FONDA GROUP INC
AMENDMENT NO.5 TO REVOLVING LOAN AGREEMENT
<DOCUMENT>
<TYPE>EX-10.12
<SEQUENCE>4
<FILENAME>0004.txt
<DESCRIPTION>AMENDMENT NO.5 TO REVOLVING LOAN AGREEMENT
<TEXT>


                                 AMENDMENT NO. 5

                                       TO

                           SECOND AMENDED AND RESTATED
                  REVOLVING CREDIT LOAN AND SECURITY AGREEMENT

     THIS AMENDMENT NO. 5 ("Amendment")  is entered into as of February 28, 2000
among THE FONDA GROUP, INC., a corporation organized under the laws of the State
of Delaware ("Borrower"),  the undersigned financial institutions (collectively,
the "Lenders" and  individually  a "Lender") and IBJ WHITEHALL  BUSINESS  CREDIT
CORPORATION  ("IBJWBCC")  (F/K/A IBJ SCHRODER BUSINESS CREDIT  CORPORATION),  as
successor to IBJ SCHRODER BANK & TRUST COMPANY,  as agent for Lenders  (IBJWBCC,
in such capacity, the "Agent").

                                   BACKGROUND

     Borrower,  Agent and Lenders are parties to a Second  Amended and  Restated
Revolving  Credit and Security  Agreement  dated as of February  27,1997 (as the
same has been and may further be amended,  restated,  supplemented  or otherwise
modified  from time to time,  the "Loan  Agreement")  pursuant to which  Lenders
provided Borrower with certain financial accommodations.

     Borrower has requested  that Agent and Lenders amend the Loan Agreement to,
inter alia,  revise the financial  covenants,  amend the  definition of Eligible
Receivables,  increase the inventory  sub-limit  contained in the  definition of
Formula Amount,  include  certain  Receivables due and owing from Sweetheart Cup
Company,  Inc. to Borrower as Eligible  Receivables  and  increase the number of
permitted  Eurodollar  Rate Loans and Agent and  Lenders are willing to do so on
the terms and conditions hereafter set forth.

     NOW, THEREFORE,  in consideration of any loan or advance or grant of credit
heretofore  or  hereafter  made to or for the  account of  Borrower  by Agent or
Lenders,  and for  other  good  and  valuable  consideration,  the  receipt  and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:

     1.   Definitions.  All capitalized terms not otherwise defined herein shall
have the meanings given to them in the Loan Agreement.

     2.   Amendment to Loan Agreement. Subject to satisfaction of the conditions
precedent set forth in Section 4 below,  the Loan Agreement is hereby amended as
follows:

     (a)  Section 1.2 of the Loan Agreement is hereby amended as follows:

          (i) the following  defined terms are hereby added in their appropriate
     alphabetical order to provide as follows:

          "Sweetheart"  shall  mean  Sweetheart  Cup  Company,  Inc.  a Delaware
          corporation.
<PAGE>

          "Net Worth" at a particular  date,  shall mean all amounts which would
          be included under shareholders'  equity on a balance sheet of Borrower
          determined in accordance with GAAP as at such date.

          (ii) subclauses (a) and (b) in the definition of Eligible  Receivables
     are hereby amended in their entirety to provide as follows:

          "(a) it  arises  out of a sale made by  Borrower  to an  Affiliate  of
          Borrower  or to a  Person  controlled  by  an  Affiliate  of  Borrower
          provided,  however,  Receivables arising out of sales made by Borrower
          to Sweetheart or Fibre Marketing in an aggregate  amount not to exceed
          $5,000,000 at any one time  outstanding  and which  otherwise meet the
          eligibility  criteria  for  Eligible  Receivables  shall be  deemed to
          constitute Eligible Receivables;

          (b) (i) with  respect to  Receivables  due and owing to Borrower  from
          Customers  which were account  debtors of CEG on or before December 6,
          1999 which are  maintained on the sales journal at Fonda's  offices in
          Indianapolis,  Indiana and historically were maintained on CEG's sales
          journals (collectively, the "Special Customer Receivables"), it is due
          or unpaid more than (A) one  hundred  and twenty  (120) days after the
          original  invoice  date or (B) sixty  (60) days  after the  stated due
          date] and (ii)  with  respect  to  Receivables  which are not  Special
          Customer  Receivables,  it is due or unpaid more than ninety (90) days
          after the original invoice date."

     (b)  The following definition is hereby  amended in its entirety to provide
as follows:

          "Permitted  Investments"  shall mean (i) any Investment in Borrower or
          in  a  Wholly  Owned  Restricted  Subsidiary  of  Borrower;  (ii)  any
          Investment in Cash  Equivalents;  (iii) any  Investment by Borrower or
          any of its Restricted Subsidiaries in a Person if, as a result of such
          Investment,   (a)  such  Person  becomes  a  Wholly  Owned  Restricted
          Subsidiary of Borrower or a Wholly Owned Restricted  Subsidiary or (b)
          such Person is merged,  consolidated  or amalgamated  with or into, or
          transfers  or  conveys  substantially  all of  its  assets  to,  or is
          liquidated into,  Borrower or a Wholly Owned Restricted  Subsidiary of
          Borrower;  and (iv) any Investment  made as a result of the receipt of
          non-cash  consideration  from an Asset Sale that was made  pursuant to
          and in compliance with Section 7.1 hereof."

     (c)  Section 2.1(a) of the Loan Agreement is hereby amended in its entirety
to provide as follows:

          "2.1 (a) Revolving  Advances.  Subject to the terms and conditions set
          forth in this Agreement,  each Lender, severally and not jointly, will
          make Revolving  Advances to Borrower in aggregate amounts  outstanding
          at any time equal to such Lender's Commitment Percentage of the lesser
          of (x) the Maximum  Revolving Advance Amount less the aggregate amount
          of outstanding Letters of Credit or (y) an amount equal to the sum of:

               (i) up to  85%,  subject  to the  provisions  of  Section  2.1(b)
               hereof,  of Eligible  Receivables  ("Receivables  Advance Rate"),
               plus

               (ii) up to the lesser of (A) 60%,  subject to the  provisions  of
               Section 2.1(b) hereof ("Inventory Advance Rate"), of the value of
               the
<PAGE>
               Eligible  Inventory   (the   Receivables  Advance  Rate  and  the
               Inventory Advance Rate shall be referred to collectively,  as the
               "Revolving  Advance  Rates")  or (B) (I) at any time on or before
               April 30, 2000,  $30,000,000 in the aggregate at any one time and
               (II) at any  time on or after  May 1,  2000,  $27,500,000  in the
               aggregate at any one time, minus

               (iii) the  aggregate  amount of  outstanding  Letters  of Credit,
               minus

               (iv)  such  reserves  as Agent may  reasonably  deem  proper  and
               necessary from time to time.

          The amount derived from the sum of (x) Sections  2.1(a)(y)(i) and (ii)
          minus  (y)  Section  2.1(a)(y)(iv)  at any time and from  time to time
          shall be referred to as the "Formula Amount".  The Revolving  Advances
          shall be evidenced by secured  promissory notes in  substantially  the
          form  attached  hereto as Exhibit  2.1(a)  executed  and  delivered by
          Borrower to each Lender (collectively, "Revolving Credit Notes")."

     (d)  Clause (d) of Section 2.2 of the Loan  Agreement is hereby  amended in
its entirety to provide as follows:

          "(d)  Provided,  that,  no Event of Default shall have occurred and be
          continuing, Borrower may, on the last Business Day of the then current
          Interest Period applicable to any outstanding Eurodollar Rate Loan, or
          on any day with respect to Domestic  Rate Loans  convert any such loan
          into a loan of another  type in the same  aggregate  principal  amount
          provided, that, any conversion of a Eurodollar Rate Loan shall be made
          only on the last  Business  Day of the then  current  Interest  Period
          applicable  to such  Eurodollar  Rate  Loan.  If  Borrower  desires to
          convert a loan,  it shall give Agent not less than three (3)  Business
          Days' prior  written  notice to convert from a Domestic Rate Loan to a
          Eurodollar Rate Loan or one (1) Business Days' prior written notice to
          convert  from  a  Eurodollar  Rate  Loan  to  a  Domestic  Rate  Loan,
          specifying the date of such conversion,  the loans to be converted and
          if the  conversion  is from a Domestic  Rate Loan to any other type of
          loan, the duration of the first Interest Period therefor. After giving
          effect to each such  conversion,  there shall not be outstanding  more
          than five (5) Eurodollar Rate Loans, in the aggregate."

     (e)  Sections 6.5 and 6.6 of the Loan Agreement are hereby amended in their
entirety to provide as follows:

          "6.5 Interest  Coverage Ratio.  Cause to be maintained for each fiscal
          quarter an Interest  Coverage  Ratio of not less than 1.15 to 1.00 for
          the (a) two fiscal  quarters  ending March 31, 2000,  (b) three fiscal
          quarters  ending  June 30,  2000,  (c)  four  fiscal  quarters  ending
          September 30, 2000 and (d) for each fiscal quarter  ending  thereafter
          measured on a rolling four quarter basis.

          6.6 Net Worth.  Cause to be maintained at all times during each period
          set forth  below a Net Worth in an amount not less than the amount set
          forth opposite such period:

                 Period                                  Net Worth
                 ------                                  ---------
<PAGE>
January 1, 2000 through September 30, 2000     $11,000,000"
October 1, 2000 through September 30, 2001     The  sum of (x)  $11,000,000 plus
                                               (y) 80%  of  the  net  income  of
                                               Borrower on a  consolidated basis
                                               for   the   fiscal   year   ended
                                               September 30, 2000 (the "2000 Net
                                               Worth")

     (f)  Section 7.5 of the Loan Agreement is hereby amended in its entirety to
provide as follows:

          "7.5.  Loans.  Make  advances,  loans or  extensions  of credit to any
          Person except with respect to (a) the  extension of  commercial  trade
          credit in connection with the sale of Inventory in the ordinary course
          of its business and (b) loans to its employees in the ordinary  course
          of business not to exceed the aggregate amount of $350,000 at any time
          outstanding."

     (g)  Section 7.10  of the Loan  Agreement is hereby amended in its entirety
to provide as follows:

          "7.10. Transactions with Affiliates. Make payments to, or sell, lease,
          transfer or otherwise  dispose of any of its  properties or assets to,
          or  purchase  any  property or assets  from,  or enter into or make or
          amend  any  contract,  agreement,   understanding,  loan,  advance  or
          guarantee  with,  or for the  benefit of, any  Affiliate  (each of the
          foregoing,  an  "Affiliate  Transaction"),  unless (i) such  Affiliate
          Transaction  is on terms that are no less favorable to Borrower or the
          relevant  Restricted  Subsidiary  than  those  that  would  have  been
          obtained in comparable  transaction  with an unrelated Person and (ii)
          Borrower  delivers  to the Agent  (a) with  respect  to any  Affiliate
          transaction  or series of  related  Affiliate  Transactions  involving
          aggregate consideration in excess of $1.0 million, a resolution of the
          Board of Directors  set forth in an Officers'  Certificate  certifying
          that such  Affiliate  Transaction  complies  with clause (i) above and
          that such Affiliate Transaction has been approved by a majority of the
          disinterested  members of the Board of Directors  and (b) with respect
          to  any  Affiliate   Transaction   or  series  of  related   Affiliate
          Transactions  involving  aggregate  consideration  in  excess  of $5.0
          million,  an  opinion  as to the  fairness  to  the  holders  of  such
          Affiliate  Transaction  from a  financial  point of view  issued by an
          investment  banking  firm of national  standing  with total  assets in
          excess of $1.0  billion,  except with respect to  transactions  in the
          ordinary course of business and consistent with past practice  between
          Borrower of any of its Restricted  Subsidiaries  and Four M, or any of
          their respective  subsidiaries,  provided,  that, (1) the Indenture of
          Lease dated as of January 1, 1995, between Dennis Mehiel, as Landlord,
          and Borrower, as tenant, relating to Borrower's Jacksonville,  Florida
          facility  except for any  purchases  of property by Borrower  that may
          arise  thereunder;  (2) any employment  agreement entered into between
          any Person and Borrower or any of its Restricted  Subsidiaries  in the
          ordinary  course of business and consistent  with the past practice of
          Borrower  or such  Restricted  Subsidiary  in an amount  not to exceed
          $500,000 per annum; (3) transactions between or among Borrower and its
          Restricted  Subsidiaries  and (4)  Restricted  Payments and  Permitted
          Investments  that are permitted by the provisions of this Agreement in
          each case shall not be deemed Affiliate Transactions."

     3.   Amendment Fee. Borrower shall pay to Agent for the ratable  benefit of
Lenders an amendment  fee in an amount equal to $40,000  (the  "Amendment  Fee")
immediately  prior to the effective date of this  Agreement.  Agent shall charge
the  Amendment Fee to  Borrower's  loan account.  The Amendment Fee shall not be
subject to reduction, proration, rebate of any kind.
<PAGE>
     4.   Conditions of  Effectiveness.  This Amendment  shall become  effective
as of February 29, 2000 upon satisfaction of the following conditions precedent:
(i) Agent  shall have  received  four (4) copies of this  Amendment  executed by
Lenders  and  Borrower,  (ii) Agent  shall have  charged  the  Amendment  Fee to
Borrower's  loan  account  and  (iii)  Agent  shall  have  received  such  other
certificates,  instruments, documents, agreements and opinions of counsel as may
be  required  by  Agent  or its  counsel,  each of  which  shall  be in form and
substance satisfactory to Agent and its counsel.

     5.   Representations and Warranties.Borrower hereby represents and warrants
as follows:

     (a)  This Amendment and the Loan Agreement,  as amended  hereby, constitute
legal,  valid and binding  obligations of Borrower and are  enforceable  against
Borrower in accordance with their respective terms.

     (b)  Upon the effectiveness of this Amendment,Borrower hereby reaffirms all
covenants,  representations  and  warranties  made in the Loan  Agreement to the
extent  the same are not  amended  hereby  and  agree  that all such  covenants,
representations  and  warranties  shall be deemed to have been  remade as of the
effective date of this Amendment.

     (c)  No Event of Default or Default has occurred and is continuing or would
exist after giving effect to this Amendment.

     (d)  Borrower  has no defense,  counterclaim  or offset with respect to the
Loan Agreement.

     6.   Effect on the Loan Agreement.

     (a)  Upon the effectiveness of Section 2 hereof, each reference in the Loan
Agreement to "this Agreement,"  "hereunder," "hereof," "herein" or words of like
import shall mean and be a reference to the Loan Agreement as amended hereby.

         (b) Except as specifically amended herein, the Loan Agreement,  and all
other  documents,  instruments  and  agreements  executed  and/or  delivered  in
connection  therewith,  shall  remain in full force and  effect,  and are hereby
ratified and confirmed.

         (c) The execution,  delivery and  effectiveness of this Amendment shall
not  operate as a waiver of any right,  power or remedy of Agent or any  Lender,
nor  constitute a waiver of any  provision of the Loan  Agreement,  or any other
documents,  instruments  or agreements  executed  and/or  delivered  under or in
connection therewith.

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

     8.   Headings. Section headings in this  Amendment are included  herein for
convenience  of reference only and shall not constitute a part of this Amendment
for any other purpose.
<PAGE>
     9.   Counterparts.  This Amendment may be executed by the parties hereto in
one or more  counterparts,  each of which shall be deemed an original and all of
which taken together shall constitute one and the same agreement.  Any signature
delivered by telecopy shall be deemed to be an original signature hereto.

         IN WITNESS WHEREOF, this Amendment has been duly executed as of the day
and year first written above.

                                    THE FONDA GROUP, INC.

                                    By: /s/ Hans H. Heinsen
                                        -------------------
                                    Name:  Hans H. Heinsen
                                    Title: Senior Vice President

                    [SIGNATURES CONTINUED ON FOLLOWING PAGE]

<PAGE>

                                    IBJ WHITEHALL BUSINESS CREDIT
                                    CORPORATION, as Lender and as Agent

                                    By: /s/
                                        -------------------
                                    Name:
                                    Title:


                                    NATIONAL CITY COMMERCIAL FINANCE,
                                    INC., as Lender

                                    By: /s/
                                        -------------------
                                    Name:
                                    Title:


                                    PNC BANK, NATIONAL ASSOCIATION, as
                                    successor to
                                    BTM CAPITAL CORPORATION
                                    (F/K/A BOT FINANCIAL CORPORATION),
                                    as Lender

                                    By: /s/
                                        -------------------
                                    Name:
                                    Title:


                                    FIRST UNION NATIONAL BANK successor by
                                    merger to SIGNET BANK, as Lender

                                    By: /s/
                                        -------------------
                                    Name:
                                    Title:


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