Item 1.01. Entry into a Material Definitive Agreement.

On July 31, 2009, Orchids Paper Products Company (the "Registrant") entered into Amendment Four to Second Amended and Restated Agented Credit Agreement (the "Amendment") with its existing bank group to establish an additional construction loan. The Registrant's bank group includes Bank of Oklahoma, N.A. and Commerce Bank, N.A. The new construction loan will be used to finance the purchase of land, and construction of a new 270,000 square foot warehouse and distribution center. The Amendment includes the following provisions:

• establish a construction loan that provides for periodic loan advances up to a maximum principal amount of $6.7 million to finance the warehouse project, which includes the purchase of land and the construction of a new 270,000 square foot distribution center. The construction loan will convert to a term loan in August 2010 and will mature in July 2016. The loan will be based on an eighty percent (80%) advance rate of the costs of construction of the project;

• extend the availability and maturity of the existing revolving line of credit to April 9, 2011;

• increase the annual unfunded capital expenditures limit to $3.5 million;

• change the LIBOR margin grid and include a 3.5% all-in interest rate floor; and

• reduce the Funded-Debt-To-EBITDA covenant limit to 3.25 to 1.

The foregoing summary is not complete. A copy of the Amendment is attached as Exhibit 10.1 to this report and is incorporated herein by reference.

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under and Off-Balance Sheet Arrangement of a Registrant.

The Information provided in Item 1.01 of this Form 8-K is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits. See the Exhibit Index which is hereby incorporated by reference.

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