Document:

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                                                                     EXHIBIT 4.5

                      AMENDMENT THREE TO AGENTED REVOLVING
                         CREDIT AND TERM LOAN AGREEMENT

      This Amendment Three to Agented Revolving Credit and Term Loan Agreement
("Amendment") is dated effective March 1, 2004, among ORCHIDS PAPER PRODUCTS
COMPANY, a Delaware corporation ("Orchids"), ORCHIDS ACQUISITION GROUP, INC., a
Delaware corporation ("OAG") ("Orchids" and "OAG" are referred to herein,
separately and collectively, as "Borrower"), and BANK OF OKLAHOMA, N.A. and
LOCAL OKLAHOMA BANK, N.A. (individually "Bank" and collectively "Banks"), and
BANK OF OKLAHOMA, N.A., as agent for the Banks hereunder (in such capacity,
"Agent").

                                    RECITALS

       A. Reference is made to the Agented Revolving Credit and Term Loan
Agreement by and among Orchids, Banks and Agent, dated October 15,2002 and
amended October 14,2003 and January 14, 2004, among Borrower and Banks ("Credit
Agreement"), pursuant to which currently exists: (i) a $6,500,000 term loan
("$6,500,000 Term Loan"); (ii) a $4,000,000 term loan ("$4,000,000 Term Loan");
and (iii) a $4,500,000 revolving line of credit ("$4,500,000 Revolving Line"),
evidenced by the $3,000,150 Line Note and the $1,499,850 Line Note. Terms used
herein shall have the meanings given in the Credit Agreement, unless otherwise
defined herein.

      B. On the date of this Amendment, OAG plans to purchase 100% of the
outstanding and issued common stock of Orchids.

      C. Borrower has requested that Banks amend the Credit Agreement and
restructure the financing to provide for the purchase of stock by OAG, such
that: (i) OAG shall be added as a co- borrower to the Credit Agreement; (ii) the
$4,500,000 Revolving Line would be increased to $5,000,000, and the maturity
date extended to February 28, 2005; (iii) the $6,500,000 Term Loan and the
$4,000,000 Term Loan would be consolidated and additional funds advanced
pursuant to Section 2.1 of the Credit Agreement (as amended hereby), resulting
in one $13,500,000 term loan with a maturity date of April 30, 2007; and (iv)
certain other terms and provisions of the Credit Agreement would be modified;
and Banks have agreed to Borrower's request, subject to the terms and conditions
of this Amendment.

                                    AGREEMENT

      NOW, THEREFORE, in consideration of the representations and warranties
contained herein and for valuable consideration received, the parties agree to
the following:

      1. Amendments to the Credit Agreement. The Credit Agreement is hereby
amended, as follows:

            1.1. The Credit Agreement is amended to reflect that OAG shall be
      added as a co- borrower with Orchids, and that the term "Borrower",
      wherever used throughout the Credit Agreement and other Loan Documents,
      shall additionally include OAG, jointly and severally. And OAG hereby
      assumes all Obligations as a Borrower as a direct obligor and not as an
      accommodation party, jointly and severally. All financial covenants and
      financial statements shall be based upon consolidated information from the
      Borrowers, and all affirmative and negative covenants shall be construed
      as applying to both Borrowers in the aggregate, unless the content
      dictates otherwise as determined by the Banks in their sole discretion.

            1.2. The Credit Agreement is amended so that all references to the
      "$4,500,000 Revolving Line" are changed to the "$5,000,000 Revolving
      Line."

<PAGE>

            1.3. The Credit Agreement is amended so that all references to the
      "$6,500,000 Term Loan" or the "$4,000,000 Term Loan" are changed to the
      "$13,500,000 Term Loan."

            1.4. Section 1.2 (Adjusted LIBOR Rate) is hereby amended and
      restated in its entirety, as follows:

                  "1.2. "Adjusted LIBOR Rate" shall mean the LIBOR Rate plus the
                  LIBOR Rate Margin. The Adjusted LIBOR Rate shall be
                  recalculated by Agent (which determination shall be conclusive
                  subject to manifest error) on not less than an annual basis,
                  upon Agent's receipt of Borrower's annual audited financial
                  statements."

      From the date of this Amendment to the first recalculation, the Adjusted
      LIBOR Rate shall be set at the LIBOR Rate on the date of this Amendment
      plus four and one quarter of one percent (4.25%) percent per annum, with
      the first recalculation to be effected upon Agent's receipt of Borrower's
      December 31,2004, consolidated, annual audited financial statement.

            1.5. Section 1.3 (Adjusted Prime Rate) is hereby amended and
      restated in its entirety, as follows:

                  "1.3. "Adjusted Prime Rate" shall mean the Prime Rate plus the
                  Prime Rate Margin. The Adjusted Prime Rate shall be
                  recalculated by Agent (which determination shall be conclusive
                  subject to manifest error) on not less than an annual basis,
                  upon Agent's receipt of Borrower's annual audited financial
                  statements."

      From the date of this Amendment to the first recalculation, the Adjusted
      Prime Rate shall be set at the Prime Rate on the date of this Amendment
      plus one and one-half of one percent (1.5%) per annum, with the first
      recalculation to be effected upon Agent's receipt of Borrower's December
      31, 2004, consolidated, annual audited financial statement.

            1.6. Section 1.22 ("$4,333,550 Term Note") is hereby deleted in its
      entirety.

            1.7. Section 1.23 (Funded Debt) is hereby amended and restated in
      its entirety, as follows:

                  "1.23. "Funded Debt" shall mean, to the extent actually funded
                  and outstanding at a specified time, all interest bearing Debt
                  of Borrower plus Subordinated Debt and permitted Capitalized
                  Lease Expenditures."

            1.8. Section 1.34 (LIBOR Margin) is amended to reflect that the grid
      is hereby amended and restated, as follows:

<TABLE>
<CAPTION>
          RATIO OF FUNDED DEBT TO CASH FLOW                  LIBOR MARGIN
          ---------------------------------                  ------------
<S>                                                          <C>
Greater than or equal to 3.5 to 1 but less than 4.0               4.25%
to 1

Greater than or equal to 3.0 to 1 but less than 3.5               3.75%
to 1

Greater than or equal to 2.25 to 1 but less than 3.0              3.00%
to 1

Greater than or equal to 1 .5 to 1 but less than 2.25             2.75%
to 1

Less than 1 .5 to 1                                               2.25%
</TABLE>

<PAGE>

            1.9. Section 1.36 (Loan) is hereby amended and restated in its
      entirety, as follows:

                  "1.36 "Loan" shall mean advances under the $5,000,000
                  Revolving Line and the $13,500,000 Term Loan."

            1.10. Section 1.46 (Notes) is hereby amended and restated in its
      entirety, as follows:

                  "1.46. "Notes" shall mean, separately and collectively, the
                  Line Notes and the Term Notes."

            1.11. Sections 1.48 ($1,499,850 Line Note) and 1.49 ($1,333,200 Term
      Note) are hereby deleted in their entirety.

            1.12. Section 1.57 (Prime Rate Margin) is amended to reflect that
      the grid is hereby amended and restated, as follows:

<TABLE>
<CAPTION>
          RATIO OF FUNDED DEBT TO CASH FLOW                  PRIME MARGIN
          ---------------------------------                  ------------
<S>                                                          <C>
Greater than or equal to 3.5 to 1 but less than 4.0              1.5%
to 1

Greater than or equal to 3.0 to 1 but less than 3.5              1.0%
to 1

Greater than or equal to 2.25 to 1 but less than 3.0             .25%
to 1

Greater than or equal to 1 .5 to 1 but less than 2.25              0
to 1

Less than 1 .5 to 1                                              -.5%
</TABLE>

            1.13. Section 1.60 (Pro Rata Share) is hereby amended and restated
      in its entirety, as follows:

                  "1.60. "Pro Rata Share" shall mean, as to Bank of Oklahoma,
                  N.A., seventy-five percent (75%), and as to Local Oklahoma
                  Bank, twenty-five percent (25%).

            1.14. The last sentence of Section 1.62.10 ("Qualified Receivables")
      is hereby amended as follows:

                  "Notwithstanding the foregoing, but subject to formal written
                  approval of the Banks, the accounts receivable of Dollar
                  General Store and Family Dollar (or their respective
                  successors) shall be included as Qualified Receivables up to
                  35% of total accounts receivable, and any amounts over 35%
                  will be excluded from the Borrowing Base unless specifically
                  waived in writing in each instance by the Banks in their sole
                  discretion."

            1.15. Section 1.66 ("Termination Date") is hereby amended to
      evidence that the termination date shall now mean and read "February 28,
      2005".

            1.16. Sections 1.67 ($3,000,150 Line Note), 1.68 ($2,166,450 Term
      Note), and 1.69 ($2,666,800 Term Note) are hereby deleted in their
      entirety.

            1.17. New Sections 1.73 through 1.77 are hereby added, as follows:

<PAGE>

                  "1.73. "Cash Flow" shall mean EBITDA less any income taxes
                  paid in cash and any distributions or dividends paid in cash
                  with respect to Borrowers' shares of capital stock.

                  1.74. "Line Note" or "Line Notes" shall mean, separately and
                        collectively, the $1,250,000 Promissory Note and the
                        $3,750,000 Promissory Note in form and content as set
                        forth on Schedules "1.74(a)" and "1.74(b)",
                        respectively, attached hereto.

                  1.75. "Term Note" or "Term Notes" shall mean, separately and
                        collectively, the $3,375,000 Promissory Note and the
                        $10,125,000 Promissory Note, in form and content as set
                        forth on Schedules "1.75(a)" and "1.75(b)",
                        respectively, attached hereto.

                  1.76. "Subordinated Debt" means the aggregate principal amount
                        of up to $3,000,000 evidenced by the Subordinated Notes
                        issued to the lenders set forth on Schedule "1.76"
                        hereto and in such amounts set forth opposite each
                        lender's name on Schedule "1.76."

                  1.77. "Subordinated Notes" means the unsecured, subordinated
                        Promissory Notes issued by OAG, the form of which is
                        attached as Schedule "1.77" hereto."

      The Line Notes to be attached to the Credit Agreement as Schedules
      "1.74(a)" and "1.74(b)"; the Term Notes to be attached to the Credit
      Agreement as Schedules "1.75(a)" and "1.75(b)"; the names of the
      subordinated lenders to be attached to the Credit Agreement as Schedule
      1.76, and the Subordinated Note to be attached to the Credit Agreement as
      Schedule "1.77" shall be attached to this Amendment as Schedules
      "1.17(a)", "1.17(b)", "1.17(c)", "1.17(d), "1.17(e)" and "1.17(f)",
      respectively.

            1.18. Section 2.1 ($6,500,000 Term Loan) is hereby deleted and
      replaced with the following:

                  "2.1. $13,500,000 Term Loan. Subject to the terms and
                  conditions of this Agreement, each Bank agrees to loan to
                  Borrower said Bank's Pro Rata Share of the aggregate principal
                  amount of $13,500,000, to be further evidenced by the Term
                  Notes. The purpose of the advance under the $13,500,000 Term
                  Loan is to finance OAG's acquisition of the stock of Orchids.
                  The available amount to be advanced at closing shall not
                  exceed $13,500,000.

                  2.1.1 Mandatory Excess Cash Flow Recapture. Borrower shall
                  make a principal reduction to the Term Notes equal to forty
                  percent (40%) of the Excess Cash Flow determined annually
                  based upon Borrower's annual audited financial statements to
                  Agent. For purposes hereof, Excess Cash Flow shall mean, for
                  the applicable twelve (12) month period, EBITDA minus, without
                  duplication: (i) principal and interest paid under the Notes,
                  (ii) interest expense to the extent paid in cash during such
                  period, (iii) capitalized lease payments permitted hereunder,
                  (iv) any income taxes paid in cash and (v) cash payments made
                  in such period with respect to permitted capital expenditures.

            1.19. Section 2.2 ($4,000,000 Term Loan) is hereby deleted in its
      entirety.

<PAGE>

            1.20. Section 2.3 ($4,500,000 Revolving Line) is hereby amended to
      reflect that all references to the amount "$4,500,000" shall now mean and
      read "$5,000,000", and that all references to the "$3,000,150 Line Note"
      and the "$1,499,850 Line Note" shall now mean and read the "Line Notes".

            1.21. A new Section 7.2(8) is hereby added:

                  "(8) The Subordinated Debt."

      (In furtherance hereof, in Section 7.2(6) the word "and" at the end
      thereof is hereby deleted; and in Section 7.2(7) the word "and" is hereby
      added to the end thereof.

            1.22. Section 7.3 (Mergers) is hereby amended by adding the
      following sentence at the end of that Section:

                  "Notwithstanding anything to the contrary in the preceding
                  sentence, OAG and Orchids may merge with each other provided
                  that no Initial Default or Matured Default exists or will
                  occur as a result of the merger, and subject to Banks' prior
                  written consent which will not be withheld unreasonably."

            1.23. Section 7.6 (Dividends) is hereby amended to reflect that the
      phrase "Except as related to the refinance of stockholder equity
      contemplated under Section 2.2 hereof," is hereby deleted.

            1.24. Section 7.9 (Transactions with Affiliates) is hereby amended
      by adding the following sentence to the end of that Section:

                  "Notwithstanding anything to the contrary in the preceding
                  sentence, the Borrower shall be permitted to enter into and
                  perform its obligations under the Management Services
                  Agreement between the Borrower and Weatherly Group, LLC (or
                  its affiliates) substantially in the form attached as Schedule
                  7.9, provided that such performance does not cause an Initial
                  Default or Matured Default."

            1.25. Section 8.1 (Funded Debt to EBITDA) is hereby amended as
                  follows:

                  "8.1 Funded Debt to EBITDA. Maintain, tested on the last day
                  of each fiscal quarter commencing March 31,2004, a ratio of
                  (i) Funded Debt for the preceding four consecutive fiscal
                  quarters of Borrower to (ii) EBITDA for the preceding four
                  consecutive fiscal quarters of Borrower of not greater than
                  3.5 to 1."

            1.26. Section 8.3 (Tangible Net Worth) is hereby amended to read as
                  follows:

                  "8.3 Net Worth. Maintain, tested on the last day of each
                  fiscal quarter commencing March 31, 2004, a net worth of not
                  less than $8,000,000, including Subordinated Debt."

            1.27. Section 8.4 (Debt Service Coverage Ratio) is hereby amended to
      read as follows:

                  "8.4 Debt Service Coverage Ratio. Maintain, tested on the last
                  day of each fiscal quarter commencing March 31, 2004, a Debt
                  Service Coverage Ratio of not less than 1.25 to 1."

<PAGE>

            1.28. Section 9.1 (Events of Default) is amended to reflect that
      subparagraph (10) is hereby mended and restated in its entirety, and a new
      subparagraph (11) is hereby added, as follows:

                  "(10) Without the prior written consent of Banks, which
                  consent shall not be unreasonably withheld, conditioned or
                  delayed, a change in management should occur such that Mike
                  Sage is no longer the Chief Executive Officer of Orchids, or
                  any merger or other corporate restructure occurs.
                  Notwithstanding anything to the contrary in the preceding
                  sentence, neither the termination of Mike Sage's employment
                  for cause nor the merger of Orchids and OAG (subject to
                  Section 7.3) is an Event of Default.

                  (11) A change in control of Borrower should occur, such that
                  the majority owners as of March 2, 2004 no longer collectively
                  own fifty-one percent (51%) or more of the outstanding common
                  stock of Borrower."

      2. Conditions Precedent. This Amendment and each Bank's commitments
hereunder are conditioned upon satisfaction of the following at or before
closing.

            2.1. Borrower shall execute and deliver to Banks this Amendment.

            2.2. Borrower shall execute and deliver to Bank of Oklahoma, N.A.
      the $3,750,000 Promissory Note and the $10,125,000 Promissory Note.

            2.3. Borrower shall execute and deliver to Local Oklahoma Bank the
      $1,250,000 Promissory Note and the $3,375,000 Promissory Note.

            2.4. Borrower shall deliver to Banks an original, fully executed
      Subordination Agreement, in form and content as set forth on Schedule
      "2.4" hereto, accompanied by a form of the Subordinated Notes, which must
      be unsecured and otherwise in form and content acceptable to Bank.

            2.5. Borrower shall deliver to Banks an opinion of counsel for
      Orchids and OAG, in form and content acceptable to Banks.

            2.6. Borrower shall deliver to Bank a Secretary's Certificate for
      Orchids, in form and content as set forth on Schedule "2.6" hereto.

            2.7. Borrower shall deliver to Banks a Secretary's Certificate for
      OAG, in form and content as set forth on Schedule "2.7" hereto.

            2.8. Borrower shall deliver to Banks a Certificate of Good Standing,
      a copy of the Certificate of Incorporation and a copy of the Bylaws, and
      any amendments thereto, for OAG

            2.9. Borrower shall pay to Agent, for the benefit of Banks, a
      commitment fee in the amount of $92,500.

            2.10. Borrower shall pay to Agent an arranger fee in the amount of
      $11,562.

            2.11. Borrower shall provide any and all documents, agreements and
      instruments related to this transaction, reasonably requested by the
      Banks.

            2.12. Borrower shall deliver to Agent an executed copy of the Escrow
      Agreement ("Escrow Agreement"), which must evidence that any distributions
      to Borrower shall be delivered to Agent.

<PAGE>

            2.13. Borrower shall pay all accrued and unpaid interest under the
      Loans described in Recital A through the day preceding closing.

            2.14. Orchids shall execute and deliver to Agent a First Amendment
      to Mortgage, Assignment of Leases and Rents, Security Agreement and
      Financing Statement, in form and content as set forth on Schedule "2.14"
      hereto.

            2.15. Banks must approve the Management Service Agreement.

      3. Borrower Ratification. Orchids and OAG each hereby ratify and confirm
the Credit Agreement, and all instruments, documents and/or agreements executed
and/or delivered by Orchids to Bank in connection therewith, and each Borrower
represents to Banks that: (i) they remain in full force and effect; (ii) all
representations and warranties made thereunder are true and correct as of the
date hereof; (iii) no Subsidiary of Borrower has been created or acquired which
would be subject to Section 6.12 of the Credit Agreement; and (iv) no Event of
Default exists or will result from the execution of this Amendment. Further, OAG
hereby acknowledges and agrees that it has read and understands the Credit
Agreement and all other Loan Documents, and that it agrees to comply with each
and every provision thereof as fully as if it had executed the original Credit
Agreement and other Loan Documents.

      4. Ratification and Amendment of Security Agreement. Orchids hereby
specifically ratifies and confirms the Security Agreement, and acknowledges and
agrees that it is hereby amended to reflect that it secures the Line Notes and
the Term Notes. 5. Escrowed Funds. Borrower hereby assigns, transfers and
conveys to Agent all of Borrower's rights under the Escrow Agreement, including
the right to receive any distributions thereunder, and Borrower hereby
authorizes and directs the escrow agent to distribute any proceeds thereunder,
which Borrower is entitled to receive, directly to Agent for application to the
Notes as determined by Banks in their sole discretion.

      6. Governing Law and Binding Effect. This Amendment shall be governed by
and construed in accordance with the laws of the State of Oklahoma, and shall
inure to the benefit of and be binding upon the parties hereto, their successors
and assigns.

      7. Costs, Expenses and Fees. Borrower agrees to pay all costs, expenses
and fees incurred by the Banks or otherwise in connection herewith, including,
without limitation, all reasonable attorney fees, costs and expenses of Riggs,
Abney, Neal, Turpen, Orbison & Lewis.

      8. Multiple Counterparts. This Amendment may be executed in any number of
counterparts, and all the counterparts taken together shall be deemed to
constitute one and the same instrument.

      9. Further Assurances. Borrower will immediately execute and deliver to
the Banks upon request all such other and further instruments as may be required
or desired by the Banks from time to time in compliance with or in
accomplishment of the covenants and agreements of Borrower made in this
Amendment and such other instruments and documents referred to or mentioned
herein, all as may be necessary or appropriate in connection therewith.

<PAGE>

      IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed.

                                 "Borrower"

                                 ORCHIDS PAPER PRODUCTS COMPANY

                                 By /s/ Keith R. Schroeder
                                    -------------------------------------------
                                    Keith R. Schroeder, Chief Financial Officer

                                 ORCHIDS ACQUISITION GROUP, INC.

                                 By /s/ Keith R. Schroeder
                                    -------------------------------------------
                                    Keith R. Schroeder, Executive Vice
                                    President

                                 BANK OF OKLAHOMA, N.A., as Bank and Agent

                                 By /s/ Stephen R. Wright
                                    -------------------------------------------
                                    Stephen R. Wright, Senior Vice President

                                 LOCAL OKLAHOMA BANK, as Bank

                                 By /s/ Elisabeth F. Blue
                                    -------------------------------------------
                                    Elisabeth F. Blue, Senior Vice President<PAGE>

                                                                     EXHIBIT 4.6

                       AMENDMENT FOUR TO AGENTED REVOLVING
                         CREDIT AND TERM LOAN AGREEMENT

      This Amendment Four to Agented Revolving Credit and Term Loan Agreement
("Amendment") is dated effective July 19, 2004, among ORCHIDS PAPER PRODUCTS
COMPANY, a Delaware corporation ("Orchids"), ORCHIDS ACQUISITION GROUP, INC., a
Delaware corporation ("OAG") ("Orchids" and "OAG" are referred to herein,
separately and collectively, as "Borrower"), and BANK OF OKLAHOMA, N.A. ("BOK")
and INTERNATIONAL BANK OF COMMERCE (F/K/A LOCAL OKLAHOMA BANK) ("IBC") (BOK and
IBC are referred to herein individually as a "Bank" and collectively as the
"Banks"), and BANK OF OKLAHOMA, N.A., as agent for the Banks hereunder (in such
capacity, "Agent").

                                    RECITALS

      A.    Reference is made to the Agented Revolving Credit and Term Loan
Agreement by and among Orchids, Banks and Agent, dated October 15, 2002 and
amended October 14, 2003, January 14,2004, and March 1,2004, among Borrower and
Banks ("Credit Agreement"), pursuant to which currently exists: (i) a
$13,500,000 term loan; and (ii) a $5,000,000 revolving line of credit. Terms
used herein shall have the meanings given in the Credit Agreement, unless
otherwise defined herein.

      B.    Borrower has requested that Banks amend the Credit Agreement to
reflect that (i) the $13,500,000 term loan is being reduced to $11,764,819.37,
and new payment amounts will go into effect under the Term Notes, (ii) the new
$3,898,851.98 equipment loan from BOK to Borrower does not violate any covenants
or provisions of the Credit Agreement; and (ii) the required ratio of Funded
Debt to EBITDA shall be temporarily increased; and Banks have agreed to
accommodate Borrower's request, subject to the terms and conditions of this
Amendment.

                                    AGREEMENT

      NOW, THEREFORE, in consideration of the representations and warranties
contained herein and for valuable consideration received, the parties agree to
the following:

      1.    Acknowledgment of Equipment Loan. The Banks hereby acknowledge that
on July 8,2004, Borrower executed a Loan Agreement, Promissory Note, Security
Agreement and certain other related documents in favor of BOK, under which BOK
advanced funds to Borrower in the amount of $3,898,851.98 ("Equipment Loan") for
the purpose of refinancing the lease with Banc One Leasing Corporation
("Lease"), the terms of which are contained in Lease Agreement #1000110724 dated
August 31, 2000. The Banks hereby acknowledge and agree that the Equipment Loan
is a refinance of the Lease previously disclosed to Banks by inclusion on
Schedule "7.4" of the Credit Agreement, and that Borrower's entering into the
Equipment Loan shall not be construed as a violation of any covenants contained
in the Credit Agreement, including, without limitation, Section 7.2 (Debt). In
addition, the Banks hereby acknowledge and agree that BOK shall be the sole
lender under the Equipment Loan, not the Agent for the Banks, and that the
Equipment Loan shall not be subject to any agency provisions contained in the
Credit Agreement, including, without limitation, those contained in Section 10
(Agency Provisions).

      2.    No Violation of Capital Expenditures Covenant. The Banks hereby
acknowledge and agree that the Equipment Loan shall not be considered an
expenditure for a fixed or capital asset for

<PAGE>

purposes of computation of Section 8.5 (Capital Expenditures), and Borrower's
entering into the Equipment Loan shall not trigger an Event of Default
thereunder.

      3.    Intercreditor Provisions. IBC hereby specifically acknowledges and
agrees, as follows:

            a.    Any security interest IBC may have in the collateral listed on
      Schedule "3(a)" hereto ("BOk Collateral") shall be and is hereby made
      inferior and subordinate in priority to the security interest of BOk
      therein. The subordination and priorities herein specified are applicable
      irrespective of the time or order of attachment or perfection of security
      interests; the time or order of filing or recording financing statements;
      or the time of giving or failure to give notice of the acquisition or
      expected acquisition of purchase money or other security interests.

            b.    Until BOk has notified IBC that the Equipment Loan has finally
      been paid in full, except to the extent necessary to preserve IBC's
      subordinated claim in the BOk Collateral, IBC hereby agrees not to enforce
      its security interest in any of the BOk Collateral, nor to attach, levy
      upon, execute against, exercise any rights to, assert any claim on or
      interest in, take any action against, or institute any proceedings with
      respect to any of the BOk Collateral.

            c.    IBC hereby agrees that if at any time it should receive or
      otherwise be in possession of any of the BOk Collateral or any money,
      property, or proceeds at any time and from time to time through
      foreclosure and bankruptcy or insolvency proceedings or otherwise under or
      with respect to any of its liens and security interests in property
      constituting BOk Collateral, the BOk Collateral and such money, property,
      and proceeds relating thereto shall, until the Equipment Loan is finally
      paid in full, be received or held by IBC or its agent as bailee in trust
      for BOk, segregated from all other properties it owns or holds, and IBC or
      its agent shall turn over to BOk the identical remittances as promptly as
      possible with all necessary endorsements thereon to be applied by BOk, for
      application as BOk may from time to time elect, to the payment of all
      costs and expenses including reasonable attorney fees and legal expenses
      incurred by BOk in seeking to collect or enforce any rights under any of
      the BOk Collateral and in seeking to collect the Equipment Loan and to
      enforce rights under any agreement or instrument relating to the Equipment
      Loan or any of the BOk Collateral, and to the payment of the remainder of
      the Equipment Loan.

      4.    Amendments to the Credit Agreement.

            4.1.  Section 1.2 (Adjusted LIBOR Rate) is hereby deleted and
      replaced with the following:

                  "1.2. "Adjusted LIBOR Rate" shall mean the LIBOR Rate plus the
            LIBOR Rate Margin. The Adjusted LIBOR Rate shall be recalculated by
            Agent (which determination shall be conclusive subject to manifest
            error) on not less than a quarterly basis, upon Agent's receipt of
            Borrower's quarterly financial statements."

      From the date of this Amendment to the first recalculation, the Adjusted
      LIBOR Rate shall be set at the LIBOR Rate on the date of this Amendment
      plus four and one quarter of one percent (4.25%) percent per annum, with
      the first recalculation to be effected upon Agent's receipt of Borrower's
      September 30, 2004, consolidated, quarterly financial statement.

                                         2
<PAGE>

            4.2.  Section 1.3 (Adjusted Prime Rate) is hereby deleted and
      replaced with the following:

                  "1.3. "Adjusted Prime Rate" shall mean the Prime Rate plus the
            Prime Rate Margin. The Adjusted Prime Rate shall be recalculated by
            Agent (which determination shall be conclusive subject to manifest
            error) on not less than a quarterly basis, upon Agent's receipt of
            Borrower's quarterly financial statements."

      From the date of this Amendment to the first recalculation, the Adjusted
      Prime Rate shall be set at the Prime Rate on the date of this Amendment
      plus one and one-half of one percent (1.5%) per annum, with the first
      recalculation to be effected upon Agent's receipt of Borrower's September
      30, 2004, consolidated, quarterly financial statement.

            4.3.  Section 8.1 (Funded Debt to EBITDA) of the Credit Agreement is
      hereby deleted and replaced with the following:

                  "8.1. Funded Debt to EBITDA. Maintain, tested on the last day
            of each fiscal quarter, a ratio of Funded Debt for the preceding
            four consecutive fiscal quarters of Borrower to EBITDA for the
            preceding four consecutive fiscal quarters of Borrower of not
            greater than 4.0 to 1 until December 31, 2005, and 3.5 to 1
            thereafter."

            4.4.  The Term Notes, attached to the Credit Agreement as Schedules
      "1.75(a)" and "1.75(b)" are hereby replaced with the promissory notes
      attached hereto as Schedules )"4.4(a)" and "4.4(b)" (the "Replacement
      Notes").

      5.    Conditions Precedent. This Amendment and each Bank's commitments
hereunder are conditioned upon satisfaction of the following at or before
closing.

            5.1.  Borrower shall execute and deliver to Banks this Amendment.

            5.2.  Borrower shall execute and deliver to Banks the Replacement
      Notes.

            5.3.  Borrower shall provide any and all documents, agreements and
      instruments related to this transaction, reasonably requested by the
      Banks.

      6.    Borrower Ratification. Each Borrower hereby ratifies and confirms
the Credit Agreement, and all instruments, documents and/or agreements executed
and/or delivered by Borrower to Bank in connection therewith, and each Borrower
represents to Banks that: (i) they remain in full force and effect; (ii) all
representations and warranties made thereunder are true and correct as of the
date hereof; (iii) no Subsidiary of Borrower has been created or acquired which
would be subject to Section 6.12 of the Credit Agreement; and (iv) no Event of
Default exists or will result from the execution of this Amendment.

      7.    Governing Law and Binding Effect. This Amendment shall be governed
by and construed in accordance with the laws of the State of Oklahoma, and shall
inure to the benefit of and be binding upon the parties hereto, their successors
and assigns.

      8.    Costs, Expenses and Fees. Borrower agrees to pay all costs, expenses
and fees incurred by the Banks or otherwise in connection herewith, including,
without limitation, all reasonable attorney fees, costs and expenses of Riggs,
Abney, Neal, Turpen, Orbison & Lewis.

                                        3
<PAGE>

      9.    Multiple Counterparts. This Amendment may be executed in any number
of counterparts, and all the counterparts taken together shall be deemed to
constitute one and the same instrument.

      10.   Further Assurances. Borrower will immediately execute and deliver to
the Banks upon request all such other and further instruments as may be required
or desired by the Banks from time to time in compliance with or in
accomplishment of the covenants and agreements of Borrower made in this
Amendment and such other instruments and documents referred to or mentioned
herein, all as may be necessary or appropriate in connection therewith.

                            [Signature Pages to Follow]

                                        4
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed.

                                 "Borrower"

                                 ORCHIDS PAPER PRODUCTS COMPANY

                                 By /s/  Keith R. Schroeder
                                    --------------------------------------------
                                    Keith R. Schroeder, Chief Financial Officer

                                 ORCHIDS ACQUISITION GROUP, INC.

                                 By /s/ Keith R. Schroeder
                                    --------------------------------------------
                                    Keith R. Schroeder, Executive Vice President

                                 BANK OF OKLAHOMA, N.A., as Bank and Agent

                                 By /s/  Stephen R. Wright
                                    --------------------------------------------
                                    Stephen R. Wright, Senior Vice President

                                 INTERNATIONAL BANK OF COMMERCE (F/K/A LOCAL
                                 OKLAHOMA BANK), as Bank

                                 By /s/ Gina Volturo
                                    --------------------------------------------
                                    Gina Volturo, SVP

                                        5

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