SWEETHEART HOLDINGS INC \DE\
LOAN DEPT OF BUSINESS & ECON DEVELOP OF MD
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>3
<FILENAME>ex10-67loanmd.txt
<DESCRIPTION>LOAN DEPT OF BUSINESS & ECON DEVELOP OF MD
<TEXT>



                                 LOAN AGREEMENT


         THIS LOAN AGREEMENT (as it may be amended, this "Agreement") is made as
of this ___ day of ____________,  200__,  between SWEETHEART CUP COMPANY INC., a
Delaware  corporation (the "Borrower"),  and DEPARTMENT OF BUSINESS AND ECONOMIC
DEVELOPMENT, a principal department of the State of Maryland (the "Lender").

                                    RECITALS

         1. The Borrower is indebted to the Lender in the  principal  amount not
to exceed $2,000,000, plus interest thereon (the "Loan"), which will be advanced
to the  Borrower  pursuant  to  this  Agreement.  The  Loan  is  evidenced  by a
Promissory  Note  dated the date  hereof  in the  original  principal  amount of
$2,000,000  made by the Borrower and payable to the Lender (as it may be amended
or replaced, the "Note").

         2. The  Loan  was  made  pursuant  to the  provisions  of the  Maryland
Economic  Development  Assistance  Authority  and Fund  ("MEDAAF"),  codified as
Sections  5-1401 through 5-1411 of Article 83A of the Annotated Code of Maryland
(as amended, the "Act").

         3. The Loan proceeds  will be used by the Borrower in  connection  with
the following  activities  (collectively,  the "Project"):  (a)  construction of
improvements to the Borrower's  facility,  located at 10100  Reisterstown  Road,
Owings Mills, Maryland (the "Facility"),  that is used to manufacture single-use
disposable  products  for the  food  and  beverage  industry  and  for  offices,
including the Corporate  Headquarters  (defined below);  and (b) the acquisition
and installation of equipment into the Facility.

         4. The Board of Directors of the Borrower  approves the Project and the
terms of this Agreement by its resolution and execution of this Agreement.

         NOW, THEREFORE, for other good and valuable consideration,  the receipt
and sufficiency of which are hereby acknowledged, the parties agree as follows:


                                    ARTICLE I
                                   DEFINITIONS

         All  accounting  terms not  specifically  defined herein shall have the
meanings  determined by generally accepted accounting  principles,  consistently
applied.  All terms  previously  defined are  incorporated  in this Agreement by
<PAGE>
reference.  Capitalized  terms used in this Agreement have the meanings  defined
below:

                  "Application"  means the Application  from the Borrower to the
Lender dated January 22, 2002, as it may be amended.

                  "Borrower's Contribution" means the Borrower's provision of at
least $3,000,000 towards the costs of the Project, in addition to the Loan.

                  "Claim" means any action or other claim for  liability,  loss,
expense,  or other  cost,  including  fees,  costs and  expenses  of  attorneys,
consultants, contractors, and experts.

                  "Completion Date" means December 31, 2002.

                  "Corporate   Headquarters"  means  the  Borrower's   corporate
headquarters  where the president and other  executive  officers of the Borrower
conduct substantially all of the operations of the Borrower.

                  "Default"    means  any  default  under  Article  IV  of  this
Agreement.

                  "Employees"  means  employees  who  (a)  are  employed  by the
Borrower at the Facility for at least 1800 hours per year,  without a fixed term
of employment,  (b) are eligible for an employer subsidized health care benefits
package,  (c) are eligible for similar other benefits as other  employees of the
Borrower and any subsidiary or affiliate of the Borrower, and (d) make an hourly
wage of at least 150% of the federal minimum wage. An Employee shall not include
(i) an employee of a company acquired by the Borrower after the date hereof,  if
the employee's place of employment  immediately  prior to the acquisition was in
the  State  or  (ii) an  employee  of the  Borrower  who is  transferred  to the
Facility,  if the  employee's  place  of  employment  immediately  prior  to the
transfer was in the State.

                  "Environmental   Requirement"   means   any   Law   or   other
restriction,  whether  public  or  private,  that in any way  pertains  to human
health,   safety  or   welfare,   Hazardous   Materials,   Hazardous   Materials
Contamination or the environment  (including any Law or restriction dealing with
ground, air, water or noise pollution or contamination, and underground or above
ground tanks).

                  "Expenses" means all reasonable costs and expenses incurred by
the  Lender  (whether  before or after a  Default)  in  connection  with,  or in
exercising or enforcing any rights,  powers and remedies provided in, any of the
Financing Documents.

                  "Fifth  Period"  means from  January 1, 2006 to  December  31,
2006.

                                       2
<PAGE>
                  "First  Period"  means  from  the  date of this  Agreement  to
December 31, 2002.

                  "Final  Report" means a completed and executed final report in
substantially the form of Exhibit B attached to this Agreement.

                  "Financing   Documents"  means  all  documents   executed  and
delivered  in  connection  with  the Loan and the  Obligations,  including  this
Agreement, the Note and any other document,  evidencing or securing the Loan, as
any of them may be amended.

                  "Fourth  Period"  means from  January 1, 2005 to December  31,
2005.

                  "Governmental  Authority" means the United States,  the State,
or  any  of  their  political  subdivisions,   agencies,  or  instrumentalities,
including  any  local  authority  having  jurisdiction  over any  aspect  of the
Project.

                  "Hazardous Materials" means any hazardous or toxic substances,
wastes or  materials,  including any substance  that contains  asbestos,  radon,
polychlorinated biphenyls, urea formaldehyde, explosives, radioactive materials,
or  petroleum  products,  that,  because of their  quantity,  concentration,  or
physical,  chemical,  or  infectious  characteristics,  may  pose a  present  or
potential  hazard or  nuisance  to human  health,  safety or  welfare  or to the
environment.

                  "Hazardous  Materials  Contamination"  means  the  present  or
future  contamination  of (a) any part of the Facility,  including soil,  ground
water,  and air, by Hazardous  Materials,  or (b) any part of any other property
(including soil,  ground water, and air) or improvement as a result of Hazardous
Materials emanating from the Facility.

                  "Hydric  Soils" means any soil  category  upon which  building
could be  prohibited  or  restricted  under any  applicable  Law,  including any
restrictions  imposed by the Army Corps of Engineers  based upon its  guidelines
concerning soil, vegetation, and effect on the ecosystem.

                  "Laws"  means any current or future  federal,  state and local
laws, statutes, rules, ordinances, regulations, codes, orders, or decrees of any
court or other Governmental Authority having jurisdiction.

                  "Obligations" means all duties of payment,  performance,  and
completion owed by the Borrower to the Lender under the Financing  Documents and
by law, including the obligations to:

                           (a)      Pay  all sums of  money  owed in  connection
with the Loan and any of the  Financing  Documents,  including all funds and all
sums of

                                       3
<PAGE>
principal,  interest,  and  premium,  if any,  due or to become  due,  and past,
present,  and future  advances under any of the Financing  Documents,  all money
advanced  or  expended  by the Lender as  provided  for in any of the  Financing
Documents, and all Expenses; and

                           (b)      Strictly  observe  and  perform  all  of the
provisions of the Financing Documents, time being of the essence.

                  "Regulations"  means  the  regulations  in COMAR  24.05.02.01
through 24.05.02.16, as they may be amended.

                  "Second  Period"  means from  January 1, 2003 to December  31,
2003.

                  "State" means the State of Maryland.

                  "Taxes"   means  all  taxes,   water   rents,   sewer   rents,
assessments, utility charges (whether public or private), and other governmental
or municipal or public dues, charges, and levies.

                  "Third  Period"  means from  January 1, 2004 to  December  31,
2004.


                                   ARTICLE II
                       TERMS OF THE LOAN AND DISBURSEMENT


         Section 2.01.  The Loan.

         Subject to the terms and conditions of all of the Financing  Documents,
the Lender agrees to extend the Loan to the Borrower.


         Section 2.02.  Repayment and Interest.

         All sums  advanced  under the Loan shall be  evidenced  by the Note and
shall be repaid with interest in accordance with the provisions of the Note.


         Section 2.03.  Disbursement.

         (a)      In General. Subject to the compliance by the Borrower with all
of the  terms  of  all  of the  Financing  Documents,  the  satisfaction  of all
conditions  precedent to disbursing Loan proceeds under this Agreement,  and the
non-existence  of a Default or any event,  circumstance,  act or omission  which
with the giving of notice,  the passage of time,  or both,  would  constitute  a
Default,  the Lender  shall  advance to the Borrower the full amount of the Loan
pursuant to a completed Request for Disbursement,  the form of which is attached
hereto as Exhibit A.

                                      4
<PAGE>
         (b)      Disbursement.  The Request for  Disbursement shall  be made to
the Lender at the address  specified in Section 5.01, or at any other place that
the Lender designates.

         (c)      Disbursement  to  the  Borrower.    The disbursement  shall be
made  directly to the  Borrower by check.  The Lender shall only  disburse  Loan
proceeds  upon  presentation  by the  Borrower  of  invoices,  bills,  or  other
satisfactory  proof of payments to reimburse  the Borrower for payments made for
up to 70% of the costs of the Project.

         (d)      Conditions for Disbursement.  The obligation of the Lender  to
disburse  the  proceeds  of the  Loan  is  subject  to the  satisfaction  of the
following conditions as of the date the disbursement is made:

                  (i)      Receipt of Request for Disbursement. The Lender shall
have received a completed Request for Disbursement.

                  (ii)     Representations  True. No  representation or warranty
of the Borrower  contained in this Agreement shall be or have become  materially
incorrect or inaccurate.

                  (iii)    No Defaults.  There  shall be no default, or event of
default  under  the  terms of any of the  Financing  Documents,  or any  Default
hereunder and no event,  circumstance,  act, or omission  shall exist which with
the giving of notice, the passage of time, or both, would constitute an event of
default (including a Default) under any of the Financing  Documents or a Default
hereunder.

                  (iv)     Solvency Certifications.  If requested by the Lender,
the  Borrower  shall  deliver to the Lender  satisfactory  evidence  that no (1)
petition in bankruptcy,  voluntary or otherwise,  (2) assignment for the benefit
of  creditors,   (3)  petition  seeking   reorganization  or  arrangement  under
bankruptcy  laws of the  United  States or of any  state,  or (4) other  similar
action brought under any bankruptcy  laws, is pending against the Borrower.  The
Lender may request such a certification at any time during the Loan term.

                  (v)      No Adverse  Change.  There  has  been  no  materially
adverse change in the Borrower's  financial condition from that reflected in the
Borrower's  financial  statements most recently submitted to the Lender prior to
the closing.

         (e)      The Borrower's right to  borrow  under  this  Agreement  shall
terminate 1 month after the date of this Agreement.

                                       5
<PAGE>
         (f)      Availability  of  Funds.   Disbursement  of Loan  proceeds are
subject to the continuing availability of funds for such purpose, and compliance
with all applicable Laws.


         Section 2.04.  Conditions Precedent to Disbursement.

Before  disbursing any Loan proceeds,  the Lender shall receive all of the items
set forth on the Pre-Closing and Closing Checklist attached hereto as Exhibit C,
in form and substance acceptable to the Lender.


         Section 2.05.  Completion.

         Within 30 days after the Completion  Date, the Borrower shall submit to
the Lender the following:

                  (a)      Evidence that the Project is completed; and

                  (b)      A  Final  Report,   together   with    any additional
information reasonably required by the Lender.


                                   ARTICLE III
                        REPRESENTATIONS, WARRANTIES AND
                            COVENANTS OF THE BORROWER


         Section 3.01.  Representations and Warranties.

         The Borrower represents and warrants as follows:

                  (a)      Organization.  The Borrower:


                           (i)      Is a corporation  duly  organized,   validly
existing, and in good standing under the laws of the State of Delaware;

                           (ii)     Has  the  power  to own  its property and to
carry on its business as now being conducted;

                           (iii)    Is duly qualified to do business  and is  in
good  standing in the State and in each  jurisdiction  in which the character of
properties  owned by it or the  transaction of its business makes  qualification
necessary; and

                           (iv)     Has   delivered   a  complete  copy  of  its
articles of incorporation and by-laws,  together with all amendments thereto, to
the Lender.

                                       6
<PAGE>
                  (b)      Due  Authorization.   The Borrower   has    the  full
corporate power and authority to enter into this  Agreement,  to borrow the Loan
as  contemplated by the Financing  Documents,  to execute and deliver all of the
Financing  Documents  to which it is a party,  and to comply  with the terms set
forth in all of the Financing Documents,  all of which have been duly authorized
by all  necessary  corporate  action of the  Borrower.  No approval of any other
person or public  authority or regulatory body is required as a condition to the
validity of any of the Financing  Documents,  or, if required,  the approval has
been obtained.

                  (c)      Validity   of   Financing  Documents.  All   of   the
Financing  Documents have been properly  executed by the Borrower and Borrower's
execution and delivery of the Financing Documents will:

                           (i)      Not violate any  Laws, or  any provision  of
the Borrower's articles of incorporation or by-laws;

                           (ii)     Not violate any  provision,  or result in  a
breach,  of any document or agreement  binding on the Borrower or affecting  its
property; or

                           (iii)    Constitute the  valid  and  legally  binding
obligations  of  the  Borrower,  fully  enforceable  against  the  Borrower,  in
accordance with their respective terms.

                  (d)      Legal  Actions.  There is no (1) Claim pending or, to
the best of the  Borrower's  knowledge,  threatened  in any court or before  any
governmental  agency,  and  (2)  investigation  by or  before  any  Governmental
Authority, that:

                           (i)      Questions the validity or  enforceability of
any of the Financing  Documents,  or any action taken, or to be taken, under any
of them; or

                           (ii)     Is likely to result in any material  adverse
change  in  the  authority,   properties,  assets,  liabilities,  or  conditions
(financial  or  otherwise)  of the  Borrower  that would  materially  impair the
Borrower's  ability to perform any of its obligations under any of the Financing
Documents; or

                  (e)      Borrower's   Financial   Statements.   The Borrower's
financial  statements,  copies of which have been furnished to the Lender,  were
prepared  in  accordance   with   generally   accepted   accounting   principles
consistently   applied  (other  than  with  respect  to  the  interim  financial
statement,  the  absence  of  footnotes  and being  subject  to normal  year-end
adjustments)  and are complete and correct and fairly and accurately  present in
all material  respects the financial  condition of the Borrower as of their date
and the results of its operations  for the period(s) then ended.  There has been
no material adverse change in the financial

                                       7
<PAGE>
condition of the Borrower or the results of its operations  since the date(s) of
such financial statements.

                  (f)      Taxes. All  Taxes  due  and  payable imposed upon the
Borrower and its  properties  have been paid prior to the date when any interest
or penalty would accrue for  nonpayment,  except for those Taxes being contested
in good faith and by appropriate proceedings by the Borrower.

                  (g)      Accuracy  of  Statements.  All information  contained
in any financial  statement,  report, or other document given by the Borrower or
by any other  person on behalf of the  Borrower in  connection  with the Loan is
true and  accurate in all  material  respects,  and the  Borrower and each other
person has not omitted to state any material fact or any fact  necessary to make
the information not misleading.

                  (h)      Application.  All information in the Application  was
true and  complete in all material  respects as of the date of the  Application.
The  Borrower  is aware of no event  that would  require  any  amendment  to the
Application  in  order  to make  any  information  in the  Application  true and
complete in all material  respects and not misleading in any material respect as
of the date of this  Agreement,  and the  Borrower is aware of no event or other
fact that should have been,  and has not been,  reported in the  Application  as
material information.

                  (i)      Financing Document Defaults.  There is  no  event  of
default  or  default  on the part of the  Borrower  under  any of the  Financing
Documents and no Default under this  agreement,  and no event has occurred or is
continuing that, with notice,  or the passage of time, or both, would constitute
an event of default or default under any of the Financing Documents or a Default
under this Agreement.

                  (j)      Compliance With Laws.  The Borrower has complied with
all Laws in effect.

                  (k)      State Drug  Policy.  The  Borrower is  in  compliance
with the State's  policy  concerning  drug and alcohol free  workplaces,  as set
forth in COMAR 01.01.1989.18 and 21.11.08.

                  (l)      Approvals.  The Borrower has obtained,  or expects to
obtain prior to the commencement of construction of the Project:

                           (i)      All   approvals  from  and  reviews  by  all
Governmental  Authorities of the Laws applicable to the Project and the Facility
or has reasonable assurances that such approvals will be obtained; and

                                       8
<PAGE>
                           (ii)     All  necessary   building  permits  for  the
Project.

                  (m)      Utilities and Roads.  The Facility is serviced by all
utility services and roads necessary for the intended operation of the Facility.

                  (n)      Zoning.  The intended use of the  Facility  will  not
violate any zoning or other Law, or any restrictive covenant or agreement of the
Borrower  (now in existence or known by the Borrower to be proposed)  applicable
to the  Facility  or its use,  and all  requirements  for  such  use  have  been
satisfied.

                  (o)      Environmental  Conditions.  The  Facility,  including
the land, surface water, ground water on which the Facility is constructed:  (i)
Is free of any  substantial  amounts  of  waste or  debris;  (ii) Is free of any
Hazardous Materials and Hazardous Materials Contamination;  (iii) To the best of
Borrower's knowledge,  has never been used as a manufacturing,  storage, or dump
site for  Hazardous  Materials;  (iv) Is in  compliance  with all  Environmental
Requirements; and (v) Contains no Hydric Soils.

                  (p)      Priority  Funding Area. The Property  is  located  in
"Priority  Funding  Area" as that  term is  defined  in Title  5-7B of the State
Finance and Procurement Article of the Annotated Code of Maryland.

                  (q)      Corporate  Headquarters.  The Borrower represents and
warrants that the Corporate Headquarters are located at the Facility.


         Section 3.02.     Borrower's Covenants.


         The Borrower covenants as follows:

                  (a)      Repayment   and   Performance.  The  Borrower   shall
promptly pay and perform all of the  Obligations  in the manner  provided in the
Financing Documents.

                  (b)      Use of Loan  Proceeds.  The Borrower  shall  use  the
Loan proceeds for the costs of the Project approved by the Lender.

                  (c)      Financial  Information.  The  Borrower shall  furnish
the Lender with:


                           (i)      As soon as  available,  but in no event more
than 120 calendar days after the close of each of the Borrower's fiscal years, a
copy  of  the  Borrower's  annual  financial   statement  in  reasonable  detail
satisfactory  to the Lender,  prepared in  accordance  with  generally  accepted
accounting  principles,  consistently  applied,  and audited by an  independent,
certified public accountant; and

                                       9
<PAGE>
                           (ii)     Any    additional   information   reasonably
requested by the Lender.

                  (d)      Good Standing.   The  Borrower  shall   maintain  its
existence as a Delaware  corporation and its good standing and  qualification to
do business in the State.

                  (e)      State Drug  Policy.  The  Borrower  will  comply with
the State's policy concerning drug and alcohol free workplaces,  as set forth in
COMAR 01.01.1989.18 and 21.11.08, for the term of this Agreement.  Specifically,
the Borrower shall:

                           (i)      Make  a  good  faith   effort to   eliminate
illegal drug use and alcohol and drug abuse from its workplaces  during the term
of this Agreement;

                           (ii)     Prohibit    the    unlawful     manufacture,
distribution, dispensation, possession, or use of drugs in its workplaces;

                           (iii)    Prohibit  its  employees  from working under
the influence of alcohol or drugs;

                           (iv)     Not hire or assign to work  on  an  activity
funded in whole or part  with  State  funds,  anyone  whom it  knows,  or in the
exercise of due diligence it should know,  currently abuses alcohol or drugs and
is not actively engaged in a bona fide rehabilitation program;

                           (v)      Promptly   inform   the    appropriate   law
enforcement  agency  of every  drug  related  crime  that  occurs  in any of its
workplaces  if any of its  employees has observed the violation or otherwise has
reliable information that a violation has occurred; and

                           (vi)     Notify  employees   that  drug  and  alcohol
abuse are banned in the  workplaces,  impose  sanctions on  employees  who abuse
drugs and alcohol in the  workplaces,  and institute  steps to maintain drug and
alcohol free workplaces.

                  (f)      Completion.  The Borrower shall:

                           (i)      Cause the Project to  be  completed  by  the
Completion Date;

                           (ii)     Cause   the  Project  to  be   completed  in
accordance with the terms of this Agreement; and

                                       10
<PAGE>
                           (iii)    Satisfy   all  applicable   Laws   for   the
operation of the Facility by the Completion Date.

                  (g)      Payment of  Contractors.  The  Borrower will promptly
pay all contractors and materialmen the amounts due them.

                  (h)      Maintenance of the Project.  The Borrower  shall,  at
its sole cost and expense:  (i) Keep, or cause to be kept,  the Facility in good
condition,  working  order,  and  repair;  (ii) Make,  or cause to be made,  all
replacements  to any of the Facility so that the Facility will always be in good
condition; (iii) Operate, or cause to be operated, the Facility in the manner in
which similar property is operated by persons  operating a first-class  business
of a similar nature.

                  (i)      Insurance.

                           (i)      During the  term  of  this   Agreement,  the
Borrower  shall obtain and  maintain,  except as provided  below,  the following
insurance coverages:

                                    (1)     During any  period  of  construction
on the Facility, builder's all-risk insurance of the type customarily carried in
the case of similar  construction for the full replacement cost of work in place
and materials stored in connection with such construction;

                                    (2)     Comprehensive     general     public
liability and property  damage  insurance in amounts  usually carried by similar
operations  against  claims  for bodily  injury,  death,  or damage to  property
occurring on the Facility;
                                    (3)     "All risk" coverage for the Facility
in amounts  necessary to prevent the application of any co-insurance  provisions
up to the full replacement value of the Facility;

                                    (4)     Workers' compensation insurance  for
all employees of the Borrower employed at the Facility in the State; and

                                    (5)     If the Facility is,or is later found
to  be,  in  an  area  that  has  been  identified  by  the  Federal   Insurance
Administration  as having special flood and mudslide  hazards,  and in which the
sale of flood  insurance is available  under the National Flood Insurance Act of
1968, a flood insurance  policy  satisfactory to the Lender.  If the Facility is
not in an area having  special flood and mudslide  hazards,  the Borrower  shall
deliver to the Lender a certificate  or letter  issued by its insurance  company
stating that the Facility is not in a special flood and mudslide hazard area.

                                       11
<PAGE>
                           (ii)     All   insurance   policies   shall   be with
responsible companies reasonably acceptable to the Lender and shall each bear an
endorsement  that it shall not be  canceled,  terminated,  endorsed,  or amended
without 30 days written notice to the Lender.

                           (iii)    Upon request,  the Borrower  shall file with
the  Lender  a  detailed  list of the  insurance  then in  effect  covering  the
Facility, stating the names of the insurance companies, the amounts and rates of
insurance,  dates of the expiration thereof and the properties and risks covered
thereby.
                           (iv)     The   Borrower   shall  cause   certificates
of insurance,  evidencing  that the Borrower  maintains  the insurance  required
under this subsection, to be delivered annually to the Lender.

                           (v)      The  Borrower  shall  give the Lender prompt
notice of any loss  covered by the builders  all-risk or the all-risk  insurance
required under this Agreement.

                  (j)      Notification  of  Claims. The Borrower shall promptly
notify  the  Lender  of  any  (i)  material  action  or  prospective  claims  or
litigation,  including  tax  deficiencies,  that  may be  asserted  against  the
Borrower,  and (ii)  default  or event of  default  under the terms of any bond,
debenture, note, or other evidence of indebtedness of the Borrower.

                  (k)      Access.  Any duly authorized   representative of  the
Lender  shall,  at all  reasonable  times,  have  access to all  portions of the
Facility.

                  (l)      Books  and   Records. The Borrower  shall   keep  any
books,  records,  and other  documents  that may be required under the rules and
procedures now or hereafter  applicable to MEDAAF loans made by the Lender,  and
as may be reasonably  necessary to disclose fully the amount and  disposition of
the Loan,  the total costs  incurred to complete the Project,  and the source of
all funds  expended  towards the costs of the  Project.  All books,  records and
other  documents  shall  be  maintained  at  the  offices  of the  Borrower  for
inspection,  copying,  audit and examination at all reasonable times by any duly
authorized  representative of the Lender. All books, records and other documents
shall be maintained until the first to occur of (i) three years after completion
of the Project, or (ii) the completion of an audit of the Project by the State.

                  (m)      Taxes.  The Borrower shall promptly pay all Taxes due
and payable  imposed on the Borrower and its  properties  prior to the date when
any  interest or penalty  would accrue for  non-payment,  except for those Taxes
being contested in good faith by appropriate proceedings by the Borrower.

                                       12
<PAGE>
                  (n)      Press  Releases.  Without  the prior consent  of  the
Lender,  the Borrower may not issue any press  releases in  connection  with the
Loan, the State, or the Lender.

                  (o)      Further  Assurances.  At any time,  upon  request  by
the Lender, the Borrower,  at its sole expense, will make, execute, and deliver,
or cause to be made, executed, and delivered, any additional documents that may,
in the opinion of the Lender, be necessary or desirable to effectuate, complete,
perfect, continue, or preserve the Obligations. Upon any failure by the Borrower
to do so, the Lender may make and execute any such  documents in the name of the
Borrower,  and at the sole  expense of the  Borrower,  and the  Borrower  hereby
irrevocably  appoints the Lender the agent and  attorney-in-fact of the Borrower
to do so, this  appointment  being coupled with an interest.  The Lender may, at
its option,  advance the  Expenses  incurred  in making and  executing  any such
documents and the Borrower shall reimburse the Lender for any sums advanced with
interest at a rate equal to 12% per annum if such  Expenses  are not  reimbursed
within  30  days  of  receipt  by  the  Borrower  of a  request  by  Lender  for
reimbursement.  Any such Expenses, together with interest, same shall be part of
the Obligations.

                  (p)      Indemnification.  The Borrower releases the State and
the Lender from, and agrees to protect, indemnify and save each of them harmless
against,  any Claims and Expenses incurred by, or asserted against, any of them,
arising in connection  with the Loan,  the Project,  or the Facility.  All money
expended  by the State or the Lender as a result of such  Claims  and  Expenses,
together with interest at a rate equal to 12% per annum 30 days from the date of
receipt by the  Borrower  of a request by the  Lender for  reimbursement,  shall
constitute an additional  indebtedness  of the Borrower and shall be immediately
due and payable by the Borrower to the State and the Lender.  Nothing  contained
in this Section  3.02(p) or in the Financing  Documents  shall be construed as a
limit on the Obligations. This Section 3.02(p) shall survive termination of this
Agreement and repayment of the Loan and Note in full.

                  (q)      Contractor's  Non-Discrimination.  The Borrower shall
not  discriminate on the basis of race,  color,  sex,  religion,  or national or
ethnic  origin in its  hiring of  contractors  to carry out any  portion  of the
Project.   Borrower  shall  prohibit  its  contractors  from  engaging  in  such
discrimination  in the hiring of  subcontractors to carry out any portion of the
Project.

                  (r)      Expenses. All Expenses incurred by the  Lender  shall
become part of the  Obligations  and shall be repaid by the  Borrower on demand,
together with interest at a rate equal to 12% per annum 30 days from the date of
receipt by the Borrower of a request by the Lender for reimbursement.

                                       13
<PAGE>
                  (s)      Compliance With Laws.  The Borrower will comply  with
all Laws.


                  (t)      Borrower's  Contribution.  The Borrower  covenants to
expend the Borrower's Contribution by the Completion Date.

                  (u)      Corporate  Headquarters. The  Borrower  covenants  to
maintain the Corporate  Headquarters at the Facility. By January 31st each year,
the  Borrower  shall  submit  to  the  Lender  a  certification  executed  by an
authorized  officer of the Borrower stating that the Corporate  Headquarters are
located at the Facility.


                                   ARTICLE IV
                              DEFAULT AND REMEDIES


         Section 4.01.  Defaults.

         The following events shall constitute a Default under this Agreement:

                  (a)      The Borrower fails to pay the principal amount of the
Loan and  interest  thereon  according  to the  terms  of the Note or any  other
payment required by any of the Financing Documents, including the Obligations;

                  (b)      The  Borrower  ceases  to   use   the  Facility   for
manufacturing  of  single-use  disposable  products  for the food  and  beverage
industry and offices, including the Corporate Headquarters;

                  (c)      Any Loan  proceeds  are used  for any  purpose  other
than for the costs of the Project as approved by the Lender;

                  (d)      Except for the obligations  of the  Borrower to repay
the amounts due under the terms of the Note and the  obligations as specified in
subsection (a) above,  the breaches of the  covenants,  conditions or agreements
specified in subsection (e) below and the other Defaults  enumerated  under this
Section 4.01,  the Borrower fails to duly and promptly  perform,  comply with or
observe any of the terms,  covenants,  conditions  or  agreements  contained  in
Sections  3.01(c) and 3.02(c) and (e) of this  Agreement,  which failure remains
unremedied for 15 days after written notice thereof shall have been given to the
Borrower by the Lender;

                  (e)      The Borrower  fails  to  duly  and promptly  perform,
comply with or observe any of the terms,  covenants,  conditions  or  agreements
contained in Sections  3.02,  (a),  (b), (d), (f), (g), (h), (i), (j), (k), (l),
(m), (n), (o), (r), (s), (t), (u) and Sections 6.01, 6.02, 6.03 and 6.04 of this
Agreement;

                                       14
<PAGE>
                  (f)      Any representation, or warranty made  herewith or any
other statement or  representation  made in any  certificate,  report or opinion
(including legal opinions),  financial statement, or other document furnished in
connection with the Loan was incorrect in any material respect when made;

                  (g)      Any change in  any  zoning  ordinance  or  any  other
public  restriction is enacted which limits or defines the uses that may be made
on any  part of the  Facility,  so  that  the use of the  Facility  would  be in
violation of the  restriction  or zoning  change and the  Facility  would not be
useable for offices and the manufacturing of single-use  disposable products for
the food and beverage industry;

                  (h)      Any   portion  of,  or  interest  in, the Facility is
sold, leased,  subleased,  or transferred,  encumbered,  or otherwise  conveyed,
without the prior written consent of the Lender;

                  (i)      The Borrower fails to comply with any  requirement of
any  Governmental   Authority  within  30  days  after  written  notice  of  the
requirement  is made or within  any other time  period  set by the  Governmental
Authority;  or if any  proceeding  is  commenced  or action taken to enforce any
remedy for a violation of any  requirement  of a  Governmental  Authority or any
restrictive covenant affecting any part of the Facility;

                  (j)      The  Project  is  not completed, as determined in the
sole discretion of the Lender, by the Completion Date;

                  (k)      A default or event of default occurs  under the terms
of any bond, debenture,  note, or other evidence of indebtedness of the Borrower
and remains uncured beyond any applicable grace or cure period;

                  (l)      Final judgment  for the  payment  of money in  excess
of $1,000,000 is rendered  against the Borrower and is not  discharged or a stay
of execution  thereon or a bond is not procured  within 30 days from the date of
entry thereof, or if thereafter the judgment remains unsatisfied for a period of
30 days after the termination of any such stay of execution thereon or bond;

                  (m)      Any court of  competent  jurisdiction  makes a  final
order (i)  adjudicating  the Borrower a bankrupt,  (ii)  appointing a trustee or
receiver of a substantial part of the property of the Borrower,  (iii) approving
a petition for, or affecting an arrangement  in,  bankruptcy,  a  reorganization
pursuant  to federal  bankruptcy  law,  or any other  judicial  modification  or
alterations  of the rights of the Lender or of other  creditors of the Borrower,
(iv) assuming  custody or sequestering  any substantial  part of the property of
the  Borrower,  or (v)  attaching  or  garnishing  any  substantial  part of the
property of the  Borrower;  or if the Borrower (A) files such  petition,  or (B)
takes or consents to any other actions

                                       15
<PAGE>
seeking any such judicial  order,  or (C) makes an assignment for the benefit of
creditors,  or (D) fails to pay debts generally as they become due, or (E) makes
an admission in writing of inability to pay debts generally as they become due;

                  (n)      A permanent or preliminary injunction is issued  that
lasts for more than 90 days, that prohibits the Borrower from using the Facility
for offices and the manufacturing of single-use disposable products for the food
and beverage industry;

                  (o)      Without  the prior   written   consent of  the Lender
(which  consent will not be  unreasonably  withheld),  the Borrower (i) sells or
transfers  all or  substantially  all of its  business  assets,  (ii) begins any
proceeding to dissolve or liquidate,  (iii) changes the form of business  entity
through  which  it  presently   conducts  its   business,   or  (iv)  merges  or
consolidates;

                  (p)      Without  the  prior   written  consent of the Lender,
the Borrower is dissolved by operation of law or in any other manner;

                  (q)      The Lender makes a good  faith  determination  that a
material adverse change has occurred in the financial  condition of the Borrower
from the  condition  set forth in the most  recent  financial  statement  of the
Borrower  furnished  to the  Lender,  or from  the  financial  condition  of the
Borrower as most recently disclosed to the Lender in any other manner;

                  (r)      The Lender makes a good faith determination that  the
prospect of payment of the outstanding  principal and accrued interest under the
Note is impaired for any reason;

                  (s)      The Borrower moves any portion of its Facility or any
of its operations from the Facility.

                  (t)      By the Completion Date, the Borrower fails to  expend
the amount of the Borrower's  Contribution  towards the costs of the Project, as
approved by the Lender;

                  (u)      A  default or event of default occurs under the terms
of any of the other Financing Documents; or

                  (v)      The Borrower employs less than 1400 Employees at  any
time.


         Section 4.02.  Remedies.

         (a)      Upon the occurrence of any Default, the Lender may:

                                       16
<PAGE>
                  (i)      Require   the   immediate   repayment of  the  entire
outstanding principal  indebtedness,  together with all accrued interest,  under
the Note and any Obligations;

                  (ii)     At any time proceed to protect and enforce all rights
and  remedies  available  to the Lender  under this  Agreement or by Law, by any
other proceedings,  whether for specific  performance of any agreement contained
in this Agreement, damages, or other relief; and

                  (iii)    Suspend  or  terminate  the  Borrower's  authority to
receive any undisbursed Loan proceeds at any time by notice to the Borrower.

         (b)      All  remedies provided for in this Agreement  or by   Law  are
cumulative and are in addition to any other rights and remedies available to the
Lender  under any Law.  The  exercise of any right or remedy by the Lender shall
not  constitute a cure or waiver of any Default by the Borrower,  nor invalidate
any act done pursuant to any notice of Default,  nor prejudice the Lender in the
exercise of those rights.

         (c)      The failure of  the  Lender to insist upon performance of  any
term of this  Agreement  shall  not  constitute  a  waiver  of any  term of this
Agreement.  No act of the Lender  shall be  construed  as an election to proceed
under  any one  provision  in  this  Agreement  to the  exclusion  of any  other
provision.

         (d)      If the Lender  suspends  or  terminates  this  Agreement,  the
rights and  remedies  available to the Lender shall  survive the  suspension  or
termination.


         Section 4.03.  Setoff.

         The Lender may set off against  and apply any funds of the  Borrower on
deposit  with,  or under  the  control  of,  the  Lender to the  payment  of the
Obligations, without notice and without resort to any judicial proceeding.


                                    ARTICLE V
                                  MISCELLANEOUS


         Section 5.01.  Notices.

         (a)      All  communications  between  the  parties  made  pursuant  to
this Agreement shall be in writing.

         (b)      Any  communication   shall  (a)  when  mailed,  be   effective
three business days after it is deposited in the mails, (b) when mailed for next
day delivery by a reputable overnight courier service, be effective one business
day

                                       17
<PAGE>
after  mailing,  and (c) when  sent by fax,  be  effective  when it is faxed and
receipt of the communication is confirmed.  Communications shall be delivered to
the office of the addressee, as follows:

                  (i)      Communications to the Lender shall be mailed to:

                           Department of Business and Economic Development
                           217 East Redwood Street, 22nd Floor
                           Baltimore, Maryland  21202
                           Attention:  Loan Administration Unit
                           FAX Number:  (410) 333-6931

                           With a copy to the Counsel to the Lender, on the 11th
                           Floor  at  the  same  address,   or  if  by  fax,  to
                           410-333-8298.

                  (ii)     Communications to the Borrower shall be mailed to:

                           Sweetheart Cup Company Inc.
                           10100 Reisterstown Road
                           Owings Mills, Maryland  2117
                           Attention:  Linda B. Ridgley
                           FAX Number:  410-998-1492

                           With a copy to the Counsel to the Borrower:

                                    115 Stevens Avenue
                                    Valhalla, New York  10595
                                    Attention:  Harvey L. Friedman, Esquire
                                    FAX Number:  (914) 747-9293

         (c)      The  Borrower and the Lender may change their notice addresses
by sending written notice to the other party.


         Section 5.02.  Assignment.

         No benefit or burden  imposed on the Borrower  under this Agreement may
be assigned without the prior written consent of the Lender.


         Section 5.03.  Successors Bound.

         This  Agreement  shall  inure to the  benefit  of, and shall be binding
upon, each of the parties and their successors and permitted assigns.

                                       18
<PAGE>
         Section 5.04.  Severability.

         The  invalidity  of any part of this  Agreement  shall not  affect  the
validity of the remaining provisions of this Agreement.


         Section 5.05.  Entire Agreement.

         This Agreement  constitutes the entire  agreement  between the Borrower
and  the  Lender  and  supersedes   all  prior  oral  and  written   agreements,
representations,  and negotiations  between the parties  concerning the Loan and
the Obligations.


         Section 5.06.  Amendment of Agreement.

         This  Agreement  may be amended only in writing  executed by the Lender
and the Borrower.


         Section 5.07.  Headings.

         The headings used in this Agreement are for convenience only and do not
constitute a part of this Agreement.


         Section 5.08.  Disclaimer of Relationships.

         The Borrower  acknowledges that the obligation of the Lender is limited
to making  the Loan on the terms set forth in this  Agreement.  Nothing  in this
Agreement,  and no act of the Lender or the Borrower,  shall be deemed to create
any  relationship of third-party  beneficiary,  principal and agent,  limited or
general  partnership,  joint  venture,  or any other  relationship  between  the
Borrower and the Lender. In addition,  by inspecting any part of the Facility or
by accepting or approving any action of the Borrower  under any of the Financing
Documents,  the  Lender  shall  not be  considered  to  warrant  the  condition,
legality,  or sufficiency of any part of the Facility or any action taken or not
taken by the Borrower.


         Section 5.09.  Governing Law.

         This  Agreement  and all of the  other  Financing  Documents  shall  be
governed by the laws of the State.


         Section 5.10.  Term of Agreement.

         Except  as  otherwise   provided  in  this  Agreement,   unless  sooner
terminated by the mutual consent of the Borrower and the Lender,  this Agreement
shall  remain in full  force  and  effect  until  the Loan and the  Obligations,
together with interest and all other sums due and owing in connection  with this
Agreement,

                                       19
<PAGE>
the Obligations or the Loan,  have been paid in full to the  satisfaction of the
Lender.


         Section 5.11.  Illegality.

         If performance of any obligation  under any of the Financing  Documents
would  require the  performing  party to violate the Law,  then the  performance
shall be reduced to the level permitted by Law, and if (1) any provision of this
Agreement,  other  than  provisions  requiring  the  Borrower  to pay  interest,
principal, principal and interest, or any other of the Obligations, operates, or
would  operate,  to invalidate any part of this  Agreement,  then such provision
only shall be void as though not set forth in this Agreement,  and the remainder
of this  Agreement  shall remain in full force and effect,  (2) any provision of
this Agreement requires the Borrower to pay interest,  principal,  principal and
interest, or any other of the Obligations, then at the option of the Lender, the
entire unpaid sum under the Loan, with all unpaid interest accrued thereon,  and
all other unpaid Obligations shall become due and payable.


         Section 5.12.  WAIVER OF JURY TRIAL.

         THE BORROWER HEREBY  VOLUNTARILY AND INTENTIONALLY  WAIVES ANY RIGHT IT
MAY HAVE TO A TRIAL BY JURY IN ANY ACTION,  PROCEEDING OR LITIGATION DIRECTLY OR
INDIRECTLY  ARISING OUT OF, UNDER AND IN CONNECTION  WITH THE LOAN OR ANY OF THE
FINANCING DOCUMENTS.


         Section 5.13.  Expenses.

         The Borrower  shall pay all Expenses in  connection  with the execution
and delivery of any of the Financing Documents.


         Section 5.14.  Counterparts.

         This  Agreement  may be executed in one or more  counterparts,  each of
which  shall be an  original,  but all of  which,  when  taken  together,  shall
constitute one document.

                                       20
<PAGE>
                                   ARTICLE VI
                         EMPLOYMENT, INTEREST RATE AND
                              EMPLOYMENT REPORTING


         Section 6.01.  Maintenance of Employees.


         (a)      Representation    and    Warranty-Employees.   The    Borrower
represents  and  warrants  that as of the date of this  Agreement,  the Borrower
employs at least 1400 Employees.

         (b)      The Grantee  covenants that at all times during  the  term  of
this Agreement, it will continuously employ at least 1400 Employees. Pursuant to
Section 6.03(d) of this Agreement, the Lender may request employment information
at any time during the term of this Agreement to confirm  whether the Grantee is
in compliance with this covenant.


         Section 6.02.      Calculation of Employees.

         1. The  Lender's  determination  of the  number of  Employees as of the
date of closing and  December  31,  2002 shall be based on the actual  number of
Employees  employed as of those dates,  which  numbers shall be set forth in the
reports required in Section 6.03(a) and (b) of this Agreement, respectively.

         2. The Lender's determination of the number of Employees as of December
31st of 2003,  2004,  2005 and 2006  shall be based on an  average of the actual
number of Employees as of June 30 and  December 31 of the Second  Period,  Third
Period, Fourth Period and Fifth Period, respectively,  which numbers will be set
forth in the reports required in Sections 6.03(c) of this Agreement.

         3. The Lender's determination of whether the  Borrower  has employed at
least  1400  Employees  at all times  shall be  determined  each  calendar  year
beginning  2003 by  averaging  the actual  number of Employees as of June 30 and
December  31 of  each  year.  Provided,  however,  that if the  Lender  requests
employment  information pursuant to Section 6.03(d) of this Agreement to confirm
that  the  Borrower  is in  compliance  with  Section  6.01  (b),  the  Lender's
determination of whether the Borrower has employed at least 1400 Employees shall
be based on the  actual  number of  Employees  as of the date  specified  by the
Lender.


         Section 6.03.  Employee Reporting Requirement.

         1. At or prior to closing of the Loan, the Borrower shall submit to the
Lender (i) a list of the names of all of the Employees  employed at the Facility
as of the month  prior to  closing,  and (ii) the social  security  number,  the
average  hours  worked,  or expected to be worked,  for the year,  the hourly or
annual pay

                                       21
<PAGE>
rate, and a general  description of available benefits for each listed Employee.
An officer of the Borrower shall certify to the Lender that (1) the list is true
and accurate, (2) the employees listed meet the definition of Employees, and (3)
each of the Employees listed is employed at the Facility.

         2. By January 31, 2003, the  Borrower  shall submit to the Lender (i) a
list  of the  names  of all of the  Employees  employed  at the  Facility  as of
December  31,  2002,  and (ii) the social  security  number,  the average  hours
worked,  or expected to be worked,  for the year, the hourly or annual pay rate,
and a general  description of available  benefits for each listed  Employee.  An
officer of the  Borrower  shall  certify to the Lender that (1) the list is true
and accurate, (2) the employees listed meet the definition of Employees, and (3)
each of the Employees listed is employed at the Facility.

         3. By January 31st of each year, beginning 2004 and continuing  through
2007,  the  Borrower  shall  submit to the Lender for the Second  Period,  Third
Period,  Fourth Period and Fifth Period, a report that contains (i) the names of
all of the Employees,  and (ii) the social  security  number,  the average hours
worked,  or expected to be worked,  for the year, the hourly or annual pay rate,
and a general  description of available benefits for each listed Employee.  Each
report shall  contain the  information  as of June 30 and  December  31st of the
applicable  one-year  period.  An officer of the Borrower  shall  certify to the
Lender that (1) the list is true and accurate, (2) the employees listed meet the
definition of Employees, and (3) each of the Employees listed is employed at the
Facility.

         4. Upon  the  request  of the Lender, the Borrower covenants to provide
the Lender with any information and reports that the Lender  determines,  in its
discretion, are needed to confirm or verify the employment information submitted
by the  Borrower.  The Borrower  shall permit the Lender to inspect the employee
records of the  Borrower  to  confirm  the  employee  information  submitted  by
Borrower to the Lender.


         Section 6.04.  Determination of Interest Rate.

         1. First Period.

                  (i)      During the First  Period,  the  interest  rate on the
Loan shall be 3% per annum, if the Lender has determined that as of December 31,
2002, the Borrower employed at least 1600 Employees.

                  (ii)     During the  First  Period,  the interest on  the Loan
shall be 4% per annum,  if the Lender has  determined  that as of  December  31,
2002, the Borrower employed at least 1550 but not more than 1599 Employees.

                                       22
<PAGE>
                  (iii)    During the  First  Period,  the interest rate on  the
Loan shall be 5% per annum, if the Lender has determined that as of December 31,
2002, the Borrower employed at least 1500 but not more than 1549 Employees.

                  (iv)     During the First  Period,  the interest  rate on  the
Loan shall be 6% per annum, if the Lender has determined that as of December 31,
2002, the Borrower employed at least 1450 but not more than 1499 Employees.

                  (v)      During the First  Period,  the  interest  rate on the
Loan shall be 8% per annum,  if the Lender has  determined  that as for December
31, 2002, the Borrower employed at least 1400 but not more than1449 Employees.

         2. Second Period.

                  (i)      During the Second  Period,  the interest  rate on the
Loan shall be 3% per annum,  if the Lender has determined that during the Second
Period at least 1600 Employees were employed.

                  (ii)     During the Second Period,  the  interest  on the Loan
shall be 4% per  annum,  if the  Lender has  determined  that  during the Second
Period on average at least 1550 but not more than 1599 Employees were employed.

                  (iii)    During the Second Period,  the interest  rate on  the
Loan shall be 5% per annum,  if the Lender has determined that during the Second
Period on average at least 1500 but not more than 1549 Employees were employed.

                  (iv)     During the Second  Period,  the interest rate on  the
Loan shall be 6% per annum,  if the Lender has determined that during the Second
Period on average at least 1450 but not more than 1499 Employees were employed.

                  (v)      During the Second  Period,  the interest  rate on the
Loan shall be 8% per annum,  if the Lender has determined that during the Second
Period on average at least 1400 but not more than 1449 Employees were employed.

         3. Third Period.

                  (i)      During the Third  Period,  the  interest  rate on the
Loan shall be 3% per annum,  if the Lender has determined  that during the Third
Period at least 1600 Employees were employed.

                  (ii)     During the Third  Period,  the interest on  the  Loan
shall be 4% per annum, if the Lender has determined that during the Third Period
on average at least 1550 but not more than 1599 Employees were employed.

                                       23
<PAGE>
                  (iii)    During the Third  Period,  the interest rate  on  the
Loan shall be 5% per annum,  if the Lender has determined  that during the Third
Period on average at least 1500 but not more than 1549 Employees were employed.

                  (iv)     During the Third  Period,  the interest  rate on  the
Loan shall be 6% per annum,  if the Lender has determined  that during the Third
Period on average at least 1450 but not more than 1499 Employees were employed.

                  (v)      During the Third  Period,  the  interest  rate on the
Loan shall be 8% per annum,  if the Lender has determined  that during the Third
Period on average at least 1400 but not more than 1449 Employees were employed.

         4. Fourth Period.

                  (i)      During the Fourth  Period,  the interest  rate on the
Loan shall be 3% per annum,  if the Lender has determined that during the Fourth
Period at least 1600 Employees were employed.

                  (ii)     During the Fourth Period,  the interest on  the  Loan
shall be 4% per  annum,  if the  Lender has  determined  that  during the Fourth
Period on average at least 1550 but not more than 1599 Employees were employed.

                  (iii)    During the Fourth Period,  the interest rate  on  the
Loan shall be 5% per annum,  if the Lender has determined that during the Fourth
Period on average at least 1500 but not more than 1549 Employees were employed.

                  (iv)     During the Fourth  Period,  the interest rate on  the
Loan shall be 6% per annum,  if the Lender has determined that during the Fourth
Period on average at least 1450 but not more than 1499 Employees were employed.

                  (v)     During the Fourth  Period,  the interest  rate on  the
Loan shall be 8% per annum,  if the Lender has determined that during the Fourth
Period on average at least 1400 but not more than 1449 Employees were employed.

         5. Fifth Period.

                  (i)      During the Fifth  Period,  the  interest  rate on the
Loan shall be 3% per annum,  if the Lender has determined  that during the Fifth
Period at least 1600 Employees were employed.

                  (ii)     During the Fifth  Period,  the interest on  the  Loan
shall be 4% per annum, if the Lender has determined that during the Fifth Period
on average at least 1550 but not more than 1599 Employees were employed.

                                       24
<PAGE>
                  (iii)    During the Fifth  Period,  the  interest rate on  the
Loan shall be 5% per annum if the Lender has  determined  that  during the Fifth
Period on average at least 1500 but not more than 1549 Employees were employed.

                  (iv)     During the Fifth  Period,  the interest  rate on  the
Loan shall be 6% per annum,  if the Lender has determined  that during the Fifth
Period on average at least 1450 but not more than 1499 Employees were employed.

                  (v)      During the Fifth  Period,  the  interest  rate on the
Loan shall be 8% per annum,  if the Lender has determined  that during the Fifth
Period on average at least 1400 but not more than 1449 Employees were employed.

                     [Signatures appears on the next page.]

                                       25
<PAGE>
         IN WITNESS  WHEREOF,  the  Borrower  and the Lender  have  caused  this
Agreement to be executed and delivered as of the date first above written.


WITNESS:                                   DEPARTMENT OF BUSINESS AND
                                              ECONOMIC DEVELOPMENT




                                   By:                                 (SEAL)
---------------------------                ----------------------------
                                           David S. Iannucci
Name:                                      Secretary
     ----------------------



WITNESS:                                   Sweetheart Cup Company Inc.




                                   By:                                 (SEAL)
---------------------------                ----------------------------
                                           Name:
                                                -----------------------
Name:                                      Title:
     ----------------------                     -----------------------


STATE OF MARYLAND, CITY/COUNTY OF                 , TO WIT:
                                  ----------------

         I HEREBY CERTIFY that on this     day of              ,  200  ,  before
                                       ---        -------------      --
me, a Notary  Public  in the State of  Maryland,  personally  appeared  David S.
Iannucci,  who acknowledged himself to be the Secretary of Business and Economic
Development, known or satisfactorily proven to me to be the person whose name is
subscribed to this document,  and acknowledged  that he executed it on behalf of
Business and Economic Development as its duly authorized Secretary.

         AS WITNESS my hand and Notarial Seal.

                                           -----------------------------
                                           Notary Public

My Commission expires:
                       ------------

                                       26
<PAGE>
STATE OF MARYLAND, CITY/COUNTY OF                 , TO WIT:
                                  ----------------

         I HEREBY CERTIFY that on this     day of              ,  200  ,  before
                                       ---        -------------      --
me,  a  Notary   Public  in  the   State  of   Maryland,   personally   appeared
                 ,  who  acknowledged  himself/herself  to be the             of
-----------------                                                  ----------
sWEETHEART  CUP COMPANY  iNC.,  known or  satisfactorily  proven to me to be the
person whose name is subscribed to this document,  and acknowledged  that she/he
executed  it  on  behalf  of  the                  ,   as  its  duly  authorized
                                   ----------------
             .
-------------

         AS WITNESS my hand and Notarial Seal.

                                           ----------------------------
                                           Notary Public

My Commission expires:
                       ------------

                                       27
<PAGE>
                                 LOAN AGREEMENT

                                    EXHIBIT A


                            REQUEST FOR DISBURSEMENT

1.       Project Name:
                        ---------------
2.       Applicant:
                     ------------------------------------------------------
3.       Request No. (number consecutively):
                                              -----------------------------
4.

<TABLE>
<CAPTION>
------------------------------------- -------------------------- -------------------------- --------------------------
              Activity                 Actual Cost (& Contract     Amount Requested from        Cumulative Amount
                                          # if applicable)          Department in this           Requested from
                                                                          Request              Department to date
<S>                                   <C>                         <C>                       <C>
------------------------------------- -------------------------- -------------------------- --------------------------



------------------------------------- -------------------------- -------------------------- --------------------------



------------------------------------- -------------------------- -------------------------- --------------------------



------------------------------------- -------------------------- -------------------------- --------------------------



------------------------------------- -------------------------- -------------------------- --------------------------



------------------------------------- -------------------------- -------------------------- --------------------------
               Total:
------------------------------------- -------------------------- -------------------------- --------------------------
</TABLE>

Instructions:

         (1)      Cost  figures  must  be  supported  by adequate  documentation
(invoices, bills, vouchers, etc.).

         (2)      The Department will not honor requests for disbursement  which
exceed 70% of the Project costs.

                                       28
<PAGE>
Certification:

         SWEETHEART CUP COMPANY INC. (the "Borrower") hereby certifies that:

                  1.       The attached request is for  funds to  reimburse  the
Borrower for a portion of the costs  incurred in connection  with the Project as
approved by the Department of Business and Economic Development (the "Lender").

                  2.       This request is not for previously requested funds.

                  3.       The  conditions  to  be  satisfied   prior   to   the
disbursement  of MEDAAF  funds as set forth in the Loan  Agreement  between  the
Lender and Sweetheart Cup Company Inc. (the "Agreement") have been met.

                  4.       No default   exists   under   the   Agreement  or the
Promissory Note executed in connection with the Agreement.

                  5.       The   representations    and  warranties  made by the
Borrower in the Agreement are true and correct in all material respects.


WITNESS:                                    SWEETHEART CUP COMPANY INC.




                                   By:                                 (SEAL)
---------------------------                ----------------------------
Name:                                      Name:
     ----------------------                      ----------------------
                                           Title:
                                                 ----------------------
                                           Date:
                                                 ----------------------

                                       29
<PAGE>
                                 LOAN AGREEMENT

                                    EXHIBIT B

     Maryland Economic Development Assistance Authority and Fund ("MEDAAF")
               Final Report and Certification of Completion Costs

1.  Project Name:
                   -----------------------------------------------
2.  Borrower:
               -----------------------------------
3.  Period Covered:                     to
                     ------------------    -----------------------
4.  Activity:

<TABLE>
<CAPTION>
---------------------------------------- --------------------- -------------------- -------------------- -------------------
           Costs of Project              Costs Paid by MEDAAF     Other Source         Other Source         Other Source

<S>                                      <C>                   <C>                  <C>                  <C>
---------------------------------------- --------------------- -------------------- -------------------- -------------------



---------------------------------------- --------------------- -------------------- -------------------- -------------------



---------------------------------------- --------------------- -------------------- -------------------- -------------------



---------------------------------------- --------------------- -------------------- -------------------- -------------------



---------------------------------------- --------------------- -------------------- -------------------- -------------------



---------------------------------------- --------------------- -------------------- -------------------- -------------------



---------------------------------------- --------------------- -------------------- -------------------- -------------------
TOTAL:
---------------------------------------- --------------------- -------------------- -------------------- -------------------
</TABLE>

*(Please specify in parenthesis the entity which paid each particular cost.)

                                       30
<PAGE>
CERTIFICATION:

1.       Attached   hereto  as   Exhibit  A  is a true and  correct  summary  of
charges incurred by the Borrower for work actually performed in conjunction with
the Project.

2.       All  invoices  referenced  on Exhibit A  have been paid in full  by the
Borrower.

All capitalized terms used in this  certification that are not otherwise defined
herein shall have the meanings assigned to them in the Loan Agreement,  dated as
of              ,  2002,  between the  Borrower and  Department  of Business and
    ------------
Economic Development (the "Lender").


WITNESS:                                    SWEETHEART CUP COMPANY INC




                                   By:                                 (SEAL)
---------------------------                ----------------------------
Name:                                      Name:
     ----------------------                     -----------------------
                                           Title:
                                                -----------------------
                                           Date:
                                                -----------------------

                                       31
<PAGE>
                                 LOAN AGREEMENT




                                    EXHIBIT C



                        PRE-CLOSING AND CLOSING CHECKLIST

                                       32





</TEXT>
</DOCUMENT>
