Exhibit 10.2

 

CARAUSTAR INDUSTRIES, INC.

 

RESTORATION PLAN

 

This Plan established by Caraustar Industries, Inc. is effective this 22nd day
of November 1996, and is further amended on February 7, 2002, and August 11,
2005, and is further amended and restated November 7, 2005, retroactively
effective to the 1st day of January 2005. This document applies to persons
separating from service after October 13, 2005.

 

ARTICLE 1 – PURPOSE OF PLAN

 

Section 1.1    Purpose: The purpose of this Plan is to provide supplemental
retirement benefits to certain named Caraustar Industries, Inc. Executives. The
benefits to be provided under this Plan are intended to supplement other
retirement benefits provided by the Company through plans qualified under
Section 401(a) of the Internal Revenue Code of 1986, nonqualified plans, and the
federal Social Security system of the United States. Section 1.2    Design: The
Plan is designed to provide supplemental retirement benefits as described in
Section 3.4 and is intended to be an unfunded plan providing deferred
compensation for a select group of highly compensated or management employees.
ARTICLE 2 – DEFINITIONS Section 2.1    Average Annual Compensation: The average
of the Executive’s annual Compensation over the five (5) consecutive calendar
years during the ten (10) most recent calendar years (including the calendar
year in which the Executive’s Payment Event occurs) which produces the highest
average, or, if the Executive has less than five (5) consecutive years of
service, the average of the Executive’s annual Compensation for his or her full
calendar years of Service. Section 2.2    Beneficiary: The Spouse of the
Executive as of his Payment Event. If the Spouse predeceases the Executive or
the Executive has no Spouse, the beneficiary is the person designated by the
Executive to be the beneficiary in such event, or the Executive’s estate if no
person has been designated by the Executive as the beneficiary. Section 2.3   
Board: The Board of Directors of Caraustar Industries, Inc.

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Section 2.4    Calculation Date: With respect to any Executive, the date on
which his Payment Event occurs. Section 2.5    Change-In-Control: The occurrence
of any of the following events as defined in IRS regulations under Code Section
409A:      (a)    Change in the ownership of the Company,      (b)    Change in
the effective control of the Company, or      (c)    Change in the ownership of
a substantial portion of the assets of the Company. Section 2.6    Code: The
Internal Revenue Code of 1986, as amended, or as it may be amended from time to
time. Section 2.7    Company: Caraustar Industries, Inc. Section 2.8   
Compensation: Wages as defined in Section 3401(a) of the Code for the purposes
of income tax withholding at the source but determined without regard to any
rules that limit the remuneration included in wages based on the nature or
location of the employment or the services performed (such as the exception for
agricultural labor in Section 3401(a)(2)), reduced by all of the following items
(even if includible in gross income): reimbursements or other expense
allowances, fringe benefits (cash and noncash), moving expenses, deferred
compensation, and welfare benefits. Compensation shall also include any amount
which is contributed by the Company pursuant to a salary reduction agreement and
which is not includible in the Executive’s gross income under Sections 125,
402(a)(8), 402(h), or 403(b) of the Code. Section 2.9    Compensation and
Employee Benefits Committee: The Compensation and Employee Benefits Committee as
established by the Board. Section 2.10    Covered Compensation: For the
Executive, the amount determined for the calendar year in which he attains or
will attain his Social Security Retirement Age using the Covered Compensation
Table in Internal Revenue Service Revenue Ruling 93-20 (or any successor table
as updated and issued by the Internal Revenue Service from time to time) as in
effect for the calendar year in which his employment with the Employer
terminates. No increase in Covered Compensation shall decrease the Executive’s
amount of benefits under this Plan after his Calculation Date. Section 2.11   
Early Retirement Adjustment Factor:

 

Age Benefit

Begins

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   Factor

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Age Benefit

Begins

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   Factor

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64

   .9231    59    .6538

63

   .8462    58    .6154

62

   .7692    57    .5769

61

   .7308    56    .5292

60

   .6923    55    .4862

 

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     The Early Retirement Adjustment Factors are interpolated for retirement at
an age in between whole ages. Section 2.12    Early Retirement Age: The age of
the Executive on the first date upon which the Executive both has attained age
fifty-five (55) and has completed ten (10) or more years of Vesting Service as
defined in the Retirement Plan. Section 2.13    Employee: A participant of the
“Caraustar Industries, Inc. Retirement Plan.” Section 2.14    Executive: A
participant in the Plan as appointed by the Chief Executive Officer, upon
receiving approval from the Compensation and Employee Benefits Committee.
Section 2.15    Final Average Compensation: The average annual Compensation for
the three (3) consecutive calendar years in which the Executive was employed by
the Company immediately preceding his Payment Event excluding the calendar year
in which his Payment Event occurs, or, if the Executive’s entire period of
service with the Employer is less than three (3) consecutive calendar years, the
average of this annual Compensation for his full calendar years of Service. For
purposes of this Section, Compensation for any year in excess of the taxable
wage base in effect at the beginning of such year shall not be taken into
account. Section 2.16    Hour of Service: Each hour for which an Employee is
paid, or entitled to payment, for the performance of duties for the Company as
an Employee during any period of employment. Section 2.17    Normal Retirement
Age: Age sixty-five (65). Section 2.18    Normal Retirement Date: The first day
of the month coincident with or next following the date the Executive attains
his Normal Retirement Age. Section 2.19    Payment Event: With respect to any
Executive, the first to occur of his Retirement Date, death, the date he suffers
a Total and Permanent Disability, or a Change-In-Control. Section 2.20    Plan:
The “Caraustar Industries, Inc. Restoration Plan”, as set forth herein or in any
amendment hereto. Section 2.21    Plan Administrator: The individual or
committee appointed pursuant to Article 7 of the Retirement Plan, who shall have
the same powers and those duties with respect to the Plan as those described in
Article 7 of the Retirement Plan. The Plan Administrator is the named fiduciary
for purposes of the Employee Retirement Income Security Act of 1974 as amended.

 

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Section 2.22    Plan Year: The calendar year. Section 2.23    Retirement
Benefit: The Accrued Benefit determined in Section 3.1 multiplied by the Early
Retirement Adjustment Factor if the Retirement Date precedes the Normal
Retirement Date. Section 2.24    Retirement Date: The first day of the month
coincident with or next following the date the Executive attains his Early
Retirement Age or Normal Retirement Age and actually terminates employment with
the Company. Section 2.25    Retirement Plan: The Caraustar Industries, Inc.
Retirement Plan for the Employees of Caraustar Industries, Inc., as amended from
time to time. Section 2.26    Service: An Employee shall be credited with one
(1) year of Service for each Plan Year during which he completes one thousand
(1,000) or more Hours of Service with the Company. An Employee shall also be
credited with Service solely for purposes of determining his Accrued Benefit
under Section 3.1 (but not for purposes of vesting under Section 3.4) for
employment with an employer other than the Company provided the Chief Executive
Officer makes a qualifying recommendation and such recommendation is endorsed by
the Board’s Compensation and Employee Benefits Committee. Section 2.27   
Specified Employee: Any Employee but excluding Beneficiaries, who during a
calendar year is an officer of the Company having annual compensation greater
than $130,000 (as adjusted under Section 416(i)(1) of the Code for Plan Years
beginning after December 31, 2002), a 5-percent owner of the Company or a
1-percent owner of the Company having annual compensation of more than $150,000
is considered a “key” employee as of December 31 of that year. For this purpose,
annual compensation means compensation within the meaning of section 415(c)(3)
of the Code and the applicable regulations and other guidance of general
applicability issued thereunder. An Executive is a Specified Employee for any
twelve month period beginning each April 1st if such Executive was a key
employee as of the next preceding December 31st. Section 2.28    Spouse: The
individual to whom the Executive is legally married as of the earlier of the
Executive reaching his Retirement Date, suffering a Total and Permanent
Disability (as defined in Article 1 of the Retirement Plan and in accordance
with a determination made by the Social Security Administration), death, or upon
the Change-In-Control of the Company. Section 2.29    Total and Permanent
Disability: The event shall have the meaning specified in Article 1 of the
Retirement Plan, but limited to Social Security Administration approved
disability.

 

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ARTICLE 3 – BENEFITS

 

Section 3.1    Accrued Benefit: The Accrued Benefit is an annual amount,
calculated as of the Executive’s Calculation Date, equal to the product of (a)
times (b) minus (c) where:      (a)   Is 1.35% of Average Annual Compensation
times years of Service projected to Normal Retirement Date, offset by .65% of
Final Average Compensation up to Covered Compensation times years of Service
projected to Normal Retirement Date, and      (b)   Is a fraction where the
numerator is years of Service as of the Calculation Date and the denominator is
the greater of years of Service as of the Calculation Date or years of Service
projected to Normal Retirement Date, and      (c)   Is the Executive’s accrued
benefit under the Retirement Plan as of the Calculation Date, the accrued
benefit under any Company paid deferred compensation arrangements as of the
Calculation Date other than the Caraustar Industries, Inc. Employees’ Savings
Plan (the Caraustar 401(k) Plan), and/or any other accrued benefit payable
through another employer’s qualified defined benefit plan as of the Calculation
Date by which the Executive has obtained additional years of Service.
Notwithstanding the above, the Executive’s accrued benefit is also reduced by
the actuarial equivalent of a hypothetical benefit account based on accumulating
the Executive’s service-weighted retirement contributions under the Caraustar’s
401(k) Plan with interest using for each calendar year the 10-year Treasury Bond
constant maturity rate, monthly average yield for the December preceding such
year. Actuarial equivalence for this purpose will be on the same basis used for
the optional forms of payment herein. If a benefit of another employer is offset
hereunder and is not in the form of a Life Annuity payable at age 65,
Caraustar’s actuary shall determine the equivalent Life Annuity at age 65 for
the purpose of determining the offset amount. Section 3.2    Forms of Benefit
Payment and Election Requirements:      (a)   Normal Form of Payment: Unless
otherwise elected, the form of benefit payment for a Retirement Payment under
Section 3.4(a)(1) or Disability Payment under Section 3.4(a)(2) shall be a
5-Year Certain Annuity. The 5-Year Certain Annuity is equal to the actuarial
equivalent of the Retirement Benefit. The benefits under a 5-Year Certain
annuity are payable in 60 monthly installments to the Executive while the
Executive is alive and continuing to the Beneficiary for the balance of the 60
payments remaining after the death of the Executive. The amount benefit under
this Normal Form

 

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         of Payment and the rules for payments after the death of the Executive
or the Executive’s Beneficiary will be determined in the same manner as
described below for a 10-Year Certain Annuity.          The normal form of
payment for a Death Payment shall be a Life Annuity. The normal form of payment
for a Change-In-Control Payment shall be a lump sum.     (b)    Optional Forms:
In lieu of the Normal Form, the Executive may elect to receive his Retirement
Payment under Section 3.4(a)(1) in any of the following optional forms of
payment. The Disability Payment under Section 3.4(a)(2) shall be paid in the
same form of payment elected for the Retirement Payment. The optional forms of
payment are:          (1)    10-Year Certain Annuity: The 10-Year Certain
Annuity is the actuarial equivalent benefit of the Retirement Benefit. The
10-Year Certain Annuity is payable in 120 monthly installments to the Executive
while the Executive is alive and continuing to the Executive’s Beneficiary for
the balance of the 120 payments remaining after the death of the Executive. Such
actuarial equivalent shall be determined using the mortality table prescribed in
Rev. Rul. 2001-62 and the interest rate most recently used as of the calculation
date to discount this Plan’s liabilities for FAS 87 purposes.               If
the Beneficiary who is receipt of monthly payments by reason of the Executive’s
death, dies before a total of 120 monthly payments have been paid to the
Executive and the Beneficiary, then the present value of the remaining payments
(determined using the interest rate most recently used to discount this Plan’s
liabilities for FAS 87 purposes) will be paid to the Beneficiary’s estate. If
the Executive’s named Beneficiary predeceases the Executive, and the Executive
dies before a total of 120 monthly payments have been made to the Executive, the
present value of the remaining payments (determined using the interest rate most
recently used to discount this Plan’s liabilities for FAS 87 purposes) will be
paid to the Executive’s estate.          (2)    Life Annuity: Equal to the
Retirement Benefit payable monthly for the life of the Executive.          (3)
   Joint and 50% Survivor Annuity Survivor Annuity: Equal to the actuarial
equivalent of the Retirement Benefit (using the mortality table prescribed in
Rev. Rul. 2001-62 and the interest rate most recently used to discount this
Plan’s liabilities for FAS 87 purposes) payable monthly for the life of the
Executive with a survivor annuity of half of such amount continuing for the life
of the Spouse following the death of the Executive.

 

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          (4)    Joint and 100% Survivor Annuity Survivor Annuity: Equal to the
actuarial equivalent of the Retirement Benefit (using the mortality table
prescribed in Rev. Rul. 2001-62 and the interest rate most recently used to
discount this Plan’s liabilities for FAS 87 purposes) payable monthly for the
life of the Executive with a survivor annuity equal to the amount that the
Executive was receiving with such amount continuing for the life of the Spouse
following the death of the Executive.      (c)    If the Executive elects a
Joint and 50% Survivor Annuity and the Executive’s Spouse dies prior to the
Executive’s commencement of benefits, a Life Annuity election shall be
substituted for the Joint and 50% Survivor Annuity.      (d)    If the Executive
terminates on or after his Early Retirement Age and before his Normal Retirement
Age, his benefits will commence as soon as administratively feasible after his
termination of employment. Notwithstanding the above, the Executive may elect as
provided in paragraph (e) below to have his benefits commence on his Normal
Retirement Date. In such case the Executive’s benefit will be computed without
adjustment for early retirement.      (e)    The Executive’s election as to form
of payment and any election under paragraph (d) above to receive benefits
commencing at the Executive’s Normal Retirement Date even though he terminates
at his Early Retirement Date must be made in writing no later than the last day
of the calendar year preceding the year in which benefits hereunder are earned
by reason of the Executive’s Service, except that for the first year of an
Executive’s participation hereunder, the Executive must make his elections no
later than 30 days after first becoming eligible to participate in this Plan.  
        Notwithstanding the above, an Executive who was participating in the
Plan before January 1, 2005, may make a new election during 2005.           An
Executive who has made an election prior to the last day permitted under this
paragraph (e) for making elections may change his or her election as long the
new election is made not later than such last day permitted.      (f)    No
Change in Election Permitted After Deadline for Elections: Except as otherwise
provided herein, once an Executive makes an election, such election may not be
changed. Section 3.3    Forfeiture of Benefit: If the Executive engages in any
acts or omissions constituting dishonesty, intentional breach of fiduciary
obligation or intentional wrongdoing, in each case that results in substantial
harm to the business or property of the Company, he shall forfeit and be
ineligible to receive any benefits under this Plan, and any benefits paid to
such Executive (or Beneficiary) can be

 

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     recovered by the Company. The recovery of any benefits paid to such
Executive shall not preclude the Company from taking any other actions against
the Executive. Section 3.4    Benefit Payments:      (a)    If a Payment Event
occurs with respect to the Executive while he is employed with the Company, then
he (or his Beneficiary) shall be entitled to receive benefits as follows:       
   (1)    Retirement Payment In the event that an Executive retires from active
service on or after his Early Retirement Age or Normal Retirement Age, the
Executive will be paid a Retirement Benefit payable as of the Executive’s
Retirement Date adjusted according to the form of payment elected by the
Executive. If benefits are payable before the Executive’s Normal Retirement Age,
such benefits shall be reduced for early commencement by multiplying the accrued
benefit by the Early Retirement Adjustment Factors based on the Executive’s age
on the date of commencement.           (2)    Disability Payment In the event
that an Executive incurs a Total and Permanent Disability and such disability
occurs prior to the Executive’s Early or Normal Retirement Date, a Retirement
Benefit will be payable as of the first day of the month coincident with or next
following the later of the date the Executive ceases to perform services for the
Company, or the date Worker’s Compensation and/or Caraustar’s long-term
disability income plan benefits cease. The form of payment shall be the same
form of payment that is applicable for a Retirement Payment.                If
disability benefits are payable before the Executive’s Normal Retirement Age,
such benefits shall be reduced for early commencement by multiplying the accrued
benefit by the Early Retirement Adjustment Factors based on the Executive’s age
on the date of commencement. If the Disability Payment commences before age 55,
then the benefit shall be further reduced by 1/360th for each month that the
Executive’s age on date of commencement precedes age 55.                If a
disabled Executive recovers from disability before his Normal or Early
Retirement Age, then any disability benefits he is receiving shall cease.       
   (3)    Death Payment In the event that the Executive dies before his or her
Retirement Date, has five (5) or more years of Service, and has been married for
at least one year prior to his death, the Spouse shall receive a Life Annuity
equal to 50% of the Joint and 50% Survivor Annuity payable as of the first day
of the month coincident with or next following the later

 

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               of the Executive’s death or the date on which the Executive would
have reached age 55. If the Spouse benefits commence before the Executive’s
Normal Retirement Date, they will be reduced according to the Early Retirement
Adjustment Factor based on the Executive’s age (or age the Executive would have
been had he survived) on the date of benefit commencement.                If the
Executive dies on or after his Retirement Date and before his benefits commence,
the benefits will be paid according to the form of payment applicable to the
Executive.           (4)    Change-In-Control Except as provided in Section 3.3,
in the event that there is a Change-In-Control of the Company, the Executive
shall become fully vested and receive an immediate lump-sum distribution, and
the Plan shall terminate. The lump sum distribution shall be equal to the
greater of (i) the present value of the Retirement Benefit payable in a life
annuity form calculated as of the Payment Event, or (ii) the present value of
the Accrued Benefit deferred to Normal Retirement Age; with such present values
being determined using the actuarial equivalent definition for lump sum payments
in the Retirement Plan, including the mortality table and interest rate
specified therein.      (b)    Notwithstanding the above provisions of this
Section 3.4, if the Executive is a Specified Employee at the time of the Payment
Event, the commencement of his Retirement Payments shall be delayed for a period
of six months following the Executive’s date of separation from service. After
the passage of this six-month period, the first payment thereafter shall include
any payments that were missed during the six-month delay plus interest at the
same interest rate used to determine an optional form of payment under this Plan
as of the date of the Executive’s separation. Should the Executive die during
the six-month period, any death payments under this Plan are not subject to the
six-month delay rule of this paragraph.           Whether or not an Executive is
deemed to have a separation of service shall be determined in accordance with
regulations under Sec. 409A of the Code.      (c)    No hardship withdrawals
shall be permitted from this Plan.      (5)           Section 3.5    Time of
Benefit Payments: Payment of Benefits under the Plan shall commence when such
benefits become payable pursuant to Section 3.4, or as soon thereafter as
administratively feasible. Section 3.6    Mental or Legal Incompetence: The
Company, in its sole discretion, may make distribution to the guardian or other
legal representative of the Executive or Beneficiary, if the Executive or
Beneficiary is determined by a court of proper jurisdiction to be mentally or
legally incompetent to receive such benefit

 

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     distribution. Any such distribution shall be in full and complete
satisfaction of any and all claims whatsoever by or on behalf of such Executive
under this Plan against the Company, the Plan Administrator, any member of the
Board, other Executives or officers of the Company, other employees,
shareholders and any other person acting on behalf of them. ARTICLE 4 –
MISCELLANEOUS Section 4.1    Amendment or Termination: The Chief Executive
Officer, upon receiving approval from the Compensation and Employee Benefits
Committee, shall have the right to amend this Plan from time to time and to
terminate this Plan at any time; provided, however, no such action shall reduce
the Accrued Benefit, as of the date of such action, of any Executive whose
benefits hereunder are vested, or defer the time for paying such benefits under
Section 3.4. Section 4.2    Company Liability: Nothing in this Plan shall be
construed to limit in any way the right of the Company to terminate the
employment of the Executive at any time; or to be evidence of any agreement or
understanding, express or implied, that the Company or any affiliate company
will employ the Executive in any particular position or at any particular rate
or remuneration or for any particular period of time. Section 4.3   
Indemnification: The Company shall indemnify and hold harmless the
Administrator, any member thereof and any Employee who may act on behalf of the
Company in the administration of this Plan from and against any liability, loss,
cost or expense (including reasonable attorneys’ fees) incurred at any time as a
result of or in connection with any claims, demands, actions or causes of action
of the Executive, any person claiming through or under any of them, or any other
person, party or authority claiming to have an interest in this Plan or standing
to act for any persons or groups having an interest in this Plan, for or on
account of, any of the acts or omissions (or alleged acts or omissions) of the
Administrator, any member thereof or any such Employee, except to the extent
resulting from such person’s willful misconduct. Section 4.4    Tax Effects: The
Company makes no warranties or representations with regard to the tax effects or
results of this Plan. The Executive participating under this Plan shall be
deemed to have relied upon his own tax advisors with regard to such effects.
Section 4.5    No Assignment; Binding Effect: Neither the Executive nor
Beneficiary shall have the right to alienate, assign, commute or otherwise
encumber his benefit for any purpose whatsoever, and any attempt to do so shall
be disregarded completely as null and void. The provisions of this Plan shall be
binding on the Executive and on each person who claims a benefit under him and
on the Company.

 

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Section 4.6    Self-Interest: The Executive shall not have any right to vote or
decide upon any matter related directly or indirectly to him or any right to
claim any benefit under this Plan. Section 4.7    Claims Procedures: The claims
procedures shall be the same as under the Retirement Plan. Section 4.8   
Construction: This Plan shall be construed in accordance with the laws of the
State of Georgia. The headings and subheadings in this Plan have been inserted
for convenience of reference only and are to be ignored in construction of the
provisions of this Plan. In the construction of this Plan, the masculine shall
include the feminine and the singular the plural wherever appropriate.

 

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IN WITNESS WHEREOF, the Company has caused its duly authorized officers to
execute and seal this Plan as of this 7th day of November, 2005.

 

PLAN SPONSOR:

 

CARAUSTAR INDUSTRIES, INC.

 

By:  

/s/ Barry A. Smedstad

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Title:  

Vice President, Human Resources

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(CORPORATE SEAL) Attest:  

/s/ Marinan R. Mays

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Title:  

Assistant Secretary

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