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EXHIBIT 10(b)
March 10, 1993
Mr. Lary R. Scott
3187 Alexis Drive
Palo Alto, California 94304
Dear Lary:
The purpose of this letter is to confirm that the Compensation
Committee, acting under authority of the Board of Directors of the Company
("Board"), has authorized me to extend an employment contract ("Agreement") to
you as Chief Executive Officer of Carolina Freight Corporation (the "Company")
and Carolina Freight Carriers Corporation in accordance with the terms and
conditions herein outlined.
First, the term of the Agreement shall be for a period of three years,
which shall commence on March 22, 1993 and shall continue in effect until March
21, 1996; provided, however, that on March 21, 1994 the Agreement shall be
automatically extended the term of this Agreement for one additional year (to
March 21, 1997) unless at least ninety (90) days prior to such March 21, 1994
the Company shall have given written notice to you that this Agreement shall
not be so extended; and, in the event the Agreement has been extended to March
21, 1997 the term shall be further automatically extended by the Company for
another year on March 21, 1995 (to March 21, 1998) unless the Company shall
have given written notice to you at least ninety (90) days prior to March 21,
1995 that this Agreement shall not be so extended.
Second, your base salary shall not be less than $250,000 during the
first year of this Agreement and shall be adjusted upward annually to such
amount as the Compensation Committee shall, in its discretion determine, but in
no event less than an amount equal to the average percent of increase allowed
to that group of employees who comprise the officer group of Carolina Freight
Corporation. In the event of a general pay reduction which applies to all
officers of the Company, your base salary shall be reduced by an amount which
shall be equal to the average percentage of reduction among all other officers
of the Company.
_____ _____
LRS KGY
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Mr. Lary R. Scott
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March 10, 1993
Third, you will be granted an option to purchase 35,000 shares of the
common stock of the Company at a per share purchase price that is equal to the
closing price of said stock as of the first day of your employment.
Fourth, bonuses shall be paid to you in such amounts as shall be
determined by the Compensation Committee but shall be paid in at least an
amount that is 125% of the highest bonus paid to any officer of Carolina
Freight Corporation pursuant to the terms of the Carolina Freight Carriers
Corporation and Red Arrow Incentive Bonus Plan approved by the Carolina Freight
Corporation Board of Directors on January 6, 1993 or any successor plan
applicable to the officers of the Company.
Fifth, the Company will provide you a membership in the Gaston Country
Club, Gastonia, North Carolina which shall include payment by the Company of
initiation fees, dues, and assessments.
Sixth, a company car will be provided to you in accordance with the
Company's practice of providing automobiles for use by its officers.
Seventh, employee benefits which are provided to other officers of the
Company will be provided to you including, but not limited to, vacation,
holiday, and sick leave; group health and life insurance coverage; Senior
Executive Benefit Plan; Employee Savings and Protection Plan; Deferred
Compensation Plan; Severance Pay Agreement; Indemnity Agreement; and, Pension
Plan. Benefits provided under any of the foregoing plans, as well as new plans
which may be instituted by the Company, are subject to change. Any such
changes may impact your individual benefit but shall be commensurate with the
benefits provided to other officers of the Company.
Eighth, termination by the Company of your employment for Cause, as
defined herein, shall also terminate the Company's obligation to perform
further on any provision of this Agreement except as to those benefits referred
to in paragraph Seventh which shall be provided to you in accordance with
specific terms of plan documents and agreements governing such benefits.
"Cause" shall mean (1) the willful and continued failure by you to perform
substantially your duties with the Company (other than any such failure
resulting from your incapacity due to physical or mental illness) after a
demand for substantial performance is
_____ _____
LRS KGY
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Mr. Lary R. Scott
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March 10, 1993
delivered to you by the Chairman of the Board which specifically identifies the
manner in which you have not substantially performed your duties, or (2) the
willful engaging by you in illegal conduct which is materially and demonstrably
injurious to the Company. For purposes of this paragraph, no act or failure to
act, on your part shall be considered "willful" unless done, or omitted to be
done, by you in bad faith and without reasonable belief that your action or
omission was in, or not opposed to, the best interests of the Company. You
shall not be deemed to have been terminated for Cause unless and until there
shall have been delivered to you a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire membership of
the Board at a regular meeting or a meeting called and held for the purpose,
finding that in the good faith opinion of the Board you were guilty of the
conduct set forth above in (1) or (2) of this paragraph and specifying the
particulars thereof in detail.
Ninth, termination by you of your employment for "Good Reason" during
the term of this Agreement shall require the Company to continue to fulfill all
obligations herein set forth during the term as fully as if you were continued
in full employment under the Agreement. The term "Good Reason" shall mean (1)
a substantial change in your status or a significant alteration of your job
responsibilities (except in connection with the termination of your employment
for Cause, disability or retirement or as a result of your death or by you
other than for Good Reason), (2) a reduction by the Company in your base
salary, (3) the failure by the Company to continue in effect any plan in which
you are now participating (or plans providing you with at least substantially
similar benefits) other than as a result of the normal expiration of any such
plan in accordance with its terms, or the taking of any action, or the failure
to act, by the Company which would adversely affect the continued participation
in any of such plans on at least as favorable a basis to you or which would
materially reduce your benefits in the future under any of such plans or
deprive you of any material benefit enjoyed by you, (4) the failure by the
Company to provide and credit you with the number of paid vacation days to
which you are then entitled in accordance with the Company's normal vacation
policy, (5) the Company's requiring you to be based anywhere other than within
a radius of fifty (50) miles of the city of Cherryville except for required
travel on Company business consistent with reasonable business travel that
might ordinarily be expected of one occupying your position, or (6) any
purported termination by the Company of your employment which is not effected
pursuant to the requirements of the eighth paragraph of this Agreement.
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LRS KGY
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Mr. Lary R. Scott
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March 10, 1993
Please indicate your acquiescence and assent to this Agreement by
initialing each of the previous pages at the space provided and by
countersigning the last page of this letter.
Yours sincerely,
K. G. Younger
Chairman of the Board
Agreed to this _______
day of March, 1993.
________________________
Lary R. Scott
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