ASSET PURCHASE AGREEMENT

Exhibit 10.01

ASSET PURCHASE AGREEMENT

BETWEEN

SONOCO PRODUCTS COMPANY

AND

CARAUSTAR INDUSTRIAL & CONSUMER PRODUCTS GROUP, INC.

OCTOBER 1, 2007

TABLE OF CONTENTS

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ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT entered into this 1st day of October, 2007, to be effective as of 12:01 a.m. on the date hereof between Sonoco Products Company, a South Carolina corporation (hereinafter sometimes referred to as “Purchaser”), and Caraustar Industrial & Consumer Products Group, Inc., a Delaware corporation (hereinafter sometimes referred to as “Seller”).

WITNESSETH:

WHEREAS, as part of its overall business, Seller is in the business of (i) manufacturing and selling composite cans and caulk cartridges in Covington, Georgia, Orrville, Ohio, St. Paris, Ohio, and Stevens Point, Wisconsin (the “Composite Cans Business”) and (ii) manufacturing and selling injection molded and extruded carriers and containers in New Smyrna Beach, Florida and Union, South Carolina but specifically excluding the business of manufacturing tackle boxes and tackle box components pursuant to the Tackle Box IP (the “Paragon Business”) (the Composite Can Business and the Paragon Business being jointly referred to as the “Business”); and

WHEREAS, Purchaser desires to purchase and Seller desires to sell certain of the assets used by Seller and Paragon in the Business.

NOW, THEREFORE, in consideration of the premises and the mutual promises, representations, warranties and covenants hereinafter set forth, the parties hereto agree as follows:

I. DEFINITIONS.

As used herein, the following terms shall have the following meanings unless the context otherwise requires:

1.1 “Accounts Receivable” shall mean all accounts and notes receivable and other claims for money due to the Seller arising from the rendering of services or the sale of goods or materials.

1.2 “Affiliates” shall mean, with respect to any Person, any other Person that directly, or indirectly through one or more intermediates Controls or is controlled by, or is under common Control with, such person.

1.3 “Agreement” shall mean this Asset Purchase Agreement including the Schedules and Exhibits hereto, as originally executed and as subsequently amended from time to time in accordance with the provisions hereof.

1.4 “Agreement Termination Date” shall have the meaning assigned to such term in Section 7.1.

1.5 “Assets” shall have the meaning assigned such term in Section 2.1.2.

1.6 “Board of Arbitration” shall have the meaning assigned to such term in Section 6.3.3.

1.7 “Business” shall have the meaning assigned to such term in the recitals of this Agreement.

1.8 “Business Employees” shall mean all current officers, directors, employees or consultants who are employed or otherwise compensated by Seller in connection with the Business, including all employees on temporary leave of absence, including family medical leave, military leave, temporary disability or sick leave or workers compensation leave, but excluding employees on long-term disability leave, on the Closing Date.

1.9 “CERCLA” shall mean the federal Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. § 9601 et seq .), as amended.

1.10 “Claim” shall mean any claim, demand, Order or Proceeding, whether based in contract, tort, implied duty of one party to the other, violation of a law or regulation, or any other theory of liability and whether at law or in equity, arising out of or relating to this Agreement or otherwise relating to the transaction between the parties that is the subject of this Agreement, including any claim alleging negligent or intentional misrepresentation or non-disclosure in the inducement of a contract or in the execution or performance of a contract.

1.11 “Claim Notice Period” shall have the meaning assigned to such term in Section 6.3.2.

1.12 “Closing” shall mean the consummation of the transactions provided for in this Agreement.

1.13 “Closing Date” shall mean the date on which the Closing occurs pursuant to Section 5.3 hereof.

1.14 “Code” shall mean the Internal Revenue Code of 1986, as amended.

1.15 “Collective Bargaining Agreements” shall have the meaning assigned to such term in Section 3.6.7.

1.16 “Competing Business” shall have the meaning assigned to such term in Section 2.10.1.

1.17 “Composite Can Business” shall have the meaning assigned to such term in the recitals of this Agreement.

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1.18 “Confidential Information” shall have the meaning assigned such term in Section 8.10.

1.19 “Consent” shall mean any approval, consent, ratification, waiver, or other authorization (including any Governmental Authorization).

1.20 “Contemplated Transactions” shall mean all of the transactions contemplated by this Agreement including the purchase of the Assets and the performance by Purchaser and Seller of their respective covenants and obligations under this Agreement.

1.21 “Control” (including, with its correlative meanings, “Controlled by” and “under common Control with”) shall mean, with respect to any Person, any of the following: (i) ownership, directly or indirectly, by such Person of equity securities entitling it to exercise in the aggregate more than 50% of the voting power of the entity in question, or (ii) the possession by such Person of the power, directly or indirectly, (A) to elect a majority of the board of directors (or equivalent governing body) of the entity in question; or (B) to direct or cause the direction of the management and policies of or with respect to the entity in question, whether through ownership of securities, by contract or otherwise.

1.22 “Contracts” shall mean each contract, agreement or instrument, whether oral or written, to which Seller is a party relating to the Business or the Assets.

1.23 “Employee Benefit Plan” shall mean any “employee benefit plan” (as such term is defined in ER1SA §3(3)) and any other material employee benefit plan, program or arrangement of any kind.

1.24 “Employee Pension Benefit Plan” shall have the meaning assigned to such term in ERISA Section 3(2).

1.25 “Employee Welfare Benefit Plan” shall have the meaning assigned to such term in ERISA Section 3(1).

1.26 “Encumbrance” shall mean and includes any security interest, mortgage, Lien, pledge, Claim, charge, escrow, encumbrance, cloud, option, security agreement or other similar agreement, arrangement, Agreement, understanding or obligation, whether written or oral and whether or not relating in any way to credit or the borrowing of money.

1.27 “Encumbrance Documents” shall have the meaning assigned to such term in Section 3.12.3.8.

1.28 “Environmental Laws” shall mean all current federal, state and local statutory laws, ordinances and regulations relating to environmental protection, or the use, analysis, generation, manufacture, storage, discharge, release, disposal or transportation of Hazardous Materials (including, but not limited to, on-site or off-site contamination by Hazardous Materials).

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1.29 “Environmental Liabilities” or “Environmental Liabilities” shall mean any claims by any Person or Governmental Entity that are based upon:

(i) any Environmental Laws; or

(ii) any judgment, order, writ, decree, permit, requirement or injunction imposed by any Governmental Entity with respect to any Environmental Laws,

The term “Environmental Liabilities” shall include, but not be limited to: (a) fines, penalties, judgments, awards, settlements, compromises, losses, damages, interest, costs, reasonable fees (including reasonable attorneys’ and consultants’ fees), expenses and disbursements; and (b) financial responsibility for (i) cleanup costs, including any removal, remedial or other response actions, and natural resource damages, and (ii) any other compliance or remedial measures, provided, however, that all such costs or measures are required by law, court order or governmental agency, or are in settlement of a claim, demand, notice, complaint or lawsuit by a governmental agency or private party.

1.30 “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

1.31 “ERISA Affiliate” shall mean each Person that is treated as a single employer with Seller for purposes of Code Section 414.

1.32 “Estoppel Certificates” shall have the meaning assigned to such term in Section 5.1.15.

1.33 “Fiduciary” shall have the meaning assigned to such term in ERISA Section 3(21).

1.34 “Financial Statements” shall have the meaning assigned to such term in Section 3.10.

1.35 “FIRPTA Affidavit” shall have the meaning assigned to such term in Section 5.1.16.

1.36 “GAAP” shall mean U.S. generally accepted accounting principles and practices set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other statements by such other entity as may be approved by a significant segment of the accounting profession that are applicable to the circumstances as of the date of determination.

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1.37 “Governmental Authorization” means any approval, consent, license, permit, waiver, or other authorization issued, granted, given, or otherwise made available by or under the authority of any Governmental Entity or pursuant to any Legal Requirement.

1.38 “Governmental Entity” shall mean any federal, state, local, foreign or other governmental or administrative authority, agency, entity, body, court or tribunal.

1.39 “Guaranty Agreement” shall have the meaning assigned to such term in Section 2.19.

1.40 “Hazardous Materials” shall mean petroleum and any Hazardous Substance (as such term is defined in CERCLA).

1.41 “Improvements” shall have the meaning assigned to such term in Section 3.12.3.2.

1.42 “Indemnifiable Loss” shall mean any item or matter eligible for indemnification pursuant to Sections 6.1 or 6.2, as applicable, hereunder, whether or not indemnification is sought.

1.43 “Indemnifying Party” shall have the meaning assigned to such term in Section 6.3.1.1.

1.44 “Indemnitee” shall have the meaning assigned to such term in Section 6.3.1.1.

1.45 “Indemnity Notice” shall have the meaning assigned to such term in Section 6.3.2.

1.46 “Indemnity Response Period” shall have the meaning assigned to such term in Section 63.2.

1.47 “Intellectual Property” shall have the meaning assigned to such term in Section 2.1.2.5 hereof.

1.48 “Inventory” shall have the meaning assigned to such term in Section 2.1.2.3.

1.49 “Inventory Statement” shall have the meaning assigned to such term in Section 2.3.

1.50 “Law” shall mean all statutes, laws, ordinances, regulations, rules, resolutions, orders, determinations, writs, injunctions, awards (including without limitation awards of any arbitrator), judgments and decrees applicable to the specified persons or entities and to the businesses and assets thereof (including without, limitation Laws relating to securities registration and regulation; the sale, leasing, ownership or management of real property; employment practices, terms and conditions, and wages and hours; building standards, land use and zoning; safety, health and fire prevention; and environmental protection).

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1.51 “Leased Real Property” shall mean the leasehold or subleasehold estates and other rights to use or occupy any land, buildings, structures, improvements, fixtures, or other interests in real property by Seller exclusively in connection with the Business.

1.52 “Legal Requirement” shall mean any federal, state, local, municipal, foreign, international, multinational, or other administrative order, constitution, law, ordinance, principle of common law, regulation, statute, or treaty.

1.53 “Lease Consents” shall have the meaning assigned to such term in Section 5.1.14.

1.54 “Lien” shall mean, with respect to any asset, any mortgage, lien, pledge, charge, security interest or Encumbrance of any kind, or any agreement to give the foregoing in respect of such asset.

1.55 “Material Adverse Effect” or “Material Adverse Change” means any effect or change that would be materially adverse to the Business, taken as a whole, or to the ability of any party to consummate timely the Contemplated Transactions; provided that none of the following shall be deemed to constitute, and none of the following shall be taken into account in determining whether there has been, a Material Adverse Effect or Material Adverse Change: (a) any adverse change, event, development, or effect arising from or relating to (1) general business or economic conditions, including such conditions related to the Assets, (2) national or international political or social conditions, including the engagement by the United States in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack upon the United States, or any of its territories, possessions, or diplomatic or consular offices or upon any military installation, equipment or personnel of the United States, (3) financial, banking, or securities markets (including any disruption thereof and any decline in the price of any security or any market index), (4) changes in United States generally accepted accounting principles, (5) changes in laws, rules, regulations, orders, or other binding directives issued by any governmental entity or (6) the taking of any action contemplated by this Agreement and the other agreements contemplated hereby, (b) any existing event, occurrence, or circumstance with respect to which Purchaser has knowledge as of the date hereof and (c) any adverse change in or effect on the Business that is cured by Seller before the earlier of (1) the Closing Date and (2) the date on which this Agreement is terminated pursuant to Article 7 hereof.

1.56 “Order” or “Orders” shall mean any judgments, writs, decrees, injunctions, orders, compliance agreements or settlement agreements of or with any Governmental Entity,

1.57 “Offered Employees” shall have the meaning assigned to such term in Section 2.6.

1.58 “Ordinary Course of Business” shall mean, with respect to any Person, ordinary course of business consistent with past practices of such Person and prudent customary business operations.

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1.59 “Organizational Documents” means (a) the articles or certificate of incorporation and the bylaws or code of regulations of a corporation; (b) the partnership agreement and any certificate or statement of partnership of a general partnership; (c) the limited partnership agreement and the certificate of limited partnership of a limited partnership; (d) the articles or certificate of organization of a limited liability company and the operating agreement or limited liability company agreement of a limited liability company; (e) any charter or similar document adopted or filed in connection with the creation, formation or organization of a Person; and (f) any amendment to any of the foregoing.

1.60 “Owned Real Property” shall have the meaning assigned to such term in Section 2.1.2.2.

1.61 “Paragon” shall mean Paragon Plastics, Inc. a South Carolina corporation and wholly-owned subsidiary of Seller.

1.62 “Paragon Business” shall have the meaning assigned to such term in the recitals of this Agreement.

1.63 “PBGC” shall mean the Pension Benefit Guaranty Corporation.

1.64 “Permitted Liens” or “Permitted Lien” shall mean (i) any Lien for Taxes not yet due or delinquent or being contested in good faith by appropriate proceedings, (ii) any statutory Lien arising in the Ordinary Course of Business by operation of law with respect to a liability that is not yet due or delinquent, (iii) mechanics’ liens and similar liens for labor, materials, or supplies provided with respect to Owned Real Property incurred in the Ordinary Course of Business for amounts that are not delinquent and that are not material or being contested by appropriate proceedings; (iv) any minor imperfection of title or recorded easements, covenants or other restrictions effecting Owned Real Property which individually or in the aggregate with other such items do not or would not materially impair the use or occupancy of such Owned Real Property in the operation of the Business; and (v) any Lien for obligations which are Assumed Liabilities.

1.65 “Permits” shall mean all permits, licenses, authorizations, registrations, franchises, approvals, consents, certificates, variances and similar rights obtained, or required to be obtained, from Governmental Entities.

1.66 “Person” shall mean any individual, corporation (including any non-profit corporation), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, labor union, or other entity or Governmental Entity.

1.67 “Personal Property Leases” shall have the meaning assigned to such term in Section 3.12.2.

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1.68 “Plant Closing Laws” shall have the meaning assigned to such term in Section 3.17.1.

1.69 “Proceeding” shall mean any action, arbitration, audit, hearing, investigation, litigation, or suit (whether civil, criminal, administrative, investigative, or informal) commenced, brought, conducted, or heard by or before, or otherwise involving, any Governmental Entity or arbitrator.

1.70 “Prohibited Transaction” shall have the meaning assigned to such term in ERISA Section 406 and Code Section 4975.

1.71 “Purchase Price” shall have the meaning assigned to such term in Section 2.2.

1.72 “Purchaser” shall have the meaning assigned to such term in the introductory paragraph of this Agreement.

1.73 “Purchaser’s Knowledge” shall mean the actual knowledge of Kevin P. Mahoney, Rick Maloney and Steve Heisler after reasonable inquiry.

1.74 “Real Estate Impositions” shall have the meaning assigned to such term in Section 3.12.3.9.

1.75 “Real Property Laws” shall have the meaning assigned to such term in Section 3.12.3.4.

1.76 “Real Property Lease” shall have the meaning assigned to such term in Section 3.12.2.

1.77 “Real Property” shall mean the Owned Real Property and the Leased Real Property.

1.78 “Real Property Permits” shall have the meaning assigned to such term in Section 3.12.3.6.

1.79 “Reportable Event” shall have the meaning assigned to such term in ERISA Section 4043.

1.80 “Representative” means, with respect to a particular Person, any director, officer, employee, agent, consultant, advisor, or other representative of such Person, including legal counsel, accountants, and financial advisors.

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1.81 “Restricted Contract” means any Contract that may not be assigned to Purchaser by reason of the absence of a consent to assignment.

1.82 “Rules of Arbitration” shall have the meaning assigned to such term in Section 6.3.3.

1.83 “Section” shall mean a section (or a subsection) of this Agreement.

1.84 “Seller” shall have the meaning assigned to such term in the introductory paragraph of this Agreement.

1.85 “Seller Employee Liabilities” shall mean any claims, liabilities, costs, expenses or compensation which exist, which arise by reason of, or which are in any way connected with or based on (1) an employee’s employment relationship with Seller and/or the termination of such relationship including, but not limited to, Seller’s obligation to pay its employees incentive payments under any Employee Benefit Plan of Seller, (2) any fair employment practices act of any Governmental Entity and/or any law, ordinance or regulation promulgated by any such Governmental Entity as applied to employees of Seller in connection with their employment or other relationship with Seller, (3) interference with and/or breach of contract with employees of Seller in connection with their employment or other relationship with Seller, (4) retaliatory or wrongful discharge of any employee of Seller in connection with their employment or other relationship with Seller, (5) intentional or negligent infliction of emotional distress or mental anguish upon employees of Seller in connection with their employment or other relationship with Seller, (6) outrageous conduct with respect to employees of Seller in connection with their employment or other relationship with Seller, (7) interference with business relationships, contractual relationships or employment relationships involving employees of Seller in connection with their employment or other relationships with Seller and any third party, (8) breach of duty, fraud, fraudulent inducement to contract, breach of right of privacy, libel, slander, or tortuous conduct of any kind with respect to employees of Seller in connection with their employment or other relationship with Seller, (9) violations of Title VII of the Civil Rights Act of 1964 and/or the Civil Rights Act of 1991 and/or 42 U.S.C. §1981 with respect to employees of Seller in connection with their employment or other relationship with Seller, (10) violations of Age Discrimination in Employment Act of 1967, the Age Discrimination Claims Assistance Act of 1988 and/or the Older Workers’ Benefit Protection Act with respect to employees of Seller in connection with their employment or other relationship with Seller, (11) violations of the handicap or disability discrimination laws or acts of any Governmental Entity, including, but not limited to, the Rehabilitation Act of 1973 and the Americans with Disabilities Act with respect to employees of Seller in connection with their employment or other relationship with Seller, (12) discriminatory or wrongful acts against employees of Seller in connection with their employment or other relationship with Seller, (13) violations of ERISA or the Family and Medical Leave Act or the Fair Labor Standards Act with respect to employees of Seller in connection with their employment or other relationship with Seller, (14) violations of the workers’ compensation laws of any Governmental Entity by Seller or with respect to

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employees of Seller in connection with their employment or other relationship with Seller, (15) violations of any other law or regulations of any Governmental Entity with respect to employees of Seller in connection with their employment or other relationship with Seller, or (16) incorrect classification by Seller of individuals as either employees or independent contractors.

1.86 “Seller’s Knowledge” shall mean the actual knowledge of Ronald J. Domanico, Wilma Elizabeth Beaty, Steven L. Kelchen, Frank S. Snyder, J. Randy Kelley, Kim Robinson and Andrew C. McGowan after reasonable inquiry.

1.87 “Seller’s Union Facility” shall mean the real property listed as item 1 on Schedule 2.1.2.2.

1.88 “Supply Agreement” shall have the meaning assigned to such term in Section 2.17.

1.89 “Surveys” shall have the meaning assigned to such term in Section 5.1.13.

1.90 “Tackle Box IP” shall have the meaning assigned to such term in Section 2.1.3.

1.91 “Taxes” means all taxes (including, without limitation, income, corporation, capital, sales, withholding, franchise, customs duties, profits, gross receipts, excise, property, stamp, transfer, water, business, and goods and services taxes), imposts, duties, levies, deductions, withholdings, charges, assessments, reassessments or fees of any nature (including, without limitation, interest, penalties and additions) that are imposed by any relevant taxing authority; and “Tax” shall mean any one of them.

1.92 “Tax Return” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereto.

1.93 “Third Party Claim” shall have the meaning assigned to such term in Section 6.3.1.1.

1.94 “Title Commitments” shall have the meaning assigned to such term in Section 5.1.11.

1.95 “Title Company” shall have the meaning assigned to such term in Section 5.1.11.

1.96 “Title Policies” shall have the meaning assigned to such term in Section 5.1.12.

1.97 “Transition Services Agreement” shall have the meaning assigned to such term in Section 2.18.

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1.98 “Transferred Employee” shall have the meaning assigned to such term in Section 2.73.

1.99 “Transferred Employee Benefit Assets” shall have the meaning assigned to such term in Section 2.7.3.

1.100 “Transferred Employee Benefit Liabilities” shall have the meaning assigned to such term in Section 2.7.3.

1.101 “Transferee Plan” shall have the meaning assigned to such term in Section 2.7.3.

1.102 “Transferor Plan” shall mean the defined contribution Employee Pension Benefit Plan, currently sponsored and maintained by Seller for the benefit of the Offered Employees and other employees of Seller.

II. COVENANTS AND UNDERTAKINGS

2.1 Purchase and Sale of Assets.

2.1.1 Subject to the terms and conditions hereinafter set forth, at the Closing, Seller shall sell, assign, transfer, convey, and deliver to Purchaser, and Purchaser shall purchase and assume from Seller, in consideration of the payment of the Purchase Price, the Assets, free and clear of all liens, claims, charges and encumbrances of any nature whatsoever, except for Permitted Liens.

2.1.2 The assets to be purchased hereunder (the “Assets”) shall consist of the following, in each case owned by the Seller or Paragon, in existence on the Closing Date wherever located, irrespective of whether actually in use on that date:

2.1.2.1 all tangible personal property and fixtures of the Seller used primarily in the Business including, but not limited to, those items listed on Schedule 2.1.2.1 and all assignable warranties of” third parties with respect thereto;

2.1.2.2 the real property listed on Schedule 2.1.2.2 (the “Owned Real Property”);

2.1.2.3 all inventories of raw materials, finished goods, work in progress, and spare parts and supplies of the Seller used primarily in the Business wherever located and in existence on the Closing Date (“Inventory”) and Seller’s right to receive refunds or rebates in connection with its purchase of any Inventory;

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2.1.2.4 all data and records related primarily to the operations of the Business, including, without limitation, all lists of customers and suppliers and related customer and supplier records (wherever located) of the Business, manuals, price lists (either in hard copy form or by access to computer files), referral sources, research and development reports and records, production reports and records, service and warranty records, equipment logs and maintenance records, operating guides and manuals, financial and accounting records, creative materials, advertising materials, promotional materials, studies, reports, correspondence and other similar documents and records and copies of all personnel records, and all other documents of or primarily relating to the Business);

2.1.2.5 all intangible rights and property, trademarks (including trade dress, etc.), trademark registrations, trademark applications, service marks, service mark registrations, service mark applications, trade names, product names, copyrights, copyright registrations, copyright applications, United States and foreign patent rights (including, without limitation, issued patents, applications, divisions, continuations and continuations-in-part, reissues, patents of addition, utility models and inventors’ certificates), maskworks and registrations and applications or registration thereof, licenses, processes, formulae, trade secrets, drawings, designs, inventions, whether patentable or unpatentable and whether or not reduced to practice, manufacturing and production processes and techniques, research and development information, financial, marketing, and business data, pricing and cost information, business and marketing plans, and know-how, including all rights to sue for past infringement (together with good will pertaining thereto) used primarily in the Business including, but not limited to, those items listed on Schedule 2.1.2.5 attached hereto (the “Intellectual Property”); and

2.1.2.6 all Contracts assumed under Section 2.5, and all outstanding offers or solicitations made by or to Seller to enter into any prospective contract relating exclusively to the Business;

2.1.2.7 all claims of Seller against third parties relating to the Assets, whether choate or inchoate, known or unknown, contingent or noncontingent;

2.1.2.8 the transferable Permits;

2.1.2.9 all insurance benefits, including rights and proceeds, arising from or relating to the Assets or the Assumed Liabilities prior to the Closing Date, unless expended in accordance with this Agreement;

2.1.2.10 all rights of Seller relating to deposits and prepaid expenses of the Business, claims for refunds and rights to offset in respect thereof of the Business; and

2.1.2.11 all going concern value and goodwill of the Business.

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Notwithstanding the foregoing, the transfer of the Assets pursuant to this Agreement shall not include the assumption of any liability related to the Assets unless Purchaser expressly assumes that Liability pursuant to Section 2.4.

2.1.3 All assets of Seller and Paragon not included in Section 2.1.2 shall remain the property of Seller or Paragon, as the case may be, included, but not limited to the name “Caraustar” and “Caraustar Industrial & Consumer Products Group” or any derivations therefrom and any other trademarks or service marks associated with the business of Seller and its Affiliates not used primarily in the Business, cash and cash equivalents, negotiable instruments, Accounts Receivable, the patents and trademarks listed on Schedule 2.1.3 (the “Tackle Box IP”), the assets of Seller or Paragon not primarily related to the Business, any contracts of Seller or Paragon not relating to the Business and expressly including the contracts included on Schedule 3.6 which are designated as not being assigned or assumed, the minute books, corporate seals, stock register and short-term investments, corporate charter of Seller or Paragon, all claims for refund of Taxes which relate to the period prior to the Closing Date, the shares of capital stock of Seller or Paragon held in treasury, all insurance policies and rights thereunder and all claims for refunds of insurance premiums paid by Seller or Paragon which relate to the period following the Closing Date, all rights of Seller or Paragon in connection with and assets of the Employee Benefits Plans, the rights of Seller or Paragon under this Agreement and the agreements contemplated herein and any personnel records and other documents that Seller or Paragon is required by applicable Law to retain in their respective possession (collectively, the “Excluded Assets”).

2.2 Consideration. In consideration of the sale, transfer, conveyance, assignment and delivery of the Business and the Assets, the delivery and performance under the covenant not to compete or solicit business in Section 2.5, and in reliance upon the representations and warranties made herein by Seller, at Closing Purchaser shall pay to Seller an amount equal to $20,900,000 reduced to the extent severance to be paid by Seller as provided in Section 2.7.2 is less than $900,000 (the “Purchase Price”) by wire transfer at Closing.

2.3 Inventory Valuation at Closing. On or before Closing, the Purchaser and the Seller shall perform a joint physical count of the Inventory. At Closing, or no later than 14 calendar days after Closing, Seller shall prepare and deliver to the Purchaser a statement showing the value of the Inventory of the Business as of the Closing Date (“Inventory Statement”) along with all working papers used to calculate such valuation. The Inventory shall be valued pursuant to GAAP or otherwise consistent with Seller’s policies applicable to the Financial Statements and Interim Financial Statements. In the event Purchaser does not object by written notice to Seller to such Inventory Statement within thirty (30) days from receipt thereof by Purchaser, the Inventory Statement shall be deemed accepted. If Purchaser makes a timely objection to the Inventory Statement, Purchaser and the Seller shall have fourteen (14) calendar days from receipt of such objection by Seller in which to reach agreement as to the value of the Inventory for the Inventory Statement. If no agreement is reached in said fourteen (14) calendar day period, at the end of such period, Purchaser and the Seller shall appoint KPMG LLP to arbitrate the dispute and calculate the Inventory Statement. The determination shall be binding on the parties. Purchaser on the one hand

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and Seller on the other hand shall each pay one-half of the fees and expenses of KPMG LLP. Within fourteen (14) calendar days after the final determination of the final Inventory value as shown on the Inventory Statement as determined by KPMG LLP, the Seller shall pay to Purchaser by wire transfer, the amount, if any, by which the final Inventory value is less than $7,200,000.

2.4 Allocation of Purchase Price. The Purchase Price shall be allocated among the Assets and Covenant not to Compete as set forth on Schedule 2.4. After the Closing, the parties shall make consistent use of the allocations specified in Schedule 2.4 for all Tax purposes and in all filings, declarations and reports with the Internal Revenue Service in respect thereof, including the reports required to be filed under Section 1060 of the Code. Purchaser shall prepare and deliver Internal Revenue Service Form 8594 to Seller within 60 days after the Closing Date to be filed with the Internal Revenue Service. In any proceeding related to the determination of any Taxes, neither Purchaser nor Seller shall contend or represent that such allocation is not a correct allocation.

2.5 Liabilities of the Seller. Except for the Assumed Liabilities, Purchaser assumes no debt, liability or obligation (whether absolute, accrued, contingent, known, unknown or otherwise) of the Seller, its Affiliates or any other Person and it is expressly understood and agreed that all debts, liabilities and obligations of the Seller, its Affiliates and the Business not expressly assumed in this Section shall remain the sole obligation of Seller and its Affiliates, Purchaser shall assume the following liabilities of Seller and no other (the “Assumed Liabilities”):

2.5.1 All obligations arising under purchase agreements for raw materials, supplies, services and other products under purchase orders, releases, and supply contracts issued to suppliers of the Seller which have been entered into in the Ordinary Course of Business and if such obligations meet the threshold in Section 3.6 for disclosure they are disclosed on Schedule 3.6 or entered into in the Ordinary Course of Business after the date hereof);

2.5.2 Obligations to supply and warrant finished goods to customers of the Seller on and after the Closing, where such obligations have been entered into in the Ordinary Course of Business and if such obligations meet the threshold in Section 3.6 for disclosure they are disclosed on Schedule 3.6 or entered into in the Ordinary Course of Business after the date hereof);

2.5.3 Liabilities incurred under or in respect of (i) the Permitted Liens; (ii) the Personal Property Leases; and (iii) the Contracts listed on Schedule 2.5.3 to the extent assigned with appropriate consents obtained in each case where required in respect of the period commencing at the Closing Date;

2.5.4 Subject to, and to the extent of, the transfer of Transferred Employee Benefit Assets from the Transferor Plan to the Transferee Plan pursuant to Section 2.7.3, all liabilities incurred by Seller, its Affiliates or any other Person employed by, or performing services for, the Seller or its Affiliates, and any fiduciary of the Transferor Plan (i) arising by

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reason of any fiduciary or non-fiduciary decisions made to effectuate the transfer of Transferred Employee Benefit Liabilities and Transferred Employee Benefit Assets from the trustee of the Transferor Plan to the trustee of the Transferee Plan pursuant to Section 2.7.3 of this Agreement, (ii) arising by reason of any actions taken by Seller, its Affiliates, or any other Person employed by, or performing services for, the Seller or its Affiliates, to effectuate such actual transfer of assets and liabilities (iii) arising with respect to the Transferred Employee Benefit Liabilities and the Transferred Employee Benefit Assets, the holding thereof, and any fiduciary responsibilities associated with such transferred assets and liabilities, after such transfer has occurred, or (iv) any liability associated with the Transferee Plan, whether such liability is imposed on the Purchaser, the Transferee Plan, its fiduciaries, or any other Person; and

2.5.5 Subject to, and to the extent of, the transfer of assets and liabilities from the Transferor Plan to the Transferee Plan as described in Section 2.7.3 of this Agreement, all Transferred Employee Benefit Liabilities associated with any Transferred Employee Benefit Assets actually transferred from the trustee of the Transferor Plan to the trustee of the Transferee Plan pursuant to Section 2.7.3 of this Agreement.

2.6 Examination of Records. Between the date of this Agreement and the Closing Date, Seller will allow Purchaser and its counsel and other representatives reasonable access to the Real Property, all books, records, files, documents, assets, other properties, contracts and agreements of the Business, including without limitation records regarding environmental, occupation, safety and health matters, relating to the Assets and the Business which may be reasonably requested, and shall furnish Purchaser, its officers and representatives during such period with all information concerning the Assets and the Business which may be reasonably requested; provided that, Purchaser and its counsel and other representatives shall not interview or otherwise communicate with (i) any employee of the Business or (ii) any customer of the Business concerning the acquisition of the Business without, in the case of (i) and (ii), obtaining the prior written consent of Seller. Purchaser will conduct any such investigation in a manner which will not unreasonably interfere with the business of Seller.

2.7 Employees and Employee Benefits.

2.7.1 Effective as of the close of business on the last business day immediately prior to the Closing Date, Seller shall terminate the employment of each of (i) its hourly employees of the Business and (ii) those salaried employees of the Business designated by Purchaser in writing (the “Offered Employees”). Purchaser shall offer employment to all Offered Employees on terms in Purchaser’s absolute discretion. Any Offered Employee is and shall be terminable at the will of Purchaser or as otherwise agreed to between Purchaser and Offered Employee. Purchaser shall have the sole and complete discretion to change any of the terms or conditions of employment, compensation or benefits relating to any Offered Employee at any time. Purchaser shall not have any responsibility, liability or obligation, whether primarily or as a successor employer, with respect to any Seller Employee Liabilities. Seller hereby consents to the hiring of the Offered Employees and waives, with respect to the

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employment of such Offered Employees, any claims or rights Seller may have against Purchaser or Offered Employee under any non-competition, confidentiality or employment agreement pertaining principally to the Business. Seller shall promptly pay directly to each of the Offered Employees and to any Employee Benefit Plans with respect to the Offered Employees that portion of those wages and benefits which have been accrued on behalf of the Offered Employees as of and through the Closing Date, said payments to be made within a reasonable time, and Purchaser shall have or assume no liability therefore. Any Offered Employees of Seller hired by Purchaser shall have the right to participate in such benefit programs as may be established by Purchaser, in its sole discretion, for similarly situated employees of the Purchaser.

2.7.2 Schedule 2.7.2 lists each salaried employee of the Business and the compensation and severance payable to such employee as of the Closing Date. At Closing, Purchaser may, but is not required to, offer employment to one or more of such salaried employees. Seller represents and warrants to Purchaser that no severance will be payable to such salaried employees under any Employee Benefit Plan of Seller, Applicable Law or otherwise to the extent Purchaser offers such salaried employees employment at the annual compensation listed on Schedule 2.7.2. Except as provided herein, Purchaser shall pay to Seller after Closing, any severance required to be paid by Seller to such salaried employees in excess of $900,000. For purposes of calculating total severance paid by Seller for purposes of the preceding sentence, severance in excess of the amount shown on Schedule 2.7.2 shall not be considered. Purchaser shall pay Seller such amounts within 10 calendar days after Seller provides written support that such severance has actually been paid. Such written support shall detail each salaried employee paid, the date of payment, the amount actually paid, and the amount shown for such employees on Schedule 2.7.2. In the event Seller pays severance to a salaried employee although Purchaser made such employee an offer of employment under the conditions provided above, such severance shall not be considered for purposes of calculating any amounts due Seller under this Section 2.7.2.

2.7.3 As of the Closing, the Seller shall cause each of the Offered Employees who accept employment with the Purchaser (the “Transferred Employees”) to become fully vested in his or her benefits accrued under the Transferor Plan. As soon as administratively practicable following the Closing, Purchaser shall establish and maintain or designate a previously established and maintained defined contribution profit-sharing plan (the “Transferee Plan”) for the benefit of all Transferred Employees and, if desired by Purchaser, other employees of Purchaser. Upon receipt of a legal opinion from Seller’s counsel (in a form acceptable to Seller) that the transfer of assets and liabilities provided in this Section 2.7.3 will have no adverse effect on any of the Transferor Plan, Seller or Caraustar Industries, Inc. and any of Seller’s or Caraustar Industries, Inc.’s fiduciaries or trustees and a receipt of a copy of resolutions of the Purchaser by which the Purchaser directs and authorizes the trustee of the Transferee Plan to accept a transfer from the trustee of the Transferor Plan of (i) the accrued benefit liabilities of the Transferor Plan for the benefit of the Transferred Employees (the “Transferred Employee Benefit Liabilities”), and (ii) those assets held by the trustee of the Transferor Plan which are attributable to the Transferred Employee Benefit Liabilities (the “Transferred Employee Benefit Assets”), the Seller shall cause the trustee of the Transferor Plan to transfer the Transferred Employee Benefit Assets and the

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Transferred Employee Benefit Liabilities to the Transferee Plan. The Transferee Plan shall satisfy the representations and warranties made by Purchaser pursuant to Section 4.5 hereof, and shall provide all optional forms of benefit with respect to the Transferred Employee Benefit Assets and Transferred Employee Benefit Liabilities as were available under the Transferor Plan, except to the extent that, in accordance with applicable Treasury regulations, an optional form of benefit has been eliminated. The transfer of assets and liabilities provided in this Section 2.7.3 shall satisfy the requirements of Sections 411(d)(6) and 414(1) of the Code, and shall be effectuated in accordance with the notification requirements of Section 101 of ERISA. The transfer of assets as provided in this Section 2.7.3 shall be made in cash, except that account balances or portions thereof invested in a promissory note of a Transferor Plan participant shall be transferred in kind to the Transferee Plan.

2.7.4 Seller agrees that for a period of 24 months after Closing that it will not solicit for employment of any of the Transferred Employees.

2.8 Supplying of Financial Statements . Seller covenants to deliver to Purchaser all financial statements of the Business prepared by Seller in the normal course after the date of this Agreement through the Closing Date and as otherwise requested by Purchaser.

2.9 Negotiation with Others . From and after the date of this Agreement until the Closing or earlier termination of this Agreement pursuant to Section 7.1, Seller shall not directly or indirectly:

2.9.1 solicit, encourage, entertain, initiate discussions or engage in negotiations regarding any inquiries or proposals from any person or entity, or provide any nonpublic information to or consider the merits of any inquiries or proposals from any person or entity, or take any action to facilitate the efforts of any person or entity, other than Purchaser, relating to the possible acquisition of all or a substantial part of the Business (whether by way of merger, purchase of capital stock, purchase of assets or otherwise);

2.9.2 except for information furnished to Purchaser or to third parties as required for Seller to obtain all necessary consents in connection with the transactions contemplated by this Agreement provide information with respect to the Seller to any person or entity, other than Purchaser, relating to the possible acquisition of all or a substantial part of the Business (whether by way of merger, purchaser of capital stock, purchase of assets or otherwise);

2.9.3 enter into any agreement with any person or entity, other than Purchaser, providing for the possible acquisition or all of a substantial part of the Business (whether by way of merger, purchase of capital stock, purchase of assets or otherwise); or

2.9.4 make or authorize any statement, recommendation or solicitation in support of any possible acquisition by any person or entity, other than Purchaser, of all or a substantial part of the Business (whether by way of merger, purchase of capital stock, purchase of assets or otherwise).

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Seller shall notify, Purchaser of any inquiries or proposals which Seller reasonably believes to be serious inquiries with a reasonable possibility of fruition within 3 business days of receipt or awareness of the same by Seller.

2.10 Confidentiality . In the event the Closing does not occur, the parties’ obligations under the confidentiality agreement among them dated April 9, 2007, shall continue in accordance with the terms of such agreement.

2.11 Covenant Not to Compete or Solicit Business.

2.11.l In furtherance of the sale of the Business to Purchaser and to protect the value and goodwill of the Business and in consideration of the Purchase Price, the Seller covenants and agrees that, after the Closing for a period ending on the 5th anniversary of the Closing, Seller and its Affiliates will not directly or indirectly (whether as principal, agent, independent contractor, partner or otherwise) own, manage, operate, control, participate in, or otherwise carry on, a business that is the same as, or is substantially similar to, the Business (a “Competing Business”) in the United States.

2.11.2 Notwithstanding Section 2.11.1, (i) the ownership of 10% or less of a publicly-traded company which is a Competing Business in the United States shall not be a violation of Section 2.10.1 and (iii) the acquisition, directly or indirectly, by a Person engaged in a Competing Business of 80% or more of the Capital Stock of the Seller or any Affiliate in a stock purchase, merger, consolidation or similar transaction shall not be a violation of Section 2.11.1.

2.11.3 In the event Seller or any Affiliate of Seller violates any of such Person’s obligations under this Section 2.11, Purchaser may proceed against such Person in law or in equity for such damage or other relief as a court may deem appropriate. Seller acknowledges that a violation of this Section 2.11 may cause Purchaser irreparable harm which may not be adequately compensated for by money damages. Seller therefore agrees that in the event of any actual or threatened violation of this Section 2.11, Purchaser shall be entitled, in addition to other remedies that it may have, to a temporary restraining order and to preliminary and final injunctive relief against Seller or such Affiliate of Seller to prevent any violations of this Section 2.11, without the necessity of posting a bond. The prevailing party in any action commenced under this Section 2.11 shall also be entitled to receive reasonable attorneys’ fees and court costs.

2.11.4 It is the intent and understanding of each party hereto that if, in any Proceeding before any Governmental Entity or arbitrator legally empowered to enforce this Section 2.11 any term, restriction, covenant or promise in this Section 2.11 is found to be unreasonable and for that reason unenforceable, then such term, restriction, covenant or promise shall be deemed modified to the extent necessary to make it enforceable by such Governmental Entity.

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2.12 Access to Records after Closing.

2.12.1 For a period of 7 years after the Closing, Seller and its Representatives shall have reasonable access to all of the books and records of the Business to the extent that such access may reasonably be required by Seller in connection with matters relating to or affected by the operations of the Business prior to the Closing Date. Such access shall be afforded by Purchaser upon receipt of reasonable advance notice and during normal business hours. Seller shall be solely responsible for any costs or expenses incurred by it pursuant to this Section 2.12.1. If Purchaser or any of its affiliates shall desire to dispose of any of such books and records prior to the expiration of such seven-year period, Purchaser shall, prior to such disposition, give Seller a reasonable opportunity, at Seller’s expense, to segregate and remove such books and records as Seller may select.

2.12.2 For a period of 7 years after the Closing, Purchaser and its Representatives shall have reasonable access to all of the books and records of the Business that are retained by the Seller to the extent that such access may reasonably be required by Purchaser in connection with matters relating to or affected by the operations of the Business on or after the Closing Date. Such access shall be afforded by Seller upon receipt of reasonable advance notice and during normal business hours. Purchaser shall be solely responsible for any costs or expenses incurred by it pursuant to this Section 2.12.2. If Seller or any of its affiliates shall desire to dispose of any of such books and records prior to the expiration of such seven-year period, Seller shall, prior to such disposition, give Purchaser a reasonable opportunity, at Purchaser’s expense, to segregate and remove such books and records as Purchaser may select.

2.13 Operation of the Business of Seller . Between the date of this Agreement and the Closing, Seller shall:

2.13.1 conduct the Business only in the Ordinary Course of Business;

2.13.2 except as otherwise directed by Purchaser in writing, and without making any commitment on Purchaser’s behalf, use commercially reasonable efforts to preserve intact its current business organization, keep available the services of its officers, employees and agents and maintain its relations and goodwill with suppliers, customers, landlords, creditors, employees, agents and others having business relationships with it;

2.13.3 maintain the Assets in a state of repair and condition that complies with Legal Requirements and is consistent with the requirements and normal conduct of the Business except in the Ordinary Course of Business;

2.13.4 keep in full force and effect, without amendment, all material rights relating to the Business;

2.13.5 comply with all Legal Requirements and contractual obligations applicable to the operations of the Business;

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2.13.6 continue in full force and effect the insurance coverage on the Assets in the Ordinary Course of Business;

2.13.7 cooperate with Purchaser and assist Purchaser in identifying the Governmental Authorizations required by Purchaser to operate the Business from and after the Closing Date and transferring existing Governmental Authorizations of Seller to Purchaser, where permissible;

2.13.8 upon request from time to time, execute and deliver all documents and do all other acts that may be reasonably necessary to consummate the Contemplated Transactions;

2.13.9 maintain all books and records of Seller relating to the Business in the Ordinary Course of Business; and

2.13.10 not materially modify any compensation paid to any of the Seller’s employees without the express written consent of Purchaser, other than annual salary or wage increases which are in the Ordinary Course of Business of Seller; provided however, that Seller may not make any changes to compensation which will increase severance obligations shown on Schedule 2.7.2.

2.14 Required Approvals . As promptly as practicable after the date of this Agreement, Seller shall make all filings required by Legal Requirements to be made by it in order to consummate the Contemplated Transactions. Each party shall cooperate with the other party and its representatives with respect to all filings that said party elects to make or, pursuant to Legal Requirements, shall be required to make in connection with the Contemplated Transactions. Each Party also shall cooperate with the other party and its representatives in obtaining all material consents.

2.15 Notification . Between the date of this Agreement and the Closing, each party shall promptly notify the other party in writing if it becomes aware of (a) any fact or condition that causes or constitutes a breach of any of its representations and warranties made as of the date of this Agreement, or (b) the occurrence after the date of this Agreement of any fact or condition that would or be reasonably likely to (except as expressly contemplated by this Agreement) cause or constitute a breach of any such representation or warranty had that representation or warranty been made as of the time of the occurrence of, or its discovery of, such fact or condition. Should any such fact or condition require any change to any Schedule delivered by a party hereunder, said party shall promptly deliver to the other party a supplement to such Schedule specifying such change. Such delivery shall not affect any rights of the other party under Section 7.1 (Termination) and Article VI (Indemnification). During the same period, each party also shall promptly notify the party of the occurrence of any breach of any covenant of said party in this Article II or of the occurrence of any event that may make the satisfaction of the conditions in Section 5.1 (Conditions Precedent to Obligations of Purchaser to Close) impossible or unlikely.

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2.16 Prorations . Seller and Purchaser agree to prorate all taxes and lease payments owed with respect to the Assets or with respect to any period of time that begins before the Closing Date hereof and ends after the Closing Date. Seller shall pay all such liabilities on or with respect to the Assets to the extent such liabilities and obligations relate to any time period ending 12:00 a.m. on the day immediately before the Closing Date except for the Assumed Liabilities and Purchaser shall pay all Assumed Liabilities and all liabilities and obligations on or with respect to the Assets to the extent such liabilities related to periods on and after the Closing Date. Any amounts owing by Purchaser to Seller or Seller to Purchaser under this Section 2.16 shall be due and paid at Closing. Prorations with respect to the Real Property transfers may be set forth on a separate settlement statement or statements thereforeg.

2.17 Supply Agreement . At Closing, the Purchaser and Seller shall execute a supply agreement in the form of Exhibit 2.17 (the “Supply Agreement”).

2.18 Transition Services Agreement . At Closing, the Purchaser and Seller shall execute a transition services agreement in the form of Exhibit 2.18 (the “Transition Services Agreement”).

2.19 Guaranty Agreement . At Closing, the Seller shall deliver the guaranty of Caraustar Industries, Inc. in the form of Exhibit 2.19 (the “Guaranty Agreement”).

2.20 Title Insurance and Surveys . Seller shall use commercially reasonable efforts to assist Purchaser in obtaining the Title Commitments, Title Policies and Surveys in form and substance as set forth in Section 5.1.11, 5.1.12 and 5.1.13 of this Agreement, within the time periods set forth therein, including removing from title any Liens which are not Permitted Liens. Seller shall provide the Title Company with any customary owner’s affidavits, to delete exceptions for parties in possession (other than tenants under leases) and such other customary gap and owner’s affidavits as reasonably requested by the Title Company to issue the Title Policies in forms reasonably acceptable to Seller. Purchaser will pay all title exam fees, commitment related fees and charges, the cost of all title insurance policies, and related Title Company charges, and the costs of recording any mortgage or security instruments of Purchaser’s lender and any such lender’s title policy and endorsements.

2.21 Antitrust . Each party will cooperate in good faith with the other (i) in resolving any inquiry, investigation, or litigation regarding the legality of the Contemplated Transactions under any antitrust law pending or threatened on the part of any Governmental Entity, including the U.S. Department of Justice, the Federal Trade Commission, and state attorney general, or any other unit of government, and (ii) in resolving any litigation regarding the legality of the Contemplated Transactions under any antitrust law pending or threatened on the part of any private party.

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Each party will consult with counsel for the other party as to, and permit such counsel to participate in, any investigation or litigation referred to in this Section 2.20 above. Each party, acting through outside counsel, will (i) promptly notify the other party of any communication to that party from any Governmental Entity, and subject to applicable law, permit the other party to review in advance any proposed written communication to such Governmental Entity and incorporate the other party’s reasonable comments, (ii) not agree to participate in any substantive meeting or discussion with any such Governmental Entity in respect to any inquiry, investigation, or litigation concerning the Contemplated Transactions unless it consults with the other party and provide it the opportunity to attend, and (iii) furnish the other party with copies of all correspondence, filings and written communications between them and their Affiliates and their respective representatives on the one hand, and any such Government