AMENDMENT NO. 2
TO THIRD AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
AMENDMENT NO.2 TO THIRD AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT ("this Amendment"), dated as of February 28, 2003, among SWEETHEART
CUP COMPANY INC., a Delaware corporation (the "Borrower"), SWEETHEART HOLDINGS
INC., a Delaware corporation ("Holdings"), the lending institutions party hereto
and BANK OF AMERICA, N.A., as Agent (the "Agent").
WHEREAS, the Borrower, Holdings, the lenders party thereto and
the Agent entered into a certain Third Amended and Restated Loan and Security
Agreement, dated as of March 25, 2002 as amended (such agreement as amended
being referred to herein as the "Loan and Security Agreement"), pursuant to
which such lenders have agreed, subject to certain terms and conditions, to make
revolving advances and term loans to the Borrower and to issue or to cause the
issuance of letters of credit for the account of the Borrower;
WHEREAS, the Borrower, Holdings, the Lenders and the Agent
desire to amend the Loan and Security Agreement;
NOW, THEREFORE, the Borrower, Holdings, the Lenders and the
Agent hereby agree as follows:
SECTION 1. CAPITALIZED TERMS. Capitalized terms used but not
defined herein shall have the respective meanings set forth in the Loan and
Security Agreement.
SECTION 2. AMENDMENTS. The Loan and Security Agreement shall
be, and upon the fulfillment of the conditions set forth in Section 4 hereof is,
amended as follows:
2.1. The definition of "Availability" in Section 1.1 of the
Loan and Security Agreement is amended by (i) deleting the word "or" immediately
before clause (a)(iii) thereof and (ii) adding the following clause immediately
after such clause (a)(iii) before the semicolon:
"or (iv) if and so long as any Senior Exchange Notes remain
outstanding, the limitation in the indenture governing the
Senior Exchange Notes corresponding to the limitation in the
indenture governing the Senior Subordinated Notes referred to
in clause (iii) above (or if there is no corresponding
limitation in the indenture governing the Senior Exchange
Notes, the maximum amount (if applicable) permitted under the
indenture governing the Senior Exchange Notes that the
Borrower may borrow under the revolving credit facility
provided hereunder, which limitation shall be separate from
any provision in such indenture permitting the Term Loans)"
2.2. The definition of "Change of Control" in Section 1.1 of
the Loan and Security Agreement is amended by adding the words ", the Senior
Exchange Notes" immediately before the words "or the Senior Replacement Notes"
in clause (v) of such definition.
2.3. The definition of "Fixed Charge Component" in Section
1.1 of the Loan and Security Agreement is amended by adding the words ", the
Senior Exchange Notes" immediately before the words "or the Xxxxx Senior
Subordinated Notes" in clause (y) of the parenthetical contained in clause (iv)
of such definition.
2.4. New definition "Senior Exchange Notes" is added to
Section 1.1 of the Loan and Security Agreement and reads as follows:
`"Senior Exchange Notes" means the senior unsecured notes
contemplated to be issued by the Borrower (subject to and to the extent
permitted by the terms of this Agreement) pursuant to an exchange offer
in exchange for not less than 90% (or such lesser percentage as agreed
to in writing by the Agent and the Majority Lenders) of the Senior
Subordinated Notes outstanding immediately prior to such issuance,
which Senior Exchange Notes shall be issued in an aggregate principal
amount equal to the aggregate outstanding principal amount of Senior
Subordinated Notes to be exchanged therefor and for which neither the
Borrower, Parent nor any of their respective affiliates shall be paid
any cash or other consideration.'
2.5. The definition of "Stated Termination Date" in Section
1.1 of the Loan and Security Agreement is amended in its entirety to read as
follows:
`"Stated Termination Date" means the fifth anniversary of the
Closing Date; provided that (i) in the event the Borrower has not
refinanced, repaid or extended the Senior Subordinated Notes (not less
than 90%, or such lesser percentage as agreed to in writing by the
Agent and the Majority Lenders, of the Senior Subordinated Notes if
such notes are refinanced with Senior Exchange Notes) on terms
reasonably acceptable to the Agent and the Majority Lenders prior to
July 1, 2003, the Stated Termination Date means July 1, 2003, (ii)
subject to clause (i) above, in the event prior to July 1, 2003 the
Borrower has exchanged not less than 90% (or such lesser percentage as
agreed to in writing by the Agent and the Majority Lenders) of the
Senior Subordinated Notes with Senior Exchange Notes and thereafter the
Senior Exchange Notes are not refinanced, repaid or extended on terms
reasonably acceptable to the Agent and the Majority Lenders prior to
the earlier of (x) the date six months prior to the scheduled maturity
date of the Senior Exchange Notes and (y) December 31, 2003, the Stated
Termination Date means the earlier of the dates referred to in such
clauses (x) and (y) and (iii) subject to clauses (i) and (ii) above, in
the event the Borrower has not refinanced, repaid or extended the Xxxxx
Senior Subordinated Notes on terms reasonably acceptable to the Agent
and the Majority Lenders prior to September 1, 2006, the Stated
Termination Date means September 1, 2006.'
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2.6. The definition of "Transaction Documents" in Section
1.1 of the Loan and Security Agreement is amended by adding the words "the
Senior Exchange Notes (but only if issued)," immediately after the words "the
Senior Replacement Notes (but only if issued)," contained therein.
2.7. The words "(or twelve (12) monthly installments with a
final scheduled maturity date on March 1, 2003 if the Stated Termination Date
shall be March 1, 2003)" in Section 2.3(c) of the Loan and Security Agreement
are amended in their entirety to read as follows:
"(or if the Stated Termination Date shall be earlier than
March 1, 2005, a lesser number of monthly installments with a
final scheduled maturity date on such Stated Termination
Date)".
2.8. Section 8.1 of the Loan and Security Agreement is
amended by (i) deleting the word "and" at the end of clause (ii) of the last
sentence of such section and substituting therefor a comma and (ii) adding the
following at the end of such last sentence immediately prior to the period:
"and (iv) with respect to any such borrowing, issuance or
delivery made on or after the issuance of the Senior Exchange
Notes (if issued), the indenture relating to the Senior
Exchange Notes".
2.9. Section 9.10(A)(c)of the Loan and Security Agreement is
amended by adding the words "or the Senior Exchange Notes, as the case may be"
immediately after the words "the Senior Replacement Notes" in clause (x)
thereof.
2.10. Section 9.12 of the Loan and Security Agreement is
amended by adding the following to the end thereof immediately prior to the
period:
"and unsecured guaranties by Parent and Subsidiaries of the
Borrower (other than Lily Cup and the Global Entities) of the
obligations of the Borrower under the Senior Exchange Notes".
2.11. Section 9.13 of the Loan and Security Agreement is
amended by adding the words "(and unsecured Debt under the Senior Exchange Notes
issued solely in exchange for Debt under the Senior Subordinated Notes, which
Debt under the Senior Exchange Notes shall have such terms and conditions, and
be issued pursuant to documentation, satisfactory to the Agent and the Majority
Lenders)" immediately after the words "unsecured Debt under the Senior
Subordinated Notes" at the beginning of clause (j) of such Section.
2.12. Section 9.14 of the Loan and Security Agreement is
amended by (i) adding the words ", the Senior Exchange Notes" immediately after
the words "the Senior Subordinated Notes, the Xxxxx Senior Subordinated Notes"
in the second parenthetical in the first sentence of such section, in clause
(ii) of such first sentence and in the second sentence of such section, (ii)
deleting the word "and" at the end of clause (iii) of the first sentence of such
section and
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substituting a comma therefor, (iii) adding a new clause (v) at the end of
clause (iv) of the first sentence of such section immediately before the period
which reads as follows:
"and (v) not less than 90% (or such lesser percentage as
agreed to in writing by the Agent and the Majority Lenders) of
the outstanding Senior Subordinated Notes with the Senior
Exchange Notes in an exchange offer (which Senior Exchange
Notes and indenture governing same shall be satisfactory to
the Agent and the Majority Lenders)"
and (iv) deleting the words "clauses (iii) and (iv)" contained in the
parenthetical in the second sentence of such section and substituting therefor
the words "clauses (iii), (iv) and (v)".
2.13. Section 9.15 of the Loan and Security Agreement is
amended by deleting clause (a) of the third sentence thereof and substituting
the following therefor:
"(a) so long as no Event of Default exists at the time of
payment or would exist immediately after giving effect
thereto, Parent or the Borrower may pay the fees as required
pursuant to the Management Services Agreement as in effect on
the Closing Date in an aggregate amount not to exceed
$2,000,000 (or such lesser amount, if any, permitted under the
indenture for the Senior Exchange Notes (if issued) as in
effect on the date of execution of such indenture) in any
Fiscal Year (payable semi-annually 45 days after each interest
payment date with respect to, and as defined in, the Senior
Subordinated Notes; it being understood and agreed that in the
event the Senior Subordinated Notes shall be repaid, redeemed
or exchanged in full, such fees shall continue to be payable
at such times as if the Senior Subordinated Notes were not
repaid, redeemed or exchanged) and reimbursement for
reasonable out-of-pocket expenses, provided, however, that all
obligations of Parent or the Borrower to pay fees pursuant to
said Management Services Agreement shall also be subordinated
to the payment of all Obligations in respect of this Agreement
and the other Loan Documents (including, without limitation,
pursuant to the Parent Guaranty) to at least the same extent
as the obligations of the Borrower in respect of the Senior
Subordinated Notes are subordinated to the prior payment of
"Senior Indebtedness" (as defined in the Indenture for the
Senior Subordinated Notes) (it being understood and agreed
that in the event the Senior Subordinated Notes shall be
repaid, redeemed or exchanged in full, such subordination of
such fees shall continue as if the Senior Subordinated Notes
were not repaid, redeemed or exchanged);".
2.14. Section 9.17 of the Loan and Security Agreement is
amended by (i) adding the words "and except for the amendment of the Senior
Subordinated Notes and the indenture related thereto pursuant to a supplemental
indenture in form and substance satisfactory to the Agent to remove covenants
and events of default in such notes and indenture" to the end of the first
sentence of such section immediately before the period and (ii) adding the words
", the Senior Exchange Notes" immediately before the words "or the Senior
Replacement Notes" in the third sentence of such section.
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2.15. Section 9.24 of the Loan and Security Agreement is
amended to read as follows:
"9.24 Trade Support. The Borrower shall not permit the ratio
of (x) its accounts payable on the last day of any fiscal
month of the Borrower set forth below to (y) its inventory on
such last day (as such accounts payable and inventory are set
forth on the books and records of the Borrower and shown in
the monthly financial statements of the Borrower under "Merged
Domestic") to be less than the ratio set forth opposite such
fiscal month:
------------------------ ------------------------------------
Fiscal Month ending on Ratio
------------------------ ------------------------------------
March 30, 2003 .33/1
------------------------ ------------------------------------
April 27, 2003 .45/1
------------------------ ------------------------------------
May 25, 2003 .45/1
------------------------ ------------------------------------
June 29, 2003 .45/1
------------------------ ------------------------------------
July 27, 2003 and each For each such fiscal month,the ratio
subsequent fiscal month of (x) $7,500,000 less than the
through and including accounts payable for such fiscal
fiscal month ending month projected on the Borrower's
March 28, 2004 projections under the category
"Merged Domestic" to be delivered
by the Borrower to the Agent and the
Lenders on or about March 7, 2003 to
(y) the inventory for such fiscal
month projected on such projections
under the category "Merged
Domestic"'
------------------------ ------------------------------------
2.16. Section 11.1(d) of the Loan and Security Agreement is
amended by adding the words ", the Senior Exchange Notes" immediately after each
usage of the words "Xxxxx Senior Subordinated Notes" in such section.
SECTION 3. SENIOR REPLACEMENT NOTES. Each of the Borrower and
Holdings agrees that in the event that Senior Exchange Notes are issued, then
the Borrower shall no longer be permitted to issue Senior Replacement Notes.
SECTION 4. EFFECTIVENESS. This Amendment shall become
effective upon:
(a) the Agent receiving counterparts hereof
duly executed and delivered by the Borrower, Holdings, the Lenders and
the Agent; and
(b) the Agent receiving for the ratable
benefit of the Lenders an extension fee in the amount of $1,000,000.
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SECTION 5. COUNTERPARTS. This Amendment may be executed in
counterparts, each of which shall be an original, and all of which, taken
together, shall constitute a single instrument. This Amendment shall be governed
by, and construed in accordance with, the laws of the State of New York.
SECTION 6. REFERENCES TO LOAN AND SECURITY AGREEMENT. From and
after the effectiveness of this Amendment and the amendments contemplated
hereby, all references in the Loan and Security Agreement to "this Agreement",
"hereof", "herein", and similar terms shall mean and refer to the Loan and
Security Agreement, as amended and modified by this Amendment, and all
references in other documents to the Loan and Security Agreement shall mean such
agreement as amended and modified by this Amendment.
SECTION 7. RATIFICATION AND CONFIRMATION. The Loan and
Security Agreement is hereby ratified and confirmed and, except as herein
agreed, remains in full force and effect. Each of the Borrower and Holdings
represents and warrants that (i) all representations and warranties contained in
the Loan Documents are true and correct in all material respects with the same
effect as though such representations and warranties had been made on and as of
the date hereof (except to the extent that such representations or warranties
expressly related to a specified prior date) and (ii) there exists no Default or
Event of Default.
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed by their respective authorized officers as of the
day and year first above written.
SWEETHEART CUP COMPANY INC.
By:
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Name:
------------------------
Title:
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SWEETHEART HOLDINGS INC.
By:
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Name:
------------------------
Title:
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BANK OF AMERICA, N.A.
Individually and as Agent
By:
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Name:
------------------------
Title:
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CONGRESS FINANCIAL CORPORATION
By:
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Name:
------------------------
Title:
------------------------
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XXXXXXX WHITEHALL BUSINESS
CREDIT CORPORATION
By:
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Name:
------------------------
Title:
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TRANSAMERICA BUSINESS CREDIT
CORPORATION
By:
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Name:
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Title:
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PNC BANK, NATIONAL ASSOCIATION
By:
------------------------
Name:
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Title:
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NATIONAL CITY COMMERCIAL
FINANCE, INC.
By:
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Name:
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Title:
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FOOTHILL CAPITAL CORPORATION
By:
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Name:
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Title:
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THE CIT GROUP/BUSINESS CREDIT,
INC.
By:
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Name:
------------------------
Title:
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