AMENDMENT NO. 2
TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
AMENDMENT NO. 2 TO AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT ("this Amendment"), dated as of March 10, 1998, among SWEETHEART CUP
COMPANY INC. a Delaware corporation (the "Borrower"), SWEETHEART HOLDINGS INC.,
a Delaware corporation ("Holdings"), the lending institutions party hereto and
BANKAMERICA BUSINESS CREDIT, INC., as Agent (the "Agent").
WHEREAS, the Borrower, Holdings, the lenders party thereto and
the Agent entered into a certain Amended and Restated Loan and Security
Agreement, dated as of October 24, 1997, as amended (such agreement as so
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 to the Borrower and to issue or to cause the issuance of
letters of credit for the account of the Borrower;
WHEREAS, the Borrower and Holdings desire to amend certain
financial covenants and the defined term "Change of Control" in the Loan and
Security Agreement;
WHEREAS, the Majority Lenders and the Agent are agreeable to
such amendments, subject to the terms and conditions herein contained;
NOW, THEREFORE, the Borrower, Holdings, the Majority 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 3 hereof is,
amended as follows:
2.1. The definition of "Adjusted Net Earnings from Operations"
in Section 1.1 of the Loan and Security Agreement is amended by:
(a) adding the following proviso to the end of clause (a)
thereof immediately before the semicolon:
"; provided that notwithstanding the foregoing, for
purposes of testing the Fixed Charge Coverage Ratio
for any Test Period ending on or after June 30, 1998,
any gain arising from the sale of any capital assets
(other than
"; provided that notwithstanding the foregoing, for
purposes of testing the Fixed Charge Coverage Ratio
for any Test Period ending on or after June 30, 1998,
any gain arising from the sale of any capital assets
(other than Credit Agreement Collateral) of Parent or
any of its Subsidiaries permitted under Section 9.9
may be included in such net income if all of the net
cash proceeds of such sale have been reinvested in
any business of Parent or the Borrower permitted
under Section 9.18"; and
(b) deleting the last sentence of such definition and
substituting the following therefor:
"For purposes of the Fixed Charge Coverage Ratio test
set forth in Section 9.26, (i) Adjusted Net Earnings
From Operations shall not include the one-time costs
and expenses arising from (x) the transactions
contemplated hereby on the Closing Date or in
connection with the Divestiture or the sales
permitted by Sections 9.9(iv) and (v)(C) or (y) with
respect to Test Periods ending on or before March 31,
1998, the transfer and management of the Double Sided
Poly (DSP) Cold Cup conversion program, (ii) with
respect to Test Periods ending on or before March 31,
1998, any charge of the Borrower with respect to
plant closings, consolidations and the transfer and
management of the Double Sided Poly (DSP) Cold Cup
conversion program after the Closing Date and related
employee severance shall constitute an expense of the
Borrower when such charge is actually paid in cash by
the Borrower and not when such charge is accrued on
the books and records of the Borrower and (iii) with
respect to Test Periods ending on or after June 30,
1998, any charge of the Borrower with respect to
employee severance resulting from early termination
of employees of the Borrower shall constitute an
expense of the Borrower when such charge is actually
paid in cash by the Borrower and not when such charge
is accrued on the books and records of the Borrower."
2.2. The definition of "Change of Control" in
Section 1.1 of the Loan and Security Agreement is amended by:
(a) deleting clauses (i) and (ii) thereof and substituting the
following therefor:
" (i) Neither American Industrial Partners Capital Fund, L.P.,
a Delaware limited partnership ("AIP"), and/or SF Holdings
Group, Inc., a Delaware corporation (the "Buyer"), shall,
separately or collectively, be the record and Beneficial Owner
(as defined below) of a majority in the aggregate of the total
voting power of the Voting Stock (as defined below) of Parent,
whether as a result of an issuance of securities of Parent,
any merger, consolidation, liquidation or dissolution of
Parent, any direct or indirect transfer of securities or
otherwise; or
(ii) Neither AIP and/or the Buyer shall, separately
or collectively, have
2
the right or ability, by voting power, contract or otherwise,
to elect or designate for election a majority of the Board of
Directors (as defined below) of Parent; or " and
(b) deleting the period at the end of clause (v) thereof,
substituting ";or " therefor and adding the following clauses after such clause
(v):
"(vi) None of AIP, Xxxxxx Xxxxxx and/or any one or
more trusts, corporations, partnerships, limited liability
companies or other entities in which Xxxxxx Xxxxxx has a
Beneficial Ownership interest of a majority in the aggregate
of the total voting power of such entity (each, a "Controlled
Entity") shall, separately or collectively, be the record and
Beneficial Owner of a majority in the aggregate of the total
voting power of the Voting Stock of the Buyer, whether as a
result of an issuance of securities of the Buyer, any merger,
consolidation, liquidation or dissolution of the Buyer, any
direct or indirect transfer of securities or otherwise; or
(vii) None of AIP, Xxxxxx Xxxxxx and/or one or more
Controlled Entities shall, separately or collectively, have
the right or ability, by voting power, contract or otherwise,
to elect or designate for election a majority of the Board of
Directors of the Buyer."
2.3. The definition of "Fixed Charge Component " in Section
1.1 of the Loan and Security Agreement is amended by adding the clause ", for
the calculation of the Fixed Charge Coverage Ratio for Test Periods ending on or
before March 31, 1998," immediately before the phrase "Capital Expenditures paid
for by the Borrower with cash proceeds from the sale of assets" in clause (iii)
thereof.
2.4. Section 9.23 of the Loan and Security Agreement is
deleted in its entirety and the following shall be substituted therefor:
"9.23 Capital Expenditures. Neither Parent nor any of
its Subsidiaries shall make or incur any Capital
Expenditures in any Fiscal Year set forth below if,
after giving effect thereto, the aggregate amount of
all Capital Expenditures by Parent and its
Subsidiaries on a consolidated basis during such
Fiscal Year shall exceed the amount set forth below
opposite such Fiscal year:
Fiscal Year Amount
1998 $47,000,000
1999 $50,000,000
2000 $47,000,000
3
The Borrower will use its commercially reasonable
best efforts to use the net proceeds (but in any
event shall use not less than 75% of the net
proceeds) of each sale of Secured Note Collateral
permitted pursuant to Sections 9.9(ii), (iii) and
(iv) to incur Capital Expenditures, to the extent
otherwise permitted under this Section. The Borrower
agrees to promptly notify the Agent of any such sale
and the amount of net proceeds to be derived from
each such sale."
2.5. Section 9.26 of the Loan and Security Agreement is
amended by deleting in its entirety the schedule contained therein and
substituting the following schedule therefor:
"Fiscal Quarter Ending Ratio
December 31, 1997 .15/1
March 31, 1998 .15/1
June 30, 1998 .54/1
September 30, 1998 .64/1
December 31, 1998 .64/1
March 31, 1999 .64/1
June 30, 1999 .66/1
September 30, 1999 .67/1
December 31, 1999 .69/1
March 31, 2000 .70/1
June 30, 2000 .73/1
September 30, 2000 .76/1 "
2.6. Section 11.1 of the Loan and Security Agreement is
amended by (i) deleting the word "or " at the end of clause (p) thereof, (ii)
deleting the period at the end of clause (q) thereof and substituting therefor
";or " and (iii) adding the following clause (r) thereto:
"(r) there shall occur any of the events, acts or
conditions described in Section 6 of the Waiver dated
January 21, 1998 by the Lenders to the Borrower and
Parent or any of the waivers or other agreements of
the Majority Lenders in such Waiver shall be revoked
or of no further force or effect as contemplated by
such Section 6; or the Borrower or Parent shall
breach any agreement made by it under such Waiver."
SECTION 3. EFFECTIVENESS. This Amendment shall become
effective only after satisfaction of the following conditions:
(a) the Agent shall have received an original
counterpart hereof duly executed and delivered by the
Borrower, Holdings, the Majority Lenders and the Agent;
4
(b) SF Holdings Group, Inc. (the "Buyer ") shall have
acquired shares of the outstanding capital stock of Holdings
representing 90% of the outstanding shares of capital stock of
Holdings and 48% of the outstanding Voting Stock of Holdings
pursuant to and in accordance with the terms of the Investment
Agreement, dated as of December 29, 1997, among the
stockholders of Holdings immediately prior to such
acquisition, Creative Expressions Group, Inc. and the Buyer as
in effect on the date of execution thereof; and
(c) No Default or Event of Default shall have
occurred and be continuing.
SECTION 4. 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 5. 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 6. 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.
5
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: /s/ Xxxxx X. Xxxxxxx
------------------------------
Name: Xxxxx Xxxxxxx
Title: Vice President and Treasurer
SWEETHEART HOLDINGS INC.
By: /s/ Xxxxx X. Xxxxxxx
------------------------------
Name: Xxxxx Xxxxxxx
Title: Vice President and Treasurer
BANKAMERICA BUSINESS CREDIT, INC.
Individually and as Agent
By: /s/ Xxxxx Xxxxxxxxx
------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Vice President
CONGRESS FINANCIAL CORPORATION
By: /s/ Xxxxx X. Last
------------------------------
Name: Xxxxx X. Last
Title: Vice President
6
TRANSAMERICA BUSINESS CREDIT
CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Senior Vice President
MELLON BANK, N.A.
By: /s/ Xxxx Xxxxxxxx
------------------------------
Name: Xxxx Xxxxxxxx
Title: Vice President
AT&T COMMERCIAL FINANCE
CORPORATION
By: /s/ Xxxxx X. Xxxxxxxxxx
------------------------------
Name: Xxxxx X. Xxxxxxxxxx
Title: Vice President
