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<PAGE>
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."
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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
entire
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