<PAGE>
                                                                   EXHIBIT 10.7
                                                                 EXECUTION COPY

                      FOURTH AMENDMENT TO CREDIT AGREEMENT

         This Fourth Amendment to Credit Agreement (this "Amendment") is
entered into as of June 3, 2002 among (i) CARAUSTAR INDUSTRIES, INC. (the
"Borrower"), (ii) the subsidiaries of the Borrower identified as Guarantors on
the signature pages hereto, (iii) the Lenders identified on the signature pages
hereto and (iv) BANK OF AMERICA, N.A., as Administrative Agent (the
"Administrative Agent"). All capitalized terms used herein and not otherwise
defined shall have the meanings ascribed to such terms in the Credit Agreement
referred to below.

                                    RECITALS

         A.       A Credit Agreement dated as of March 29, 2001 (as amended by
that certain First Amendment to Credit Agreement dated as of September 10,
2001, that certain Second Amendment to Credit Agreement dated as of November
30, 2001 and that certain Third Amendment to Credit Agreement dated as of
January 22, 2002 and as further modified or amended from time to time, the
"Credit Agreement") has been entered into by and among the Borrower, the
Guarantors party thereto (the "Guarantors"), the financial institutions party
thereto (the "Lenders") and the Administrative Agent.

         B.       The Borrower has requested, and the Required Lenders have
agreed to, an amendment of the terms of the Credit Agreement as set forth
below.

                                   AGREEMENT

         NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

         1.       Amendment to Section 1.1 of the Credit Agreement. Section 1.1
of the Credit Agreement is hereby amended by adding the following definitions
in appropriate alphabetical order:

         (a)      "Collateral" means all the accounts receivable and inventory
                  of the Credit Parties, now existing or hereafter acquired and
                  with respect to which Liens in favor of the Administrative
                  Agent are purported to be granted, effective as of the
                  Collateral Effective Date, pursuant to and in accordance with
                  the terms of the Collateral Documents.

         (b)      "Collateral Documents" means a collective reference to the
                  Security Agreement and all financing statements and/or other
                  documents reasonably requested by the Administrative Agent to
                  create and/or perfect its security interest, for the benefit
                  of the secured parties referred to therein, in the Collateral
                  of the Credit Parties.


<PAGE>

         (c)      "Collateral Effective Date" means the first date upon which
                  (i) the quotient of (a) the aggregate principal amount as of
                  such date of (x) all outstanding Loans and (y) all
                  outstanding L/C Obligations divided by (b) the Aggregate
                  Revolving Credit Commitment as of such date is greater than
                  or equal to 50% and (ii) the ratio of (a) Total Debt as of
                  such date to (b) EBITDA (measured for the period of four (4)
                  consecutive fiscal quarters ending as of the last day of the
                  most recently ended fiscal quarter for which the
                  Administrative Agent has received the financial statements
                  and Officer's Compliance Certificate required to be delivered
                  pursuant to Section 7.1(a) or (b) and Section 7.2 of the
                  Credit Agreement, as appropriate) is greater than 4.25 to
                  1.0; provided that, for purposes of calculating the ratio of
                  Total Debt to EBITDA as contemplated by clause (ii)(b) above
                  and in any Officer's Compliance Certificate, EBITDA for any
                  period during which Historical JS Industrial Packaging Group
                  EBITDA is applicable shall be calculated after giving effect
                  to the JS Industrial Packaging Group Acquisition as if such
                  acquisition were consummated on the first day of such period
                  and so as to include Historical JS Industrial Packaging Group
                  EBITDA for such period. Notwithstanding anything to the
                  contrary contained herein, the definition of "Collateral
                  Effective Date" may not be amended, modified, changed,
                  discharged or terminated in a manner materially adverse to
                  the Lenders except with the prior written consent of all of
                  the Lenders.

         (d)      "Fourth Amendment" means that certain Fourth Amendment to
                  Credit Agreement dated as of June 3, 2002 among the Borrower,
                  the Guarantors, the Lenders party thereto and the
                  Administrative Agent.

         (e)      "Fourth Amendment Effective Date" has the meaning provided in
                  Section 24 of the Fourth Amendment.

         (f)      "Historical JS Industrial Packaging Group EBITDA" means, for
                  any period ending on the date the JS Industrial Packaging
                  Group Acquisition is consummated, the sum of the following
                  amounts for such period to the extent attributable to the
                  business acquired by the Borrower in connection with the JS
                  Industrial Packaging Group Acquisition: (a) net income (after
                  taxes), plus (b) an amount which, in the determination of net
                  income, has been deducted for (i) all interest expense
                  (whether paid or accrued) and capitalized interest, including
                  without limitation (x) the amortization of debt discount and
                  premium, (y) the interest component under Capital Leases and
                  synthetic leases and (z) the implied interest component,
                  discount or other similar fees or charges in connection with
                  any asset securitization program, net of interest income
                  (including any net amount payable or receivable under any
                  Hedging Agreement regarding the hedging of interest rate risk
                  exposure), (ii) all federal and state income tax expense and
                  (iii) depreciation and amortization expense, minus (c) an
                  amount which, in the determination of net income, has
                  been added for any non-cash credits, all of the foregoing
                  determined and computed on a Consolidated basis in accordance
                  with GAAP; provided that (A) the calculation of Historical JS
                  Industrial Packaging


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<PAGE>

                  Group EBITDA shall be based on financial information that is
                  readily ascertainable (whether from stand alone financial
                  statements or an independent auditor's analysis and review or
                  other reasonable method acceptable to the Administrative
                  Agent; provided that such other reasonable method shall have
                  been disclosed to the Lenders and no objection shall have
                  been received from the Required Lenders within five (5)
                  Business Days of such disclosure) and (B) the financial
                  information serving as the basis for the calculation of
                  Historical JS Industrial Packaging Group EBITDA for any
                  period shall be delivered in writing by the Borrower to the
                  Administrative Agent and the Lenders concurrently with, or
                  prior to, the delivery of the Officer's Compliance
                  Certificate required to be delivered pursuant to Section 7.2
                  of the Credit Agreement for the relevant period.

         (g)      "JS Industrial Packaging Group Acquisition" means the
                  Borrower's acquisition from Jefferson Smurfit Corporation of
                  the business referred to as the "JS Industrial Packaging
                  Group" for an aggregate consideration (including any assumed
                  Debt) of approximately $90 million (plus approximately $5
                  million of transaction costs).

         (h)      "New Senior Subordinated Note Indenture" means the Indenture,
                  to be dated on or about the closing date of the JS Industrial
                  Packaging Group Acquisition, between the Borrower, the
                  Subsidiaries of the Borrower identified as guarantors therein
                  and The Bank of New York, as Trustee, as amended, modified
                  and supplemented from time to time to the extent permitted
                  under this Agreement.

         (i)      "New Senior Subordinated Notes" means the Senior Subordinated
                  Notes issued pursuant to the New Senior Subordinated Note
                  Indenture, as amended, modified and supplemented from time to
                  time to the extent permitted under this Agreement.

         (j)      "Security Agreement" means that certain Security Agreement,
                  substantially in the form of Exhibit I hereto, to be dated as
                  of the Fourth Amendment Effective Date among the Credit
                  Parties and the Administrative Agent, pursuant to which Liens
                  in favor of the Administrative Agent, in its capacity as
                  Collateral Agent, for the ratable benefit of (i) the
                  Administrative Agent and the Lenders (and, with respect to
                  Obligations under Hedging Agreements, Affiliates of the
                  Lenders as well as the Lenders), (ii) the lenders under the
                  Premier Boxboard Credit Facility and (iii) the lenders under
                  the Standard Gypsum Credit Facility, are purported to be
                  granted, effective as of the Collateral Effective Date, as
                  such Security Agreement is amended, modified, restated or
                  supplemented from time to time.

         (k)      "Standard Gypsum Credit Facility" means the revolving credit
                  facility provided pursuant to the Second Amended and Restated
                  Loan Agreement, dated as of August 1, 1999 (as may be further
                  amended, restated, modified or supplemented from time to
                  time), between the lenders party thereto, Standard Gypsum and
                  Toronto Dominion (Texas), Inc., as administrative agent.


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<PAGE>

         2.       Further Amendment to Section 1.1 of the Credit Agreement. The
definition of "Applicable Percentage" in Section 1.1 of the Credit Agreement is
hereby amended by replacing the pricing grid found therein with the following:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
                                      Applicable          Applicable         Applicable        Applicable
  Pricing           Total           Percentage for      Percentage for     Percentage for      Percentage
   Level       Leverage Ratio        Offshore Rate         Base Rate         Commitment           for
                                         Loans               Loans              Fee             L/C Fee
-------------------------------------------------------------------------------------------------------------
  <S>          <C>                  <C>                 <C>                <C>                 <C>
     I             < 45.0%               1.75%               0.50%             0.40%             1.75%
-------------------------------------------------------------------------------------------------------------
     II        < 55.0% but >             2.00%               0.75%             0.50%             2.00%
                           _
                   45.0%
-------------------------------------------------------------------------------------------------------------
    III        < 60.0% but >             2.25%               1.00%             0.50%             2.25%
                           _
                    55.0%
-------------------------------------------------------------------------------------------------------------
     IV        < 65.0% but >             2.50%               1.25%             0.50%             2.50%
                           _
                    60.0%
-------------------------------------------------------------------------------------------------------------
                   > 65.0%               2.75%               1.50%             0.55%             2.75%
                   _
-------------------------------------------------------------------------------------------------------------
</TABLE>

         3.       Further Amendment to Section 1.1 of the Credit Agreement. The
definition of the "EBITDA" is hereby amended by:

                  (a)      inserting the following at the end of clause (b)(v)
         therein:

                  "and one-time charges, fees and expenses paid or incurred by
                  the Borrower in connection with the issuance of the New
                  Senior Subordinated Notes and the consummation of the other
                  transactions contemplated by the Fourth Amendment in an
                  aggregate amount of up to $3,000,000"; and

                  (b)      inserting the following immediately after the words
         "Section 9.6" in the proviso therein:

                           "(other than the JS Industrial Packaging Group
                           Acquisition)".

         4.       Further Amendment to Section 1.1 of the Credit Agreement. The
definition for "Loan Documents" is hereby amended in its entirety by replacing
it with the following:

                  "Loan Documents" means, collectively, this Agreement, the
         Notes, the L/C Applications, any Guarantor Joinder Agreement, the
         Collateral Documents and each other document, instrument and agreement
         executed and delivered by any Credit Party or its Subsidiaries in
         connection with this Agreement or otherwise referred to herein or
         contemplated hereby, all as may be amended, restated or otherwise
         modified.

         5.       Further Amendment to Section 1.1 of the Credit Agreement. The
definition of "Senior Subordinated Note Indenture" is hereby amended by
inserting the following at the end thereof:


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<PAGE>

                  "Except as otherwise expressly provided herein or as the
         context otherwise requires, references herein to the Senior
         Subordinated Note Indenture shall also be deemed references to the New
         Senior Subordinated Note Indenture."

         6.       Further Amendment to Section 1.1 of the Credit Agreement. The
definition of "Senior Subordinated Notes" is hereby amended by inserting the
following at the end thereof:

                  "Except as otherwise expressly provided herein or as the
         context otherwise requires, references herein to the Senior
         Subordinated Notes shall also be deemed references to the New Senior
         Subordinated Notes."

         7.       Amendment to Section 8.3 of the Credit Agreement. Section 8.3
of the Credit Agreement is hereby amended by inserting the following at the end
of the sentence found therein:

                  "Within ten Business Days after the occurrence of the
         Collateral Effective Date, the Administrative Agent, in its capacity
         as Collateral Agent under the Security Agreement (for the ratable
         benefit of the Secured Parties named therein), shall be named as loss
         payee, as its interest may appear, and/or additional insured with
         respect to any such insurance providing coverage in respect of any
         Collateral, and each provider of any such insurance shall agree, by
         endorsement upon the policy or policies issued by it or by independent
         instruments furnished to the Administrative Agent, that it will give
         the Administrative Agent thirty (30) days prior written notice before
         any such policy or policies shall be altered or canceled.

                  In the event there occurs, on or after the occurrence of the
         Collateral Effective Date, any material loss, damage to or destruction
         of the Collateral of any Credit Party or any part thereof, such Credit
         Party shall promptly give written notice thereof to the Administrative
         Agent generally describing the nature and extent of such loss, damage
         or destruction. Subsequent to any loss, damage to or destruction of
         the Collateral of any Credit Party or any part thereof, and subject to
         the provisions of the last sentence of this paragraph, such Credit
         Party, whether or not the insurance proceeds, if any, received on
         account of such damage or destruction shall be sufficient for that
         purpose, at such Credit Party's cost and expense, will promptly repair
         or replace the Collateral of such Credit Party so lost, damaged or
         destroyed; provided, however, that such Credit Party need not repair
         or replace the Collateral of such Credit Party so lost, damaged or
         destroyed to the extent the failure to make such repair or replacement
         (a) is desirable to the conduct of the business of such Credit Party
         in the ordinary course and otherwise is in the best interest of such
         Credit Party and (b) would not materially impair the rights and
         benefits of (i) the Administrative Agent or the Lenders under this
         Credit Agreement or any other Loan Document or (ii) the Collateral
         Agent and Secured Parties under (and as defined in) the Security
         Agreement. So long as no Event of Default has occurred and is
         continuing, the Administrative Agent, in its capacity as Collateral
         Agent under the Security Agreement, agrees to release any insurance
         proceeds received by it to the applicable Credit Party for replacement
         or restoration of the portion of the Collateral of such Credit Party
         lost, damaged or destroyed. In the event a


                                       5
<PAGE>

         Credit Party shall receive any insurance proceeds as a result of any
         loss, damage or destruction of Collateral in a net amount in excess of
         $1,000,000, the Credit Parties shall, within the period of 180 days
         following the date of receipt of such proceeds, apply (or cause to be
         applied) an amount equal to such proceeds to (x) make reinvestments
         consisting of acquisitions of assets used or useful in the same or a
         similar line of business as the Borrower and its subsidiaries were
         engaged in on the Closing Date (including but not limited to the
         repair or replacement of the related Collateral) or (y) prepay the
         Secured Obligations (as defined in the Security Agreement) (including
         by cash collateralizing letter of credit (but only after all
         outstanding loans under the same facility have been prepaid) or
         guaranty obligations) on a pro rata basis.

                  The Administrative Agent is authorized, but not obligated, as
         the attorney-in-fact of each of the Credit Parties and for the benefit
         of the Lenders (and any other secured parties under the Security
         Agreement), upon the occurrence and during the continuance of an Event
         of Default on or after the Collateral Effective Date, without the
         consent of the applicable Credit Party, (i) to adjust and compromise
         proceeds payable under such insurance policies, (ii) to collect,
         receive and give receipts for such insurance proceeds in the name of
         such Credit Party, the Administrative Agent and the Lenders (and any
         other secured parties under the Security Agreement) and (iii) to
         endorse such Credit Party's name upon any instrument in payment
         thereof.

                  All insurance proceeds shall be subject to the security
         interest of the Secured Parties (as defined in the Security Agreement)
         under the Collateral Documents."

         8.       Amendment to Section 8.10 of the Credit Agreement. Section
8.10 of the Credit Agreement is hereby amended by inserting the following at
the end of the sentence found therein:

                  "After the occurrence and during the continuance of an Event
         of Default, any such action shall be at the expense of the Credit
         Parties. In addition, after the occurrence of the Collateral Effective
         Date, the Credit Parties agree that the Administrative Agent, and its
         representatives, may conduct an audit of the Collateral annually (or,
         after the occurrence and during the continuance of an Event of
         Default, more frequently), at the expense of the Credit Parties."

         9.       Amendment to Article VIII of the Credit Agreement. Article
VIII of the Credit Agreement is hereby amended by inserting the following
Sections in numerical order:

         "(a)     SECTION 8.13      Pledged Assets.

                  Each Credit Party will (i) upon the occurrence of the
         Collateral Effective Date, cause all of its Property that constitutes
         (or pursuant to the terms hereof is intended to constitute) Collateral
         to be subject at all times to first priority, perfected Liens in favor
         of the Administrative Agent, as Collateral Agent for the ratable
         benefit of the Secured Parties referred to in the Collateral
         Documents, to secure the Obligations pursuant to the terms and
         conditions of the Collateral Documents, subject in any case to Liens
         permitted


                                       6
<PAGE>

         under Section 9.2 and (ii) deliver, or, in the case of agreements or
         other documents that require the consent of a non-Affiliate of the
         Borrower, use commercially reasonable efforts to deliver, such other
         documentation as the Administrative Agent may reasonably request in
         connection with the foregoing, including, without limitation,
         appropriate UCC-1 financing statements, landlord's waivers (subject to
         Section 8.14), certified resolutions and other organizational and
         authorizing documents of such Person, favorable opinions of counsel to
         such Person (which shall cover, among other things, the legality,
         validity, binding effect and enforceability of the documentation
         referred to above and the perfection of the Administrative Agent's
         Liens thereunder), all in form, content and scope reasonably
         satisfactory to the Administrative Agent.

         (b)      SECTION 8.14      Further Assurances Regarding, Collateral.

                  Each Credit Party shall:

                  (i) At its expense, from time to time execute and deliver, or
         cause to be executed and delivered, such additional instruments,
         certificates or documents, and take all such actions, as the
         Administrative Agent or the Required Lenders may reasonably request,
         for the purposes of implementing or effectuating the provisions of
         this Agreement and the other Loan Documents or, upon the occurrence of
         the Collateral Effective Date, creating or perfecting or ensuring the
         priority or sufficiency or enforceability or enforcement of a Lien in
         favor of the Administrative Agent as security for the Obligations upon
         any or all of the Collateral (whether owned prior to the Collateral
         Effective Date or thereafter acquired), or more fully perfecting or
         renewing any such Lien;

                  (ii) To the extent requested by the Administrative Agent, at
         such Credit Party's expense, if the exercise by the Administrative
         Agent or any Lender of any power, right, privilege or remedy pursuant
         to this Agreement or the other Loan Documents requires any consent,
         approval, recording, qualification or authorization of any
         Governmental Authority, execute and deliver, or cause the execution
         and delivery of, all applications, certifications, instruments and
         other documents and papers that may be required from the Borrower or
         any of its Subsidiaries or may reasonably be requested for such
         governmental consent, approval, recording, qualification or
         authorization; and

                  (iii) Use its commercially reasonable efforts to obtain
         within 45 days of the Collateral Effective Date (or in the case of
         locations which meet the threshold set forth herein on a date
         subsequent to the Collateral Effective Date, within 45 days of the
         date on which a Responsible Officer of the Borrower becomes aware of
         such change) such landlord waiver and/or warehousemen and bailee
         letters, as applicable, in form and substance satisfactory to the
         Administrative Agent with respect to all Collateral located at a
         leased location or held by a warehouseman or bailee to the extent the
         aggregate value of the Collateral at such location exceeds
         $1,000,000."

         10.      Amendment to Section 9.1(c) of the Credit Agreement. Section
9.1(c) of the Credit Agreement is hereby amended in its entirety by replacing
it with the following:


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<PAGE>

                  "(c) Minimum Tangible Net Worth. At all times after the
         Fourth Amendment Effective Date, the Credit Parties will not permit
         Tangible Net Worth to be less than the TNW Floor (as defined below)
         plus, as of the end of each fiscal quarter, commencing with the end of
         the first fiscal quarter ending after the Fourth Amendment Effective
         Date, (i) 50% of Net Income (to the extent positive) for the fiscal
         quarter then ended (or, with respect to the fiscal quarter in which
         the JS Industrial Packaging Group Acquisition occurs, for the portion
         of the fiscal quarter occurring after the date such acquisition is
         consummated), such increases to be cumulative, and (ii) 100% of the
         Net Cash Proceeds of Equity Issuances during the fiscal quarter then
         ended (or, with respect to the fiscal quarter in which the JS
         Industrial Packaging Group Acquisition occurs, for the portion of the
         fiscal quarter occurring after the date such acquisition is
         consummated), such increases to be cumulative. For purposes hereof,
         "TNW Floor" shall mean (A) initially, $108,900,000 and (B) upon the
         consummation of the JS Industrial Packaging Group Acquisition, 90% of
         actual Tangible Net Worth as of the date of such consummation (and
         after giving effect thereto), as calculated in good faith by the
         Borrower and as certified in writing to the Administrative Agent on
         the date of such consummation by a Responsible Officer of the
         Borrower."

         11.      Amendment to Section 9.2 of the Credit Agreement. Section 9.2
of the Credit Agreement is hereby amended by (i) deleting the word "and" at the
end of subclause (i) thereof; (ii) replacing the period at the end of subclause
(j) thereof with "; and" and (iii) adding the following new subclause (k)
immediately to the end of such clause (j):

                  "(k) prior to the consummation of the JS Industrial Packaging
         Group Acquisition, Liens in favor of the trustee for (or escrow agent
         with respect to) the New Senior Subordinated Notes granted by the
         Borrower on the Borrower's interest in the proceeds from the issuance
         of such New Senior Subordinated Notes (it being understood that such
         Liens shall secure only the obligation of the Borrower to return such
         proceeds to the trustee for the New Senior Subordinated Notes (or such
         escrow agent) in the event the JS Industrial Packaging Group
         Acquisition fails to close)."

         12.      Amendment to Section 9.2(e) of the Credit Agreement. Section
9.2(e) of the Credit Agreement is hereby amended in its entirety by replacing
it with the following:

                  "(c) Liens in favor of the Administrative Agent (or another
         collateral agent acceptable to the Administrative Agent and the
         Required Lenders) for the benefit of (i) the Administrative Agent and
         the Lenders (and, with respect to Obligations under Hedging
         Agreements, Affiliates of the Lenders), (ii) to the extent a default
         would otherwise exist under the Senior Note Indenture, the holders of
         the Senior Notes and (iii) to the extent a default would otherwise
         arise under the Premier Boxboard Credit Facility and/or Standard
         Gypsum Credit Facility, the lenders under such credit facility;"

         13.      Amendment to Section 9.3(f) of the Credit Agreement. Section
9.3(f) of the Credit Agreement is hereby amended in its entirety by replacing
it with the following:


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<PAGE>

         "(f)     Debt owing under the Senior Subordinated Notes and the New
                  Senior Subordinated Notes not to exceed in the aggregate
                  principal at any time outstanding an amount equal to (i)
                  $375,000,000 less (ii) the aggregate amount of any Senior
                  Subordinated Notes and/or New Senior Subordinated Notes that
                  have been permanently prepaid, redeemed or otherwise
                  retired;"

         14.      Amendment to Section 9.5 of the Credit Agreement. Section 9.5
of the Credit Agreement is hereby amended by adding the following at the end of
the paragraph found therein:

                  "Upon a sale of assets permitted by this Section 9.5, the
         Administrative Agent shall (to the extent applicable) deliver to the
         Credit Parties, upon the Credit Parties' request and at the Credit
         Parties' expense, such documentation as is reasonably necessary to
         evidence the release of the Administrative Agent's security interest,
         if any, in such assets, including, without limitation, amendments or
         terminations of UCC financing statements, if any, and the release of
         such Credit Party from all of its obligations, if any, under the Loan
         Documents."

         15.      Amendment of Section 9.6 of the Credit Agreement. Section 9.6
of the Credit Agreement is hereby amended in its entirety by replacing it with
the following:

         "SECTION 9.6      Limitations on Acquisitions.

                  Other than transactions permitted under Section 9.7, no
         Credit Party will, nor will it permit any of its Subsidiaries to,
         acquire all or any portion of the Capital Stock or other ownership
         interest in any Person which is not a Subsidiary or all or any
         substantial portion of the assets, property and/or operations of a
         Person which is not a Subsidiary, except (a) the JS Industrial
         Packaging Group Acquisition and (b) other acquisitions, so long as,
         with respect to transactions permitted under this clause (b), (i) the
         Person, assets, property and/or operations being acquired engage in or
         are engaged in the same line of business as that engaged in by the
         Borrower and its Subsidiaries on the Closing Date or a business
         reasonably related thereto, (ii) in the case of an acquisition of
         Capital Stock or other ownership interest of a Person, the Board of
         Directors of the Person which is the subject of such acquisition shall
         have approved the acquisition, (iii) no Default or Event of Default
         shall exist on the date of, or shall result from, any such acquisition
         (including after giving effect to such transaction on a pro forma
         basis), and (iv) the aggregate cash consideration for each such
         acquisition does not exceed $25,000,000 and the aggregate
         consideration (cash and noncash) for all such acquisitions consummated
         in any twelve-month period does not exceed $50,000,000."

         16.      Amendment to Section 11.1 of the Credit Agreement. Section
11.1 of the Credit Agreement is hereby amended by adding a new clause (q) at
the end thereof to read as follows:

                  "(q) JV Debt Cross-Default. The occurrence of (i) any event
         of default under the Standard Gypsum Credit Facility or the Premier
         Boxboard Credit Facility (beyond the period of grace, if any, provided
         therein) or (ii) any demand for payment under (A) the Borrower's
         guaranty of Standard Gypsum's obligations under the Standard Gypsum


                                       9
<PAGE>

         Credit Facility or (B) the Borrower's guaranty of Premier Boxboard's
         obligations under the Premier Boxboard Credit Facility."

         17.      Amendment to Section 13.9(d) of the Credit Agreement. Section
13.9(d)(iii) of the Credit Agreement which reads "or (iii) release all or
substantially all of the Guarantors from their obligations hereunder" is hereby
deleted and replaced with the following:

                  ", (iii) release all or substantially all of the Guarantors
         from their obligations hereunder or (iv) except as a result of or in
         connection with an Asset Disposition permitted by Section 9.5, release
         all or substantially all of the Collateral (upon or after the
         occurrence of the Collateral Effective Date)."

         18.      Modification to Section 13.11 of the Credit Agreement.
Section 13.11 of the Credit Agreement is modified as follows to fix a
typographical error: The reference to "this Section 13.10" contained in clause
(g) of the proviso found therein is replaced with a reference to "this Section
13.11 ".

         19.      Amendment to Article XIII of the Credit Agreement. A new
Section 13.20 is hereby added to the Credit Agreement to read as follows:

         "SECTION 13.20    MATTERS RELATING TO SECURITY AGREEMENT.

                  Notwithstanding anything to the contrary contained herein,
         and without limiting the generality of Section 12.1, each of the
         Lenders hereby (a) irrevocably designates and appoints Bank of America
         as Collateral Agent of such Lender under the Security Agreement and
         the other Collateral Documents for the term hereof and each such
         Lender irrevocably authorizes Bank of America as Collateral Agent for
         such Lender, to execute and deliver the Security Agreement, to take
         such action on its behalf under the provisions of the Security
         Agreement and the other Collateral Documents and to exercise such
         powers and perform such duties as are expressly delegated to the
         Collateral Agent by the terms of the Security Agreement and such other
         Collateral Documents, together with such other powers as are
         reasonably incidental thereto and (b) acknowledges and agrees that (i)
         the Security Agreement provides that the Collateral (and proceeds
         thereof) are to be shared ratably among the Secured Parties referred
         to in the Security Agreement and that the Required Secured Parties (as
         defined in the Security Agreement) can direct the Collateral Agent to
         act (or refrain from acting) with respect to the Collateral and (ii)
         neither the Security Agreement nor the definition of "Collateral
         Effective Date" herein may be amended except in accordance with the
         provisions of Section 13 thereof (which provisions may, in certain
         instances, require the consent of certain Secured Parties referred to
         in the Security Agreement in addition to consent of the Required
         Lenders hereunder)."

         20.      Amendment to Exhibit G to the Credit Agreement. Exhibit G to
the Credit Agreement is hereby amended in its entirety by replacing it with the
new Exhibit G attached hereto.


                                      10
<PAGE>

         21.      New Exhibit I of the Credit Agreement. Exhibit I attached
hereto is hereby added as a new Exhibit I to the Credit Agreement.

         22.      Representations and Warranties. Each Credit Party hereby
represents and warrants to the Administrative Agent and the Lenders that (a) no
Default or Event of Default exists; (b) all of the representations and
warranties set forth in the Loan Documents are true and correct in all material
respects as of the date hereof (except for those that expressly state that they
are made as of an earlier date); and (c) it has no claims, counterclaims,
offsets, credits or defenses to its obligations under the Loan Documents or, to
the extent it does, they are hereby released in consideration of the Required
Lenders entering into this Amendment.

         23.      Conditions Precedent to Closing. This Amendment shall be
deemed closed as of the date set forth above (the "Amendment Closing Date")
when (and only when) each of the following conditions precedent has been
satisfied:

                  (a)      The Administrative Agent shall have received from
         the Credit Parties and the Required Lenders duly executed counterparts
         of this Amendment;

                  (b)      The Administrative Agent shall have received from
         the Borrower an amendment closing fee equal to 0.125% multiplied by
         the aggregate Revolving Credit Commitments of the Consenting Lenders
         (as defined below), such fee being for the account of each such
         Consenting Lender pro rata according to such Lender's Revolving Credit
         Commitment as of the Amendment Closing Date; provided, however, that
         such fee shall be payable only to those Lenders (the "Consenting
         Lenders") that shall have returned (including via telecopy) executed
         signature pages to this Amendment on or before June 3, 2002, as
         directed by the Administrative Agent; and

                  (c)      The Credit Parties shall have paid any and all
         out-of-pocket costs (to the extent invoiced) incurred by the
         Administrative Agent through the Amendment Closing Date (including the
         reasonable fees and expenses of the Administrative Agent's legal
         counsel), and fees and other amounts payable to the Administrative
         Agent as of the Amendment Closing Date, in each case in connection
         with the arrangement, negotiation, preparation, execution and delivery
         of this Amendment.

         24.      Conditions Precedent to Effectiveness. The amendments to the
Credit Agreement set forth herein shall be deemed effective as of the date (the
"Fourth Amendment Effective Date") when (and only when) each of the following
conditions precedent has been satisfied:

                  (a)      The satisfaction of each of the conditions set forth
         in Section 23 of this Amendment;

                  (b)      The Administrative Agent shall have received (i)
         from the Credit Parties, duly executed counterparts of the Security
         Agreement and (ii) from counsel to the Credit Parties, a legal opinion
         in form and substance acceptable to the Administrative Agent and its
         counsel (which shall cover, among other things, the legality,
         validity, binding effect


                                      11
<PAGE>

         and enforceability of the Security Agreement and, subject to the
         occurrence of the Collateral Effective Date, the creation and
         perfection of the Administrative Agent's Liens thereunder);

                  (c)      The Administrative Agent shall have received from
         the Borrower an amendment effectiveness fee equal to 0.125% multiplied
         by the aggregate Revolving Credit Commitments of the Consenting
         Lenders, such fee being for the account of each such Consenting Lender
         pro rata according to such Lender's Revolving Credit Commitment as of
         the Amendment Closing Date;

                  (d)      The Borrower shall have (i) issued New Senior
         Subordinated Notes on terms and conditions reasonably satisfactory to
         the Administrative Agent and (ii) received gross proceeds from the
         issuance of such New Senior Subordinated Notes in an aggregate amount
         of not less than $50,000,000. The Borrower shall have delivered a
         copy, certified by an officer of the Borrower as true and complete, of
         the New Senior Subordinated Note Indenture and each other material
         document executed in connection therewith, in each case as originally
         executed and delivered and together with all exhibits and schedules
         thereto;

                  (e)      The JS Industrial Packaging Group Acquisition shall
         have been consummated in material compliance with all Applicable Law
         and applicable governmental approvals;

                  (f)      To the extent not paid by the Credit Parties in
         connection with the Amendment Closing Date, the Credit Parties shall
         have paid any and all out-of-pocket costs (to the extent invoiced)
         incurred by the Administrative Agent (including the reasonable fees
         and expenses of the Administrative Agent's legal counsel), and fees
         and other amounts payable to the Administrative Agent, in each case in
         connection with the arrangement, negotiation, preparation, execution
         and delivery of this Amendment;

                  (g)      The Administrative Agent shall have received
         evidence satisfactory to it that the Borrower shall have obtained
         amendments to its guaranties in connection with the Premier Boxboard
         Credit Facility and the Standard Gypsum Credit Facility that conform
         to the applicable terms of this Amendment; and

                  (h)      The representations and warranties contained in
         Section 22 of this Amendment shall be true and correct in all material
         respects on and as of such Fourth Amendment Effective Date (including
         after giving effect to the consummation of the JS Industrial Packaging
         Group Acquisition) with the same effect as if made on and as of such
         date.

         25.      Ratification of Credit Agreement. Except as expressly
modified and amended in this Amendment, all of the terms, provisions and
conditions of the Loan Documents shall remain unchanged and in full force and
effect. The term "this Agreement" or "Credit Agreement" and all similar
references as used in each of the Loan Documents shall hereafter mean the
Credit Agreement as amended by this Amendment. Except as herein specifically
agreed, the Credit


                                      12
<PAGE>

Agreement is hereby ratified and confirmed and shall remain in full force and
effect according to its terms.

         26.      Authority/Enforceability. Each of the Credit Parties hereto
represents and warrants as follows:

                  (a)      It has taken all necessary action to authorize the
         execution, delivery and performance of this Amendment.

                  (b)      This Amendment has been duly executed and delivered
         by such Person and constitutes such Person's legal, valid and binding
         obligations, enforceable in accordance with its terms, except as such
         enforceability may be subject to (i) bankruptcy, insolvency,
         reorganization, fraudulent conveyance or transfer, moratorium or
         similar laws affecting creditors' rights generally and (ii) general
         principles of equity (regardless of whether such enforceability is
         considered in a proceeding at law or in equity).

                  (c)      No consent, approval, authorization or order of, or
         filing, registration or qualification with, any court or governmental
         authority or third party is required in connection with the execution,
         delivery or performance by such Person of this Amendment. The
         execution, delivery and performance by such Person of this Amendment
         do not and will not conflict with, result in a breach of or constitute
         a default under the articles of incorporation, bylaws or other
         organizational documents of any Credit Party or any of its
         Subsidiaries or any indenture or other material agreement or
         instrument to which such Person is a party or by which any of its
         properties may be bound or any Governmental Approval relating to such
         Person except as could not reasonably be expected to have a Material
         Adverse Effect.

         27.      Expenses. The Borrower agrees to pay all reasonable costs and
expenses in connection with the preparation, execution and delivery of this
Amendment, including without limitation the reasonable fees and expenses of
Moore & Van Allen PLLC, special counsel to the Administrative Agent.

         28.      Counterparts/Telecopy. This Amendment may be executed in any
number of counterparts, each of which when so executed and delivered shall be
an original, but all of which shall constitute one and the same instrument.
Delivery of executed counterparts by telecopy shall be effective as an original
and shall constitute a representation that an original will be delivered.

         29.      GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH
CAROLINA.

         30.      Entirety. This Amendment and the other Loan Documents embody
the entire agreement between the parties and supersede all prior agreements and
understandings, if any, relating to the subject matter hereof. These Loan
Documents represent the final agreement


                                      13
<PAGE>

between the parties and may not be contradicted by evidence of prior,
contemporaneous or subsequent oral agreements of the parties. There are no oral
agreements between the parties.


                                      14
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Amendment, to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.

BORROWER:              CARAUSTAR INDUSTRIES, INC.,
                       a North Carolina corporation



                       By    /s/ H. Lee Thrash, III
                             --------------------------------------------------
                       Name: H. Lee Thrash, III
                       Title: Vice President Planning & Development and
                              Chief Financial Officer

                                          SIGNATURE PAGE TO FOURTH AMENDMENT TO
                                    CARAUSTAR INDUSTRIES, INC. CREDIT AGREEMENT
                                                                      JUNE 2002


<PAGE>

<TABLE>
<S>               <C>
GUARANTORS:       AUSTELL HOLDING COMPANY, LLC,
                  a Georgia limited liability company
                  CAMDEN PAPERBOARD CORPORATION,
                  a New Jersey corporation
                  CARAUSTAR CUSTOM PACKAGING GROUP, INC.,
                  a Delaware corporation
                  CARAUSTAR CUSTOM PACKAGING GROUP (MARYLAND), INC.,
                  a Maryland corporation
                  CARAUSTAR INDUSTRIAL AND PRODUCTS GROUP, INC.,
                  a Delaware corporation
                  CARAUSTAR MILL GROUP, INC., an Ohio corporation f/k/a Caraustar
                  Paperboard Corporation (as successor by merger to Austell Box Board
                  Corporation, Buffalo Paperboard Corporation, Carolina Component
                  Concepts, Inc., Carolina Converting Incorporated, Carolina Paper Board
                  Corporation, Carotell Paper Board Corporation, Chattanooga Paperboard
                  Corporation, Cincinnati Paperboard Corporation, Columbus Recycling,
                  Inc., New Austell Box Board Company, Paper Recycling, Inc., Reading
                  Paperboard Corporation, Richmond Paperboard Corporation and
                  Sweetwater Paper Board Company, Inc.)
                  CARAUSTAR RECOVERED FIBER GROUP, INC.,
                  a Delaware corporation
                  CHICAGO PAPERBOARD CORPORATION,
                  an Illinois corporation
                  FEDERAL TRANSPORT, INC.,
                  an Ohio corporation
                  GYPSUM MGC, INC.,
                  a Delaware corporation
                  HALIFAX PAPER BOARD COMPANY, INC.,
                  a North Carolina corporation
                  MCQUEENEY GYPSUM COMPANY,
                  a Delaware corporation
                  MCQUEENY GYPSUM COMPANY, LLC,
                  a Delaware limited liability company
                  PBL INC.,
                  a Delaware corporation
                  SPRAGUE PAPERBOARD, INC.,
                  a Connecticut corporation
</TABLE>

                  By: /s/ H. Lee Thrash, III
                     ---------------------------------------------------
                  Name: H. Lee Thrash, III
                  Title: Vice President Planning & Development and
                         Chief Financial Officer
                         of each of the foregoing Guarantors

                                          SIGNATURE PAGE TO FOURTH AMENDMENT TO
                                    CARAUSTAR INDUSTRIES, INC. CREDIT AGREEMENT
                                                                      JUNE 2002


<PAGE>

                      CARAUSTAR, G.P.,
                      a South Carolina general partnership

                      By: CARAUSTAR INDUSTRIES, INC.,
                          a North Carolina corporation, general partner



                          By: /s/ H. Lee Thrash, III
                             -------------------------------------------
                          Name: H. Lee Thrash, III
                          Title: Vice President Planning & Development and
                                 Chief Financial Officer

                      By: CARAUSTAR INDUSTRIAL AND CONSUMER PRODUCTS
                          GROUP, INC., a Delaware corporation, general partner



                          By: /s/ H. Lee Thrash, III
                             -------------------------------------------
                          Name: H. Lee Thrash, III
                          Title: Vice President Planning & Development and
                                 Chief Financial Officer

                                          SIGNATURE PAGE TO FOURTH AMENDMENT TO
                                    CARAUSTAR INDUSTRIES, INC. CREDIT AGREEMENT
                                                                      JUNE 2002


<PAGE>


ADMINISTRATIVE
AGENT:                           BANK OF AMERICA, N.A., in its capacity
                                 as Administrative Agent



                                 By: /s/ Thomas R. Sullivan
                                    ------------------------------------------
                                 Name: Thomas R. Sullivan
                                      ----------------------------------------
                                 Title: Vice President
                                       ---------------------------------------

                                          SIGNATURE PAGE TO FOURTH AMENDMENT TO
                                    CARAUSTAR INDUSTRIES, INC. CREDIT AGREEMENT
                                                                       MAY 2002


<PAGE>

LENDERS:                         BANK OF AMERICA, N.A.,
                                 as an Issuing Lender and a Lender



                                  By: /s/ Thomas R. Sullivan
                                     -----------------------------------------
                                  Name: Thomas R. Sullivan
                                       ---------------------------------------
                                  Title: Vice President
                                        --------------------------------------

                                          SIGNATURE PAGE TO FOURTH AMENDMENT TO
                                    CARAUSTAR INDUSTRIES, INC. CREDIT AGREEMENT
                                                                       MAY 2002



<PAGE>

                             BANKERS TRUST COMPANY,
                             individually as an Issuing Lender and a Lender



                             By: /s/ M. A. Orlando
                                -----------------------------------------------
                             Name: Marco Orlando
                                  ---------------------------------------------
                             Title: Director
                                   --------------------------------------------

                                          SIGNATURE PAGE TO FOURTH AMENDMENT TO
                                    CARAUSTAR INDUSTRIES, INC. CREDIT AGREEMENT
                                                                       MAY 2002


<PAGE>

                           CREDIT SUISSE FIRST BOSTON



                           By: /s/ Jay Chall
                              -----------------------------------------
                           Name: Jay Chall
                                ---------------------------------------
                           Title: Director
                                 --------------------------------------



                           By: /s/ Jeffrey Bernstein
                              -----------------------------------------
                           Name: Jeffrey Bernstein
                                ---------------------------------------
                           Title: Vice President
                                 --------------------------------------

                                          SIGNATURE PAGE TO FOURTH AMENDMENT TO
                                    CARAUSTAR INDUSTRIES, INC. CREDIT AGREEMENT
                                                                       MAY 2002


<PAGE>

                             CREDIT LYONNAIS NEW YORK BRANCH



                             By: /s/ Scott R. Chappelka
                                ---------------------------------------
                             Name: Scott R. Chappelka
                                  -------------------------------------
                             Title: Vice President
                                   ------------------------------------

                                          SIGNATURE PAGE TO FOURTH AMENDMENT TO
                                    CARAUSTAR INDUSTRIES, INC. CREDIT AGREEMENT
                                                                       MAY 2002


<PAGE>

                             THE BANK OF NEW YORK



                             By: /s/ Thomas J. McCormack
                                --------------------------------------
                             Name: Thomas J. McCormack
                                  ------------------------------------
                             Title: Assistant Vice President
                                   -----------------------------------

                                          SIGNATURE PAGE TO FOURTH AMENDMENT TO
                                    CARAUSTAR INDUSTRIES, INC. CREDIT AGREEMENT
                                                                       MAY 2002
<PAGE>
                                   EXHIBIT G

                    FORM OF OFFICER'S COMPLIANCE CERTIFICATE

         The undersigned, on behalf of Caraustar Industries, Inc., a North
Carolina corporation (the "Borrower"), hereby certifies to the Administrative
Agent and the Lenders, each as defined in the Credit Agreement referred to
below, as follows:

         1.       This Certificate is delivered to you pursuant to Section 6.2
of the Credit Agreement dated as of March 29, 2001 (as amended, restated or
otherwise modified, the "Credit Agreement") by and among the Borrower, the
Subsidiaries of the Borrower identified therein, the Lenders from time to time
party thereto (the "Lenders") and Bank of America, N.A., as Administrative
Agent. Capitalized terms used herein and not defined herein shall have the
meanings assigned thereto in the Credit Agreement.

         2.       I have reviewed the financial statements of the Borrower and
its Subsidiaries dated as of ____________ and for the ______________ period[s]
then ended and such statements present fairly in all material respects the
financial condition of the Borrower and its Subsidiaries as of their respective
dates and the results of the operations of the Borrower and its Subsidiaries
for the respective period[s] then ended, subject to normal year end adjustments
for interim statements.

         3.       I have reviewed the terms of the Credit Agreement and the
related Loan Documents and have made, or caused to be made under my
supervision, a review in reasonable detail of the transactions and the
condition of the Borrower and its Subsidiaries during the accounting period
covered by the financial statements referred to in Paragraph 2 above. Such
review has not disclosed the existence during or at the end of such accounting
period of any condition or event that constitutes a Default or an Event of
Default, nor do I have any knowledge of the existence of any such condition or
event as at the date of this Certificate [except, if such condition or event
existed or exists, describe the nature and period of existence thereof and what
action the Borrower and its Subsidiaries have taken, are taking and propose to
take with respect thereto].

         4.       The Applicable Percentage Pricing Level and information as to
the financial ratios necessary for determining such figure are set forth on the
attached Schedule 1.

         5.       The Borrower and its Subsidiaries are in compliance with the
financial covenants contained in Section 9.1 of the Credit Agreement as shown
on such Schedule 1.

         6.       Based on the financial information set forth on the attached
Schedule 2, the Collateral Effective Date [has] [has not] occurred. The
information on Schedule 2 shall include a calculation, as of the end of the
accounting period covered by the financial statements referred to in Paragraph
2 above, of (i) the quotient of (a) the aggregate principal amount as of such
date of (x) all outstanding Loans and (y) all outstanding L/C Obligations
divided by (b) the Aggregate Revolving Credit Commitment as of such date, and
(ii) the ratio of (a) Total Debt as of such date to (b) EBITDA for the period
of four (4) consecutive fiscal quarters ending as of such date.


<PAGE>

 WITNESS the following signature as of the ____ day of _______________, 200_.

                                  CARAUSTAR INDUSTRIES, INC.,
                                  a North Carolina corporation



                                  By:
                                     -------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                        ----------------------------------------


<PAGE>

                                   Schedule 1

           Financial Covenant and Applicable Percentage Calculations

                                  See attached


<PAGE>

                                   Schedule 2

                   Determination of Collateral Effective Date

                                  See attached


<PAGE>

                                   EXHIBIT I

                           FORM OF SECURITY AGREEMENT

                                [to be attached]
<PAGE>
                                                                   EXHIBIT 10.7


                               SECURITY AGREEMENT


         THIS SECURITY AGREEMENT (this "Security Agreement") is entered into as
of June --, 2002 among (i) CARAUSTAR INDUSTRIES, INC. (the "Borrower"), (ii) the
Subsidiaries of the Borrower listed on the signature pages hereto or that
become parties hereto after the date hereof (individually a "Guarantor" and
collectively the "Guarantors"; together with the Borrower, individually an
"Obligor" and collectively the "Obligors") and BANK OF AMERICA, N.A., in its
capacity as collateral agent (in such, the "Collateral Agent") for the Secured
Parties (as defined below).

                                    RECITALS

                  WHEREAS, pursuant to that certain Credit Agreement, dated as
of March 29, 2001 (as amended, modified, extended, renewed or replaced from
time to time, the "Credit Agreement"), among the Borrower, the Guarantors, the
financial institutions from time to time party thereto (the "Lenders") and Bank
of America, N.A. ("Bank of America"), as Administrative Agent, the Lenders have
agreed to make Loans and issue Letters of Credit upon the terms and subject to
the conditions set forth therein;

                  WHEREAS, the Borrower has executed that certain Guaranty
Agreement dated as of July 30, 1999 (as amended, modified, extended, renewed or
replaced from time to time, the "Premier Boxboard Guaranty") in favor of
SunTrust Bank (formerly known as SunTrust Bank, Atlanta; "SunTrust"), pursuant
to which the Borrower has guaranteed 50% of the obligations of Premier Boxboard
Limited LLC ("Premier Boxboard") under a certain revolving credit facility in
favor of Premier Boxboard and evidenced by the Credit Agreement referred to and
defined in the Premier Boxboard Guaranty (the "Premier Boxboard Credit
Agreement");

                  WHEREAS, the Borrower has executed that certain Second
Amended and Restated Parent Guaranty dated as of August 1, 1999 (as amended,
modified, extended, renewed or replaced from time to time, the "Standard Gypsum
Guaranty") in favor of Toronto Dominion (Texas), Inc., ("Toronto Dominion"),
pursuant to which the Borrower has guaranteed 50% of the obligations of
Standard Gypsum, L.L.C. ("Standard Gypsum") under a certain credit facility in
favor of Standard Gypsum and evidenced by the Loan Agreement referred to and
defined in the Standard Gypsum Guaranty (the "Standard Gypsum Loan Agreement");

                  WHEREAS, the Obligors are required to execute this Security
Agreement in consideration of, and as a condition precedent to the
effectiveness of, that certain Amendment No. 4 to Credit Agreement dated as of
June 3, 2002 among the Obligors, the Lenders party thereto and Bank of America,
as Administrative Agent;

                  WHEREAS, pursuant to the Premier Boxboard Guaranty, the
Obligors must permit SunTrust to share ratably in any liens granted for the
benefit of the Lenders;


                                       1
<PAGE>


                  WHEREAS, in connection with the Standard Gypsum Guaranty, the
Obligors have agreed to permit Toronto Dominion to share ratably in any liens
granted for the benefit of the Lenders and in any proceeds realized from the
sale or other disposition of any Collateral securing such liens; and

                  WHEREAS, Bank of America is acting as Collateral Agent for
the Secured Parties (as defined below) pursuant to the terms of this Security
Agreement.

                  NOW, THEREFORE, in consideration of these premises and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:

                  1.       Definitions.

                  (a)      Capitalized terms used and not otherwise defined
         herein shall have the meanings ascribed to such terms in the Credit
         Agreement, and the following terms which are defined in the Uniform
         Commercial Code in effect in the State of North Carolina on the date
         hereof are used herein as so defined: Accounts, As-Extracted
         Collateral, Chattel Paper, Consumer Goods, Farm Products, Instrument,
         Inventory, Manufactured Homes, Tangible Chattel Paper and Proceeds.
         For purposes of this Security Agreement, the term "Lender" shall
         include any Affiliate of any Lender which has entered into a Hedging
         Agreement with any Obligor.

                  (b)      In addition, the following terms shall have the
         following meanings:

                  "Documents": the collective reference to the Credit
         Agreement, the Loan Documents, the Premier Boxboard Guaranty, the
         Standard Gypsum Guaranty and any Hedging Agreements between an Obligor
         and a Lender or an Affiliate of a Lender.

                  "Fully Satisfied": with respect to the Secured Obligations as
         of any date, that, as of such date, (a) all principal of and interest
         accrued to such date which constitute Secured Obligations shall have
         been indefeasibly paid in full in cash, (b) all fees, expenses and
         other amounts then due and payable which constitute Secured
         Obligations shall have been indefeasibly paid in cash, (c) all
         outstanding letters of credit shall have been (i) terminated and
         surrendered, (ii) fully cash collateralized on terms reasonably
         satisfactory to (x) with respect to Letters of Credit outstanding
         under the Credit Agreement, the Issuing Lender and the Required
         Lenders and (y) with respect to any other letter of credit, the issuer
         thereof, or (iii) secured by one or more letters of credit on terms
         and conditions, and with one or more financial institutions,
         reasonably satisfactory to (x) with respect to Letters of Credit
         outstanding under the Credit Agreement, the Issuing Lender and the
         Required Lenders and (y) with respect to any other letter of credit,
         the issuer thereof, and (d) the relevant commitments shall have
         expired or been terminated in full.


                                       2
<PAGE>


                  "Required Secured Parties": at any date, any combination of
         Secured Parties collectively holding more than sixty-six and
         two-thirds percent (66-2/3%) of the aggregate unpaid principal amount
         of the Secured Obligations at such time.

                  "Secured Obligations": with respect to the Collateral, all of
         the following, whether now existing or hereafter incurred: (i) the
         prompt performance and observance by each Obligor of all of its
         Obligations to the Lenders under the Loan Documents, including,
         without limitation, (a) all obligations consisting of principal of and
         interest on (including interest accruing after the filing of any
         bankruptcy or similar petition) the Loans, all fees, indemnities and
         other amounts arising under any of the Loan Documents and all
         reimbursement obligations in respect of Letters of Credit, (b) all
         guaranty obligations arising out of Article X of the Credit Agreement
         and (c) all obligations arising under any Hedging Agreements between
         any Obligor and any Lender, or any Affiliate of a Lender, (ii) the
         prompt performance and observance by the Borrower of all of its
         guaranty obligations to SunTrust under the Premier Boxboard Guaranty,
         (iii) the prompt performance and observance by the Borrower of all of
         its guaranty obligations to Toronto Dominion under the Standard Gypsum
         Guaranty and (iv) all other indebtedness, liabilities and obligations
         of any kind or nature, now existing or hereafter arising, owing from
         any Obligor to any Secured Party or the Collateral Agent under any of
         the Documents, howsoever evidenced, created, incurred or acquired,
         whether primary, secondary, direct, contingent, or joint and several,
         and all obligations and liabilities incurred in connection with
         collecting and enforcing the Secured Obligations.

                  "Secured Parties": the collective reference to (i) the
         Lenders and any Affiliate of a Lender that has entered into a Hedging
         Agreement, (ii) SunTrust and (iii) Toronto Dominion, as administrative
         agent, and "Secured Party" means any one of them, as applicable.

                  2.       Grant of Security Interest in the Collateral.
Subject to Section 25 hereof, to secure the prompt payment and performance in
full when due, whether by lapse of time, acceleration or otherwise, of the
Secured Obligations, each Obligor hereby grants to the Collateral Agent, for
the ratable benefit of the Secured Parties, a continuing security interest in,
and a right to set off against, any and all right, title and interest of such
Obligor in and to the following, whether now owned or existing or owned,
acquired, or arising hereafter (collectively, the "Collateral"):

                  (a)      all Accounts;

                  (b)      all Inventory;

                  (c)      all books, records, ledger cards, files,
                           correspondence, computer programs, tapes, disks, and
                           related data processing software (owned by such
                           Obligor or to the extent of its interest therein)
                           that at any time evidence or contain information
                           relating to any Collateral or are otherwise
                           necessary or helpful in the collection thereof or
                           realization thereupon; and


                                       3
<PAGE>


                  (d)      all Proceeds of any and all of the foregoing and, to
                           the extent not included in the foregoing, all
                           payments under any insurance (whether or not the
                           Collateral Agent is the loss payee therefore),
                           indemnity, warranty or guaranty with respect to any
                           of the foregoing Collateral.

                  The Obligors and the Collateral Agent, on behalf of the
Secured Parties, hereby acknowledge and agree that the security interest
created hereby in the Collateral constitutes continuing collateral security for
all of the Secured Obligations, whether now existing or hereafter arising.

                  3.       Provisions Relating, to Accounts and Inventory.

                  (a)      Anything herein to the contrary notwithstanding,
         each of the Obligors shall remain liable under each of the Accounts to
         observe and perform all the conditions and obligations to be observed
         and performed by it thereunder, all in accordance with the terms of
         any agreement giving rise to each such Account. Neither the Collateral
         Agent nor any Secured Party shall have any obligation or liability
         under any Account (or any agreement giving rise thereto) by reason of
         or arising out of this Security Agreement or the receipt by the
         Collateral Agent or any Secured Party of any payment relating to such
         Account pursuant hereto, nor shall the Collateral Agent or any Secured
         Party be obligated in any manner to perform any of the obligations of
         an Obligor under or pursuant to any Account (or any agreement giving
         rise thereto), to make any payment, to make any inquiry as to the
         nature or the sufficiency of any payment received by it or as to the
         sufficiency of any performance by any party under any Account (or any
         agreement giving rise thereto), to present or file any claim, to take
         any action to enforce any performance or to collect the payment of any
         amounts which may have been assigned to it or to which it may be
         entitled at any time or times.

                  (b)      At any time after the occurrence and during the
         continuance of an Event of Default, (i) the Collateral Agent shall
         have the right, but not the obligation, to make test verifications of
         the Accounts in any manner and through any medium that it reasonably
         considers advisable, and the Obligors, upon the written request of the
         Collateral Agent, shall furnish all such assistance and information as
         the Collateral Agent may reasonably require in connection with such
         test verifications, (ii) upon the Collateral Agent's request and at
         the expense of the Obligors, the Obligors shall cause independent
         public accountants or others satisfactory to the Collateral Agent to
         furnish to the Collateral Agent reports showing reconciliations, aging
         and test verifications of, and trial balances for, the Accounts and
         (iii) the Collateral Agent in its own name or in the name of others
         may communicate with account debtors on the Accounts to verify with
         them to the Collateral Agent's satisfaction the existence, amount and
         terms of any Accounts.

                  (c)      At any time after the occurrence and during the
         continuance of an Event of Default, the Collateral Agent shall have
         the right, but not the obligation, to inspect and evaluate the
         Inventory in any manner and through any medium that it reasonably
         considers advisable, and the Obligors, upon the written request of the
         Collateral Agent, shall furnish all such assistance and information as
         the Collateral Agent may reasonably require in


                                       4
<PAGE>


         connection with such inspections and evaluations. Each Obligor will
         furnish to the Collateral Agent from time to time statements and
         schedules further identifying and describing the inventory and other
         Collateral of such Grantor and such other reports in connection with
         such Collateral as the Collateral Agent may reasonably request, all in
         reasonable detail.

                  4.       Representations and Warranties. Each Obligor hereby
represents and warrants to the Collateral Agent, for the benefit of the Secured
Parties, that until such time as the Secured Obligations are Fully Satisfied:

                  (a)      Legal Name and Location of Obligor. Each Obligor's
         exact legal name is as shown in this Security Agreement and its state
         of formation is (and for the prior four months has been) as set forth
         on Schedule 4(a) hereto. The principal place of business and chief
         executive office of each Obligor is as set forth on Schedule 4(a)
         hereto. No Obligor has in the past four months changed its name, been
         party to a merger, consolidation or other change in structure or used
         any tradename except as set forth in Schedule 4(a) attached hereto.

                  (b)      Location of Collateral. The location of all
         Collateral owned by each Obligor is as shown on Schedule 4(b) hereto.

                  (c)      Ownership. Each Obligor is the legal and beneficial
         owner of the Collateral which it purports to own, and each Obligor has
         the right to pledge, sell, assign or transfer the Collateral.

                  (d)      Security Interest/Priority. Upon the Collateral
         Effective Date, this Security Agreement shall create a valid security
         interest in favor of the Collateral Agent, for the ratable benefit of
         the Secured Parties, in the Collateral of such Obligor and, when
         properly perfected by filing, shall constitute a valid perfected
         security interest in such Collateral, to the extent such security
         interest can be perfected by filing under the UCC, free and clear of
         all Liens except for Liens permitted under Section 9.2 of the Credit
         Agreement.

                  (e)      Types of Collateral. None of the Collateral consists
         of, or is the Proceeds of, (i) As-Extracted Collateral, (ii) Consumer
         Goods, (iii) Farm Products or (iv) Manufactured Homes.

                  (f)      Accounts. (i) Each Account of the Obligors and the
         papers and documents relating thereto are genuine and in all material
         respects what they purport to be, (ii) each Account arises out of (A)
         a bona fide sale of goods sold and delivered by such Obligor (or is in
         the process of being delivered) or (B) services theretofore actually
         rendered by such Obligor to, the account debtor named therein, (iii)
         no Account of an Obligor in excess of $50,000 is evidenced by any
         Instrument or Chattel Paper unless such Instrument or Chattel Paper
         has been theretofore endorsed over and delivered to, or submitted to
         the control of, the Collateral Agent and (iv) no surety bond was
         required or given in connection with any Account of an Obligor or the
         contracts or purchase orders out of which they arose.


                                       5
<PAGE>


                  (g)      Inventory. No Inventory is held by an Obligor
         pursuant to consignment, sale or return, sale on approval or similar
         arrangement except for raw materials supplied to an Obligor on a sale
         or return, consignment or similar arrangement.

                  (h)      Authorization. It has taken all necessary action to
         authorize the execution, delivery and performance of this Security
         Agreement.

                  (i)      Execution and Delivery. This Security Agreement has
         been duly executed and delivered by such Person and constitutes such
         Person's legal, valid and binding obligations, enforceable in
         accordance with its terms, except as such enforceability may be
         subject to (i) bankruptcy, insolvency, reorganization, fraudulent
         conveyance or transfer, moratorium or similar laws affecting
         creditors' rights generally and (ii) general principles of equity
         (regardless of whether such enforceability is considered in a
         proceeding at law or in equity).

                  (j)      No Covenants: No Conflict. No consent, approval,
         authorization or order of, or filing, registration or qualification
         with, any court or governmental authority or third party is required
         in connection with the execution, delivery or performance by such
         Person of this Security Agreement. The execution, delivery and
         performance by such Person of this Security Agreement do not and will
         not conflict with, result in a breach of or constitute a default under
         the articles of incorporation, bylaws or other organizational
         documents of any Obligor or any of its Subsidiaries or any indenture
         or other material agreement or instrument to which such Person is a
         party or by which any of its properties may be bound or any
         Governmental Approval relating to such Person except as could not
         reasonably be expected to have a Material Adverse Effect.

                  5.       Covenants. Each Obligor covenants that until such
time as the Secured Obligations are Fully Satisfied such Obligor shall:

                  (a)      Other Liens. Defend the Collateral against the
         claims and demands of all other parties claiming an interest therein,
         and keep the Collateral free from all Liens, except in each case for
         Liens permitted under Section 9.2 of the Credit Agreement. Neither the
         Collateral Agent, nor any Secured Party authorizes any Obligor to, and
         no Obligor shall, sell, exchange, transfer, assign, lease or otherwise
         dispose of the Collateral or any interest therein, except as permitted
         under the Credit Agreement.

                  (b)      Preservation of Collateral. To the extent consistent
         with ordinary prudent business practices, keep the Collateral in good
         repair, working order and condition and not use the Collateral in
         violation of the provisions of this Security Agreement or any other
         agreement relating to the Collateral or any policy insuring the
         Collateral or any applicable statute, law, bylaw, rule, regulation or
         ordinance; provided, however, an Obligor may discontinue the operation
         or maintenance of a property or piece of equipment if the
         discontinuance (i) is desirable to the conduct of such Obligor's
         business and (ii) does not materially adversely affect the business of
         the Obligors on a consolidated basis.


                                       6
<PAGE>


                  (c)      Instruments/Tangible Chattel Paper/Documents. If, on
         or after the Collateral Effective Date, any amount payable in excess
         of $50,000 under or in connection with any of the Collateral in excess
         of $50,000 shall be or become evidenced by any Instrument, or Tangible
         Chattel Paper, or if any property constituting Collateral shall be
         stored or shipped subject to a Document, such Instrument, Tangible
         Chattel Paper or Document is either in the possession of such Obligor
         at all times or, if requested by the Collateral Agent, to perfect its
         security interest in such Collateral, is delivered to the Collateral
         Agent duly endorsed in a manner reasonably satisfactory to the
         Collateral Agent. Such Obligor shall ensure that any Collateral
         consisting, on or after the Collateral Effective Date, of Tangible
         Chattel Paper is marked with a legend reasonably acceptable to the
         Collateral Agent indicating the Collateral Agent's security interest
         in such Tangible Chattel Paper.

                  (d)      Change in Corporate Structure or Location. Not,
         without providing prior written notice to the Collateral Agent, and
         then only to the extent permitted under the Credit Agreement, (i)
         alter its corporate existence or, in one transaction or in a series of
         transactions, merge into or consolidate with any other entity, or sell
         all or substantially all of its assets, (ii) change its state of
         incorporation or formation or (iii) change its registered corporate
         name; provided that within 30 days of any such change, the Obligor
         shall provide the Collateral Agent with all such information as the
         Collateral Agent may reasonably request to enable the Collateral Agent
         to file such amendments to any previously filed financing statements
         as the Collateral Agent may reasonably require.

                  (e)      Inspection. Upon reasonable notice, and during
         reasonable hours, at all times allow the Collateral Agent or its
         representatives to visit and inspect the Collateral as set forth in
         Section 8.10 of the Credit Agreement.

                  (f)      Filing of Financing Statements; Filing of Financing
         Statements, Notices, etc. Each Obligor hereby authorizes the
         Collateral Agent to prepare and file such financing statements
         (including renewal statements) or amendments thereof or supplements
         thereto or other instruments as the Collateral Agent may from time to
         time reasonably deem necessary or appropriate in order to perfect and
         maintain the security interests granted hereunder (and effective as of
         the Collateral Effective Date) in accordance with the UCC. Each
         Obligor shall also execute and deliver to the Collateral Agent such
         agreements, assignments or instruments (including affidavits, notices,
         reaffirmations and amendments and restatements of existing documents,
         as the Collateral Agent may reasonably request) and do all such other
         things as the Collateral Agent may reasonably deem necessary or
         appropriate to assure to the Collateral Agent its security interests
         hereunder (which are effective as of the Collateral Effective Date).
         To that end, each Obligor agrees that the Collateral Agent may file
         one or more financing statements disclosing the Collateral Agent's
         security interests (which are effective as of the Collateral Effective
         Date) in any or all of the Collateral of such Obligor without, to the
         extent permitted and/or required by law, such Obligor's signature
         thereon, and further each Obligor hereby irrevocably makes,
         constitutes and appoints the Collateral Agent, its nominee or any
         other person whom the Collateral Agent may designate, as such
         Obligor's attorney in fact with full power and for the limited purpose
         to sign in the name


                                       7
<PAGE>


         of such Obligor any such financing statements, amendments and
         supplements to financing statements, renewal financing statements,
         notices or similar documents which in the Collateral Agent's
         reasonable discretion would be necessary, appropriate or convenient in
         order to perfect and maintain perfection of the security interests
         granted hereunder, such power, being coupled with an interest, being
         and remaining irrevocable until the Secured Obligations are Fully
         Satisfied. Each Obligor hereby agrees that a carbon, photographic or
         other reproduction of this Security Agreement or any such financing
         statement is sufficient for filing as a financing statement by the
         Collateral Agent without notice thereof to such Obligor wherever the
         Collateral Agent may in its sole discretion desire to file the same.
         In the event for any reason the law of any jurisdiction other than
         North Carolina becomes or is applicable to the Collateral of any
         Obligor or any part thereof, or to any of the Secured Obligations,
         such Obligor agrees to execute and deliver all such instruments and to
         do all such other things as the Collateral Agent in its sole
         discretion reasonably deems necessary or appropriate to preserve,
         protect and enforce the security interests of the Collateral Agent
         under the law of such other jurisdiction (and, if an Obligor shall
         fail to do so promptly upon the request of the Collateral Agent, then
         the Collateral Agent may execute any and all such requested documents
         on behalf of such Obligor pursuant to the power of attorney granted
         hereinabove). Each Obligor agrees to mark, upon the Collateral
         Effective Date and as necessary thereafter, its books and records to
         reflect the security interest of the Collateral Agent in the
         Collateral.

                  (g)      Treatment of Accounts. Not grant or extend the time
         for payment of any Account, or compromise or settle any Account for
         less than the full amount thereof, or release any person or property,
         in whole or in part, from payment thereof, or allow any credit or
         discount thereon, other than as normal and customary in the ordinary
         course of an Obligor's business or to the extent such action would not
         reasonably be expected to have a Material Adverse Effect.

                  (h)      Collateral Held by Warehouseman, Bailee, etc. If any
         Collateral having a value in excess of $1,000,000 is at any time on or
         after the Collateral Effective Date in the possession or control of a
         warehouseman, bailee or any agent or processor of the Obligors, (i)
         notify in writing the Collateral Agent of such possession, (ii) notify
         in writing such Person of the Collateral Agent's security interest for
         the ratable benefit of the Secured Parties in such Collateral, (iii)
         instruct in writing such Person to hold all such Collateral for the
         Collateral Agent's account and subject to the Collateral Agent's
         instructions and (iv) use its commercially reasonable efforts to
         obtain an acknowledgment from such Person that is holding such
         Collateral for the benefit of the Collateral Agent.

                  (i)      Insurance. Insure, repair and replace the Collateral
         of such Obligor as set forth in the Credit Agreement. All insurance
         proceeds shall be subject to the security interest of the Collateral
         Agent hereunder.

                  6.       Advances by Secured Parties. On failure of any
Obligor to perform any of the covenants and agreements contained herein, the
Collateral Agent may, on or after the Collateral Effective Date and at its sole
option and in its sole discretion, perform the same and in so doing


                                       8
<PAGE>


may expend such sums as the Collateral Agent may reasonably deem advisable in
the performance thereof, including, without limitation, the payment of any
insurance premiums, the payment of any taxes, a payment to obtain a release of
a Lien or potential Lien, expenditures made in defending against any adverse
claim and all other expenditures which the Collateral Agent or the Secured
Parties may make for the protection of the security hereof or may be compelled
to make by operation of law. The Collateral Agent or, if applicable, the
relevant Secured Party shall notify the respective Obligor of any such
expenditure. All such sums and amounts so expended (including, without
limitation, reasonable attorneys' fees and court costs in connection therewith)
shall be repayable by the Obligors on a joint and several basis promptly upon
timely notice thereof and demand therefor, shall constitute additional Secured
Obligations and shall bear interest from the date said amounts are expended at
the default rate specified in Section 4.1 of the Credit Agreement for Revolving
Loans that are Base Rate Loans. No such performance of any covenant or
agreement by the Collateral Agent or the Secured Parties on behalf of any
Obligor, and no such advance or expenditure therefor, shall relieve the
Obligors of any default under the terms of this Security Agreement, or the
Documents. The Secured Parties may make any payment hereby authorized in
accordance with any bill, statement or estimate procured from the appropriate
public office or holder of the claim to be discharged without inquiry into the
accuracy of such bill, statement or estimate or into the validity of any tax
assessment, sale, forfeiture, tax lien, title or claim except to the extent
such payment is being contested in good faith by an Obligor in appropriate
proceedings and against which adequate reserves are being maintained in
accordance with GAAP.

                  7.       Events of Default.

                  Any of (a) the occurrence of an event which under the Credit
Agreement would constitute an Event of Default thereunder, (b) the occurrence
of an event which gives SunTrust the right to demand payment under the Premier
Boxboard Guaranty or (c) the occurrence of an event which gives Toronto
Dominion the right to demand payment under the Standard Gypsum Guaranty shall
be an Event of Default hereunder (an "Event of Default").

                  8.       Remedies.

                  (a)      General Remedies. Upon the occurrence and during the
         continuance of an Event of Default occurring simultaneously with or
         subsequent to the Collateral Effective Date, the Secured Parties shall
         have, in addition to the rights and remedies provided herein, in the
         Documents, or by law (including, but not limited to, levy of
         attachment, garnishment and the rights and remedies set forth in the
         Uniform Commercial Code of the jurisdiction applicable to the affected
         Collateral), the rights and remedies of a secured party under the UCC
         (regardless of whether the UCC is the law of the jurisdiction where
         the rights and remedies are asserted and regardless of whether the UCC
         applies to the affected Collateral), and further, the Collateral Agent
         may, with or without judicial process or the aid and assistance of
         others, (i) enter on any premises on which any of the Collateral may
         be located and, without resistance or interference by the Obligors,
         take possession of the Collateral, (ii) dispose of any Collateral on
         any such premises, (iii) to the extent such Collateral may be moved,
         require the Obligors to assemble and make available to the Collateral
         Agent at the expense of the Obligors any Collateral at any place and
         time designated by the Collateral Agent which is reasonably convenient
         to both parties, (iv) remove any Collateral from any



                                       9
<PAGE>


         such premises for the purpose of effecting sale or other disposition
         thereof, and/or (v) without demand and without advertisement, notice,
         hearing or process of law, all of which each of the Obligors hereby
         waives to the fullest extent permitted by law, at any place and time
         or times, sell and deliver any or all Collateral held by or for it at
         public or private sale, by one or more contracts, in one or more
         parcels, for cash, upon credit or otherwise, at such prices and upon
         such terms as the Collateral Agent deems advisable, in its sole
         discretion (subject to any and all mandatory legal requirements).
         Neither the Collateral Agent's compliance with any applicable state or
         federal law in the conduct of such sale, nor its disclaimer of any
         warranties relating to the Collateral, shall be considered to
         adversely affect the commercial reasonableness of such sale. In
         addition to all other sums due the Collateral Agent and the Secured
         Parties with respect to the Secured Obligations, the Obligors shall
         pay the Collateral Agent and each of the Secured Parties all
         reasonable documented costs and expenses incurred by the Collateral
         Agent or any such Secured Party, including, but not limited to,
         reasonable attorneys' fees and court costs, in obtaining or
         liquidating the Collateral, in enforcing payment of the Secured
         Obligations, or in the prosecution or defense of any action or
         proceeding by or against the Collateral Agent or the Secured Parties
         or the Obligors concerning any matter arising out of or connected with
         this Security Agreement, any Collateral or the Secured Obligations,
         including, without limitation, any of the foregoing arising in,
         arising under or related to a case under the Bankruptcy Code. To the
         extent the rights of notice cannot be legally waived hereunder, each
         Obligor agrees that any requirement of reasonable notice shall be met
         if such notice is personally served on or mailed, postage prepaid, to
         the Borrower in accordance with the notice provisions of Section 13.1
         of the Credit Agreement at least 10 days before the time of sale or
         other event giving rise to the requirement of such notice. The
         Collateral Agent and the Secured Parties shall not be obligated to
         make any sale or other disposition of the Collateral regardless of
         notice having been given. To the extent permitted by law, any Secured
         Party may be a purchaser at any such sale. To the extent permitted by
         applicable law, each of the Obligors hereby waives all of its rights
         of redemption with respect to any such sale. Subject to the provisions
         of applicable law, the Collateral Agent and the Secured Parties may
         postpone or cause the postponement of the sale of all or any portion
         of the Collateral by announcement at the time and place of such sale,
         and such sale may, without further notice, to the extent permitted by
         law, be made at the time and place to which the sale was postponed, or
         the Collateral Agent and the Secured Parties may further postpone such
         sale by announcement made at such time and place.

                  (b)      Remedies relating to Accounts. Upon the occurrence
         and during the continuance of an Event of Default occurring
         simultaneously with or subsequent to the Collateral Effective Date,
         whether or not the Collateral Agent has exercised any or all of its
         rights and remedies hereunder, each Obligor will promptly upon the
         written request of the Collateral Agent instruct all account debtors
         to remit all payments in respect of Accounts to a mailing location
         selected by the Collateral Agent. In addition, the Collateral Agent or
         its designee may notify any Obligor's customers and account debtors
         that the Accounts of such Obligor have been assigned to the Collateral
         Agent or of the Collateral Agent's security interest therein, and may
         (either in its own name or in the name of an Obligor or both) demand,
         collect (including without limitation by way of a lockbox
         arrangement), receive, take receipt for, sell, sue for, compound,
         settle, compromise and give acquaintance for any


                                      10
<PAGE>


         and all amounts due or to become due on any Account, and, in the
         Collateral Agent's discretion, file any claim or take any other action
         or proceeding to protect and realize upon the ratable security
         interest of the Secured Parties in the Accounts. Each Obligor
         acknowledges and agrees that the Proceeds of its Accounts remitted to
         or on behalf of the Collateral Agent in accordance with the provisions
         hereof shall be solely for the Collateral Agent's own convenience and
         that such Obligor shall not have any right, title or interest in such
         Accounts or in any such other amounts except as expressly provided
         herein. The Collateral Agent and the Secured Parties shall have no
         liability or responsibility to any Obligor for acceptance of a check,
         draft or other order for payment of money bearing the legend "payment
         in full" or words of similar import or any other restrictive legend or
         endorsement or be responsible for determining the correctness of any
         remittance. Each Obligor hereby agrees to indemnify the Collateral
         Agent and the Secured Parties from and against all liabilities,
         damages, losses, actions, claims, judgments, costs, expenses, charges
         and reasonable attorneys' fees suffered or incurred by the Collateral
         Agent or the Secured Parties (each, an "Indemnified Party") because of
         the maintenance of the foregoing arrangements except as relating to or
         arising out of the gross negligence or willful misconduct of an
         Indemnified Party or its officers, employees or agents. In the case of
         any investigation, litigation or other proceeding, the foregoing
         indemnity shall be effective whether or not such investigation,
         litigation or proceeding is brought by an Obligor, its directors,
         shareholders or creditors or an Indemnified Party or any other Person
         or any other Indemnified Party is otherwise a party thereto.

                  (c)      Access. In addition to the rights and remedies
         hereunder, upon the occurrence and during the continuance of an Event
         of Default occurring simultaneously with or subsequent to the
         Collateral Effective Date, the Collateral Agent shall have the right
         to enter and remain upon the various premises of the Obligors without
         cost or charge to the Collateral Agent, and use the same, together
         with materials, supplies, books and records of the Obligors for the
         purpose of collecting and liquidating the Collateral, or for preparing
         for sale and conducting the sale of the Collateral, whether by
         foreclosure, auction or otherwise. In addition, the Collateral Agent
         may remove Collateral, or any part thereof, from such premises and/or
         any records with respect thereto, in order to effectively collect or
         liquidate such Collateral.

                  (d)      Nonexclusive Nature of Remedies. Failure by the
         Collateral Agent or the Secured Parties to exercise any right, remedy
         or option under this Security Agreement, the Documents, or as provided
         by law, or any delay by the Collateral Agent or the Secured Parties in
         exercising the same, shall not operate as a waiver of any such right,
         remedy or option. No waiver hereunder shall be effective unless it is
         in writing, signed by the party against whom such waiver is sought to
         be enforced and then only to the extent specifically stated, which in
         the case of the Collateral Agent or the Secured Parties shall only be
         granted as provided herein. To the extent permitted by law, neither
         the Collateral Agent, the Secured Parties, nor any party acting as
         attorney for the Collateral Agent or the Secured Parties, shall be
         liable hereunder for any acts or omissions or for any error of
         judgment or mistake of fact or law other than their gross negligence
         or willful misconduct hereunder. The rights and remedies of the
         Collateral Agents and the Secured Parties under this Security


                                      11
<PAGE>


         Agreement shall be cumulative and not exclusive of any other right or
         remedy which the Collateral Agent or the Secured Parties may have.

                  (e)      Retention of Collateral. Upon the occurrence and
         during the continuance of an Event of Default occurring simultaneously
         with or subsequent to the Collateral Effective Date, the Collateral
         Agent may, after providing the notices required by Sections 9-620 and
         9-621 of the UCC or otherwise complying with the requirements of
         applicable law of the relevant jurisdiction accept or, to the extent
         the Collateral Agent is in possession of any of the Collateral, retain
         the Collateral in satisfaction of the Secured Obligations. Unless and
         until the Collateral Agent shall have provided such notices, however,
         the Collateral Agent shall not be deemed to have retained any
         Collateral in satisfaction of any Secured Obligations for any reason.

                  (f)      Deficiency. In the event that the proceeds of any
         sale, collection or realization are insufficient to pay all amounts to
         which the Collateral Agent or the Secured Parties are legally
         entitled, the Obligors shall be jointly and severally liable for the
         deficiency, together with interest thereon at the default rate
         specified in Section 4.1 of the Credit Agreement for Revolving Loans
         that are Base Rate Loans, together with the costs of collection and
         the reasonable fees of any attorneys employed by the Collateral Agent
         or Secured Party to collect such deficiency. Any surplus remaining
         after the full payment and satisfaction of the Secured Obligations
         shall be returned to the Obligors or to whomsoever a court of
         competent jurisdiction shall determine to be entitled thereto.

                  9.       Rights of the Collateral Agent.

                  (a)      Power of Attorney. In addition to other powers of
         attorney contained herein, each Obligor hereby designates and appoints
         the Collateral Agent, on behalf of the Secured Parties, and each of
         its designees or agents, as attorney-in-fact of such Obligor,
         irrevocably and with power of substitution, with authority to take any
         or all of the following actions upon the occurrence and during the
         continuance of an Event of Default occurring simultaneously with or
         subsequent to the Collateral Effective Date:

                           (i)      to demand, collect, settle, compromise,
                  adjust, give discharges and releases, all as the Collateral
                  Agent may reasonably determine;

                           (ii)     to commence and prosecute any actions at
                  any court for the purposes of collecting any Collateral and
                  enforcing any other right in respect thereof as the
                  Collateral Agent may deem reasonably appropriate;

                           (iii)    to defend, settle or compromise any action
                  brought and, in connection therewith, give such discharge or
                  release as the Collateral Agent may deem reasonably
                  appropriate;

                           (iv)     receive, open and dispose of mail addressed
                  to an Obligor and endorse checks, notes, drafts, acceptances,
                  money orders, bills of lading,


                                      12
<PAGE>


                  warehouse receipts or other instruments or documents
                  evidencing payment, shipment or storage of the goods giving
                  rise to the Collateral of such Obligor on behalf of and in
                  the name of such Obligor, or securing, or relating to such
                  Collateral;

                           (v)      sell, assign, transfer, make any agreement
                  in respect of, or otherwise deal with or exercise rights in
                  respect of, any Collateral or the goods or services which
                  have given rise thereto, as fully and completely as though
                  the Collateral Agent were the absolute owner thereof for all
                  purposes;

                           (vi)     adjust and settle claims under any
                  insurance policy relating thereto;

                           (vii)    execute and deliver all assignments,
                  conveyances, statements, financing statements, renewal
                  financing statements, security agreements, affidavits,
                  notices and other agreements, instruments and documents that
                  the Collateral Agent may reasonably determine necessary in
                  order to perfect and maintain the security interests and
                  liens granted in this Security Agreement and in order to
                  fully consummate all of the transactions contemplated
                  therein;

                           (viii)   institute any foreclosure proceedings that
                  the Collateral Agent may deem appropriate; and

                           (ix)     do and perform all such other acts and
                  things as the Collateral Agent may reasonably deem to be
                  necessary, proper or convenient in connection with the
                  Collateral.

         This power of attorney is a power coupled with an interest and shall
         be irrevocable until such time as the Secured Obligations are Fully
         Satisfied. The Collateral Agent shall be under no duty to exercise or
         withhold the exercise of any of the rights, powers, privileges and
         options expressly or implicitly granted to the Collateral Agent in
         this Security Agreement, and shall not be liable for any failure to do
         so or any delay in doing so. The Collateral Agent shall not be liable
         for any act or omission or for any error of judgment or any mistake of
         fact or law in its individual capacity or its capacity as
         attorney-in-fact except acts or omissions resulting from its gross
         negligence or willful misconduct. This power of attorney is conferred
         on the Collateral Agent solely to protect, preserve and realize upon
         its security interest in the Collateral.

                  (b)      Performance by the Collateral Agent of Obligations.
         If any Obligor fails to perform any agreement or obligation contained
         herein on a timely basis, the Collateral Agent itself may, on and
         after the Collateral Effective Date, perform, or cause performance of,
         such agreement or obligation, and the expenses of the Collateral Agent
         incurred in connection therewith shall be payable by the Obligors on a
         joint and several basis pursuant to Section 11 hereof.


                                      13
<PAGE>


                  (c)      Assignment by the Collateral Agent. The Collateral
         Agent may from time to time assign its own interest (but not the
         interest of any other Secured Party) in the Secured Obligations and
         any portion thereof and/or the Collateral and any portion thereof, and
         the assignee shall be entitled to all of the rights and remedies of
         the Collateral Agent under this Security Agreement in relation
         thereto.

                  (d)      Release of Collateral. Upon a sale of any of the
         Collateral of an Obligor as permitted by Section 9.5 of the Credit
         Agreement, the Collateral Agent shall (to the extent applicable)
         deliver to the Obligor, upon the Obligor's request and at the
         Obligor's expense, such documentation as is reasonably necessary to
         evidence the release of the Collateral Agent's security interest, if
         any, in such Collateral, including, without limitation, amendments or
         terminations of UCC financing statements, if any, and the release of
         such Obligor from all of its obligations, if any, under this Security
         Agreement.

                  (e)      The Collateral Agent's Duty of Care. Other than the
         exercise of reasonable care to assure the safe custody of the
         Collateral while being held by the Collateral Agent hereunder, the
         Collateral Agent shall have no duty or liability to preserve rights
         pertaining thereto, it being understood and agreed that the Obligors
         shall be responsible for preservation of all rights in the Collateral
         until surrendered or tendered to the Collateral Agent, and the
         Collateral Agent shall be relieved of all responsibility for the
         Collateral upon surrendering it or tendering the surrender of it to
         the Obligors. The Collateral Agent shall be deemed to have exercised
         reasonable care in the custody and preservation of the Collateral in
         its possession if the Collateral is accorded treatment substantially
         equal to that which the Collateral Agent accords its own property,
         which shall be no less than the treatment employed by a reasonable and
         prudent agent in the industry, it being understood that the Collateral
         Agent shall not have responsibility for taking any necessary steps to
         preserve rights against any parties with respect to any of the
         Collateral. In the event of a public or private sale of Collateral
         pursuant to Section 8 hereof, the Collateral Agent shall have no
         obligation to clean-up, repair or otherwise prepare the Collateral for
         sale.

                  10.      Application of Proceeds. Upon the occurrence and
during the continuance of an Event of Default, any proceeds of any Collateral,
when received by the Collateral Agent or any of the Secured Parties in cash or
its equivalent, will be applied in reduction of the applicable Secured
Obligations then due and payable as follows:

                  (a)      FIRST, to the payment of all out-of-pocket costs and
         expenses (including without limitation reasonable attorneys' fees) of
         the Collateral Agent or an applicable Secured Party in connection with
         enforcing the rights of the applicable Secured Parties under this
         Security Agreement and any protective advances made by the Collateral
         Agent or an applicable Secured Party;

                  (b)      SECOND, to the payment of all other expenses then
         due and payable by the Obligors under the Documents or otherwise in
         connection with the Secured Obligations, pro rata as set forth below;


                                      14
<PAGE>


                  (c)      THIRD, to the payment of all indemnity obligations
         then due and payable by the Obligors under the Documents or otherwise
         in connection with the Secured Obligations, pro rata as set forth
         below;

                  (d)      FOURTH, to the payment of (i) all fees of the
         Administrative Agent and (ii) all fees of SunTrust and Toronto
         Dominion, if any, that are in the nature of administrative agent's
         fees, in each case that are then due and payable under the Documents
         or otherwise in connection with the Secured Obligations, pro rata as
         set forth below;

                  (e)      FIFTH, to the payment of all commitment and other
         fees and commissions then due and payable under the Documents or
         otherwise in connection with the Secured Obligations, pro rata as set
         forth below;

                  (f)      SIXTH, to the payment of all accrued and unpaid
         interest then due and payable under the Documents or otherwise in
         connection with the Secured Obligations (including without limitation
         any accrued and unpaid interest on obligations arising under any
         Hedging Agreements between any Obligor and any Lender, or any
         Affiliate of a Lender), pro rata as set forth below;

                  (g)      SEVENTH, to the payment of the principal amount of
         the Secured Obligations then due and payable and to the cash
         collateral account described in Section 11.2(b) of the Credit
         Agreement to the extent of any L/C Obligations then outstanding
         (including without limitation the termination value or other payment
         obligations (not constituting interest or fees) arising under any
         Hedging Agreements between any Obligor and any Lender, or any
         Affiliate of a Lender), pro rata as set forth below;

                  (h)      EIGHTH, to all other obligations which shall have
         become due and payable under the applicable Documents and not repaid
         pursuant to clauses "FIRST" through "SEVENTH" above, pro rata as set
         forth below; and

                  (i)      NINTH, to the payment of the surplus, if any, to
         whomever may be lawfully entitled to receive such surplus.

In carrying out the foregoing, (i) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; (ii) each of the applicable Secured Parties shall receive
an amount equal to its pro rata share of amounts available to be applied above
(based on the proportion that the then outstanding obligations owed by the
Obligors to such Secured Party under the Documents bears to the aggregate
outstanding obligations of the Obligors to the applicable Secured Parties under
the Documents); and (iii) to the extent that any amounts available for
distribution pursuant to clause "SEVENTH" above are attributable to L/C
Obligations then outstanding under the Credit Agreement, such amounts shall be
held by the Collateral Agent in a cash collateral account and applied (x)
first, to reimburse the Issuing Lender and/or the Lenders under the Credit
Agreement from time to time for any drawings under Letters of Credit and (y)
then, following the expiration of all such L/C Obligations, without
duplication, to all other obligations of


                                      15
<PAGE>


the types described in clause "SEVENTH" above; provided that the aggregate
amount distributable to a Secured Party (or to its representative on its
behalf) on a given distribution date shall not exceed the aggregate amount of
Secured Obligations which are then due and payable to such Secured Party. Each
Obligor irrevocably waives the right to direct the application of such payments
and proceeds and acknowledges and agrees that the Collateral Agent shall have
the continuing and exclusive right to apply and reapply any and all such
payments and proceeds in the Collateral Agent's sole discretion,
notwithstanding any entry to the contrary upon any of its books and records.

                  11.      Costs of Counsel. If at any time hereafter, whether
upon the occurrence of an Event of Default or not, the Collateral Agent or a
Secured Party employs counsel to prepare or consider amendments, waivers or
consents with respect to this Security Agreement, or to take action or make a
response in or with respect to any legal or arbitral proceeding relating to
this Security Agreement or relating to the Collateral, or to protect the
Collateral or exercise any rights or remedies under this Security Agreement or
with respect to the Collateral, then the Obligors agree to promptly pay upon
demand any and all such reasonable documented costs and expenses of the
Collateral Agent or the Secured Parties, all of which costs and expenses shall
constitute Secured Obligations hereunder.

                  12.      Continuing Agreement.

                  (a)      This Security Agreement shall be a continuing
         agreement in every respect and shall remain in full force and effect
         until such time as the Secured Obligations are Fully Satisfied. Upon
         such payment and termination, this Security Agreement shall be
         automatically terminated and the Collateral Agent and the Secured
         Parties shall, upon the request and at the expense of the Obligors,
         forthwith release all of its liens and security interests hereunder
         and shall execute and deliver all UCC termination statements and/or
         other documents reasonably requested by the Obligors evidencing such
         termination. Notwithstanding the foregoing all releases and
         indemnities provided hereunder shall survive termination of this
         Security Agreement.

                  (b)      This Security Agreement shall continue to be
         effective or be automatically reinstated, as the case may be, if at
         any time payment, in whole or in part, of any of the Secured
         Obligations is rescinded or must otherwise be restored or returned by
         the Collateral Agent or any Secured Party as a preference, fraudulent
         conveyance or otherwise under any bankruptcy, insolvency or similar
         law, all as though such payment had not been made; provided that in
         the event payment of all or any part of the Secured Obligations is
         rescinded or must be restored or returned, all reasonable costs and
         expenses (including without limitation any reasonable legal fees and
         disbursements) incurred by the Collateral Agent or any Secured Party
         in defending and enforcing such reinstatement shall be deemed to be
         included as a part of the Secured Obligations.

                  13.      Amendments; Waivers; Modifications.

                  (a)      This Security Agreement and the provisions hereof
         may not be amended, waived, modified, changed, discharged or
         terminated except with the prior written consent


                                      16
<PAGE>


         of both (i) the parties required to give such consent under Section
         13.11 of the Credit Agreement and (ii) the Required Secured Parties;
         provided that, without the prior written consent of each Secured
         Party, no such amendment, waiver or modification shall (x) alter the
         pro rata sharing among the Secured Parties of the Liens granted
         hereunder (and proceeds thereof) or the order of the application of
         proceeds set forth in Section 10 or (y) except as the result of or in
         connection with an Asset Disposition permitted by Section 9.5 of the
         Credit Agreement, release all or substantially all of the Collateral
         (upon or after the occurrence of the Collateral Effective Date).

                  (b)      Notwithstanding anything to the contrary herein or
         in the Credit Agreement, the definition of "Collateral Effective Date"
         as set forth in Section 1.1 of the Credit Agreement may not be
         amended, modified, changed, discharged or terminated in a manner
         adverse to the Secured Parties except with the prior written consent
         of each Secured Party.

                  14.      Successors in Interest. This Security Agreement
shall create, effective as of the Collateral Effective Date, a continuing
security interest in the Collateral and shall be binding upon each Obligor, its
successors and assigns and shall inure, together with the rights and remedies
of the Collateral Agent and the Secured Parties hereunder, to the benefit of
the Collateral Agent and the Secured Parties, on a ratable basis, and their
successors and permitted assigns; provided, however, that none of the Obligors
may assign its rights or delegate its duties hereunder without the prior
written consent of each Secured Party (or, with respect to the Lenders, the
Required Lenders, as required by the Credit Agreement).

                  15.      Notices. All notices required or permitted to be
given under this Security Agreement shall be in conformance with Section 13.1
of the Credit Agreement and/or, to the extent applicable, the Premier Boxboard
Guaranty and/or the Standard Gypsum Guaranty.

                  16.      Counterparts. This Security Agreement may be
executed in any number of counterparts (including telecopy), each of which
where so executed and delivered shall be an original, but all of which shall
constitute one and the same instrument. It shall not be necessary in making
proof of this Security Agreement to produce or account for more than one such
counterpart.

                  17.      Headings. The headings of the sections hereof are
provided for convenience only and shall not in any way affect the meaning or
construction of any provision of this Security Agreement.

                  18.      Governing Law; Submission to Jurisdiction; Venue.

                  (a)      THIS SECURITY AGREEMENT AND THE RIGHTS AND
         OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND
         CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
         NORTH CAROLINA. Any legal action or proceeding with respect to this
         Security Agreement may be brought in the courts of the State of North
         Carolina in Mecklenburg County, or of the United States for the
         Western District of North Carolina, and, by execution and delivery of
         this Security Agreement, each Obligor hereby irrevocably accepts for
         itself and in respect of its property, generally and unconditionally,
         the


                                      17
<PAGE>


         jurisdiction of such courts. Each Obligor further irrevocably consents
         to the service of process out of any of the aforementioned courts in
         any such action or proceeding by the mailing of copies thereof by
         registered or certified mail, postage prepaid, to it at the address
         for notices pursuant to Section 13.1 of the Credit Agreement, such
         service to become effective 30 days after such mailing. Nothing herein
         shall affect the right of the Collateral Agent to serve process in any
         other manner permitted by law or to commence legal proceedings or to
         otherwise proceed against any Obligor in any other jurisdiction.

                  (b)      Each Obligor hereby irrevocably waives any objection
         which it may now or hereafter have to the laying of venue of any of
         the aforesaid actions or proceedings arising out of or in connection
         with this Security Agreement brought in the courts referred to in
         clause (a) hereof and hereby further irrevocably waives and agrees not
         to plead or claim in any such court that any such action or proceeding
         brought in any such court has been brought in an inconvenient forum.

                  19.      Waiver of Jury Trial. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, EACH OF THE PARTIES TO THIS SECURITY AGREEMENT HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.

                  20.      Severability. If any provision of any of the
Security Agreement is determined to be illegal, invalid or unenforceable, such
provision shall be fully severable and the remaining provisions shall remain in
full force and effect and shall be construed without giving effect to the
illegal, invalid or unenforceable provisions.

                  21.      Entirety. This Security Agreement and the Documents
represent the entire agreement of the parties hereto and thereto, and supersede
all prior agreements and understandings, oral or written, if any, including any
commitment letters or correspondence relating to the Documents, or the
transactions contemplated herein and therein.

                  22.      Survival. All representations and warranties of the
Obligors hereunder shall survive the execution and delivery of this Security
Agreement and the Documents, the delivery of the Notes and the making of the
Loans and the issuance of the Letters of Credit under the Credit Agreement.

                  23.      Other Security. To the extent that any of the
Secured Obligations are now or hereafter secured by property other than the
Collateral (including, without limitation, real property and securities owned
by an Obligor), or by a guarantee, endorsement or property of any other Person,
then the Collateral Agent and the Secured Parties shall have the right to
proceed against such other property, guarantee or endorsement upon the
occurrence and during the continuance of any Event of Default occurring
simultaneously with or subsequent to the Collateral Effective Date, and the
Collateral Agent and the Secured Parties have the right, in their sole
discretion, to determine which rights, security, liens, security interests or
remedies the Collateral Agent and the Secured Parties shall at any time pursue,
relinquish, subordinate, modify or take with respect thereto, without


                                      18
<PAGE>


in any way modifying or affecting any of them or any of the Collateral Agent's
and the Secured Parties' rights or the Secured Obligations under this Security
Agreement or the Documents.

                  24.      Joint and Several Obligations of Obligors.

                  (a)      Each of the Obligors is accepting joint and several
         liability hereunder in consideration of the financial accommodation to
         be provided by the Secured Parties under the Documents, for the mutual
         benefit, directly and indirectly, of each of the Obligors and in
         consideration of the undertakings of each of the Obligors to accept
         joint and several liability for the obligations of each of them.

                  (b)      Each of the Obligors jointly and severally hereby
         irrevocably and unconditionally accepts, not merely as a surety but
         also as a co-debtor, joint and several liability with the other
         Obligors with respect to the payment and performance of all of the
         Secured Obligations arising under this Security Agreement and the
         Documents, it being the intention of the parties hereto that all the
         Secured Obligations shall be the joint and several obligations of each
         of the Obligors without preferences or distinction among them.

                  (c)      Notwithstanding any provision to the contrary
         contained herein, in any of the Documents, the obligations of each
         Guarantor under the Credit Agreement and the other Documents shall be
         limited to an aggregate amount equal to the largest amount that would
         not render such obligations subject to avoidance under Section 548 of
         the Bankruptcy Code or any comparable provisions of any applicable
         state law.

                  25.      Effective Date. Notwithstanding anything in this
Security Agreement to the contrary, the grants of security interests pursuant
to Section 2 hereof shall not become effective until the Collateral Effective
Date; provided that on such Collateral Effective Date such grants of security
interests shall become effective immediately and without any further action on
the part of any of the parties hereto.

                  26.      Rights of Required Lenders. All rights of the
Collateral Agent hereunder, if not exercised by the Collateral Agent, may be
exercised by the Required Lenders.

                  27.      Third-Party Beneficiaries. The parties hereto
further acknowledge and agree that SunTrust and Toronto Dominion are intended
third-party beneficiaries of this Security Agreement and this Security
Agreement shall be enforceable by each of them.

                  28.      Indemnification. The Borrower hereby reaffirms its
indemnity obligations under Section 13.2(c) of the Credit Agreement and
acknowledges and agrees that this Security Agreement constitutes a Loan
Document for purposes thereof. Without limiting the foregoing, the Obligors
hereby agree to defend, indemnify and hold harmless the Collateral Agent and
the Secured Parties, and their respective parents, Subsidiaries, Affiliates,
employees, agents, officers and directors, from and against any losses,
penalties, fines, liabilities, settlements, damages, costs and expenses,
suffered by any such Person in connection with any claim, investigation,
litigation or other proceeding (whether or not the Collateral Agent or any
Secured Party is a party thereto) and the prosecution and defense thereof,
arising out of or in any way connected with this


                                      19
<PAGE>


Security Agreement or the other Documents or as a result of the breach of any
of the Obligors' obligations hereunder or thereunder, including without
limitation reasonable attorney's fees (including the allocated cost of internal
counsel), consultant's fees and settlement costs (but excluding any losses,
penalties, fines liabilities, settlements, damages, costs and expenses to the
extent incurred by reason of the gross negligence or willful misconduct of the
Person to be indemnified (as finally determined by a court of competent
jurisdiction)).

                  29.      Collateral Agency Provisions.

                  (a)      Appointment. Each of SunTrust, Toronto Dominion and
         Bank of America, as Administrative Agent for the Lenders, hereby
         irrevocably designates and appoints Bank of America as Collateral
         Agent of such Secured Party (or the Secured Parties represented by it)
         under this Security Agreement for the term hereof and each such Person
         irrevocably authorizes Bank of America as Collateral Agent for such
         Secured Party (or the Secured Parties represented by it), to take such
         action on its behalf under the provisions of this Security Agreement
         and to exercise such powers and perform such duties as are expressly
         delegated to the Collateral Agent by the terms of this Security
         Agreement, together with such other powers as are reasonably
         incidental thereto. Notwithstanding any provision to the contrary
         elsewhere in this Security Agreement, the Collateral Agent shall not
         have any duties or responsibilities, except those expressly set forth
         herein and therein, or any fiduciary relationship with any Secured
         Party, and no implied covenants, functions, responsibilities, duties,
         obligations or liabilities shall be read into this Security Agreement
         or otherwise exist against the Collateral Agent. Any reference to the
         Collateral Agent in this Section 29 shall be deemed to refer to the
         Collateral Agent solely in its capacity as Collateral Agent and not in
         its capacity as a Secured Party.

                  (b)      Delegation of Duties. The Collateral Agent may
         execute any of its respective duties under this Security Agreement by
         or through agents or attorneys-in-fact and shall be entitled to advice
         of counsel concerning all matters pertaining to such duties. The
         Collateral Agent shall not be responsible for the negligence or
         misconduct of any agents or attorneys-in-fact selected by the
         Collateral Agent with reasonable care.

                  (c)      Exculpatory Provisions. Neither the Collateral Agent
         nor any of its officers, directors, employees, agents,
         attorneys-in-fact, Subsidiaries or Affiliates shall be (i) liable for
         any action lawfully taken or omitted to be taken by it or such Person
         under or in connection with this Security Agreement (except for
         actions occasioned solely by its or such Person's own gross negligence
         or willful misconduct), or (ii) responsible in any manner to any of
         the Secured Parties for any recitals, statements, representations or
         warranties made by any Obligor or any of its Subsidiaries or any
         officer thereof contained in this Security Agreement or in any
         certificate, report, statement or other document referred to or
         provided for in, or received by the Collateral Agent under or in
         connection with, this Security Agreement or for the value, validity,
         effectiveness, genuineness, enforceability or sufficiency of this
         Security Agreement or for any failure of any Obligor or any of its
         Subsidiaries to perform its obligations hereunder. The Collateral
         Agent shall not be under any obligation to any Secured Party to
         ascertain or to inquire as to the


                                      20
<PAGE>


         observance or performance of any of the agreements contained in, or
         conditions of, this Security Agreement, or to inspect the properties,
         books or records of any Obligor or any of its Subsidiaries.


                  (d)      Reliance by Collateral Agent. The Collateral Agent
         shall be entitled to rely, and shall be fully protected in relying,
         upon any note, writing, resolution, notice, consent, certificate,
         affidavit, letter, cablegram, telegram, telecopy, telex or teletype
         message, statement, order or other document or conversation believed by
         it to be genuine and correct and to have been signed, sent or made by
         the proper Person or Persons and upon advice and statements of legal
         counsel (including, without limitation, counsel to the Obligors),
         independent accountants and other experts selected by the Collateral
         Agent. The Collateral Agent may deem and treat the payee of any note
         as the owner thereof for all purposes unless the Collateral Agent
         shall have actual notice of any transferee. The Collateral Agent shall
         be fully justified in failing or refusing to take any action under
         this Security Agreement unless it shall first receive advice or
         concurrence of the Required Secured Parties (or, when expressly
         required hereby, all the Secured Parties) as it deems appropriate or
         it shall first be indemnified to its satisfaction by the Secured
         Parties against any and all liability and expense which may be
         incurred by it by reason of taking or continuing to take any such
         action except for its own gross negligence or willful misconduct. The
         Collateral Agent shall in all cases by fully protected in acting, or in
         refraining from acting, under this Security Agreement in accordance
         with a request of the Required Secured Parties (or, when expressly
         required hereby, all the Secured Parties), and such request and any
         action taken or failure to act pursuant thereto shall be binding upon
         all the Secured Parties and all future holders of the Secured
         Obligations.

                  (e)      Notice of Default. The Collateral Agent shall not be
         deemed to have knowledge or notice of the occurrence of any Event of
         Default hereunder unless it has received notice of such Event of
         Default in accordance with the terms of the Credit Agreement or notice
         from a Secured Party of the Obligors referring to this Security
         Agreement, describing such Event of Default and stating that such
         notice is a "notice of default." In the event the Collateral Agent
         receives such notice, it shall promptly give notice thereof to the
         Secured Parties. The Collateral Agent shall take such action with
         respect to such Event of Default as shall be reasonably directed by
         the Required Secured Parties; provided that unless and until the
         Collateral Agent shall have received such directions, the Collateral
         Agent may (but shall not be obligated to) take such action, or refrain
         from taking such action, with respect to such Event of Default as it
         shall deem advisable in the best interests of the Secured Parties,
         except to the extent that other provisions of this Security Agreement
         expressly require that any such action be taken or not be taken only
         with the consent and authorization or the request of the Secured
         Parties or Required Secured Parties, as applicable.

                  (f)      Non-Reliance on the Collateral Agent and Other
         Secured Parties. Each of SunTrust, Toronto Dominion and Bank of
         America, as Administrative Agent for the Lenders, expressly
         acknowledges that neither the Collateral Agent nor any of its
         respective officers, directors, employees, agents, attorneys-in-fact,
         Subsidiaries or Affiliates has made any representations or warranties
         to it and that no act by the


                                      21
<PAGE>


         Collateral Agent hereinafter taken, including any review of the
         affairs of the Obligors or any of their respective Subsidiaries, shall
         be deemed to constitute any representation or warranty by the
         Collateral Agent to any Secured Party. Each of SunTrust, Toronto
         Dominion and Bank of America, as Administrative Agent for the Lenders,
         represents that it has made and will continue to make, independently
         and without reliance upon the Collateral Agent or any other Secured
         Party, and based on such documents and information as it shall deem
         appropriate at the time, its own credit analysis, appraisals and
         decisions in taking or not taking action under this Security Agreement
         and the other Documents, and to make such investigation as it deems
         necessary to inform itself as to the business, operations, property,
         financial and other condition and creditworthiness of the Obligors and
         their respective Subsidiaries. Except for notices, reports and other
         documents expressly required to be furnished to the Secured Parties by
         the Collateral Agent hereunder, the Collateral Agent shall not have
         any duty or responsibility to provide any Secured Party with any
         credit or other information concerning the business, operations,
         property, financial and other condition or creditworthiness of any
         Obligor or any of its Subsidiaries which may come into the possession
         of the Collateral Agent or any of its respective officers, directors,
         employees, agents, attorneys-in-fact, Subsidiaries or Affiliates.

                  (g)      Indemnification. The Lenders under the Credit
         Agreement have agreed, and each of SunTrust and Toronto Dominion, as
         Secured Parties, hereby agree, to indemnify the Collateral Agent in
         its capacity as such and (to the extent not reimbursed by the Obligors
         and without limiting the obligation of the Obligors to do so), ratably
         according to the respective amounts of their Secured Obligations from
         and against any and all liabilities, obligations, losses, damages,
         penalties, actions, judgments, suits, costs, expenses or disbursements
         of any kind whatsoever which may at any time (including, without
         limitation, at any time following the payment of the Secured
         Obligations) be imposed on, incurred by or asserted against the
         Collateral Agent in any way relating to or arising out of this
         Security Agreement or the other Documents, or any documents
         contemplated by or referred to herein or therein or the transactions
         contemplated hereby or thereby or any action taken or omitted by the
         Collateral Agent under or in connection with any of the foregoing;
         provided that no Secured Party shall be liable for the payment of any
         portion of such liabilities, obligations, losses, damages, penalties,
         actions, judgments, suits, costs, expenses or disbursements to the
         extent they result from the Collateral Agent's bad faith, gross
         negligence or willful misconduct. The agreements in this Section 29(g)
         shall survive the payment of the Secured Obligations and all other
         amounts payable hereunder and the termination of this Security
         Agreement.

                  (h)      The Collateral Agent in Its Individual Capacity. The
         Collateral Agent and its respective Subsidiaries and Affiliates may
         make loans to, accept deposits from and generally engage in any kind
         of business with the Obligors as though the Collateral Agent were not
         an Collateral Agent hereunder. With respect to any Loans made or
         renewed by it and any Note issued to it and with respect to any Letter
         of Credit issued by it or participated in by it, the Collateral Agent
         shall have the same rights and powers under this Security Agreement
         and the other Documents as any Secured Party and may exercise


                                      22
<PAGE>


         the same as though it were not an Collateral Agent, and the terms
         "Secured Party" and "Secured Parties" shall include the Collateral
         Agent in its individual capacity.

                  (i)      Resignation of the Collateral Agent; Successor
         Collateral Agent. The Collateral Agent may resign as Collateral Agent
         at any time by giving thirty (30) days advance notice thereof to the
         Secured Parties and the Obligors and, thereafter, the retiring
         Collateral Agent shall be discharged from its duties and obligations
         hereunder. Upon any such resignation, the Required Secured Parties
         shall have the right, subject to the approval of the Borrower (so long
         as no Event of Default has occurred and is continuing), to appoint a
         successor Collateral Agent. If no successor Collateral Agent shall
         have been so appointed by the Required Secured Parties, been approved
         (so long as no Event of Default has occurred and is continuing) by the
         Borrower or have accepted such appointment within thirty (30) days
         after the Collateral Agent's giving of notice of resignation, then the
         Collateral Agent may, on behalf of the Secured Parties, appoint a
         successor Collateral Agent reasonably acceptable to the Borrower (so
         long as no Default or Event of Default has occurred and is
         continuing). Upon the acceptance of any appointment as Collateral
         Agent hereunder by a successor Collateral Agent, such successor
         Collateral Agent shall thereupon succeed to and become vested with all
         rights, powers, privileges and duties of the retiring Collateral
         Agent. After any retiring Collateral Agent's resignation hereunder as
         Collateral Agent, the provisions of this Section 29 shall continue in
         effect for its benefit in respect of any actions taken or omitted to
         be taken by it while it was acting as Collateral Agent. If no
         successor administrative agent has accepted appointment as Collateral
         Agent by the date which is thirty (30) days following a retiring
         Collateral Agent's notice of resignation, the retiring Collateral
         Agent's resignation shall nevertheless thereupon become effective and
         the Secured Parties shall perform all of the duties of the Collateral
         Agent hereunder until such time, if any, as the Required Secured
         Parties appoint a successor agent as provided for above.


                  [remainder of page intentionally left blank]


                                      23
<PAGE>


         Each of the parties hereto has caused a counterpart of this Security
Agreement to be duly executed and delivered as of the date first above written.


BORROWER:                           CARAUSTAR INDUSTRIES, INC.,
                                    a North Carolina corporation

                                    By:
                                       ----------------------------------------
                                    Name:
                                    Title:


<PAGE>


                  GUARANTORS: AUSTELL HOLDING COMPANY, LLC,
                  a Georgia limited liability company
                  CAMDEN PAPERBOARD CORPORATION,
                  a New Jersey corporation
                  CARAUSTAR CUSTOM PACKAGING GROUP, INC.,
                  a Delaware corporation
                  CARAUSTAR CUSTOM PACKAGING GROUP (MARYLAND), INC.,
                  a Maryland corporation
                  CARAUSTAR INDUSTRIAL AND CONSUMER PRODUCTS GROUP, INC.,
                  a Delaware corporation
                  CARAUSTAR MILL GROUP, INC.,
                  an Ohio corporation f/k/a Caraustar Paperboard
                  Corporation (as successor by merger to Austell Box
                  Board Corporation, Buffalo Paperboard Corporation,
                  Carolina Component Concepts, Inc., Carolina Converting
                  Incorporated, Carolina Paper Board Corporation,
                  Carotell Paper Board Corporation, Chattanooga
                  Paperboard Corporation, Cincinnati Paperboard
                  Corporation, Columbus Recycling, Inc., New Austell Box
                  Board Company, Paper Recycling, Inc., Reading
                  Paperboard Corporation, Richmond Paperboard
                  Corporation and Sweetwater Paper Board Company, Inc.)
                  CARAUSTAR RECOVERED FIBER GROUP, INC.,
                  a Delaware corporation
                  CHICAGO PAPERBOARD CORPORATION,
                  an Illinois corporation
                  FEDERAL TRANSPORT, INC.,
                  an Ohio corporation
                  GYPSUM MGC, INC.,
                  a Delaware corporation
                  HALIFAX PAPER BOARD COMPANY, INC.,
                  a North Carolina corporation
                  MCQUEENEY GYPSUM COMPANY,
                  a Delaware corporation
                  MCQUEENY GYPSUM COMPANY, LLC,
                  a Delaware limited liability company
                  PBL INC.,
                  a Delaware corporation
                  SPRAGUE PAPERBOARD, INC.,
                  a Connecticut corporation

                  By:
                     ----------------------------------------------------------
                  Name:
                  Title:
                        of each of the foregoing Guarantors


<PAGE>


                  CARAUSTAR, G.P.,
                  a South Carolina general partnership

                  By: CARAUSTAR INDUSTRIES, INC.,
                      a North Carolina corporation, general partner

                      By:
                         -------------------------------------------------------
                      Name:
                      Title:

                  By: CARAUSTAR INDUSTRIAL AND CONSUMER PRODUCTS GROUP, INC.,
                      a Delaware corporation, general partner

                      By:
                         -------------------------------------------------------
                      Name:
                      Title:


<PAGE>


Agreed and Accepted to as of the date first above written.


BANK OF AMERICA, N.A.,
in its capacity as Collateral Agent

By:
   --------------------------------------------
Name:
     ------------------------------------------
Title:
      -----------------------------------------


The undersigned hereby acknowledge and accept the
foregoing Security Agreement and agree to the terms
of Section 29 thereof:


BANK OF AMERICA, N.A.,
in its capacity as Administrative Agent for the Lenders

By:
   --------------------------------------------
Name:
     ------------------------------------------
Title:
      -----------------------------------------


SUNTRUST BANK, ATLANTA


By:
   --------------------------------------------
Name:
     ------------------------------------------
Title:
      -----------------------------------------


 TORONTO DOMINION (TEXAS), INC.

By:
   --------------------------------------------
Name:
     ------------------------------------------
Title:
      -----------------------------------------


<PAGE>


                                 SCHEDULE 4(a)

              PRINCIPAL PLACE OF BUSINESS/CHIEF EXECUTIVE OFFICES


<PAGE>


                                 SCHEDULE 4(b)

                            LOCATIONS OF COLLATERAL


<PAGE>


                            CONSENT AND MODIFICATION

                                                July 11, 2002

Caraustar Industries, Inc.
3100 Joe Jerkins Boulevard
Austell, Georgia 30106-3227
Attention: H. Lee Thrash, III


Ladies and Gentlemen:

Reference is hereby made to that certain Credit Agreement dated as of March 29,
2001 (as amended by that certain First Amendment to Credit Agreement dated as
of September 10, 2001, that certain Second Amendment to Credit Agreement dated
as of November 30, 2001, that certain Third Amendment to Credit Agreement dated
as of January 22, 2002 and that certain Fourth Amendment to Credit Agreement
dated as of June 3, 2002 (the "Fourth Amendment") and as further modified or
amended from time to time, the "Credit Agreement"). Capitalized terms used
herein without definition shall have the meanings ascribed to such terms in the
Credit Agreement.

You have requested that the Required Lenders consent to modifications of the
Fourth Amendment to:

         (1)      Modify the definition of "New Senior Subordinated Note
Indenture" in Section 1 of the Fourth Amendment to read as follows:

         "New Senior Subordinated Note Indenture" means the Indenture, to be
         dated on or about the date of the asset purchase agreement executed
         and delivered in connection with the JS Industrial Packaging Group
         Acquisition, between the Borrower, the Subsidiaries of the Borrower
         identified as guarantors therein and The Bank of New York, as Trustee,
         as amended, modified and supplemented from time to time to the extent
         permitted under this Agreement; and

         (2)      Modify Section 24 of the Fourth Amendment by adding the
following sentence at the end thereof:

         Notwithstanding the foregoing or Section 9.13 of the Credit Agreement,
         Section 13 of the Fourth Amendment shall become effective upon the
         date of the asset purchase agreement executed and delivered in
         connection with the JS Industrial Packaging Group Acquisition;
         provided that (x) New Senior Subordinated Notes shall (except as
         otherwise specified in clause (y) below) be issued and redeemed (or
         may be redeemed) in accordance with the terms of the New Senior
         Subordinated Note Indenture and the Escrow Agreement defined and
         referred to therein and (y) any and all New Senior Subordinated Notes
         issued prior to the consummation of the JS Industrial Packaging Group
         Acquisition shall, in any event, be redeemed not later than September
         30, 2002 if the JS Industrial Packaging Group Acquisition has not been
         consummated on or before such date.

The undersigned Required Lenders hereby consent to the above modifications.


<PAGE>


Except to the extent specifically provided to the contrary in this letter, all
terms and conditions of the Fourth Amendment and the Credit Agreement shall
remain in full force and effect, without modification or limitation. This
letter shall not operate as a consent to any other action or inaction by the
Borrower or any of the Guarantors, or as a waiver of any right, power, or
remedy of any Lender or the Administrative Agent under, or any provision
contained in, the Fourth Amendment or the Credit Agreement except as
specifically provided herein. This letter may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which taken
together shall be deemed to constitute one and the same instrument. This letter
shall constitute a Loan Document.


                                    Very truly yours,


ADMINISTRATIVE
AGENT:                              BANK OF AMERICA, N.A., in its capacity
                                    as Administrative Agent


                                    By: /s/ Thomas R. Sullivan
                                       ----------------------------------------
                                    Name: Thomas R. Sullivan
                                         --------------------------------------
                                    Title: Vice President
                                          -------------------------------------


                                             CONSENT AND MODIFICATION REGARDING
                                                            FOURTH AMENDMENT TO
                                    CARAUSTAR INDUSTRIES, INC. CREDIT AGREEMENT
                                                                      JULY 2002


<PAGE>


LENDERS:                            BANK OF AMERICA, NA.,
                                    Individually as an Issuing Lender and a
                                    Lender


                                    By: /s/ Thomas R. Sullivan
                                       ----------------------------------------
                                    Name: Thomas R. Sullivan
                                         --------------------------------------
                                    Title: Vice President
                                          -------------------------------------


                                             CONSENT AND MODIFICATION REGARDING
                                                            FOURTH AMENDMENT TO
                                    CARAUSTAR INDUSTRIES, INC. CREDIT AGREEMENT
                                                                      JULY 2002


<PAGE>


                                    BANKERS TRUST COMPANY,
                                    individually as an Issuing Lender and a
                                    Lender


                                    By: /s/ Marco Orlando
                                       ----------------------------------------
                                    Name: Marco Orlando
                                         --------------------------------------
                                    Title: Director
                                          -------------------------------------


                                             CONSENT AND MODIFICATION REGARDING
                                                            FOURTH AMENDMENT TO
                                    CARAUSTAR INDUSTRIES, INC. CREDIT AGREEMENT
                                                                      JULY 2002


<PAGE>


                                    CREDIT SUISSE FIRST BOSTON


                                    By: /s/ Jay Chall
                                       ----------------------------------------
                                    Name: JAY CHALL
                                         --------------------------------------
                                    Title: DIRECTOR
                                          -------------------------------------


                                    By: /s/ Jeffrey Bernstein
                                       ----------------------------------------
                                    Name: JEFFREY BERNSTEIN
                                         --------------------------------------
                                    Title: VICE PRESIDENT
                                          -------------------------------------


                                             CONSENT AND MODIFICATION REGARDING
                                                            FOURTH AMENDMENT TO
                                    CARAUSTAR INDUSTRIES, INC. CREDIT AGREEMENT
                                                                      JULY 2002


<PAGE>


                                    CREDIT LYONNAIS NEW YORK BRANCH


                                    By: /s/ Scott R. Chappelka
                                       ----------------------------------------
                                    Name: SCOTT R. CHAPPELKA
                                         --------------------------------------
                                    Title: VICE PRESIDENT
                                          -------------------------------------


                                             CONSENT AND MODIFICATION REGARDING
                                                            FOURTH AMENDMENT TO
                                    CARAUSTAR INDUSTRIES, INC. CREDIT AGREEMENT
                                                                      JULY 2002


<PAGE>


                                    THE BANK OF NEW YORK


                                    By: /s/ David C. Seigel
                                       ----------------------------------------
                                    Name: David C. Seigel
                                         --------------------------------------
                                    Title: Vice President
                                          -------------------------------------


                                             CONSENT AND MODIFICATION REGARDING
                                                            FOURTH AMENDMENT TO
                                    CARAUSTAR INDUSTRIES, INC. CREDIT AGREEMENT
                                                                      JULY 2002


<PAGE>


Acknowledged and Agreed:


BORROWER:                           CARAUSTAR INDUSTRIES, INC.,
                                    a North Carolina corporation


                                    By: /s/ H. Lee. Thrash, III
                                       ----------------------------------------
                                    Name: H. Lee Thrash, III

                                    Title: Vice President Planning &
                                           Development and Chief Financial
                                           Officer



                                             CONSENT AND MODIFICATION REGARDING
                                                            FOURTH AMENDMENT TO
                                    CARAUSTAR INDUSTRIES, INC. CREDIT AGREEMENT
                                                                      JULY 2002


<PAGE>


GUARANTORS:                AUSTELL HOLDING COMPANY, LLC,
                           a Georgia limited liability company
                           CAMDEN PAPERBOARD CORPORATION,
                           a New Jersey corporation
                           CARAUSTAR CUSTOM PACKAGING GROUP, INC.,
                           a Delaware corporation
                           CARAUSTAR CUSTOM PACKAGING GROUP (MARYLAND), INC.,
                           a Maryland corporation
                           CARAUSTAR INDUSTRIAL AND PRODUCTS GROUP, INC.,
                           a Delaware corporation
                           CARAUSTAR MILL GROUP, INC., an Ohio corporation f/k/a
                           Caraustar Paperboard Corporation (as successor by
                           merger to Austell Box Board Corporation, Buffalo
                           Paperboard Corporation, Carolina Component Concepts,
                           Inc., Carolina Converting Incorporated, Carolina
                           Paper Board Corporation, Carotell Paper Board
                           Corporation, Chattanooga Paperboard Corporation,
                           Cincinnati Paperboard Corporation, Columbus
                           Recycling, Inc., New Austell Box Board Company,
                           Paper Recycling, Inc., Reading Paperboard
                           Corporation, Richmond Paperboard Corporation and
                           Sweetwater Paper Board Company, Inc.)
                           CARAUSTAR RECOVERED FIBER GROUP, INC.,
                           a Delaware corporation
                           CHICAGO PAPERBOARD CORPORATION,
                           an Illinois corporation
                           FEDERAL TRANSPORT, INC.,
                           an Ohio corporation
                           GYPSUM MGC, INC.,
                           a Delaware corporation
                           HALIFAX PAPER BOARD COMPANY, INC.,
                           a North Carolina corporation
                           MCQUEENEY GYPSUM COMPANY,
                           a Delaware corporation
                           MCQUEENY GYPSUM COMPANY, LLC,
                           a Delaware limited liability company
                           PBL INC.,
                           a Delaware corporation
                           SPRAGUE PAPERBOARD, INC.,
                           a Connecticut corporation

                           By: /s/ H. Lee Thrash, III
                               ------------------------------------------------
                           Name: H. Lee Thrash, III
                           Title: Vice President Planning & Development and
                                  Chief Financial Officer
                                  of each of the foregoing Guarantors


                                             CONSENT AND MODIFICATION REGARDING
                                                            FOURTH AMENDMENT TO
                                    CARAUSTAR INDUSTRIES, INC. CREDIT AGREEMENT
                                                                      JULY 2002


<PAGE>


                           CARAUSTAR, G.P.,
                           a South Carolina general partnership

                           By: CARAUSTAR INDUSTRIES, INC.,
                               a North Carolina corporation, general partner

                               By: /s/ H. Lee Thrash, III
                                  ---------------------------------------------
                               Name: H. Lee Thrash, III
                               Title: Vice President Planning & Development and
                                      Chief Financial Officer

                           By: CARAUSTAR INDUSTRIAL AND CONSUMER PRODUCTS
                               GROUP, INC., a Delaware corporation,
                               general partner

                               By: /s/ H. Lee Thrash, III
                                  ---------------------------------------------
                               Name: H. Lee Thrash, III
                               Title: Vice President Planning & Development and
                                      Chief Financial Officer


                                             CONSENT AND MODIFICATION REGARDING
                                                            FOURTH AMENDMENT TO
                                    CARAUSTAR INDUSTRIES, INC. CREDIT AGREEMENT
                                                                      JULY 2002