Document:

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                                                                   EXHIBIT 10.12

                          AMERICA SERVICE GROUP INC.

                  AMENDED AND RESTATED INCENTIVE STOCK PLAN

          1. Purpose. The America Service Group Inc. Amended Incentive Stock
Plan (the "Plan") is intended to provide incentives which will attract and
retain highly competent persons as officers, key employees and non-employee
directors of America Service Group Inc. and its subsidiaries (the "Company"),
as well as independent contractors providing consulting or advisory services to
the Company, by providing them opportunities to acquire shares of Common Stock
of the Company ("Common Stock") or to receive monetary payments based on the
value of such shares pursuant to the Benefits described herein.

          2. Administration. The Plan will be administered by the Incentive
Stock Committee (the "Committee") appointed by the Board of Directors of the
Company from among its member which shall be comprised of not less than two
non-employee members of the Board provided, however, that as long as the Common
Stock of the Company is registered under the Securities Exchange Act of 1934,
members of the Committee must qualify as non-employee Directors within the
meaning of Securities and Exchange Commission Regulation Section
240.16b-3(b)(3). The Committee is authorized, subject to the provisions of the
Plan, to establish such rules and regulations as it deems necessary for the
proper administration of the Plan and any Benefits granted hereunder as it deems
necessary or advisable. All determinations and interpretations made by the
Committee shall be binding and conclusive on all participants and their legal
representatives. The Committee is authorized, subject to the provisions of the
Plan, from time to time to delegate to the President and Chief Executive Officer
of the Company the authority to grant stock options to present or future key
employees of the Company who are not subject to Section 16 of the Securities
Exchange Act of 1934, such options to be in such amounts and on such terms,
consistent with the terms of the Plan, as the President and Chief Executive
Officer shall determine.

         3. Participants. Participants will consist of such key employees
(including officers) and non-employee directors of the Company, and independent
contractors providing consulting or advisory services to the Company, as the
Committee in its sole discretion determines to be significantly responsible for
the success and future growth and profitability of the Company and whom the
Committee may designate from time to time to receive Benefits under the Plan.
Designation of a participant in any year shall not require the Committee to
designate such person to receive a Benefit in any other year or, once
designated, to receive the same type or amount of Benefit as granted to the
participant in any year. The Committee shall consider such factors as it deems
pertinent in selecting participants and in determining the type and amount of
their respective Benefits.

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          4. Types of Benefits. Benefits under the Plan may be granted in any
one or a combination of (a) Stock Options, (b) Stock Appreciation Rights, and
(c) Stock Awards, all as described below (collectively "Benefits").

          5. Shares Reserved under the Plan. There is hereby reserved for
issuance under the Plan an aggregate of 1,482,500 shares of Common Stock, which
may be authorized but unissued or treasury shares, including shares of Common
Stock subject to options originally outstanding under the Company's Employee's
1986 Stock Option Plan, as amended, (the "1986 Plan"). Any shares subject to
Stock Options or Stock Appreciation Rights or issued under such options or
rights or as Stock Awards under the 1986 Plan or this Plan may thereafter be
subject to new options, rights or awards under this Plan if there is a lapse,
expiration or termination of any such options or rights prior to issuance of
the shares or the payment of the equivalent or if shares are issued under such
options or rights or as such awards, and thereafter are reacquired by the
Company without consideration pursuant to rights reserved by the Company upon
issuance thereof or otherwise. No participant hereunder may receive in any
calendar year Stock Options and Stock Appreciation Rights for more than 250,000
shares of Common Stock hereunder.

          6. Stock Options. Stock Options will consist of awards from the
Company, in the form of agreements, which will enable the holder to purchase a
specific number of shares of Common Stock, at set terms and at a fixed purchase
price. Stock Options may be "incentive Stock Options" within the meaning of
Section 422 of the Internal Revenue Code ("Incentive Stock Options") or Stock
Options which do not constitute Incentive Stock Options ("Nonqualified Stock
Options"). Each Stock Option shall be subject to such terms and conditions
consistent with the Plan as the Committee may impose from time to time, subject
to the following limitations:

          (a) Option-Price. Stock Options granted hereunder shall have such
    per-share option price as the Committee may determine at the date of
    grant provided, however, that the per-share option price for Stock Options
    shall not be less than 100% of the Fair Market Value of the Common Stock on
    the date the option is granted.

          (b) Payment of Option Price. The option purchase price may be paid by
    check or, in the discretion of the Committee, by the delivery of shares
    of Common Stock of the Company then owned by the participant. In the
    discretion of the Committee, payment may also be made by any other means
    (including cashless exercise as permitted under Federal Reserve Board
    Regulation T) consistent with the Plan's purpose and applicable law. To
    facilitate the foregoing, the Company may enter into agreements for
    coordinated procedures with one or more brokerage firms.

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         (c) Exercise Period. Stock Options granted under the Plan shall be
    exercisable not later than ten years after the date they are granted.
    All Stock Options shall terminate at such earlier times and upon such
    conditions or circumstances as the Committee shall in its discretion set
    forth in such option at the date of grant. The Committee may provide,
    either at the time of grant or subsequently, that a Stock Option include
    the right to acquire a replacement Stock Option upon exercise of the
    original Stock Option (in whole or in part) prior to termination of
    employment of the participant and through payment of the exercise price in
    shares of Common Stock. The terms and conditions of a replacement option
    shall be determined by the Committee in its sole discretion.

         (d) Limitations on Incentive Stock Options. Incentive Stock Options
    may be granted only to participants who are employees of the Company at
    the date of grant. The aggregate Fair Market Value (determined as of the
    time the option is granted) of the Common Stock with respect to which
    Incentive Stock options are exercisable for the first time by a participant
    during any calendar year (under all option plans of the Company) shall not
    exceed $100,000. Incentive Stock Options may not be granted to any
    participant who, at the time of grant, owns stock possessing (after the
    application of the attribution rules of Section 424(d) of the Code) more
    than 10% of the total combined voting power of all classes of stock of the
    Company, unless the option price is fixed at not less than 110% of the Fair
    Market Value of the Common Stock on the date of grant and the exercise of
    such option is prohibited by its terms after the expiration of five years
    from the date of grant of such option.

         (e) Automatic Grants to Non-Employee Directors. Each non-employee
    director of the Company who first becomes a member of the Board on or
    after May 1, 1996 shall, subject to the number of shares remaining available
    under this Plan, automatically receive, on the date he or she first becomes
    a director of the Company, a Nonqualified Stock Option to purchase 15,000
    shares of Common Stock, at an exercise price per share equal to 100% of
    the Fair Market Value of the Common Stock on the date of receipt of such
    option. For purposes of this Plan, a non-employee director is any person
    who is a member of the Board of the Company and who is not an employee of
    or an independent contractor providing consulting or advisory services to
    the Company.

        7. Stock Appreciation Rights. The Committee may, in its discretion,
grant Stock Appreciation Rights to the holders of any Stock Options granted
hereunder. In addition, Stock Appreciation Rights may be granted independently
of and without relation to options. Each Stock Appreciation Right shall be
subject to such terms and conditions consistent with the Plan as the Committee
shall impose from time to time, including the following:

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          (a) A Stock Appreciation Right relating to a Stock Option may be made
    part of such option at the time of its grant or at any time thereafter
    up to six months prior to its expiration.

          (b) Each Stock Appreciation Right will entitle the holder to elect to
    receive the appreciation in the Fair Market Value of the shares subject
    thereto up to the date the right is exercised. In the case of a right
    issued in relation to a Stock Option, such appreciation shall be measured
    from not less than the option price and in the case of a right issued
    independently of any Stock Option, such appreciation shall be measured from
    not less than the Fair Market Value of the Common Stock on the date the
    right is granted. Payment of such appreciation shall be made in cash or in
    Common Stock, or a combination thereof, as set forth in the award, but no
    Stock Appreciation Right shall entitle the holder to receive, upon exercise
    thereof, more than the number of shares of Common Stock (or cash of equal
    value) with respect to which the right is granted.

          (c) Each Stock Appreciation Right will be exercisable at the times
    and to the extent set forth therein, but no Stock Appreciation Right
    may be exercisable earlier than six months after the date it was granted or
    later than the earlier of (i) the remaining term of the related option, if
    any, or (ii) ten years after it was granted. Exercise of a Stock
    Appreciation Right shall reduce the number of shares issuable under the
    Plan (and the related option, if any) by the number of shares with respect
    to which the right is exercised.

          8. Stock Awards. Stock Awards will consist of Common Stock
transferred to participants for such consideration as the Committee shall
determine (or for no consideration) as additional compensation for services to
the Company. Stock Awards shall be subject to such terms and conditions as the
Committee determines appropriate, including, without limitation, restrictions
on the sale or other disposition of such shares, and rights of the Company to
reacquire such shares upon termination of the participant's employment within
specified periods and/or if performance goals established by the Committee are
not achieved.

          9. Adjustment Provisions.

          (a) If the Company shall at any time change the number of issued
    shares of Common Stock without new consideration to the Company (such
    as by stock dividends or stock splits), the total number of shares reserved
    for issuance under this Plan and the number of shares covered by each
    outstanding Benefit shall be adjusted so that the aggregate consideration
    payable to the Company and the value of each such Benefit shall not be
    changed. The Committee may also provide for the continuation of Benefits or
    for other equitable adjustments after changes in the Common Stock resulting
    from

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         reorganization, sale, merger, consolidation or similar occurrence.

                (b) Not to withstanding any other provision of this Plan, and
        without affecting the number of shares otherwise reserved or available
        hereunder, the Committee may authorize the issuance or assumption of
        Benefits in connection with any merger, consolidation, acquisition of
        property or stock, or reorganization upon such terms and conditions as
        it may deem appropriate.

                (c) In the case of any merger, consolidation or combination of
        the Company with or into another corporation, other than a merger,
        consolidation, or combination in which the Company is the continuing
        corporation and which does not result in the outstanding Common Stock
        being converted into or exchanged for different securities, cash or
        other property, or any combination thereof (an "Acquisition"):

                        (i) any participant to whom a Stock Option has been
                granted under the Plan shall have the right (subject to the
                provisions of the Plan and any limitation applicable to such
                option) thereafter and during the term of such option, to
                receive upon exercise thereof the Acquisition Consideration
                (as defined below) receivable upon such Acquisition by a holder
                of the number of shares of Common Stock which might have been
                obtained upon exercise of such option or portion thereof, as
                the case may be, immediately prior to such Acquisition; and

                        (ii) any participant to whom a Stock Appreciation Right
                has been granted under the Plan shall have the right (subject
                to the provisions of the Plan and any limitation applicable to
                such right) thereafter and during the term of such right to
                receive upon exercise thereof the difference between the
                aggregate Fair Market Value of the Acquisition consideration
                receivable upon such Acquisition by a holder of the number of
                shares of Common Stock which might have been obtained upon
                exercise of the Stock Option related thereto or any portion
                thereof, as the case may be, immediately prior to such
                Acquisition and the aggregate option price of the related
                option, or the aggregate Fair Market Value on the date of
                grant of the right, whichever is applicable.

The term "Acquisition consideration" shall mean the kind and amount of shares
of the surviving or new corporation, cash, securities, evidence of indebtedness,
other property or any combination thereof receivable in respect of one share of
Common Stock of the Company upon consummation of an Acquisition.

                (d) If there is a change in control of the company, then all
        current Stock options shall vest and become exercisable by participants
        in accordance with their terms. For such purpose, a "change in control
        of the Company" shall mean a change in control of a nature that would be
        required to be reported in response to Item 6 (e) of Schedule 14A of
        Regulation 14A promulgated under the Securities Exchange Act of 1934
        ("Exchange Act"); provided however, that without limitation, such a
        change in control shall be deemed to have occurred if: (i) any "person"
        (as such term is used in Section 13 (d) and 14 (d) (2) of the Exchange
        Act) other than an employee or any other person currently the beneficial
        owner of 10% or more of the outstanding common stock of the Company,
        becomes the beneficial owner, directly or indirectly, of securities of
        the Company representing 30% or more of the combined voting power of the
        Company's then outstanding securities; (ii) during any period of two
        consecutive years, individuals who at the beginning of such period
        constituted the Board of Directors of the Company cease for any reason
        to constitute at least a majority thereof (unless the election of each
        director, who was not a director at the beginning of the period, was
        approved by a vote of at least two-thirds of the directors then still in
        office who were directors at the beginning of the period); or (iii)
        approval by the stockholders of the Company of (A) a complete
        liquidation of the Company; (B) an agreement for the sale or other
        disposition of all or substantially all of the assets of the Company to
        any "person;" or (C) a merger, consolidation or reorganization involving
        the Company, unless (1) the stockholders of the Company immediately
        before such merger, consolidation, or reorganization own, directly or
        indirectly immediately following such merger, consolidation or
        reorganization, at least two-thirds of the combined voting power of the
        outstanding voting securities of the corporation resulting from such
        merger or consolidation or reorganization of its parent company (the
        "Surviving Corporation") in substantially the same proportion as their
        ownership of the voting shares immediately before such merger,
        consolidation or reorganization; or (2) the individuals who were members
        of the Board immediately prior to the execution of the agreement for
        such merger, consolidation or reorganization constitute at least
        two-thirds of the members of the board of directors of the Surviving
        Corporation.

                10. Nontransferability. Each Benefit granted under the

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        Plan to a participant shall not be transferable by him otherwise than
        by law or by will or the laws of descent and distribution, and shall be
        exercisable, during his lifetime, only by him. In the event of the
        death of a participant while the participant is rendering services to
        the Company, each Benefit theretofore granted to him shall be
        exercisable during such period after his death as the Committee shall
        in its discretion set forth in such Benefit at the date of grant
        (but not beyond the stated duration of the Benefit) and then only:

                        (a) By the executor or administrator of the estate of
                the deceased participant or the person or persons to whom the
                deceased participant's rights under the Benefit shall pass
                by will or the laws of descent and distribution; and

                        (b) To the extent that the deceased participant was
                entitled to do so at the date of his death.

        Notwithstanding the foregoing, at the discretion of the Committee, a
        Benefit may permit the transfer of the Benefit by the participant
        solely to members of the participant's immediate family or trusts or
        family partnerships for the benefit of such persons subject to such
        terms and conditions as may be established by the Committee.

                11. Other Provisions. The award of any Benefit under the Plan
        may also be subject to such other provisions (whether or not applicable
        to the Benefit awarded to any other participant) as the Committee
        determines appropriate, including without limitation, provisions for
        the installment purchase of Common Stock under Stock Options,
        provisions for the installment exercise of Stock Appreciation Rights,
        provisions to assist the participant in financing the acquisition of
        Common Stock, provisions for the forfeiture of, or restrictions on
        resale or other disposition of Shares acquired under any form of
        Benefit, provisions for the acceleration of exercisability of
        Benefits in the event of a change of control of the Company, provisions
        for the payment of the value of Benefits to participants in the event
        of a change of control of the Company, provisions for the forfeiture
        of, or provisions to comply with Federal and state securities laws, or
        understandings or conditions as to the participant's employment in
        addition to those specifically provided for under the Plan.

                12. Fair Market Value. For purposes of this Plan and any
        Benefits awarded hereunder, Fair Market Value of Common Stock shall be
        the mean between the highest and lowest sale prices for the Company's
        Common Stock as reported in The Wall Street Journal under the heading
        "NASDAQ National Market" (or equivalent recognized source of
        quotations) on the date of calculation (or on the next preceding
        trading date if Common Stock was not traded on the date of
        calculation), provided, however, that if the Company's Common Stock is
        not at any time listed for trading on the NASDAQ National Market
        System, Fair Market Value mean the amount determined in good faith by
        the Committee as the fair market value

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        of the Common Stock of the Company.

                13. Withholdings. All payments or distributions made pursuant
        to the Plan shall be net of any amounts required to be withheld
        pursuant to applicable federal, state and local tax withholding
        requirements. If the Company proposes or is required to distribute
        Common Stock pursuant to the Plan, it may require the recipient to
        remit to it an amount sufficient to satisfy such tax withholding
        requirements prior to the delivery of any certificates for such Common
        Stock. The Committee may, in its discretion and subject to such rules
        as it may adopt, permit an optionee or award or right holder to pay all
        or a portion of the federal, state and local withholding taxes arising
        in connection with (a) the exercise of a Nonqualified Stock Option or
        Stock Appreciation Right or (b) the receipt of Stock Awards, by
        electing to have the Company withhold shares of Common Stock having a
        Fair Market Value equal to the amount to be withheld.

                14. Tenure. A participant's right, if any, to continue to serve
        the Company as an officer, employee, director, independent contractor,
        or otherwise, shall not be enlarged or otherwise affected by his
        designation as a participant under the Plan.

                15. Duration. Amendment and Termination. No Benefit shall be
        granted after March 1, 2006; provided, however, that the terms and
        conditions applicable to any Benefit granted prior to such date may at
        any time before such date or thereafter be amended or modified by mutual
        agreement between the Company and the participant or such other persons
        as may then have an interest therein. Also, by mutual agreement between
        the Company and a participant hereunder, under this Plan or under any
        other present or future plan of the Company, Benefits may be granted to
        such participant in substitution and exchange for, and in cancellation
        of, any Benefits previously granted such participant under this Plan,
        or any Benefit previously granted to him under the 1986 Plan or any
        other present or future plan of the Company. The Board of Directors may
        amend the Plan from time to time or terminate the Plan at any time
        provided, however, that Paragraph 6(e) of this Plan may not be amended
        more frequently than once every six months. However, no action
        authorized by this paragraph shall reduce the amount of any existing
        Benefit or change the terms and conditions thereof without the
        participant's consent. No amendment of the Plan shall, without approval
        of the stockholders of the Company, (i) materially increase the total
        number of shares which may be issued under the Plan; (ii) materially
        increase the amount or type of Benefits that may be granted under the
        Plan; (iii) materially modify the requirements as to eligibility for
        Benefits under the Plan; (iv) result in any member of the Committee
        losing his or her status as a non-employee Director under Securities
        and Exchange Commission Regulation Section 240.16b-3(b) (3); or (v)
        result in the Plan losing its status as a protected plan under
        Securities and Exchange Commission Rule 16b-3.

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                16. Stockholder Approval. The Plan was adopted by the Board of
        Directors of the Company on March 19, 1996. The Plan and any Benefits
        granted thereunder shall be null and void (to the extent the Plan and
        such Benefits incorporate provisions and/or utilize shares of Common
        Stock not provided for in, or available under, the Plan prior to such
        adoption by the Board of Directors) if stockholder approval is not
        obtained within twelve (12) months of the adoption of the Plan by the
        Board of Directors.<PAGE>
                      FIFTH AMENDMENT TO CREDIT AGREEMENT

         THIS FIFTH AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is entered
into as of December 27, 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, that certain Third Amendment to Credit Agreement dated as of January
22, 2002 and that certain Fourth Amendment to Credit Agreement dated as of
September 23, 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.       Amendments to Credit Agreement.

         (a)      Section 9.1 of the Credit Agreement is hereby amended by
inserting the following as a new last paragraph of such Section 9.1:

                  "For the purpose of calculating (i) Net Worth as part of the
         calculation of the Total Leverage Ratio with respect to Section 9.1(a)
         above and (ii) Tangible Net Worth with respect to Section 9.1(c)
         above, such calculations shall exclude (i.e., there will be added back
         to Net Worth or Tangible Net Worth, as the case may be) (a) for each
         fiscal year beginning with the 2002 fiscal year, any year-end non-cash
         adjustment (on an after-tax basis) to other comprehensive income to
         reflect any Additional Minimum Liability (as defined below), and (b)
         for the fiscal quarters ending December 31, 2002 and March 31, 2003,
         any restructuring charges (cash or non-cash) taken during such fiscal
         quarters

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         in connection with the Borrower retiring or taking other action on
         idle or underperforming assets; provided, however, that the aggregate
         incremental amount of all such charges added back to Net Worth or
         Tangible Net Worth, as the case may be, with respect to the charges
         referenced in the foregoing clause (b) shall not exceed $16,000,000
         (calculated on an after-tax basis). For purposes hereof, "Additional
         Minimum Liability" means, as of any date, with respect to any Pension
         Plan, the sum of the absolute values of (x) the unfunded accumulated
         benefit obligation existing as of the end of the fiscal year then
         ending or the most recently ended fiscal year, as applicable, plus (y)
         the Borrower's prepaid pension asset position existing as of the end
         of the fiscal year then ending or the most recently ended fiscal year,
         as applicable."

         (b)      Section 9.10 of the Credit Agreement is amended by deleting
the period at the end of such Section 9.10 and inserting the following proviso:

         "; provided, however, that the foregoing shall not prohibit any Credit
         Party from changing its assumptions regarding the useful life of
         assets so long as such changes are consistent with then-current
         industry practice."

         2.       Conditions Precedent to Effectiveness. The amendments to the
Credit Agreement set forth herein shall be deemed effective as of the date (the
"Fifth Amendment Effective 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 fee equal to 0.10% multiplied by the
         aggregate Revolving Credit Commitments of the Consenting Lenders
         (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 Fifth Amendment Effective 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 5:00
         p.m., Eastern Standard Time, on Friday, December 27, 2002, as directed
         by the Administrative Agent; and

                  (c)      the Borrower shall have paid any and all
         out-of-pocket costs (to the extent invoiced) incurred by the
         Administrative Agent or Banc of America Securities LLC, as an Arranger
         (including the reasonable fees and expenses of the Administrative
         Agent's legal counsel), and fees and other amounts payable to the
         Administrative Agent or Banc of America Securities LLC, as an
         Arranger, in each case in connection with the arrangement,
         negotiation, preparation, execution and delivery of this Amendment.

                  (d)      The representations and warranties contained in
         Sections 3 and 5 of this Amendment shall be true and correct in all
         material respects on and as of the Fifth Amendment Effective Date with
         the same effect as if made on and as of such date.

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         3.       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 Fifth Amendment Effective Date (except for those that
expressly state that they are made as of an earlier date, in which case they
shall be true and correct as of such 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.

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

         5.       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.

         6.       Expenses. The Borrower agrees to pay all reasonable costs and
expenses in connection with the preparation, execution and delivery of this
Amendment, including without

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limitation the reasonable fees and expenses of Moore & Van Allen PLLC, special
counsel to the Administrative Agent.

         7.       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.

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

         9.       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 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.

         10.      Acknowledgment of Guarantors. The Guarantors acknowledge and
consent to all of the terms and conditions of this Amendment and agree that
this Amendment and any documents executed in connection herewith do not operate
to reduce or discharge the Guarantors' obligations under the Credit Agreement
or the other Loan Documents.

         11.      Affirmation of Liens. Each Credit Party affirms the liens and
security interests created and granted by it in the Loan Documents (including,
but not limited to, the Security Agreement) and agrees that this Amendment
shall in no manner adversely affect or impair such liens and security
interests.

                                       4
<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/ Ronald J. Domanico
                              -------------------------------------------------
                           Name: Ronald J. Domanico
                           Title: Vice President and CFO

                                           Signature Page to Fifth Amendment to
                                    Caraustar Industries, Inc. Credit Agreement
                                                                  December 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 CONSUMER PRODUCTS GROUP,
                           INC.,
                           a Delaware corporation (on behalf of itself and
                           CICPG, LCC, a North Carolina limited liability
                           company, in its capacity as sole member thereof)
                           CARAUSTAR MILL GROUP, INC.,
                           an Ohio corporation f/k/a Caraustar Paperboard
                           Corporation (on behalf of itself and RECCMG, LCC, a
                           Georgia limited liability company, in
                           its capacity as sole member thereof)
                           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/ Ronald J. Domanico
                              -------------------------------------------------
                           Name: Ronald J. Domanico
                           Title: Vice President and Secretary
                                     of each of the foregoing Guarantors

                                           Signature Page to Fifth Amendment to
                                    Caraustar Industries, Inc. Credit Agreement
                                                                  December 2002
<PAGE>
                           CARAUSTAR, G.P.,
                           a South Carolina general partnership

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

                               By: /s/ Ronald J. Domanico
                                  ---------------------------------------------
                                  Name: Ronald J. Domanico
                                  Title: Vice President and Secretary

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

                               By: /s/ Ronald J. Domanico
                                  ---------------------------------------------
                                  Name: Ronald J. Domanico
                                  Title: Vice President and Secretary

                                           Signature Page to Fifth Amendment to
                                    Caraustar Industries, Inc. Credit Agreement
                                                                  December 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 Fifth Amendment to
                                    Caraustar Industries, Inc. Credit Agreement
                                                                  December 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 Fifth Amendment to
                                    Caraustar Industries, Inc. Credit Agreement
                                                                  December 2002
<PAGE>
                           DEUTSCHE BANK TRUST COMPANY AMERICAS
                           individually as an Issuing Lender and a Lender

                           By: /s/ Mary Jo Jolly
                              -------------------------------------------------
                           Name: Mary Jo Jolly
                           Title: Assistant Vice President

                                           Signature Page to Fifth Amendment to
                                    Caraustar Industries, Inc. Credit Agreement
                                                                  December 2002
<PAGE>
                           CREDIT SUISSE FIRST BOSTON

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

                           By: /s/ Cassandra Droogan
                              -------------------------------------------------
                           Name: Cassandra Droogan
                           Title: Associate

                                           Signature Page to Fifth Amendment to
                                    Caraustar Industries, Inc. Credit Agreement
                                                                  December 2002
<PAGE>
                           CREDIT LYONNAIS NEW YORK BRANCH

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

                                           Signature Page to Fifth Amendment to
                                    Caraustar Industries, Inc. Credit Agreement
                                                                  December 2002
<PAGE>
                           THE BANK OF NEW YORK

                           By:  /s/  Brendan T. Nedzi
                              -------------------------------------------------
                           Name:  Brendan T. Nedzi
                           Title: Senior Vice President

                                           Signature Page to Fifth Amendment to
                                    Caraustar Industries, Inc. Credit Agreement
                                                                  December 2002

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