Document:

<PAGE>   1
                                                                  Exhibit 10.18

July 11, 2000

Mr. David D. Howe
4120 Apple Blossom Road
Lutz, FL  33549

Dear Dave:

It is with great pleasure that I offer you the position of Senior Vice
President, Customer Service Delivery and Operations (CSD&O) with Intermedia
Communications Inc., at our Tampa headquarters. We anticipate that you will
accept this offer and officially assume this position on July 17, 2000.

This is an important senior executive position within the company that reports
directly to Dave Ruberg, Chairman, President and CEO. Your annual base salary
will be $250,000 (based on 52 weeks service). This will be reviewed again on
January 1, 2001.

This position has an annual management incentive compensation target
opportunity of 50% of base salary ($125,000). This management incentive
compensation will be prorated for 2000 and will be contingent upon the
achievement of shared corporate objectives as well as the achievement of two to
five individual objectives that relate to your primary responsibilities. You
are expected to establish these individual objectives, with Dave's approval.

Dave, this offer includes a signing bonus of $50,000. This signing bonus will
be forgiven at the rate of 1/12 per month for the 12 months following your
start date. If you voluntarily terminate your employment with Intermedia prior
to the end of this 12-month period, the signing bonus balance that exceeds the
forgiven amount must be repaid to the Company.

This offer also includes a stock option grant covering 175,000 shares of
Intermedia common stock, subject to approval by the Compensation Committee of
the Board of Directors. This grant will vest in equal installments over the
60-month period commencing with the date of your employment by the Company,
subject to customer terms contained in the standard incentive stock options
issued by the Company under the Plan. For pricing purposes, the date of the
grant will be deemed to be the date upon which the options have been approved
by the Compensation Committee of the Board of Directors. In accordance with the
provisions of the stock option plan and agreement, the vesting of this grant
would accelerate and become fully vested upon the earlier of termination of
your employment with Intermedia, without cause, following the occurrence of a
change of control or one year following the occurrence of any such change of
control.

As a senior vice president you are eligible for a severance package in the
event that you are terminated without cause or as a result of a change in
control of the Company. The severance

<PAGE>   2

package and benefits therein will be provided to you upon approval by the
Compensation Committee of the board of Directors.

As an employee of Intermedia, you will be entitled to all employee benefits:
Medical insurance, prescription drug card, dental insurance, long-term
disability, life insurance, 401(k) Plan, educational reimbursement, holidays,
sick leave, military leave, bereavement leave, voting time off and jury duty
leave, and supplemental executive life insurance. Assuming you start on July
17, 2000, your medical benefits will be effective August 1, 2000. You will be
eligible for 3 weeks of paid vacation per year.

We sincerely believe that Intermedia has an exciting future, filled with
substantial opportunity for business growth and success. We also feel that you
are a very talented person with significant potential to help us grow and
succeed. We are excited about the prospect of you joining the Intermedia team.

Sincerely,

/s/ David C. Ruberg
------------------------------------
David C. Ruberg
Chairman, President and CEO

By signing below I accept this offer:

/s/ Davis D. Howe                         7-12-00
------------------------------------      -------
Signature                                   Date

Please return the signed offer letter to Patricia A. Kurlin, SVP Human
Resources.

<PAGE>   3

August 2, 2000

Davis D. Howe
One Intermedia Way
Tampa, FL  33647

Dear Dave:

This letter will amend the July 11, 2000 offer letter setting forth the
compensation terms of your employment by the Company.

If your employment with the Company is terminated by the Company for any reason
other than for cause (described below), the Company will continue to pay your
base salary as in effect at the time of termination through the later of March
31, 2001 or one year following the date of termination, payable (i) for the
first six months following such termination on the same dates it would have
been paid had your employment continued through such later date, with the
remainder paid in a lump sum at the conclusion of the initial six months, or
(ii) if your termination occurred following the occurrence of a Change of
Control (defined below), in a lump sum promptly following such termination.
Your entitlement to receive payments pursuant to clause (i) of the preceding
sentence shall terminate and cease to be of any force or effect in the event
you, directly or indirectly (whether by an entity of which you own greater than
10% of the outstanding equity interest or by which you are employed in a senior
executive capacity) or otherwise knowingly hire within six months following
your date of termination any employee of the Company who was employed by the
Company or its subsidiaries on the date of your termination.

Cause means (i) any conduct or behavior by you that would reasonably be
expected to have a material adverse affect on the Company's business or
reputation, (ii) commission by you of an act involving moral turpitude or
dishonesty, including fraud, (iii) your material failure to reasonably perform
your duties for the Company, or (iv) your willful failure to perform or abide
by any lawful directions or instructions of the Company consistent with your
capacity as a senior executive of the Company.

In addition, and without limitation of any payments to be made to you pursuant
to the preceding paragraph, upon the occurrence of a Change of Control of the
Company, the Company shall pay to you, in a lump sum promptly following the
occurrence of such a Change of Control, an amount equal to two multiplied by
the sum of your base salary in effect immediately prior to the occurrence of
such Change of Control, plus two multiplied by the amount of the target bonus
applicable to the position held by you immediately prior to the occurrence of
such Change of Control for the fiscal year of the Company in which the Change
of Control occurs.

<PAGE>   4

For purposes of the preceding sentence, "Change of Control" means the sale,
exchange or transfer of common stock of the Company, whether in one transaction
or a series of related transactions occurring in one year, which results in an
accumulation of 50% or more of the outstanding shares of common stock (on a
fully diluted basis) in one holder or several affiliated holders (or any such
transaction(s) occurring within six months that results in an accumulation of
at least 35% of such shares of common stock (on a fully diluted basis).

Nothwithstanding anything in this letter or any other agreement to the
contrary, in the event it is determined that any payments or distributions by
the Company or any affiliate thereof or any other person to or for your
benefit, whether paid or payable pursuant to the terms of this letter, or
pursuant to any other agreement or arrangement with the Company or any such
affiliate ("Payments"), would be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986, as amended (the "Code"), or any
successor provision, or any interest or penalties with respect to such excise
tax (the excise tax, together with any interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then you will be entitled to
receive an additional payment from the Company (a "Gross-Up Payment") in an
amount that after payment by you of all taxes (including, without limitation,
any federal, state and local income tax and any interest or penalties imposed
with respect to such taxes and any Excise Tax) imposed upon the Gross-Up
Payment, you will retain an amount of the Gross-Up Payment equal to the Excise
Tax imposed upon the Payments. The Gross-Up Payment will be paid to you prior
to the time the Excise Tax is payable to you. The amount of the Gross-Up
Payment will be calculated, and the time of payment will be determined, by the
Company's independent accounting firm, engaged immediately prior to the event
that triggered the payment, in consultation with the Company's outside legal
counsel. For purposes of making calculations required by this paragraph, the
accounting firm may make reasonable assumptions and approximations concerning
applicable taxes and may rely on reasonable, good faith interpretations
concerning the application of Sections 280G and 4999 of the Code, provided that
the account firm's determinations must be made with substantial authority
(within the meaning of Section 6662 of the Code). If the precise amount of the
Gross-Up Payment cannot be determined on the date it is to be paid, an amount
equal to the best estimate of the Gross-Up Payment will be made on that date
and, within 10 days after the precise calculation is obtained, either the
Company will pay any additional amount to you or you will pay any excess amount
to the Company, as the case may be. If subsequently the Internal Revenue
Service (the "IRS") claims that any additional Excise Tax is owing, an
additional Gross-Up Payment will be paid to you within 30 days of your
providing substantiation of the claim made by the IRS. After payment to you of
the Gross-Up Payment, you will provide to the Company any information
reasonably requested by the Company relating to the Excise Tax, you will take
those actions as the Company reasonable requests to contest the Excise Tax,
cooperate in good faith with the Company to effectively contest the Excise Tax
and permit the Company to participate in any proceedings contesting the Excise
Tax. The Company will bear and pay directly all costs and expenses (including
any interest or penalties on the Excise Tax), and indemnify and hold you
harmless, on an after-tax basis, from all such costs and expenses related to
such contest. Should it ultimately be determined that any amount of an Excise
Tax is not properly owed, you will refund to the Company the related amount of
the Gross-Up Payment.

<PAGE>   5

Except as amended hereby, the terms of your original offer letter continue in
full force and effect. If the foregoing is acceptable to you, please sign in
the space provided below and return to me one fully executed copy of this
letter. Nothing in this letter will be deemed to affect the at-will status of
your continued employment by Intermedia.

                                          Intermedia Communications Inc.

                                          /s/ David C. Ruberg
                                          -------------------------------------
                                              David C. Ruberg
                                              President and CEO

Agreement with terms
of letter confirmed:

/s/ Davis D. Howe
----------------------------
Davis D. Howe<PAGE>   1
                                                                    EXHIBIT 4.07

================================================================================

                           CARAUSTAR INDUSTRIES, INC.,

                                   as Issuer,

                     THE SUBSIDIARY GUARANTORS NAMED HEREIN,

                                       and

                              THE BANK OF NEW YORK,

                                   as Trustee

                          SECOND SUPPLEMENTAL INDENTURE

                           Dated as of March 29, 2001

                       $200,000,000 7 3/8% NOTES DUE 2009

================================================================================

<PAGE>   2
                          SECOND SUPPLEMENTAL INDENTURE

         SECOND SUPPLEMENTAL INDENTURE, dated as of March 29, 2001, among
CARAUSTAR INDUSTRIES, INC., a North Carolina corporation (the "Company"), having
its principal office at 3100 Joe Jerkins Boulevard, Austell, Georgia, 30106, the
Subsidiary Guarantors (as hereinafter defined) named herein, and THE BANK OF NEW
YORK, as Trustee hereunder (the "Trustee"), having its Corporate Trust Office at
101 Barclay Street, 21W, Corporate Trust Administration, New York, NY 10286.
Terms used herein which are defined in the Indenture (as hereinafter defined)
shall have the respective meanings assigned to them in the Indenture.

                                    RECITALS

         WHEREAS, the Company and the Trustee entered into an Indenture, dated
as of June 1, 1999 (the "Indenture"), providing for the issuance of debt
securities in series; and

         WHEREAS, pursuant to the Indenture, the Company and the Trustee entered
into a First Supplemental Indenture, dated as of June 1, 1999 (the "First
Supplemental Indenture"), pursuant to which the Company issued $200,000,000 in
aggregate principal amount of its 7 3/8% Notes due 2009 (the "Notes"); and

         WHEREAS, Section 901 of the Indenture provides that the Company and the
Trustee may supplement the Indenture in order to add certain provisions in
respect of any series of Securities that do not adversely affect the rights of
the Holders thereof; and

         WHEREAS, the Company desires to cause certain of its Subsidiaries to
guarantee the payment and performance of the Company's obligations with respect
to the Notes, and in order to provide the terms and conditions of such
guarantees and certain related changes to the terms of the Notes, the Company
and the Subsidiary Guarantors named herein have duly authorized the execution
and delivery of this Second Supplemental Indenture; and

         WHEREAS, all acts and things prescribed by the Indenture, by law and by
the certificate of incorporation and bylaws of the Company, each Subsidiary
Guarantor and the Trustee necessary to make this Second Supplemental Indenture a
valid instrument legally binding on the Company, the Subsidiary Guarantors and
the Trustee, in accordance with its terms, have been done and performed;

         NOW, THEREFORE, in order to declare the terms and conditions of the
guarantees of the Notes by the Subsidiary Guarantors, and in consideration of
the premises and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, it is mutually covenanted and
agreed, for the equal and proportionate benefit of all Holders from time to time
of the Notes, as follows:

<PAGE>   3
                                    ARTICLE I

                              SUBSIDIARY GUARANTEES

         Section 101. Guarantees. Each Subsidiary Guarantor hereby
unconditionally and irrevocably guarantees, jointly and severally, to each
Holder and to the Trustee and its successors and assigns (a) the full and
punctual payment of principal of and interest on the Notes when due, whether at
maturity, by acceleration, by redemption or otherwise, and all other monetary
obligations of the Company under the Indenture and the Notes and (b) the full
and punctual performance within applicable grace periods of all other
obligations of the Company under the Indenture and the Notes (all the foregoing
being hereinafter collectively called the "Obligations"). Each Subsidiary
Guarantor further agrees that the Obligations may be extended or renewed, in
whole or in part, without notice or further assent from such Subsidiary
Guarantor and that such Subsidiary Guarantor will remain bound under this
Article notwithstanding any extension or renewal of any Obligation.

         Each Subsidiary Guarantor waives presentation to, demand of, payment
from and protest to the Company of any of the Obligations and also waives notice
of protest for nonpayment. Each Subsidiary Guarantor waives notice of any
default under the Notes or the Obligations. The obligations of each Subsidiary
Guarantor hereunder shall not be affected by (a) the failure of any Holder or
the Trustee to assert any claim or demand or to enforce any right or remedy
against the Company or any other Person under the Indenture, the Notes or any
other agreement or otherwise; (b) any extension or renewal of any thereof; (c)
any rescission, waiver, amendment or modification of any of the terms or
provisions of the Indenture, the Notes or any other agreement; (d) the release
of any security held by any Holder or the Trustee for the Obligations or any of
them; (e) the failure of any Holder or the Trustee to exercise any right or
remedy against any other guarantor of the Obligations; or (f) except as set
forth in Section 106 of this Article, any change in the ownership of such
Subsidiary Guarantor.

         Each Subsidiary Guarantor further agrees that its Subsidiary Guarantee
herein constitutes a guarantee of payment, performance and compliance when due
(and not a guarantee of collection) and waives any right to require that any
resort be had by any Holder or the Trustee to any security held for payment of
the Obligations.

         Except as expressly set forth in Sections 102 and 106 of this Article,
the obligations of each Subsidiary Guarantor hereunder shall not be subject to
any reduction, limitation, impairment or termination for any reason, including
any claim of waiver, release, surrender, alteration or compromise, and shall not
be subject to any defense of setoff, counterclaim, recoupment or termination
whatsoever or by reason of the invalidity, illegality or unenforceability of the
Obligations or otherwise. Without limiting the generality of the foregoing, the
obligations of each Subsidiary Guarantor herein shall not be discharged or
impaired or otherwise affected by the failure of any Holder or the Trustee to
assert any claim or demand or to enforce any remedy under the Indenture, the
Notes or any other agreement, by any waiver or modification of any thereof, by
any default, failure or delay, willful or otherwise, in the performance of the
obligations, or by any other act or thing or omission or delay to do any other

                                       2
<PAGE>   4
act or thing which may or might in any manner or to any extent vary the risk of
such Subsidiary Guarantor or would otherwise operate as a discharge of such
Subsidiary Guarantor as a matter of law or equity.

         Each Subsidiary Guarantor further agrees that its guarantee herein
shall continue to be effective or be reinstated, as the case may be, if at any
time payment, or any part thereof, of principal of or interest on any Obligation
is rescinded or must otherwise be restored by any Holder or the Trustee upon the
bankruptcy or reorganization of the Company or otherwise.

         In furtherance of the foregoing and not in limitation of any other
right which any Holder or the Trustee has at law or in equity against any
Subsidiary Guarantor by virtue hereof, upon the failure of the Company to pay
the principal of or interest on any Obligation when and as the same shall become
due, whether at maturity, by acceleration, by redemption or otherwise, or to
perform or comply with any other Obligation, each Subsidiary Guarantor hereby
promises to and shall, upon receipt of written demand by the Trustee, forthwith
pay, or cause to be paid, in cash, to the Holders or the Trustee an amount equal
to the sum of (1) the unpaid amount of such Obligations, (2) accrued and unpaid
interest on such Obligations (but only to the extent not prohibited by law) and
(3) all other monetary Obligations of the Company to the Holders and the
Trustee.

         Each Subsidiary Guarantor agrees that it shall not be entitled to any
right of subrogation in respect of any Obligations guaranteed hereby until
payment in full of all Obligations. Each Subsidiary Guarantor further agrees
that, as between it, on the one hand, and the Holders and the Trustee, on the
other hand, (x) the maturity of the Obligations guaranteed hereby may be
accelerated as provided in Article Five of the Indenture for the purposes of
such Subsidiary Guarantor's Subsidiary Guarantee herein, notwithstanding any
stay, injunction or other prohibition preventing such acceleration in respect of
the Obligations guaranteed hereby, and (y) in the event of any declaration of
acceleration of such Obligations as provided in Article Five of the Indenture,
such Obligations (whether or not due and payable) shall forthwith become due and
payable by such Subsidiary Guarantor for the purposes of this Section.

         Each Subsidiary Guarantor also agrees to pay any and all costs and
expenses (including reasonable attorneys' fees and expenses) incurred by the
Trustee or any Holder in enforcing any rights under this Section.

         Section 102. Limitation on Liability. Each Subsidiary Guarantor and by
its acceptance hereof each Holder hereby confirms that it is the intention of
all such parties that the Subsidiary Guarantee by such Guarantor pursuant hereto
not constitute a fraudulent transfer or conveyance for purposes of Title 11,
U.S. Code or any similar federal or state law for the relief of debtors, the
Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any
similar federal or state law. To effectuate the foregoing intention, the Holders
and each such Subsidiary Guarantor hereby irrevocably agree that the Obligations
of such Subsidiary Guarantor under its Subsidiary Guarantee shall be limited to
the maximum amount as will, after giving effect to all other contingent and
fixed liabilities of such Subsidiary Guarantor (including, without limitation,
any Obligations under or with respect to the Credit Agreement) and after giving
effect to any collections from or payments made by or on behalf of any other
Subsidiary Guarantor in respect

                                       3
<PAGE>   5
of the obligations of such other Subsidiary Guarantor under its Subsidiary
Guarantee or pursuant to Section 107 of this Article, result in the Obligations
of such Subsidiary Guarantor under its Subsidiary Guarantee not constituting
such fraudulent transfer or conveyance.

         Section 103. Successors and Assigns. This Article shall be binding upon
each Subsidiary Guarantor and its successors and assigns and shall inure to the
benefit of the successors and assigns of the Trustee and the Holders and, in the
event of any transfer or assignment of rights by any Holder or the Trustee, the
rights and privileges conferred upon that party in the Indenture and in the
Notes shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions of the Indenture.

         Section 104. No Waiver. Neither a failure nor a delay on the part of
either the Trustee or the Holders in exercising any right, power or privilege
under this Article shall operate as a waiver thereof, nor shall a single or
partial exercise thereof preclude any other or further exercise of any right,
power or privilege. The rights, remedies and benefits of the Trustee and the
Holders herein expressly specified are cumulative and not exclusive of any other
rights, remedies or benefits which either may have under this Article at law, in
equity, by statute or otherwise.

         Section 105. Modification. No modification, amendment or waiver of any
provision of this Article, nor the consent to any departure by any Subsidiary
Guarantor therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Trustee, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice to or demand on any Subsidiary Guarantor in any case shall entitle such
Subsidiary Guarantor to any other or further notice or demand in the same,
similar or other circumstances.

         Section 106. Release of Subsidiary Guarantor. Upon the sale or other
disposition (including by way of consolidation or merger) of a Subsidiary
Guarantor or upon the sale or disposition of all or substantially all the assets
of such Subsidiary Guarantor (in each case other than a sale or disposition to
the Company or an Affiliate of the Company), such Subsidiary Guarantor shall be
released from all obligations under this Article and its Subsidiary Guarantee
without any further action required on the part of the Trustee or any Holder. In
addition to the foregoing, if the Company exercises its Defeasance option
pursuant to Article Fourteen of the Indenture, each Subsidiary Guarantor shall
be released from all obligations under this Article and its Subsidiary
Guarantee. If for any reason a Subsidiary Guarantor ceases to be a guarantor of
the Credit Agreement, such Subsidiary Guarantor shall also be released from all
obligations under this Article and its Subsidiary Guarantee without any further
action required on the part of the Trustee or any Holder. At the request of the
Company, the Trustee shall execute and deliver an appropriate instrument
evidencing such release.

         Section 107. Contribution. In order to provide for just and equitable
contribution among the Subsidiary Guarantors, the Subsidiary Guarantors agree,
inter se, that in the event any payment or distribution is made by any
Subsidiary Guarantor (a "Funding Guarantor") under its Subsidiary Guarantee,
such Funding Guarantor shall be entitled to a contribution from all other
Subsidiary Guarantors in a pro rata amount based on the Adjusted Net Assets (as
hereinafter defined) of each Subsidiary Guarantor (including the Funding
Guarantor) for all payments,

                                       4
<PAGE>   6
damages and expenses incurred by that Funding Guarantor in discharging the
Company's obligations with respect to the Notes or any other Subsidiary
Guarantor's Obligations with respect to its Subsidiary Guarantee. As used
herein, "Adjusted Net Assets" means, with respect to any Subsidiary Guarantor at
any date, the lesser of the amount by which (a) the fair value of the property
of such Subsidiary Guarantor exceeds the total amount of liabilities, including,
without limitation, contingent liabilities (after giving effect to all other
fixed and contingent liabilities incurred or assumed on such date), but
excluding liabilities under the Subsidiary Guarantee of such Subsidiary
Guarantor at such date and (b) the present fair salable value of the assets of
such Subsidiary Guarantor at such date, exceeds the amount that will be required
to pay the probable liability of such Subsidiary Guarantor on its debts (after
giving effect to all other fixed and contingent liabilities incurred or assumed
on such date and after giving effect to any collection from any Subsidiary of
such Subsidiary Guarantor in respect of the obligations of such Subsidiary under
its Subsidiary Guarantee), excluding debt in respect of its Subsidiary
Guarantee, as they become absolute and matured.

                                   ARTICLE II

                     SPECIAL PROVISIONS APPLICABLE TO SERIES

         In addition to the terms set forth in the First Supplemental Indenture,
the following terms shall be applicable to all of the Notes, whether now
Outstanding or hereafter authenticated, executed and delivered:

         Section 201.  Defined Terms.

         (a) "Credit Agreement" means the Credit Agreement, to be dated on or
about March 29, 2001, among the Company, as borrower, certain Subsidiaries of
the Company from time to time a party thereto, as guarantors, the lenders party
thereto, and Bank of America, N.A., as administrative agent, including any
related notes, guarantees, collateral documents, instruments and agreements
executed in connection therewith, as amended, restated, modified, renewed,
refunded, replaced or refinanced in whole or in part from time to time.

         (b) "Foreign Subsidiary" means any Subsidiary not created or organized
in the United States, any state thereof or the District of Columbia and that
conducts substantially all of its operations outside of the United States.

         (b) "Obligations" has the meaning specified in Section 101 of this
Second Supplemental Indenture.

         (c) "Subsidiary Guarantor" means (i) each of the Company's Subsidiaries
providing guarantees under the Credit Agreement on the date of closing thereof
(other than Paragon Plastics, Inc.) and (ii) any Person that becomes a
Subsidiary of the Company and provides a guarantee under the Credit Agreement
that, pursuant to the terms of the Indenture or otherwise in the future,
executes a supplemental indenture or other instrument in which such Subsidiary
unconditionally guarantees the Company's obligations under the Notes and the
Indenture;

                                       5
<PAGE>   7
provided that any Person constituting a Subsidiary Guarantor as described above
shall cease to constitute a Subsidiary Guarantor when its respective Subsidiary
Guarantee is released in accordance with the terms of the Indenture.

         (d) "Subsidiary Guarantee" means a guarantee by a Subsidiary Guarantor
of the Company's obligations under the Notes and the Indenture.

         Section 202. Future Subsidiary Guarantors. If the Company or any of its
Subsidiaries shall acquire or create any Subsidiary (other than a Foreign
Subsidiary) after the date hereof, then such newly acquired or created
Subsidiary shall, substantially concurrently with (and in any event within 10
Business Days after) providing such guarantee, become a Subsidiary Guarantor by
executing a supplemental indenture containing a Subsidiary Guarantee and
otherwise in form and substance satisfactory to the Trustee.

         Section 203. Event of Default. In addition to the Events of Default set
forth in Section 501 of the Indenture, it shall be an Event of Default with
respect to the Notes if (a) any Subsidiary Guarantee shall be held in any
judicial proceeding to be unenforceable or invalid or shall cease for any reason
to be in full force and effect (other than in accordance with its terms or as
permitted by the Indenture) or (b) any Subsidiary Guarantor, or any Person
acting on behalf of any Subsidiary Guarantor, shall deny or disaffirm its
obligations under its Subsidiary Guarantee.

                                   ARTICLE III

                                  MISCELLANEOUS

         Section 301. This Second Supplemental Indenture is supplemental to the
Indenture and does and shall be deemed to form a part of, and shall be construed
in connection with and as part of, the Indenture for any and all purposes.
Except as specifically modified herein, the Indenture and the Notes are in all
respects ratified and confirmed (mutatis mutandis) and shall remain in full
force and effect in accordance with their terms.

         Section 302. This Second Supplemental Indenture shall become effective
upon execution and delivery by each of the Company, the Subsidiary Guarantors
named herein, and the Trustee.

         Section 303. Except as otherwise expressly provided herein, no duties,
responsibilities or liabilities are assumed, or shall be construed to be
assumed, by the Trustee by reason of this Second Supplemental Indenture. This
Second Supplemental Indenture is executed and accepted by the Trustee subject to
all the terms and conditions set forth in the Indenture with the same force and
effect as if those terms and conditions were repeated at length herein and made
applicable to the Trustee with respect hereto.

         Section 304. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND
BE USED TO CONSTRUE THIS SECOND SUPPLEMENTAL INDENTURE, THE NOTES AND THE
SUBSIDIARY GUARANTEES.

                                       6
<PAGE>   8

         Section 305. The parties may sign any number of copies of this Second
Supplemental Indenture. Each signed copy shall be an original, but all of such
executed copies together shall represent the same agreement.

                                       7
<PAGE>   9
         IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be duly executed as of the day and year first above
written.

                                          CARAUSTAR INDUSTRIES, INC.

                                          By: /s/ H. Lee Thrash, III
                                             ----------------------------------
                                          Name: H. Lee Thrash, III
                                               --------------------------------
                                          Title: Vice President
                                                --------------------------------
Attest:

By: /s/ Marinan R. Mays
   -------------------------------------
Name: Marinan R. Mays
     -----------------------------------
Title: Secretary
      ----------------------------------

                                   THE BANK OF NEW YORK, Trustee

                                   By:   /s/ Robert A. Massimillo
                                         --------------------------------------
                                   Name: Robert A. Massimillo
                                         --------------------------------------
                                   Title: Assistant Vice President
                                         --------------------------------------

                                   SUBSIDIARY GUARANTORS:
                                   AUSTELL BOX BOARD CORPORATION
                                   AUSTELL HOLDING COMPANY, LLC
                                   BUFFALO PAPERBOARD CORPORATION
                                   CAMDEN PAPERBOARD CORPORATION
                                   CARAUSTAR CUSTOM PACKAGING GROUP, INC.
                                   CARAUSTAR CUSTOM PACKAGING GROUP (MARYLAND),
                                     INC.
                                   CARAUSTAR INDUSTRIAL & CONSUMER PRODUCTS
                                     GROUP, INC.
                                   CARAUSTAR PAPERBOARD CORPORATION
                                   CARAUSTAR RECOVERED FIBER GROUP, INC.
                                   CAROLINA COMPONENT CONCEPTS, INC.
                                   CAROLINA CONVERTING INCORPORATED
                                   CAROLINA PAPER BOARD CORPORATION
                                   CAROTELL PAPER BOARD CORPORATION
                                   CHATTANOOGA PAPERBOARD CORPORATION
                                   CHICAGO PAPERBOARD CORPORATION

                             (signatures continued)

                                       8
<PAGE>   10

                                   CINCINNATI PAPERBOARD CORPORATION
                                   COLUMBUS RECYCLING, INC.
                                   FEDERAL TRANSPORT, INC.
                                   GYPSUM MGC, INC.
                                   HALIFAX PAPER BOARD COMPANY, INC.
                                   MCQUEENEY GYPSUM COMPANY
                                   MCQUEENY GYPSUM COMPANY, LLC
                                   NEW AUSTELL BOX BOARD COMPANY
                                   PAPER RECYCLING, INC.
                                   PBL INC.
                                   READING PAPERBOARD CORPORATION
                                   RICHMOND PAPERBOARD CORPORATION
                                   SPRAGUE PAPERBOARD, INC.
                                   SWEETWATER PAPER BOARD COMPANY, INC.

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

                                   CARAUSTAR, G.P.

                                   By:  Caraustar Industries, Inc., its general
                                        partner

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

                                   By:   Caraustar Industrial & Consumer
                                         Products Group, Inc., its general
                                         partner

                                   By:   /s/ H. Lee Thrash, III
                                         --------------------------------------
                                   Name: H. Lee Thrash, III
                                         --------------------------------------
                                   Title: Vice President
                                         --------------------------------------
Attest:

By:   /s/ Marinan R. Mays
      --------------------------------------
Name: Marinan R. Mays
      --------------------------------------
Title: Assistant Secretary
      --------------------------------------

                                       9

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