
consummation of the Contemplated Transactions; and

 

49

 

(iv)                             
any change that (A)
has had or would reasonably be expected to have a material adverse effect on
the business, operations, assets, condition or prospects or Sellers or upon the
Assets, or (B) materially impairs or delays the ability of Sellers to effect
the Closing.

 

Sellers’ notification of Buyer of any of the events
set forth above in accordance with this Section 10.12 shall not be deemed
to cure any related breaches of the representations, warranties, covenants or
agreements contained in this Contract, nor shall the failure of Buyer to take
any action with respect to such notice be deemed a waiver of any such breach or
breaches.

 

11.                                
Indemnification; Remedies

 

11.1.                       
SURVIVAL

 

All representations, warranties, covenants and
obligations in this Contract, the certificates delivered pursuant to
Section 2.7 and any other certificate or document delivered pursuant to
this Contract shall survive the Closing and the consummation of the Contemplated
Transactions, subject to Section 11.7. The right to indemnification,
reimbursement or other remedy based upon such representations, warranties,
covenants and obligations shall not be affected by any investigation (including
any environmental investigation or assessment) conducted with respect to, or
any Knowledge acquired (or capable of being acquired) at any time, whether
before or after the execution and delivery of this Contract or the Closing
Date, with respect to the accuracy or inaccuracy of or compliance with any such
representation, warranty, covenant or obligation. The waiver of any condition
based upon the accuracy of any representation or warranty, or on the
performance of or compliance with any covenant or obligation, will not affect
the right to indemnification, reimbursement or other remedy based upon such
representations, warranties, covenants and obligations.

 

11.2.                       
INDEMNIFICATION AND REIMBURSEMENT BY SELLER

 

From and after the Closing Date, Sellers will, jointly
and severally, indemnify and hold harmless Buyer, and its Representatives,
shareholders, subsidiaries and Related Persons (collectively, the “Buyer
Indemnified Persons”), and will reimburse the Buyer Indemnified Persons for any
loss, liability, claim, damage, expense (including costs of investigation and
defense and reasonable attorneys’ fees and expenses) or diminution of value,
whether or not involving a Third-Party Claim (collectively, “Damages”), arising
from or in connection with:

 

(a)                                 
any Breach of any
representation or warranty made by Sellers in (i) this Contract, (ii) the
certificates delivered pursuant to Section 2.7 (for this purpose, each
such certificate will be deemed to have stated that Sellers’ 
representations and warranties in this Contract fulfill the requirements of
Section 7.1 as of the Closing Date as if made on the Closing Date, unless
the certificate expressly states that the matters disclosed in a supplement
certificate have caused a condition specified in Section 7.1 not to be
satisfied), (iii) any transfer instrument or (iv) any other certificate,
document, writing or instrument delivered by Sellers pursuant to this Contract;

 

50

 

(b)                                
any Breach of any
covenant or obligation of Sellers in this Contract or in any other certificate,
document, writing or instrument delivered by Sellers pursuant to this Contract;

 

(c)                                 
any Liability arising
out of the ownership or operation of the Assets prior to the Effective Time
other than the Assumed Liabilities;

 

(d)                                
any brokerage or
finder’s fees or commissions or similar payments based upon any agreement or
understanding made, or alleged to have been made, by any Person with Sellers
(or any Person acting on their behalf) in connection with any of the
Contemplated Transactions;

 

(e)                                 
any product or
component thereof manufactured by or shipped, or any services provided by,
Sellers, in whole or in part, prior to the Closing Date;

 

(f)                                   
any liability under
the WARN Act or any similar state or local Legal Requirement that may result
from an “Employment Loss”, as defined by 29 U.S.C. sect. 2101(a)(6), caused by
any action of Sellers prior to the Closing;

 

(g)                                
any noncompliance
with the Bulk Sales Laws or fraudulent transfer law in respect of the
Contemplated Transactions;

 

(h)                                
any Employee Plan established
or maintained by Seller; or

 

(i)                                    
any Retained
Liabilities.

 

11.3.                       
INDEMNIFICATION AND
REIMBURSEMENT BY SELLER—ENVIRONMENTAL
MATTERS

 

In addition to the other indemnification provisions in
this Article 11, from and after the Closing Date Sellers will indemnify
and hold harmless Buyer and the other Buyer Indemnified Persons, and will
reimburse Buyer and the other Buyer Indemnified Persons, for any Damages
(including costs of cleanup, containment or other remediation) arising from or
in connection with:

 

(a)                                 
any Environmental,
Health and Safety Liabilities arising out of or relating to: (i) the ownership
or operation by any Person at any time on or prior to the Closing Date of any
of the Facilities, Assets or the business of Sellers, or (ii) any Hazardous
Materials or other contaminants that were present on the Facilities or Assets
at any time on or prior to the Closing Date; or

 

(b)                                
any bodily injury
(including illness, disability and death, regardless of when any such bodily
injury occurred, was incurred or manifested itself), personal injury, property
damage (including trespass, nuisance, wrongful eviction and deprivation of the
use of real property) or other damage of or to any Person or any Assets in any
way arising from or allegedly arising from any Hazardous Activity conducted by
any Person with respect to the business of Sellers or the Assets prior to the
Closing Date or from any Hazardous Material that was (i) present on or before
the Closing Date on or at the Facilities (or present on any other property if
such Hazardous Material emanated from any Facility and was present on any
Facility

 

51

 

on or prior to the Closing Date) or (ii) Released or
allegedly Released by any Person on or at any Facilities or Assets at any time
on or prior to the Closing Date.

 

Buyer will be entitled to control any Remedial Action,
any Proceeding relating to an Environmental Claim and, except as provided in
the following sentence, any other Proceeding with respect to which indemnity
may be sought under this Section 11.3. The procedure described in
Section 11.9 will apply to any claim solely for monetary damages relating
to a matter covered by this Section 11.3.

 

11.4.                       
INDEMNIFICATION AND REIMBURSEMENT BY BUYER

 

From and after the Closing Date, Buyer will indemnify
and hold harmless Sellers and their representatives, shareholders,
subsidiaries, and related persons (collectively, the “Seller Indemnified
Persons”), and will reimburse Sellers and the Seller Indemnified Persons, for
any Damages arising from or in connection with:

 

(a)                                 
any Breach of any
representation or warranty made by Buyer in this Contract or in any
certificate, document, writing or instrument delivered by Buyer pursuant to
this Contract;

 

(b)                                
any Breach of any
covenant or obligation of Buyer in this Contract or in any other certificate,
document, writing or instrument delivered by Buyer pursuant to this Contract;

 

(c)                                 
any claim by any
Person for brokerage or finder’s fees or commissions or similar payments based
upon any agreement or understanding alleged to have been made by such Person
with Buyer (or any Person acting on Buyer’s behalf) in connection with any of
the Contemplated Transactions;

 

(d)                                
any obligations of
Buyer with respect to bargaining with the collective bargaining representatives
of Active Hired Employees subsequent to the Closing;

 

(e)                                 
any Assumed
Liabilities;

 

(f)                                   
any Liability arising
out of the ownership or operation of the Assets after the Effective Time other
than the Retained Liabilities;

 

(g)                                
any product or
component thereof manufactured and shipped by, or any services provided by,
Buyer, in whole or in part, after the Closing Date;

 

(h)                                
any Liability under
the WARN Act or any similar state or local Legal Requirement that may result
from an “Employment Loss”, as defined by 29 U.S.C. sect. 2101(a) (6), caused by
any action of Buyer after the Closing or by Buyer’s decision not to hire
previous employees of Sellers prior to the Closing;

 

(i)                                    
any Environmental,
Health and Safety Liabilities not in existence as of the Closing Date arising
out of or relating to: (i) the ownership or operation by any Person at any time
after the Closing Date of any of the Facilities, Assets or the

 

52

 

business of Buyer, or (ii) any Hazardous Materials or
other contaminants that were present on the Facilities or Assets at any time
after the Closing Date; or

 

(j)                                    
any Liability of
Sellers arising out of Closing the Contemplated Transactions in the absence of
Consents pursuant to Buyer’s exercise of rights provided in Section 8.3.

 

11.5.                       
LIMITATIONS ON AMOUNT—SELLER

 

Sellers shall have no liability (for indemnification
or otherwise) with respect to claims under Section 11.2(a) until the total
of all Damages with respect to such matters exceeds One Million Five Hundred
Thousand dollars ($1,500,000), and then only for the amount by which such
Damages exceed One Million Five Hundred Thousand dollars ($1,500,000). However,
this Section 11.5 will not apply to claims under Section 11.2(b)
through (i) or to matters arising in respect of Sections 3.1, 3.2, 3.7, 3.8,
3.10, 3.12, 3.18, 3.20, 3.23, 3.24, 3.25, or 3.26 or to any Breach of any of
Sellers’ representations and warranties of which the Sellers had Knowledge at
any time prior to the date on which such representation and warranty is made or
any intentional Breach by Sellers of any covenant or obligation, and Sellers
will be jointly and severally liable for all damages with respect to such
Breaches.  Notwithstanding the foregoing, Sellers’ aggregate liability
under Sections 11.2 and 11.3 shall in no event exceed Ten Million Dollars
($10,000,000), except in the case of claims based on Sellers’ failure to pay or
make adequate provision for the payment of Retained Liabilities for which there
shall be no limit to Sellers’ Liability.

 

11.6.                       
LIMITATIONS ON AMOUNT—BUYER

 

Buyer will have no liability (for indemnification or
otherwise) with respect to claims under Section 11.4(a) until the total of
all Damages with respect to such matters exceeds One Million Five Hundred
Thousand dollars ($1,500,000) and then only for the amount by which such
Damages exceed One Million Five Hundred Thousand dollars ($1,500,000). However,
this Section 11.6 will not apply to claims under Section 11.4(b)
through (i) or matters arising in respect of Section 4.4 or to any Breach
of any of Buyer’s representations and warranties of which Buyer had Knowledge
at any time prior to the date on which such representation and warranty is made
or any intentional Breach by Buyer of any covenant or obligation, and Buyer will
be liable for all Damages with respect to such Breaches.  Notwithstanding
the foregoing, Buyer’s aggregate liability under Section 11.4 shall in no
event exceed Ten Million Dollars ($10,000,000).

 

11.7.                       
TIME AND OTHER LIMITATIONS ON LIABILITY

 

(a)                                 
If the Closing
occurs, Sellers will have liability (for indemnification or otherwise) with
respect to any Breach of (i) a covenant or obligation to be performed or
complied with prior to or after the Closing Date or (ii) a representation or
warranty, only if on or before the termination of the Escrow Agreement Buyer
notifies Sellers of a claim specifying the factual basis of the claim in
reasonable detail to the extent then known by Buyer.  The amount of any
Damages for which Sellers will have liability (for indemnification or
otherwise) shall be net of any amounts (i) actually recovered by the Buyer or
Buyer Indemnified Persons under

 

53

 

insurance policies in effect and applicable to such
Damages; and, in this regard, the Buyer or Buyer Indemnified Persons shall use
its or their Best Efforts to seek to obtain recovery under such insurance
policies.

 

(b)                                
If the Closing
occurs, Buyer will have liability (for indemnification or otherwise) with
respect to any Breach of (i) a covenant or obligation to be performed or
complied with prior to or after the Closing Date or (ii) a representation or
warranty, only if on or before the termination of the Escrow Agreement Sellers
notify Buyer of a claim specifying the factual basis of the claim in reasonable
detail to the extent then known by Sellers.

 

(c)                                 
Each party agrees
that it will not seek punitive damages as to any matter under, relating to or
arising out of the Contemplated Transactions unless the party’s claim is based,
in whole or in part, on the fraudulent acts of the other party.

 

(d)                                
No party shall be
entitled to indemnification under this Contract with respect to any Damage that
is attributable to any Breach of this Contract by such party.  Buyer and
Sellers shall cooperate with each other with respect to resolving any claim or
liability with respect to which one party is obligated to indemnify the other party
hereunder, including by making Best Efforts to mitigate or resolve any such
claim or liability.  In the event that Buyer or Sellers shall fail so to
cooperate and make such efforts to mitigate or resolve any such claim or
liability, then notwithstanding anything else to the contrary contained herein,
the other party shall not be required to indemnify any Person for any Damage
that could reasonably be expected to have been avoided if Buyer or Sellers, as
the case may be, had made such efforts.

 

(e)                                 
The parties hereto
agree that the indemnification provisions in this Contract are intended to
provide the exclusive remedy following the Closing as to all Damages either may
incur arising from or relating to the Contemplated Transactions, and each party
hereby waives, to the full extent they may do so, any other rights or remedies
that may arise under any applicable statute, rule or regulation, provided,
however, claims for fraud or intentional misrepresentation shall not be limited
by the provisions of this Section 11.7.

 

11.8.                       
RIGHT
OF SETOFF

 

Upon notice to Sellers or Buyer, as the case may be,
specifying in reasonable detail the basis therefor, either Sellers or Buyer may
set off any amount to which it may be entitled under this Article 11
against amounts otherwise payable to the other party. Neither the exercise of
nor the failure to exercise such right of setoff will constitute an election of
remedies or limit either Sellers or Buyer in any manner in the enforcement of
any other remedies that may be available to it.

 

11.9.                       
THIRD-PARTY CLAIMS

 

(a)                                 
Promptly after
receipt by a Person entitled to indemnity under Sections 11.2, 11.3 (to the
extent provided in the last sentence of Section 11.3) or 11.4 (an
“Indemnified Person”) of notice of the assertion of a Third-Party Claim against
it,

 

54

 

such Indemnified Person shall give notice to the
Person obligated to indemnify under such Section (an “Indemnifying
Person”) of the assertion of such Third-Party Claim, provided that the failure
to notify the Indemnifying Person will not relieve the Indemnifying Person of
any liability that it may have to any Indemnified Person, except to the extent
that the Indemnifying Person demonstrates that the defense of such Third-Party
Claim is materially prejudiced by the Indemnified Person’s failure to give such
notice.

 

(b)                                
If an Indemnified
Person gives notice to the Indemnifying Person pursuant to Section 11.9(a)
of the assertion of a Third Party Claim, the Indemnifying Person, at its
option, shall have the right to and, if requested by any Indemnified Person
shall, assume the defense of the Third-Party Claim including the employment of
counsel reasonably satisfactory to the Indemnified Person.  The
Indemnified Person shall have the right to employ separate counsel in
connection with such Third-Party Claim and participate in the defense thereof,
but the fees and expenses of such counsel shall be at the expense of the
Indemnified Persons, unless:  (i) the Indemnifying Person has failed
promptly to assume the defense and employ counsel; or (ii) any Indemnified
Person in good faith shall determine that such Indemnified Person may have
available to it one or more defenses or counterclaims that are inconsistent
with one or more of those that may be available to the Indemnifying Person in
respect of such Third-Party Claim; provided that the Indemnifying Person shall
not in such event be responsible hereunder for fees and expenses of more than
one firm of separate counsel hired by the Indemnified Persons in connection
with any such Third-Party Claim in the same jurisdiction, in addition to any
local counsel.

 

(c)                                 
The Indemnifying
Person shall not be liable for any settlement or compromise of any Third-Party
Claim effected without its written consent unless the Indemnifying Person has
failed promptly to assume the defense and employ counsel after having notified
the Indemnified Persons of its intent to do so or shall have failed to assume
the defense after being requested to do so by any Indemnified Person.  The
Indemnifying Person shall not, without the prior written consent of the
Indemnified Persons, which consent shall not be unreasonably withheld, settle
or compromise any claim, or permit a default of consent to the entry of any
judgment in respect thereof, unless (A) such settlement, compromise or consent
includes, as an unconditional term thereof, the giving by the claimant to the
Indemnified Persons of an unconditional release from all liability in respect
of such claim, and (B) such settlement, compromise or consent does not impose
any liability or obligation on (or provide for injunctive or other non-monetary
relief affecting) any of the Indemnified Persons.

 

(d)                                
Notwithstanding the
provisions of Section 13.4, both Sellers and Buyer hereby consent to the
nonexclusive jurisdiction of any court in which a Proceeding in respect of a
Third-Party Claim is brought against any Buyer Indemnified Person or Seller
Indemnified Person, as the case may be, for purposes of any claim that a Buyer
Indemnified Person or Seller Indemnified Person, as the case may be, may have
under this Contract with respect to such Proceeding or the matters alleged

 

55

 

therein and agree that process may be served on
Sellers or Buyer, as the case may be, with respect to such a claim anywhere in
the world.

 

(e)                                 
With respect to any
Third-Party Claim subject to indemnification under this Article 11, (i)
both the Indemnified Person and the Indemnifying Person, as the case may be,
shall keep the other Person fully informed of the status of such Third-Party
Claim and any related Proceedings at all stages thereof where such Person is
not represented by its own counsel, and (ii) the parties agree (each at its own
expense) to render to each other such assistance as they may reasonably require
of each other and to cooperate in good faith with each other in order to ensure
the proper and adequate defense of any Third-Party Claim.

 

(f)                                   
With respect to any
Third-Party Claim subject to indemnification under this Article 11, the
parties agree to cooperate in such a manner as to preserve in full (to the
extent possible) the confidentiality of all Confidential Information and the
attorney-client and work-product privileges. In connection therewith, each
party agrees that: (i) it will use its Best Efforts, in respect of any
Third-Party Claim in which it has assumed or participated in the defense, to
avoid production of Confidential Information (consistent with applicable law
and rules of procedure), and (ii) all communications between any party hereto and
counsel responsible for or participating in the defense of any Third-Party
Claim shall, to the extent possible, be made so as to preserve any applicable
attorney-client or work-product privilege.

 

11.10.                 
OTHER
CLAIMS

 

A claim for indemnification for any matter not
involving a Third-Party Claim may be asserted by notice to the party from whom
indemnification is sought and shall be paid promptly after such notice.

 

11.11.                 
INDEMNIFICATION IN CASE OF STRICT LIABILITY

 

THE INDEMNIFICATION PROVISIONS IN THIS ARTICLE 11
SHALL BE ENFORCEABLE, REGARDLESS OF WHETHER THE LIABILITY IS BASED UPON PAST,
PRESENT OR FUTURE ACTS, CLAIMS OR LEGAL REQUIREMENTS (INCLUDING ANY PAST,
PRESENT OR FUTURE BULK SALES LAW, ENVIRONMENTAL LAW, FRAUDULENT TRANSFER ACT,
OCCUPATIONAL SAFETY AND HEALTH LAW OR PRODUCTS LIABILITY, SECURITIES OR OTHER
LEGAL REQUIREMENT).

 

12.                                
Confidentiality

 

12.1.                       
DEFINITION OF CONFIDENTIAL INFORMATION

 

(a)                                 
As used in this
Article 12, the term “Confidential Information” includes any and all of
the following information of Sellers or Buyer that has been or may hereafter be
disclosed in any form, whether in writing, orally, electronically or otherwise,
or otherwise made available by observation, inspection or otherwise by any
party (Buyer on the one hand or Sellers on the other hand) or their
Representatives

 

56

 

(collectively, a “Disclosing Party”) to the other
party or their Representatives (collectively, a “Receiving Party”):

 

(i)                                    
all information that
is a trade secret under applicable trade secret or other law;

 

(ii)                                 
all information
concerning product specifications, data, know-how, formulae, compositions,
processes, designs, sketches, photographs, graphs, drawings, samples,
inventions and ideas, past, current and planned research and development,
current and planned manufacturing or distribution methods and processes,
customer lists, current and anticipated customer requirements, price lists,
market studies, business plans, computer hardware, Software and computer
software and database technologies, systems, structures and architectures;

 

(iii)                              
all information
concerning the business and affairs of the Disclosing Party (which includes
historical and current financial statements, financial projections and budgets,
tax returns and accountants’ materials, historical, current and projected
sales, capital spending budgets and plans, business plans, strategic plans,
marketing and advertising plans, publications, client and customer lists and
files, contracts, the names and backgrounds of key personnel and personnel
training techniques and materials, however documented), and all information
obtained from review of the Disclosing Party’s documents or property or
discussions with the Disclosing Party regardless of the form of the
communication; and

 

(iv)                             
all notes, emails,
analyses, databases, compilations, studies, summaries and other material
prepared by the Receiving Party to the extent containing or based, in whole or
in part, upon any information included in the foregoing.

 

(b)                                
Any trade secrets of
a Disclosing Party shall also be entitled to all of the protections and
benefits under applicable trade secret law and any other applicable law. If any
information that a Disclosing Party deems to be a trade secret is found by a
court of competent jurisdiction not to be a trade secret for purposes of this
Article 12, such information shall still be considered Confidential
Information of that Disclosing Party for purposes of this Article 12 to
the extent included within the definition. In the case of trade secrets, each
of Buyer and Sellers hereby waives any requirement that the other party submit
proof of the economic value of any trade secret or post a bond or other
security.

 

12.2.                       
RESTRICTED USE OF CONFIDENTIAL INFORMATION

 

(a)                                 
Each Receiving Party
acknowledges the confidential and proprietary nature of the Confidential
Information of the Disclosing Party and agrees that such Confidential
Information (i) shall be kept confidential by the Receiving Party; (ii) shall
not be used for any reason or purpose other than to evaluate and consummate the
Contemplated Transactions; and (iii) without limiting the foregoing, shall not
be disclosed by the Receiving Party to any Person, except in

 

57

 

each case as otherwise expressly permitted by the
terms of this Contract or with the prior written consent of an authorized
representative of Sellers with respect to Confidential Information of Sellers
(each, a “Sellers Contact”) or an authorized representative of Buyer with
respect to Confidential Information of Buyer (each, a “Buyer Contact”). Each of
Buyer and Sellers shall disclose the Confidential Information of the other
party only to its Representatives who require such material for the purpose of
evaluating the Contemplated Transactions and are informed by Buyer or Sellers,
as the case may be, of the obligations of this Article 12 with respect to
such information. Each of Buyer or Sellers shall (iv) enforce the terms of this
Article 12 as to its respective Representatives; (v) take such action to
the extent necessary to cause its Representatives to comply with the terms and
conditions of this Article 12; and (vi) be responsible and liable for any
breach of the provisions of this Article 12 by it or its Representatives.

 

(b)                                
Unless and until this
Contract is terminated, Sellers shall maintain as confidential any Confidential
Information (including for this purpose any information of Sellers of the type
referred to in Sections 12.1(a)(i), (ii) and (iii), whether or not disclosed to
Buyer) of the Sellers relating to any of the Assets or the Assumed Liabilities.
Notwithstanding the preceding sentence, Sellers may use any Confidential
Information of Sellers before the Closing in the Ordinary Course of Business in
connection with the transactions permitted by Section 5.2.

 

(c)                                 
From and after the
Closing, the provisions of Section 12.2(a) above shall not apply to or
restrict in any manner Buyer’s use of any Confidential Information of the
Sellers relating to any of the Assets or the Assumed Liabilities.

 

12.3.                       
EXCEPTIONS

 

Sections 12.2(a) and (b) do not apply to that part of
the Confidential Information of a Disclosing Party that a Receiving Party
demonstrates (a) was, is or becomes generally available to the public other
than as a result of a breach of this Article 12 or the Confidentiality
Agreement by the Receiving Party or its Representatives; (b) was or is
developed by the Receiving Party independently of and without reference to any
Confidential Information of the Disclosing Party; or (c) was, is or becomes
available to the Receiving Party on a nonconfidential basis from a Third Party
not bound by a confidentiality agreement or any legal, fiduciary or other
obligation restricting disclosure. Sellers shall not disclose any Confidential
Information of Sellers relating to any of the Assets or the Assumed Liabilities
in reliance on the exceptions in clauses (b) or (c) above.

 

12.4.                       
LEGAL PROCEEDINGS

 

If a Receiving Party becomes compelled in any
Proceeding or is requested by a Governmental Body having regulatory
jurisdiction over the Contemplated Transactions to make any disclosure that is
prohibited or otherwise constrained by this Article 12, that Receiving
Party shall provide the Disclosing Party with prompt notice of such compulsion
or request so that it may seek an appropriate protective order or other
appropriate remedy or waive compliance with the provisions of this
Article 12. In the absence of a protective order or other remedy, the
Receiving Party may disclose that portion (and only that portion) of the
Confidential Information of the

 

58

 

Disclosing Party that, based upon advice of the
Receiving Party’s counsel, the Receiving Party is legally compelled to disclose
or that has been requested by such Governmental Body, provided, however, that
the Receiving Party shall use reasonable efforts to obtain reliable assurance
that confidential treatment will be accorded by any Person to whom any
Confidential Information is so disclosed. The provisions of this
Section 12.4 do not apply to any Proceedings between the parties to this
Contract.

 

12.5.                       
RETURN OR DESTRUCTION OF CONFIDENTIAL INFORMATION

 

If this Contract is terminated, each Receiving Party
shall (a) destroy all Confidential Information of the Disclosing Party prepared
or generated by the Receiving Party without retaining a copy of any such
material; (b) promptly deliver to the Disclosing Party all other Confidential
Information of the Disclosing Party, together with all copies thereof, in the
possession, custody or control of the Receiving Party or, alternatively, with
the written consent of a Sellers Contact or a Buyer Contact (whichever
represents the Disclosing Party) destroy all such Confidential Information; and
(c) certify all such destruction in writing to the Disclosing Party, provided,
however, that the Receiving Party may retain a list that contains general
descriptions of the information it has returned or destroyed to facilitate the
resolution of any controversies after the Disclosing Party’s Confidential
Information is returned.

 

12.6.                       
ATTORNEY-CLIENT PRIVILEGE

 

The Disclosing Party is not waiving, and will not be
deemed to have waived or diminished, any of its attorney work product
protections, attorney-client privileges or similar protections and privileges
as a result of disclosing its Confidential Information (including Confidential
Information related to pending or threatened litigation) to the Receiving
Party, regardless of whether the Disclosing Party has asserted, or is or may be
entitled to assert, such privileges and protections. The parties (a) share a common
legal and commercial interest in all of the Disclosing Party’s Confidential
Information that is subject to such privileges and protections; (b) are or may
become joint defendants in Proceedings to which the Disclosing Party’s
Confidential Information covered by such protections and privileges relates;
(c) intend that such privileges and protections remain intact should either
party become subject to any actual or threatened Proceeding to which the
Disclosing Party’s Confidential Information covered by such protections and
privileges relates; and (d) intend that after the Closing the Receiving Party
shall have the right to assert such protections and privileges. No Receiving
Party shall admit, claim or contend, in Proceedings involving either party or otherwise,
that any Disclosing Party waived any of its attorney work-product protections,
attorney-client privileges or similar protections and privileges with respect
to any information, documents or other material not disclosed to a Receiving
Party due to the Disclosing Party disclosing its Confidential Information
(including Confidential Information related to pending or threatened
litigation) to the Receiving Party.

 

13.                                
General Provisions

 

13.1.                       
EXPENSES

 

Except as otherwise provided in this Contract, each
party to this Contract will bear its respective fees and expenses incurred in
connection with the preparation, negotiation, execution and performance of this
Contract and the Contemplated Transactions, including all fees and expense

 

59

 

of its Representatives.  If this Contract is
terminated, the obligation of each party to pay its own fees and expenses will
be subject to any rights of such party arising from a Breach of this Contract
by another party.

 

13.2.                       
PUBLIC ANNOUNCEMENTS

 

Any public announcement, press release or similar
publicity with respect to this Contract or the Contemplated Transactions will
be issued, if at all, at such time and in such manner as Buyer and Sellers
agree in their reasonable judgment. Except with the prior consent of the other
party or as permitted by this Contract, neither Sellers, Buyer nor any of their
Representatives shall disclose to any Person (a) the fact that any Confidential
Information of Sellers have been disclosed to Buyer or its Representatives,
that Buyer or their Representatives have inspected any portion of the
Confidential Information of Sellers, that any Confidential Information of Buyer
has been disclosed to Sellers or their Representatives or that Sellers or their
Representatives have inspected any portion of the Confidential Information of
Buyer or (b) any information about the Contemplated Transactions, including the
status of such discussions or negotiations, the execution of any documents
(including this Contract) or any of the terms of the Contemplated Transactions
or the related documents (including this Contract). Sellers and Buyer will
consult with each other concerning the means by which Sellers’ employees, customers,
suppliers and others having dealings with Sellers will be informed of the
Contemplated Transactions, and Buyer will have the right to be present for any
such communication.  Notwithstanding the foregoing, Buyer acknowledges
that Sellers have disclosed certain information about the Contemplated
Transactions to ESOP participant-beneficiaries having the right to direct the
ESOT Trustee concerning its approval of the Contemplated Transactions, and
Buyer agrees that Sellers may continue to make such disclosures of the
Contemplated Transactions as the Sellers deem necessary, in their reasonable
discretion, to effect such approval.

 

13.3.                       
NOTICES

 

All notices, Consents, waivers and other
communications required or permitted by this Contract shall be in writing and
shall be deemed given to a party when (a) delivered to the appropriate address
by hand or by nationally recognized overnight courier service (costs prepaid);
(b) sent by facsimile or e-mail with confirmation of transmission by the
transmitting equipment; or (c) received or rejected by the addressee, if sent
by certified mail, return receipt requested, in each case to the following
addresses, facsimile numbers or e-mail addresses and marked to the attention of
the person (by name or title) designated below (or to such other address,
facsimile number, e-mail address or person as a party may designate by notice
to the other parties):

 

Sellers (before the Closing): The Wornick Company

Attention: Mr. Larry L. Rose

President and Chief Executive Officer

10825 Kenwood Road

Cincinnati, Ohio 45242

Fax no.: 513/791-4148

E-mail address: lrose@larrylr.com

 

60

 

Sellers (after the Closing): 

Attention: Mr. Larry L. Rose

Fax no.: 513/791-4148

E-mail address: lrose@larrylr.com

 

The Wornick Company Right Away Division, L.P.

Attention: Keith Frase

President

P.O. Box 55

McAllen, Texas 78505-0055

Fax no.: (956) 631-0857

E-mail address: kfrase@wornick.com

 

Right Away Management Corporation

Attention: Keith Frase

President

P.O. Box 55

McAllen, Texas 78505-0055

Fax no.: (956) 631-0857

E-mail address: kfrase@wornick.com

 

Buyer or Veritas:  The Wornick Company c/o
Veritas Capital Management, L.L.C.

Attention:  Robert B. McKeon and Thomas J.
Campbell

660 Madison Avenue

New York, NY 10021

Fax no.:  (212) 688-9411

E-mail address:               
rmckeon@veritascapital.com

tcampbell@veritascapital.com

 

with a copy to:

Winston & Strawn LLP

Attention:  Benjamin M. Polk

200 Park Avenue

New York, NY 10166-4193

Fax no. (212) 294-4700

E-mail address: bpolk@winston.com

 

13.4.                       
JURISDICTION; SERVICE OF PROCESS

 

Any Proceeding arising out of or relating to this
Contract or any Contemplated Transaction shall be brought in the courts of the
State of Delaware and each of the parties irrevocably submits to the exclusive
jurisdiction of each such court in any such Proceeding, waives any objection it
may now or hereafter have to venue or to convenience of forum, agrees that all
claims in respect of the Proceeding shall be heard and determined only in any
such court and agrees not to bring any Proceeding arising out of or relating to
this Contract or any Contemplated Transaction in any other court. The parties
agree that either or both of them may file a copy of this paragraph with any
court as written evidence of the knowing, voluntary and bargained agreement
between the

 

61

 

parties irrevocably to waive any objections to venue
or to convenience of forum. Process in any Proceeding referred to in the first
sentence of this section may be served on any party anywhere in the world.

 

13.5.                       
ENFORCEMENT OF CONTRACT

 

Sellers and Buyer acknowledge and agree that both
Sellers and Buyer would be irreparably damaged if any of the provisions of this
Contract are not performed in accordance with their specific terms and that any
Breach of this Contract by Sellers or Buyer, as the case may be, could not be
adequately compensated in all cases by monetary damages alone. Accordingly, in
addition to any other right or remedy to which the parties may be entitled, at
law or in equity, each party shall be entitled to enforce any provision of this
Contract by a decree of specific performance and to temporary, preliminary and
permanent injunctive relief to prevent Breaches or threatened Breaches of any
of the provisions of this Contract, without posting any bond or other
undertaking.

 

13.6.                       
WAIVER; REMEDIES CUMULATIVE

 

The rights and remedies of the parties to this
Contract are cumulative and not alternative. Neither any failure nor any delay
by any party in exercising any right, power or privilege under this Contract or
any of the documents referred to in this Contract will operate as a waiver of
such right, power or privilege, and no single or partial exercise of any such
right, power or privilege will preclude any other or further exercise of such
right, power or privilege or the exercise of any other right, power or
privilege. To the maximum extent permitted by applicable law, (a) no claim or
right arising out of this Contract or any of the documents referred to in this
Contract can be discharged by one party, in whole or in part, by a waiver or
renunciation of the claim or right unless in writing signed by the other party;
(b) no waiver that may be given by a party will be applicable except in the
specific instance for which it is given; and (c) no notice to or demand on one
party will be deemed to be a waiver of any obligation of that party or of the
right of the party giving such notice or demand to take further action without
notice or demand as provided in this Contract or the documents referred to in
this Contract.

 

13.7.                       
ENTIRE CONTRACT AND MODIFICATION

 

This Contract supersedes all prior agreements, whether
written or oral, between the parties with respect to its subject matter
(including any letter of intent and any confidentiality agreement between Buyer
and Sellers) and constitutes (along with the Exhibits and other documents
delivered pursuant to this Contract) a complete and exclusive statement of the
terms of the agreement between the parties with respect to its subject matter.
This Contract may not be amended, supplemented, or otherwise modified except by
a written agreement executed by the party to be charged with the amendment.

 

13.8.                       
ASSIGNMENTS, SUCCESSORS AND NO THIRD-PARTY RIGHTS

 

No party may assign any of its rights or delegate any
of its obligations under this Contract without the prior written consent of the
other parties, except that Buyer may assign any of its rights and delegate any
of its obligations under this Contract to any Subsidiary or other Related
Person of Buyer and may collaterally assign its rights hereunder to any
financial institution

 

62

 

providing financing in connection with the
Contemplated Transactions. Subject to the preceding sentence, this Contract
will apply to, be binding in all respects upon and inure to the benefit of the
successors and permitted assigns of the parties. Nothing expressed or referred
to in this Contract will be construed to give any Person other than the parties
to this Contract any legal or equitable right, remedy or claim under or with
respect to this Contract or any provision of this Contract, except such rights
as shall inure to a successor or permitted assignee pursuant to this
Section 13.8 and except as provided in Article 11 with respect to
indemnification of Buyer Indemnified Persons and Seller Indemnified Persons.

 

13.9.                       
SEVERABILITY

 

If any provision of this Contract is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Contract will remain in full force and effect. Any provision of this
Contract held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.

 

13.10.                 
CONSTRUCTION; USAGE

 

(a)                                 
The headings of
Articles and Sections in this Contract are provided for convenience only and
will not affect its construction or interpretation. All references to
“Articles,” “Sections” and “Schedules” refer to the corresponding Articles,
Sections and Schedules of this Contract.

 

(b)                                
Interpretation. 
In this Contract, unless a clear contrary intention appears:

 

(i)                                    
the singular number
includes the plural number and vice versa;

 

(ii)                                 
reference to any
Person includes such person’s successors and assigns but, if applicable, only
if such successors and assigns are not prohibited by this Contract, and
reference to a Person in a particular capacity excludes such Person in any
other capacity or individually;

 

(iii)                              
reference to any
gender includes each other gender;

 

(iv)                             
reference to any
agreement, document or instrument means such agreement, document or instrument
as amended or modified and in effect from time to time in accordance with the
terms thereof;

 

(v)                                
reference to any
Legal Requirement means such Legal Requirement as amended, modified, codified,
replaced or reenacted, in whole or in part, and in effect from time to time,
including rules and regulations promulgated thereunder, and reference to any
section or other provision of any Legal Requirement means that provision
of such Legal Requirement from time to time in effect and constituting the
substantive amendment, modification, codification, replacement or reenactment
of such section or other provision;

 

63

 

(vi)                             
“hereunder,”
“hereof,” “hereto”, and words of similar import shall be deemed references to
this Contract as a whole and not to any particular Article, Section or
other provision hereof;

 

(vii)                          
“including” (and with
correlative meaning “include”) means including without limiting the generality
of any description preceding such term;

 

(viii)                       
“or” is used in the
inclusive sense of “and/or”;

 

(ix)                               
with respect to the
determination of any period of time, “from” means “from and including” and “to”
means “to but excluding”; and

 

(x)                                  
references to
documents, instruments or agreements shall be deemed to refer as well to all
addenda, exhibits, schedules or amendments thereto.

 

(c)                                 
Accounting Terms and
Determinations.  Unless otherwise specified herein, all accounting terms
used herein shall be interpreted and all accounting determinations hereunder
shall be made in accordance with GAAP.

 

(d)                                
Legal Representation
of the Parties.  This Contract was negotiated by the parties with the
benefit of legal representation, and any rule of construction or interpretation
otherwise requiring this Contract to be construed or interpreted against any
party shall not apply to any construction or interpretation hereof.

 

(e)                                 
The schedules
attached hereto referenced in Article 3 (the “Disclosure Schedules”) shall
be arranged in sections corresponding to the sections contained in
Article 3, and the disclosures in any section of the Disclosure
Schedule shall qualify the corresponding section of Article 3 and
any other section of Article 3 to which the Disclosure
Schedule is reasonably applicable.  The information in the Disclosure
Schedules constitutes (i) exceptions to particular representations, warranties,
covenants and obligations of Sellers as set forth in this Contract or (ii)
descriptions or lists of assets and liabilities and other items referred to in
this Contract.

 

13.11.                 
TIME
OF ESSENCE

 

With regard to all dates and time periods set forth or
referred to in this Contract, time is of the essence.

 

13.12.                 
GOVERNING
LAW

 

This Contract will be governed by and construed under
the laws of the State of Delaware without regard to conflicts-of-laws
principles that would require the application of any other law.

 

13.13.                 
EXECUTION OF CONTRACT

 

This Contract may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Contract and all of which, when taken together, will be deemed to constitute
one and the same agreement. The exchange of copies of this Contract and of
signature

 

64

 

pages by facsimile transmission shall constitute
effective execution and delivery of this Contract as to the parties and may be
used in lieu of the original Contract for all purposes. Signatures of the
parties transmitted by facsimile shall be deemed to be their original
signatures for all purposes.

 

13.14.                 
ATTORNEYS’
FEES

 

If any party to this Contract initiates any legal
action arising out of or in connection with this Contract, the prevailing party
in such legal action shall be entitled to recover from the other party all
reasonable attorneys’ fees, expert witness fees and expenses incurred by the
prevailing party in connection with any claim upon which such party prevails.

 

13.15.                 
WAIVER OF JURY TRIAL

 

THE PARTIES HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN
ANY PROCEEDING ARISING OUT OF OR RELATING TO THIS CONTRACT OR ANY OF THE
CONTEMPLATED TRANSACTIONS, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.  THE PARTIES AGREE THAT
ANY OF THEM MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN
EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE
PARTIES IRREVOCABLY TO WAIVE TRIAL BY JURY AND THAT ANY PROCEEDING WHATSOEVER
BETWEEN THEM RELATING TO THIS CONTRACT OR ANY OF THE CONTEMPLATED TRANSACTIONS
SHALL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING
WITHOUT A JURY.

 

13.16.                 
VERITAS

 

Veritas is a limited liability company duly organized,
validly existing and in good standing under the laws of Delaware.  Veritas
has all requisite power and authority to conduct its business as it has been
and is currently being conducted and to execute this Contract for the purposes
stated herein, and the execution and delivery of this Contract by Veritas and
the performance by it of its obligations hereunder have been duly and validly
authorized by all necessary action on the part of Veritas.  Veritas
represents and warrants that it has, and will maintain until the Closing or
other termination of this Contract, cash in the amount of Five Million Dollars
($5,000,000) to perform its obligations under this Contract.

 

IN WITNESS WHEREOF, the parties have executed this
Contract as of the dates written below.

 

Buyer:

The Wornick Company, a Delaware corporation

 

	
  By:

  	
  /s/ Robert B. McKeon

  	
   

  
	
   

  	
  Name:

  	
  Robert B. McKeon

  	
   

  
	
   

  	
  Title:

  	
   

  	
  President

  	
   

  
	
   

  	
  Date: December 3,
  2003

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

65

 

Solely for purposes of Sections 2.3(c) and 13.16:

Veritas:

Veritas Capital Management II, L.L.C.

 

	
  By:

  	
  /s/ Robert B. McKeon

  	
   

  
	
   

  	
  Robert B. McKeon

  	
   

  
	
   

  	
  Title:

  	
   

  	
  President

  	
   

  
	
   

  	
  Date: December 3,
  2003

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
   

  	
  Sellers:

  
	
   

  	
   

  
	
   

  	
  The Wornick Company, a
  Nevada corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry L. Rose

  	
   

  
	
   

  	
   

  	
  Larry L. Rose,
  President and Chief Executive

  Officer

  	
   

  
	
   

  	
   

  
	
   

  	
  Date: December 3,
  2003

  
	
   

  	
   

  
	
   

  	
  The Wornick Company
  Right Away Division, a

  Nevada corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry L. Rose

  	
   

  
	
   

  	
   

  	
  Larry L. Rose,
  President and Chief Executive

  Officer

  	
   

  
	
   

  	
   

  
	
   

  	
  Date: December 3,
  2003

  
	
   

  	
   

  
	
   

  	
  The Wornick Company
  Right Away Division, L.P.,

  a Texas limited partnership

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Right Away Management

  Corporation, its General Partner

  
	
   

  	
   

  	
  By:

  	
  /s/ Keith Frase

  	
   

  
	
   

  	
   

  	
   

  	
  Keith Frase, President

  	
   

  
	
   

  	
   

  
	
   

  	
  Date: December 3,
  2003

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Right Away Management
  Corporation, a Texas

  business corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Keith Frase

  	
   

  
	
   

  	
   

  	
  Keith Frase, President

  	
   

  
	
   

  	
  Date: December 3,
  2003

  

 

66

 

Schedule 1

SCHEDULE OF DEFINITIONS

 

For purposes of this Contract, the following terms and
variations thereof have the meanings specified or referred to in this
Schedule 1:

 

“Accounts Receivable”—(a) all trade accounts
receivable and other rights to payment from customers of Sellers and the full
benefit of all security for such accounts or rights to payment, including all
trade accounts receivable representing amounts receivable in respect of goods
shipped or products sold or services rendered to customers of Sellers, (b) all
other accounts or notes receivable of Sellers and the full benefit of all
security for such accounts or notes and (c) any claim, remedy or other right
related to any of the foregoing.

 

“Accrued Expenses” — any expenses of Sellers accrued
on the books of the company as of the Closing Date.

 

“Active Employee”  — as defined in
Section 10.1.

 

“Adjustment Amount”—as defined in Section 2.8.

 

“Appurtenances”—all privileges, rights, easements,
hereditaments and appurtenances belonging to or for the benefit of the Land,
including all easements appurtenant to and for the benefit of any Land (a
“Dominant Parcel”) for, and as the primary means of access between, the
Dominant Parcel and a public way, or for any other use upon which lawful use of
the Dominant Parcel for the purposes for which it is presently being used is
dependent, and all rights existing in and to any streets, alleys, passages and
other rights-of-way included thereon or adjacent thereto (before or after
vacation thereof) and vaults beneath any such streets.

 

“Assets”—as defined in Section 2.1.

 

“Assignment and Assumption Agreement”—as defined in
Section 2.7(a)(ii).

 

“Assumed Liabilities”—as defined in
Section 2.4(a).

 

“Balance Sheet”—as defined in Section 3.3.

 

“Best Efforts”—the efforts that a prudent Person
desirous of achieving a result would use in similar circumstances to achieve
that result as expeditiously as possible, provided, however, that a Person
required to use Best Efforts under this Contract will not be thereby required
to take actions that would result in a material adverse change in the benefits
to such Person of this Contract and the Contemplated Transactions or to dispose
of or make any change to its business, expend any material funds or incur any
other material burden.

 

“Bill of Sale”—as defined in Section 2.7(a)(i).

 

67

 

“Breach”—any breach of, or any inaccuracy in, any
representation or warranty or any breach of, or failure to perform or comply
with, any covenant or obligation, in or of this Contract or any other Contract,
or any event which with the passing of time or the giving of notice, or both,
would constitute such a breach, inaccuracy or failure.

 

“Bulk Sales Laws”—as defined in Section 5.10.

 

“Business Day”—any day other than (a) Saturday or
Sunday or (b) any other day on which banks in Ohio are permitted or required to
be closed.

 

“Buyer”—as defined in the first paragraph of this
Contract.

 

“Buyer Indemnified Persons”—as defined in
Section 11.2.

 

“Closing”—as defined in Section 2.6.

 

“Closing Date”—the date on which the Closing actually
takes place.

 

“Closing Inventories and Fixed Assets Capital”—as
defined in Section 2.9(b).

 

“COBRA”—Section 4980B of the Code (as well as its
predecessor provision, Section 162(k) of the Code) and Sections 601
through 608, inclusive, of ERISA.

 

“Code”—the Internal Revenue Code of 1986.

 

“Confidential Information”—as defined in
Section 12.1.

 

“Consent”—any approval, consent, ratification, waiver
or other authorization.

 

“Contemplated Transactions”—all of the transactions
contemplated by this Contract.

 

“Contract”—any agreement, contract, Lease, consensual
obligation, promise or undertaking (whether written or oral and whether express
or implied), whether or not legally binding.

 

“Damages”—as defined in Section 11.2.

 

“Effective Time”—  11:59 p.m. on the Closing
Date.

 

“Employee Benefit Plans”—as defined in
Section 3.12.

 

“Encumbrance”—any charge, claim, community or other
marital property interest, condition, equitable interest, lien, encumbrance,
hypothecation, option, pledge, security interest, mortgage, right of way,
easement, encroachment, servitude, right of first option, proxies, title
retention agreement, title defect, securityholder agreement, right of first
refusal or similar restriction, including any restriction on use, voting (in
the case of any security or equity interest), transfer, receipt of income or
exercise of any other attribute of ownership.

 

68

 

“Environment”—soil, land surface or subsurface strata,
surface waters (including navigable waters and ocean waters), groundwaters,
drinking water supply, stream sediments, ambient air (including indoor air),
plant and animal life and any other environmental medium or natural resource.

 

“Environmental, Health and Safety Liabilities”—any
cost, damages, expense, liability, obligation or other responsibility arising
from or under any Environmental Law or Occupational Safety and Health Law,
including those consisting of or relating to:

 

(a)                                 
any environmental,
health or safety matter or condition (including on-site or off-site
contamination, occupational safety and health and regulation of any chemical
substance or product);

(b)                                
any fine, penalty,
judgment, award, settlement, legal or administrative proceeding, damages, loss,
claim, demand or response, remedial or inspection cost or expense arising under
any Environmental Law or Occupational Safety and Health Law;

(c)                                 
financial
responsibility under any Environmental Law or Occupational Safety and Health
Law for cleanup costs or corrective action, including any cleanup, removal,
containment or other remediation or response actions (“Cleanup”) required by
any Environmental Law or Occupational Safety and Health Law (whether or not
such Cleanup has been required or requested by any Governmental Body or any
other Person) and for any natural resource damages; or

(d)                                
any other compliance,
corrective or remedial measure required under any Environmental Law or
Occupational Safety and Health Law.

 

The terms “removal,” “remedial” and “response action”
include the types of activities covered by the United States Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (CERCLA).

 

“Environmental Law”—any Legal Requirement that
requires or relates to:

 

(a)                                 
advising appropriate
authorities, employees or the public of intended or actual Releases of
pollutants or hazardous substances or materials, violations of discharge limits
or other prohibitions and the commencement of activities, such as resource
extraction or construction, that could have significant impact on the
Environment;

(b)                                
preventing or
reducing to acceptable levels the Release of pollutants or hazardous substances
or materials into the Environment;

(c)                                 
reducing the
quantities, preventing the Release or minimizing the hazardous characteristics
of wastes that are generated;

(d)                                
assuring that
products are designed, formulated, packaged and used so that they do not
present unreasonable risks to human health or the Environment when used or
disposed of;

(e)                                 
protecting resources,
species or ecological amenities;

(f)                                   
reducing to
acceptable levels the risks inherent in the transportation of hazardous
substances, pollutants, oil or other potentially harmful substances;

(g)                                
cleaning up
pollutants that have been Released, preventing the Threat of Release or paying
the costs of such clean up or prevention; or

(h)                                
making responsible
parties pay private parties, or groups of them, for damages done to their health
or the Environment or permitting self-appointed representatives of the public
interest to recover for injuries done to public assets.

 

69

 

“ERISA”—the Employee Retirement Income Security Act of
1974.

 

“ESOP” — The Wornick Company Employee Stock Ownership
Plan.

 

“ESOT” — The Wornick Company Employee Stock Ownership
Trust established pursuant to the ESOP.

 

“ESOT Trustee” — First Bankers Trust Company, 2321
Koch’s Lane, P.O. Box 3566, Quincy, IL 62305-3566.

 

“Exchange Act”—the Securities Exchange Act of 1934.

 

“Excluded Assets”—as defined in Section 2.2.

 

“Facilities”—any leasehold interest in real property
currently operated by Sellers, including the Tangible Personal Property used or
operated by Sellers at the respective locations of the Leasehold Real Property
specified in Section 3.6.

 

“Fixed Assets”  — the Tangible Personal Property
of Seller described in Schedule 2.1(b)
determined on a net basis after depreciation.

 

“GAAP”—generally accepted accounting principles for
financial reporting in the United States, applied on a basis consistent with
the basis on which the Balance Sheet and the other financial statements
referred to in Section 3.3 were prepared.

 

“Governing Documents”—with respect to any particular
entity, (a) if a corporation, the articles or certificate of incorporation and
the bylaws; (b) if a general partnership, the partnership agreement and any
statement of partnership; (c) if a limited partnership, the limited partnership
agreement and the certificate of limited partnership; (d) if a limited
liability company, the articles of organization and operating agreement; (e) if
another type of Person, any other charter or similar document adopted or filed
in connection with the creation, formation or organization of the Person; (f)
all equityholders’ agreements, voting agreements, voting trust agreements,
joint venture agreements, registration rights agreements or other agreements or
documents relating to the organization, management or operation of any Person
or relating to the rights, duties and obligations of the equityholders of any
Person; and (g) any amendment or supplement to any of the foregoing.

 

“Governmental Authorization”—any Consent, license,
registration or permit issued, granted, given or otherwise made available by or
under the authority of any Governmental Body or pursuant to any Legal
Requirement.

 

“Government Furnished Materials” — Materials furnished
to the Sellers by Defense Supply Center Philadelphia at no cost to
Sellers.  These are not recorded in Sellers’ financial statements but are
separately accounted for in Sellers’ Records.

 

“Governmental Body”—any:

 

70

 

(a)                                 
nation, state,
county, city, town, borough, village, district or other jurisdiction;

(b)                                
federal, state,
local, municipal, foreign or other government;

(c)                                 
governmental or
quasi-governmental authority of any nature (including any agency, branch,
department, board, commission, court, tribunal or other entity exercising
governmental or quasi-governmental powers);

(d)                                
multinational
organization or body;

(e)                                 
body exercising, or
entitled or purporting to exercise, any administrative, executive, judicial,
legislative, police, regulatory or taxing authority or power; or

(f)                                   
official of any of
the foregoing.

 

“Ground Lease”—any long-term lease of land in which
most of the rights and benefits comprising ownership of the land and the
improvements thereon or to be constructed thereon, if any, are transferred to
the tenant for the term thereof.

 

“Ground Lease Property”—any land, improvements and
appurtenances subject to a Ground Lease in favor of Sellers.

 

“Hazardous Activity”—the distribution, generation,
handling, importing, management, manufacturing, processing, production,
refinement, Release, storage, transfer, transportation, treatment or use
(including any withdrawal or other use of groundwater) of Hazardous Material
in, on, under, about or from any of the Facilities or any part thereof into the
Environment and any other act, business, operation or thing that increases the
danger, or risk of danger, or poses an unreasonable risk of harm, to persons or
property on or off the Facilities.

 

“Hazardous Material”—any substance, material or waste
which is or will foreseeably be regulated by any Governmental Body, including
any material, substance or waste which is defined as a “hazardous waste,”
“hazardous material,” “hazardous substance,” “extremely hazardous waste,”
“restricted hazardous waste,” “contaminant,” “toxic waste” or “toxic substance”
under any provision of Environmental Law, and including petroleum, petroleum
products, asbestos, presumed asbestos-containing material or
asbestos-containing material, urea formaldehyde and polychlorinated biphenyls.

 

“HSR Act”—the Hart-Scott-Rodino Antitrust Improvements
Act.

 

“Improvements”—all buildings, structures, fixtures and
improvements located on the Land or included in the Assets, including those
under construction.

 

“Indemnified Person”—as defined in Section 11.9.

 

“Indemnifying Person”—as defined in Section 11.9.

 

“Initial Inventories and Fixed Assets Capital”—as
defined in Section 2.9(a).

 

“Intellectual Property Assets”—as defined in
Section 3.21(a).

 

“Interim Balance Sheet”—as defined in
Section 3.3.

 

71

 

“Inventories”—all inventories of Sellers, wherever
located, including all finished goods, work in process, raw materials, spare
parts and all other materials and supplies to be used or consumed by Sellers in
the production of finished goods.

 

“IRS”—the United States Internal Revenue Service and,
to the extent relevant, the United States Department of the Treasury.

 

“Knowledge”—an individual will be deemed to have
Knowledge of a particular fact or other matter if (a) that individual is
actually aware of that fact or matter or (b) a prudent individual could be
expected to discover or otherwise become aware of that fact or matter in course
of conducting a reasonably comprehensive investigation regarding the accuracy
of any representation or warranty contained in this Contract.

 

A Person (other than an individual) will be deemed to
have Knowledge of a particular fact or other matter if any individual who is
serving, or who has at any time served, as a director, officer, partner,
executor or trustee of that Person (or in any similar capacity) has, or at any
time had, Knowledge of that fact or other matter (as set forth in (a) and (b)
above).

 

“Land”—all parcels and tracts of land in which Sellers
have a leasehold ownership interest.

 

“Lease”—any Leasehold Real Property Lease or any lease
or rental agreement, license, right to use or installment and conditional sale
agreement to which each Seller is a party and any other Seller Contract
pertaining to the leasing or use of any Tangible Personal Property.

 

“Leasehold Real Property”—the Land and Improvements
and all Appurtenances thereto and any Ground Lease Property.

 

“Legal Requirement”—any federal, state, local,
municipal, foreign, international, multinational or other constitution, law,
ordinance, principle of common law, code, regulation, statute or treaty.

 

“Liability”—with respect to any Person, any liability
or obligation of such Person of any kind, character or description, whether
known or unknown, absolute or contingent, accrued or unaccrued, disputed or
undisputed, liquidated or unliquidated, secured or unsecured, joint or several,
due or to become due, vested or unvested, executory, determined, determinable
or otherwise, and whether or not the same is required to be accrued on the
financial statements of such Person.

 

“Marks”—as defined in Section 3.21(a)(i).

 

“Material Consents”—as defined in Section 7.3.

 

“Occupational Safety and Health Law”—any Legal
Requirement designed to provide safe and healthful working conditions and to
reduce occupational safety and health hazards, including the Occupational
Safety and Health Act, and any program, whether governmental or private (such
as those promulgated or sponsored by industry associations and insurance
companies), designed to provide safe and healthful working conditions.

 

72

 

“Order”—any order, injunction, judgment, decree,
ruling, assessment or arbitration award of any Governmental Body or arbitrator.

 

“Ordinary Course of Business”—an action taken by a
Person will be deemed to have been taken in the Ordinary Course of Business
only if that action:

 

(a)                                 
is consistent in
nature, scope and magnitude with the past practices of such Person and is taken
in the ordinary course of the normal, day-to-day operations of such Person;

(b)                                
does not require
authorization by the board of directors or shareholders of such Person (or by
any Person or group of Persons exercising similar authority) and does not
require any other separate or special authorization of any nature, or if any
such authorization is required, such authorization has been so obtained; and

(c)                                 
is similar in nature,
scope and magnitude to actions customarily taken, without any separate or
special authorization, in the ordinary course of the normal, day-to-day
operations of other Persons that are in the same line of business as such
Person.

 

“Permitted Encumbrances”—as defined in
Section 3.7.

 

“Person”—an individual, partnership, corporation,
business trust, limited liability company, limited liability partnership, joint
stock company, trust, unincorporated association, joint venture or other entity
or a Governmental Body.

 

“Proceeding”—any action, arbitration, audit, hearing,
investigation, litigation or suit (whether civil, criminal, administrative,
judicial or investigative, whether formal or informal, whether public or
private) commenced, brought, conducted or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.

 

“Purchase Price”—as defined in Section 2.3.

 

“QSSS” — as defined in Section 2.1(k).

 

“Real Property Lease”—any Ground Lease or Space Lease.

 

“Record”—information that is inscribed on a tangible
medium or that is stored in an electronic or other medium and is retrievable in
perceivable form.

 

“Related Person”—

 

With respect to a particular individual:

 

(a)                                 
each other member of
such individual’s Family;

(b)                                
any Person that is
directly or indirectly controlled by any one or more members of such
individual’s Family;

(c)                                 
any Person in which
members of such individual’s Family hold (individually or in the aggregate) a
Material Interest; and

(d)                                
any Person with
respect to which one or more members of such individual’s Family serves as a
director, officer, partner, executor or trustee (or in a similar capacity).

 

With respect to a specified Person other than an
individual:

 

73

 

(a)                                 
any Person that
directly or indirectly controls, is directly or indirectly controlled by or is
directly or indirectly under common control with such specified Person;

(b)                                
any Person that holds
a Material Interest in such specified Person;

(c)                                 
each Person that
serves as a director, officer, partner, executor or trustee of such specified
Person (or in a similar capacity);

(d)                                
any Person in which
such specified Person holds a Material Interest; and

(e)                                 
any Person with
respect to which such specified Person serves as a general partner or a trustee
(or in a similar capacity).

 

For purposes of this definition, (a) “control”
(including “controlling,” “controlled by,” and “under common control with”)
means the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise, and shall be
construed as such term is used in the rules promulgated under the Securities
Act; (b) the “Family” of an individual includes (i) the individual, (ii) the
individual’s spouse, (iii) any other natural person who is related to the
individual or the individual’s spouse within the second degree and (iv) any
other natural person who resides with such individual; and (c) “Material
Interest” means direct or indirect beneficial ownership (as defined in Rule
13d-3 under the Exchange Act) of voting securities or other voting interests
representing at least ten percent (10%) of the outstanding voting power of a
Person or equity securities or other equity interests representing at least ten
percent (10%) of the outstanding equity securities or equity interests in a
Person.

 

“Release”—any release, spill, emission, leaking,
pumping, pouring, dumping, emptying, injection, deposit, disposal, discharge,
dispersal, leaching or migration on or into the Environment or into or out of
any property.

 

“Remedial Action”—all actions, including any capital
expenditures, required or voluntarily undertaken (a) to clean up, remove, treat
or in any other way address any Hazardous Material or other substance; (b) to
prevent the Release or Threat of Release or to minimize the further Release of
any Hazardous Material or other substance so it does not migrate or endanger or
threaten to endanger public health or welfare or the Environment; (c) to
perform pre-remedial studies and investigations or post-remedial monitoring and
care; or (d) to bring all Facilities and the operations conducted thereon into
compliance with Environmental Laws and environmental Governmental
Authorizations.

 

“Representative”—with respect to a particular Person,
any director, officer, manager, employee, agent, consultant, advisor,
accountant, financial advisor, legal counsel or other representative of that
Person.

 

“Retained Liabilities”—as defined in
Section 2.4(b).

 

“SEC”—the United States Securities and Exchange
Commission.

 

“Securities Act”—the Securities Act of 1933, as
amended.

 

“Sellers”—as defined in the first paragraph of this
Contract.

 

74

 

“Seller Contract”—any Contract (a) under which Sellers
have or may acquire any rights or benefits; (b) under which Sellers have or may
become subject to any obligation or liability; or (c) by which Sellers or any
of the assets owned or used by Sellers is or may become bound.

 

“Software”—all computer software and subsequent
versions thereof, including source code, object, executable or binary code,
objects, comments, screens, user interfaces, report formats, templates, menus,
buttons and icons and all files, data, materials, manuals, design notes and
other items and documentation related thereto or associated therewith.

 

“Space Lease”—any lease or rental agreement pertaining
to the occupancy of any improved space on any Land.

 

“Subsidiary”—with respect to any Person (the “Owner”),
any corporation or other Person of which securities or other interests having
the power to elect a majority of that corporation’s or other Person’s board of
directors or similar governing body, or otherwise having the power to direct
the business and policies of that corporation or other Person (other than
securities or other interests having such power only upon the happening of a
contingency that has not occurred), are held by the Owner or one or more of its
Subsidiaries.

 

“Tangible Personal Property”—all machinery, equipment,
tools, furniture, office equipment, computer hardware, supplies, materials,
vehicles and other items of tangible personal property (other than Inventories)
of every kind owned or leased by Sellers (wherever located and whether or not
carried on Sellers’ books), together with any express or implied warranty by
the manufacturers or sellers or lessors of any item or component part thereof
and all maintenance records and other documents relating thereto.

 

“Tax”—any income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, property,
environmental, windfall profit, customs, vehicle, airplane, boat, vessel or
other title or registration, capital stock, franchise, employees’ income
withholding, foreign or domestic withholding, social security, unemployment,
disability, real property, personal property, sales, use, transfer, value
added, alternative, add-on minimum and other tax, fee, assessment, levy,
tariff, charge or duty of any kind whatsoever and any interest, penalty,
addition or additional amount thereon imposed, assessed or collected by or
under the authority of any Governmental Body or payable under any tax-sharing
agreement or any other Contract.

 

“Tax Return”—any return (including any information
return), report, statement, schedule, notice, form, declaration, claim for
refund or other document or information filed with or submitted to, or required
to be filed with or submitted to, any Governmental Body in connection with the
determination, assessment, collection or payment of any Tax or in connection
with the administration, implementation or enforcement of or compliance with
any Legal Requirement relating to any Tax.

 

“Third Party”—a Person that is not a party to this
Contract.

 

“Third-Party Claim”—any claim against any Indemnified
Person by a Third Party, whether or not involving a Proceeding.

 

75

 

“Threat of Release”—a reasonable likelihood of a
Release that may require action in order to prevent or mitigate damage to the
Environment that may result from such Release.

 

“Trade Accounts Payable” — unsettled contractual
payment obligations, incurred in the Ordinary Course of Business, owing by
Sellers to Third Parties.

 

“WARN Act”— Worker Adjustment and Retraining
Notification Act.

 

76

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