<PAGE>   1
                                                                 EXHIBIT 10.2(b)


                   AMENDED AND RESTATED PAPER SUPPLY AGREEMENT

         THIS AMENDED AND RESTATED PAPER SUPPLY AGREEMENT (this "Agreement") is
made and entered into as of October 28, 1999, by and among STONE CONTAINER
CORPORATION, a Delaware corporation ("Seller"), S&G Packaging Company, L.L.C., a
Delaware limited liability company ("Buyer") and GAYLORD CONTAINER CORPORATION,
a Delaware corporation ("Gaylord").

         WHEREAS, Seller, Gaylord and Buyer have entered into a Paper Supply
Agreement, dated as of July 12, 1996, as amended (the "Original Agreement").

         WHEREAS, on October 28, 1999, Seller and Gaylord have entered into a
Securities Purchase Agreement (the "Purchase Agreement"), pursuant to which,
among other things, Seller has agreed to sell all its membership interests in
Buyer to Gaylord.

         WHEREAS, in furtherance of the transaction contemplated by the Purchase
Agreement, the parties hereto wish to amend and restate the Original Agreement
as set forth herein.

         NOW, THEREFORE, Seller agrees to sell and deliver unbleached kraft
paper of the kind and quality hereinafter described ("Paper") to Buyer, and
Buyer agrees to purchase Paper from Seller, all upon the terms and subject to
the conditions set forth below:

         1. Term

         1.1 The initial term of this Agreement ("Initial Term") shall commence
on the date hereof (the "Closing Date") and terminate on the date which is five
years after the Closing Date (the "Initial Termination Date").

         1.2 Notwithstanding anything to the contrary set forth in Section 1.1
above, Buyer shall have the right to cause this Agreement to remain in full
force and effect for an additional three year period (the "Option Period"), at
its sole discretion, by giving prior written notice to Seller at least 90 days
prior to the Initial Termination Date, in which case, this Agreement shall
terminate on the date which is eight years after the Closing Date. (For purposes
of this Agreement, "Term" shall mean the term of this agreement including the
Initial Term and the Option Period, if applicable.)



<PAGE>   2

         2.    Quantity

         2.1   Subject to the other terms and conditions hereof, in each year
during the Term, Seller agrees to sell and deliver to Buyer, and Buyer agrees to
purchase and accept from Seller, the following quantities of Paper, which Paper
shall have a basis weight of up to but not exceeding 40 lbs.:

               (i) during the year commencing on the Closing Date and ending 12
         months thereafter: 5,000 tons per month;

               (ii) during the year commencing on the first anniversary of the
         Closing Date and ending 12 months thereafter: 4,000 tons per month;

               (iii) during all subsequent years of the Term, commencing on the
         second anniversary of the Closing Date: 3,000 tons per month.

         2.2   In addition, for up to three months after the Closing Date,
Seller shall sell and deliver at the request of Buyer up to 3,000 tons per month
of Paper in basis weights greater than 40 lbs. at the prices specified in
Section 3.1 below.

         2.3   Buyer agrees to make a good faith effort to order Paper from
Seller in balanced monthly quantities as set forth in Section 2.1 above. Any
shortfall from or excess of tons of Paper ordered in any month shall be taken
into account in the sale and delivery of Paper in the following month.

         2.4   Seller shall not be obligated to sell and deliver and Buyer shall
not be obligated to buy and accept Paper hereunder to the extent either party is
unable to do so as a result of strikes or other labor slow downs or other
labor-related difficulties, labor shortage, civil commotions, fire, explosions,
flood, earthquakes, hurricanes or other acts of God, war, breakdowns or failure
of plant machinery or equipment, delays in or lack of transportation,
governmental priorities or allocation, delays of suppliers, scarcity or
unavailability of raw materials, or any other cause beyond the reasonable
control of Seller or Buyer, as the case may be.




                                       2
<PAGE>   3


         3.    Price.

         3.1   On the Closing Date, the delivered price per ton for Paper sold
hereunder during the first calendar month of this Agreement shall be as follows:

               Basis Weight         Price                      Upcharge
               ------------         -----                      --------

               50 lb. and up        $ 390.00 for the             $  0
                                    first 90 days following
                                    the Closing Date, and
                                    $ 365.00 thereafter
               40 lb.               $ 440.00                     $ 75
               35 lb.               $ 465.00                     $100
               33 lb.               $ 490.00                     $125
               28-30 lb.            $ 505.00                     $140

As to deliveries made in each calendar month after such first calendar month,
prices shall remain the same as for the preceding calendar month subject to
adjustment upward or downward in accordance with Section 3.2 below. Prices shall
be increased to account for price differentials for the various other grades of
Paper to be purchased and sold hereunder, which increase shall be made in
accordance with the upcharges set forth above.

         3.2   In the event that the price of 70 pound unbleached kraft paper as
quoted in Pulp & Paper Week Price Watch increases or decreases from the price
quoted in the immediately preceding issue of Pulp and Paper Week Price Watch,
the price for deliveries made in the calendar month immediately following such
increase or decrease shall be adjusted dollar for dollar by an amount per ton
equal to such increase or decrease, as the case may be. If the range of prices
is quoted in the Pulp & Paper Week Price Watch, the lowest price in the range
shall be used for purposes of such adjustments. Notwithstanding the above, if
Pulp & Paper Price Watch ceases to be published, the parties will negotiate in
good faith to jointly determine a new formula to establish the delivered price
of Paper. If the parties are unable to agree on a new formula, disagreements
will be resolved in accordance with Section 21 hereunder.

         4.    Taxes. Prices include freight but do not include sales, excise,
use or other taxes not in effect or hereafter levied by reason of this
transaction. All taxes (other than taxes based on Seller's income) are for the
account of Buyer. Buyer shall provide Seller with Buyer's current sales tax
certificate of exemption.

         5.    Terms of Payment

         5.1   Seller shall forward an invoice, dated the date of shipment, to
Buyer at the time of shipment. For all grades of Paper, payment terms shall be:
1%, 30 days, net 60 days.



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<PAGE>   4
         5.2   Payments shall be remitted to the address specified on each
invoice.

         6.    Orders and Shipments.

         6.1   Buyer agrees to provide Seller with written shipping
instructions, which instructions shall be provided in sufficient time (and in
any event at least 10 business days prior to the date of delivery) to permit
Seller to make delivery within the periods specified in such instructions.
Shipments will be made from Seller's mill by the least cost common carrier to
the destinations designated by Buyer in writing. Buyer shall receive a per ton
freight allowance of: (i) $30 on all orders of Paper produced by the Hodge, LA
mill for delivery to the Hodge, LA bag plant (such allowance, the "Hodge
Allowance"); and (ii) $25 on all orders of Paper produced by the Seminole, FL
mill for delivery to the Yulee, FL bag plant. All written instructions provided
by Buyer to Seller shall specify the grades desired, within the grade
limitations set forth herein. Paper shall meet the specifications attached
hereto as Exhibit A.

         6.2   Notwithstanding anything to the contrary set forth herein, Buyer
shall receive the Hodge Allowance retroactively on all orders of Paper delivered
to Buyer by Seller on or after May 1, 1999. Any amount of the Hodge Allowance to
which Buyer is entitled to (but has not received) as of the date hereof shall be
credited to Buyer by Seller and shall be deducted from any obligation of Buyer
to make payments to Seller hereunder.

         7.    Most Favored Nations Status.

         7.1   Seller agrees that Buyer shall be entitled to "most favored
nations" status as Seller's preferred customer, so that for each and every Price
Period (as defined below), Buyer will be the lowest price buyer of kraft grocery
bag or sack paper or any other product, irrespective of what it is called, which
is used or intended to be used in the manufacture of retail bags, including,
without limitation, grocery bags or sacks (such paper or other product,
"Applicable Paper"), from Seller. By virtue of this consideration and at all
times during the Term, Seller agrees that in the event Seller shall, directly or
indirectly (such as through a subsidiary or an affiliate), charge during a
particular Price Period a lower Effective Price (as defined below) for
Applicable Paper to any other entity or person than is charged to Buyer during
such particular Price Period, Seller shall promptly notify Buyer and provide
Buyer with the opportunity to receive such lower Effective Price offered to such
third person or entity on all pending or future purchases during such particular
Price Period. For purposes of this Agreement, (i) "Effective Price" shall mean
the price charged by Seller per ton of Applicable Paper of the same or similar
quality and grade and (ii) "Price Period" shall mean, with respect to any
particular Effective Price, a period commencing when Seller, directly or
indirectly (such as through a subsidiary or an affiliate), charges such
Effective Price to any person or entity (other than the Buyer) and ending when
the price of Applicable Paper for which such Effective Price was charged is
adjusted upwards in any subsequent issue of Pulp and Paper Week Price Watch.

         7.2   Notwithstanding anything to the contrary contained herein, the
provisions of Section 7.1 hereof shall not apply to any sales or offers to sell
Applicable Paper to Interstate Acquisition



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<PAGE>   5

Corp. ("Interstate") pursuant to the Paper Sales Agreement dated January 27,
1999 between Seller and Interstate (the "Interstate Agreement") or to Rosenbloom
Paper Supply Co. ("RPSC") pursuant to the Paper Supply Agreement dated January
16, 1964, as amended, between Seller and RPSC (the "RPSC Agreement") but only
for the duration and under the terms of such agreements as are currently in
effect.

         8.    First Refusal Rights.

         8.1   Prior to directly or indirectly (such as through a subsidiary or
an affiliate) selling or offering to sell Applicable Paper to any person or
entity (other than Buyer or Gaylord), Seller shall deliver written notice (the
"Sale Notice") to Gaylord by facsimile addressed to Frank Sobieralski, Director
of Planning and Exchange Sales and Chuck Beech, Manager, Customer Service and
Business Logistics at (847) 405-5642 (or any other person at any other facsimile
number designated by Gaylord to Seller upon 3 days written notice). The
facsimile transmission of the Sale Notice shall be confirmed by telephone
message by Seller to Frank Sobieralski at (847) 405-5623, or in his absence to
Chuck Beech at (847) 405-5581 (or to such other person at such other number
designated by Gaylord to Seller upon 3 days written notice). The Sale Notice
shall set forth in reasonable detail the terms and conditions of the proposed
sale. Gaylord may elect to purchase all (but not less than all) of the
Applicable Paper to be purchased upon the terms and conditions set forth in the
Sale Notice(or, if less, at the prices determined in accordance with Section 7
herein) by delivering a written notice of such election to Seller by the end of
the first business day following the business day on which Seller receives
confirmation of proper transmission of such Sale Notice has been received by
Buyer (which transmission shall be deemed proper if the requirements set forth
in the second sentence of this Section 8.1 are complied with by Seller). In the
event Gaylord does not elect to purchase all of the Applicable Paper as set
forth in the Sale Notice pursuant to the terms thereof or of this Section 8.1,
Seller may sell such Applicable Paper to such person or entity as set forth in
the applicable Sale Notice; provided that, if such sale is not consummated
within 10 business days after the applicable Sale Notice has been delivered to
Gaylord, Seller shall not sell such Applicable Paper to any person or entity
(other than Buyer or Gaylord), except pursuant to the procedures set forth in
the first four sentences of this Section 8.1.

         8.2   Notwithstanding anything to the contrary contained herein, the
provisions of Section 8.1 above shall not apply to any sales or offers to sell
Applicable Paper to Interstate pursuant to the Interstate Agreement or to RPSC
pursuant to the RPSC Agreement but only for the duration and under the terms of
such agreements as are currently in effect.

         9.    Records and Right to Audit. During the Term, and for a period of
two years following the termination of this Agreement, Seller shall maintain
clear, complete and accurate records of all documentation, invoices, orders and
proposals relating to (i) any action intended (or reasonably calculated) to
result in the sale of Applicable Paper by Seller to any person or entity (other
than Buyer or Gaylord) and (ii) the determination of price pursuant to Section 3
hereunder. Seller shall make available to Gaylord's outside accountants and
auditors its books and records (including, without limitation, all documentation
required to be maintained by Seller




                                        5
<PAGE>   6


under the preceding sentence) necessary to evidence compliance with the terms
and conditions of Sections 7 and 8 hereof and the prices to be determined
pursuant to Section 3 hereof, provided that Buyer and Gaylord covenant and agree
neither to request nor accept any information from such outside accountants or
auditors other than confirmation that the terms and conditions of Sections 3, 7
and 8 hereof are either being complied with or not being complied with, and
further provided that such information shall not be disclosed to any person or
used for any purpose except as may be necessary to carry out the intent and
effectuate the purposes hereof.

         10.   Warranty and Warranty Disclaimer. Seller warrants that all Paper
sold pursuant hereto will conform to the specifications set forth on Exhibit A.
The parties acknowledge that the specifications do not exceed normal industry
standards. Any deviation in the paper descriptions, specifications or other
provisions hereof must be consented to in writing by both Buyer and Seller.
Should standards for bag paper materially change for the entire industry, and
should Buyer request Seller to change its specifications accordingly, then
Seller shall have the right to make the necessary capital expenditures to
accomplish such changes within a reasonable time. Seller also warrants it will
convey good and marketable title to the Paper, free and clear of any liens,
claims or other encumbrances. The aforesaid warranties run only to Buyer and are
non-assignable. Except as expressly set forth above, there is NO WARRANTY,
REPRESENTATION OR CONDITION OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING NO
WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR PARTICULAR PURPOSE relating to
such Paper and none shall be implied by law. As to the warranty expressly made
with respect to the specifications referred to above, any claim by Buyer on
account of breach of such warranty shall be deemed waived conclusively unless
written notice thereof is given within 30 days of Buyer's receipt of Paper (or
such other period as may be customary in the industry from time to time) and
before use or alteration thereof and shall not apply to any Paper which shall
have been damaged in any material way after title and risk of loss pass to
Buyer. The foregoing limitations of warranty shall not apply to warranty of
title. Seller shall have the right to either replace or repair any defective
Paper, to refund the purchase price or credit Buyer therewith, or, with Buyer's
concurrence, to grant a reasonable allowance on account of such defects, it
being understood that if Seller no longer manufactures and sells Paper to Buyer
under this Agreement, Seller shall refund the proper amount to Buyer; and
SELLER'S LIABILITY AND BUYER'S EXCLUSIVE REMEDY FOR DEFECTIVE PAPER SHALL BE
LIMITED TO REPLACEMENT, REPAIR, CREDIT OR ALLOWANCE AS SELLER MAY ELECT AND AS
PROVIDED ABOVE AND SELLER SHALL NOT BE LIABLE FOR ANY OTHER LOSS OR DAMAGES,
DIRECT, CONSEQUENTIAL, SPECIAL OR OTHERWISE, occasioned by defects or
deficiencies in the Paper or for my other cause whatsoever. Seller shall be
given reasonable opportunity to investigate all claims and no Paper shall be
returned to Seller until receipt by Buyer of shipping instructions from Seller.




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<PAGE>   7

         11.   Delays. In the event of delay or failure of performance not
excused in accordance with the provisions of this Agreement, SELLER'S LIABILITY
SHALL NOT EXCEED AND BUYER'S EXCLUSIVE REMEDY SHALL BE LIMITED TO THE EXCESS
COSTS, if any, reasonably incurred by Buyer in procuring the undelivered portion
of the Paper ordered from other sources. IN NO EVENT SHALL SELLER BE LIABLE FOR
ANY CONSEQUENTIAL, SPECIAL OR CONTINGENT DAMAGES. No Paper will be held after
the time designated for shipment, except by mutual consent, and except that
Seller may delay shipments pending settlement of any overdue indebtedness from
Buyer to Seller. Notwithstanding anything to the contrary contained in this
Agreement, delivery dates are approximate and delivery within a reasonable time
of the dates specified shall be deemed full performance of Seller's obligations
under this Agreement.

         12.   Title and Risk of Loss. Title to, possession and risk of loss or
damage of Paper sold hereunder shall pass to Buyer on delivery to the common
carrier for such Paper at Seller's mill.

         13.   Assignment. Any party hereto may assign this Agreement (a) in
whole or in part to another corporation(s), partnership(s), or other business
entity(ies) into or with which such party shall be merged, or to which all or
substantially all of the assets of such party shall be conveyed or transferred,
or to any subsidiary of such party, or (b) as a collateral assignment to its
creditors. Except as provided above, no party hereto may assign this Agreement,
or any part hereof, without the prior written consent of the other party (which
consent shall not be unreasonably withheld or delayed). Upon any assignment as
herein permitted, all the terms and provisions of this Agreement binding upon or
inuring to the benefit of the assigning party shall be binding upon and inure to
the benefit of the assignee. No assignment, consolidation, merger, sale or
transfer by any other means shall relieve the assigning party of its obligations
hereunder.

         14.   Notices. All notices and other communications given to or made
upon any party hereto in connection with this Agreement shall, except as
otherwise expressly provided herein or therein, be in writing und mailed
(registered or certified), telecopied or delivered by hand or by reputable
overnight courier service to the respective parties, as follows:

Gaylord:       Gaylord Container Corporation
               500 Lake Cook Road, Suite 400
               Deerfield, Illinois 60015
               Attention: David F. Tanaka
               Telecopy: (847) 405-5586

Seller:        Stone Container Corporation
               150 North Michigan Avenue
               Chicago, Illinois 60601-7568
               Attention: Leslie T. Lederer
               Telecopy: (312) 580-4919




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<PAGE>   8

Buyer:         S&G Packaging Company, L.L.C.
               500 Lake Cook Road, Suite 400
               Deerfield, Illinois 60015
               Attention: General Counsel
               Telecopy: (847) 405-5628

or in accordance with any subsequent written direction from the recipient party
to the sending party. All such notices and other communications shall, except as
otherwise expressly herein provided, be effective upon delivery if delivered by
hand; one day after deposit with a reputable overnight courier service, delivery
charges prepaid; five business days after deposit in the mail when mailed by
registered or certified mail, postage prepaid; or in the case of telecopy, when
received.

         15.   No Implied Waiver; Writing Required. No delay or failure of any
party in exercising any right, power or remedy under this Agreement shall affect
or operate as a waiver thereof, nor shall any single or partial exercise thereof
or any abandonment or discontinuance of steps to enforce such a right, power or
remedy preclude any further exercise thereof or of any other right, power or
remedy. Any waiver, permit, consent or approval of any kind or character on the
part of any party hereto of any breach or default or any such waiver of any
provision or condition of this Agreement, must be in writing and shall be
effective only to the extent in such writing specifically set forth.

         16.   Complete Agreement. This Agreement, the Purchase Agreement and
the other Transaction Agreements (as such term is defined in the Purchase
Agreement) and the Exhibits and Schedules hereto and thereto contain the entire
agreement between the parties hereto with respect to the subject matter hereof.
This Agreement, the Purchase Agreement and the other Transaction Agreements and
the Exhibits and Schedules hereto and thereto supersede any previous
understandings or agreements (including without limitation the Original
Agreement), whether written or oral, with respect to the subject matter hereof.
This Agreement cannot be amended, modified or supplemented except by an
instrument in writing executed by the parties hereto.

         17.   Governing Law. This Agreement shall in all respects be governed
by, and construed and enforced in accordance with, the laws of the State of
Illinois, without giving effect to any choice of law or conflict of law rules or
provisions (whether of the State of Illinois or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than the State
of Illinois.

         18.   Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law in any jurisdiction, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating any other provision of this Agreement.

         19.   Headings. Section and subsection headings in this Agreement are
included for convenience of reference only and shall not constitute a part of
this Agreement for any other purpose.


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<PAGE>   9



         20.   Counterparts. This Agreement may be executed in any number of
counterparts and by either party hereto on separate counterparts, each of which,
when so executed and delivered, shall be an original, but all such counterparts
shall together constitute one and the same instrument.

         21.   Arbitration. Any dispute, controversy or claim, whether based on
contract, tort, statute, fraud, misrepresentation or any other legal theory
between the parties hereto, will be resolved according to the procedures set
forth in Section 9.11 (Arbitration) of the Purchase Agreement (as in effect on
the date hereof), disregarding the first clause of Section 9.11 which refers to
Sections 2.2 and 8.6 of the Purchase Agreement.


                                   * * * * * *



















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<PAGE>   10


         IN WITNESS WHEREOF, each of the undersigned parties has caused its
authorized representative to execute this Agreement as of the date first above
written.

                                   GAYLORD CONTAINER CORPORATION


                                   By: /s/ Jeffrey B. Park
                                   ---------------------------------------------
                                   Its: Vice President and Corporate Controller
                                   ---------------------------------------------

                                   STONE CONTAINER CORPORATION


                                   By: /s/ Leslie Ledrer
                                   ---------------------------------------------
                                   Its: V.P., Secretary and General Council
                                   ---------------------------------------------


                                   S&G PACKAGING COMPANY, L.L.C.


                                   By: /s/ Thomas Cadden
                                   ---------------------------------------------
                                   Its: President
                                   ---------------------------------------------







<PAGE>   11
                                    EXHIBIT A

                               S&G PACKAGING, LLC

                       RETAIL NATURAL KRAFT SPECIFICATIONS

<TABLE>
<CAPTION>
          BASIS WEIGHT (#/3MSF)             MD TEAR          MULLEN               % MOISTURE                               HST
          (CONDITIONED @ 7.5% MOIS)         (GRAMS)           (PSI)                              MAX      (SECONDS)      % FORMIC
    GRADE        MIN           MAX            MIN              MIN       MIN         MAX        STREAK       MIN         ACID INK
----------------------------------------------------------------------------------------------------------------------------------
    <S>          <C>           <C>           <C>              <C>       <C>        <C>          <C>            <C>          <C>
      28         26.6          29.4            36              15        3.0        7.5         8.5            15           1
----------------------------------------------------------------------------------------------------------------------------------
      30         28.5          31.5            38              16        3.0        7.5         8.5            15           1
----------------------------------------------------------------------------------------------------------------------------------
      33         31.4          34.7            45              17        3.0        7.5         8.5            15           1
----------------------------------------------------------------------------------------------------------------------------------
      35         33.3          36.8            50              19        3.0        7.5         8.5            15           1
----------------------------------------------------------------------------------------------------------------------------------
      40         38.0          42.0            63              23        3.5        8.0         9.0            35           1
----------------------------------------------------------------------------------------------------------------------------------
      45         42.8          47.3            72              26        3.5        8.0         9.5            35           1
----------------------------------------------------------------------------------------------------------------------------------
      50         47.5          52.5            86              30        4.0        8.5         9.5            50           2
----------------------------------------------------------------------------------------------------------------------------------
      57         54.2          59.9            97              34        4.5        8.5         9.5            50           2
----------------------------------------------------------------------------------------------------------------------------------
      60         57.0          63.0           112              37        4.5        8.5         9.5            50           2
----------------------------------------------------------------------------------------------------------------------------------
      63         59.9          66.2           117              39        4.5        8.5         9.5            50           2
----------------------------------------------------------------------------------------------------------------------------------
      65         61.8          68.3           121              40        4.5        8.5         9.5            50           2
----------------------------------------------------------------------------------------------------------------------------------
      67         63.7          70.4           126              42        4.5        8.5         9.5            50           2
----------------------------------------------------------------------------------------------------------------------------------
      70         66.5          73.5           131              44        4.5        8.5         9.5            50           2
----------------------------------------------------------------------------------------------------------------------------------
      73         69.4          76.7           136              47        4.5        8.5         9.5            50           2
----------------------------------------------------------------------------------------------------------------------------------
      75         71.3          78.8           141              49        4.5        8.5         9.5            50           2
----------------------------------------------------------------------------------------------------------------------------------
      80         76.0          84.0           150              53        4.5        8.5         9.5            50           2
</TABLE>

CALIPER:  ROLL AVERAGE MUST BE WITHIN +/- 0.001 INCH OF MILL TARGET.
          ROLL VARIATION MUST BE NO GREATER THAN +/- 0.001 INCH
    HST:  REFLECTANCE ENDPOINT = 80%