Exhibit 10.02
SECOND AMENDED
AND RESTATED FORBEARANCE AGREEMENT
This Second Amended and Restated Forbearance
Agreement is made, and is effective, as of September 12, 2007
(“ Second Amended Forbearance Agreement ”), and
amends and restates that certain First Amended Forbearance
Agreement (defined below) by and among The Wornick Company (the
“ Company ”), Right Away Management Corporation,
The Wornick Company Right Away Division and The Wornick Company
Right Away Division L.P. (each a “ Subsidiary ,”
and collectively, the “ Subsidiaries ”), the
holders of the Company’s 10.875% Senior Secured Notes due
2011 (the “ Notes ”) that were issued pursuant
to that certain Indenture, dated as of June 30, 2004 (as amended,
modified, supplemented or amended and restated from time to time,
the “ Indenture ”), that are signatories hereto
(each a “ Noteholder ,” and collectively, the
“ Noteholders ,” and together with the Company,
the “ Parties ”) and U.S. Bank National
Association, as indenture trustee (the “ Indenture
Trustee ”) under the Indenture, solely with respect to
Sections 3(b)(i) and 14 hereof.
RECITALS
WHEREAS, t he Noteholders collectively
hold 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 that are outstanding;
WHEREAS, each of the Noteholders (other than
DDJ Total Return Loan Fund, L.P.; B IV Capital Partners, L.P.; DDJ
High Yield Fund; GMAM Investment Funds Trust II, for the account of
the Promark Alternative High Yield Bond Fund
(Account No. 7M2E); GMAM Investment Funds
Trust; General Motors Welfare Benefit Trust (VEBA); GMAM Investment
Funds Trust II for the account of the Promark Alternative High
Yield Bond Fund (Account No. 7MWD); DDJ Capital Management Group
Trust; Stichting Pensioenfonds Hoogovens; The October Fund, Limited
Partnership; DDJ/Ontario Credit Opportunities Fund, L.P.; and
Multi-Style, Multi-Manager Funds PLC The Global High Yield Fund
(collectively, “ DDJ ”)), is a member of the
unofficial group of holders of the Notes (the “ Noteholder
Group ”), which collectively holds a majority in
principal amount of the Notes;
WHEREAS, t he Company, the Subsidiaries
and DDJ Total Return Loan Fund, L.P. (as assignee of Texas State
Bank; in such capacity, “ Lender ”) are parties
to that certain Loan Agreement, dated as of June 30, 2004 (as
amended by the First Amendment dated as of March 16, 2007, and as
further amended, modified, supplemented or amended and restated
from time to time, the “ Loan Agreement ”);
WHEREAS, (a) t he obligations of the
Company and the Subsidiaries evidenced by the Notes and the
Guarantees (as defined in the Indenture) and (b) the obligations of
the Company and the Subsidiaries to Lender pursuant to the Loan
Agreement and the other Loan Documents (as defined in the Loan
Agreement), are secured by a security interest in and continuing
lien on substantially all of the assets of the Company and the
Subsidiaries (the “ Collateral ”);
WHEREAS, Lender’s and the
Indenture Trustee’s rights with respect to the priority and
enforcement of their security interests in the Collateral are
governed by
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that certain Intercreditor Agreement, dated as
of June 30, 2004, between the Indenture Trustee and the Texas State
Bank (as amended, modified, supplemented or amended and restated
from time to time, the “ Intercreditor Agreement
”);
WHEREAS, a s of the date hereof, the
Events of Default referred to herein as the “ Specified
Existing Defaults ,” all of which are specified on
schedule A attached hereto, have occurred and are
continuing;
WHEREAS, the Company, the Subsidiaries, the
Noteholders and the Indenture Trustee entered into an initial
forbearance agreement dated as of July 16, 2007 (the “
Initial Forbearance Agreement ”) pursuant to which the
Noteholders agreed to forbear, and agreed to direct the Indenture
Trustee to forbear, from exercising their rights and remedies under
the Indenture during the Forbearance Period (as defined in the
Initial Forbearance Agreement);
WHEREAS, the Company, the Subsidiaries, the
Noteholders and the Indenture Trustee entered into an amended and
restated forbearance agreement dated as of August 13, 2007 (the
“ First Amended Forbearance Agreement ”)
pursuant to which the Noteholders agreed to further forbear, and
agreed to direct the Indenture Trustee to further forbear, from
exercising their rights and remedies under the Indenture during the
Forbearance Period (as defined in the First Amended Forbearance
Agreement);
WHEREAS, the Forbearance Period (as defined in
the First Amended Forbearance Agreement) under the First Amended
Forbearance Agreement is set to
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expire on September 17, 2007 and the
Company and the Subsidiaries have asked the Noteholders to extend
the Forbearance Period through October 16, 2007;
WHEREAS, the Company and the Subsidiaries
entered into an initial forbearance agreement with the Lender dated
as of July 16, 2007 (the “ DDJ Forbearance Agreement
”) pursuant to which the Lender agreed to forbear from
exercising its rights and remedies under the Loan Agreement and the
other Loan Documents (as defined in the Loan Agreement) until the
expiration of the forbearance period set forth in the DDJ
Forbearance Agreement;
WHEREAS, the Company and the Subsidiaries
entered subsequently into an amended forbearance agreement with the
Lender dated as of August 13, 2007 (the “ DDJ Amended
Forbearance Agreement ”) pursuant to which the Lender
agreed to further forbear from exercising its rights and remedies
under the Loan Agreement and the other Loan Documents (as defined
in the Loan Agreement) until the expiration of the forbearance
period set forth in the DDJ Amended Forbearance Agreement (the
“ DDJ Amended Forbearance Period ”);
WHEREAS, the Company and the Subsidiaries have
advised the Noteholders that the Company, the Subsidiaries and
Lender will, simultaneously with the execution of this Second
Amended Forbearance Agreement, amend and restate the DDJ Amended
Forbearance Agreement, pursuant to which Lender shall agree to
extend the DDJ Amended Forbearance Period and continue to forbear
from exercising the rights and remedies available to Lender under
the Loan Agreement and the other Loan Documents
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(as
defined in the Loan Agreement), all on the terms and conditions set
forth in such separate amended forbearance agreement through and
including October 14, 2007 (as such agreement may be amended,
modified, supplemented or amended and restated from time to time,
the “ DDJ Second Amended Forbearance Agreement
”);
WHEREAS, at t he Company’s
request, the Noteholders have agreed to continue forbearing from
exercising, and continue to instruct the Indenture Trustee not to
exercise, those of the rights and remedies available under the
Indenture, the Intercreditor Agreement, the Collateral Agreements
and/or applicable law that have or may have arisen, or may
hereafter arise, due to the occurrence and continuance of the
Specified Existing Defaults on the terms and conditions set forth
herein; and
WHEREAS, capitalized terms used and not defined
herein shall have the meanings ascribed to them in the Indenture
and the First Amended Forbearance Agreement.
NOW
THEREFORE, in consideration of the premises and the respective
covenants and agreements set forth in this Second Amended
Forbearance Agreement, the Parties, each intending to be legally
bound, agree that the First Amended Forbearance Agreement is
amended and restated in its entirety as follows:
1.
Forbearance .
(a)
Effective as of the Second Amended Forbearance Effective Date (as
defined below), the Noteholders agree that, until the expiration of
the Second Forbearance Period (as defined below), they will forbear
from exercising, and shall direct
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the
Indenture Trustee, and by signature hereto so direct the
Indenture Trustee pursuant to Section 6.5 of the Indenture, not to
exercise, any rights and remedies against the Company or the
Subsidiaries that are available under the Indenture, the
Intercreditor Agreement, the Collateral Agreements and/or
applicable law solely with respect to the Specified Existing
Defaults (excluding, however, the Noteholders’ right to
charge default interest on the Notes (including on all unpaid
interest on the Notes to the extent provided under the Indenture)
during the Second Forbearance Period); provided ,
however , that nothing herein shall restrict, impair or
otherwise affect the exercise of the Noteholders’ rights
under this Second Amended Forbearance Agreement, and
provided further that no such forbearance shall
constitute a waiver with respect to any such Specified Existing
Defaults or any other Events of Default under the
Indenture.
(b)
As used herein, the term “ Second Forbearance Period
” shall mean the period beginning on the date hereof and
ending upon the occurrence of a Termination Event. As used
herein, “ Termination Event ” shall mean the
earlier to occur of (i) October 17, 2007; and (ii) two business
days after the delivery by the Noteholder Group to the Company and
Lender of a written notice terminating the Second Forbearance
Period (the “ Termination Notice ”), which
notice may be delivered at any time upon or after the occurrence of
any Forbearance Default (as defined below); provided ,
however , that notwithstanding the foregoing, (x) this
Second Amended Forbearance Agreement shall immediately terminate
two (2) business days after the occurrence of a Forbearance Default
under subsection (D) below without the need for delivery of the
Termination Notice or any other notice, and (y) this Second
Amended
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Forbearance Agreement shall immediately
terminate upon the occurrence of a Forbearance Default under
subsection (J) below, without the need for delivery of the
Termination Notice or any other notice. As used herein, the
term “ Forbearance Default ” shall mean: (A) the
failure of the Company to provide the Noteholder Group and its
financial advisors with reasonable access, as determined by the
Noteholder Group in its reasonable discretion, to its Chief
Executive Officer, other senior executives and outside advisors,
including representatives of Kroll Zolfo Cooper that are working
with the Company, and to provide the Noteholder Group and its legal
and financial advisors with any and all due diligence information
they may reasonably request, including, without limitation, the
Company’s current 13-week cash flow schedule, and all updates
thereto as soon as reasonably practicable after they are prepared,
but in no event no later than two (2) business days thereafter; (B)
the failure of the Company to engage in good faith negotiations
with the Noteholder Group regarding a potential restructuring
transaction, which determination shall be made by the Noteholder
Group in its reasonable discretion; (C) the failure of the Company
to promptly notify the Noteholder Group of the occurrence of a
Forbearance Default (as defined in the DDJ Second Amended
Forbearance Agreement) under the DDJ Second Amended Forbearance
Agreement or any amendment or modification to the DDJ Second
Amended Forbearance Agreement; (D) termination of the DDJ
Second Amended Forbearance Agreement; (E) the execution of any
amendment or modification to the DDJ Second Amended Forbearance
Agreement, which amendment or modification has a material adverse
effect on the Noteholder Group as determined by the Noteholder
Group in its reasonable discretion; (F) termination by
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the
Company of the Chanin Engagement Letter or the failure of the
Company to pay Chanin’s fees, expenses and indemnity in
accordance with the terms of the Chanin Engagement Letter;
(G) the occurrence of any Event of Default that is not a
Specified Existing Default; (H) the failure of the Company to
comply with any term, condition, covenant or agreement set forth in
this Second Amended Forbearance Agreement; (I) the failure of
any representation or warranty made by the Company under this
Second Amended Forbearance Agreement to be true and correct in all
material respects as of the date when made; (J) the
commencement by or against the Company or any of the Subsidiaries
of a case under title 11 of the United States Code; or (K) the
commencement of any action or proceeding by any creditor of the
Company or any of the Subsidiaries seeking to attach or take
similar action against the assets of the Company or the
Subsidiaries. Any Forbearance Default shall constitute an
immediate Event of Default under the Indenture.
(c)
Upon the occurrence of a Termination Event, the agreement of the
Noteholders hereunder to forbear, and to direct the Indenture
Trustee to forbear, from exercising rights and remedies in respect
of the Specified Existing Defaults, shall immediately terminate
without the requirement of any demand, presentment, protest, or
notice of any kind (other than, where required, the Termination
Notice), all of which the Company and the Subsidiaries hereby
waive. The Company and the Subsidiaries agree that, upon the
occurrence of, and at any time after, the occurrence of a
Termination Event, the Noteholders or the Indenture Trustee, as
applicable, may proceed, subject to the terms of the Indenture, the
Intercreditor Agreement, the Collateral
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Agreements and/or applicable law, to exercise
any or all rights and remedies under the Indenture, the
Intercreditor Agreement, the Collateral Agreements and/or
applicable law, including, without limitation, the rights and
remedies on account of the Specified Existing 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, subject to the terms of the Intercreditor
Agreement, the Collateral Agreements and any related documents, the
Noteholders or the Indenture Trustee, as applicable, may, upon such
notice or demand as is specified by the Indenture, the
Intercreditor Agreement, the Collateral Agreements or applicable
law (x) collect and/or commence any legal or other action to
collect any or all of the Company’s or the
Subsidiaries’ obligations under the Indenture or
