Document:

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                                                                    Exhibit 4.25

                               SECOND AMENDMENT TO

                      DEBTOR-IN-POSSESSION CREDIT AGREEMENT

            SECOND AMENDMENT (this "Amendment") dated as of February 8, 2000 to
the Debtor-in-Possession Credit Agreement, dated as of January 18, 2000 (as
amended by the First Amendment dated as of January 25, 2000 and as the same may
be further amended from time to time, the "Credit Agreement"), among American
Pad & Paper Company of Delaware, Inc. (the "Borrower"), American Pad & Paper
Company, WR Acquisition, Inc., the subsidiary guarantors party thereto, each a
debtor and debtor-in-possession in a case pending under Chapter 11 of the
Bankruptcy Code, the lenders from time to time party thereto (the "Lenders"),
Bankers Trust Company, as Agent (in such capacity, the "Agent") for the Lenders,
First Union National Bank, as Syndication Agent, and Deutsche Bank Securities
Inc., as Arranger. Capitalized terms used herein and not otherwise defined
herein have the meanings set forth in the Credit Agreement.

                                R E C I T A L S

            WHEREAS, on January 18, 2000, the Bankruptcy Court approved the
First Interim Order authorizing the Borrower to borrow up to $20,000,000 of
Loans on an interim basis pursuant to the terms set forth in the First Interim
Order and the Credit Agreement;

            WHEREAS, on January 28, 2000, the Bankruptcy Court approved the
Revised Interim Order authorizing the Borrower to borrow up to an additional
$15,000,000 of Loans on an interim basis pursuant to the terms set forth in the
Revised Interim Order and the Credit Agreement as amended by the First Amendment
dated as of January 25, 2000;

            WHEREAS, the Official Committee of Unsecured Creditors (the
"Creditors' Committee") filed an objection (the "Objection") to the approval of
the Final Order;

            WHEREAS, the parties conducted negotiations concerning the Objection
following which (i) the Credit Parties withdrew their request for approval of
the Term Loans and (ii) the Creditors' Committee withdrew the Objection;

            WHEREAS, the Credit Parties and the undersigned Lenders have agreed
to amend the Credit Agreement to, among other things, eliminate any requirement
that the Final Order approve Section 1.1(e) of the Credit Agreement and
authorize the Term

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Loans;

            WHEREAS, the Credit Parties and the undersigned Lenders acknowledge
that the Term Loan Effective Date has not and will not occur and that there will
be no Term Loans under the Credit Agreement;

            WHEREAS, the Borrower has requested that the Lenders amend the
Credit Agreement as set forth herein; and

            WHEREAS, the undersigned Lenders are agreeable to the Borrower's
request, but only on the terms and subject to the conditions set forth herein.

            NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, the parties hereto agree as follows:

            SECTION  .1.  Amendments.  Effective as of the date hereof but
subject to the satisfaction of the conditions set forth in Section 2 hereof,
the Credit Agreement is hereby amended as follows:

            (a)   Section 1.5 is amended by adding at the end thereof a new
clause (f) as follows:

                  "(f) If any Lender assigns any of its rights under this
            Agreement in accordance with Section 12.4(b), the Borrower shall not
            be obligated to issue replacement Notes unless requested by the
            applicable Lender."

            (b) Section 1.8(d) is amended by deleting "Termination Date" from
each place it appears and substituting therefor "Final Maturity Date."

            (c)   Section 1.14(a) is amended by:

                   (i) inserting "and subject to the provisions thereof" in the
            third line immediately after "upon entry of the Interim Order (and
            the Final Order, as applicable)"; and

                  (ii) deleting "Termination Date" from the proviso and
            substituting therefor "Final Maturity Date."

            (d) Section 1.14(c) is amended by deleting "The Liens" at the
beginning of such Section and substituting therefor "Pursuant to the Orders, the
Liens."

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            (e) Section 1.16 is amended by inserting the following immediately
before the period at the end of such Section: "; provided, however, that this
Section 1.16(ii) shall not apply to any portion of the Obligations that is
treated as a prepetition unsecured claim as a result of a successful challenge
by any Person (other than a Credit Party) to the priority of the Liens securing
the Prepetition Obligations in accordance with paragraph 16 of the Interim
Order."

            (f) Section 2.1(a)(x) is amended by inserting "or to assure
performance of contracts and similar obligations" immediately before "as the
case may be."

            (g)   Section 2 is amended by adding at the end thereof a new
Section 2.6 as follows:

                  "2.6 Existing Letters of Credit. If a drawing is made under
            any Existing Letter of Credit and the beneficiary thereunder returns
            any amount of such drawing to the Borrower, the Borrower shall
            promptly pay such amount to the Prepetition Agent in reduction of
            the Borrower's reimbursement obligation with respect to such
            Existing Letter of Credit."

            (h) Section 3.3(g) is amended by deleting "Termination Date" and
substituting therefor "Final Maturity Date."

            (i)   Section 4.2(d) is amended by:

                   (i) inserting "pursuant to the Orders" immediately after
            "shall be applied" in each place it appears; and

                  (ii) inserting the following immediately before the period at
            the end of the second sentence of such Section: "; provided, that
            the Total Revolving Loan Commitment shall not be reduced pursuant to
            this clause (d) below the lesser of (i) an amount reasonably
            necessary to preserve the value of the Credit Parties' assets
            remaining after such Asset Sale, as reflected in a revised Budget
            approved by the Agent, the Required Lenders and the Required
            Revolving Lenders, which revised Budget shall be consistent with the
            plans furnished by the Borrower pursuant to Sections 7.19, 7.20 and
            7.21 and (ii) the Borrowing Base as adjusted by the Agent in
            accordance with Section 1.1(d) after such Asset Sale."

            (j) Section 5.1(i) is amended by deleting "(following the Borrower's
retention of the Crisis Manager) or an Authorized Officer (prior to the
Borrower's retention of the Crisis Manager)" and substituting therefor (when the
Crisis Manager is in place) or an Authorized Officer (when the Crisis Manager is
not in place)."

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            (k)   Section 5.1(s) is amended and restated as follows:

                  "(s) Consultants. The Credit Parties shall have engaged Lazard
            Freres & Co. LLC pursuant to an engagement letter which shall be
            subject to Bankruptcy Court approval and subject to the right of the
            Agent and any Lender to object thereto."

            (l) Section 5.1(w) is amended by adding "in accordance with the
terms of this Agreement" immediately after "during the pendency of the Cases."

            (m) Section 5.2(d) is amended and restated as follows:

                  "(d) Borrowing Certificate. The Agent shall have received a
            certificate, in form and substance satisfactory to the Agent and
            executed by the Crisis Manager (when the Crisis Manager is in place)
            or an Authorized Officer (when the Crisis Manager is not in place)
            of the Borrower, certifying that (i) the requested Loan or Letter of
            Credit and the intended use of proceeds thereof are consistent with
            the terms of this Agreement and will be used solely for
            expenditures, and in the approximate amounts, set forth in the then
            applicable Budget, (ii) the proceeds thereof are necessary, after
            utilization and application of the Borrower's and the Guarantors'
            available Cash Collateral, in order for the Borrower and the
            Guarantors to satisfy their obligations with respect to the items
            set forth in the then applicable Budget, (iii) all of the
            representations and warranties contained in Section 6 are true and
            correct in all material respects (except for those that expressly
            relate to a specific date, in which case they shall be true and
            correct in all material respects as of such date), (iv) the Borrower
            and the Guarantors have observed and performed all applicable
            covenants and agreements contained herein, in the other Credit
            Documents and the Interim Order or the Final Order (as applicable)
            and satisfied in all material respects each condition to the making
            of such Loan or the issuance of such Letter of Credit contained
            herein, in the other Credit Documents or in the Interim Order or the
            Final Order (as applicable) to be observed, performed or satisfied
            by the Credit Parties, (v) the making of any requested Revolving
            Loan or the issuance of any requested Letter of Credit would not
            cause the

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            aggregate principal amount of all Revolving Loans, when added to all
            Other Revolving Exposure, to exceed the lesser of (y) the Total
            Revolving Loan Commitment and (z) the Borrowing Base then in effect,
            (vi) such officer or the Crisis Manager, as the case may be, has no
            knowledge of the existence of any Default or Event of Default, (vii)
            the information provided in the then applicable Budget continues to
            be true and correct in all material respects, (viii) the requested
            Loan or Letter of Credit will not result in the Credit Parties
            exceeding any amounts in the then applicable Budget by more than
            10%, (ix) the Credit Parties are keeping separate records of
            post-Petition Date Accounts and payments thereon, (x) the Credit
            Parties are not applying payments on post-Petition Date Accounts to
            pre-Petition Date Accounts, (xi) the Credit Parties are not allowing
            offsets against post-Petition Date Accounts on account of
            pre-Petition Date rebates, allowances or offsets (excluding certain
            pre-Petition Date and post-Petition Date rebates and volume
            discounts which are payable to customers after the Petition Date and
            which are described in such certificate) and (xii) the Credit
            Parties are not remitting any payments on post-Petition Date
            Accounts in payment of the Accounts Receivable Facility."

            (n) Section 6.3 is amended by inserting "and subject to the
provisions thereof" in the third line immediately after "the Interim Order or
the Final Order (when applicable)."

            (o) Section 6.16 is amended by deleting "and the Borrower has no
Foreign Subsidiaries other than Foreign Sales."

            (p) Section 6.24 is amended by deleting "The subordination
provisions" and substituting therefor "Subject to the reservation of rights
provisions in the Orders in favor of any Person (other than a Credit Party), the
subordination provisions."

            (q) Section 7.1(a) is amended by:

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                   (i) deleting "of cash flows" in the fifth line and
            substituting therefor "and cash flows";

                  (ii) deleting "December 30, 1999" in the tenth line and
            substituting therefor "January 17, 2000"; and

                  (iii) deleting "certified by the Crisis Manager (following the
            Borrower's retention of the Crisis Manager) or an Authorized Officer
            (prior to the Borrower's retention of the Crisis Manager)" and
            substituting therefor "reviewed by the Crisis Manager as evidenced
            by the Crisis Manager's signature thereon (when the Crisis Manager
            is in place) or certified by an Authorized Officer of Holdings (when
            the Crisis Manager is not in place)."

            (r) Section 7.1(b)(i) is amended by deleting "certified by the
Crisis Manager (following the Borrower's retention of the Crisis Manager) or an
Authorized Officer of Holdings (prior to the Borrower's retention of the Crisis
Manager)" and substituting therefor "reviewed by the Crisis Manager as evidenced
by the Crisis Manager's signature thereon (when the Crisis Manager is in place)
or certified by an Authorized Officer of Holdings (when the Crisis Manager is
not in place)."

            (s) Section 7.1(b)(ii) is amended by deleting "certified by the
Crisis Manager (following the Borrower's retention of the Crisis Manager) or an
Authorized Officer of Holdings (prior to the Borrower's retention of the Crisis
Manager)" and substituting therefor "reviewed by the Crisis Manager as evidenced
by the Crisis Manager's signature thereon (when the Crisis Manager is in place)
or certified by an Authorized Officer of Holdings (when the Crisis Manager is
not in place)."

            (t) Section 7.1(d)(i) is amended by deleting "15" and substituting
therefor "20."

            (u) Section 7.1(d)(ii) is amended by:

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                   (i) deleting "15 days after the end of each month" and
            substituting therefor "30 days after the end of each month other
            than for January 2000"; and

                  (ii) adding the following immediately before the semicolon at
            the end of such Section: "(it being understood that Holdings shall
            be permitted to furnish one comparison that satisfies the
            requirements of Section 7.1(a) and this Section 7.1(d)(ii) for each
            such month)."

            (v)   Section 7.1(d)(iv) is amended and restated as follows:

                  "Weekly, before 5:00 p.m. (New York time) on the second
            Business Day of each week, and at any other time requested by the
            Agent during the continuance of a Default or Event of Default, a
            borrowing base certificate, substantially in the form of Exhibit N
            (the "Borrowing Base Certificate"), which shall: (A) detail the
            Credit Parties' Eligible Accounts Receivable and the Credit Parties'
            Eligible Inventory as of each Saturday of the immediately preceding
            week (or as of such other date as the Agent may request); (B)
            prepared under the direction of the Crisis Manager (when the Crisis
            Manager is in place) or an Authorized Officer of the Borrower (when
            the Crisis Manager is not in place) and reviewed by the Crisis
            Manager as evidenced by his signature thereon or certified by such
            officer subject only to adjustment upon completion of the normal
            year-end audit of physical inventory; and (C) attach thereto such
            additional schedules and other information as the Agent may
            reasonably request (including, without limitation, a monthly aging
            of Accounts);"

            (w)   Sections 7.1(d)(v) and (vi) are amended and restated as
follows:

                  "(v) On or before 5:00 p.m. (New York time) on Tuesday of each
            week, an oral report or, if reasonably requested by the Agent (but
            in no event more than once per month), a written report describing
            the then current status of the Credit Parties' relationship with
            their vendors, which (in the case of the twenty largest vendors of
            the Credit Parties) shall be on a vendor-by-vendor basis; and

                  (vi)  [Intentionally Omitted]."

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            (x) Section 7.1(e) is amended by deleting "(following the Borrower's
retention of the Crisis Manager) or an Authorized Officer of Holdings (prior to
the Borrower's retention of the Crisis Manager)" and substituting therefor
"(when the Crisis Manager is in place) or an Authorized Officer (when the Crisis
Manager is not in place)."

            (y) Section 7.1(i) is amended and restated as follows:

                  "(i) On or before 5:00 p.m. (New York time) on Tuesday of each
            week, a report from the Consultants summarizing the status of the
            Borrower's efforts to consummate the Sale Proposal. In addition, if
            requested by the Agent, the Borrower shall conduct bi-weekly
            conference calls with the Lenders to report on the status of the
            Sale Proposal."

            (z) Section 7.1(j) is amended by adding "Holdings shall make
available" immediately before "copies of any filings and registrations."

            (aa)  Section 7.1(m) is amended and restated as follows:

                  "(m) Accounts Collection Report. Within three Business Days of
            the receipt of any remittance in an amount in excess of $100,000
            received by any Credit Party during the preceding week, such Credit
            Party shall deliver to the Agent a report describing whether such
            remittance is in respect of the payment of Accounts arising before
            the Petition Date or arising on or after the Petition Date."

            (bb) Section 7.8 is amended by deleting "(following the Borrower's
retention of the Crisis Manager) or an Authorized Officer of Holdings (prior to
the Borrower's retention of the Crisis Manager)" and substituting therefor
"(when the Crisis Manager is in place) or an Authorized Officer of Holdings
(when the Crisis Manager is not in place)."

            (cc)  Section 7.13 is amended and restated as follows:

                  "7.13 Reorganization Plan. Prior to filing any proposed
            Reorganization Plan, Holdings will, and will cause each of its
            Subsidiaries to, discuss in good faith any proposed Reorganization
            Plan with the Agent and the Required Lenders and use reasonable
            efforts to obtain the support of the Agent and the Required Lenders
            to any Reorganization Plan."

            (dd) Section 7.14 is amended by inserting "Subject to the provisions
of the Bankruptcy Code," immediately before

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Holdings will contribute."

            (ee) Section 7.19 is amended by deleting "After the Borrower's
retention of the Crisis Manager" and substituting therefor "While the Crisis
Manager is in place."

            (ff) Section 7.20 is amended by deleting "After the Borrower's
retention of the Crisis Manager" and substituting therefor "While the Crisis
Manager is in place."

            (gg)  Section 7.21 is amended by:

                   (i) deleting "Cards" from each place is appears and
            substituting therefor "Card"; and

                  (ii) deleting "After the Borrower's retention of the Crisis
            Manager" and substituting therefor "While the Crisis Manager is in
            place."

            (hh) Section 7.22 is amended by adding the following sentence at the
end thereof: "The Crisis Manager may be removed at the reasonable discretion of
the Borrower after the Borrower notifies the Agent of the Borrower's reason for
such removal; provided, that within 10 days after such removal, the Borrower
shall retain a replacement Crisis Manager acceptable to the Agent and the
Required Revolving Lenders pursuant to an engagement letter satisfactory to the
Agent and the Required Revolving Lenders."

            (ii) Section 7.23 is amended by deleting "such reports and give" and
substituting therefor "such reports with the Agent and Arthur Andersen and to
give."

            (jj) Section 8.2 is amended by deleting "Holdings will not, will not
permit any of its Subsidiaries to, and will not apply to the Bankruptcy Court
for authority to "and substituting therefor "Except as authorized by the
Bankruptcy Court after notice and a hearing and after providing a proposal to
the Agent and discussing such proposal with the Agent, Holdings will not, and
will not permit any of its Subsidiaries to."

            (kk)  Clause (d) of Section 8.2 is amended and restated as
follows:

                  "(d) each Credit Party may sell (i) assets if the sales price
            for such sale or group of related sales does not exceed $1,000,000
            and such sale or sales are for fair value and at arm's length and
            (ii) other assets (including assets pursuant to the Sales Proposal)
            with the prior written consent of the Required Lenders, in any case
            so long as the Net Cash

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            Proceeds therefrom are applied in accordance with Sections 3.3(d)
            and 4.2(d);".

            (ll)  Clause (f) of Section 8.2 is amended and restated as
follows:

                  "(f) the Borrower and its Subsidiaries may, in the ordinary
            course of business, sell by-products (such as paper scraps) in an
            aggregate amount not to exceed $100,000;"

            (mm)  Section 8.3 is amended by:

                  (i) deleting the period at the end of clause (k) and
            substituting therefor "; and"; and

                  (ii) adding at the end thereof a new clause (l) as follows:

                  "(l) Liens upon assets of any Credit Party subject to
            Capitalized Lease Obligations to the extent such Capitalized Lease
            Obligations are permitted under Section 8.4(j); provided, that (x)
            such Liens only secure the payment of Indebtedness arising under
            such Capitalized Lease Obligation and (y) the Lien encumbering the
            asset giving rise to the Capitalized Lease Obligation does not
            encumber any other asset of any Credit Party."

            (nn)  Section 8.4 is amended by:

                  (i) deleting "and" at the end of clause (h);

                  (ii) deleting the period at the end of clause (i) and
            substituting therefor "; and"; and

                  (iii)       adding at the end thereof a new clause (j) as
            follows:

                  "(j) Indebtedness of the Credit Parties evidenced by
            Capitalized Lease Obligations to the extent permitted under Section
            8.9, provided that the aggregate principal amount of Capitalized
            Lease Obligations permitted by this clause (j) shall not exceed the
            amount permitted in the then applicable Budget."

            (oo)  Section 8.6 is amended by:

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                   (i) deleting "one or more accounts maintained with the Agent
            or a Lender" from clause (a) and substituting therefor "accordance
            with Sections 8.17 and 8.25";

                  (ii) deleting clause (f) and substituting therefor the
            following: "(f) deposits made in the ordinary course of business
            shall be permitted, excluding deposits of advanced payments in favor
            of vendors in excess of $250,000 in the aggregate;"

                  (iii) deleting the period at the end of clause (l) and
            substituting therefor ";and"; and

                  (iv) adding at the end thereof a new clause (m) as follows:

                  "(m) The Borrower and its Subsidiaries may make travel
            advances to employees in the ordinary course of business and
            consistent with past practice; provided that the aggregate
            outstanding amount of advances permitted by this clause (m) shall
            not exceed $50,000 at any time."

            (pp) Section 8.15 is amended by adding the following immediately
before the period at the end thereof: ", except that, with the prior written
consent of the Agent and the Required Revolving Lenders, the Credit Parties may
create a Subsidiary to facilitate the Sale Proposal or any other sale of an
operating division permitted under this Agreement; provided, that if such
Subsidiary is not sold within a reasonable period of time pursuant to the Sale
Proposal or such other sale, such Subsidiary shall, promptly upon the request of
the Agent, comply with Section 7.11."

            (qq) Section 8.21 is amended by inserting "or any other order of the
Bankruptcy Court" immediately after "permitted by the Orders."

            (rr)  Section 8.22 is amended by:

                  (i) inserting "outside the ordinary course of business"
            immediately after "any agreement to pay"; and

                  (ii) deleting "in accordance with any agreements or plans
            approved by the Agent and the Required Lenders."

            (ss) Section 8.24(a) is amended by inserting "or

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ordered by the Bankruptcy Court" immediately after "the Required Lenders."

            (tt) Section 9.5(f) is amended by adding ", unless such relief is
granted with respect to litigation of a claim which is covered by insurance"
immediately before the semicolon at the end of such Section.

            (uu) Section 9.5(h) is amended and restated as follows:

                  "(h) [Intentionally Omitted];"

            (vv) Section 9.5(j) is amended by deleting the period at the end of
such Section and substituting therefor the following: "; provided, however, that
in no event shall an Event of Default occur solely as a result of a successful
challenge by any Person (other than a Credit Party) to the priority of the Liens
securing the Prepetition Obligations in accordance with paragraph 16 of the
Interim Order; or"

            (ww) Section 9.9 is amended by adding the following immediately
before the semicolon at the end of such Section: "; provided, however, that in
no event shall an Event of Default occur solely as a result of the assertion of
claims against Holding or any of its Subsidiaries pursuant to any provision of
the Bankruptcy Code."

            (xx) The definition of "Authorized Officer" in Section 10 is amended
by adding "or the Crisis Manager (when the Crisis Manager is in place)"
immediately before the period at the end of such definition.

            (yy) The definition of "Budget" in Section 10 is amended by deleting
"(following the Borrower's retention of the Crisis Manager) or an Authorized
Officer (prior to the Borrower's retention of the Crisis Manager)" and
substituting therefor "(when the Crisis Manager is in place) or an Authorized
Officer (when the Crisis Manager is not in place)."

            (zz) Clause (i) in the definition of "Consolidated EBIT" in Section
10 is amended and restated as follows: "(i) without giving effect to any
extraordinary gains or losses from sales or disposals of assets sold outside the
ordinary course of business or to gains or losses from the sale of assets (other
than inventory) sold in the ordinary course of business".

            (aaa) The definition of "Consolidated EBITDA" in Section 10 is
amended by deleting "Consolidated EBITDA" from the last place it appears and
substituting therefor "Consolidated EBIT."

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            (bbb) Clause (e) of the definition of "Eligible Accounts
Receivable" in Section 10 is amended by:

                  (i) deleting "(iii)" and substituting therefor "(ii); and

                  (ii) deleting the proviso and substituting therefor the
            following: "provided, that Accounts owing by each of Nationwide,
            Unisource and xpedx (each, a "Specified Account Debtor") shall not
            be deemed ineligible under clause (ii) unless (A) a Specified
            Account Debtor has a legally enforceable right of setoff against a
            Borrowing Base Party in which case the Account owing by such
            Specified Account Debtor shall be deemed to be ineligible, to the
            extent of the amount of such setoff, or (B) a Specified Account
            Debtor exercises any setoff or similar rights against a Borrowing
            Base Party in which case all Accounts owing by such Specified
            Account Debtor shall be deemed to be ineligible, to the extent of
            the amounts owed by the Borrowing Base Parties to such Specified
            Account Debtor or its affiliates; or"

            (ccc) Clause (h) of the definition of "Eligible Accounts Receivable"
in Section 10 is amended by deleting "sale-and-return,".

            (ddd) The definition of "Final Order" in Section 10 is amended by
deleting "(including, without limitation, Section 1.1(e))".

            (eee) The definition of "Inventory" in Section 10 is amended by
deleting the comma immediately after "the Borrowing Base Parties'."

            (fff) The definition of "Letter of Credit" in Section 10 is amended
by adding the following at the end thereof: "An Existing Letter of Credit or a
renewal of an Existing Letter of Credit shall not be considered a Letter of
Credit as defined in Section 2.1(a)."

            (ggg) The definition of "Maximum Swingline Amount" in Section 10 is
amended by deleting "January 29, 2000" and substituting therefor "the date on
which the Final Order is entered."

            (hhh) The definition of "Required Lenders" in Section 10 is amended
by deleting "Prepetition Indebtedness" and substituting therefor "Prepetition
Obligations."

            (iii) Section 10 is amended by deleting the

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definition of "Termination Date" from the first place it appears.

            (jjj) The definition of "Termination Date" in Section 10 is amended
and restated as follows:

                  "'Termination Date' shall mean the date of the termination of
            the Total Revolving Loan Commitment upon the occurrence of an Event
            of Default or otherwise in accordance with the terms hereof."

            (kkk) Section 12.1 is amended by:

                  (i) deleting "and" immediately before "(v)"; and

                  (ii) adding the following immediately before the period at the
            end of such Section: "; and (vi) to pay to the Prepetition Agent,
            for the benefit of itself, the Existing Lenders and the issuer of
            the Existing Letters of Credit, all accrued and unpaid fees, costs
            and charges from time to time owing to the Prepetition Agent, such
            issuer and the Existing Lenders under the Existing Credit Agreement.
            The Borrower shall not be obligated to pay or reimburse any Person
            for any out-of-pocket costs and expenses pursuant to this Section
            12.1 unless the Borrower receives an invoice in reasonable detail
            for such costs and expenses."

            (lll) Section 12.4(b) is amended by:

                   (i)        inserting "unless requested by the Lender
            pursuant to Section 1.5(f)," immediately after "replacement
            Notes" in clause (ii) of the first proviso to such Section; and

                  (ii) inserting "either such assigning Lender shall have no
            Commitments and outstanding Loans or" immediately before "the sum of
            the Commitments" in the third proviso to such Section.

            (mmm) The second proviso in Section 12.12 is amended by:

                  (i) inserting "or" immediately before "(iv)"; and

                  (ii) deleting "or (v) amend, modify or waive any provision
            that expressly provides for the consent of all Revolving Lenders,".

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            (nnn) Section 12.19(a)(i) is amended by:

                  (i) inserting ", subject to the provisions of the Bankruptcy
            Code and pursuant to the Orders," immediately before "be applied as
            follows";

                  (ii) inserting the following immediately after clause first:
            "second, to the Credit Parties to fund amounts owing under the
            Carve-Out,";

                  (iii) renumbering (A) clause second as clause third, (B)
            clause third as clause fourth, (C) clause fourth as clause fifth,
            (D) clause fifth as clause sixth, (E) clause sixth as clause
            seventh, (F) clause seventh as clause eighth and (G) clause eighth
            as clause ninth; and

                  (iv) deleting "this clause eighth" and substituting therefor
            "this clause ninth."

            SECTION .2. Conditions to Effectiveness. This Amendment shall become
effective when, and only when (a) the Agent shall have received counterparts of
this Amendment, duly executed by each Credit Party and the Required Lenders and
(b) the Final Order shall have been entered.

            SECTION .3. No Addition of Term Lenders to Credit Agreement, etc.
Notwithstanding anything to the contrary contained in this Amendment, the Credit
Agreement or the other Credit Documents, the parties hereto agree that (a) the
Term Loan Effective Date shall be deemed to have not occurred, (b) no Lender
shall be a Term Lender, (c) no Lender shall have a Term Loan Commitment, (d) no
Term Loans shall be made or deemed to be made, (e) the Total Term Loan
Commitment shall be zero at all times and (f) any reference in the Credit
Agreement to the phrase "prior to the Term Loan Effective Date" shall be deemed
to mean during the term of the Credit Agreement.

                                      -15-
<PAGE>

            SECTION  .4.  Representations and Warranties.  Each Credit Party
represents and warrants as follows:

            (a) Subject to the approval by the Bankruptcy Court of the Final
Order, the execution, delivery and performance by such Credit Party of this
Amendment and the consummation of the transactions contemplated hereby are
within such Credit Party's corporate powers, have been duly authorized by all
necessary corporate action on the part of such Credit Party, and do not (i)
violate such Credit Party's Certificate of Incorporation or By-Laws, (ii)
contravene any applicable provision of any law, statute, rule or regulation, or
any order, writ, injunction or decree of any court or governmental
instrumentality or (iii) conflict or result in any inconsistency with, or result
in the breach of, or constitute a default under, any provision of any loan
agreement, indenture, mortgage, deed of trust or any other material agreement to
which such Credit Party is a party or by which it or any of its assets are bound
or to which it may be subject.

            (b) Except for the approval by the Bankruptcy Court of the Final
Order, no order, consent, approval, license, authorization or validation of, or
filing, recording or registration with, or exemption by, any foreign or domestic
governmental or public body or authority, or any subdivision thereof, is
required to authorize or is required in connection with (i) the execution,
delivery and performance by such Credit Party of this Amendment or (ii) the
legality, validity, binding effect or enforceability of this Amendment.

            (c) This Amendment has been duly executed and delivered by such
Credit Party and constitutes the legal, valid and binding obligation of such
Credit Party, enforceable against such Credit Party in accordance with its
terms.

            (d)   No Default or an Event of Default has occurred and is
continuing.

            (e) All representations and warranties contained in the Credit
Agreement and the other Credit Documents are true and correct in all material
respects with the same effect as though made on the date hereof (except for any
representation or warranty which by its terms is made as of a specified date, in
which case such representation or warranty was true and correct as of such
specified date).

                                      -16-
<PAGE>

            SECTION  .5.  Reference to and Effect on the Credit Documents.

            (a) Upon the effectiveness hereof, each reference in the Credit
Agreement to "this Agreement," "hereunder," "hereof" or words of like import
referring to the Credit Agreement, and each reference in the other Credit
Documents to the Credit Agreement, "thereunder," "thereof" or words of like
import referring to the Credit Agreement, shall mean and be a reference to the
Credit Agreement, as amended hereby.

            (b) Except as specifically provided herein, each Credit Document is
and shall continue to be in full force and effect and is hereby ratified and
confirmed in all respects.

            (c) The execution, delivery and effectiveness of this Amendment
shall not, except as expressly provided herein, operate as an amendment to or a
waiver of any right, power or remedy of the Agent or any Lender under any of the
Credit Documents, nor constitute an amendment to or a waiver of any provision of
any of the Credit Documents.

            (d) This Amendment shall constitute a Credit Document.

            SECTION .6. Costs and Expenses. The Borrower shall pay promptly all
reasonable out-of-pocket costs and expenses of the Agent and each Lender in
connection with the preparation, execution and delivery of this Amendment and
any other instrument or document delivered in connection herewith (including,
without limitation, the reasonable fees and expenses of counsel for the Agent
and each Lender).

            SECTION  .7.  Governing Law.  This Amendment shall be governed
by, and construed in accordance with, the laws of the State of New York and,
to the extent applicable, the Bankruptcy Code.

            SECTION .8. Execution in Counterparts; etc. This Amendment may be
executed in any number of counterparts, each of which when so executed and
delivered shall be deemed to be an original and all of which taken together
shall constitute one and the same agreement. Delivery of an executed counterpart
of a signature page to this Amendment by telecopier shall be as effective as
delivery of a manually executed counterpart of this Amendment.

                                      -17-
<PAGE>

            IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective duly authorized officers as of the date first
above written.

                                    AMERICAN PAD & PAPER COMPANY, as Debtor
                                    and Debtor-in-Possession

                                    By:
                                       --------------------------------------
                                       Name:  James W. Swent III
                                       Title:  Chief Executive Officer

                                    WR ACQUISITION, INC., as Debtor and
                                    Debtor-in-Possession

                                    By:
                                       --------------------------------------
                                       Name:  James W. Swent III
                                       Title:  Chief Executive Officer

                                    AMERICAN PAD & PAPER COMPANY OF DELAWARE,
                                    INC., as Debtor and Debtor-in-Possession

                                    By:
                                       --------------------------------------
                                       Name:  James W. Swent III
                                       Title:  Chief Executive Officer

                                    AP&P MANUFACTURING, INC., as Debtor and
                                    Debtor-in-Possession

                                    By:
                                       --------------------------------------
                                       Name:  James W. Swent III
                                       Title:  Chief Executive Officer

                      (Signature Page to Second Amendment)

<PAGE>

                                    AMERICAN PAD & PAPER SALES COMPANY, INC.,
                                    as Debtor and Debtor-in-Possession

                                    By:
                                       --------------------------------------
                                       Name:  James W. Swent III
                                       Title:  Chief Executive Officer

                                    AMERICAN PAD AND PAPER FOREIGN SALES
                                    CORPORATION, as Debtor and
                                    Debtor-in-Possession

                                    By:
                                       --------------------------------------
                                       Name:  James W. Swent III
                                       Title:  Chief Executive Officer

                                    AP&P FINANCING COMPANY, INC., as Debtor
                                    and Debtor-in-Possession

                                    By:
                                       --------------------------------------
                                       Name:  James W. Swent III
                                       Title:  Chief Executive Officer

                     [Signature Page to Second Amendment]

<PAGE>

                                    BANKERS TRUST COMPANY, as Agent, a
                                    Revolving Lender and a Term Lender

                                    By:
                                       --------------------------------------
                                       Name:
                                       Title:

                     [Signature Page to Second Amendment]

<PAGE>

                                    BANK OF AMERICA, N.A., as a Revolving
                                     Lender

                                    By:
                                       --------------------------------------
                                       Name:
                                       Title:

   [Signature Page to Second Amendment]

<PAGE>

                                    BANK OF SCOTLAND, as a Revolving
                                    Lender and a Term Lender

                                    By:
                                       --------------------------------------
                                       Name:
                                       Title:

                      [Signature Page to Second Amendment]

<PAGE>

                                    BANK ONE TEXAS, N.A., as a Revolving Lender
                                    and a Term Lender

                                    By:
                                       --------------------------------------
                                       Name:
                                       Title:

                      [Signature Page to Second Amendment]

<PAGE>

                                    CARL MARKS MANAGEMENT COMPANY, L.P., as a
                                    Revolving Lender and a Term Lender

                                    By:
                                       --------------------------------------
                                       Name:
                                       Title:

                      [Signature Page to Second Amendment]

<PAGE>

                                    CIBC INC., as a Revolving Lender
                                    and a Term Lender

                                    By:
                                       --------------------------------------
                                       Name:
                                       Title:

                      [Signature Page to Second Amendment]

<PAGE>

                                    CITIBANK, N.A., as a Revolving Lender
                                    and a Term Lender

                                    By:
                                       --------------------------------------
                                       Name:
                                       Title:

                      [Signature Page to Second Amendment]

<PAGE>

                                    ERSTE BANK DER OESTERREICHISCHEN SPARKASSEN
                                    AG, as a Revolving Lender and a Term Lender

                                    By:
                                       --------------------------------------
                                       Name:
                                       Title:

                                    By:
                                       --------------------------------------
                                       Name:
                                       Title:

                      [Signature Page to Second Amendment]

<PAGE>

                                    FIRST UNION NATIONAL BANK, as Syndication
                                    Agent, a Revolving Lender and a Term Lender

                                    By:
                                       --------------------------------------
                                       Name:
                                       Title:

                      [Signature Page to Second Amendment]

<PAGE>

                                    GUARANTY BUSINESS CREDIT CORPORATION,
                                    dba Fidelity Funding, as a Revolving Lender

                                    By:
                                       --------------------------------------
                                       Name:
                                       Title:

<PAGE>

                                    HCM OFFSHORE TRUST, as a Revolving Lender
                                    and a Term Lender

                                    By:
                                       --------------------------------------
                                       Name:
                                       Title:

                      [Signature Page to Second Amendment]

<PAGE>

                                    LEHMAN COMMERCIAL PAPER INC., as a Revolving
                                    Lender and a Term Lender

                                    By:
                                       --------------------------------------
                                       Name:
                                       Title:

                      [Signature Page to Second Amendment]

<PAGE>

                                    PAM CAPITAL FUNDING, L.P., as a Revolving
                                    Lender and a Term Lender

                                    By: Highland Capital Management,
                                    L.P., as Collateral Manager

                                    By:
                                       --------------------------------------
                                       Name:
                                       Title:

                      [Signature Page to Second Amendment]

<PAGE>

                                    TRI-LINKS INVESTMENT TRUST, as a
                                    Revolving Lender and a Term Lender

                                    By: Wilmington Trust Company,
                                        solely in its capacity as Owner
                                          Trustee

                                    By:
                                       --------------------------------------
                                       Name:
                                       Title:

                      [Signature Page to Second Amendment]<PAGE>

                                                                   Exhibit 10.36

                          AMERICAN PAD & PAPER COMPANY

                    1999 KEY EMPLOYEES STOCK INCENTIVE PLAN

SECTION 1.  Purpose

            The purpose of the American Pad & Paper Company 1999 Key Employees
Stock Incentive Plan (the "Plan") is to enable American Pad & Paper Company, a
Delaware corporation (the "Company") and its subsidiaries to attract, retain and
motivate their employees by providing for or increasing the proprietary
interests of such employees in the Company.

SECTION 2.  Persons Eligible

            Any person employed by the Company or any of its subsidiaries
including any director who is so employed (an "Employee"), shall be eligible to
be considered for the grant of Awards (as defined below) under the Plan.

SECTION 3.  Awards

            (a) The Committee (as defined below), on behalf of the Company, is
authorized under the Plan to enter into any type of arrangement with an Employee
that is consistent with the provisions of the Plan and that by its terms
involves the issuance or potential issuance of (i) shares of Common Stock, par
value $.01 per share, of the Company ("Common Stock") or (ii) a Derivative
Security (as such term is defined in Rule 16a-1 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as such Rule may be
amended from time to time) with an exercise or conversion right at a price
related to Common Stock or with a value derived from the value of the shares of
Common Stock. The entering into of any such arrangement is referred to herein as
the grant of an "Award."

            (b) Awards are not restricted to any specified form or structure and
may include, without limitation, sales or bonuses of stock, restricted stock,
restricted stock unit, stock options, reload stock options, stock purchase
warrants, other rights to acquire stock, securities convertible into or
redeemable for stock, stock appreciation rights, limited stock appreciation
rights, phantom stock, dividend equivalents, performance units or performance
shares, and an Award may consist of one or more such security or benefit.

            (c) Common Stock may be issued pursuant to an Award for any lawful
consideration as determined by the Committee, including, without limitation,
services rendered by the recipient of such Award.

                                      -1-
<PAGE>

            (d) Subject to the provisions of the Plan, the Committee, in its
sole and absolute discretion, shall determine all of the terms and conditions of
each Award granted under the Plan, which terms and conditions may include
without limitation:

            (i) a provision permitting the recipient of such Award, including a
      director or officer of the Company, to pay the purchase price of the
      Common Stock or other property issuable pursuant to such Award, or such
      recipient's tax withholding obligation with respect to such Award, in
      whole or in part, by any one or more of the following:

            (A)   the delivery of  previously  owned shares of Common Stock or
                  other property,

            (B)   a reduction in the amount of Common Stock or other property
                  otherwise issuable pursuant to such Award, or

            (C)   the delivery of a promissory  note, the terms and conditions
                  of which shall be determined by the Committee;

            (ii) a provision conditioning or accelerating the receipt of
      benefits pursuant to such Award, either automatically or in the discretion
      of the Committee, upon the occurrence of specified events, including a
      change of control of the Company, an acquisition of a specified percentage
      of the voting power of the Company, the dissolution or liquidation of the
      Company, a sale of substantially all of the property and assets of the
      Company or an event of the type described in Section 7 hereof; or

            (iii) a provision required in order for such Award to qualify as an
      incentive stock option under Section 422 of the Internal Revenue Code (an
      "Incentive Stock Option").

            (e) Notwithstanding any other provision of the Plan, no one Employee
shall be granted options or other Awards with respect to more than 100,000
shares of Common Stock in any one calendar year; provided, however, that this
limitation shall not apply if it is not required in order for the compensation
attributable to Awards hereunder to qualify as performance-based compensation
described in Section 162(m) of the Internal Revenue Code ("Performance-Based
Compensation"). The limitation set forth in this Section 3(e) shall be subject
to adjustment as provided in Section 7 hereof, but only to the extent such
adjustment would not affect the status of compensation attributable to Awards
hereunder as Performance-Based Compensation.

SECTION 4.  Stock Subject to Plan

            (a) At any time, the aggregate number of shares of Common Stock
issued and issuable pursuant to all Awards granted under the Plan shall not
exceed 1,500,000, subject to adjustment as provided in Section 7 hereof. Shares
of Common Stock issued pursuant to the Plan may be authorized but unissued
shares, treasury shares, reacquired shares or any combination thereof.

            (b) For purposes of Section 4(a) hereof, the aggregate number of
shares of Common Stock issued and issuable pursuant to Awards granted under the
Plan shall at any time be deemed to be equal to the sum of the number of shares
of Common Stock which have been issued

                                      -2-
<PAGE>

pursuant to Awards and which have not been repurchased by the Company and the
number of shares which are or may be issuable at or after such time pursuant to
Awards granted prior to such time.

SECTION 5.  Duration

            No Awards shall be granted under the Plan after April 27, 2009.
Shares of Common Stock may be issued after April 27, 2009 pursuant to Awards
granted prior to such date, however, no shares of Common Stock shall be issued
under the Plan after April 27, 2019.

SECTION 6.  Administration

            (a) The Plan shall be administered by a committee (the "Committee")
of the Board of Directors of the Company (the "Board") consisting of two or more
directors, each of whom is a "Non-Employee Director" (as such term is defined in
Rule 16b-3 under the Exchange Act, as such Rule may be amended from time to
time) and an "outside director" as defined in Section 162(m) of the Internal
Revenue Code; provided that to the extent permitted at any time under Rule 16b-3
or any successor rule and under Section 162(m) of the Internal Revenue Code or
any successor statutory provision, and any implementing regulations, without
adversely affecting the ability of the Plan to comply with the conditions for
exemption from Section 16 of the Exchange Act provided by Rule 16b-3 and the
exemption from the limitations on the deductibility of certain executive
compensation provided by Section 162(m), the Committee may delegate the
administration of the Plan in whole or in part, on such terms and conditions, to
such other person or persons as it may determine in its discretion, which
persons may be officers or employees of the Company or third parties (each such
person, an "Authorized Delegate").

            (b) Subject to the provisions of the Plan, the Committee (or its
Authorized Delegate) shall be authorized and empowered to do all things
necessary or desirable in connection with the administration of the Plan,
including the following:

            (i)   adopt,  amend and rescind rules and regulations  relating to
      the Plan;

            (ii) determine which persons meet the requirements of Section 2
      hereof for eligibility under the Plan and to which of such eligible
      persons, if any, Awards shall be granted hereunder;

            (iii) determine  whether,  and the extent to which adjustments are
      required pursuant to Section 7 hereof;

            (iv)  interpret   and   construe   the  Plan  and  the  terms  and
      conditions of any Award granted hereunder; and
            (v) correct any defect or supply any omission or reconcile any
      inconsistency in the Plan or in any Award in the manner and to the extent
      the Committee deems necessary or desirable to carry it into effect.

            (c) Any decision of the Committee (or any Authorized Delegate) in
the interpretation and administration of the Plan shall lie within its sole and
absolute discretion and shall

                                      -3-
<PAGE>

be final, conclusive and binding on all parties concerned. The Committee may act
only by a majority of its members in office, except that the members thereof may
authorize any one or more of their members or any Authorized Delegate to execute
and deliver documents or to take any other ministerial action on behalf of the
Committee with respect to Awards made or to be made to Plan participants. No
member of the Committee or Authorized Delegate shall be liable for anything done
or omitted to be done by such member or Authorized Delegate, by any other member
of the Committee or by any other Authorized Delegate in connection with the
performance of duties under the Plan, except for his or her own willful
misconduct or as expressly provided by statute. Determinations to be made by the
Committee under the Plan may be made by Authorized Delegates.

SECTION 7.  Adjustments

            If the outstanding securities of the class then subject to the Plan
are increased, decreased or exchanged for or converted into cash, property or a
different number or kind of securities, or if cash, property or securities are
distributed in respect of such outstanding securities, in either case as a
result of a reorganization, merger, consolidation, recapitalization,
restructuring, reclassification, dividend (other than a regular, quarterly cash
dividend) or other distribution, stock split, reverse stock split or the like,
or if substantially all of the property and assets of the Company are sold,
then, unless the terms of such transaction shall provide otherwise, the
Committee shall make appropriate and proportionate adjustments in (a) the number
and type of shares or other securities or cash or other property that may be
acquired pursuant to Awards theretofore granted under the Plan, (b) the maximum
number and type of shares or other securities that may be issued pursuant to
Awards thereafter granted under the Plan and (c) to the extent permitted under
Section 3(e) hereof, the maximum number of shares of Common Stock with respect
to which Awards may be granted to any Employee during any calendar year;
provided, however, that no adjustment shall be made to the number of shares of
Common Stock that may be acquired pursuant to outstanding Incentive Stock
Options or the maximum number of shares of Common Stock with respect to which
Incentive Stock Options may be granted under the Plan to the extent such
adjustment would result in such options being treated as other than Incentive
Stock Options; provided further that no such adjustment shall be made to the
extent the Committee determines that such adjustment would result in the
disallowance of a federal income tax deduction for compensation attributable to
Awards hereunder by causing such compensation to be other than Performance-Based
Compensation.

SECTION 8.  Amendment and Termination

            The Board may amend or terminate the Plan at any time and in any
manner; provided however, that no such amendment or termination shall deprive
the recipient of an Award previously granted under the Plan of any of his or her
rights thereunder, without the consent of such recipient and provided further
that no amendment shall become effective without stockholder approval if such
stockholder approval is required by law.

SECTION 9.  Effectiveness

            The Plan shall be submitted to the stockholders of the Company for
their approval and adoption in accordance with Section 162(m) under the Internal
Revenue Code. The Plan shall

                                      -4-
<PAGE>

not be effective and no Award shall be made hereunder unless and until the Plan
has been so approved and adopted.

SECTION 10.  Miscellaneous Provisions

            (a) Neither the Plan nor any action taken hereunder shall be
construed as giving any Employee or other person any right to continue to be
employed by the Company or any of its subsidiaries.

            (b) Except as may be set forth in an Award or otherwise approved by
the Committee an Employee's rights and interest under the Plan may not be
assigned or transferred, hypothecated or encumbered in whole or in part either
directly or by operation of law or otherwise (except in the event of an
Employee's death) including, but not by way of limitation, execution, levy,
garnishment, attachment, pledge, bankruptcy or in any other manner.

            (c) It is the intent of the Company that the Plan comply in all
respects with Rule 16b-3 under the Exchange Act and Section 162(m) of the
Internal Revenue Code, that any ambiguities or inconsistencies in construction
of the Plan be interpreted to give effect to such intention and that if any
provision of the Plan is found not to be in compliance with Rule 16b-3 or
Section 162(m), such provision shall be deemed null and void to the extent
required to permit the Plan to comply with Rule 16b-3 or Section 162(m), as the
case may be.

            (d) The Company shall have the right to deduct from any payment made
under the Plan any federal, state, local or foreign income or other taxes
required by law to be withheld with respect to such payment. It shall be a
condition to the obligation of the Company to issue shares of Common Stock,
other securities or property or any combination thereof, upon exercise,
settlement or payment of any Award under the Plan, that the recipient of an
Award (or any beneficiary or person entitled to act) pay to the Company, upon
its demand, such amount as may be required by the Company for the purpose of
satisfying any liability to withhold such taxes.

            (e) By accepting any Award or other benefit under the Plan, each
recipient of an Award and each person claiming under or through him or her shall
be conclusively deemed to have indicated his or her acceptance and ratification
of, and consent to, any action taken under the Plan by the Company, the Board or
the Committee or its delegates.

            (f) The validity, construction, interpretation, administration and
effect of the Plan, and of its rules and regulations, and rights relating to the
Plan and to Awards granted under the Plan, shall be governed by the substantive
laws, but not the choice of law rules, of the State of Delaware.

                                      -5-

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