Exhibit 10.01
FORBEARANCE AGREEMENT
This FORBEARANCE
AGREEMENT (this “ Agreement ”), is dated as of July
16, 2007, is entered into by and among DDJ Total Return Loan Fund,
L.P., as the Lender (as defined in the Loan Agreement referred to
below), The Wornick Company, a Delaware corporation (the “
Company ”), Right
Away Management Corporation, a Delaware corporation, The Wornick
Company Right Away Division, a Delaware corporation, and The
Wornick Company Right Away Division, L.P., a Delaware limited
partnership (each, a “ Subsidiary ”, and, collectively,
the “ Subsidiaries
”).
RECITALS:
A.
The Company, the Lender (as assignee of Texas State Bank) and the
Subsidiaries are parties to that certain Loan Agreement, dated as
of June 30, 2004 (as amended by the First Amendment thereto dated
as of March 16, 2007 and as further amended, modified, supplemented
or amended and restated from time to time, the “ Loan Agreement ”).
B.
As of the date hereof, the Events of Default referred to herein as
the “Specified Defaults” have occurred and are
continuing.
C.
The Company and the Subsidiaries have advised the Lender that the
Company, the Subsidiaries and certain holders (the “
Noteholders ”) of the
Company’s 10.875% Senior Secured Notes due 2011 (the “
Notes ”) holding not
less than $100 million in aggregate principal amount of the Notes,
representing not less than 80% of the aggregate principal amount of
the Notes outstanding, will, simultaneously with the execution of
this Agreement, enter into a separate forbearance agreement
pursuant to which the Noteholders shall agree to forbear from
exercising the rights and remedies available to the Noteholders
under the Indenture, the Intercreditor Agreement and the Collateral
Agreements (as defined in the Indenture), all on the terms and
conditions set forth in such forbearance agreement (as such
agreement may be amended, modified, supplemented or amended and
restated from time to time, the “ Noteholder Forbearance Agreement
”).
D.
At the Company’s request, the Lender has agreed to forbear
from exercising those of its rights and remedies under the Loan
Agreement, the other Loan Documents and/or applicable law that have
arisen, or may arise in the future, due to (i) the occurrence and
continuance of the Specified Defaults and (ii) any Event of Default
resulting solely from the Company’s failure to make the
scheduled interest payment due under the Notes on July 15, 2007, in
each case, on the terms and conditions set forth herein.
NOW, THEREFORE, in
consideration of the premises and the respective representations,
warranties, covenants and agreements set forth in this Agreement,
and intending to be legally bound, the parties hereto agree as
follows:
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ARTICLE I
DEFINITIONS
1.1
Defined Terms.
(a)
Capitalized terms that are defined in this Agreement shall have the
meanings ascribed to such terms in this Agreement. All other
capitalized terms shall have the meanings ascribed in the Loan
Agreement. Unless the context of this Agreement clearly requires
otherwise, references to the plural include the singular;
references to the singular include the plural; the words
“include,” “includes,” and
“including” will be deemed to be followed by
“without limitation”; and the term “or”
has, except where otherwise indicated, the inclusive meaning
represented by the phrase “and/or”.
(b)
This Agreement constitutes a “Loan Document” as defined
in the Loan Agreement.
(c)
References in this Agreement to the Lender shall constitute
references to DDJ Total Return Loan Fund, L.P. solely in its
capacity as the Lender.
ARTICLE II
FORBEARANCE AND AMENDMENT TO LOAN AGREEMENT
2.1
Forbearance; Forbearance Default Rights and
Remedies.
(a)
Effective as of the Forbearance Effective Date (as defined below),
the Lender agrees that until the expiration of the
“Forbearance Period” (as defined below), it will
forbear from exercising its rights and remedies against the Company
or the Subsidiaries under the Loan Agreement, the other Loan
Documents and/or applicable law solely with respect to the
Specified Defaults and any Event of Default resulting solely from
the Company’s failure to make the scheduled interest payment
due under the Notes on July 15, 2007 (excluding, however, in each
case, its right to charge interest on any Obligations during the
Forbearance Period at the default interest rate specified in the
Revolving Note and the Term Note); provided , however
, (i) each of the Company and the Subsidiaries shall comply, except
to the extent such compliance is expressly excused by the terms of
this Agreement, with all explicit restrictions or prohibitions
triggered by the existence and/or continuance of any Event of
Default under the Loan Agreement, this Agreement or any of the
other Loan Documents, (ii) nothing herein shall restrict, impair or
otherwise affect the Lender’s rights and remedies under any
agreements containing subordination provisions in favor of the
Lender (including, without limitation, any rights or remedies
available to the Lender as a result of the occurrence or
continuation of the Specified Defaults or any Event of Default
resulting from the Company’s failure to make the scheduled
interest payment due under the Notes on July 15, 2007), and (iii)
nothing herein shall restrict, impair or otherwise affect the
exercise of the Lender’s rights under this Agreement.
As used herein, the term “ Specified Defaults ” shall mean
the Events of Default listed on Annex I hereto. During
the Forbearance Period, any condition to the making of an Advance
under the Loan Agreement that would not be met solely because of
the occurrence and continuance of any Specified Default or any
Event of Default resulting solely from the Company’s failure
to make the scheduled interest payment due under the Notes on July
15, 2007 is hereby waived.
(b)
As used herein, the term “ Forbearance Period ” shall mean
the period beginning on the Forbearance Effective Date (as defined
below) and ending upon the occurrence of a Termination Event.
As used herein, “ Termination
Event ” shall mean the
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earlier to occur of (i) the delivery by the
Lender to the Company, the counsel to the Noteholder Group (as
defined in the Noteholder Forbearance Agreement) and the Trustee
(as defined in the Intercreditor Agreement) of a written notice
terminating the Forbearance Period, which notice may be delivered
at any time upon or after the occurrence of any Forbearance Default
(as defined below), and (ii) August 13, 2007. As used herein,
the term “ Forbearance
Default ” shall mean: (A) the occurrence of any Event
of Default that is not (i) a Specified Default or (ii) an Event of
Default resulting solely from the Company’s failure to make
the scheduled interest payment due under the Notes on July 15,
2007, (B) the delivery of any written notice by the Noteholders to
the Company terminating the Noteholder Forbearance Agreement and/or
the Forbearance Period (as defined in the Noteholder Forbearance
Agreement) as a result of the occurrence and continuation of any
Forbearance Default (as defined in the Noteholder Forbearance
Agreement) or any other termination of the Noteholder Forbearance
Agreement, (C) the delivery of any Indenture Payment Notice (as
defined in Section 2.4 below) to the Lender, (D) the failure of the
Company or any Subsidiary to comply with any term, condition,
covenant or agreement set forth in this Agreement, (E) the failure
of any representation or warranty made by the Company or any
Subsidiary under this Agreement to be true and correct in all
material respects as of the date when made, (F) the failure of the
Company promptly to notify the Lender of any amendment or
modification to the Noteholder Forbearance Agreement; (G) the
execution of any amendment or modification to the Noteholder
Forbearance Agreement, which amendment or modification has a
material adverse effect on the Lender, as determined by the Lender
in its discretion, (H) any occurrence, event or change in facts or
circumstances occurring on or after the Forbearance Effective Date
that would result in a Material Adverse Change, (I) the occurrence
of any violation or breach of, or other failure to observe, perform
or comply with, the terms of the Intercreditor Agreement by the
Trustee, or (J) the commencement by or against the Company or any
Subsidiary of a proceeding under any Debtor Relief Laws. Any
Forbearance Default shall constitute an immediate Event of Default
under the Loan Agreement.
(c)
Upon the occurrence of a Termination Event, the agreement of the
Lender hereunder to forbear from exercising its rights and remedies
in respect of the Specified Defaults and any Event of Default
resulting solely from the Company’s failure to make the
scheduled interest payment due under the Notes on July 15, 2007
shall immediately terminate without the requirement of any demand,
presentment, protest, or notice of any kind, all of which each of
the Company and the Subsidiaries hereby waives. The Company
and the Subsidiaries agree that the Lender may at any time after
the occurrence of a Termination Event proceed to exercise any or
all of its rights and remedies under the Loan Agreement, any other
Loan Document, the Intercreditor Agreement and/or applicable law,
including, without limitation, its rights and remedies on account
of the Specified Defaults and any other Events of Default that may
then exist. Without limiting the generality of the foregoing,
upon the occurrence of a Termination Event, the Lender may, upon
such notice or demand as is specified by the Loan Agreement, any
other Loan Documents, the Intercreditor Agreement or applicable
law, (i) collect and/or commence any legal or other action to
collect any or all of the Obligations from the Company and the
Subsidiaries, (ii) foreclose or otherwise realize on any or all of
the Collateral, and/or appropriate, setoff or apply to the payment
of any or all of the Obligations, any or all of the Collateral or
proceeds thereof, and (iii) take any other enforcement action or
otherwise exercise any or all rights and remedies provided for by
under
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the
Loan Agreement, any other Loan Documents, the Intercreditor
Agreement and/or applicable law, all of which rights and remedies
are fully reserved by the Lender.
(d)
Any agreement by the Lender to extend the Forbearance Period or
enter into any other forbearance or similar arrangement must be set
forth in writing and signed by a duly authorized signatory of the
Lender. The Company and each of the Subsidiaries acknowledges
that the Lender has made no assurances whatsoever concerning any
possibility of any extension of the Forbearance Period, any other
forbearance or similar arrangement or any other limitations on the
exercise of its rights, remedies and privileges under or otherwise
in connection with the Loan Agreement, the other Loan Documents,
the Intercreditor Agreement and/or applicable law.
(e)
The Company and each of the Subsidiaries acknowledges and agrees
that any forbearance, waiver, consent or other financial
accommodation (including the funding of any borrowing request under
the Revolving Loan) which the Lender may make on or after the date
hereof has been made by the Lender in reliance upon, and is
consideration for, among other things, the general releases and
reaffirmation of indemnities contained in Article 4 hereof and the
other covenants, agreements, representations and warranties of the
Company and each of the Subsidiaries hereunder.
2.2
Amendment to Section 8.02. Section 8.02 of the
Loan Agreement is hereby amended and restated in its entirety to
read as follows:
“Borrower will not permit the aggregate
rentals payable under all non-cancelable operating leases entered
into after Closing to which Borrower or Subsidiary is a party to
exceed (a) $500,000 during any fiscal year ending with fiscal year
2006, (b) $1,250,000 during the fiscal year 2007, and (c)
$1,500,000 thereafter. Without the prior written consent of
the Lender in its sole discretion, no such operating lease entered
into after May 1, 2007 and having a term greater than one year
shall contain any restriction on the Borrower’s or applicable
Subsidiary’s right to grant a lien to the Lender on such
Person’s leasehold interest in the subject property, and the
lessor in respect of each such lease shall have agreed to provide
upon request a collateral access agreement substantially in the
form provided by the Lender with such modifications therein as
shall be reasonably acceptable to the Lender. Lender
acknowledges and consents to the Leases pledged to Lender by
Leasehold Deed of Trust to secure the Obligations and the other
existing leases on other real property disclosed to Lender.
Borrower agrees not to amend the Leases in any material respect
without the prior written consent of the Lender. At
Lender’s request, Borrower and its Subsidiaries will grant
Lender first liens on the leasehold int
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