AMENDMENT NO. 3 AND WAIVER TO THE CREDIT AGREEMENT

Exhibit 10.16

EXECUTION COPY

AMENDMENT NO. 3 AND WAIVER TO THE CREDIT AGREEMENT

Dated as of March 27, 2006

AMENDMENT NO. 3 AND WAIVER TO THE CREDIT AGREEMENT (this “ Amendment and Waiver ”) among SOLO CUP COMPANY, a Delaware corporation (the “ Borrower ”), SOLO CUP INVESTMENT CORPORATION, a Delaware corporation (“ Holdings ”), the banks, financial institutions and other institutional lenders party to the Credit Agreement referred to below from time to time (collectively, the “ Lenders ”) and BANK OF AMERICA, N.A., as administrative agent for the Lenders (in such capacity, the “ Administrative Agent ”).

PRELIMINARY STATEMENTS:

(1) WHEREAS, the Borrower, Holdings, the Lenders, CITICORP NORTH AMERICA, INC., as syndication agent, HARRIS TRUST AND SAVINGS BANK, as documentation agent and as an L/C Issuer and BANK OF AMERICA, N.A., as Administrative Agent, Swing Line Lender and as an L/C Issuer have entered into a Credit Agreement dated as of February 27, 2004 (such Credit Agreement, as amended, supplemented or otherwise modified up to but not including the date hereof, the “ Credit Agreement ”; capitalized terms not otherwise defined in this Amendment and Waiver will have the same meanings as specified in the Credit Agreement);

(2) WHEREAS, the Borrower has requested that the Lenders amend the Credit Agreement and waive certain provisions of the Credit Agreement as described below; and

(3) WHEREAS, the Lenders have agreed, subject to the terms and conditions hereinafter set forth, to amend the Credit Agreement and waive certain provisions of the Credit Agreement in certain respects as set forth below.

NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the sufficiency and receipt of all of which is hereby acknowledged, the parties hereto hereby agree as follows:

SECTION 1. Amendments to Credit Agreement . The Credit Agreement is, effective as of the date hereof and subject to the satisfaction of the conditions precedent set forth in Section 3 , hereby amended as follows:

(a) Section 1.01 of the Credit Agreement is hereby amended by adding the following new definitions in the appropriate alphabetical order:

“ Intercreditor Agreement ” means the Intercreditor Agreement, dated as of March 31, 2006, between the Administrative Agent and the Second Lien Administrative Agent and acknowledged by the Borrower, as amended, supplemented or otherwise modified to the extent permitted under the Loan Documents.

“ Permitted Sale and Leaseback Transactions ” means with respect to Holdings or any Subsidiary, any arrangement, directly or indirectly, with any Person whereby Holdings or such Subsidiary shall sell or transfer any of the manufacturing facilities of Holdings and its Subsidiaries located in Owing Mills and/or Dallas and thereafter rent or lease such manufacturing facilities that it intends to use for the same purpose or purposes as such manufacturing facilities being sold or transferred.

“ Second Lien Administrative Agent ” means the “Administrative Agent” under and as defined in the Second Lien Credit Agreement.

“ Second Lien Credit Agreement ” means the Second Lien Credit Agreement, dated as of March 31, 2006, among the Borrower, Holdings, the lenders from time to time party thereto and Bank of America, as administrative agent, as amended, supplemented or otherwise modified to the extent permitted under the Loan Documents.

“ Second Lien Facility ” means the second senior secured lien term loan facility of the Borrower in an aggregate principal amount of $80,000,000, as evidenced by the Second Lien Loan Documents.

“ Second Lien Loan Documents ” means the “Loan Documents” as defined in the Second Lien Credit Agreement, as amended, supplemented or otherwise modified to the extent permitted under the Loan Documents.

Project Java – Amendment No. 3

“ Second Lien Obligations ” means the “Obligations” under and as defined in the Second Lien Credit Agreement.

“ Third Amendment ” means the Amendment No. 3 and Waiver to this Agreement, dated as of March 27, 2006, among the Borrower, Holdings, the Administrative Agent and the Lenders party thereto.

“ Third Amendment Effective Date ” has the meaning specified in Section 3 of the Third Amendment.

(b) Section 1.01 of the Credit Agreement is hereby further amended by adding a proviso to the end of the definition of “Average Total Debt” to read in full as follows:

“; provided , further , that for the 365 days immediately preceding the Third Amendment Effective Date and solely in respect of the computation after the Third Amendment Effective Date of the financial covenants set forth in Section 7.10 hereof, the average daily Outstanding Amount of all Revolving Credit Loans, Swing Line Loans and L/C Borrowings shall be deemed to have been zero.”

(c) Section 1.01 of the Credit Agreement is hereby further amended by deleting in the definition of “Inventory Reduction Charges” the amount “$30,000,00” appearing therein and by replacing it with the amount “$30,000,000”.

(d) Section 1.01 of the Credit Agreement is hereby further amended by amending and restating the definition of “Loan Documents” to read in full as follows:

“ Loan Documents ” means, collectively, (a) for purposes of this Agreement and the Notes and any amendment, supplement or other modification hereof or thereof and for all other purposes other than for purposes of the Guaranty and the Collateral Documents, (i) this Agreement, (ii) the Notes, (iii) the Guaranty, (iv) the Collateral Documents, (v) the Fee Letter, (vi) the Intercreditor Agreement and (vii) each Issuer Document and (b) for purposes of the Guaranty and the Collateral Documents, (i) this Agreement, (ii) the Notes, (iii) the Guaranty, (iv) the Collateral Documents, (v) each Issuer Document, (vi) the Fee Letter, (vii) the Intercreditor Agreement and (viii) each Secured Hedge Agreement.

(e) Section 2.05(b)(ii) of the Credit Agreement is hereby amended by adding at the end thereof the following proviso:

“; provided , still further , that notwithstanding the foregoing, at the request of the Borrower, any Net Cash Proceeds from any Permitted Sale and Leaseback Transaction may be used to prepay the Second Lien Facility rather than any Loans hereunder, so long as (x) before and after giving effect to such prepayment no Default or Event of Default shall have occurred and be continuing and (y) on the date of such prepayment, after giving pro forma effect thereto, the Consolidated Leverage Ratio shall be less than 5.00:1.00.”

(f) Section 2.05(b)(iv) of the Credit Agreement is hereby amended by adding at the end thereof the following proviso:

“; provided , however , that notwithstanding the foregoing, at the request of the Borrower, (A) any such Net Cash Proceeds from any Permitted Refinancing Subordinated Indebtedness of Holdings or any of its Subsidiaries may be used to prepay the Second Lien Facility rather than any Loans hereunder and (B) any Net Cash Proceeds from any Indebtedness incurred pursuant to Section 7.02(b)(O) hereof may be used to prepay the Second Lien Facility rather than any Loans hereunder, in each case, so long as (x) before and after giving effect to such prepayment no Default or Event of Default shall have occurred and be continuing and (y) on the date of such prepayment, after giving pro forma effect thereto, the Consolidated Leverage Ratio shall be less than 4.50:1.00.”

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Project Java – Amendment No. 3

(g) Section 7.01(a) of the Credit Agreement is hereby amended by adding the phrase “, and Liens pursuant to any of the Second Lien Loan Documents securing any Second Lien Obligations and Liens securing any Indebtedness permitted to be incurred pursuant to Section 7.02(b)(O) hereof, in each case subject to the provisions of the Intercreditor Agreement” immediately prior to the semi-colon at the end of such clause.

(h) Section 7.02(b)(A) of the Credit Agreement is hereby amended by adding the phrase “and Indebtedness arising under the Second Lien Loan Documents in an aggregate principal amount not to exceed $80,000,000” immediately prior to the semi-colon at the end of such clause.

(i) Section 7.02(b) of the Credit Agreement is hereby further amended by deleting the word “and” appearing at the end of Section 7.02(b)(M) , by deleting the “.” appearing at the end of Section 7.02(b)(N) and by replacing it with the phrase “; and”, and by adding a new subsection (O)  to read in full as follows:

“(O) additional Indebtedness under the Loan Documents incurred after the Third Amendment Effective Date, in an aggregate principal amount not to exceed $80,000,000; provided that (x) before and after giving effect to the issuance or incurrence of such Indebtedness, no Default or Event of Default shall have occurred and be continuing, (y) the proceeds of such Indebtedness shall be used to prepay the Term Loans (as defined in the Second Lien Credit Agreement), and (z) the holders of such Indebtedness shall have become a party to the Intercreditor Agreement.”

(j) Section 7.02(b)(K) of the Credit Agreement is hereby amended by adding the parenthetical “(including, without limitation, as to subordination)” after the words “Administrative Agent” appearing therein.

(k) Section 7.03(l) of the Credit Agreement is hereby amended by adding the phrase “, Section 7.02(b)(K) ” immediately prior to the word “or” appearing therein.

(l) Section 7.05 of the Credit Agreement is hereby amended by deleting the word “and” appearing at the end of Section 7.05(o) , by deleting the “.” appearing at the end of Section 7.05(p) and be replacing it with the phrase “; and”, and by adding a new subsection (q)  to read in full as follows:

“(q) (x) any Permitted Sale and Leaseback Transactions, and (y) the Disposition of the portion of Excess Cash Flow that is not required to be used pursuant to Section 2.05(b)(i) to prepay the Loans to the extent such portion of Excess Cash Flow shall be used to prepay the Term Loans (as defined in the Second Lien Credit Agreement); provided that, before and after giving effect to such Permitted Sale and Leaseback Transaction or such Disposition, no Default or Event of Default shall have occurred and be continuing.”

(m) Section 7.05 of the Credit Agreement is hereby further amended by replacing the phrase “ Section 7.05(p) ” in the proviso thereto with the phrase “ Section 7.05(q) ”.

(n) Section 7.09 of the Credit Agreement is hereby amended by replacing the parenthetical in the second line thereof with the following:

“(other than this Agreement, any other Loan Document, any Second Lien Loan Document or any documentation in respect of Indebtedness permitted to be incurred pursuant to Section 7.02(b)(O) hereof)”

(o) Section 7.10(a) of the Credit Agreement is hereby amended by replacing the table therein in its entirety with the following:

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Project Java – Amendment No.