CAROLINA FREIGHT CORP, 10-K, 1994-03-30

CAROLINA FREIGHT CORP
10-K, 1994-03-30
TRUCKING (NO LOCAL)

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<PAGE> 1

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 1993
Commission File No. 1-8441

CAROLINA FREIGHT CORPORATION
(Exact name of registrant as specified in its charter)

NORTH CAROLINA 56-1349996
------------------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

North Carolina Highway 150 East
Cherryville, North Carolina 28021
- --------------------------------------- -----------
(Address of principal executive office) (Zip Code)

(704) 435-6811
(Registrant's telephone number, including area code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

Name of each Exchange
Title of each class on which registered
- ---------------------------- --------------------
Common Stock, $.50 par value New York and Pacific
Stock Exchanges

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes x No
--- ---

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. ( )

State the aggregate market value of the voting stock held by
non-affiliates of the registrant. (The aggregate market value shall be
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within 60 days prior
to the date of filing.)

At February 28, 1994 - $70,537,974
<PAGE> 2
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date. (APPLICABLE ONLY
TO CORPORATE REGISTRANTS.)

At February 28, 1994 - 6,561,672 shares of Common Stock,
$.50 par value

Documents Incorporated by Reference

List hereunder the following documents if incorporated by reference
and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the
document is incorporated: (1) Any annual report to security holders; (2) Any
proxy or information statement; and (3) Any prospectus filed pursuant to Rule
424(b) or (c) under the Securities Act of 1933. (The listed documents should
be clearly described for identification purposes.)

(1) Portions of the 1993 Annual Report to Security Holders - Part II and Part
IV.

(2) Proxy Statement for the 1994 Annual Meeting of Shareholders of Carolina
Freight Corporation - Part III.

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<PAGE> 3
Part I

Item 1. Business.

Carolina Freight Corporation is a freight transportation holding
company whose primary subsidiaries are Carolina Freight Carriers Corporation
("Carolina"), Red Arrow Freight Lines, Inc. ("Red Arrow"), G.I. Trucking
Company ("G.I."), Cardinal Freight Carriers, Inc. ("Cardinal"), The Complete
Logistics Company, Inc. ("CLC"), and Innovative Logistics Incorporated ("ILI").
The consolidated revenue of the Corporation ranks it among the ten largest
motor carriers of general freight in the United States.

Through its subsidiary carriers, Carolina Freight Corporation serves
all of the 50 largest Standard Metropolitan Statistical Areas of the United
States.

In addition to their independent operations, Carolina, G.I. and Red
Arrow use rail carriers to provide intermodal transportation between their
areas of operation.

Subsidiaries of Carolina Freight Corporation presently provide
services for customers in over 130 countries in North America, Africa,
Australia, New Zealand, South America, Central America, Eastern and Western
Europe, the Middle East, Asia and throughout the Pacific Rim and the Caribbean
Sea.

The Corporation`s consolidated insurance subsidiary, Motor Carrier
Insurance, Ltd., a Bermuda company, provides cargo, public liability and
workers' compensation insurance coverage, under reinsurance agreements, to the
Corporation's operating subsidiaries.

The Corporation's principal offices are located at North Carolina
Highway No. 150 East, Cherryville, North Carolina 28021, and its telephone
number is 704/435-6811.

On December 31, 1993, the Corporation had 11,174 total employees.

Unless the context requires otherwise, reference to the Corporation in
this report shall mean Carolina Freight Corporation and its subsidiaries.

CAROLINA FREIGHT CARRIERS

Carolina Freight Carriers is an over-the-road motor carrier which
began operations in 1932 as Beam Trucking Company. The company has its
headquarters in Cherryville, North Carolina and operates as a transporter of
general commodities primarily within a 32 state region of the eastern half of
the United States. Its major service area is connected with the territories of
G.I. and Red Arrow through an intermodal partnership with those companies.
Carolina`s major traffic lanes are between points in the South and Northeast,
the South and Midwest, the Midwest and the Northeast, and within the South.
Carolina is authorized by the Interstate Commerce Commission ("ICC") to serve
all points in the contiguous United States.

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<PAGE> 4
Carolina handles broadly diversified traffic including textile
products, plastics, foodstuffs, pharmaceuticals, chemicals, auto parts,
construction materials and hardware. The only commodity accounting for more
than 10% of revenue in 1993 was textiles (cloth, dry goods, fabrics, clothing,
fibers, yarn) which accounted for approximately 10.8%. During 1993, no single
customer accounted for more than 4% of revenue, and the largest ten customers
accounted for less than 18% of revenue. During 1993, 91% of revenue was
derived from less-than-truckload ("LTL") shipments (shipments weighing less
than 10,000 pounds).

EQUIPMENT AND PROPERTY. Carolina owns all of its revenue equipment
except equipment used in connection with intermodal operations. At December
31, 1993, Carolina owned 3,093 tractors, 10,846 trailers, 78 trucks, and
operated 171 service centers consisting of 154 terminals (98 owned and 56
leased) and 17 agencies. In addition to the operation of major vehicle
maintenance facilities at the six major breakbulk terminals in Carolina's
system - Atlanta, Chicago, Carlisle (Pa.), Cherryville, Cincinnati, and Toledo
- - there are similar maintenance facilities at various terminals throughout the
Carolina system.

G.I. TRUCKING COMPANY

G.I. is headquartered in La Mirada, California and provides
over-the-road freight transportation services to shippers and receivers in
California, Oregon, Washington, Idaho, Utah, Nevada, Colorado, New Mexico,
Texas and Arizona. Service is provided to and from Hawaii. The major service
area of G.I. is connected with the territories of Carolina and Red Arrow
through an intermodal partnership with those companies. Founded in 1946, G.I.
was acquired by Carolina Freight Corporation in October 1983. At December 31,
1993, G.I. owned 424 tractors, 1,586 trailers, 16 trucks, and operated 44
service centers consisting of 24 terminals (14 owned and 10 leased) and 20
agencies.

RED ARROW FREIGHT LINES, INC.

Red Arrow`s executive offices are in Dallas, Texas and administrative
services are performed in corporate offices in Cherryville, North Carolina. It
is an over-the-road motor carrier which transports general commodities in
Texas, Kansas, Arkansas, Louisiana and Oklahoma. The major service area of Red
Arrow is connected with the territories of G.I. and Carolina through an
intermodal partnership with those companies. Red Arrow was founded in 1928 and
acquired by Carolina Freight Corporation in January 1984. At December 31,
1993, Red Arrow owned 191 tractors, 179 trailers, 3 trucks, and operated 15
service centers consisting of 11 terminals (4 owned and 7 leased) and 4
agencies.

CARDINAL FREIGHT CARRIERS, INC.

Cardinal was established in 1980. It is an irregular route motor
carrier with authority to serve all points in the United States, although its
services are presently confined to serving customers east of the Mississippi
River. Cardinal specializes in the transportation of truckload freight. Its
general office is in Concord, North Carolina. At December 31, 1993, Cardinal
owned 130 tractors and 744 trailers and operated 217 leased tractors.

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<PAGE> 5
THE COMPLETE LOGISTICS COMPANY, INC.

CLC is a full service equipment and driver leasing company, owning 124
tractors, 284 trailers, and 67 trucks as of December 31, 1993. CLC was
formerly the leasing division of G.I. Trucking Company and is headquartered in
Buena Park, California.

INNOVATIVE LOGISTICS INCORPORATED

ILI is a third party logistics firm based in Fort Mill, South Carolina
and provides transportation-related services such as intermodal shipping, rate
negotiation, and warehousing. The international division, with offices in
Charleston, South Carolina, and Houston, Texas, provides NVOCC service to most
foreign locations.

CAPITAL EXPENDITURES

Capital expenditures in 1993 net of dispositions were $15.8 million.
Revenue and service equipment purchases were $17.3 million. Land and terminal
expenditures were $4.7 million. Other capital expenditures totaled $7.3
million. The proceeds from dispositions totaled $13.5 million which included
the sale of terminal facilities in Atlanta, Cincinnati, Austin, Houston, and
San Antonio.

MANAGEMENT CHANGES

James D. Carlton became president of Carolina Freight Carriers in June
1993. In December 1993, Braxton Vick, who previously served as Executive Vice
President of Corporate Services, was promoted to Executive Vice President of
Corporate Planning and Development. In addition, John L. Fraley, Jr., a
veteran of Carolina Freight Carriers, and James R. Hertwig, former president of
a major intermodal company, were elected vice presidents of the Company. In
January 1993, Philip G. Deely, who formerly served as a distribution executive
for a large shipper, was named President of Innovative Logistics Incorporated.

Item 2. Properties.

The Corporation, through its subsidiaries, owns and operates 117
terminal facilities in 26 states. At December 31, 1993, these properties had a
net book value of $132.5 million. In addition, the Corporation leases 71 real
properties under leases for terms of generally one to ten years. These
properties are used as offices, terminals, warehouses and vehicle maintenance
facilities.

The Corporation, through its subsidiaries, transports freight, using
both over-the-road and local tractors, trailers and trucks. This revenue
equipment is virtually all owned by the respective subsidiary, though minor
amounts are leased both with and without drivers. At December 31, 1993, the
value of revenue equipment, less accumulated depreciation, totaled $87.8
million and consisted of 4,179 tractors, 13,639 trailers and 164 trucks. In
addition, service vehicles, data processing equipment, furniture and fixtures,
and leasehold improvements had a net book value of $26.1 million.

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<PAGE> 6
Item 3. Legal Proceedings.

(a) There are not now pending any material legal proceedings, other
than ordinary routine litigation incident to the Corporation's business, to
which the Corporation or any of its subsidiaries is a party or to which any of
their respective properties is subject. During 1993, no material litigation or
governmental proceeding was instituted or pending against the Corporation or
any of its subsidiaries arising from any alleged violation of any emission
control standards or other environmental regulations.

(b) No material legal proceedings were terminated in the fourth
quarter of 1993.

Item 4. Submission of Matters to a Vote of Security Holders.

No matters were submitted during the fourth quarter of 1993 to a vote
of security holders, through the solicitation of proxies or otherwise.

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<PAGE> 7
PART II

Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters.

The registrant's common stock is traded on the New York and Pacific
Stock Exchanges (Symbol - CAO). The range of market values and amounts of
dividends paid during the last two years are shown in the following table:

<TABLE>
<CAPTION>
Dividends
High Low Per Share
---- --- ---------
<S> <C> <C> <C> <C>
1993:
First Quarter 16 13 1/8 $.05
Second Quarter 15 11 3/8 $.05
Third Quarter 14 3/4 11 1/2 $.05
Fourth Quarter 13 3/4 11 1/2 $.05

1992:
First Quarter 20 1/4 16 $.15
Second Quarter 18 1/2 12 7/8 $.15
Third Quarter 14 5/8 12 1/8 $.15
Fourth Quarter 15 10 1/2 $.05
</TABLE>

As of December 31, 1993, there were 2,642 record holders of the
Corporation's Common Stock.

The Corporation has paid quarterly cash dividends on its Common Stock
since 1963. The Board of Directors suspended payment of common share dividends
on January 10, 1994. Future dividends will depend upon the Corporation's
earnings, its financial condition and other relevant factors. A debt agreement
places certain restrictions on the payment of cash dividends by Carolina
Freight Corporation, the parent company. Under the agreement, future dividends
of the Corporation are limited to approximately $3.7 million plus 50% of
earnings, as defined, after December 31, 1993.

Item 6. Selected Financial Data.

The selected financial data for the past five years appears on pages
18 and 19 of the registrant's annual report to shareholders for the year ended
December 31, 1993 and is incorporated by reference to the extent of the
respective columns of financial data for the years 1989 through 1993.

Item 7. Management`s Discussion and Analysis of Results of Operations and
Financial Condition.

Management`s Review appearing on pages 20 through 23 of the annual report
to shareholders for the year ended December 31, 1993 is incorporated herein by
reference.

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<PAGE> 8
Item 8. Financial Statements and Supplementary Data.

The consolidated financial statements including the Report of Independent
Public Accountants, appearing on pages 24 through 37, in the annual report to
shareholders for the year ended December 31, 1993 are incorporated herein by
reference.

Item 9. Disagreements on Accounting and Financial Disclosure.

None.

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<PAGE> 9
PART III

The information called for by Part III is incorporated by reference
from registrant's definitive proxy statement. Disclosures concerning
delinquent filings under Section 16(A) of the Securities Exchange Act of 1934
can be found in the Company's 1994 Proxy Statement.

PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

(a) The following documents are filed as a part of this report:

1. Financial Statements - The following information appearing in the
annual report to shareholders for year ended December 31, 1993 is
incorporated by reference:

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Consolidated Balance Sheets, December 31, 1993 and 1992 24 - 25

Consolidated Statements of Operations for the Years Ended
December 31, 1993, 1992 and 1991. 26

Consolidated Statements of Cash Flows for the Years Ended
December 31, 1993, 1992 and 1991. 27

Consolidated Statements of Stockholder's Equity for the
Years Ended December 31, 1993, 1992 and 1991. 28

Notes to Consolidated Financial Statements, December 31,
1993, 1992 and 1991. 29 - 37

Report of Independent Public Accountants 37

</TABLE>

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<PAGE> 10

2. Financial Statement Schedules

Schedule No. Schedule Name
------------ -------------

III. Condensed Financial Information - Parent
Company Only

V. Property, Plant and Equipment

VI. Accumulated Depreciation, Depletion and
Amortization of Property, Plant and
Equipment

VIII. Valuation and Qualifying Accounts

X. Supplementary Income Statement
Information

All other schedules for which provision is made in the
applicable accounting regulations of the Securities and Exchange
Commission are not required under the related instructions or
are inapplicable.

3. Exhibits

3(a) Articles of Incorporation of Carolina Freight Corporation
(as amended up to May 16, 1988). Incorporated by reference to
Exhibit 3(a) on Form 10-K for the year ended December 31, 1988,
File No. 1-8441.

(i) Articles of Amendment of Carolina Freight Corporation.
Incorporated by reference to Exhibit 3(a)(i) on Form 10-K
for the year ended December 31, 1989, File No. 1-8441.

3(b) Amended and Restated Bylaws of Carolina Freight Corporation.
Incorporated by reference to Exhibit 3(b) on Form 10-Q for the
quarter ended September 8, 1990, File No. 1-8441.

3(c) Amended and Restated Charter of Carolina Freight Carriers
Corporation. Incorporated by reference to Exhibit 3(b) on
Form 10-K for the year ended December 31, 1985, File No.
1-8441.

4 6 1/4% Convertible Subordinated Debentures Due 2011 - all
documents in connection with Company's registration statement
on Form S-3, File No. 33-4742 in 1986 are incorporated by
reference.

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<PAGE> 11
10(a) Consulting Services Agreement between Carolina Freight
Corporation and K. G. Younger. Incorporated by reference
to Exhibit 10(b) on Form 10-K for the year ended December 31,
1990, File No. 1-8441.

10(b) Employment Contract Agreement between Carolina Freight
Corporation and Lary R. Scott dated March 22, 1993.

10(c) Employment Contract Agreement between Carolina Freight
Corporation and Palmer E. Huffstetler dated March 22, 1993.

10(d) Carolina Freight Corporation Employee Savings and Protection
Plan (as amended through October 1, 1991). Incorporated by
reference to Exhibit 10(c) on Form 10-K for the year ended
December 31, 1991, File No. 1-8441.

10(e) The Complete Logistics Company Employee Savings and Profit
Sharing Plan, October 1, 1993.

10(f) Carolina Freight Corporation Employees' Pension Plan (as
restated January 1, 1985). Incorporated by reference to
Exhibit 10(d) on Form 10-K for the year ended December 31,
1985, File No. 1-8441.

(i) 1989 Amendments to Carolina Freight Corporation Employees'
Pension Plan. Incorporated by reference to Exhibit 10(c)
(i) on Form 10-K for the year ended December 31, 1989,
File No. 1-8441.

(ii) 1992 Amendment to Carolina Freight Corporation Employees'
Pension Plan. Incorporated by reference to Exhibit 10(d)
(ii) on Form 10-K for the year ended December 31, 1992,
File No. 1-8441.

10(g) G. I. Trucking Company Employees Retirement Plan as amended and
restated effective July 1, 1992. Incorporated by reference to
Exhibit 10(e) on Form 10-K for the year ended December 31, 1992,
File No. 1-8441.

10(h) G. I. Trucking Company Freight Handlers Retirement Plan as
amended and restated effective July 1, 1992. Incorporated by
reference to Exhibit 10(f) on Form 10-K for the year ended
December 31, 1992, File No. 1-8441.

10(i) Group Annuity Contract No. IN 15150 between G.I. Trucking
Company and Connecticut General Life Insurance Company.
Incorporated by reference to Exhibit 10(h) on Form 10-K
for the year ended December 31, 1985,
File No. 1-8441.

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<PAGE> 12
10(j) Stock Option Plans:

(i) 1984 Incentive Stock Option Plan of Carolina Freight
Corporation and 1984 Incentive Stock Option Agreement.
Incorporated by reference to Exhibit 10(d) on Form 10-K
for the year ended December 31, 1984, File No. 1-8441.

(ii) Amendment to 1984 Incentive Stock Option Plan of Carolina
Freight Corporation. Incorporated by reference to Exhibit
10(h)(ii) on Form 10-K for the year ended December 31, 1987,
File No. 1-8441.

(iii) Amendments to 1975, 1980 and 1984 Stock Option Plans.
Incorporated by reference to Exhibit 10(h)(iii) on
Form 10-K for the year ended December 31, 1988,
File No. 1-8441.

(iv) 1988 Incentive Stock Option Plan of Carolina Freight
Corporation and 1988 Incentive Stock Option Agreement.
Incorporated by reference to Exhibit 10(h)(iv) on
Form 10-K for the year ended December 31, 1988, File
No. 1-8441.

(v) Amendments to 1980, 1984 and 1988 Incentive Stock Option
Plans of Carolina Freight Corporation. Incorporated by
reference to Exhibit 10(h)(v) on Form 10-K for the year
ended December 31, 1989, File No. 1-8441.

(vi) 1989 Incentive Stock Option Plan of Carolina Freight
Corporation and 1989 Incentive Stock Option Agreement.
Incorporated by reference to Exhibit 10(h)(vi) on
Form 10-K for the year ended December 31, 1989, File
No. 1-8441.

10(k) Revolving Credit and Term Loan Agreement between Carolina
Freight Carriers Corporation and Citibank, N.A. dated
December 1, 1990. Incorporated by reference to Exhibit 10(i)
on Form 10-K for the year ended December 31, 1990,
File No. 1-8441.

(i) First Amendment to Revolving Credit and Term Loan Agreement
dated December 31, 1991. Incorporated by reference to Exhibit
10(i) on Form 10-K for the year ended December 31, 1991,
File No. 1-8441.

(ii) Second Amendment to Revolving Credit and Term Loan Agreement
dated October 5, 1992. Incorporated by reference to Exhibit
10(i)(ii) on Form 10-K for the year ended December 31, 1992,
File No. 1-8441.

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<PAGE> 13
10(l) Guaranty Agreement between Carolina Freight Corporation
and Citibank, N.A. dated December 1, 1990. Incorporated by
reference to Exhibit 10(j) on Form 10-K for the year ended
December 31, 1990, File No. 1-8441.

(i) First Amendment to Guaranty Agreement dated October 5, 1992.
Incorporated by reference to Exhibit 10(j)(i) on Form 10-K
for the year ended December 31, 1992, File No. 1-8441.

10(m) Carolina Freight Trade Receivables Master Trust Pooling and
Servicing Agreement dated December 1, 1993.

10(n) Executive Benefit Plan Agreements:

(i) Executive Benefit Plan Agreements of All Officers and
Directors of Carolina Freight Corporation. Incorporated
by reference to Exhibit 10(j) on Form 10-K for the year
ended December 31, 1984, File No. 1-8441.

(ii) Salary Deferral Plan of Officers and Directors of
Carolina Freight Corporation. Incorporated by reference
to Exhibit 10(r)(ii) on Form 10-K for the year ended
December 31, 1986, File No. 1-8441.

(iii) Amendment Number One to Deferred Compensation Agreement
of All Directors of Carolina Freight Corporation.
Incorporated by reference to Exhibit 10(p)(iii) on
Form 10-K for the year ended December 31, 1987, File
No. 1-8441.

(iv) Amendment Number One to Deferred Compensation Agreement
of All Officers of Carolina Freight Corporation.
Incorporated by reference to Exhibit 10(p)(iv) for
the year ended December 31, 1987, File No. 1-8441.

(v) Amended Executive Supplemental Benefit Plan. Incorporated
by reference to Exhibit 10(p)(v) on Form 10-K for the
year ended December 31, 1988, File No. 1-8441.

(vi) Representative sample of individual contracts signed by
participants in the 1990 Salary Deferral Plan for Officers
and Directors. The total amount deferred by the executive
officers, as a group, in 1991 can be found on page 7 of the
Company's 1992 Proxy Statement. The total amount deferred
in 1991 by the directors, as a group, was $37,000.
Incorporated by reference to Exhibit 10(v)(vi) on Form 10-K
for the year ended December 31, 1991, File 1-8441.

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<PAGE> 14
10(o) Form of Indemnification Agreement between Carolina Freight
Corporation and Its Board of Directors and Schedule
Identifying Documents Omitted. Incorporated by reference
to Exhibit 10(q) on Form 10-K for the year ended
December 31, 1987, File No. 1-8441.

10(p) Form of Severance Pay Agreement between Carolina Freight
Corporation and Its Officers and Schedule Identifying
Documents Omitted. Incorporated by reference to Exhibit
10(r) on Form 10-K for the year ended December 31, 1987,
File No. 1-8441.

10(q) Loan Agreements in connection with the following industrial
revenue bond financings of Carolina Freight Carriers
Corporation:

(i) Howard County, Maryland dated September 1, 1981.
Incorporated by reference to Exhibit 10(k)(i) on
Form 10-K for the year ended December 31, 1984,
File No. 1-8441.

(ii) City of Rockford, Illinois dated October 1, 1981.
Incorporated by reference to Exhibit 10(k)(ii) on
Form 10-K for the year ended December 31, 1984,
File No. 1-8441.

(iii) New Jersey Economic Development (Jersey City)
dated January 1, 1982. Incorporated by reference
to Exhibit 10(k)(iii) on Form 10-K for the year
ended December 31, 1984, File No. 1-8441.

(iv) Village of Forest View, Illinois dated November 1,
1982. Incorporated by reference to Exhibit 10(k)(iv)
on Form 10-K for the year ended December 31, 1984,
File No. 1-8441.

(v) County of Cuyahoga, Ohio dated August 29, 1983.
Incorporated by reference to Exhibit 10(k)(vi)
on Form 10-K for the year ended December 31, 1984,
File No. 1-8441.

(vi) Mortgage Note and Mortgage dated December 9, 1983 of
Berks County Development Authority. Incorporated by
reference to Exhibit 10(k)(vii) on Form 10-K for the
year ended December 31, 1984, File No. 1-8441.

(vii) City of Hayward, California and Summit Companies, Inc.
Incorporated by reference to Exhibit 10(k)(viii) on
Form 10-K for the year ended December 31, 1984,
File No. 1-8441.

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<PAGE> 15
(viii) County of Lucas, Ohio dated May 1, 1984. Incorporated
by reference to Exhibit 10(k)(ix) on Form 10-K for the
year ended December 31, 1984, File No. 1-8441.

(ix) Michigan Job Development Authority dated October 1,
1984. Incorporated by reference to Exhibit 10(k)(x)
on Form 10-K for the year ended December 31, 1984,
File No. 1-8441.

(x) Cumberland County, Pa. Industrial Development Authority
Mortgage dated October 1, 1985, and Promissory Note
dated October 17, 1985. Incorporated by reference to
Exhibit 10(s)(xii) on Form 10-K for the year ended
December 31, 1985, File No. 1-8441.

(xi) Dade County, Florida, Industrial Development Authority,
Installment Purchase Contract, dated December 1, 1985.
Incorporated by reference to Exhibit 10(s)(xiv) on
Form 10-K for the year ended December 31, 1985, File
No. 1-8441.

(xii) City of Memphis and County of Shelby, Tennessee,
Industrial Development Board dated October 1, 1986.
Incorporated by reference to Exhibit 10(s)(xv)
on Form 10-K for the year ended December 31, 1986,
File No. 1-8441.

(xiii) New Jersey Economic Development Authority, Variable Rate
Demand Economic Development Bond dated February 22, 1990.
Incorporated by reference to Exhibit 10(v)(xiv)
on Form 10-K for the year ended December 31, 1990,
File No. 1-8441.

(xiv) Carolina Freight Tax-Exempt Bond Grantor Trust dated
May 23, 1990. Incorporated by reference to Exhibit
10(v)(xv) on Form 10-K for the year ended December 31,
1990, File No. 1-8441.

10(r) Grantor Trust Agreement. Incorporated by reference to
Exhibit 10(w) on Form 10-K for the year ended December 31,
1989, File No. 1-8441.

11 Computation of Earnings Per Common Share.

13 1993 Annual Report to Shareholders.

21 List of subsidiaries of Carolina Freight Corporation.

23 Consent of Independent Public Accountants.

(b) Reports on Form 8-K filed in the fourth quarter, 1993: None

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<PAGE> 16
CAROLINA FREIGHT CORPORATION
SCHEDULE III - CONDENSED FINANCIAL INFORMATION - PARENT COMPANY ONLY
FOR THE YEARS ENDED DECEMBER 31, 1993 AND 1992

CONDENSED BALANCE SHEETS

1993 1992
Assets ------------ ------------

Current Assets:
Cash and temporary cash investments $ 131,611 $ 161,683
Prepayments 102,618 77,496
Other Assets 1,587,202 1,563,837
------------ ------------
Total current assets $ 1,821,431 $ 1,803,016
------------ ------------
Other Assets:
Investment in subsidiaries 196,569,010 146,153,266
Advances to subsidiaries 24,660,076 41,569,976
Other 1,256,711 1,135,542
------------ ------------
Total other assets 222,485,797 188,858,784
------------ ------------

Total Assets $224,307,228 $190,661,800
============ ============

Liabilities and Stockholders' Equity

Current Liabilities:
Accounts payable $ 149,455 $ 149,148
Other payables and accrued liabilities 726,566 702,791
------------ ------------
Total current liabilities 876,021 851,939
------------ ------------
Advances from subsidiaries 51,508,967 12,325,769
------------ ------------
Long-Term Debt:
6.25% Convertible Subordinated Debentures 49,994,000 49,994,000
Other long-term debt 601,980 518,545
------------ ------------
Total long-term debt 50,595,980 50,512,545
------------ ------------
Deferred Income Taxes (286,352) (203,434)
------------ ------------
Stockholders' Equity:
Preferred stock 2,211,200 2,211,200
Common stock 3,280,836 3,280,836
Paid-in capital 44,349,110 44,349,110
Retained earnings 71,771,466 77,333,835
------------ ------------
Total stockholders' equity 121,612,612 127,174,981
------------ ------------
Total liabilities and
stockholders' equity $224,307,228 $190,661,800
============ ============

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<PAGE> 17
CAROLINA FREIGHT CORPORATION
SCHEDULE III - CONDENSED FINANCIAL INFORMATION - PARENT COMPANY ONLY
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991

CONDENSED STATEMENTS OF EARNINGS

<TABLE>
<CAPTION>
1993 1992 1991
----------- ----------------- --------------
<S> <C> <C> <C>
Other Income (Expense):
Interest income and other expense, net $ 4,412,368 $ 4,612,555 $ 3,544,178
Interest expense (3,795,119) (3,826,975) (3,457,684)
------------ ------------ ------------
Earnings Before Income Taxes and Equity
in Undistributed Net Income of Subsidiaries 617,249 785,580 86,494

Provision for Income Taxes 157,805 298,523 32,917

Equity in Undistributed Net Income of (4,621,031) 2,757,775 1,521,656
Subsidiaries
------------ ------------ ------------
Net Earnings Before Cumulative Effect of Change
in Accounting Principle $ (4,161,587) $ 3,244,832 $ 1,575,233

Cumulative Effect of Change in Accounting Principle 0 403,514 -
------------ ------------ ------------
Net Earnings $ (4,161,587) $ 3,648,346 $ 1,575,233
============ ============ ============

</TABLE>

-17-
<PAGE> 18
CAROLINA FREIGHT CORPORATION
SCHEDULE III - CONDENSED FINANCIAL INFORMATION - PARENT COMPANY ONLY
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991

CONDENSED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
1993 1992 1991
------------ ------------ --------------
<S> <C> <C> <C>
NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES:

Net earnings for the year $ (4,161,587) $ 3,648,346 $ 1,575,233
Noncash items included in income:
Undistributed earnings of subsidiaries 4,621,031 (2,757,775) (1,521,656)
Increase (decrease) in accounts payable 307 24,650 4,498
Net increase (decrease) from change in other working
capital items affecting operating activities (24,712) 2,108,160 (2,857,440)
Other, net (240,862) (584,798) (215,466)
------------ ------------ ------------
Net cash provided by (used for) operating activities $ 194,177 $ 2,438,583 $ (3,014,831)
------------ ------------ ------------
NET CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES: $ 0 $ 0 $ 0
------------ ------------ ------------

NET CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES:

Advances from subsidiaries $ 1,093,098 $ 699,845 $ 7,032,904
Proceeds from issuance of long-term debt 83,435 205,982 28,665
Common stock issued 0 6,000 36,563
Dividends on common and preferred stock (1,400,782) (3,369,246) (4,024,249)
------------ ------------ ------------
Net cash provided by (used for) financing activities $ (224,249) $ (2,457,419) $ 3,073,883
------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH AND TEMPORARY
CASH INVESTMENTS $ (30,072) $ (18,836) $ 59,052

CASH AND TEMPORARY CASH INVESTMENTS AT
BEGINNING OF YEAR $ 161,683 $ 180,519 $ 121,467
------------ ------------ ------------
CASH AND TEMPORARY CASH INVESTMENTS AT
END OF YEAR $ 131,611 $ 161,683 $ 180,519
============ ============ ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION
Cash paid during the year for interest $ 3,771,345 $ 3,843,663 $ 3,461,296
Cash paid (received) during the year for taxes 264,088 (1,825,187) 2,944,539

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING ACTIVITIES
Company contributions of receivables to a subsidiary
in exchange for an investment in that subsidiary $ 55,000,000 $ - $ -
</TABLE>

-18-
<PAGE> 19
CAROLINA FREIGHT CORPORATION
SCHEDULE III - CONDENSED FINANCIAL INFORMATION - PARENT COMPANY ONLY
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991

NOTES TO CONDENSED FINANCIAL STATEMENTS

(1) These unaudited condensed financial statements have been prepared
pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and note disclosures
normally included in annual financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to those rules and regulations, although
the company believes that the disclosures made are adequate to make
the information presented not misleading.

(2) The revolving credit agreements of Carolina Freight Carrier
Corporation, the 9.4% note agreement and certain industrial
bonds of the operating subsidiaries totaling $11,196,000 are
guaranteed as to principal and interest payments by Carolina Freight
Corporation.

(3) See Notes to Consolidated Financial Statements for additional
disclosures.

-19-
<PAGE> 20
CAROLINA FREIGHT CORPORATION
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991

<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E Column F
- ---------------------- ----------------------- --------------------- -------------------- ---------------- --------------
Balance at Begin- Other Changes Balance at End
Description ning of Period Additions at Cost Retirements Add (Deduct) of Period
- ---------------------- ----------------------- --------------------- -------------------- ---------------- --------------
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1993:

Land $ 40,074,238 $ 327,218 $ 2,466,192 $(1,209,339) $ 36,725,925
Buildings 142,551,860 4,337,882 5,605,225 1,209,339 142,493,856

Revenue Equipment 265,035,224 16,783,572 20,887,270 (633,921) 260,297,605
Service Cars & Equipment 12,889,712 498,961 6,576,070 6,812,603

Shop & Garage Equipment 2,273,536 395,706 36,447 2,632,795
Furniture & Office Equipment 44,006,368 5,910,078 7,284,015 42,632,431
Miscellaneous Equipment 10,965,128 687,319 201,369 633,921 12,084,999

Leasehold Improvements 1,346,732 361,024 187,439 1,520,317
------------ ----------- ----------- ----------- ------------
$519,142,798 $29,301,760 $43,244,027 $ 0 $505,200,531
============ =========== =========== =========== ============

Year Ended December 31, 1992:

Land $ 37,894,346 $ 2,511,199 $ $ (331,307) $ 40,074,238
Buildings 135,551,185 7,686,143 1,016,775 331,307 142,551,860

Revenue Equipment 262,146,975 19,312,753 16,324,012 (100,492) 265,035,224
Service Cars & Equipment 11,876,812 2,939,318 1,971,839 45,421 12,889,712

Shop & Garage Equipment 2,161,216 124,657 12,337 2,273,536
Furniture & Office Equipment 39,683,959 6,023,599 1,403,363 (297,827) 44,006,368
Miscellaneous Equipment 9,925,144 1,185,068 200,155 55,071 10,965,128

Leasehold Improvements 1,302,060 56,117 11,445 1,346,732
------------ ----------- ----------- ----------- ------------
$500,541,697 $39,838,854 $20,939,926 $ (297,827)(1) $519,142,798
============ =========== =========== =========== ============

Year Ended December 31, 1991:

Land $ 36,947,855 $ 1,165,216 $ 155,650 $ (63,075) $ 37,894,346
Buildings 129,576,355 6,292,193 380,438 63,075 135,551,185

Revenue Equipment 246,967,566 27,554,161 12,335,269 (39,483) 262,146,975
Service Cars & Equipment 11,349,452 2,163,766 1,636,406 11,876,812

Shop & Garage Equipment 2,002,461 159,179 424 2,161,216
Furniture & Office Equipment 34,751,426 11,911,999 6,979,466 39,683,959
Miscellaneous Equipment 9,426,520 515,280 48,724 32,068 9,925,144

Leasehold Improvements 1,018,849 275,796 7,415 1,302,060
------------ ----------- ----------- ----------- ------------
$472,040,484 $50,037,590 $21,536,377 $ 0 $500,541,697
============ =========== =========== =========== ============
</TABLE>

(1) $(297,827) adjustment of capitalized computer lease of 1991.

-20-
<PAGE> 21
CAROLINA FREIGHT CORPORATION
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION
OF PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991

<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E Column F
- ----------------------------- ------------------ --------------------- -------------- --------------- --------------
Balance at Begin- Additions Charged Other Changes Balance at End
Description ning of Period to Costs and Expenses Retirements Add (Deduct) of Period
- ----------------------------- ------------------ --------------------- -------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1993:

Buildings $ 43,561,972 $ 6,232,262 $ 3,060,092 $ $ 46,734,142

Revenue Equipment 170,290,083 21,092,137 18,343,303 (574,234) 172,464,683
Service Cars & Equipment 6,910,168 1,177,472 3,943,589 4,144,051

Shop & Garage Equipment 1,573,043 169,876 28,840 1,714,079
Furniture & Office Equipment 26,183,070 5,915,084 7,250,396 24,847,758
Miscellaneous Equipment 6,638,234 842,810 185,220 574,234 7,870,058

Leasehold Improvements 1,049,615 104,989 157,431 997,173
------------ ----------- ----------- --------- ------------
$256,206,185 $35,534,630(1) $32,968,871 $ 0 $258,771,944
============ =========== =========== ========= ============

Year Ended December 31, 1992:

Buildings $ 37,641,526 $ 6,104,030 $ 183,584 $ $ 43,561,972

Revenue Equipment 160,858,934 23,578,336 14,059,110 (88,077) 170,290,083
Service Cars & Equipment 6,143,166 2,388,694 1,660,300 38,608 6,910,168

Shop & Garage Equipment 1,430,041 151,949 8,947 1,573,043
Furniture & Office Equipment 20,963,708 6,686,936 1,382,954 (84,620) 26,183,070
Miscellaneous Equipment 5,838,035 928,825 178,095 49,469 6,638,234

Leasehold Improvements 873,499 187,561 11,445 1,049,615
------------ ----------- ----------- --------- ------------
$233,748,909 $40,026,331(2) $17,484,435 $ (84,620)(3) $256,206,185
============ =========== =========== ========= ============

Year Ended December 31, 1991:

Buildings $ 32,075,371 $ 5,729,955 $ 163,800 $ $ 37,641,526

Revenue Equipment 147,674,664 23,291,940 10,070,234 (37,436) 160,858,934
Service Cars & Equipment 5,057,001 2,470,895 1,384,730 6,143,166

Shop & Garage Equipment 1,287,963 142,502 424 1,430,041
Furniture & Office Equipment 21,658,195 6,043,186 6,737,673 20,963,708
Miscellaneous Equipment 5,002,946 837,950 40,297 37,436 5,838,035

Leasehold Improvements 689,013 184,486 873,499
------------ ----------- ----------- --------- ------------
$213,445,153 $38,700,914(4) $18,397,158 $ 0 $233,748,909
============ =========== =========== ========= ============
</TABLE>

(1) Depreciation of $132,478 relating to non-operating assets was also
charged to expense.
(2) Depreciation of $242,268 relating to non-operating assets was also charged
to expense.
(3) $(84,653) adjustment of capitalized computer lease of 1991.
(4) Depreciation of $175,073 relating to non-operating assets was also charged
to expense.

-21-
<PAGE> 22
CAROLINA FREIGHT CORPORATION
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991

<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
- --------------------- ------------------- ------------------ -------------- ---------------
ADDITIONS
-------------
Balance at Begin- Charged to Costs Balance at End
Description ning of Period and Expenses Deductions of Period
- --------------------- ------------------- ------------------ -------------- ---------------
<S> <C> <C> <C> <C>
DEDUCTED IN BALANCE SHEET FROM
ASSET TO WHICH IT APPLIES

Year Ended December 31, 1993:

Reserve for uncollectible
accounts receivable $4,982,453 $3,469,480 $3,270,331(1) $5,181,602(2)
========== ========== ========== ==========

Year Ended December 31, 1992:

Reserve for uncollectible
accounts receivable $4,562,715 $3,419,930 $3,000,192(1) $4,982,453(3)
========== ========== ========== ==========

Year Ended December 31, 1991:

Reserve for uncollectible
accounts receivable $4,483,935 $3,484,084 $3,405,304(1) $4,562,715(4)
========== ========== ========== ==========
</TABLE>

(1) Uncollectible accounts written off net of bad debt recoveries.
(2) $20,033 applicable to customer and interline receivables and $5,161,569
applicable to other receivables as a result of the sale of receivables
explained in the Notes to Consolidated Financial Statements.
(3) $2,629,186 applicable to customer and interline receivables and $2,353,267
applicable to other receivables as a result of the sale of receivables
explained in the Notes to Consolidated Financial Statements.
(4) $2,423,239 applicable to customer and interline receivables and $2,139,476
applicable to other receivables as a result of the sale of receivables
explained in the Notes to Consolidated Financial Statements.

-22-
<PAGE> 23
CAROLINA FREIGHT CORPORATION
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991

The following amounts have been charged directly to income during the three
years ended December 31:

1993 1992 1991
----------- ----------- -----------
Maintenance and repairs $39,522,704 $35,523,797 $34,500,352

Taxes, other than payroll and
income taxes: $30,083,353 $28,267,184 $26,367,215
Fuel (included above) $17,730,666 $16,304,608 $15,706,506

Amortization of operating rights, royalties and advertising expenses
have been omitted since they are not required under the related instruction.

-23-
<PAGE> 24

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Carolina Freight Corporation:

We have audited, in accordance with generally accepted auditing standards, the
consolidated financial statements included in Carolina Freight Corporation's
annual report to shareholders incorporated by reference in this Form 10-K, and
have issued our report thereon dated January 31, 1994 (except with respect to
the matter discussed in the subsequent event footnote, as to which the date is
March 17, 1994). Our audit was made for the purpose of forming an opinion on
those statements taken as a whole. The schedules listed in item 14(a)(2) are
the responsibility of the Company's management and are presented for purposes
of complying with the Securities and Exchange Commission's rules and are not
part of the basic financial statements. These schedules have been subjected to
the auditing procedures applied in the audit of the basic financial statements
and, in our opinion, fairly state in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.

/s/ ARTHUR ANDERSEN & CO.

Charlotte, North Carolina,
January 31, 1994 (except with respect to the
matter discussed in the subsequent event
footnote, as to which the date is March 17, 1994).

-24-
<PAGE> 25

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized, on the 28th day of March, 1993.

CAROLINA FREIGHT CORPORATION
(Registrant)

/s/ Lary R. Scott
By: ____________________________
Lary R. Scott
Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of

1934, this report has been signed below by the following persons on behalf

of the registrant and in the capacities indicated on the 28th day of

March, 1993.

<TABLE>
<S> <C>
Signature Title
--------- -----

Principal Executive Officer:
/s/ Lary R. Scott
---------------------------- Chief Executive Officer
Lary R. Scott and Director

Principal Financial and
Accounting Officer:

/s/ Shawn W. Poole
---------------------------- Treasurer and Chief
Shawn W. Poole Financial Officer

</TABLE>

-25-
<PAGE> 26

<TABLE>
<S> <C>
/s/ K. G. Younger Director
- ---------------------------------
K. G. Younger

/s/ Palmer E. Huffstetler Director
- ---------------------------------
Palmer E. Huffstetler
</TABLE>

-26-
<PAGE> 27

<TABLE>
<S> <C>
/s/ J. M. Carstarphen Director
- ---------------------------------
J. M. Carstarphen

</TABLE>

-27-
<PAGE> 28

<TABLE>
<S> <C>
/s/ Charles L. Grace Director
- ---------------------------------
Charles L. Grace
</TABLE>

-28-
<PAGE> 29

<TABLE>
<S> <C>
Director
- ---------------------------------
Howard H. Haworth
</TABLE>

-29-
<PAGE> 30

<TABLE>
<S> <C>
/s/ William M. R. Mapel Director
- ---------------------------------
William M. R. Mapel
</TABLE>

-30-
<PAGE> 31
<TABLE>
<S> <C>
/s/ James G. Martin Director
- ---------------------------------
James G. Martin
</TABLE>

-31-
<PAGE> 32
<TABLE>
<S> <C>
/s/ Paul F. Richardson Director
- ---------------------------------
Paul F. Richardson
</TABLE>

-32-
<PAGE> 33
EXHIBIT INDEX

<TABLE>
<CAPTION>
Page No.
<S> <C> <C>
3(a) Articles of Incorporation of Carolina Freight Corporation
(as amended up to May 16, 1988). Incorporated by reference to
Exhibit 3(a) on Form 10-K for the year ended December 31, 1988,
File No. 1-8441. -

(i) Articles of Amendment of Carolina Freight Corporation.
Incorporated by reference to Exhibit 3(a)(i) on Form 10-K
for the year ended December 31, 1989, File No. 1-8441. -

3(b) Amended and Restated Bylaws of Carolina Freight Corporation.
Incorporated by reference to Exhibit 3(b) on Form 10-Q for the
quarter ended September 8, 1990, File No. 1-8441. -

3(c) Amended and Restated Charter of Carolina Freight Carriers
Corporation. Incorporated by reference to Exhibit 3(b) on
Form 10-K for the year ended December 31, 1985, File No.
1-8441. -

4 6 1/4% Convertible Subordinated Debentures Due 2011 - all
documents in connection with Company's registration statement
on Form S-3, File No. 33-4742 in 1986 are incorporated by
reference. -

10(a) Consulting Services Agreement between Carolina Freight
Corporation and K. G. Younger. Incorporated by reference
to Exhibit 10(b) on Form 10-K for the year ended December 31,
1990, File No. 1-8441. -

10(b) Employment Contract Agreement between Carolina Freight
Corporation and Lary R. Scott dated March 22, 1993. 39

10(c) Employment Contract Agreement between Carolina Freight
Corporation and Palmer E. Huffstetler dated March 22, 1993. 44

10(e) The Complete Logistics Company Employee Savings and Profit
Sharing Plan, October 1, 1993. 49

-33-
<PAGE> 34
<TABLE>
<S> <C> <C>
(i) 1989 Amendments to Carolina Freight Corporation Employees
Pension Plan. Incorporated by reference to Exhibit
10(c)(i) on Form 10-K for the year ended December 31,
1989, File No. 1-8441. -

(ii) 1992 Amendment to Carolina Freight Corporation Employees'
Pension Plan. Incorporated by reference to Exhibit
10(d)(ii) on Form 10-K for the year ended December 31,
1992, File No. 1-8441. -

10(g) G. I. Trucking Company Employees Retirement Plan as amended
and restated effective July 1, 1992. Incorporated by reference
to Exhibit 10(e) on Form 10-K for the year ended December 31,
1992, File No. 1-8441. -

10(j) Stock Option Plans:

(ii) Amendment to 1984 Incentive Stock Option Plan of
Carolina Freight Corporation. Incorporated by
reference to Exhibit 10(h)(ii) on Form 10-K for
the year ended December 31, 1987, File No. 1-8441. -

(iii) Amendments to 1975, 1980 and 1984 Stock Option Plans.
Incorporated by reference to Exhibit 10(h)(iii) on
Form 10-K for the year ended December 31, 1988,
File No. 1-8441. -

-34-
<PAGE> 35
<TABLE>
<S> <C> <C>
(v) Amendments to 1980, 1984 and 1988 Incentive Stock Option
Plans of Carolina Freight Corporation. Incorporated by
reference to Exhibit 10(h)(v) on Form 10-K for the year
ended December 31, 1989, File No. 1-8441. -

10(k) Revolving Credit and Term Loan Agreement between Carolina
Freight Carriers Corporation and Citibank, N.A. dated December 1,
1990. Incorporated by reference to Exhibit 10(i) on Form 10-K
for the year ended December 31, 1990, File No.1-8441. -

(i) First Amendment to Revolving Credit and Term Loan
Agreement dated December 31, 1991. Incorporated by
reference to Exhibit 10(i) on Form 10-K for the year
ended December 31, 1991, File No. 1-8441. -

(ii) Second Amendment to Revolving Credit and Term Loan
Agreement dated October 5, 1992. Incorporated by
reference to Exhibit 10(i)(ii) on Form 10-K for the
year ended December 31, 1992, File No. 1-8441 -

10(l) Guaranty Agreement between Carolina Freight Corporation
and Citibank, N.A. dated December 1, 1990. Incorporated by
reference to Exhibit 10(j) on Form 10-K for the year ended
December 31, 1990, File No. 1-8441. -

(i) First Amendment to Guaranty Agreement dated October 5,
1992. Incorporated by reference to Exhibit 10(j)(i) on
Form 10-K for the year ended December 31, 1992, File No.
1-8441. -

10(m) Carolina Freight Trade Receivables Master Trust Pooling and
Servicing Agreement dated December 1, 1993.

10(n) Executive Benefit Plan Agreements:

(ii) Salary Deferral Plan of Officers and Directors of
Carolina Freight Corporation. Incorporated by reference
to Exhibit 10(r)(ii) on Form 10-K for the year ended
December 31, 1986, File No. 1-8441. -
</TABLE>

-35-
<PAGE> 36

<TABLE>
<S> <C> <C>
(iii) Amendment Number One to Deferred Compensation Agreement
of All Directors of Carolina Freight Corporation.
Incorporated by reference to Exhibit 10(p)(iii) on
Form 10-K for the year ended December 31, 1987, File
No. 1-8441. -

(v) Amended Executive Supplemental Benefit Plan. Incorporated
by reference to Exhibit 10(p)(v) on Form 10-K for the
year ended December 31, 1988, File No. 1-8441. -

10(o) Form of Indemnification Agreement between Carolina Freight
Corporation and Its Board of Directors and Schedule
Identifying Documents Omitted. Incorporated by reference
to Exhibit 10(q) on Form 10-K for the year ended
December 31, 1987, File No. 1-8441. -

10(p) Form of Severance Pay Agreement between Carolina Freight
Corporation and Its Officers and Schedule Identifying
Documents Omitted. Incorporated by reference to Exhibit 10(r)
on Form 10-K for the year ended December 31, 1987, File No. 1-8441. -

10(q) Loan Agreements in connection with the following industrial
revenue bond financings of Carolina Freight Carriers
Corporation:

(i) Howard County, Maryland dated September 1,
1981. Incorporated by reference to Exhibit
10(k)(i) on Form 10-K for the year ended
December 31, 1984, File No. 1-8441. -

(ii) City of Rockford, Illinois dated October 1, 1981.
Incorporated by reference to Exhibit
10(k)(ii) on Form 10-K for the year ended
December 31, 1984, File No. 1-8441. -
</TABLE>

-36-
<PAGE> 37

<TABLE>
<S> <C>
(iii) New Jersey Economic Development (Jersey City)
dated January 1, 1982. Incorporated by reference
to Exhibit 10(k)(iii) on Form 10-K for the year
ended December 31, 1984, File No. 1-8441. -

(iv) Village of Forest View, Illinois dated November 1,
1982. Incorporated by reference to Exhibit 10(k)(iv)
on Form 10-K for the year ended December 31, 1984,
File No. 1-8441. -

(v) County of Cuyahoga, Ohio dated August 29, 1983.
Incorporated by reference to Exhibit 10(k)(vi)
on Form 10-K for the year ended December 31, 1984,
File No. 1-8441. -

(vii) City of Hayward, California and Summit Companies, Inc.
dated December 1, 1983. Incorporated by reference to
Exhibit 10(k)(viii) on Form 10-K for the year ended
December 31, 1984, File No. 1-8441. -

(viii) County of Lucas, Ohio dated May 1, 1984. Incorporated
by reference to Exhibit 10(k)(ix) on Form 10-K for the
year ended December 31, 1984, File No. 1-8441. -

(ix) Michigan Job Development Authority dated October 1,
1984. Incorporated by reference to Exhibit 10(k)(x)
on Form 10-K for the year ended December 31, 1984,
File No. 18441. -

(xii) City of Memphis and County of Shelby, Tennessee,
Industrial Development Board dated October 1, 1986.
Incorporated by reference to Exhibit
10(s)(xv) on Form 10-K for the year ended December 31,
1986, File No. 1-8441. -
</TABLE>

-37-
<PAGE> 38
<TABLE>
<S> <C> <C>
(xiii) New Jersey Economic Development Authority, Variable Rate
Demand Economic Development Bond dated February 22, 1990.
Incorporated by reference to Exhibit 10(v)(xiv)
on Form 10-K for the year ended December 31, 1990,
File No. 1-8441. -

(xiv) Carolina Freight Tax-Exempt Bond Grantor Trust dated
May 23, 1990. Incorporated by reference to Exhibit
10(v)(xv) on Form 10-K for the year ended December 31,
1990, File No. 1-8441. -

10(r) Grantor Trust Agreement. Incorporated by reference to
Exhibit 10(w) on Form 10-K for the year ended December 31,
1989, File No. 1-8441. -

11 Computation of Earnings Per Common Share.

13 1993 Annual Report to Shareholders.

21 List of subsidiaries of Carolina Freight Corporation.

23 Consent of Independent Public Accountants.
</TABLE>

-38-

<PAGE> 1
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

-40-
<PAGE> 2
Mr. Lary R. Scott
Page 2
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.

_____ _____
LRS KGY

-41-
<PAGE> 3
Mr. Lary R. Scott
Page 3
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.

_____ _____
LRS KGY

-42-
<PAGE> 4
Mr. Lary R. Scott
Page 4
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

-43-

<PAGE> 1
EXHIBIT 10(c)

March 10, 1993

Mr. Palmer E. Huffstetler
President
Carolina Freight Corporation
N.C. Highway #150 East
Cherryville, North Carolina 28021

Dear Palmer:

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 President 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 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 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 $182,000 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

_____ _____
PEH KGY

-45-
<PAGE> 2
Mr. Palmer E. Huffstetler
Page 2
March 10, 1993

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.

Third, 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 other than the Chief Executive Officer 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.

Fourth, as has been the Company's practice, we shall continue to
provide you with membership in Cleveland Country Club which includes payment by
the Company of fees, dues, and assessments.

Fifth, a company car will be provided to you in accordance with the
Company's practice of providing automobiles for use by its officers.

Sixth, employee benefits which have previously been provided to you
will continue to be offered 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; Pension Plan; and stock options
which have been previously issued. 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.

Seventh, during a period of ninety (90) days preceding the expiration
of the final year of this Agreement you shall be entitled to elect retirement
from the Company and receive the equivalent benefits as those offered to you by
Carolina Freight

_____ _____
PEH KGY

-46-
<PAGE> 3
Mr. Palmer E. Huffstetler
Page 3
March 10, 1993

Carriers Corporation as an eligible participant under its 1992 Retirement
Incentive Program and such benefits shall be adjusted to reflect your rate of
compensation, then-current years of service, and benefit levels during the
term of this Agreement. For purposes of computing benefits, your retirement
date shall be deemed to be the last date that you perform service under the
terms of this Agreement.

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 Sixth 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 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.

_____ _____
PEH KGY

-47-
<PAGE> 4
Mr. Palmer E. Huffstetler
Page 4
March 10, 1993

(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 where your office is presently located except for
required travel on Company business consistent with reasonable business travel
obligations that might ordinarily be expected by 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.

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 February, 1993.

________________________
Palmer E. Huffstetler

_____ _____
PEH KGY

-48-

<PAGE> 1

COMPLETE LEASING CONCEPTS, INC. EMPLOYEE
SAVINGS AND PROFIT SHARING PLAN

_______________

TEXT OF PLAN

October 1, 1993

_______________

COMPLETE LEASING CONCEPTS, INC.
6280 Manchester Boulevard
Buena Park, California 90621
<PAGE> 2
COMPLETE LEASING CONCEPTS, INC. EMPLOYEE
SAVINGS AND PROFIT SHARING PLAN

(TEXT OF PLAN)

TABLE OF CONTENTS

Page
<S> <C> <C>
PREAMBLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I. REFERENCES, CONSTRUCTION AND DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Accrued Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Authorized Leave of Absence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 Before-Tax Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.7 Before-Tax Subaccount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.8 Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.9 Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.10 Break in Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.11 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.12 Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.13 Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.14 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.15 Deferral Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.16 Deferred Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.17 Direct Rollover . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.18 Disability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.19 Disability Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.20 Early Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.21 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.22 Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.23 Entry Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.24 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.25 Forfeiture Break in Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.26 Hours of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.27 Investment Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.28 IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.29 Matching Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.30 Matching Subaccount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.31 Member . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.32 Normal Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.33 PAYSOP Subaccount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.34 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.35 Plan Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.36 Plan Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.37 Prior Plan Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.38 Profit Sharing Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.39 Profit Sharing Subaccount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C> <C>
1.40 Re-employment Commencement Date . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.41 Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.42 Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.43 Rollover Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.44 Rollover Subaccount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.45 Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.46 Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.47 Supplemental Matching Contribution . . . . . . . . . . . . . . . . . . . . . . . . 8
1.48 Supplemental Subaccount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.49 Surviving Spouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.50 Termination of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.51 Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.52 Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.53 Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.54 Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.55 Valuation Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.56 Year of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

ARTICLE II. PARTICIPATION IN THE PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.1 Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.2 Participation Upon Re-employment. . . . . . . . . . . . . . . . . . . . . . . . . 10
2.3 Responsibility for Share Decisions . . . . . . . . . . . . . . . . . . . . . . . . 10
2.4 Cessation of Membership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.5 Union Employees Excluded . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

ARTICLE III. CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.1 Before-Tax Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.2 Supplemental Matching Contributions. . . . . . . . . . . . . . . . . . . . . . . . 12
3.3 Rollover Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.4 Profit Sharing Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.5 Matching Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.6 Reversion of Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.7 Company Not Responsible for Adequacy of Trust Fund . . . . . . . . . . . . . . . . 15

ARTICLE IV. TRUST FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.1 Establishment of Investment Funds . . . . . . . . . . . . . . . . . . . . . . . . 15
4.2 Investment of PAYSOP Subaccount . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.3 Investment Direction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.4 Transfers of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.5 Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

ARTICLE V. ALLOCATIONS AND ADJUSTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.1 Allocations and Adjustments. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.2 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.3 Corrections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

ARTICLE VI. VESTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.1 Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.2 Included Years of Service - Vesting . . . . . . . . . . . . . . . . . . . . . . . 19
6.3 Normal Retirement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.4 Disability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.5 Death . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

</TABLE>

ii
<PAGE> 4
<TABLE>
<S> <C> <C> <C>
6.6 Distribution to Partially-Vested Member . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.7 Restoration of Forfeited Account Balance Upon Re-employment. . . . . . . . . . . . . . . . . . . . 20
6.8 Zero Percent (0%) Vested Member . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.9 Segregated Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.10 Forfeiture Occurs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.11 Amendment to Vesting Schedule. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

ARTICLE VII. PAYMENT OF BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.1 Entitlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.2 Method of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.3 Benefit Commencement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.4 Rollovers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.5 Medium of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.6 Applicable Valuation Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.7 Distribution of PAYSOP Subaccount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.8 Limitation on Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

ARTICLE VIII. MAXIMUM ACCOUNT ADDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.1 Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.2 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8.3 General Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.4 Order of Reduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

ARTICLE IX. SPECIAL DISCRIMINATION RULES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.2 Limit on Before-Tax Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.3 ADP Test . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.4 Special Rules For Determining Average Actual Deferral Percentage . . . . . . . . . . . . . . . . . 33
9.5 Distribution of Excess ADP Deferrals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.6 ACP Test . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.8 Distribution of Excess ACP Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.9 Forfeiture of Excess ACP Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.10 Combined ACP and ADP Test . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.11 Order of Applying Certain Sections of Article . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

ARTICLE X. IN-SERVICE WITHDRAWALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.1 Hardship Withdrawals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.2 Withdrawals After Age 59-1/2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.3 Withdrawals from Rollover Subaccount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

ARTICLE XI. LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
11.1 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
11.2 Loan Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
11.3 Claims Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
11.4 Loan Limits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
11.5 Adequate Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
11.6 Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

</TABLE>

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<TABLE>

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11.7 Repayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
11.8 Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
11.9 Foreclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
11.10 Withdrawals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
11.11 Loan Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

ARTICLE XII. TOP HEAVY PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
12.1 Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
12.2 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
12.3 Determination of Top Heavy Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
12.4 Minimum Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
12.5 Limitations on Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
12.6 Other Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

ARTICLE XIII. DESIGNATION OF BENEFICIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
13.1 Beneficiary Designation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
13.2 Failure to Designate Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

ARTICLE XIV. ADMINISTRATION OF THE PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
14.1 Powers and Duties of the Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
14.2 Powers and Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
14.3 Agents; Report of Committee to Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
14.4 Structure of Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
14.5 Adoption of Procedures of Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
14.6 Instructions for Disbursements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
14.7 Claims for Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
14.8 Hold Harmless . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
14.9 Service of Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
14.10 Investment Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

ARTICLE XV. TRANSFER OF PLAN ASSETS TO SUCCESSOR PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

ARTICLE XVI. AMENDMENT OR TERMINATION OF THE PLAN AND TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
16.1 Right to Amend, Suspend or Terminate Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
16.2 Retroactivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
16.3 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
16.4 No Further Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
16.5 Partial Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

ARTICLE XVII. GENERAL LIMITATIONS AND PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
17.1 All Risks on Members and Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
17.2 Trust Fund is Sole Source of Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
17.3 No Right to Continued Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
17.4 Payment on Behalf of Payee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
17.5 Nonalienation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
17.6 Missing Payee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
17.7 Required Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
17.8 Subject to Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
17.9 Communications to Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

</TABLE>

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17.10 Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
17.11 Communications from the Company or Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
17.12 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
17.13 Voting and Tender or Exchange Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
17.14 Exclusive Benefit of Members and Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . 61
17.15 Additional Powers of the Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
</TABLE>

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COMPLETE LEASING CONCEPTS, INC. EMPLOYEE
SAVINGS AND PROFIT SHARING PLAN

EFFECTIVE OCTOBER 1, 1993

PREAMBLE

THE COMPLETE LEASING CONCEPTS, INC. EMPLOYEE SAVINGS AND PROFIT
SHARING PLAN is designed as an incentive to Employees to make and continue
careers with the Company. The Plan provides eligible Employees the opportunity
to regularly set aside a part of their before-tax Compensation and thereby
build additional financial security upon Retirement or in the event of
Disability, death or other Termination of Service. The Plan also allows the
Company to make Profit Sharing Contributions to the Plan. The Before-Tax
Contributions, Matching Contributions and Profit Sharing Contributions made on
behalf of each Member are invested and accumulated in the Trust Fund free of
taxation until distributed when the Member's employment ends.

The Plan, and the Trust Fund established and maintained as part
of the Plan, are intended to constitute a profit sharing plan and trust with a
"cash or deferred arrangement" which are qualified and exempt from taxation
under Code Sections 401(a), 401(k) and 501(a). The Plan and Trust are also
intended to comply with all applicable requirements of ERISA. All provisions
of the Plan, including the Trust Agreement, shall be interpreted to comply with
the applicable requirements of the Code, ERISA and the Regulations.

All Trust Fund assets, contributions, income and other additions
to the Trust Fund shall be administered, distributed, forfeited and otherwise
governed by the provisions of the Plan and Trust Agreement.

The Employer was formerly a Participating Company in the Carolina
Freight Corporation Employee Savings Plan (the "Prior Plan"). The Employer
withdrew from the Prior Plan effective September 30, 1993, and established this
Plan.

ARTICLE I. REFERENCES, CONSTRUCTION AND DEFINITIONS

Unless otherwise indicated, all references to articles, sections
and subsections shall be to the Plan as set forth herein. The Plan and all
rights thereunder shall be construed and enforced in accordance with ERISA and,
to the extent that state law is applicable, the laws of the State of North
Carolina. The article titles and the captions preceding sections and
subsections have been inserted solely as a matter of convenience and in no way
define or limit the scope or intent of any provisions. When the context so
requires, the singular includes the plural. Whenever used herein and
capitalized, the following terms shall have the respective meaning indicated
unless the context plainly requires otherwise.
<PAGE> 8
1.1 ACCOUNT: The account (including a Before-Tax Subaccount,
PAYSOP Subaccount, Supplemental Subaccount, Rollover Subaccount, Profit Sharing
Subaccount, Matching Contribution and any other subaccount established from
time to time under such account) maintained to record the interest of a Member
or Beneficiary in the Trust Fund.

1.2 ACCRUED BENEFIT: With respect to each Member, the
balance in such Member's Account as of the applicable Valuation Date, following
adjustment thereof as of such Valuation Date as provided in Article V.

1.3 ADMINISTRATOR: The Employee appointed by the Committee
pursuant to Section 14.1 to perform such administrative duties as the Committee
designates.

1.4 AFFILIATE: Any entity affiliated with the Company within
the meaning of Sections 414(b), (c) or (m) of the Code or under Regulations
prescribed under Section 414(o) of the Code, except that, for purposes of
applying the provisions of Article VIII and Section 12.5 herein with respect to
limitations on contributions, Section 415(h) of the Code shall apply.

1.5 AUTHORIZED LEAVE OF ABSENCE: A leave of absence
authorized (pursuant to applicable procedures) by the Company or pertinent
Affiliate under the Company's or Affiliate's personnel practices, provided that
all persons under similar circumstances are treated alike in the granting of
such leaves of absence, and provided further that the Employee returns within
the period specified in the leave of absence, or (b) an absence required to be
considered an Authorized Leave of Absence by applicable law.

1.6 BEFORE-TAX CONTRIBUTION: A contribution made by the
Company to the Trust Fund pursuant to a Deferral Election.

1.7 BEFORE-TAX SUBACCOUNT: The subaccount kept as part of a
Member's Account (a) to account for amounts previously held in the Member's
"Salary Deferral Account" under the Prior Plan Provisions, (b) to account for
the Before-Tax Contributions, if any, made on behalf of the Member, and (c) to
account for all income, expenses, gains, losses and other adjustments allocable
to such subaccount.

1.8 BENEFICIARY: The beneficiary or beneficiaries designated
by a Member pursuant to Article XIII to receive the amount, if any, payable
under the Plan upon the death of such Member, or, where there has been no such
designation or an invalid designation, the individual or entity, or the
individuals or entities, who will receive such amount pursuant to Article XIII.

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<PAGE> 9
1.9 BOARD: The Board of Directors of the Company.

1.10 BREAK IN SERVICE: An applicable computation period, as
set forth in Section 1.56, during which an individual has not completed more
than 500 Hours of Service, as determined by the Committee (or its delegate) in
accordance with the Regulations. Solely for purposes of determining whether a
Break in Service has occurred for eligibility purposes, an individual shall be
credited with the Hours of Service in accordance with Section 1.26 which such
individual would have completed but for either (a) an Authorized Leave of
Absence for which such individual is not paid or entitled to payment or (b) a
maternity or paternity absence, as defined in Section 1.26.

1.11 CODE: The Internal Revenue Code of 1986, as now in
effect or as hereafter amended. All citations to sections of the Code are to
such sections as they may from time to time be amended or renumbered.

1.12 COMMITTEE: The "Complete Leasing Concepts, Inc. Employee
Savings and Profit Sharing Plan Committee" appointed by the Board and as
provided for in Article XIV. For purposes of ERISA, the Committee shall be the
"plan administrator" and as such is a named fiduciary of the Plan.

1.13 COMPANY: Complete Leasing Concepts, Inc., a California
corporation, or any entity which succeeds to its rights and obligations with
respect to the Plan.

1.14 COMPENSATION: Cash remuneration actually paid by the
Company to an Employee for Service during the Plan Year which constitutes
"wages" within the meaning of Section 3401(a) of the Code plus such
remuneration which, but for the deferral thereof pursuant to Sections 125 and
401(k) of the Code, would have been reported on Form W-2.

An Employee's Compensation in excess of $200,000 (as adjusted
upwards from time to time pursuant to Code Section 415(d)(1)) shall be
disregarded. In determining the Compensation of a Member for purposes of this
limitation, the rules of Code Section 414(q)(6) shall apply, except in applying
such rules, the term "family" shall include only the spouse of the Member and
any lineal descendants of the Member who have not attained age 19 before the
close of the year. If, as a result of the application of such rules the
adjusted $200,000 limitation is exceeded, then the limitation shall be prorated
among the affected individuals in proportion to each such individual's
Compensation as determined under this Section prior to the application of this
limitation.

3
<PAGE> 10
1.15 DEFERRAL ELECTION: A Member's written election filed
with the Administrator whereby the Member elects to forgo the receipt of a
specified percentage of Compensation on the condition that the Company make
Before-Tax Contributions in an amount equal to the amount of Compensation
forgone.

1.16 DEFERRED RETIREMENT: Termination of Service after the
Member's 65th birthday, other than on account of death.

1.17 DIRECT ROLLOVER: A payment by the Plan to the eligible
retirement plan specified by the distributee.

1.18 DISABILITY: A physical or mental condition which totally
and permanently prevents such Employee from performing the regular duties of
the Employee's job as the Committee in the exercise of its sole and absolute
discretion shall determine based upon competent medical evidence satisfactory
to the Committee.

1.19 DISABILITY RETIREMENT: Termination of Service which the
Committee determines, in the exercise of its sole discretion, to be on account
of Disability.

1.20 EARLY RETIREMENT: Termination of Service, other than on
account of death, on or after a Member's 55th birthday but before such Member's
65th birthday.

1.21 EFFECTIVE DATE: The "Effective Date of the Plan" is
October 1, 1993, except as otherwise provided with respect to a particular
provision.

1.22 EMPLOYEE: Except as otherwise provided herein, a person
who is a common law employee of the Company or an Affiliate. In determining
who is an Employee for purposes of this Plan, the following special provisions
shall apply to the extent applicable:

(a) Each leased employee, within the meaning of Code Section
414(n), shall be treated as an Employee. Notwithstanding the foregoing,
however, if all such leased Employees constitute less than 20 percent of the
non-highly compensated work force, as defined in Code Section 414(n)(5)(C)(ii),
of the Company and Affiliates, this Section 1.22 shall not apply to any leased
Employee covered by a retirement plan described in Code Section 414(n)(5).

(b) Each individual who is a nonresident alien and who
receives no income from the Company or an Affiliate which constitutes income
from sources within the United States shall not be treated as an Employee.

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<PAGE> 11
1.23 ENTRY DATE: With respect to an Employee, the day on
which such Employee enters the membership of the Plan as provided in Section
2.1. Entry Dates are the January 1, April 1, July 1, and October 1 of each
Plan Year during which the Plan is in effect.

1.24 ERISA: The Employee Retirement Income Security Act of
1974, as now in effect or as hereafter amended. All citations to sections of
ERISA are to such sections as they may from time to time be amended or
renumbered.

1.25 FORFEITURE BREAK IN SERVICE: A Member incurs a
Forfeiture Break in Service when the Member incurs five consecutive Breaks in
Service.

1.26 HOURS OF SERVICE: Hours of Service shall include (a)
each hour for which an Employee is paid or entitled to payment by the Company
or an Affiliate for Service; (b) each hour for which an Employee is paid or
entitled to payment by the Company for reasons other than for Service (such as
vacation, holiday, illness, incapacity (including Disability), lay-off, jury
duty, military duty or leave of absence); (c) each hour (to the extent not
included in (a) or (b)) for which back pay (irrespective of mitigation of
damages) has been either awarded or agreed to by the Company or an Affiliate;
and (d) each hour for which an Employee is not actually in Service but is
required to be given credit for Service under any law of the United States;
provided, that in applying paragraph (b) for periods in which an Employee is
not actually in Service, the following special provisions shall apply:

(a) The number of hours to be credited with respect to any
single continuous period shall be the lesser of: (A) 501 hours, or (B) the
number of hours for which the Employee is paid with respect to such period;

(b) No hours shall be credited with respect to payments made
to the Employee for the purpose of complying with applicable workers'
compensation, unemployment compensation or disability insurance laws, or
payments solely to reimburse an Employee for medical or medically related
expenses incurred by the Employee; and

(c) An amount paid to an Employee by the Company or an
Affiliate indirectly, such as by a trust, fund or insurer to which the Company
or an Affiliate makes contributions or pays premiums, shall be deemed to be
paid by the Company or Affiliate.

Notwithstanding the foregoing provisions of this Section 1.26,
solely for the purpose of determining whether an Employee has incurred a Break
in Service, the following special provisions shall apply:

5
<PAGE> 12
(A) In addition to hours for which an Employee is entitled to
credit under (a) through (d) above, such Employee shall also receive credit for
each hour with respect to the period that such Employee is on an Authorized
Leave of Absence for which such Employee is not paid or entitled to payment.

(B) An Employee who is absent from work for maternity or
paternity reasons shall receive credit for the Hours of Service which would
otherwise have been credited to such Employee but for such absence, or in any
case in which such hours cannot be determined, 8 Hours of Service per day of
such absence. For purposes of this paragraph (b), an absence from work for
maternity or paternity reasons means an absence (i) by reason of the pregnancy
of the Employee, (ii) by reason of a birth of a child of the Employee, (iii) by
reason of the placement of a child with the Employee in connection with the
adoption of such child by such Employee, or (iv) for purposes of caring for
such child for a period beginning immediately following such birth or
placement. The Hours of Service credited under this paragraph (b) shall be
credited with respect to the Plan Year in which the absence begins, if the
crediting is necessary to prevent a Break in Service in that Plan Year; in all
other cases, such Hours of Service shall be credited in the following Plan
Year.

An Employee with respect to whom the Company or Affiliate
maintains records of hours for which payment is made or due shall be credited
with Hours of Service on the basis of such records. Any other Employee shall
be credited with Hours of Service on the basis of 45 hours for each week such
Employee is paid or entitled to payment for any part of such week. Subject to
the provisions of paragraph (b) of this Section 1.26, with respect to any
Employee who is entitled to receive credit for Service for a period such
Employee is not paid or entitled to payment, such Employee shall be credited
with 45 Hours of Service for each week or part thereof during such period. The
provisions of this Section 1.26 shall be applied in accordance with the
provisions of United States Department of Labor Regulations Sections
2530.200b-2(b) and (c), which provisions are incorporated herein by reference.

1.27 INVESTMENT FUNDS: The separate subfunds of the Trust
Fund maintained for investment purposes, as provided in Article IV.

1.28 IRS: The United States Internal Revenue Service.

1.29 MATCHING CONTRIBUTION: The contribution the Company
makes to the Trust Fund pursuant to Section 3.5.

1.30 MATCHING SUBACCOUNT: The subaccount kept as part of a
Member's Account (a) to account for Matching Contributions and (b)

6
<PAGE> 13
to account for income, expenses, gains, losses and other adjustments allocable
to this subaccount.

1.31 MEMBER: With respect to a Plan Year, an Employee who is
enrolled in the Plan as provided in Article II and a former Employee who has an
Accrued Benefit for the Plan Year.

1.32 NORMAL RETIREMENT: Termination of Service, other than on
account of death, on the Member's 65th birthday (the "Normal Retirement Age").

1.33 PAYSOP SUBACCOUNT: The subaccount kept as part of a
Member's Account (a) to account for amounts previously held in the Member's
"PAYSOP Account" under the Prior Plan Provisions which were transferred from
the former Carolina Freight Corporation Payroll-Based Employee Stock Ownership
Plan to the Carolina Freight Corporation Employee Savings and Protection Plan
to this Plan and (b) to account for all income, expenses, gains, losses and
other adjustments allocable to such subaccount.

1.34 PLAN: Complete Leasing Concepts, Inc. Employee Savings
and Profit Sharing Plan, as now in effect or as hereafter amended.

1.35 PLAN ADMINISTRATOR: The Committee.

1.36 PLAN YEAR: The period beginning on October 1, 1993 and
ending on December 31, 1993. Thereafter, the period beginning on each January
1 and ending on the first December 31 thereafter.

1.37 PRIOR PLAN PROVISIONS: The text of the Carolina Freight
Corporation Employee Savings and Protection Plan document as amended and
restated effective January 1, 1987, as amended by amendments dated October 1,
1987, May 3, 1989, June 30, 1989 and October 1, 1992.

1.38 PROFIT SHARING CONTRIBUTION: The contribution the
Company makes to the Trust Fund pursuant to Section 3.4.

1.39 PROFIT SHARING SUBACCOUNT: The subaccount kept as part
of a Member's Account (a) to account for Profit Sharing Contributions, if any,
made by the Company and (b) to account for income, expenses, gains, losses and
other adjustments allocable to this subaccount.

1.40 RE-EMPLOYMENT COMMENCEMENT DATE: The date on which an
Employee first performs an Hour of Service after a Break in Service.

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<PAGE> 14
1.41 REGULATIONS: The applicable regulations issued under the
Code, ERISA or other applicable law by the IRS, the Department of Labor or any
other governmental authority, and any temporary or other appropriate and
effective regulations or rules promulgated by such authorities pending the
issuance of such regulations.

1.42 RETIREMENT: The Member's Normal Retirement, Early
Retirement, Deferred Retirement or Disability Retirement. The term "Retire"
means the act of taking Retirement.

1.43 ROLLOVER CONTRIBUTION: The contribution an Employee
makes to the Trust Fund pursuant to Section 3.3, and in accordance with Code
Section 402(c)(5), of a distribution from a retirement plan qualified under
Code Section 401(a).

1.44 ROLLOVER SUBACCOUNT: The subaccount kept as part of a
Member's Account (a) to account for amounts previously held in the Member's
"Rollover Account" under the Prior Plan Provisions, (b) to account for Rollover
Contributions, if any, made by an Employee and (c) to account for income,
expenses, gains, losses and other adjustments allocable to such subaccount.

1.45 SERVICE: Employment with the Company or any Affiliate,
including periods of employment with an Affiliate rendered by an individual
prior to the date the Affiliate became an Affiliate. Service also includes
periods of employment with a predecessor employer as required by Code Section
414(a) and the Regulations thereunder. Service may also include any period of
a Member's prior employment by any organization upon such terms and conditions
as the Company may approve and subject to any required IRS approval.

1.46 SHARES: The common stock issued by Carolina Freight
Corporation or any successor corporation thereto which is held in the Trust
Fund.

1.47 SUPPLEMENTAL MATCHING CONTRIBUTION: A contribution made
by the Company to the Trust Fund to match Before-Tax Contributions at such rate
and in such amount as the Committee determines pursuant to Section 3.2 is
necessary to meet the ADP Test under Section 9.3.

1.48 SUPPLEMENTAL SUBACCOUNT: The subaccount kept as part of
a Member's Account (a) to account for the Supplemental Matching Contributions,
if any, made on behalf of the Member and (b) to account for all income,
expenses, gains, losses and other adjustments allocable to such subaccount.

8
<PAGE> 15
1.49 SURVIVING SPOUSE: The survivor of a deceased Member to
whom such deceased Member had been legally married (as determined by the
Committee) immediately before the Member's death.

1.50 TERMINATION OF SERVICE: A termination of employment with
the Company or an Affiliate as determined by the Committee in accordance with
reasonable standards and policies adopted by the Committee; provided that a
Termination of Service shall occur on the earlier of (a) or (b) where:

(a) is the date as of which an Employee quits, is discharged,
Retires or dies, and

(b) is the first day of absence of an Employee who fails to
return to employment at the expiration of an Authorized Leave of Absence.

1.51 TRUST: The Complete Leasing Concepts, Inc. Employee
Savings and Profit Sharing Plan Trust, created by the Trust Agreement entered
into between the Company and the Trustee.

1.52 TRUST AGREEMENT: The agreement by and between the
Company and the Trustee, as it may from time to time be amended.

1.53 TRUST FUND: All cash and other assets deposited with or
acquired by the Trustee in its capacity as such hereunder, together with
accumulated income, subject to all liabilities incurred by the Trustee in its
capacity as such and less all disbursements made in respect thereof.

1.54 TRUSTEE: The entity serving as a trustee under the Trust
Agreement.

1.55 VALUATION DATE: The last day of each calendar month of
the Plan Year and any other date during the Plan Year specified by the
Committee, upon or as of which the assets and liabilities of the Trust Fund are
valued and Accounts are adjusted, as prescribed in Article V.

1.56 YEAR OF SERVICE: With respect to an individual, a Year
of Service shall accrue on the date on which such individual completes at least
1,000 Hours of Service during the applicable computation period of 12
consecutive months. The initial computation period shall begin with the date
the Employee first performs an Hour of Service. If an Employee incurs a Break
in Service before completing a Year of Service, such Employee's initial
computation period shall begin with the Employee's Re-employment Commencement
Date. If the Employee does not complete 1,000 Hours of Service during the
initial computation period, subsequent computation

9
<PAGE> 16
periods shall be each 12 month period beginning January 1 and ending December
31, beginning with the first January 1 following the date the Employee first
performed an Hour of Service or the Employee's Re-employment Commencement Date,
as the case may be.

ARTICLE II. PARTICIPATION IN THE PLAN

2.1 PARTICIPATION. Each individual who was a member of the
Carolina Freight Corporation Employee Savings and Protection Plan immediately
prior to the Effective Date of this Plan and who is an Employee as of the
Effective Date shall be enrolled as a Member of the Plan as of the Effective
Date. Each individual who is an Employee on the Effective Date and who has
attained the age of 21 and completed one Year of Service shall also be enrolled
as a Member of the Plan as of the Effective Date. Each other individual who is
an Employee on or after the Effective Date shall be enrolled as a Member of the
Plan as of the Entry Date next following such individual's attainment of age 21
and completion of one Year of Service, provided, such individual is an Employee
on such Entry Date. Notwithstanding anything hereinabove to the contrary, in
no event shall any individual become a Member if such individual (a) is a
leased employee as defined in Code Section 414(n)(2), (b) is an Employee of an
Affiliate, or (c) irrevocably elects not to become a Member.

2.2 PARTICIPATION UPON RE-EMPLOYMENT.

(A) If an Employee incurs a Termination of Service after
satisfying the age and service requirements in Section 2.1 above but before
becoming a Member and is subsequently reemployed by the Company, such Employee
may enroll in the Plan and become a member on the later of the date the
Employee again performs an Hour of Service or the Entry Date that was
applicable under Section 2.1 above.

(B) If a Member incurs a Termination of Service and is
subsequently reemployed by the Company, such individual shall be eligible to
participate in the Plan on the date such individual again performs an Hour of
Service.

2.3 RESPONSIBILITY FOR SHARE DECISIONS. By participating in
the Plan, each Member shall have accepted the responsibility for exercising the
voting, tender and exchange rights conferred in Section 17.13 with respect to
Shares allocated to the Member's PAYSOP Subaccount.

2.4 CESSATION OF MEMBERSHIP. The membership of a Member
shall end when no further benefits are payable to such Member or on such

10
<PAGE> 17
Member's account under the Plan. No allocation of contributions shall be made
for the benefit of a Member in the Plan on or after the date on which such
Member has a Termination of Service or otherwise ceases to be an Employee of
the Company and before the day, if any, on which the individual next performs
an Hour of Service as an Employee of the Company, except that earnings and
losses shall be allocated to the Member's Account in the manner provided in
Article V; provided that a Member shall be entitled to receive an allocation of
contributions as if such Member were an Employee of the Company on the last day
of the Plan Year for the Plan Year during which the Member has a Termination of
Service due to Retirement, Disability or death.

2.5 UNION EMPLOYEES EXCLUDED. Employees covered by a
collective bargaining agreement wherein retirement benefits were made the
subject of good faith bargaining between the representative of the Employees
and the Company shall not be eligible for participation in the Plan unless the
collective bargaining agreement provides for the continued participation. An
employee shall not be ineligible during the period between the selection of the
union and the first collective bargaining agreement which covers him.

ARTICLE III. CONTRIBUTIONS

3.1 BEFORE-TAX CONTRIBUTIONS.

(a) Subject to the limitations of Articles VIII and IX, the
Company shall make Before-Tax Contributions for each Member in accordance with
the Member's Deferral Election, if any, and this Section 3.1. The Company
shall deliver such Before-Tax Contributions to the Trustee as soon as
practicable after the end of the payroll period to which they relate, but in no
event shall Before-Tax Contributions for a Plan Year be delivered to the
Trustee later than 60 days after the end of such Plan Year.

(b) An Employee may file an initial Deferral Election with
the Administrator at any time, and such Deferral Election shall take effect as
soon as practicable, but not before the Employee's Entry Date. Subject to
Section 10.1(c), a Deferral Election shall remain in effect until terminated.
A Deferral Election may be terminated by the Member by filing with the
Administrator the form provided for that purpose, and the termination shall
take effect as soon as practicable thereafter. After such a termination, a
Member may file a new Deferral Election with the Administrator at any time,
which election will take effect as soon as practicable after the first Entry
Date thereafter. A Deferral Election shall terminate automatically upon a
Member's Termination of Service. A Member may

11
<PAGE> 18
change the Deferral Election no more often than once a month and no more than
six times during a Plan Year by filing an amendment with the Administrator, and
such amendment shall become effective as soon as practicable after the filing
of the amendment. A Member's Deferral Election may be terminated at any time,
effective as soon as practicable following the filing with the Administrator of
notice of such termination on the form provided by the Administrator for that
purpose.

(c) Each Deferral Election shall state the percentage of
Compensation the Member wishes to forgo. A Member may elect to forgo a
percentage of the Member's Compensation, expressed as a whole percentage, not
to exceed 20 percent; provided, however, that any Member for whom 20 percent of
Compensation is greater than the limit specified in Section 9.2(a) and for whom
such limit falls between 2 whole percentages of the Member's Compensation, may
elect an allocation of such limit in lieu of an election of a whole percentage
of Compensation. The deferral percentage, or, if elected, the amount obtained
by dividing the limit by the number of pay periods in the Plan Year shall apply
to each paycheck paid while the Deferral Election is in effect.

3.2 SUPPLEMENTAL MATCHING CONTRIBUTIONS. If, as of the last
day of each Plan Year, the "Average Actual Deferral Percentage", as defined in
Section 9.1(b), for all "Highly Compensated Employees", as defined in Section
9.1(f), for the Plan Year ending on that date exceeds the maximum percentage
which will pass the "ADP Test" set forth in Section 9.3 for such Plan Year, the
Company may make a Supplemental Matching Contribution to the Plan to be
allocated to the Supplemental Subaccount of each Member who was a "Non-highly
Compensated Employee" on such day and for whom Before-Tax Contributions were
made for the Plan Year ending on that date and who was an Employee or on an
Authorized Leave of Absence on such date or who died or Retired during that
year. The Supplemental Matching Contribution shall equal such amount, which
may be a specified amount or a percentage of compensation, as the Committee
determines in its sole discretion to be necessary to raise the Average Actual
Deferral Percentage of Non-highly Compensated Employees to the lowest
percentage which will cause the Plan to pass the ADP Test for such Plan Year
and shall be allocated based on the Before-Tax Contributions made on the
Member's behalf and not withdrawn under Article X or refunded under Sections
8.4, 9.2 or 9.5 for the Plan Year. Such contributions shall be fully vested
and nonforfeitable and treated as Before-Tax Contributions for application of
the ADP Test under Section 9.3.

3.3 ROLLOVER CONTRIBUTIONS. An Employee of the Company,
other than a leased employee as defined in Code Section 414(n)(2), or an
Employee who irrevocably elects not to become a Member, shall be

12
<PAGE> 19
permitted to transfer to the Trust Fund, and the Trustee shall accept: (a) lump
sum distributions from another qualified plan which are eligible for tax-free
rollover to a qualified plan and which are directly transferred from the other
qualified plan to this Plan; (b) lump sum distributions received by an Employee
from another qualified plan which are eligible for tax-free rollover to a
qualified plan and which are transferred by the Employee to this Plan within 60
days following such Employee's receipt thereof; (c) amounts transferred to this
Plan from a conduit individual retirement account provided that the conduit
individual retirement account has no assets other than assets which (1) were
previously distributed to the Employee by another qualified corporate (and,
after December 31, 1983, noncorporate) plan as a lump sum distribution, (2)
were eligible for tax-free rollover to a qualified corporate or noncorporate
plan and (3) were deposited in such conduit individual retirement account
within 60 days of receipt thereof and other than earnings on said assets; (d)
amounts distributed to the Employee from a conduit individual retirement
account meeting the requirements of clause (c) above and transferred by the
Employee to this Plan; and (e) amounts transferred from another plan in
accordance with Section 17.10. Such transfers shall be subject to the
following provisions: (A) prior to accepting any transfers to which this
Section applies, the Committee may require the Employee to establish that the
amounts to be transferred to this Plan meet the requirements of this Section
and may also require the Employee to provide an opinion of counsel satisfactory
to the Committee that the amounts to be transferred meet the requirements of
this Section; (B) such transfer must satisfy the requirements of Code Section
402(c); (C) permission shall be given only if, on advice of legal counsel for
the Company, the transfer will not jeopardize the status of the Trust Fund as
tax-exempt under Code Section 501(a) and the status of the Plan as qualified
under Code Section 401(a); (D) no transfer shall be accepted all or a part of
which consists of insurance contracts; and (E) no transfer of assets subject to
the survivor annuity rules of Code Section 401(a)(11) shall be accepted if the
transfer will cause this Plan to be considered a transferee plan required to
provide automatic survivor benefits. All contributions under this Section 3.3
shall be nonforfeitable.

The Committee must treat an Employee who has made a Rollover
Contribution to the Trust prior to satisfying the Plan's eligibility conditions
as a Member for all purposes of the Plan except the Employee is not treated as
a Member for purposes of sharing in Profit Sharing Contributions under the
Plan.

3.4 PROFIT SHARING CONTRIBUTIONS. The Company may, in its
sole discretion, elect to make a Profit Sharing Contribution to the Plan. The
Profit Sharing Contribution shall be allocated among all

13
<PAGE> 20
eligible Members for the Plan Year in proportion to Compensation. For purposes
of this Section only, an eligible Member shall be each Member who has completed
at least 1,000 Hours of Service for the Company and is an Employee of the
Company on the last day of the Plan Year or who incurred a Termination of
Service during the Plan Year due to Retirement, Disability or death. Such
Member shall be eligible to receive an allocation hereunder whether or not the
Member elects to defer a portion of the Member's income to this or any other
tax-qualified plans sponsored by the Company. Each Member's share of the
Profit Sharing Contribution shall be allocated to the Member's Profit Sharing
Subaccount.

3.5 MATCHING CONTRIBUTIONS. Subject to the limitations of
Articles VIII and IX, the Company shall make a Matching Contribution for each
Member who made Before-Tax Contributions. The Matching Contribution for the
Member shall be in an amount equal to 25% of the first 5 percent of
Compensation that the Member elects to defer pursuant to Section 3.1. The
Matching Contribution may be adjusted periodically by the Board.

3.6 REVERSION OF CONTRIBUTIONS.

(a) Qualification. Notwithstanding any other provisions
herein contained, this Plan is entered into on the conditions that the Plan and
the Trust Agreement shall be approved by the IRS as a qualified and exempt plan
and trust under the provisions of the Code and Regulations so that
contributions to the Trust may be deducted for Federal income tax purposes,
within the limits of the Code and Regulations, and be nontaxable to Members
when contributed. If such approval should be denied for any reason (including
failure to comply with any conditions for such approval imposed by the IRS),
contributions made after the execution of the Trust Agreement and prior to such
denial and all assets in the Trust Fund shall be returned to the Company,
without any liability to any person, within one year after the date of denial
of such approval.

(b) Mistake of Fact. Notwithstanding any other provisions
herein contained, if any contribution is made due to a mistake of fact, such
contribution shall upon the direction of the Company, which shall be given in
conformity with the provisions of ERISA, be returned to the Company or the
parties who made it, as directed by the Company, without liability to any
person.

(c) Deduction. Notwithstanding any other provisions herein
contained, all contributions are hereby expressly conditioned upon their
deductibility under Section 404 of the Code and Regulations, as amended from
time to time, and if the deduction for any contribution is disallowed in whole
or in part, then such

14
<PAGE> 21
contribution (to the extent the deduction is disallowed) shall upon direction
of the Committee, which shall be given in conformity with the provisions of
ERISA, be returned, without liability to any person, within one year after such
disallowance.

3.7 COMPANY NOT RESPONSIBLE FOR ADEQUACY OF TRUST FUND.
Except as and if required by applicable law, neither the Board, the Company,
the Committee, any member of the Committee nor the Trustee shall be responsible
for the adequacy of the Trust Fund to meet and discharge Plan liabilities.

ARTICLE IV. TRUST FUND

4.1 ESTABLISHMENT OF INVESTMENT FUNDS. All monies, securities

or other property received as contributions under the Plan shall be delivered
to the Trustee under the Trust, to be managed, invested, reinvested and
distributed for the exclusive benefit of the Members and their Beneficiaries in
accordance with the Plan, the Trust Agreement and any agreement with an
insurance company or other financial institution constituting a part of the Plan
and Trust. By written notice to the Trustee, the Committee may delegate to
itself the authority to exercise investment management responsibilities over
all or any portion of the Trust Fund. The Trustee, at the direction of the
Committee, shall cause to be established or maintain one or more of the
following types of Investment Funds for the investment of the Trust Fund,
provided that the Committee shall have the sole discretion to direct the Trustee
to change, add or eliminate any such funds from time to time.

(a) Income Fund. A low risk investment fund, the assets of
which consist primarily of one or more guaranteed income contracts issued by an
insurance company, one or more certificates of deposit issued by a national
bank or savings and loan association, one or more direct obligations of the
United States government or any agency thereof, or one or more obligations
guaranteed as to principal and interest by the United States government or an
agency thereof. It may also include contracts purchased from a financial
institution intended to limit the volatility of the Plan investment results.

(b) Equity Fund. An investment fund with a
higher-than-average risk that consists primarily of such capital, common or
other forms of equity stocks, or securities convertible into common or capital
stock as may be purchased pursuant to the Trust Agreement.

15
<PAGE> 22
(c) Balanced Fund. An investment fund with below average
risk that invests primarily in common stocks and fixed income securities.

(d) Bond Fund. An investment fund that consists primarily of
fixed income securities.

(e) GIC Fund. An investment fund that consists primarily of
investments in guaranteed income contracts.

(f) Stock Fund. Prior to December 31, 1990, Members could
elect to invest contributions in this fund pursuant to Prior Plan Provisions.
This fund is maintained by the Trustee and consists primarily of shares of
Carolina Freight Corporation as well as such amount of cash and cash
equivalents as is necessary to manage the fund.

4.2 INVESTMENT OF PAYSOP SUBACCOUNT. A Member's PAYSOP
Subaccount shall at all times be invested in the Stock Fund.

4.3 INVESTMENT DIRECTION. A Member may elect, in such
manner and form as the Administrator prescribes, to direct the investment of
contributions allocated to such Member's Before-Tax, Supplemental, Matching,
Profit Sharing and Rollover Subaccounts, in the various Investment Funds
established by the Trustee; provided, however, that a Member may not direct the
investment of contributions in the Stock Fund. In the event an effective
investment direction is not made by the Member pursuant to this Section 4.3,
all such contributions shall be invested in the Income Fund. A Member may
direct the investment of such contributions in multiples of 10 percent of the
amount of the contribution. All investment directions given by a Member shall
be deemed to be a continuing direction until changed. A Member may change such
Member's investment direction, in such manner and form as prescribed by the
Administrator, no more often than once a month and no more than six times
during a Plan Year, and such new investment direction shall become effective as
soon as practicable following the receipt by the Administrator of such
direction.

4.4 TRANSFERS OF INVESTMENTS. A Member may elect in such
manner and form as the Administrator prescribes, to transfer amounts in such
Member's Before-Tax, Supplemental, Matching, Profit Sharing and Rollover
Subaccounts (but not PAYSOP Subaccount) into and out of the various Investment
Funds; provided, however, that no amounts may be transferred into the Stock
Fund. The minimum amount that can be transferred out of any one Investment
Fund is 10 percent of the value of the Member's Account, or if less, the entire
amount invested in such Investment Fund.

16
<PAGE> 23
4.5 LOANS. A loan to a Member under Article XI shall be from
such Member's Account and shall be considered an earmarked investment of the
Member's Account. A loan to a Member shall reduce the amounts invested in the
Investment Funds on a pro rata basis and shall be charged against each
subaccount invested in each Fund on a pro rata basis. Loan repayments shall
reduce the amount of the loan to the extent it represents principal and shall
be invested in the Investment Funds in accordance with the Member's then
existing investment direction. Repayments shall be credited to the Member's
Subaccounts on a pro rata basis.

ARTICLE V. ALLOCATIONS AND ADJUSTMENTS

5.1 ALLOCATIONS AND ADJUSTMENTS.

(a) Forfeiture Allocation. Subject to any restoration
allocation required under Article VI, the Committee will allocate Member
forfeitures which occur pursuant to Section 6.10 or 17.6 to first reduce the
Company's Matching Contributions for the Plan Year in which the forfeiture
occurs and then to reduce the Company's Profit Sharing Contributions for the
Plan Year in which the forfeiture occurs.

(b) Revaluation of Trust Fund. The assets of the Trust Fund
shall be revalued by the Trustee monthly on the last day of each calendar
month, and in making such revaluation the Trustee shall take into account
earnings or losses of the Trust Fund net of reasonable expenses and capital
appreciation or depreciation in such assets whether or not realized. The
method of revaluation shall be determined by the Trustee, and shall be followed
with reasonable consistency from month to month. The aggregate amount credited
to the Accounts of all Members having Accounts in the Trust Fund shall be
adjusted monthly as of each Valuation Date so as to be equal to the value of
such assets on such date. Before making the monthly adjustments, the Accounts
of Members shall be reduced by any payments made therefrom during the previous
month.

(c) Adjustment of Accounts. The amounts in a Member's Before
Tax Subaccount, PAYSOP Subaccount, Rollover Subaccount, Matching Subaccount,
Profit Sharing Subaccount and Supplemental Subaccount shall at all times be
separately accounted for by allocating investment gains and losses,
withdrawals, distributions, and loans separately among such subaccounts pro
rata on a reasonable and consistent basis.

5.2 REPORTS. After completing the allocations provided for
in Section 5.1, the Committee shall prepare a statement which shows the value
of each Account then maintained by the Trustee for a

17
<PAGE> 24
Member, or where appropriate, for a Beneficiary. The Committee also shall
prepare quarterly an Account statement for each Member and, where appropriate,
each Beneficiary, which may be forwarded to that person and which shows the
contributions to the Account of a Member for the relevant period of the Plan
Year and the then value of that Account.

5.3 CORRECTIONS. If an error or omission is discovered in
any Account, the Committee shall make such adjustment as it deems necessary to
remedy in an equitable manner such error or omission in such Account not later
than the last day of the Plan Year in which the error or omission is
discovered.

ARTICLE VI. VESTING

6.1 VESTING.

(a) A Member shall at all times be fully vested in the
Member's Before-Tax Subaccount, Supplemental Subaccount and Rollover
Subaccount.

(b) Except as otherwise provided in Sections 6.3 through 6.6,
a Member's nonforfeitable percentage of the Member's Matching Subaccount and
Profit Sharing Subaccount shall be determined in accordance with the following
vesting schedule:

<TABLE>
<CAPTION>
Years of Service Percent Vested
---------------- --------------
<S> <C>
Less than 3 years 0%
At least 3 years 20%
At least 4 years 40%
At least 5 years 60%
At least 6 years 80%
At least 7 years or more 100%

</TABLE>
(c) For each year that the Plan is a Top-Heavy Plan (as that
term is defined in Section 12.3), the following vesting schedule shall apply
and shall be treated as a Plan amendment to this Plan:

<TABLE>
<CAPTION>
Years of Service Percent Vested
---------------- --------------
<S> <C>
Less than 1 year 0%
At least 2 years 20%
At least 3 years 40%
At least 4 years 60%
At least 5 years 80%
At least 6 years or more 100%

</TABLE>

18
<PAGE> 25
The vesting provisions of Section 6.1(b), rather than the top-heavy vesting
provisions of this Section, will apply to any Member who does not perform an
Hour of Service after the Plan becomes Top-Heavy.

6.2 INCLUDED YEARS OF SERVICE - VESTING. For purposes of
determining "Years of Service" with respect to vesting, the Plan takes into
account all Years of Service an Employee completes with the Company or an
Affiliate except:

(a) For the sole purpose of determining a Member's
nonforfeitable percentage of the Member's Account which accrued for the
Member's benefit prior to a Forfeiture Break in Service, the Plan disregards
any Year of Service after the Member first incurs a Forfeiture Break of
Service.

(b) Any Year of Service before the Member attained the age of
18.

(d) In the case of a Member who is 0% vested in the Member's
Account at the time the Member has a Break in Service, any Year of Service
before a Break in Service if the number of consecutive Breaks in Service equals
or exceeds the greater of 5 or the aggregate number of the Years of Service
prior to the Break in Service.

(e) In the case of any Member who has a 1 year Break in
Service, no Year of Service before such break shall be taken into account until
the Member completes a Year of Service after the Member's re-employment.

6.3 NORMAL RETIREMENT. Notwithstanding the vesting schedule
in Section 6.01, a Member's Account is one hundred percent (100%)
nonforfeitable upon and after attaining the Normal Retirement Age if the Member
is an Employee on or after that date. An Employee may terminate the Member's
employment and retire for the purposes hereof upon the Member's Normal
Retirement Date, and all amounts credited to such Member's Account shall be
paid to him as set forth in Article 7. If a Member continues as an Employee
after the Member's Normal Retirement Date, the Member shall continue to be
treated in all respects as a Member until the Member's actual retirement.

6.4 DISABILITY. A Member's Account will be one hundred
percent (100%) nonforfeitable if the Member's Termination of Service is a
result of the Member's Disability.

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<PAGE> 26
6.5 DEATH. A Member's Account will be one hundred percent
(100%) nonforfeitable upon the Member's death.

6.6 DISTRIBUTION TO PARTIALLY-VESTED MEMBER. If pursuant to
Article 7, a partially-vested Member receives a distribution of the entire
amount of the Member's vested Account before the Member incurs a Forfeiture
Break in Service, the distribution will result in an immediate forfeiture of
the nonvested portion of the Member's Account.

6.7 RESTORATION OF FORFEITED ACCOUNT BALANCE UPON
RE-EMPLOYMENT.

(a) A partially-vested Member who is re-employed as an
Employee after receiving a distribution of the entire amount of the Member's
vested Account may repay to the Trustee the amount of the distribution
attributable to the Member's Profit Sharing and Matching Subaccounts unless the
Member no longer has a right to restoration because:

(1) Five (5) years have elapsed since the Member's first
re-employment date as an Employee following the cash-out
distribution; or

(2) The Member incurred a Forfeiture Break in Service.

If a partially-vested Member makes the distribution repayment, the Committee
must restore the Member's Profit Sharing and Matching Subaccounts to the same
dollar amount as the dollar amount of the Member's Profit Sharing and Matching
Subaccounts on the Valuation Date immediately preceding the date of the
cash-out distribution, unadjusted for any gains or losses occurring subsequent
to that Valuation Date. Restoration of the Member's Profit Sharing and
Matching Subaccounts includes restoration of all Code Section 411(d)(6)
protected benefits with respect to the restored Profit Sharing and
Matching Subaccounts in accordance with applicable Regulations.

(b) The Committee will restore the Profit Sharing and
Matching Subaccounts as of the Valuation Date coinciding with or immediately
following the repayment. To restore the Member's subaccounts, the Committee,
to the extent necessary, will allocate to the Member's subaccounts:

(1) The amount, if any, of Member forfeitures the
Committee would otherwise allocate under Section 5.1(a);

(2) The amount, if any, of the Trust Fund net income or
gain for the Plan Year; and

20
<PAGE> 27
(3) The Company Profit Sharing Contributions and special
contributions from the Company for the purpose of restoration.

6.8 ZERO PERCENT (0%) VESTED MEMBER. A Member who is zero
percent vested in the Member's Profit Sharing and Matching Subaccounts on the
date of such Member's Termination of Service shall be deemed to have received a
distribution of the entire non-forfeitable balance in such Subaccounts on the
date of such Termination of Service. For purposes of applying the restoration
provisions of Section 6.7, the Committee will treat the zero percent vested
Member as repaying the Member's deemed distribution on the first date of the
Member's re-employment as an Employee.

6.9 SEGREGATED ACCOUNTS.

(a) Segregated Accounts for Repaid Amount. Until the
Committee restores the Member's Profit Sharing and Matching Subaccounts, as
described in Section 6.7, the Trustee will invest the cash-out amount the
Member has repaid in segregated subaccounts maintained solely for that Member.
The Trustee must invest the amount in the Member's segregated subaccounts in
Federally insured interest bearing savings account(s) or time deposit(s) (or a
combination of both), or in other fixed income investments. Until commingled
with the balance of the Trust Fund on the date the Committee restores the
Member's Profit Sharing and Matching Subaccounts, the Member's segregated
subaccounts remain a part of the Trust, but it alone shares in any income it
earns and it alone bears any expense or loss it incurs. Unless the repayment
qualifies as a Rollover Contribution, the Committee will direct the Trustee to
repay to the Member as soon as is administratively practicable the full amount
of the Member's segregated subaccounts if the Committee determines the Member
does not have the right to have the Members accounts restored pursuant to
Section 6.7.

(b) Segregated Accounts for Pre-Forfeiture Break in Service
Accounts. If a Member re-enters the Plan subsequent to incurring a Forfeiture
Break in Service, the Trustee must maintain separate subaccounts for the
Member's pre-Forfeiture Break in Service Profit Sharing and Matching
Subaccounts, unless the Member is 100% vested in the Member's pre-Forfeiture
Profit Sharing and Matching Subaccounts.

6.10 FORFEITURE OCCURS. A Member's forfeiture, if any, of the
Member's Profit Sharing and Matching Subaccounts occurs under the Plan on the
earlier of:

(a) The last day of the Plan Year in which the Member first
incurs a Forfeiture Break in Service; or

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<PAGE> 28
(b) The last day of the Plan Year in which the entire vested
portion of the Member's Profit Sharing and Matching Subaccounts is distributed
or deemed to be distributed as provided in Section 6.8.

A Member does not forfeit any portion of the Member's Profit Sharing or
Matching Subaccounts for any other reason or cause except as expressly provided
by this Section 6.10 or as provided under Section 17.6.

6.11 AMENDMENT TO VESTING SCHEDULE. Though the Company
reserves the right to amend the vesting schedule at any time, the Committee
will not apply the amended vesting schedule to reduce the nonforfeitable
percentage of any Member's Profit Sharing and Matching Subaccounts as of the
later of the date the Company adopts the amendment, or the date the amendment
becomes effective) to a percentage less than the nonforfeitable percentage
computed under the Plan without regard to the amendment. An amended vesting
schedule will apply to a Member only if the Member receives credit for at least
one Hour of Service after the new schedule becomes effective. If the Company
makes a permissible amendment to the vesting schedule, each Member having at
least three (3) Years of Service with the Employer may elect to have the
percentage of the Member's nonforfeitable Profit Sharing and Matching
Subaccounts computed under the Plan without regard to the amendment. The
Member must file the Member's election with the Administrator within sixty (60)
days of the latest of (a) the Company's adoption of the amendment; (b) the
effective date of the amendment; or (c) the Member's receipt of a copy of the
amendment. The Administrator, as soon as practicable, must forward a true copy
of any amendment to the vesting schedule to each affected Member, together with
an explanation of the effect of the amendment, the appropriate form upon which
the Member may make an election to remain under the vesting schedule provided
under the Plan prior to the amendment and notice of the time within which the
Member must make an election to remain under the prior vesting schedule. The
election described in this Section 6.11 does not apply to a Member if the
amended vesting schedule provides for vesting at least as rapid at all times as
the vesting schedule in effect prior to the amendment. For purposes of this
Section 6.11, an amendment to the vesting schedule includes any Plan amendment
which directly or indirectly affects the computation of the nonforfeitable
percentage of an Employee's rights to the Member's Profit Sharing and Matching
Subaccounts. Furthermore, the Committee must treat any shift in the vesting
schedule, due to a change in the Plan's top-heavy status, as an amendment to
the vesting schedule for purposes of this Section 6.11.

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<PAGE> 29
ARTICLE VII. PAYMENT OF BENEFITS

7.1 ENTITLEMENT. Upon a Member's Termination of Service,
such Member, or in the event of such Member's death, such Member's Beneficiary,
shall become entitled to such Member's Accrued Benefit. In the event the
Member dies after Termination of Service but prior to payment of such Member's
benefit, such Member's Accrued Benefit shall be paid to such Member's
Beneficiary.

7.2 METHOD OF DISTRIBUTION. Subject to Section 7.3(a),
distribution of a Member's Accrued Benefit shall be made in one single sum from
the Trust Fund.

7.3 BENEFIT COMMENCEMENT. The payment of the Accrued Benefit
to which a Member, or, in the event of the Member's death, such Member's
Beneficiary, is entitled shall be made as soon as practicable after such Member
incurs a Termination of Service; provided, however, in no event shall the
payment be made more than 60 days after the end of the calendar month in which
the Member incurs the later of the Member's Termination of Service or the date
the Administrator receives satisfactory evidence of the Member's death or
Disability, if applicable. Notwithstanding the foregoing, the following
special rules shall apply:

(a) If such Member has not reached age 65 and such Member's
Accrued Benefit is more than $3,500, accelerated distribution may not be made
without such Member's consent. If the Member does not consent to distribution
prior to attaining age 65, then distribution shall be made as soon as
practicable after the close of the Plan Year in which such Member attains age
65, but in no event later than 60 days following the close of such Plan Year.

(b) In no event shall distribution of a Member's Accrued
Benefit be made later than the April 1 next following the calendar year in
which the Member attains age 70 1/2.

7.4 ROLLOVERS.

(a) For purposes of this Article VII and as otherwise used in
this Plan, the following terms shall have the meaning set forth below.

(1) "Distributee" shall mean a Member, former
Employee, the Member's or former Employee's spouse or former
spouse who is the alternate payee under a Qualified Domestic
Relations Order, as defined in section 414(p)(8) of the Code, and
the surviving spouse of a Member or former Employee.

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<PAGE> 30
(2) "Eligible Rollover Distribution" shall mean any
distribution of all or any portion of the balance of the
Distributee's Account, except that an Eligible Rollover
Distribution does not include: any distribution that is one of a
series of substantially equal periodic payments (not less
frequently than annually) made for the life (or life expectancy)
of the Distributee or the joint lives (or joint life
expectancies) of the Distributee and the Distributee's designated
beneficiary, or for a specified period of 10 years or more; any
distribution to the extent such distribution is required under
section 401(a)(9) of the Code; and the portion of any
distribution that is not includable in gross income (determined
without regard to the exclusion for net unrealized appreciation
with respect to employer securities pursuant to Section
402(e)(4)).

(3) "Eligible Retirement Plan" shall mean an
Individual Retirement Account described in section 408(a) of the
Code, an Annuity Plan described in section 403(a) of the Code, an
Individual Retirement Annuity described in Section 408(b) (other
than an endowment contract), or a Qualified Trust, described in
section 401(a) of the Code. However, in the case of an Eligible
Rollover Distribution to the surviving spouse, an Eligible
Retirement Plan is an Individual Retirement Account or Individual
Retirement Annuity.

(b) Notwithstanding any provision of the Plan to the
contrary, a Distributee may elect, at the time and in the manner prescribed by
the Committee, to have any portion of an Eligible Rollover Distribution paid
directly to an Eligible Retirement Plan.

(c) The Committee may prescribe reasonable procedures for a
distributee to elect a Direct Rollover pursuant to this Section, and may
require that the Distributee provide such information and documentation as may
be reasonably necessary to accomplish a Direct Rollover. The Administrator
shall not be required to execute a Direct Rollover of a portion of the balance
to the credit of the Distributee if such portion is not equal to at least $500.
The Administrator shall not be required to execute a Direct Rollover with
respect to Eligible Rollover Distributions of a Distributee during a year that
are reasonably expected to total less than $200. Furthermore, the
Administrator shall not be required to divide an Eligible Rollover Distribution
with respect to a Distributee into separate distributions to be paid to two or
more Eligible Retirement Plans in Direct Rollovers.

(d) A Distributee who fails to make an affirmative election
under this Section shall be treated as having not made an election for a Direct
Rollover, provided the Distributee has received a

24
<PAGE> 31
written explanation of the Direct Rollover option within a reasonable time
before the Eligible Rollover Distribution. In such event, the Committee shall
make distributions in accordance with the provisions of Article VII.

7.5 MEDIUM OF PAYMENT. Distribution of a Member's Accrued
Benefit shall be made entirely in cash; provided, however, that distribution of
a Member's PAYSOP Subaccount shall be made entirely in whole Shares, with the
value of any fractional interest in Shares paid in cash, unless the Member
elects to receive such amounts in cash, in which case the Shares allocated to
the Member's PAYSOP Subaccount immediately prior to the date of distribution
shall be converted to cash and the amount that the Member shall receive is the
fair market value of the Shares as of the date the Shares are converted to
cash.

7.6 APPLICABLE VALUATION DATE. The Accrued Benefit to be
distributed pursuant to this Article VII, excluding any Shares specifically
allocated to the Member's Account which the Member does not elect to receive in
cash, shall be based upon the value of the Member's Account as of the Valuation
Date immediately following the Member's Termination of Service, adjusted for
contributions to and distributions from the Member's Account after that date
and before the date of distribution. Distributions required in connection with
contributions allocated after the distribution of a Member's Account shall be
made as soon as administratively practicable.

7.7 DISTRIBUTION OF PAYSOP SUBACCOUNT. Notwithstanding any
provision of the Plan to the contrary, in no event shall any distribution of a
Member's PAYSOP Subaccount be made before the end of the 84th month beginning
after the month in which the Shares were originally allocated to the Member's
account, except in accordance with Code Section 409(d).

7.8 LIMITATION ON DISTRIBUTIONS. Notwithstanding any
other provisions of this Plan, any distribution from this Plan shall be
made in accordance with the requirements of Code Section 401(a)(9) and
Regulations promulgated under that Section, and such requirements shall take
precedence over any contrary provisions in this Plan.

ARTICLE VIII. MAXIMUM ACCOUNT ADDITIONS

8.1 APPLICATION. The provisions of this Article VIII shall
govern notwithstanding any other provisions of the Plan.

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<PAGE> 32
8.2 DEFINITIONS. For purposes of this Article and as
otherwise used in this Plan, the following terms shall have the meaning set
forth below.

(a) "Annual Addition" shall mean the following amounts which,
without regard to this Article, are to be credited to the Member's Account for
any Limitation Year: (1) Company contributions, including Before-Tax
Contributions, Matching Contributions and Profit Sharing Contributions and (2)
such other amounts as may be required to be included under the Code Section 415
and the Regulations thereunder. "Annual Addition" shall not include, without
limitation, Rollover Contributions.

(b) "Limitation Year" shall mean the 12-month period
beginning January 1 and ending the next following December 31.

(c) "415 Compensation" shall mean, as to each Employee, the
total compensation from the Company, including overtime and bonuses, which is
paid to an Employee. For purposes of applying the limitations under Code
Section 404(a), 415 and 416, "415 Compensation" shall include: wages,
salaries, fees for professional services and other amounts received for
services actually rendered in the course of employment with the Company
(including, but not limited to, commissions paid salesmen, compensation for
services on the basis of a percentage of profits, commissions on insurance
premiums, tips and bonuses) paid during the Limitation Year and shall exclude:
(1)(A) Company contributions to a deferred compensation plan which are not
includable in the Employee's gross income for the taxable year in which
contributed, (B) Company contributions made on behalf of the Employee to a
simplified employee pension plan to the extent such contributions are
deductible from the Employee's gross income, (C) any distribution from a plan
of deferred compensation, regardless of whether such amounts are includable in
the gross income of the Employee when distributed, except however, any amounts
received by an Employee pursuant to an unfunded nonqualified plan to the extent
such amounts are includable in the gross income of the Employee; (2) amounts
realized from the exercise of a nonqualified stock option, or amounts realized
when restricted stock (or property) held by an Employee either becomes freely
transferable or is no longer subject to a substantial risk of forfeiture; (3)
amounts realized from the sale, exchange, or other disposition of stock
acquired under a qualified stock option; and (4) other amounts which receive
special tax benefits, such as premiums for group term life insurance (but only
to the extent that the premiums are not includable in the gross income of the
Employee), or contributions made by the Company (whether or not under a salary
reduction agreement) towards the purchase of any annuity contract described in
Code Section 403(b) (whether or not

26
<PAGE> 33
the contributions are excludable from the Employee's gross income); provided,
however, 415 Compensation in excess of $200,000 (as such amount may be adjusted
for inflation from time to time for a Limitation Year under Code Sections
401(a)(17) and 415(d)) in any Limitation Year shall be disregarded.

(d) "Defined Benefit Plan Fraction" shall mean, as to any
Member in any Limitation Year, a fraction (1) the numerator of which is such
Member's projected annual benefit under a defined benefit plan maintained by
the Company and any other defined benefit plan required to be aggregated with
such plan under Code Section 415(f) (determined as of the end of the Limitation
Year), and (2) the denominator of which is the lesser of (A) the product of
1.25 times $90,000 (as adjusted upward from time to time pursuant to Code
Section 415(d)), or (B) the product of 1.4 times 100 percent of such Member's
highest average 415 Compensation for the consecutive Limitation Years during
which such person has been a Member of this Plan or a participant in any other
defined benefit plan sponsored by the Company or for any 3 such consecutive
Limitation Years, whichever period is less.

(e) "Defined Contribution Plan Fraction" shall mean, as to
any Member in any Limitation Year, a fraction (1) the numerator of which is the
sum of all Annual Additions to such Member's Account, and all annual additions
(as defined in Code Section 415(c)(2)) to any account of such Member in any
other defined contribution plan required to be aggregated with this Plan under
Code Section 415(f), as of the close of such Limitation Year, and (2) the
denominator of which is the sum of the lesser of the following amounts
determined for such Limitation Year and for each prior Limitation Year during
which the Member was an Employee: (A) the product of 1.25 times $30,000 (or,
if greater, one-fourth of the $90,000 limit under Code Section 415(b)(1)(A) as
adjusted upward from time to time for a Limitation Year under Code Section
415(d)); or (B) the product of 1.4 times 25 percent of the Member's 415
Compensation for each such Limitation Year.

8.3 GENERAL RULES.

(a) The Annual Addition credited to a Member's Account for
any Limitation Year may not exceed the lesser of (1) $30,000 (or, if greater,
25 percent of the dollar limitation in effect under Section 415(b)(1)(A) of the
Code), or (2) 25 percent of the Member's 415 Compensation for the Limitation
Year.

(b) If a Member is also a participant or was a participant in
one or more defined benefit plans, the sum of such Member's Defined Benefit
Plan Fraction and Defined Contribution Plan Fraction shall not exceed 1.0 for
each Limitation Year.

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<PAGE> 34
(c) For purposes of this Article VIII, all defined
contribution plans maintained by the Company and any Affiliate shall be treated
as one plan and all defined benefit plans maintained by the Company and any
Affiliate shall be treated as one plan, as provided in Code Section 415(f).

8.4 ORDER OF REDUCTION.

(a) Any adjustment required to satisfy the limitations set
forth in Code Section 415 as a result of a Member's participation in another
defined contribution plan or defined benefit plan, shall be made first to this
Plan and then to annual additions under any defined benefit plan maintained by
the Company.

(b) If the Committee determines that the allocation of
contributions, if any, to the Account of a Member will cause the Annual
Addition for that Member to exceed the limitations set forth in Section 8.3 and
that an adjustment under this Plan is required to satisfy Section 8.3, the
excess amounts shall be held unallocated in a suspense account for the
Limitation Year and allocated and reallocated in the next Limitation Year to
all of the Members of the Plan. The excess amounts must be used to reduce
Company contributions for the next Limitation Year (and succeeding Limitation
Years, as necessary) for all of the Members in the Plan. For purposes of this
Section, excess amounts may not be distributed to a Member or former Member.
If the allocation or reallocation of the excess amounts in a later Limitation
Year causes the limitations of Code Section 415 to be exceeded with respect to
each Plan Member for the Limitation Year, then these amounts must be held
unallocated in the suspense account. If the suspense account is in existence
at any time during a particular Limitation Year other than the Limitation Year
described in the preceding sentence, all amounts in the suspense account must
be allocated and reallocated to the Members' Accounts (subject to the
limitations of Code Section 415) before any Company contributions which would
constitute annual additions may be made to the Plan for that Limitation Year.

ARTICLE IX. SPECIAL DISCRIMINATION RULES

9.1 DEFINITIONS. For purposes of this Article and as
otherwise used in this Plan, the following terms shall have the meanings set
forth below.

(a) "Actual Contribution Percentage" or "ACP" shall mean the
ratio (expressed as a percentage) of (1) the sum of the Matching Contributions
made on behalf of a Member for the Plan Year and, to the extent permitted in
Treasury Regulations and elected by the

28
<PAGE> 35
Company, the Member's Qualified Elective Deferrals, to (2) the Member's 415
Compensation, as defined in Section 8.2(c), for that period of the Plan Year
for which such person is a Member. The Company, on an annual basis, may elect
to include or not to include Qualified Elective Deferrals in computing the ACP
for a Plan Year. Furthermore, for any Plan Year in which the Plan is a Top
Heavy Plan, the Company may elect on an annual basis to count a Member's
Matching Contributions toward satisfying the required minimum contribution
under Section 12.4(a) (minimum contribution for non-key employees in a
top-heavy plan) in lieu of including such contributions in the ACP.

(b) "Actual Deferral Percentage" or "ADP" shall mean the
ratio (expressed as a percentage) of the sum of Before-Tax Contributions and
Supplemental Matching Contributions made for the Plan Year on behalf of an
Employee eligible to enroll in the Plan pursuant to Article II (excluding any
"Excess $7,000 Deferrals" by a "Non-highly Compensated Employee") to the
Member's 415 Compensation for that period of the Plan Year for which such
person is a Member.

(c) "Average Actual Contribution Percentage" shall mean the
average (expressed as a percentage) of the Actual Contribution Percentages of
the Members in a group. The percentage shall be rounded to the nearest
one-hundredth of one percent.

(d) "Average Actual Deferral Percentage" shall mean the
average (expressed as a percentage) of the Actual Deferral Percentages of such
Employees in a group. The percentage shall be rounded to the nearest
one-hundredth of one percent.

(e) "Combined ADP and ACP Test" shall have the meaning set
forth in Section 9.10.

(f) "Excess $7,000 Deferrals" shall have the meaning set
forth in Section 9.2.

(g) "Excess ACP Contributions" shall have the meaning set
fort in Section 9.8.

(h) "Excess ADP Deferrals" shall have the meaning set forth
in Section 9.5.

(i) "Family Member" shall mean, with respect to any "Highly
Compensated Employee" who was a 5 percent or more owner of the Company or one
of the 10 highest paid Highly Compensated Employees during the current Plan
Year, the Employee's spouse, a lineal ascendant or descendant, or a spouse of a
lineal ascendant or descendant.

29
<PAGE> 36
(j) "Highly Compensated Employee" shall mean any Employee
eligible to participate in the Plan pursuant to Article II who, during the
current or prior Plan Year:

(1) was a 5 percent or more owner of the Company;

(2) received 415 Compensation from the Company or an
Affiliate in excess of $75,000 for the Plan Year;

(3) received 415 Compensation from the Company or
an Affiliate in excess of $50,000 for the Plan Year and was among
the "top paid group" (as defined in Code Section 414(q)) of
Employees during the Plan Year; or

(4) was an officer receiving 415 Compensation in
excess of 50 percent of the amount specified in Code
Section 415(b)(1)(A) for the Plan Year. For this purpose no more
than 50 Employees shall be deemed officers.

For purposes of the definition of "Highly Compensated Employee,"
the $50,000 and $75,000 limitations referred to in this Section shall be
adjusted in the same manner as the limitations specified in Code Section
415(b)(1)(A). Finally, the term "Highly Compensated Employee" shall be
determined in accordance with Section 414(q) of the Code and Regulations
thereunder.

(k) "Maximum Combined Percentage" shall have the meaning set
forth in Section 9.10(b).

(l) "Non-highly Compensated Employee" shall mean an Employee
eligible to participate in the Plan pursuant to Article II who is neither a
Highly Compensated Employee nor a Family Member of a Highly Compensated
Employee.

(m) "Qualified Elective Deferrals" shall mean the Before-Tax
Contributions and Supplemental Matching Contributions made on behalf of a
Member and designated by the Committee as Qualified Elective Deferrals, which
satisfy the following requirements:

(1) the aggregate of all Before-Tax Contributions
and Supplemental Matching Contributions for the Plan Year,
including the Qualified Elective Deferrals, must satisfy the
requirements of Section 9.3(a);

(2) the Before-Tax Contributions and Supplemental
Matching Contributions for the Plan Year, excluding the Qualified
Elective deferrals, must satisfy the requirements of Section
9.3(a);

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<PAGE> 37
(3) if the Company elects to aggregate Qualified
Elective Deferrals with Matching Contributions in order to avoid
Excess ACP Contributions, such Qualified Elective Deferrals shall
only be taken into account to the extent necessary to satisfy the
provisions of Section 9.6(a)(2); and,

(4) Qualified Elective Deferrals must satisfy all
other provisions of this Plan applicable to Before-Tax
Contributions and Supplemental Matching Contributions,
respectively, and shall remain part of the Member's Before-Tax
Subaccount and Supplemental Subaccount, respectively.
Nevertheless, except as provided in this Section 9.1(m),
Qualified Elective Deferrals shall be excluded in determining
whether any other contribution or benefit satisfies the
nondiscrimination requirements of Code Section 401(a)(4) and
401(k)(3).

9.2 LIMIT ON BEFORE-TAX CONTRIBUTIONS.

(a) Notwithstanding any other provision of the Plan to the
contrary, the aggregate of a Member's Before-Tax Contributions during a
calendar year may not exceed $7,000 (as adjusted upwards from time to time
pursuant to Code Section 415(d)). Any Before-Tax Contribution in excess of the
foregoing limits ("Excess $7,000 Deferral"), plus any income and minus any loss
allocable thereto, may be distributed to the applicable Member no later than
April 15 following the Plan Year in which the Before-Tax Contributions were
made.

(b) Any Member who has an Excess $7,000 Deferral during a
calendar year may receive a distribution of the Excess $7,000 Deferral plus any
income or minus any loss allocable thereto, provided (1) the Member requests
the distribution of the Excess $7,000 Deferral, (2) the distribution occurs
after the date the Excess $7,000 Deferral arose, and (3) the Committee
designates the distribution as a distribution of an Excess $7,000 Deferral. A
Member shall be deemed to have notified the Committee of the Excess $7,000
Deferral if such Member has Excess $7,000 Deferrals for the Plan Year, taking
into account Excess $7,000 Deferrals under plans maintained by the Company or
any Affiliates.

(c) If a Member makes a Before-Tax Contribution under this
Plan and in the same calendar year makes a contribution to any other Code
Section 401(k) plan containing a cash or deferred arrangement, or a Code
Section 408(k) plan (simplified employee pension plan) or Code Section 403(b)
plan (tax-sheltered annuity) and, after the return of any Excess $7,000
Deferral pursuant to Section 9.2(a) and (b), the aggregate of all such
Before-Tax Contributions and other such contributions exceeds the limitations
contained in Code Section 402(g), then such Member may request that

31
<PAGE> 38
the Committee return all or a portion of the Member's Before-Tax Contributions
for the calendar year plus any income and minus any loss allocable thereto.
The amount by which such Before-Tax Contributions and other such contributions
exceed the Code Section 402(g) limitations will also be known as an Excess
$7,000 Deferral. A Member shall be deemed to have notified the Committee of
the Excess $7,000 Deferral if such Member has Excess $7,000 Deferrals for the
Plan Year, taking into account Excess $7,000 Deferrals under plans maintained
by the Company or any Affiliates.

(d) Any request for a return of Excess $7,000 Deferrals
pursuant to Section 9.2(c) must (1) be made in writing, (2) be submitted to the
Committee not later than the March 1 following the Plan Year in which the
Excess $7,000 Deferral arose, (3) specify the amount of the Excess $7,000
Deferral, and (4) contain a statement that if the Excess $7,000 Deferral is not
distributed, it will, when added to amounts deferred under other plans or
arrangements described in Sections 401(k), 408(k), or 403(b) of the Code,
exceed the limit imposed on the Member by Section 402(g) of the Code for the
year in which the Excess $7,000 Deferral occurred.

(e) Before-Tax Contributions may only be returned to the
extent necessary to eliminate a Member's Excess $7,000 Deferral. Excess $7,000
Deferrals shall be treated as Annual Additions under Article VIII of the Plan.
In no event shall the returned Excess $7,000 Deferrals for a particular
calendar year exceed the Member's aggregate Before-Tax Contributions for such
calendar year.

(f) The income or loss allocable to a Before-Tax Contribution
that is returned to a Member pursuant to Section 9.2(a) or (c) shall be
determined in the same manner as provided in Section 5.1.

(g) See Section 10.1(c) for circumstances under which a
Member's maximum annual Before-Tax Contribution could be reduced as a result of
such Member's receiving a hardship distribution.

9.3 ADP TEST.

(a) The Average Actual Deferral Percentage for Highly
Compensated Employees for each Plan Year and the Average Actual Deferral
Percentage for Non-highly Compensated Employees for the same Plan Year must
satisfy one of the following tests:

(1) The Average Actual Deferral Percentage for
Members who are Highly Compensated Employees for the Plan Year
shall not exceed the Average Actual Deferral Percentage for
Members who are Non-highly Compensated Employees for the Plan
Year multiplied by 1.25; or

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<PAGE> 39
(2) The excess of the Average Actual Deferral
Percentage for Members who are Highly Compensated Employees for
the Plan Year over the Average Actual Deferral Percentage for
Members who are Non-highly Compensated Employees for the Plan
Year is not more than 2 percentage points, and the Average Actual
Deferral Percentage for Members who are Highly Compensated
Employees is not more than the Average Actual Deferral Percentage
for Members who are Non-highly Compensated Employees multiplied
by 2.

(b) The permitted disparity between the Average Actual
Deferral Percentage for Highly Compensated Employees and the Average Actual
Deferral Percentage for Non-highly Compensated Employees may be further reduced
as required by Section 9.10.

(c) If at any time during a Plan Year the Committee, as a
result of periodic testing for compliance with the provisions of Section
9.3(a), determines that the Plan may not comply with such provisions as of the
end of such Plan Year, the Committee, in its discretion, may temporarily
suspend a Highly Compensated Employee's Deferral Election for all or a portion
of such remaining Plan Year and shall promptly notify the Member of the
suspension. If at the end of the Plan Year, the Plan does not comply with the
provisions of Section 9.3(a), the Company shall distribute Before-Tax
Contributions to certain Highly Compensated Employees as provided in Section
9.5, except as otherwise provided in the Code or in Treasury Regulations.

9.4 SPECIAL RULES FOR DETERMINING AVERAGE ACTUAL DEFERRAL
PERCENTAGE.

(a) The Actual Deferral Percentage for any Highly Compensated
Employee for the Plan Year who is eligible to have before-tax contributions
allocated to such person's account under 2 or more arrangements described in
Section 401(k) of the Code that are maintained by the Company or an Affiliate
shall be determined as if such before-tax contributions were made under a
single arrangement.

(b) If 2 or more plans maintained by the Company or an
Affiliate are treated as one plan for purposes of the nondiscrimination
requirements of Code Section 401(a)(4) or the coverage requirements of Code
Section 410(b) (other than for purposes of the average benefits test), all
before-tax contributions that are made pursuant to those plans (other than an
employee stock ownership plan within the meaning of Code Section 4975(e)(7))
shall be treated as having been made pursuant to one plan.

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<PAGE> 40
(c) For purposes of determining the ADP of a Highly
Compensated Employee who is either a 5 percent or more owner of the Company or
one of the 10 highest paid Highly Compensated Employees during the Plan Year,
the Before-Tax Contributions and 415 Compensation of such Member shall include
the Before-Tax Contributions and 415 Compensation of such person's Family
Members. Any person who is a Family Member shall not be treated as a separate
Employee in determining the Average Actual Deferral Percentage for either
Non-highly Compensated Employees or for Highly Compensated Employees.

(d) The determination and treatment of Before-Tax
Contributions and the Actual Deferral Percentage of any Member shall be in
accordance with such other requirements as may be prescribed from time to time
in Treasury Regulations.

9.5 DISTRIBUTION OF EXCESS ADP DEFERRALS.

(a) Before-Tax Contributions exceeding the limitations of
Section 9.3(a) ("Excess ADP Deferrals") and any income or loss allocable to
such Excess ADP Deferral shall be designated by the Committee as Excess ADP
Deferrals and shall be distributed to Highly Compensated Employees whose
Accounts were credited with Excess ADP Deferrals in the preceding Plan Year.
In determining the amount of Excess ADP Deferrals for each Highly Compensated
Employee, the Committee shall reduce the ADP for each Highly Compensated
Employee as follows:

(1) The ADP for the Highly Compensated Employee(s)
with the highest ADP will be reduced until equal to the second
highest ADPs under the Plan; then

(2) The ADP for the 2 (or more) Highly Compensated
Employees with the highest ADPs under the Plan will be reduced
until equal to the third highest ADP level under the Plan; then

(3) The steps described in (1) and (2) shall be
repeated with respect to the third and successive highest ADP
levels under the Plan until the Plan complies with one or both of
the ADP tests described in Section 9.3(a).

(b) To the extent administratively possible, the Committee
shall distribute all Excess ADP Deferrals and any income or loss allocable
thereto prior to March 15 following the end of the Plan Year in which the
Excess ADP Deferrals arose. In any event, however, the Excess ADP Deferrals
and any income or loss allocable thereto shall be distributed prior to the end
of the Plan Year following the Plan Year in which the Excess ADP Deferrals
arose.

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<PAGE> 41
Excess ADP Deferrals shall be treated as Annual Additions under Article VIII of
the Plan.

(c) The income or loss allocable to Excess ADP Deferrals
shall be determined in the same manner as provided in Section 5.1.

(d) If an Excess $7,000 Deferral has been distributed to the
Member pursuant to Section 9.2(a) or (b), then any Excess ADP Deferral
allocable to such Member for the same Plan Year shall be reduced by the amount
of such Excess $7,000 Deferral.

(e) Distribution of Excess ADP Deferrals to Members described
in Section 9.4(c) shall be made in accordance with the provisions of Treasury
Regulation Section 1.401(k)-1(f)(4) or any successor Treasury Regulation
thereto.

9.6 ACP TEST.

(a) The Average Actual Contribution Percentage for Highly
Compensated Employees for each Plan Year and the Average Actual Contribution
Percentage for Non-highly Compensated Employees for the same Plan Year must
satisfy one of the following tests:

(1) The Average Actual Contribution Percentage for
Members who are High Compensated Employees for the Plan Year
shall not exceed the Average Actual Contribution Percentage for
Members who are Non-highly Compensated Employees for the Plan
Year multiplied by 1.25; or

(2) The excess of the Average Actual Contribution
Percentage for Members who are Highly Compensated Employees for
the Plan Year over the Average Actual Contribution Percentage for
Members who are Non-highly Compensated Employees for the Plan
Year is not more than 2 percentage points, and the Average Actual
Contribution Percentage for Members who are Highly Compensated
Employees is not more than the Average Actual Contribution
Percentage for Members who are Non-highly Compensated Employees
multiplied by 2.

(b) If at the end of the Plan Year, the Plan does not comply
with the provisions of Section 9.6(a), the Company may do any or all of the
following, except as otherwise provided in the Code Section or in Treasury
Regulations, in order to comply with such provision:

(1) The Company may aggregate Qualified Elective
Deferrals of Non-highly Compensated Employees with Matching
Contributions of such Members as provided in Section 9.1(a).

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<PAGE> 42
(2) In the case of a Matching Subaccount which
does not comply with Section 9.6(a), the Company may:

(A) Distribute vested Matching Contributions
allocated to the Matching Subaccounts of certain
Highly Compensated Employees as provided in
Section 9.8;

(B) Forfeit nonvested Matching Contributions
allocated to the Matching Subaccounts of certain
Highly Compensated Employees as provided in
Section 9.9.

9.7 SPECIAL RULES FOR DETERMINING AVERAGE ACTUAL CONTRIBUTION
PERCENTAGES.

(a) The Actual Contribution Percentage for any Highly
Compensated Employee for the Plan Year who is eligible to have matching
contributions or before-tax contributions allocated to such person's account
under 2 or more arrangements described in Section 401(a) or 401(k) of the Code
that are maintained by a Company or an Affiliate shall be determined as if such
contributions were made under a single arrangement.

(b) If 2 or more plans maintained by the Company or an
Affiliate are treated as one plan for purposes of the nondiscrimination
requirements of Code Section 401(a)(4) or the coverage requirements of Code
Section 410(b) (other than for purposes of the average benefits test), all
matching contributions that are made pursuant to those plans (other than an
employee stock ownership plan within the meaning of Code Section 4975(e)(7))
shall be treated as having been made pursuant to one plan.

(c) For purposes of determining the Actual Contribution
Percentage of a Highly Compensated Employee who is a 5 percent or more owner of
a Company or one of the 10 highest paid Highly Compensated Employees during the
Plan Year, the Matching Contributions and 415 Compensation of such Member shall
include all Matching contributions and 415 Compensation of Family Members.
Family Members shall not be treated as separate Employees for purposes of
determining the Average Actual Contribution Percentage for either Non-highly
Compensated Employees or for Highly Compensated Employees.

(d) The determination and treatment of Matching Contributions
and the Actual Contribution Percentage of any Member shall be in accordance
with such other requirements as may be prescribed from time to time in Treasury
Regulations.

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<PAGE> 43
9.8 DISTRIBUTION OF EXCESS ACP CONTRIBUTIONS.

(a) Matching Contributions allocated to a Matching Subaccount
which exceed the limitations of Section 9.6(a) ("Excess ACP Contributions") and
any income or loss allocable to such Excess ACP Contribution may be designated
by the Committee as "Excess ACP Contributions" and may be distributed in the
Plan Year following the Plan Year in which the Excess ACP Contributions arose
to those Highly Compensated Employees whose Matching Subaccounts were credited
with Excess ACP Contributions in the preceding Plan Year. The amount of Excess
ACP Contributions to be distributed to a Highly Compensated Employee shall be
determined using the procedure described in Section 9.5(a).

(b) To the extent administratively possible, the Committee
shall distribute all Excess ACP Contributions and any income or loss allocable
thereto prior to March 15 following the end of the Plan Year in which the
Excess ACP Contributions arose. In any event, however, the Excess ACP
Contributions and any income or loss allocable thereto shall be distributed
prior to the end of the Plan Year following the Plan Year in which the Excess
ACP Contributions arose.

(c) Income or loss allocable to Excess ACP Contributions
shall be determined in the same manner that Net Investment Income (Loss) is
allocated as provided in Section 5.1(c).

(d) Amounts distributed to Highly Compensated Employees under
this Section 9.8 shall be treated as Annual Additions under Article VIII with
respect to the Employee who received such amount.

(e) Distribution of Excess ACP Contributions to Members
described in Section 9.7(c) shall be made in accordance with the provisions of
Treasury Regulation Section 1.401(m)(2)(iii) or any successor Treasury
Regulations thereto.

9.9 FORFEITURE OF EXCESS ACP CONTRIBUTIONS.

(a) Excess ACP Contributions and any income or loss allocable
to such Excess ACP Contribution may be forfeited and used to reduce future
Matching Contributions as provided in Section 9.6(b)(3).

(b) The amount of any Excess ACP Contributions to be
forfeited by a particular Highly Compensated Employee shall be determined
pursuant to the procedure described in Section 9.5(a).

(c) The income or loss allocable to Excess ACP Contributions
allocated to a Member's Matching Subaccount shall be determined in

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<PAGE> 44
the same manner that Net Investment Income (Loss) is allocated as provided in
Section 5.1(c).

(d) Members described in Section 9.7(c) shall forfeit their
Excess Contributions in accordance with Treasury Regulation Section
1.401(m)-1(e)(2)(iii) or any successor Treasury Regulation thereto.

(e) Amounts forfeited by Highly Compensated Employees under
this Section shall not be treated as Annual Additions under Article VIII with
respect to the Employee who forfeited such amount.

(f) Notwithstanding anything to the contrary contained
herein, vested Matching Contributions may not be forfeited to correct an Excess
ACP Contribution.

9.10 COMBINED ACP AND ADP TEST.

(a) The Plan must satisfy the "Combined ACP and ADP Test"
described in this Section 9.10 if (1) the Average Actual Deferral Percentage of
the Highly Compensated Employees exceeds 125 percent of the Average Actual
Deferral Percentage of the Non-highly Compensated Employees and (2) the
Average Actual Contribution Percentage of the Highly Compensated Employees
exceeds 125 percent of the Average Actual Contribution Percentage of the
Non-highly Compensated Employees.

(b) The Combined ACP and ADP Test is satisfied if the sum of
the Highly Compensated Employees' Average Actual Deferral Percentage and
Average Actual Contribution Percentage is equal to or less than the "Maximum
Combined Percentage" defined in paragraph (c) below.

(c) The "Maximum Combined Percentage" shall be determined by
adjusting the Non-highly Compensated Employees' Average Actual Deferral
Percentage and Average Actual Contribution Percentage in the following manner:

(1) the greater of the two percentages shall be
multiplied by 1.25, and

(2) the lesser of the two percentages shall be
increased by 2 percentage points; however, in no event shall such
adjusted percentage exceed twice the original percentage.

The sum of (1) and (2) shall be the Maximum Combined Percentage.

(d) In the event the Plan does not satisfy the Combined ADP
and ACP Test, the Highly Compensated Employees' Average Actual Deferral
Percentage shall be decreased by distributing Before-Tax

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<PAGE> 45
Contributions to certain Highly Compensated Employees using the procedures
described in Section 9.5 until the sum of such percentage and the Highly
Compensated Employees' Average Actual Contribution Percentage equals the
Maximum Combined Percentage.

(e) The Highly Compensated Employees' Average Actual
Contribution Percentage shall not be reduced in order to satisfy the Combined
ADP and ACP Test.

(f) In addition to returning Elective Deferrals to certain
Highly Compensated Employees in order to satisfy the Combined ADP and ACP Test,
income or loss allocable to such Before-Tax Contributions shall also be
distributed.

(g) To the extent administratively possible, the Committee
shall distribute the Before-Tax Contributions and allocable income or loss
prior to March 15 following the end of the Plan Year for which the Combined ADP
and ACP Test is computed. In any event, however, such Before-Tax Contributions
and allocable income or loss shall be distributed by the end of the Plan Year
following the Plan Year for which the Combined ADP and ACP Test is computed.
Before-Tax Contributions that are distributed pursuant to this Section 9.10
shall be treated as Annual Additions under Article VIII of the Plan.

(h) This income or loss allocable to returned Before-Tax
Contributions shall be determined using the same procedures described in
Section 9.5(c).

(i) To the extent the provisions of this Section 9.10
conflict with the requirements of Treasury Regulation Section 1.401(m)-2 or any
successor Regulation thereto, the provisions of such Treasury Regulation shall
prevail.

9.11 ORDER OF APPLYING CERTAIN SECTIONS OF ARTICLE.
In applying the provisions of this Article IX, the determination and
distribution of Excess $7,000 Deferrals shall be made first (to the extent
possible) and the determination, elimination of Excess ADP Deferrals shall be
made second, the determination and elimination of Excess ACP Contributions
shall be made third and finally the determination and any necessary adjustment
related to the combined ADP and ACP Test shall be made.

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<PAGE> 46
ARTICLE X. IN-SERVICE WITHDRAWALS

10.1 HARDSHIP WITHDRAWALS.

(a) If a Member incurs a financial hardship, such Member may
withdraw, prior to attaining age 59 1/2, all or a portion of the amount of such
Member's vested: 1) Rollover Subaccount; 2) Before-Tax Subaccount, provided
that the earnings allocated to the Before-Tax Subaccount after December 31,
1988, shall not be distributed under this Section; and 3) all or a portion of
the nonforfeitable Matching and Profit Sharing Subaccounts; provided, however,
in no event may a Member withdraw any amount of such Member's Account which is
pledged as security for a loan pursuant to Section 11.5. In no event shall a
hardship distribution be made from a Member's PAYSOP Subaccount or Supplemental
Subaccount. A Member shall apply for a hardship withdrawal on the form
provided by the Administrator for such purpose, including the effective date of
the withdrawal which must be at least 15 days prior to the date the form is
filed with the Administrator. A request for withdrawal may not be made more
than 4 times during each Plan Year.

(b) For purposes of this Section 10.1, a financial hardship
shall mean an immediate and heavy financial need experienced by reason of (1)
medical expenses, as described in Code Section 213(d), previously incurred by
the Member, such Member's spouse or any of such Member's dependents, as defined
in Code Section 152; (2) purchase of the Member's principal residence (other
than to make mortgage payments, except as provided under Section 10.1(b)(4);
(3) payment of tuition for the next 12 months of post-secondary education for
the Member, such Member's spouse, children or other dependents, as defined in
Code Section 152; (4) preventing the eviction of the Member from such Member's
principal residence or foreclosure on the mortgage on such residence; or (5)
any other such needs identified by the Commissioner of the IRS and announced in
a publication generally applicable to all taxpayers.

(c) A withdrawal distribution based upon financial hardship
cannot exceed the amount required to meet the immediate financial need created
by the hardship, including the amount of any federal, state or local income
taxes or penalties applicable to the amount of the distribution, and not
reasonably available from other resources of the Member. In order to ensure
compliance with the provisions of this Section 10.1 and Code Section 401(k) and
the Regulations thereunder, the Committee may require the Member to satisfy any
or all of the provisions described in subsections (1)-(4) below as a condition
precedent to receiving a hardship distribution:

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<PAGE> 47
(1) Certification by the Member on the form provided
by the Administrator for such purpose that the financial need
cannot be relieved (A) through reimbursement or compensation by
insurance or otherwise; (B) by reasonable liquidation of the
Member's assets; (C) by cessation of Before-Tax Contributions
under the Plan; (D) by other distributions or nontaxable loans
from the Plan or other plans maintained by the Company or any
Affiliate, or any other employer, or by borrowing from commercial
sources on reasonable commercial terms.

(2) Receipt by the Member of all distributions and
nontaxable loans that such Member is eligible to receive under
this Plan and under any other plan maintained by the Company or
an Affiliate.

(3) Automatic suspension of Before-Tax Contributions
beginning on the first payroll period that commences after the
date such Member receives the withdrawal. Before-Tax
Contributions on behalf of such Member may be resumed only after
the expiration of at least 12 months from the effective date of
the suspension and only after the Member files a new Deferral
Election with the Administrator. In addition, the maximum
Before-Tax Contributions under Section 9.2 that can be made on
behalf of a Member for the calendar year following a hardship
distribution shall be reduced by the amount of Before-Tax
Contributions made on behalf of the Member during the calendar
year in which the hardship distribution was made.

(4) Any other condition or method approved by the
IRS.

(d) Upon direction by the Committee, the Trustee shall pay
the amount withdrawn on the effective date specified by the Member. For
purposes of the withdrawal, the Member's Account shall be valued as of the
Valuation Date immediately preceding the effective date of the withdrawal,
adjusted for withdrawals and distributions after such date. Withdrawals shall
reduce the Member's investment in the Investment Funds on a pro rata basis and
shall be charged against a Member's subaccounts in the following sequence: (1)
Rollover Subaccount; (2) Before-Tax Subaccount, but excluding earnings accrued
thereon after December 31, 1988; (3) nonforfeitable portion of the Matching
Subaccount; and (4) nonforfeitable portion of the Profit Sharing Subaccount.

(e) The Committee shall be permitted to rely reasonably upon
the representations of the Member of such Member's financial affairs and shall
not be required to conduct an independent investigation of such
representations. Approval of any withdrawal shall be made in an objective and
nondiscriminatory manner by the

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<PAGE> 48
Committee based only upon a determination that all relevant facts and
circumstances presented by the Member or discovered by the Committee satisfy
the requirements of both Section 10.1(b) and (c). No other method of approving
withdrawals shall be allowed.

10.2 WITHDRAWALS AFTER AGE 59-1/2. After reaching age 59 1/2,
a Member who has been enrolled in the Plan for at least 5 years may withdraw
all or a portion of the amount in such Member's Before-Tax Subaccount. In
addition, a Member who has attained age 59 1/2 but has been enrolled in the
Plan for less than 5 years may withdraw all or a portion of the amount in the
Member's Before-Tax Subaccount that has been deposited in the Trust Fund for at
least 2 years. In no event, however, may a Member withdraw any amount of such
Member's Before-Tax Subaccount which is pledged as security for a loan pursuant
to Section 11.5. Withdrawals may be made pursuant to this Section 10.2 without
regard to the restrictions of Section 10.1, except that a Member must meet the
notice requirements under Section 10.1(a). The withdrawal shall be taken on a
pro rata basis from each Investment Fund in which the Member's Before-Tax
Subaccount is invested.

10.3 WITHDRAWALS FROM ROLLOVER SUBACCOUNT. A Member may
withdraw all or a portion of the amount in such Member's Rollover Subaccount
that has been deposited in the Trust Fund for at least two years. In addition,
a Member who has completed 60 months of participation may withdraw all or a
portion of the amount in such Member's Rollover Subaccount. In no event,
however, may a Member withdraw any amount which is pledged as security for a
loan pursuant to Section 11.5. In order to make such withdrawal, a Member must
meet the notice requirements under Section 10.1(a). The withdrawal shall be
taken on a pro rata basis from each Investment Fund in which the Member's
Rollover Subaccount is invested.

ARTICLE XI. LOANS

11.1 AUTHORITY. The Committee shall have the discretion to
direct the Trustee to loan money to a Member who is an Employee, a Member
who is a former Employee (if such Member is a party in interest, as defined in
Section 3(14) of ERISA, with respect to the Plan), the Beneficiary of a deceased
Member or an alternate payee under a Qualified Domestic Relations Order as
defined in Section 17.5 (hereinafter referred to in this Article XI as the
"Applicant".) Each such loan shall be treated as an investment of the
Applicant's Account.

11.2 LOAN APPLICATION. An Applicant who wishes to borrow
money from the Plan shall file a written loan application with the

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<PAGE> 49
Committee on the form provided by the Committee for such purpose. The
Committee, in the exercise of its sole discretion, shall approve the loan if
the Committee determines that the loan will not constitute a taxable
distribution from the Plan and, if the Applicant is an Employee, such Applicant
has agreed to repay the loan through payroll deduction. In exercising its
discretion to approve or deny loans, the Committee shall make loans to all
Applicants on a reasonably equivalent basis and shall not make loans to Highly
Compensated Employees, officers, or shareholders in an amount greater than the
amount made available to other Applicants.

11.3 CLAIMS PROCEDURE. Loans from the Plan that are denied,
except for the denial of a loan for less than $1,000 under Section 11.4(b),
shall be processed by the Loan Administrator in accordance with the claims
procedure in Section 14.7 of the Plan.

11.4 LOAN LIMITS.

(a) Loans made pursuant to this Article XI shall be limited to
the lesser of: (1) $50,000 reduced by the highest outstanding loan balance
during the one-year period ending on the day before the loan is made, or (2)
one-half of the Applicant's non-forfeitable Accrued Benefit as determined under
Article V as of the Valuation Date immediately preceding the filing of the
Applicant's loan application; provided, however, in no event shall a loan
exceed the value of the Applicant's non-forfeitable Accrued Benefit excluding
the Applicant's PAYSOP Subaccount. For purposes of this Section 11.4, all
loans from all plans of the Company or any Affiliate shall be aggregated. In
addition, the Committee may further limit the amount loaned to any Applicant in
order to maintain a reserve chargeable against the Applicant's Account for
income taxes which would have to be withheld by the Trustee if the loan becomes
a deemed distribution to the Applicant. Any such taxes required to be withheld
by the Trustee (whether or not such reserve has been created) shall be charged
to and reduce the Applicant's Account to the extent possible, and any excess
shall be treated as an administrative expense of the Plan which shall be
reimbursed by such Applicant.

(b) In no event shall a loan be made for less than $1,000.

(c) An Applicant shall not be granted more than one loan per
year, and an Applicant may not borrow from the Plan if such Applicant has
another outstanding loan from the Plan.

11.5 ADEQUATE SECURITY. Loans shall be adequately secured
by the Applicant's Account and supported by the Applicant's collateral
promissory note for the amount of the loan, made payable to the

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Trustee; provided, however, no more than 50 percent of the Applicant's Account,
determined immediately after the origination of the loan, may be pledged as
security for such loan.

11.6 INTEREST RATE. Loans shall bear interest at a rate
determined by the Committee which is commensurate with the interest rate
charged by persons in the business of lending money for loans made under
similar circumstances. In making such determination, the Committee shall
consider rates charged by commercial lenders in the region in which the
Applicant is located for similar loans, such as secured personal loans, car
loans or home equity loans.

11.7 REPAYMENT.

(a) Each loan shall be evidenced by a written note, payable to
the Trustee, providing for level amortization with not less than monthly
payments over a fixed period not to exceed 5 years. However, loans used to
acquire any dwelling unit which, within a reasonable time, is to be used
(determined at the time the loan is made) as a principal residence of the
Applicant shall provide for periodic repayment over a reasonable period of time
that may exceed 5 years. Notwithstanding the foregoing, loans made prior to
January 1, 1987 which are used to acquire, construct, reconstruct or
substantially rehabilitate any dwelling unit which, within a reasonable period
of time is to be used (determined at the time the loan is made) as a principal
residence of the Applicant or a member of such Applicant's family (within the
meaning of Code Section 267(c)(4)) may provide for periodic repayment over a
reasonable period of time that may exceed 5 years. The repayment period for
each loan shall be determined by the Administrator in a uniform and
nondiscriminatory manner.

(b) Loans to an Applicant who is an Employee must be repaid by
payroll deduction. Payroll deductions will continue until the earlier of the
date the loan is repaid or the date the Applicant is entitled to distribution
under the terms of the Plan. If such an Applicant has a Termination of Service
and does not receive a distribution of such Applicant's Account, then the loan
shall be repaid in equal monthly installments for the remaining term of the
loan. If such deductions from an Applicant's paychecks cease for any reason,
then the loan shall be repaid in equal monthly installments for the remaining
term of the loan or until the Applicant begins to receive paychecks in an
amount sufficient to cover the loan. If such an Applicant's paycheck is ever
insufficient to cover the amount of a loan payment, then such Applicant shall
pay the deficiency from outside funds.

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<PAGE> 51
outstanding loan balance, then an amount equal to such loan amount together
with accrued interest shall be deemed immediately due and payable and if not
paid within 30 days, the unpaid balance of the loan will be reported to the IRS
as a distribution of the Account.

11.8 DEFAULT. An Applicant is not allowed to stop payroll
deductions for repayment of a loan prior to the Applicant's Termination of
Service. An Applicant who is not an Employee or who is no longer making loan
payments sufficient to cover the Applicant's loan payments through payroll
deduction or otherwise shall be in default on a loan if such Applicant fails to
make a loan payment, as determined by the Administrator, before the date the
next following loan payment becomes due and payable, and the entire balance of
the loan shall become immediately due and payable; provided, however that in no
event shall an Applicant's Account be applied to repay the loan until the
Applicant's Account is otherwise payable under the terms of the Plan.

11.9 FORECLOSURE. If the entire balance of an Applicant's
loan becomes immediately due and payable under Section 11.8, the Administrator
shall foreclose, to the extent necessary, on the collateral held as security
for the Applicant's loan as soon as the Applicant's Account becomes payable
under the Plan. The Administrator may, however, delay such foreclosure,
provided the delay

(a) will not cause the Plan to lose any principal or interest, and

(b) the criteria for such delay are applied by the Administrator
to all similar loans on a reasonably equivalent basis.

11.10 WITHDRAWALS. As provided in Sections 10.1, 10.2 and
10.3, no amount held as security for a loan may be withdrawn by an Applicant
from such Applicant's Account while a loan is outstanding, except that such
amounts which otherwise qualify for withdrawal other than on account of
hardship under Sections 10.2 and 10.3 may be withdrawn if immediately applied
to reduce such loan amount.

11.11 LOAN INVESTMENT. All loans under this Article XI shall
be treated as investments of the Trust. Loans shall be charged pro rata
against such Applicant's subaccounts (excluding the PAYSOP Subaccount).
Interest and principal repayment shall be added to such subaccounts as provided
in Section 4.5.

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<PAGE> 52
ARTICLE XII. TOP HEAVY PROVISIONS

12.1 APPLICATION. The provisions of this Article shall
apply to each Plan Year in which the Plan is Top Heavy and shall supersede any
conflicting provision of this Plan.

12.2 DEFINITIONS. For purposes of this Article and as
otherwise used in this Plan, the following terms shall have the meanings set
forth below.

(a) "Aggregation Group" means either a Required Aggregation
Group or a Permissive Aggregation Group as determined below:

(1) Each plan of the Company or an Affiliate in
which a Key Employee is a member in the Plan Year containing the
Determination Date or any of the 4 preceding Plan Years, and each
other plan of the Company or an Affiliate which enables any plan
in which a Key Employee participates to meet the requirements of
Code Sections 401(a)(4) or 410, will be required to be
aggregated. Such group shall be known as a Required Aggregation
Group. In the case of a Required Aggregation Group, each plan in
the group will be considered Top Heavy if the Required
Aggregation Group is a Top Heavy Group. No plan in the Required
Aggregation Group will be considered Top Heavy if the Required
Aggregation Group is not a Top Heavy Group.

(2) The Company may also include any other plan not
required to be included in the Required Aggregation Group,
provided the resulting group, taken as a whole, would continue to
satisfy the provisions of Code Sections 401(a)(4) and 410. Such
group shall be known as a Permissive Aggregation Group. In the
case of a Permissive Aggregation Group, only a plan that is part
of the Required Aggregation Group will be considered Top Heavy if
the Permissive Aggregation Group is a Top Heavy Group. No plan
in the Permissive Aggregation Group will be considered Top Heavy
if the Permissive Aggregation Group is not a Top Heavy Group.

An Aggregation Group shall include any terminated plan of the
Company or an Affiliate if it was maintained within the last 5 years ending on
the Determination Date.

(b) "Determination Date" shall mean the last day of the Plan
Year immediately preceding the Plan Year for which Top Heavy status is
determined.

(c) "Key Employee" shall mean any Employee of the Company or
Beneficiary who, during the Plan Year or the 4 preceding Plan Years

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<PAGE> 53
was (1) an officer receiving 415 Compensation for the Plan Year in excess of 50
percent of the limit described in Code Section 415(b)(1)(A), (2) one of the 10
Employees owning the largest interest in the Company or an Affiliate and
receiving 415 Compensation for the Plan Year equal to or greater than the
dollar limit described in Code Section 415(c)(1)(A), (3) a greater than 5
percent owner of the Company, or (4) a greater than one percent owner of the
Company receiving 415 Compensation for the Plan Year in excess of $150,000, or
the Beneficiary of a Key Employee. The Code Section 415(c)(1)(A) limits
referred to in the preceding sentence shall be the specified dollar limits plus
any increases reflecting the cost of living adjustments specified by the
Secretary of the Treasury.

(d) "415 Compensation" shall have the meaning given such term
in Section 8.2(c) of the Plan.

(e) "Non-key Employee" shall mean any Member who is not a Key
Employee.

(f) "Top Heavy Group" shall mean an Aggregation Group in
which, as of the Determination Date, the sum of the present value of the
cumulative accrued benefits of Key Employees under all defined benefit plans
included in the group and the aggregate of the accounts of Key Employees under
all defined contribution plans included in the group exceeds 60 percent of the
sum of the present value of the cumulative accrued benefits and the aggregate
of the accounts of all Key and Non-key Employees under all plans in the group.

12.3 DETERMINATION OF TOP HEAVY STATUS. The Plan shall be
"Top Heavy" for the Plan Year if, as of the Valuation Date which coincides with
or immediately precedes the Determination Date, the aggregate of the Accounts
of Key Employees under this Plan exceeds 60 percent of the aggregate of the
Accounts of all Key and Non-Key Employees under this Plan; provided, however,
if the Plan is a member of a Required Aggregation Group, the Plan shall be Top
Heavy for the Plan Year if the Required Aggregation Group is a Top Heavy Group,
unless the Plan is also a member of a Permissive Aggregation Group that is not
a Top Heavy Group.

In determining the present value of the cumulative accrued
benefit or the amount of an account for an Employee for purposes of this
Section 12.3 or Section 12.2(f), the following rules shall apply: All
distributions made during the 5-year period ending on the Determination Date
shall be included, as well as any distributions from any plan terminated within
the 5-year period ending on the Determination Date that would have been a
member of the Required Aggregation Group had it not been terminated. In

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addition, for purposes of determining the amount of an account for any
Employee, any unallocated Company contributions or forfeitures attributable to
the Plan Year in which the Determination Date falls shall also be included.
The accrued benefit or account of any Employee who was at one time a Key
Employee but who was not a Key Employee for any of the 5 Plan Years ending on
the Determination Date and any Employee who has not performed services for the
Company or an Affiliate maintaining a plan in the Aggregation Group for the 5
Plan Years ending on the Determination Date, shall be disregarded in
determining Top Heavy status. For the purposes of this subsection, the
rollover subaccount maintained under any plan in the Aggregation Group shall be
included in the value of such Employee's account, except to the extent that the
Rollover Subaccount balance was received in a transaction consummated after
December 31, 1983 which was initiated by the Employee and the amount received
is attributable to a distribution or transfer from the plan of an employer
which is unrelated to the Company or an Affiliate.

Solely for the purpose of determining if the Plan, or any other
plan included in the Required Aggregation Group, is Top Heavy, a Non-key
Employee's accrued benefit in a defined benefit plan shall be determined under
(A) the method, if any, that uniformly applies for accrual purposes under all
plans maintained by the Company and Affiliates, or (B) if there is no such
method, as if such benefit accrued not more rapidly than the slowest accrual
rate permitted under the fractional accrual rate of Code Section 411(b)(1)(C).

12.4 MINIMUM CONTRIBUTION. Except as provided below, for any
Plan Year in which the Plan is Top Heavy, the contributions allocated on behalf
of any Non-key Employee who is an Employee on the Determination Date shall not
be less than the lesser of (a) 3 percent of such Non-key Employee's 415
Compensation for such Plan Year, or (b) the largest percentage of Matching,
Profit Sharing, Before-Tax and Supplemental Matching Contributions, as a
percentage of the Key Employee's 415 Compensation for the Plan Year, allocated
on behalf of any Key Employee for such Plan Year. The minimum allocation shall
be made even though, under other Plan provisions, the Non-key Employee would
not otherwise be entitled to receive an allocation, or would have received a
lesser allocation, for the Plan Year because of the Non-key Employee's failure
to complete a Year of Service. In determining whether a Non-key Employee has
received the required minimum allocation, such Non-key Employee's Before-Tax
and Supplemental Matching Contributions and any Matching Contributions used to
satisfy the ACP Test for such Plan Year shall not be taken into account. If a
Non-key Employee participates in this Plan and a defined benefit plan included
in the Required Aggregation Group, the minimum contribution and benefit

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<PAGE> 55
requirements for both plans in a Top Heavy Plan Year may be satisfied by an
allocation of contributions to the Account of each Non-key Employee in the
amount of 5 percent of the Non-key Employee's 415 Compensation for the Plan
Year. No minimum allocation shall be required in this Plan for any Non-key
Employee who participates in this Plan and another defined contribution plan
that provides the minimum allocation and is included with this Plan in a
Required Aggregation Group. For the purpose of determining the appropriate
percentage under Section 12.4(b), all defined contribution plans included in
the Required Aggregation Group shall be treated as one plan.

12.5 LIMITATIONS ON CONTRIBUTIONS. In any Plan Year in
which the Plan would be Top Heavy if "90 percent" were substituted for "60
percent" where it appears in Sections 12.2(f) and 12.3, "1.0" shall be
substituted for "1.25" as the multiplicand of the dollar limitation in
determining the denominator of the Defined Benefit Plan Fraction and the
Defined Contribution Plan Fraction set forth in Section 8.2(d) and (e) of this
Plan. In any Plan Year in which the Plan is Top Heavy but would not be Top
Heavy if "90 percent" were substituted for "60 percent" as provided above,
"1.0" shall be substituted for "1.25" as the multiplicand of the dollar
limitation in determining the denominator of the Defined Benefit Plan Fraction
and the Defined Contribution Plan Fraction set forth in Section 8.2(d) and (e)
of this Plan, unless the minimum allocation and minimum benefit requirements
are satisfied by substituting "4 percent" for "3 percent" and "7.5 percent"
for "5 percent" where such figures appear in Section 12.4(a).

12.6 OTHER PLANS. The Committee shall, to the extent
permitted by the Code and in accordance with the Regulations, apply the
provisions of this Article by taking into account the benefits payable and the
contributions made under any other plans maintained by the Company or any of
its Affiliates which are qualified under Section 401(a) of the Code to prevent
inappropriate omissions or duplication of minimum benefits or contributions.

ARTICLE XIII. DESIGNATION OF BENEFICIARIES

13.1 BENEFICIARY DESIGNATION. Every Member shall file with
the Administrator a written designation of one or more persons as the
Beneficiary who shall be entitled to receive the amount, if any, payable under
the Plan upon such Member's death. A Member may from time to time revoke or
change such Member's Beneficiary designation without the consent of any prior
Beneficiary by filing a new designation with the Administrator.
Notwithstanding the foregoing, no designation of a nonspousal Beneficiary by a
Member shall be given effect unless, in conformity with Section

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<PAGE> 56
417(a)(2)(A) of the Code and the Regulations thereunder, such Member's
Surviving Spouse, if any, had consented in writing to such designation or
expressly consented to all future designations; provided that (a) spousal
consent shall not be required where the spouse cannot be located or on account
of such other circumstances, if any, as are set forth in the Regulations and
(b) spousal consent, if required, must acknowledge the effect of such
designation and be witnessed by a Plan representative or notary public. The
last such designation received by the Administrator shall be controlling;
provided, however, that no designation, or change or revocation thereof, shall
be effective unless received by the Administrator prior to the Member's death,
and in no event shall it be effective as of a date prior to such receipt. All
decisions of the Administrator concerning the effectiveness of any Beneficiary
designation, and the identity of any Beneficiary, shall be final. If a
Beneficiary shall die after the death of the Member and prior to receiving the
distribution that would have been made to such Beneficiary had such
Beneficiary's death not occurred, and no alternate Beneficiary has been
designated, then for the purposes of the Plan the distribution that would have
been received by such Beneficiary shall be made to the Beneficiary's estate.

13.2 FAILURE TO DESIGNATE BENEFICIARY. Subject to Section
13.1, if no Beneficiary designation is in effect at the time of a Member's
death, the payment of the amount, if any, payable under the Plan upon such
Member's death shall be made to the Member's Surviving Spouse, if any, or if
the Member has no Surviving Spouse, to the Member's estate. If the
Administrator is in doubt as to the right of any person to receive such amount,
the Committee may direct the Trustee to retain such amount, without liability
for any interest thereon, until the rights thereto are determined, or the
Committee may direct the Trustee to pay such amount without liability for any
interest thereon, until the rights thereto are determined, or the Committee may
direct the Trustee to pay any such amount into any court of appropriate
jurisdiction, and such payment shall be a complete discharge of the liability
of the Plan and the Trust therefor.

ARTICLE XIV. ADMINISTRATION OF THE PLAN

14.1 POWERS AND DUTIES OF THE COMMITTEE. The Committee
which shall have general responsibility for the administration of the Plan
(including but not limited to complying with reporting and disclosure
requirements, and establishing and maintaining Plan records). In the exercise
of its sole and absolute discretion, the Committee shall interpret the Plan's
provisions and shall determine the eligibility of individuals for benefits.
The Committee shall appoint an Employee to act as Administrator and to perform
such

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duties as designated herein or by the Committee. The Committee shall also
engage such certified public accountants and other advisers and service
providers, who may be accountants, advisers or service providers for the
Company or an Affiliate, as it shall require or may deem advisable for purposes
of the Plan.

The Committee shall have the power to appoint or remove one or
more investment advisers and to delegate to such adviser authority and
discretion to manage (including the power to acquire and dispose of) the assets
for the Plan, provided that (a) each adviser with such authority and discretion
shall be either a bank, an insurance company or a registered investment adviser
under the Investment Advisers Act of 1940, and shall acknowledge in writing
that it is a fiduciary with respect to the Plan and (b) the Committee shall
periodically review the investment performance and methods of each adviser with
such authority and discretion.

14.2 POWERS AND DUTIES OF TRUSTEE. The Trustee shall have
responsibility under the Plan for the management and control of the assets of
the Trust Fund and shall have discretionary responsibility for the investment
and management of such assets, except to the extent that the Plan and Trust
expressly provide that the Trustee is subject to the direction of the Committee
with respect to all or a portion of the Trust Fund or the direction of a Member
with respect to the investment of the Member's Account in accordance with
Section 4.3, in which case the Trustee shall be subject to proper directions of
the Committee or Member which are made in accordance with the terms of the Plan
and are not contrary to ERISA, and except to the extent that the Trustee is
subject to the direction of an investment adviser pursuant to Section 14.10.

14.3 AGENTS; REPORT OF COMMITTEE TO BOARD. The Committee
may arrange for the engagement of such legal counsel, who may be counsel for
the Company or an Affiliate, and make use of such agents and clerical or other
personnel as it shall require or may deem advisable for purposes of the Plan.
The Committee may rely upon the written opinion of such counsel and the
accountants engaged by the Committee, and may delegate to any such agent, or
to any subcommittee or member of the Committee its authority to perform any act
hereunder, including, without limitation, those matters involving the exercise
of discretion, provided that such delegation shall be subject to revocation at
any time at the discretion of the Committee. The Committee shall report to the
Board, or to a committee of the Board designated for that purpose, as
frequently as shall be specified by the Board or such committee, with regard to
the matters for which it is responsible under the Plan.

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14.4 STRUCTURE OF COMMITTEE. The Committee shall consist of
3 or more members, each of whom shall be appointed by, shall remain in office
at the will of, and may be removed with or without cause by the Board. Any
member of the Committee may resign at any time. No member of the Committee
shall be entitled to act on or decide any matter relating solely to such member
or any of such member's rights or benefits under the Plan. In the event that
the Committee is unable to act in any matter by reason of the foregoing
restriction, the Board shall act on such matter. The members of the Committee
shall not receive any special compensation for serving in the capacities as
members of the Committee but shall be reimbursed for any reasonable expenses
incurred in connection therewith. Except as otherwise required by ERISA, no
bond or other security need be required of the Committee or any member thereof
in any jurisdiction. Any member of the Committee, any subcommittee or agent to
whom the Committee delegates any authority, and any other person or group of
persons, may serve in more than one fiduciary capacity (including service both
as a trustee and administrator) with respect to the Plan.

14.5 ADOPTION OF PROCEDURES OF COMMITTEE. The Committee
shall establish its own procedures and the time and place for its meetings, and
provide for the keeping of minutes of all meetings. A majority of the members
of the Committee shall constitute a quorum for the transaction of business at
a meeting of the Committee. Any action of the Committee may be taken upon the
affirmative vote of a majority of the members of the Committee at a meeting.
The Committee may also act without meeting by unanimous written consent.

14.6 INSTRUCTIONS FOR DISBURSEMENTS. All requests or
directions for payment, distribution or disbursement from the Plan shall be
signed by a member of the Committee or such other person or persons as the
Committee may from time to time designate in writing. This person shall cause
to be kept full and accurate accounts of receipts and disbursements of the
Plan, shall cause to be deposited all funds of the Plan to the name and credit
of the Plan in such depositories as may be designated by the Committee, shall
cause to be disbursed the monies and funds of the Plan when so authorized by
the Committee, and shall generally perform such other duties as may be assigned
to such person from time to time by the Committee.

14.7 CLAIMS FOR BENEFITS. All claims for benefits under the
Plan shall be submitted in writing to the Committee. Within a reasonable
period of time the Committee shall decide the claim by majority vote in the
exercise of its sole and absolute discretion. Written notice of the decision
on each such claim shall be furnished within 90 days after receipt of the
claim; provided that,

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if special circumstances require an extension of time for processing the claim,
an additional 90 days from the end of the initial period shall be allowed for
processing the claim, in which event the claimant shall be furnished with a
written notice of the extension prior to the termination of the initial 90-day
period indicating the special circumstance requiring an extension. If the
claim is wholly or partially denied, such written notice shall set forth an
explanation of the specific findings and conclusions on which such denial is
based. A claimant may review all pertinent documents and may request a review
by the Committee of such a decision denying the claim. Such a request shall be
made in writing and filed with the Committee within 60 days after delivery to
said claimant of written notice of said decision. Such written request for
review shall contain all additional information which the claimant wishes the
Committee to consider. The Committee may hold any hearing or conduct any
independent investigation which it deems necessary to render its decision, and
the decision on review shall be made as soon as possible after the Committee's
receipt of the request for review. Written notice of the decision on review
shall be furnished to the claimant within 60 days after receipt by the
Committee of a request for review, unless special circumstances require an
extension of time for processing, in which event an additional 60 days shall be
allowed for review and the claimant shall be so notified in writing. Written
notice of the decision on review shall include specific reasons for such
decision. For all purposes under the Plan, such decisions on claims (where no
review is requested) and decisions on review (where review is requested) shall
be final, binding and conclusive on all interested parties as to participation
and benefit eligibility, the Employee's amount of Compensation and as to any
other matter of fact or interpretation relating to the Plan.

14.8 HOLD HARMLESS. To the maximum extent permitted by law,
no member of the Committee shall be personally liable by reason of any contract
or other instrument executed by such member or on such member's behalf in such
member's capacity as a member of the Committee nor for any mistake of judgment
made in good faith, and the Company shall indemnify and hold harmless, directly
from its own assets (including the proceeds of any insurance policy the
premiums of which are paid from the Company's own assets), each member of the
Committee and each other officer, employee, or director of the Company or an
Affiliate to whom any duty or power relating to the administration or
interpretation of the Plan or to the management and control of the assets of
the Plan may be delegated or allocated, against any cost or expense (including
counsel fees) or liability (including any sum paid in settlement of a claim
with the approval of the Company) arising out of any act or omission to act in
connection with the Plan unless arising out of such person's own fraud or bad
faith.

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14.9 SERVICE OF PROCESS. The Secretary of the Company or
such other person designated by the Board shall be the agent for service of
process under the Plan.

14.10 INVESTMENT ADVISER. If the Committee appoints an
investment adviser pursuant to Section 14.1 with respect to all or a portion
of the Trust Fund, the Trustee shall invest and reinvest such portion of the
Trust Fund only to the extent and in the manner directed by the investment
adviser in writing. In performing its investment duties, the investment
adviser shall have, with respect to such portion of the Trust Fund, all of the
powers of the Trustee provided herein and in the Trust Agreement. If the
Trustee does not receive written instructions from an investment adviser with
respect to such portion of the Trust Fund, the Trustee shall, after providing
notice to the investment adviser, invest such amounts in short-term securities
of the United States or any instrumentality thereof or in one or more
investment companies commonly known as "money market" funds, and with the
consent of the Committee in a common fund maintained by the Trustee for
short-term investments. If the investment adviser resigns, or is removed, or
is no longer a qualified investment adviser as defined in ERISA, the Trustee
shall reassume complete investment responsibility for such portion of the Trust
Fund unless and until a new qualified investment adviser is appointed by the
Committee.

Unless the Trustee participates knowingly in, or knowingly
undertakes to conceal, an act or omission of the investment adviser, knowing
such act or omission to be a breach of the fiduciary responsibility of the
investment adviser with respect to the Plan, the Trustee shall not be liable
for any act or omission of the investment adviser and shall not be under any
obligation to invest or otherwise manage the assets of the Plan that are
subject to the management of the investment adviser and, to the maximum extent
permitted by ERISA, the Trustee shall have no liability or responsibility for
acting or not acting in accordance with, any written direction of the
investment adviser. The Company agrees, to the extent permitted by law, to
indemnify the Trustee and hold it harmless from and against any claim or
liability that may be asserted against it, otherwise than on account of the
Trustee's own negligence or willful misconduct, for reason of the Trustee's
taking or refraining from taking any action in accordance with this Section
14.10.

ARTICLE XV. TRANSFER OF PLAN ASSETS TO SUCCESSOR PLAN

No transfer of the Plan's assets and liabilities to a successor
employee benefit plan (whether by merger or consolidation with such successor
plan or otherwise) shall be made unless (a) the

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Committee authorizes such transfer and (b) each Member would, if either the
Plan or such successor plan then terminated, receive a benefit immediately
after such transfer which (after taking account of any distributions or
payments to them as part of the same transaction) is equal to or greater than
the benefit such Member would have been entitled to receive immediately before
such transfer if the Plan had then been terminated. The Committee may also
request appropriate indemnification (as permitted by law) from the employer or
employers maintaining such successor plan before making such a transfer.

ARTICLE XVI. AMENDMENT OR TERMINATION OF THE PLAN AND TRUST

16.1 RIGHT TO AMEND, SUSPEND OR TERMINATE PLAN.

(a) Subject to the provisions of Section 16.1(c), the Board
reserves the right at any time to amend, suspend or terminate the Plan, any
contributions thereunder, the Trust, or any contract issued by an insurance
carrier forming a part of the Plan, in whole or in part, and for any reason and
without the consent of any Member, Beneficiary, Surviving Spouse or other
eligible survivor. The Plan shall automatically be terminated upon complete
and final discontinuance of contributions thereunder.

(b) The Committee may adopt any ministerial and
nonsubstantive amendment which may be necessary or appropriate to facilitate
the administration, management and interpretation of the Plan or to conform the
Plan thereto, or to qualify or maintain the Plan and the Trust as a plan and
trust meeting the requirements of Sections 401(a), 401(k) and 501(a) of the
Code or any other applicable section of law and the Regulations issued
thereunder, provided said amendment does not have any material effect on the
currently estimated cost to the Company of maintaining the Plan.

(c) No amendment or modification shall be made which would
retroactively (1) reduce, in contravention of section 411(d)(6) of the Code,
any accrued benefits or (2) make it possible for any part of the funds of the
Plan (other than such part as is required to pay taxes, if any, and
administrative expenses as provided in Section 17.12) to be used for or
diverted to any purposes other than for the exclusive benefit of Member and the
Beneficiaries and Surviving Spouses and other eligible survivors under the Plan
prior to the satisfaction of all liabilities with respect thereto.

16.2 RETROACTIVITY. Subject to the provisions of
Section 16.1 (except Section 16.1(c)(1)), any amendment, modification,
suspension or termination of any provisions of the Plan may be made
retroactively if necessary or appropriate to qualify or maintain

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the Plan, the Trust and any contract with an insurance company which may form a
part of the Plan as a plan and trust meeting the requirements of Sections
401(a), 401(k) and 501(a) of the Code or any other applicable section of law
and the Regulations issued thereunder.

16.3 NOTICE. Notice of any amendment, modification,
suspension or termination of the Plan shall be given by the Board or the
Committee, whichever adopts the amendment, to the other and to the Trustee.

16.4 NO FURTHER CONTRIBUTIONS. Upon termination of the Plan
or a complete discontinuance of contributions, the Company shall not make any
further contributions under the Plan, and no amount shall thereafter be payable
under the Plan to or in respect of any Member except as provided in this
Article. To the maximum extent permitted by ERISA, transfers, distributions
or other dispositions of the assets of the Plan as provided in this Article
shall constitute a complete discharge of all liabilities under the Plan. The
Committee shall remain in existence and all of the provisions of the Plan which
in the opinion of the Committee are necessary for the execution of the Plan and
the administration, distribution, transfer or other disposition of the assets
of the Plan in accordance with this Section shall remain in force.

After adjustment for profits and losses of the Trust Fund to such
termination date in the manner described in Article V, each Account of a Member
who has not incurred a Break in Service which contains an Accrued Benefit
(determined without regard to this Section) as of the date of such termination
shall be fully vested as of such date.

Except as may be prohibited by Section 411(a)(11) of the Code and
the Regulations thereunder, upon or after the termination of the Plan, the
Board may terminate the Trust and upon such termination the Trustee shall pay
in a single sum to each Member the full amount credited to such Member's
individual Account. Without limiting the foregoing, any such distributions
may be made in cash, other property, or any combination, as the Committee in
its sole discretion may direct.

All determinations, approvals and notifications referred to above
shall be in form and substance and from a source satisfactory to counsel for
the Plan.

16.5 PARTIAL TERMINATION. In the event that a "partial
termination" (within the meaning of Section 411(d)(3) of the Code) of the Plan
has occurred then (a) the interest of each affected Member in such Member's
Account as to whom such termination

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occurred shall thereupon be nonforfeitable, but shall otherwise be payable as
though such termination has not occurred and (b) the provisions of Sections
16.2, 16.3 and 16.4 which in the opinion of the Committee are necessary for the
execution of the Plan and the allocation and distribution of the assets of the
Plan shall apply; provided, however, that the Board, in its discretion, subject
to any necessary governmental approval, may direct that the amounts held in the
Accounts of such Members as to whom such partial termination occurred be
segregated by the Trustee as a separate plan and applied for the benefit of
such Members in the manner described in Section 16.4 above.

ARTICLE XVII. GENERAL LIMITATIONS AND PROVISIONS

17.1 ALL RISKS ON MEMBERS AND BENEFICIARIES. Each Member
and Beneficiary shall assume all risk in connection with any decrease in the
value of the assets of the Trust Fund and the Members' Accounts. The Company
and the Committee shall not be liable or responsible for any decrease in the
value of the assets of the Trust and the Members' Accounts.

17.2 TRUST FUND IS SOLE SOURCE OF BENEFITS. The Trust Fund
shall be the sole source of benefits under the Plan and, except as otherwise
required by ERISA, the Company and the Committee assume no liability or
responsibility for payment of such benefits, and each Member, Beneficiary or
other person who shall claim the right to any payment under the Plan shall be
entitled to look only to the Trust Fund for such payment and shall not have any
right, claim or demand therefor against the Company, the Committee or any
member thereof, or any employee or director of the Company.

17.3 NO RIGHT TO CONTINUED EMPLOYMENT. Nothing contained
in the Plan shall give any Employee the right to be retained in the employment
of the Company or any of its subsidiaries or affiliated or associated
corporations or affect the right of any such employer to dismiss any Employee.
The adoption and maintenance of the Plan shall not constitute a contract
between the Company and Employee or consideration for, or an inducement to or
condition of, the employment of any Employee.

17.4 PAYMENT ON BEHALF OF PAYEE. If the Committee shall
find that any person to whom any amount is payable under the Plan is unable to
care for such Member's affairs because of illness or accident, or is a minor,
or has died, then any payment due such Member or such Member's estate (unless
a prior claim therefor has been made by a duly appointed legal representative)
may, if the Committee so elects, be paid to such Member's spouse, a child, a
relative, an institution maintaining or having custody of such

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person, or any other person deemed by the Committee to be a proper recipient on
behalf of such person otherwise entitled to payment. Any such payment shall be
a complete discharge of the liability of the Plan and the Trust therefor.

17.5 NONALIENATION. Except insofar as applicable law may
otherwise require or pursuant to a Qualified Domestic Relations Order, as
defined below, no economic interest, expectancy, benefit, payment, claim or
right of any Member or Beneficiary under the Plan and the Trust shall be
subject in any manner to any claims of any creditor of any Member or
Beneficiary, nor to alienation by anticipation, sale, transfer, assignment,
bankruptcy pledge, attachment, charge or encumbrance of any kind. If any
person shall attempt to take any action contrary to this Section, such action
shall be null and void and of no effect, and the Trustee shall disregard such
action and shall not in any manner be bound thereby and shall suffer no
liability on account of its disregard thereof.

For purposes of the Plan, a "Qualified Domestic Relation Order"
means any judgment, decree or order (including approval of a property
settlement agreement) which has been determined by the Committee in accordance
with procedures established under the Plan to constitute a qualified domestic
relations order within the meaning of Section 414(p)(1) of the Code.

17.6 MISSING PAYEE. If the Committee cannot ascertain the
whereabouts of any person to whom a payment is due under the Plan, and if,
after 5 years from the date such payment is due, a notice of such payment due
is mailed to the last known address of such person, as shown on the records of
the Committee or the Company, and within 3 months after such mailing such
person has not made written claim therefor, the Committee, if it so elects,
after receiving advice from counsel to the Plan, may direct that such payment
and all remaining payments otherwise due to such person be canceled on the
records of the Plan and the amount thereof forfeited and applied to reduce the
contributions of the Company and upon such cancellation, the Plan and Trust
shall have no further liability therefor, except that, in the event such person
later notifies the Committee of such person's whereabouts and requests the
payment or payments due to such persons under the Plan, the amounts so applied
shall be paid to such persons as provided herein.

17.7 REQUIRED INFORMATION. Each Member shall file with the
Committee such pertinent information concerning such Member, such Member's
spouse and such Member's Beneficiary, or such other person as the Committee
may specify, and no Member, or Beneficiary, or other person shall have any
rights or be entitled to any benefits

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under the Plan unless such information is filed by or with respect to such
Member.

17.8 SUBJECT TO TRUST AGREEMENT. Any and all rights or
benefits accruing to any persons under the Plan shall be subject to the terms
of the Trust Agreement which the Company shall enter into with the Trustee
providing for the administration of the Trust Fund.

17.9 COMMUNICATIONS TO COMMITTEE. All elections,
designations, requests, notices, instructions and other communications from the
Company, a Member, Beneficiary or other person to the Committee required or
permitted under the Plan shall be in such form as is prescribed from time to
time by the Committee, shall be mailed by first class mail or delivered to such
location as shall be specified by the Committee, and shall be deemed to have
been given and delivered only upon actual receipt thereof by the Committee at
such location.

17.10 TRANSFERS. The Plan and Trust may accept funds
transferred to the Plan or Trust from an employee benefit plan qualified under
Section 401(a) of the Code, except that the Plan and Trust may not accept any
amounts transferred from a defined benefit or money purchase pension plan or
any other defined contribution plan subject to the joint and survivor annuity
requirements of Code Section 401(a)(11) and may not accept, without the
approval of the Committee, any transfer that does not qualify as an elective
transfer under Treasury Regulation Section 1.411(d)-4(A-3(b)), as amended from
time to time. Any amounts so accepted on behalf of a Member shall be held in
such Member's Rollover Subaccount.

17.11 COMMUNICATIONS FROM THE COMPANY OR COMMITTEE. All
notices, statements, reports and other communications from the Company or the
Committee to any Employee, Member, Surviving Spouse, Beneficiary or other
person required or permitted under the Plan shall be deemed to have been duly
given when delivered to, or when mailed by first class mail, postage prepaid
and addressed to, such Employee, Member, Surviving Spouse, Beneficiary or other
person at such address last appearing on the records of the Committee, or when
posted by the Company or the Committee as permitted by law.

17.12 FEES AND EXPENSES. The expenses of administering the
Plan including (a) the fees and expenses of any Employee and of the Trustee
for the performance of their duties under the Trust, (b) the expenses incurred
by the members of the Committee in the performance of their duties under the
Plan (including reasonable compensation for any legal counsel, certified public
accountants and any agents and cost of services rendered in respect of the

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Plan), and (c) all other proper charges and disbursements of the Trustee or the
members of the Committee (including settlements of claims or legal actions
brought against any party, including the Trustee, approved by the Company and
the Committee, after consulting with counsel to the Plan), are to be paid by
the Plan unless paid in full by the Company. In estimating costs under the
Plan, administrative costs may be anticipated. The members of the Committee
shall not receive any special compensation for serving in their capacities as
members of the Committee.

17.13 VOTING AND TENDER OR EXCHANGE RIGHTS. Except as
otherwise required by ERISA, the Code and Regulations, all voting rights of
Shares shall be exercised by the Trustee and the Members or their Beneficiaries
in accordance with the following provisions of this Section:

(a) With respect to all corporate matters submitted to
shareholders, all Shares shall be voted only in accordance with the directions
of the Members as given to the Committee and communicated in turn by the
Committee to the Trustee. Each Member shall be entitled to direct the voting
of only the Shares (including fractional Shares to 1/100th of a Share)
allocated to such Member's Account, and if this subsection applies to Shares
allocated to the Account of a deceased Member, such Member's Beneficiary shall
be entitled to direct the voting with respect to such Shares as if such
Beneficiary were the Member.

(b) If Members are entitled under this Plan to direct the
vote of Shares with respect to a matter, then, before each annual or special
shareholders' meeting of Carolina Freight Corporation at which the matter is to
be voted, the Company shall furnish to each Member a copy of the proxy
solicitation material sent generally to shareholders, together with a form
requesting instructions on how the Shares with respect to which the Member has
voting rights and responsibility (including fractional Shares to 1/100th of a
Share) are to be voted. Upon timely receipt of such instructions, the Trustee
(after combining votes of fractional Shares to give effect to the greatest
extent possible to Members' instructions) shall vote the Shares as instructed.
Neither the Trustee nor the Committee shall make recommendations to Members on
whether to vote or how to vote. If voting instructions of any Member are not
timely received for a particular shareholders' meeting, the Shares for which
the Member is responsible shall not be voted.

(c) With respect to any matter as to which voting
instructions are not required to be solicited from Members under this Plan, the
Trustee shall vote all Shares held in the Trust Fund. Any vote by the Trustee
shall be made in its sole

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discretion, after it determines such action to be in the best interests of the
Members and their Beneficiaries.

(d) The Company shall notify each Member of each tender or
exchange offer for the Shares and utilize its best efforts to distribute or
cause to be distributed to each Member in a timely manner all information
distributed to shareholders of Carolina Freight Corporation in connection with
any such tender or exchange offer. Each Member shall have the right from time
to time with respect to the Shares allocated to such Member's Account
(including fractional Shares to 1/100th of a Share) to instruct the Trustee in
writing as to the manner in which to respond to any tender or exchange offer
which shall be pending or which may be made in the future for all such Shares
or any portion thereof. A Member's instructions shall remain in force until
superseded in writing by the Member. The Trustee shall tender or exchange
whole Shares only as and to the extent so instructed. If the Trustee shall not
receive instructions from a Member regarding any tender or exchange offer for
Shares, the Trustee shall tender or exchange any Shares allocated to such
Member's Account in the same proportion as the tendering of Shares for which
instructions were received.

(e) If Section 17.13(d) applies to Shares allocated to the
Account of a deceased Member, such Member's Beneficiary shall be entitled to
direct the manner in which to respond to any tender or exchange offer as if
such Beneficiary were the Member.

17.14 EXCLUSIVE BENEFIT OF MEMBERS AND BENEFICIARIES. In
no event shall any part of the funds of the Plan be used for or diverted to
any purposes other than for the exclusive benefit of Members and their
Beneficiaries under the Plan except as permitted under Section 403(c) of ERISA.
Upon the transfer by the Company of any money to the Trustee, all interest of
the Company therein shall cease and terminate.

17.15 ADDITIONAL POWERS OF THE COMMITTEE. Notwithstanding
any provision of the Plan to the contrary, the Committee shall have those
additional powers, rights and obligations provided under the Trust Agreement.

61
<PAGE> 68

IN WITNESS WHEREOF, the Company has caused this Plan to be
executed this _____ day of ________________, 1993, to be effective as specified
above.

COMPLETE LEASING CONCEPTS, INC.

By:
------------------------------
[Corporate Seal] __________ President

ATTEST:

- -------------------------
__________ Secretary

<PAGE> 1

EXECUTION COPY

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

CAROLINA FREIGHT FUNDING CORPORATION, Transferor

CAROLINA FREIGHT CORPORATION, Servicer and

THE FIRST NATIONAL BANK OF CHICAGO, Trustee

CAROLINA FREIGHT TRADE RECEIVABLES MASTER TRUST

POOLING AND SERVICING AGREEMENT

Dated as of December 1, 1993

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

<PAGE> 2

Table of Contents

Page

ARTICLE I

DEFINITIONS

SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Other Definitional Provisions . . . . . . . . . . . 20

ARTICLE II

TRANSFER OF RECEIVABLES

SECTION 2.01. Transfer of Receivables . . . . . . . . . . . . . . 21
SECTION 2.02. Acceptance by Trustee . . . . . . . . . . . . . . . 22
SECTION 2.03. Representations and Warranties of the
Transferor Relating to the Transferor . . . . . . 23
SECTION 2.04. Representations and Warranties of the
Transferor Relating to this Agreement
and the Trust Assets . . . . . . . . . . . . . . 26
SECTION 2.05. Affirmative Covenants of the Transferor . . . . . . 28
SECTION 2.06. Negative Covenants of the Transferor . . . . . . . 31

ARTICLE III

ADMINISTRATION AND SERVICING OF RECEIVABLES

SECTION 3.01. Acceptance of Appointment and Other
Matters Relating to the Servicer . . . . . . . . 35
SECTION 3.02. Servicing Compensation; Servicer's
Expenses . . . . . . . . . . . . . . . . . . . . 36
SECTION 3.03. Representations and Warranties of the
Servicer. . . . . . . . . . . . . . . . . . . . . 37
SECTION 3.04. Covenants of the Servicer. . . . . . . . . . . . . 40
SECTION 3.05. Reports and Records for the Trustee. . . . . . . . 43
SECTION 3.06. Annual Certificate of Servicer. . . . . . . . . . . 44
SECTION 3.07. Annual Servicing Report of Independent
Public Accountants. . . . . . . . . . . . . . . . 44
SECTION 3.08. Tax and Usury Treatment. . . . . . . . . . . . . . 45
SECTION 3.09. Notices to Carolina Freight. . . . . . . . . . . . 45
SECTION 3.10. Adjustments. . . . . . . . . . . . . . . . . . . . 45
SECTION 3.11. Securities and Exchange Commission
Filings . . . . . . . . . . . . . . . . . . . . . 45

i
<PAGE> 3
Table of Contents (cont'd)

Page

ARTICLE IV

RIGHTS OF CERTIFICATEHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS

SECTION 4.01. Rights of Certificateholders. . . . . . . . . . . . 46
SECTION 4.02. Establishment of Carolina Freight
Collection Accounts and Concentration
Account. . . . . . . . . . . . . . . . . . . . . 47
SECTION 4.03. Allocation of Collections . . . . . . . . . . . . . 49

ARTICLE V

DISTRIBUTIONS AND REPORTS TO CERTIFICATEHOLDERS . . . . . . 51

ARTICLE VI

THE CERTIFICATES

SECTION 6.01. The Certificates. . . . . . . . . . . . . . . . . . 52
SECTION 6.02. Authentication of Certificates. . . . . . . . . . . 52
SECTION 6.03. Registration of Transfer and Exchange of
Certificates. . . . . . . . . . . . . . . . . . . 53
SECTION 6.04. Mutilated, Destroyed, Lost or Stolen
Certificates. . . . . . . . . . . . . . . . . . . 55
SECTION 6.05. Persons Deemed Owners. . . . . . . . . . . . . . . 56
SECTION 6.06. Appointment of Paying Agent. . . . . . . . . . . . 56
SECTION 6.07. Access to List of Certificateholders'
Names and Addresses. . . . . . . . . . . . . . . 57
SECTION 6.08. Authenticating Agent. . . . . . . . . . . . . . . . 57
SECTION 6.09. New Issuances. . . . . . . . . . . . . . . . . . . 59

ARTICLE VII

OTHER MATTERS RELATING TO THE TRANSFEROR

SECTION 7.01. Obligations not Assignable. . . . . . . . . . . . . 61
SECTION 7.02. Limitations on Liability. . . . . . . . . . . . . . 61
SECTION 7.03. Indemnification of the Trustee, the
Trust and the Investor Certificateholders . . . . 61

ARTICLE VIII

OTHER MATTERS RELATING TO THE SERVICER

SECTION 8.01. Liability of the Servicer. . . . . . . . . . . . . 64

ii
<PAGE> 4
Table of Contents (cont'd)

Page

SECTION 8.02. Merger or Consolidation of, or
Assumption of the Obligations of, the
Servicer. . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 8.03. Limitations on Liability. . . . . . . . . . . . . . . . . . 64
SECTION 8.04. Servicer Indemnification. . . . . . . . . . . . . . . . . . 65
SECTION 8.05. The Servicer Not to Resign. . . . . . . . . . . . . . . . . 66
SECTION 8.06. Examination of Records. . . . . . . . . . . . . . . . . . . 66

ARTICLE IX

EARLY AMORTIZATION EVENTS

SECTION 9.01. Early Amortization Events. . . . . . . . . . . . . . . . . 67
SECTION 9.02. Additional Rights Upon the Occurrence of
any Early Amortization Event. . . . . . . . . . . . . . . 69

ARTICLE X

SERVICER DEFAULTS

SECTION 10.01. Servicer Defaults . . . . . . . . . . . . . . . . . . . . . 71
SECTION 10.02. Trustee to Act; Appointment of
Successor Servicer. . . . . . . . . . . . . . . . . . . . 74
SECTION 10.03. Notification to Certificateholders . . . . . . . . . . . . 76

ARTICLE XI

THE TRUSTEE

SECTION 11.01. Duties of Trustee. . . . . . . . . . . . . . . . . . . . . 77
SECTION 11.02. Certain Matters Affecting the Trustee. . . . . . . . . . . 79
SECTION 11.03. Trustee Not Liable for Recitals in Certificates. . . . . . 80
SECTION 11.04. Trustee May Own Certificates. . . . . . . . . . . . . . . 80
SECTION 11.05. Compensation; Trustee's Expenses . . . . . . . . . . . . . 81
SECTION 11.06. Eligibility Requirements for Trustee . . . . . . . . . . . 81
SECTION 11.07. Resignation or Removal of Trustee. . . . . . . . . . . . . 82
SECTION 11.08. Successor Trustee. . . . . . . . . . . . . . . . . . . . . 83
SECTION 11.09. Merger or Consolidation of Trustee . . . . . . . . . . . . 83
SECTION 11.10. Appointment of Co-Trustee or Separate Trustee . . . . . . 83
SECTION 11.11. Tax Returns. . . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 11.12. Trustee May Enforce Claims Without Possession
of Certificates. . . . . . . . . . . . . . . . . . . . . 85
SECTION 11.13. Suits for Enforcement. . . . . . . . . . . . . . . . . . . 86
SECTION 11.14. Rights of Certificateholders to Direct Trustee . . . . . . 86
SECTION 11.15. Representations and Warranties of

iii
<PAGE> 5
Table of Contents (cont'd)

Page

Trustee. . . . . . . . . . . . . . . . . . . . 87
SECTION 11.16. Maintenance of Office or Agency. . . . . . . . . 87
SECTION 11.17. Monthly Report of Trustee . . . . . . . . . . . 87

ARTICLE XII

TERMINATION

SECTION 12.01. Termination of Trust . . . . . . . . . . . . . . 88
SECTION 12.02. Final Distribution. . . . . . . . . . . . . . . 88
SECTION 12.03. Transferor's Termination Rights. . . . . . . . . 89

ARTICLE XIII

MISCELLANEOUS PROVISIONS

SECTION 13.01. Amendment; Waiver of Early Amortization
Events . . . . . . . . . . . . . . . . . . . . 90
SECTION 13.02. Protection of Right, Title and Interest
to Trust . . . . . . . . . . . . . . . . . . . 91
SECTION 13.03. Limitation on Rights of
Certificateholders . . . . . . . . . . . . . . 92
SECTION 13.04. Governing Law; Jurisdiction; Consent to
Service of Process . . . . . . . . . . . . . . 94
SECTION 13.05. Notices; Payments. . . . . . . . . . . . . . . . 94
SECTION 13.06. Rule 144A Information. . . . . . . . . . . . . . 94
SECTION 13.07. Severability of Provisions . . . . . . . . . . . 95
SECTION 13.08. Assignment. . . . . . . . . . . . . . . . . . . 95
SECTION 13.09. Certificates Nonassessable and Fully
Paid . . . . . . . . . . . . . . . . . . . . . 95

SECTION 13.10. Further Assurances. . . . . . . . . . . . . . . 95
SECTION 13.11. Nonpetition Covenant. . . . . . . . . . . . . . 95
SECTION 13.12. No Waiver; Cumulative Remedies. . . . . . . . . 96
SECTION 13.13. Counterparts. . . . . . . . . . . . . . . . . . 96
SECTION 13.14. Third-Party Beneficiaries. . . . . . . . . . . . 96
SECTION 13.15. Actions by Certificateholders. . . . . . . . . . 96
SECTION 13.16. Merger and Integration. . . . . . . . . . . . . 96
SECTION 13.17. Headings. . . . . . . . . . . . . . . . . . . . 97
SECTION 13.18. Construction of Agreement. . . . . . . . . . . . 97

iv
<PAGE> 6
EXHIBITS

Exhibit A Form of Transferor Certificate
Exhibit B Form of Annual Certificate of Servicer
Exhibit C Form of Carolina Freight Collection Account
Letter
Exhibit D Form of Rule 144A and Non-Rule 144A Letters

SCHEDULE

Schedule I Carolina Freight Collection Accounts
Schedule II Accounting Periods
Schedule III Credit Policy Manual
Schedule IV Information specified in Section 2.03(m)

v
<PAGE> 7
POOLING AND SERVICING AGREEMENT, dated as of December 1, 1993,
among CAROLINA FREIGHT FUNDING CORPORATION, a North Carolina special purpose
corporation, as Transferor, CAROLINA FREIGHT CORPORATION ("Carolina Freight"),
a North Carolina corporation, as Servicer, and THE FIRST NATIONAL BANK OF
CHICAGO, as Trustee.

In consideration of the mutual agreements herein contained,
each party agrees as follows for the benefit of the other parties and the
Certificateholders to the extent provided herein:

ARTICLE I

DEFINITIONS

SECTION 1.01. Definitions. Whenever used in this Agreement,
the following words and phrases shall have the following meanings, and the
definitions of such terms are applicable to the singular as well as the plural
forms of such terms and to the masculine as well as to the feminine and neuter
genders of such terms. All capitalized terms used herein but not defined shall
have the meanings ascribed to them in the related Series Supplement.

"Accounting Period" shall mean any of the accounting periods
so designated on Schedule II hereto.

"Act" shall mean the Securities Act of 1933, as amended from
time to time.

"Affiliate" shall mean, with respect to any specified Person,
any other Person controlling or controlled by or under common control with such
specified Person and, without limiting the generality of the foregoing,
includes (A) any Person which beneficially owns or holds 5% or more of any
class of voting securities of such designated Person or 5% or more of the
equity interest in such designated Person and (B) any Person of which such
designated Person beneficially owns or holds 5% or more of any class of voting
securities or in which such designated Person beneficially owns or holds 5% or
more of the equity interest. For the purposes of this definition, "control"
when used with respect to any specified Person shall mean the power to direct
the management and policies of such specified Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.

<PAGE> 8
"Aggregate Certificateholders' Interest" shall mean the
aggregate of the Certificateholders' Interests for each Series.

"Aggregate Invested Amount" shall mean, with respect to any
Series and for any date, an amount equal to the aggregate invested amount
specified in the related Supplement.

"Agreement" shall mean this Pooling and Servicing Agreement,
as the same may from time to time be amended, modified or otherwise
supplemented, including, with respect to any Series or Class, the related
Supplement.

"Amortization Date" with respect to any Series, shall have the
meaning specified in the related Supplement.

"Amortization Period" shall mean, with respect to any Series,
unless otherwise specified in the related Supplement, the period beginning on
the day following the last day of the Revolving Period, and ending upon the
payment in full to the Investor Certificateholders of such Series of the
Aggregate Invested Amount with respect to such Series, all accrued and unpaid
interest thereon and all other amounts owed to the Investor Certificateholders
hereunder.

"Beneficiary" shall mean any of the holders of the Investor
Certificates and any Enhancement Provider.

"Business Day" shall mean any day other than a Saturday or
Sunday or any other day on which national banking associations or state banking
institutions in New York, New York, Charlotte, North Carolina or the city in
which the Corporate Trust Office is located are authorized or obligated by law,
executive order or governmental decree to be closed.

"Canadian Receivables" shall mean United States
dollar-denominated accounts receivable generated from sales to Canadian
Obligors.

"Carolina Freight Collection Account" shall have the meaning
specified in Section 4.02.

"Carolina Freight Collection Account Bank" shall have the
meaning specified in Section 4.02.

"Carolina Freight Collection Account Letter" shall have the
meaning specified in Section 4.02.

"Certificate" shall mean any one of the Investor Certificates
or the Transferor Certificate.

2
<PAGE> 9
"Certificate Rate" shall mean, with respect to any Series or
Class, the certificate rate specified therefor in the related Supplement.

"Certificate Register" shall have the meaning specified in
Section 6.03(a).

"Certificateholder" or "Holder" shall mean an Investor
Certificateholder or the Person in whose name the Transferor Certificate is
registered in the Certificate Register.

"Certificateholders' Interest" shall have the meaning
specified in Section 4.01(a).

"Class" shall mean, with respect to any Series, any one of the
classes of Investor Certificates of that Series.

"Closing Date" shall mean, with respect to any Series, the
Closing Date specified in the related Supplement.

"Collection Period" shall mean, with respect to any
Distribution Date, the calendar month (or, in the case of the calendar month in
which the date of this Agreement occurs, the portion of such calendar month
following the Closing Date) immediately preceding the calendar month in which
such Distribution Date occurs.

"Collections" shall mean (a) all cash payments by or on behalf
of the Obligors deposited to any Carolina Freight Collection Account or
Concentration Account, or received by the Servicer, in respect of Receivables
in the form of cash, checks, wire transfers, electronic transfers or any other
form of cash payment, and (b) all interest and other investment earnings (net
of losses and investment expenses) on Collections (including without limitation
funds on deposit in the Reserve Accounts) as a result of the investment thereof
pursuant to Section 4.02.

"Concentration Account" shall have the meaning specified in
Section 4.02.

"Concentration Account Bank" shall initially be The First
National Bank of Chicago, and shall have the meaning specified in Section 4.02.

"Concentration Amount" shall mean as of any date, with respect
to each Concentration Limit, the product of (a) each such Concentration Limit
and (b) the aggregate amount of Eligible Receivables owned by the Trust.

"Concentration Limit" shall mean, with respect to the
following types of Receivables, the percentages of the

3
<PAGE> 10
amount of Eligible Receivables owned by the Trust set forth as follows: (a)
Receivables of any single Obligor rated at least A or its equivalent by the
Rating Agency, 6%; (b) Receivables of any single Obligor rated at least BBB or
its equivalent by the Rating Agency, 4%; (c) Receivables of any single Obligor
not rated or rated below BBB or its equivalent by the Rating Agency, 2.5%; (d)
aggregate Canadian Receivables, 5%; (e) aggregate Government Receivables, 3%;
and (f) aggregate Interline Receivables, 3%; provided, however, that the
Transferor may adjust the level of any Concentration Limit (i) if such
adjustment does not cause the Rating Agency, as confirmed in writing by the
Rating Agency, to lower or withdraw its rating of any Series of Certificates
and (ii) subject to any further conditions specified in any Series Supplement.

"Confidential Information" shall mean, in relation to any
Person, any written information delivered or made available by or on behalf of
Carolina Freight or the Transferor to such Person in connection with or
pursuant to this Agreement or the transactions contemplated hereby which is
proprietary in nature and clearly marked or identified as being confidential
information, other than information (i) which was publicly known, or otherwise
known to such Person, at the time of disclosure (except pursuant to disclosure
in connection with this Agreement), (ii) which subsequently becomes publicly
known through no act or omission by such Person, or (iii) which otherwise
becomes known to such Person other than through disclosure by Carolina Freight
or the Transferor.

"Contract" shall mean an agreement between Carolina Freight or
an Originating Subsidiary and a Obligor, containing terms pursuant to or under
which such Obligor shall be obligated to pay from time to time for services
performed or to be performed.

"Corporate Trust Office" shall have the meaning specified in
Section 11.16.

"Credit Policy Manual" shall mean those credit and collection
policies and practices of Carolina Freight described in Schedule IV hereto and
in effect on the date hereof relating to Receivables, as modified from time to
time in compliance with Section 3.04(j).

"Cure Funds" shall have the meaning specified in the
definition of the term "Cure Period" contained in this Section 1.01.

"Cure Period" shall mean the period (a) beginning on the day
on which a Partial Amortization Period would otherwise

4
<PAGE> 11
commence, if the Transferor shall have notified the Servicer in writing on such
day that, until the end of the Cure Period, the Transferor shall (on such day
and continuing on each day thereafter on which it receives any amount of
Investor Collections or Transferor Collections pursuant to Section 4.02(a))
deposit all such amounts of Collections pro rata to the Reserve Account of each
Series on the day collected (all such funds so deposited from time to time by
the Transferor being "Cure Funds"), and (b) continuing until the earlier of:
(i) the day on which the Net Receivables Balance equals at least the sum of (A)
the aggregate of the Loss and Dilution Reserves for all outstanding Series, (B)
the aggregate of the Yield Reserves for all outstanding Series and (C) the
Trust Aggregate Invested Amount (computed as if reduced by the amount of the
Cure Funds held in the Reserve Accounts at such time); or (ii) the fifteenth
day following the commencement of the Cure Period. The Transferor may, prior
to the end of such fifteen day period, request the commencement of a Partial
Amortization Period pursuant to clause (a) of the definition of Partial
Amortization Period. Notwithstanding the foregoing, the Transferor may not
deposit any Cure Funds to the Reserve Accounts at any time if such amount,
together with the aggregate amount of Cure Funds previously deposited by the
Transferor and held in the Reserve Accounts at such time, would exceed 30% of
the Trust Aggregate Invested Amount at such time.

"Cut-Off Date" shall mean November 5, 1993.

"Default Ratio" shall mean, for any Accounting Period, the
average of the ratios for each of the three most recently ended Accounting
Periods (each expressed as a percentage) of (i) the aggregate principal
balance, at the end of each such Accounting Period, of Receivables as to which
any payment, or part thereof, remains unpaid for 169-196 days from the due date
for such payment to (ii) the aggregate principal balance of all Receivables
acquired by the Trust during the 7th preceding Accounting Period; provided,
however, that prior to the eighth Accounting Period in 1994, such average ratio
may not be lower than 2% for the purpose of computing the Dynamic Loss and
Dilution Reserve Percentage.

"Defaulted Receivable" shall mean a Receivable: (i) as to
which the Obligor thereof has taken any action, or suffered any event to occur,
of the type constituting an Insolvency Event, (ii) as to which any payment, or
part thereof, remains unpaid by the Obligor thereof for 85 days or more from
the original due date for such payment specified in the relevant invoice, or
(iii) which, consistent with the Credit Policy Manual, would be written off as
uncollectible.

5
<PAGE> 12
"Deposit Date" shall mean each Business Day on which any
Collections are deposited in the Concentration Account.

"Determination Date" shall mean, with respect to any
Accounting Period, the tenth Business Day following the end of such Accounting
Period.

"Determination Date Certificate" shall mean, with respect to
any Determination Date and any Series, a report prepared by a Servicing Officer
for such Determination Date as of the end of the immediately preceding
Accounting Period in substantially the form set forth in the related
Supplement.

"Diluted Receivable" shall mean, that portion of any Eligible
Receivable which is either (a) reduced or cancelled as a result of (i) any
failure by Carolina Freight to provide any services or otherwise to perform
under the underlying Contract or invoice, (ii) any change in the terms of, or
cancellation of, a Contract or invoice or any other adjustment by Carolina
Freight which reduces the amount payable by the Obligor on the related
Receivable or (iii) any set off in respect of any claim by an Obligor on the
related Receivable or (b) subject to any specific dispute, offset, counterclaim
or defense other than any offset or counterclaim which is customarily accepted
by Carolina Freight (except the discharge in bankruptcy of the Obligor
thereof).

"Dilution Ratio" shall mean as of any Accounting Period, the
average of the ratios (each expressed as a percentage) for each of the three
most recently ended Accounting Periods of (i) the aggregate principal balance
of Diluted Receivables at the end of each such Accounting Period to (ii) the
aggregate principal balance of all Receivables acquired by the Trust during
each such Accounting Period.

"Discount Amount" shall mean, with respect to any Series, the
amount set forth in the related Supplement.

"Distribution Date" shall mean, with respect to any Collection
Period, the fifteenth day of the calendar month immediately following such
Collection Period, or, if such day is not a Business Day, the next succeeding
Business Day or such other day as set forth in the Supplement for a Series.

"Duff & Phelps" shall mean Duff & Phelps Credit Rating Co. or
its successor.

"Dynamic Loss and Dilution Reserve Percentage" shall mean as
of any date a percentage equal to the sum of (a) 3 multiplied by the highest
Default Ratio during the most recently ended thirteen Accounting Period
interval plus (b) 3 multiplied

6
<PAGE> 13
by the highest Dilution Ratio during such thirteen Accounting Period interval.

"Early Amortization Event" shall have the meaning specified in
Section 9.01 and with respect to any Series shall also mean any Early
Amortization Event specified in the related Supplement.

"Eligible Institution" shall mean a depository institution
organized under the laws of the United States of America or any one of the
states thereof, including the District of Columbia (or any domestic branch of a
foreign bank), which at all times is a member of the FDIC, has a combined
capital and surplus of at least $100,000,000 and satisfies two (2) of the
following three (3) criteria: (i) has (A) a long-term unsecured debt rating of
at least A3 or better by Moody's or (B) a certificate of deposit rating or
short-term unsecured debt rating of P-1 by Moody's, (ii) has (A) a long-term
unsecured debt rating of at least A- or better by S&P or (B) a certificate of
deposit rating or short-term unsecured debt rating of A-1 by S&P and (iii) has
(A) a long-term unsecured debt rating of at least A- or better by Duff & Phelps
or (B) a certificate of deposit rating or short-term unsecured debt rating of
Duff-1 by Duff & Phelps.

"Eligible Investments" shall mean book-entry securities
entered on the books of the registrar of such security and held in the name or
on behalf of the Trustee, negotiable instruments or securities represented by
instruments in bearer or registered form (registered in the name of the Trustee
or its nominee) which evidence:

(a) direct obligations of and obligations fully
guaranteed as to timely payment by, the United States of America;

(b) demand deposits, time deposits or certificates of
deposit (having original maturities of no more than 365 days) of
depository institutions or trust companies incorporated under the laws
of the United States of America or any state thereof (or domestic
branches of foreign banks), subject to supervision and examination by
Federal or state banking or depository institution authorities, and
having, at the time of the Trust's investment or contractual
commitment to invest therein, the highest short-term unsecured debt
rating from S&P, Moody's and Duff & Phelps;

(c) commercial paper (having original maturities of no
more than 270 days) having, at the time of the Trust's investment or
contractual commitment to invest therein, the

7
<PAGE> 14
highest short-term rating from S&P, Moody's and Duff & Phelps;

(d) investments in no load money market funds having a
rating from each rating agency rating such fund in its highest
investment category;

(e) notes or bankers' acceptances (having original
maturities of no more than 270 days) issued by any depository
institution or trust company referred to in clause (b) above; or

(f) The First National Bank of Chicago Corporate Trust
Short Term Investment Fund, so long as it shall be rated by S&P,
Moody's and Duff & Phelps as either AAAm, Aaa or Duff-1+, as an
eligible investment for AAA rated transactions, or in the highest
short term rating assigned by each such rating agency.

"Eligible Receivable" shall mean each Receivable or portion
thereof:

(i) the Obligor of which is not an Affiliate of
Carolina Freight or the Transferor;

(ii) as to which, at the time of the Transfer of
such Receivable to the Trust, the Transferor or the Trust will have
good and marketable title thereto free and clear from Liens except
as created hereunder, and which has been the subject of either a valid
transfer and assignment from the Transferor to the Trust of all the
Transferor's right, title and interest therein (and in the proceeds
thereof), or the grant of a first priority perfected "security
interest" (within the meaning of the UCC of the jurisdiction the law of
which governs the perfection of the interest in such Receivable created
hereunder) therein (and in the proceeds thereof);

(iii) which is not a Defaulted Receivable or a
Diluted Receivable;

(iv) which arose in the ordinary course of business
of Carolina Freight or any of the Originating Subsidiaries and is an
account receivable representing all or part of the sales price of
merchandise, insurance or services within the meaning of Section
3(c)(5) of the Investment Company Act, the Obligor of which is
primarily liable with respect thereto;

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<PAGE> 15
(v) which is an "account" (within the meaning of Section
9-106 of the UCC of the jurisdiction the law of which governs the
perfection of the interest in such Receivable created hereunder);

(vi) which is denominated and payable only in United
States dollars in the United States or Canada;

(vii) the Obligor of which is a United States or Canadian
resident;

(viii) which will at all times be the legal and assignable
payment obligation of the Obligor of such Receivable, enforceable
against such Obligor in accordance with its terms except as such
enforceability may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium or other laws affecting
creditors' rights generally, and except as such enforceability may be
limited by general principles of equity (whether considered in a suit
at law or in equity);

(ix) which was created in compliance with, and which, at
the time of the Transfer of such Receivable to the Trust, does not
contravene in any material respect, any applicable Requirements of
Law, and the Obligor on which is not in violation of any such
Requirements of Law in any material respect with respect to such
Receivable;

(x) which satisfies all material applicable
requirements of the Credit Policy Manual;

(xi) with respect to which all material consents,
licenses, approvals or authorizations of, or registrations or
declarations with, any Governmental Authority required to be obtained,
effected or given in connection with the creation of such Receivable
have been duly obtained, effected or given and are in full force and
effect;

(xii) which is not subject to any specific waiver or
modification except for a Receivable which is subject to a waiver or
modification as permitted in accordance with the Credit Policy Manual
and which waiver or modification is reflected in the Servicer's
records and computer files relating thereto;

(xiii) which is not subject to any enforceable provision
prohibiting the transfer or assignment of such payment obligation;

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<PAGE> 16
(xiv) the payment terms of which conform substantially to
the provisions of the Credit Policy Manual of Carolina Freight as in
effect on the Cut-Off Date; and

(xv) which is not categorized by the Transferor as an
Unbilled, Collect Receivable.

"Eligible Servicer" shall mean Carolina Freight, the Trustee
or an entity which, at the time of its appointment as Servicer, (a) is
servicing a portfolio of trade receivables, (b) is legally qualified and has
the capacity to service the Receivables and (c) has demonstrated the ability to
professionally and competently service a portfolio of similar trade receivables
in accordance with high standards of skill and care.

"Enhancement" shall mean the rights and benefits provided to
the Investor Certificateholders of any Series or Class pursuant to any letter
of credit, surety bond, cash collateral account, spread account, guaranteed
rate agreement, maturity liquidity facility, tax protection agreement, interest
rate swap agreement or other similar arrangement. The subordination of any
Series or Class to any other Series or Class or of the Transferor's Interest to
any Series or Class shall be deemed to be an Enhancement.

"Enhancement Agreement" shall mean any agreement, instrument
or document governing the terms of any Enhancement of any Series or pursuant to
which any Enhancement of any Series is issued or outstanding.

"Enhancement Provider" shall mean the Person providing any
Enhancement, other than any Certificateholders (including any holder of the
Transferor Certificate) the Certificates of which are subordinated to any
Series or Class.

"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.

"Expected Final Payment Date" with respect to any Series shall
have the meaning specified in the related Supplement.

"FDIC" shall mean the Federal Deposit Insurance Corporation or
any successor.

"Floating Allocation Percentage" with respect to each Series,
shall have the meaning specified in the related Supplement.

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<PAGE> 17
"Government Receivable" shall mean a Receivable with respect
to which the Obligor is the federal government of the United States or a
political, administrative or regulatory subdivision thereof.

"Governmental Authority" shall mean any country or nation, any
political subdivision of such country or nation, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government of any country or nation or political subdivision
thereof.

"Indemnified Amounts" shall have the meaning specified in
Section 7.03.

"Indemnified Party" shall have the meaning specified in
Section 7.03.

"Independent Public Accountants" means any of (a) Arthur
Andersen & Co., (b) Deloitte & Touche, (c) Coopers & Lybrand, (d) Ernst &
Young, (e) KMPG Peat Marwick and (f) Price Waterhouse, provided, that such firm
is independent with respect to the Servicer within the meaning of the Act.

"Initial Aggregate Invested Amount" shall mean, with respect
to any Series and for any date, an amount equal to the initial invested amount
specified in the related Supplement.

"Insolvency Event" shall mean, with respect to a specified
Person, (a) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of such Person or any substantial part
of its property in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official for such Person or for any substantial part of its property, or
ordering the winding-up or liquidation of such Person's affairs, and, other
than in a case in which such proceeding was instituted by an Affiliate of such
Person, such decree or order shall remain unstayed and in effect for a period
of 60 consecutive days; or (b) the commencement by such Person of a voluntary
case under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or the consent by such Person to the entry of an order for
relief in an involuntary case under any such law, or the consent by such Person
to the appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for any
substantial part of its property, or the making by such Person of any general
assignment for the benefit of creditors, or the failure by such Person
generally to pay its debts as such debts become due or the admission by such

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<PAGE> 18
Person in writing (as to which the Trustee shall have notice) of its inability
to pay its debts generally, or the adoption by the Board of Directors or
managing member of such Person of a resolution which authorizes action by such
Person in furtherance of any of the foregoing.

"Interest Period" shall mean, with respect to any Distribution
Date except for the initial Distribution Date, the period from and including
the preceding Distribution Date to but excluding such Distribution Date, and,
in the case of the initial Distribution Date, the period from and including the
Closing Date to but excluding such initial Distribution Date.

"Interline Receivable" shall mean a Receivable with respect to
which the Obligor is a freight carrier for which Carolina Freight or an
Originating Subsidiary has provided shipping services.

"Internal Revenue Code" shall mean the Internal Revenue Code
of 1986, as amended from time to time.

"Investment Company Act" shall mean the Investment Company Act
of 1940, as amended from time to time.

"Investor Certificate" shall mean any one of the certificates
executed by the Transferor and authenticated by or on behalf of the Trustee, in
substantially the form attached to the related Supplement, other than the
Transferor Certificate.

"Investor Certificateholder" shall mean the Person in whose
name an Investor Certificate is registered in the Certificate Register.

"Investor Collections" with respect to each Series, shall have
the meaning specified in the related Supplement.

"Lien" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, encumbrance, lien (statutory or other), preference,
participation interest, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever, including, without limitation,
any conditional sale or other title retention agreement, any financing lease
having substantially the same economic effect as any of the foregoing and the
filing of any financing statement under the UCC or comparable law of any
jurisdiction to evidence any of the foregoing.

"Loss and Dilution Reserve" shall mean, with respect to any
Series, the amount set forth in the related Supplement.

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<PAGE> 19
"Loss to Liquidation Ratio" shall mean as to any date the
ratio, expressed as a percentage, calculated by dividing (a) the aggregate
Outstanding Balance of all Receivables written off as uncollectible in
accordance with the Credit Policy Manual by Carolina Freight during the
thirteen-month Accounting Period interval most recently ended by (b) the
aggregate amount of Collections during such thirteen-month Accounting Period
interval.

"Majority in Interest" shall mean with respect to each Series
the Holders of Certificates evidencing 51% or more of the Certificateholders'
Interest in such outstanding Series.

"Market Make Whole Premium" with respect to any Series, shall
have the meaning specified in the related Supplement, if applicable.

"Moody's" shall mean Moody's Investors Service, Inc. or its
successor.

"Net Receivables Balance" shall mean at any time the excess of
(a) the aggregate Outstanding Balance of Receivables that are Eligible
Receivables at such time over (b) the Overconcentration Amount at such time.

"Notices" shall have the meaning specified in Section 13.05(a).

"Obligor" shall mean each Person who is obligated to pay for
services provided by Carolina Freight or any of its Originating Subsidiaries
which gave rise to a Receivable, including any guarantor of such Person's
obligations.

"Officer's Certificate" shall mean, unless otherwise specified
in this Agreement, a certificate signed by the President, any Vice President,
the Chief Financial Officer, the Treasurer or Controller of the Transferor, or
of the Servicer, or any Successor Servicer, as the case may be, and delivered
to the Trustee.

"Opinion of Counsel" shall mean a written opinion of counsel,
who may be counsel for, or an employee of, the Person providing the opinion and
who shall be reasonably acceptable to the Trustee.

"Originating Subsidiaries" shall mean Carolina Freight
Carriers Corporation, a North Carolina corporation, G.I. Trucking Company, a
California corporation, and Red Arrow Freight Lines, Inc., a Texas corporation,
each a wholly-owned subsidiary of Carolina Freight.

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<PAGE> 20
"Outstanding Balance" of any Receivable at any time shall mean
the then outstanding principal balance thereof.

"Overconcentration Amount" shall mean at any time the sum of
the amounts, if any, by which the aggregate Outstanding Balance of Eligible
Receivables of the types specified in clauses (a) through (f) of the definition
of Concentration Limit owned by the Trust exceeds the aggregate of the
Concentration Amounts.

"Partial Amortization Amount" shall mean, with respect to any
Series and any Partial Amortization Period, an amount equal to the product of
(a) the related Series Allocation Percentage and (b) the amount by which the
Net Receivables Balance is less than the sum of the amounts specified in
clauses (b)(i)-(iii) of the definition of "Partial Amortization Period".

"Partial Amortization Period" shall mean, unless the
Amortization Period shall have commenced prior thereto, either (a) during any
Cure Period, the period beginning on the first Business Day following the
Business Day on which the Transferor shall request the commencement of such
period pursuant to the definition of Cure Period or (b) the period beginning on
the Business Day on which the Net Receivables Balance falls below the sum of
(i) the aggregate of the Loss and Dilution Reserves for all outstanding Series,
(ii) the aggregate of the Yield Reserves for all outstanding Series and (iii)
the Trust Aggregate Invested Amount (computed as if reduced by (A) the amount
of Cure Funds held in the Reserve Accounts at such time and (B) Collections
allocated to the Partial Amortization Amount and held in the Concentration
Account), and continuing each day thereafter until the Net Receivables Balance
shall be equal to or greater than the amount specified in clauses (i) through
(iii) above.

"Paying Agent" shall mean any paying agent appointed pursuant
to Section 6.06.

"Person" shall mean any individual, corporation, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization, Governmental Authority or any other entity of similar nature.

"Principal Terms" shall mean, with respect to any Series: (a)
the name or designation; (b) the initial principal amount (or method for
calculating such amount); (c) the Certificate Rate (or method for the
determination thereof); (d) the payment date or dates and the date or dates
from which interest shall accrue; (e) the method for allocating collections to
Investor Certificateholders; (f) the designation of any Series Accounts and the
terms governing the operation of any such Series Accounts; (g) the issuer and
terms of any form of Enhancement

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<PAGE> 21
with respect thereto; (h) the terms on which the Investor Certificates of such
Series may be exchanged for Investor Certificates of another Series,
repurchased or redeemed by the Transferor or remarketed to other investors; (i)
the number of Classes of Investor Certificates of such Series and, if more than
one Class, the rights and priorities of each such Class; (j) the Series
Servicing Fee and the Series Trustee's Fee; (k) the Amortization Date and the
Termination Date; and (l) any other terms of such Series.

"Purchase Price" shall have the meaning specified in the
Receivables Purchase Agreement.

"Rating Agency" shall mean Duff & Phelps.

"Rating Agency Condition" shall mean, with respect to any
action, that the Rating Agency, upon the written request of the Transferor, the
Servicer or the Trustee, shall have notified such parties in writing that such
action will not result in a reduction or withdrawal of the rating of any
outstanding Series or Class with respect to which it is a Rating Agency.

"Receivable" shall mean an account receivable shown on the
records of Carolina Freight as of the Cut-Off Date, and from time to time
thereafter, arising from the providing of services by Carolina Freight or any
of its Originating Subsidiaries in the ordinary course of business of Carolina
Freight or the Originating Subsidiaries, including without limitation, all
monies due or to become due and all Collections and other amounts received from
time to time with respect to such Receivable and all proceeds (including,
without limitation, "proceeds" as defined in the UCC of the jurisdiction the
law of which governs the perfection of the interest on the Receivables
transferred hereunder) thereof and "Receivables" shall mean all such
Receivables; provided, however, that the term "Receivable" shall not include
(a) as of the Cut-Off Date, accounts receivable which do not satisfy the
conditions of clauses (vi) and (vii) of the definition of Eligible Receivable
and (b) as of any subsequent date of Transfer to the Trust, accounts receivable
which do not satisfy the conditions of clauses (vi) and (vii) of the definition
of Eligible Receivable.

"Receivables Purchase Agreement" shall mean the agreement
between Carolina Freight and the Transferor, dated as of the date hereof,
governing the terms and conditions upon which the Transferor shall have
acquired the Receivables transferred to the Trust on the Closing Date and all
Receivables transferred to the Trust from time to time thereafter, as the same
may from time to time be amended, modified or otherwise supplemented.

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<PAGE> 22
"Record Date" shall mean, with respect to any Distribution
Date, the last day of the preceding calendar month.

"Requirements of Law" shall mean any law, treaty, rule or
regulation, or final determination of an arbitrator or Governmental Authority,
and, when used with respect to any Person, the certificate of incorporation and
by-laws or other organizational or governing documents of such Person.

"Reserve Account" with respect to each Series shall have the
meaning specified in the related Supplement and "Reserve Accounts" shall refer
to all the Reserve Accounts established for outstanding Series in accordance
with the terms of the related Supplements.

"Responsible Officer" shall mean, when used with respect to
the Trustee, any officer within the corporate trust department of the Trustee
including any vice president, assistant vice president, secretary, assistant
secretary, treasurer, assistant treasurer, trust officer or any other officer
of the Trustee customarily performing functions similar to those performed by
the persons who at the time shall be such officers, respectively, or to whom
any corporate trust matter is referred because of such officer's knowledge of
and familiarity with the particular subject.

"Revolving Period" shall mean, with respect to any Series, the
period specified in the related Supplement.

"S&P" shall mean Standard & Poor's Corporation or Standard &
Poor's Ratings Group, as applicable, or the successor of either of them.

"Securities Act" shall mean the Securities Act of 1933, as
amended.

"Series" shall mean any series of Investor Certificates.

"Series Account" shall mean any deposit, trust, escrow,
reserve or similar account maintained for the benefit of the Investor
Certificateholders or any Series or Class, as specified in any Supplement.

"Series Allocation Percentage" shall mean, with respect to any
Series, the percentage equivalent of a fraction, the numerator of which is the
Aggregate Invested Amount for such Series and the denominator of which is the
Trust Aggregate Invested Amount.

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<PAGE> 23
"Series Cut-Off Date" shall mean, with respect to any Series,
the date specified as such in the related Supplement.

"Series Issuance Date" shall mean, with respect to any Series,
the date on which the Investor Certificates of such Series are to be originally
issued in accordance with Section 6.09 and the related Supplement.

"Series Servicing Fee" shall mean, with respect to any Series,
the amount specified in the applicable Supplement.

"Series Trustee's Fee" shall mean, with respect to any Series,
the amount specified in the applicable Supplement.

"Service Transfer" shall have the meaning specified in Section
10.01.

"Servicer" initially shall mean Carolina Freight in its
capacity as Servicer pursuant to this Agreement, and after any Service Transfer
shall mean the Successor Servicer.

"Servicer Default" shall have the meaning specified in Section
10.01.

"Servicing Fee" shall have the meaning specified in Section
3.02(a).

"Servicing Officer" shall mean any officer or other employee
of the Servicer or other agent of the Servicer who in any case is involved in,
or responsible for, the administration and servicing of the Receivables and
whose name appears on a list of servicing officers furnished to the Trustee by
the Servicer, as such list may from time to time be amended.

"Successor Servicer" shall have the meaning specified in
Section 10.02(a).

"Supplement" shall mean, with respect to any Series, a
supplement to this Agreement, executed and delivered in connection with the
original issuance of the Investor Certificates of such Series pursuant to
Article VI, and all amendments and supplements to this Agreement.

"Tax Opinion" shall mean, with respect to any action, an
Opinion of Counsel who is not an employee of the Servicer or any Affiliate of
the Servicer to the effect that, for federal and North Carolina (and any other
State where substantial servicing activities in respect of Receivables are
conducted by the Transferor or the Servicer if there is a substantial change
from present servicing activities) state income and franchise tax

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<PAGE> 24
purposes, (a) such action will not adversely affect the characterization of the
Investor Certificates of any outstanding Series or Class as debt, (b) such
action will not cause a taxable event to any Investor Certificateholder, (c)
following such action the Trust should not be treated as an association (or
publicly traded partnership) taxable as a corporation, (d) in the case of the
original issuance of Certificates, the Investor Certificates should properly be
characterized as debt for tax purposes, or if not debt, as an interest in a
partnership and not in an association taxable as a corporation and (e) in the
case of Section 6.09(b), the Investor Certificates of the new Series will be
characterized as debt.

"Termination Notice" shall have the meaning specified in
Section 10.01.

"Transfer" shall have the meanings specified in Section 2.01,
it being understood that the date of Transfer of any Receivable or other Trust
Asset shall be the date on which such Receivable or other Trust Asset shall be
created or otherwise arise and, in the case of such Receivable, be acquired by
the Transferor under the Receivables Purchase Agreement.

"Transfer Agent and Registrar" shall have the meaning
specified in Section 6.03.

"Transferor" shall mean Carolina Freight Funding Corporation,
a North Carolina special purpose corporation.

"Transferor's Account" shall mean the special account (account
number _____________________), under the dominion and control of the
Transferor, for deposits by the Servicer pursuant to the applicable Supplement,
maintained at the office of ____________ in _______, ________, or such other
account at such other bank, under the dominion and control of the Transferor,
as Transferor may designate for such purpose from time to time.

"Transferor Certificate" shall mean the certificate executed
by the Transferor and authenticated by or on behalf of the Trustee, in
substantially the form of Exhibit A hereto.

"Transferor Collections" shall mean, with respect to any date,
that portion of the Collections deposited to the Concentration Account or
received by the Servicer on such date equal to the product of (i) the
Transferor Percentage on such date times (ii) the aggregate amount of such
Collections.

"Transferor Interest" shall have the meaning specified in
Section 4.01(a).

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<PAGE> 25
"Transferor Percentage" shall mean at any time 100% minus the
aggregate of the Floating Allocation Percentages of all outstanding Series at
such time.

"Transferor Receivable" shall mean a Receivable acquired by
the Transferor pursuant to the Receivables Purchase Agreement.

"Trust" shall mean the Carolina Freight Trade Receivables
Master Trust created by this Agreement.

"Trust Aggregate Invested Amount" shall mean at any time the
sum of the Aggregate Invested Amounts for all outstanding Series at such time.

"Trust Assets" shall have the meaning specified in Section
2.01.

"Trustee" shall mean The First National Bank of Chicago, in
its capacity as trustee on behalf of the Trust, or its successor in interest,
or any successor trustee appointed as herein provided.

"Trustee's Account" with respect to each Series, shall have
the meaning specified in the related Supplement.

"Trustee's Fee" shall have the meaning specified in Section
11.05.

"Turnover Rate" shall mean, with respect to any date, the
average of the percentage equivalent of a fraction for each of the three most
recently ended Accounting Periods the numerator of which is the Net Receivables
Balance as of the last day of each such Accounting Period and the denominator
of which is the aggregate balance of Receivables transferred to the Trust
during each such Accounting Period; provided, however, that with respect to any
such Accounting Periods, or portion thereof, occurring prior to the Closing
Date, the denominator of such fraction shall be the aggregate balance of
Receivables originated by Carolina Freight during such Accounting Period or
portion thereof.

"UCC" shall mean the Uniform Commercial Code, as amended from
time to time, as in effect in any applicable or specified jurisdiction.

"Unbilled, Collect Receivable" shall mean a Receivable as to
which both of the following conditions exist: (i) the Obligor is the consignee
of the freight shipped and (ii) Carolina Freight or the appropriate Originating
Subsidiary has not yet sent an invoice to the Obligor.

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<PAGE> 26
"Undivided Fractional Interest" with respect to each Series
shall have the meaning specified in the related Supplement.

SECTION 1.02. Other Definitional Provisions. (a) All terms
defined in this Agreement shall have the defined meanings when used in any
certificate or other document made or delivered pursuant hereto unless
otherwise defined therein.

(b) As used herein and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined in
this Agreement, and accounting terms partly defined in this Agreement to the
extent not defined, shall have the respective meanings given to them under
generally accepted accounting principles or regulatory accounting principles,
as applicable and in effect from time to time. To the extent that the
definitions of accounting terms herein are inconsistent with the meanings of
such terms under generally accepted accounting principles or regulatory
accounting principles, the definitions contained herein shall control.

(c) The words "hereof", "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement; and
Section, Schedule and Exhibit references contained in this Agreement are
references to Sections, Schedules and Exhibits in or to this Agreement unless
otherwise specified; and the term "including" means "including without
limitation".

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<PAGE> 27
ARTICLE II

TRANSFER OF RECEIVABLES

SECTION 2.01. Transfer of Receivables. (a) By execution of
this Agreement, the Transferor does hereby transfer, assign, set-over and
otherwise convey without recourse, except as expressly provided herein (the
making of such transfer, assignment, set-over and conveyance being a
"Transfer", and so to transfer, assign, set-over and otherwise convey being to
"Transfer") to the Trust, for the benefit of the Certificateholders:

(i) all of the Transferor's right, title and interest in,
to and under all Transferor Receivables existing at the close of business on
the Cut-Off Date and thereafter created from time to time, and conveyed to the
Transferor under the Receivables Purchase Agreement from time to time, until
the termination of the Revolving Period of the last outstanding Series, and all
monies due or to become due and all Collections and other amounts received from
time to time with respect to such Transferor Receivables and all proceeds
(including, without limitation, "proceeds" as defined in the UCC of the
jurisdiction the law of which governs the perfection of the interest in the
Transferor Receivables transferred hereunder) thereof; and

(ii) all of the Transferor's rights, remedies, powers and
privileges under the Receivables Purchase Agreement.

Such property described in the preceding sentence, together with all monies
from time to time on deposit in, and all Eligible Investments and other
securities, instruments and other investments purchased from funds on deposit
in, the Concentration Account and any Series Account, and any Enhancements
shall constitute the assets of the Trust (collectively the "Trust Assets").

The foregoing Transfer does not constitute and is not intended
to result in an assumption by the Trust, the Trustee or any Certificateholder
of any obligation of the Servicer, Carolina Freight, the Transferor or any
other Person in connection with the Receivables or under the Receivables
Purchase Agreement or under any agreement or instrument relating thereto,
including, without limitation, any obligation to any Obligor. The foregoing
Transfer to the Trust shall be made to the Trustee, on behalf of the Trust, and
each reference in this Agreement to such Transfer shall be construed
accordingly.

The Transferor agrees to record and file from time to time, at
its own expense, financing statements and other documents

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<PAGE> 28
(and amendments thereto, assignments thereof and continuation statements,
when applicable) with respect to the Receivables and the other Trust
Assets now existing and hereafter created meeting the requirements of
applicable law in such manner and in such jurisdictions as are necessary to
perfect, and maintain perfection of, the Transfers of the Receivables and the
other Trust Assets to the Trust, and to deliver a file-stamped copy of such a
financing statement or other document or other evidence of such filing to the
Trustee on or prior to the Closing Date. The Trustee shall be under no
obligation whatsoever to file such financing statements, documents, amendments,
assignments or continuation statements, or to make any other filing under the
UCC in connection with such Transfer.

Carolina Freight and the Transferor further agree, at their
own expense, on or prior to the Closing Date to indicate in their electronic
files that the Receivables have been conveyed, in the case of Carolina Freight,
to the Transferor in accordance with the Receivables Purchase Agreement and, in
the case of the Transferor, to the Trust in accordance with this Agreement for
the benefit of the Certificateholders.

(b) The Trustee hereby agrees not to disclose to any
Person any information delivered to the Trustee from time to time with respect
to the Receivables or any Obligor except (i) to a Successor Servicer or as
required by a Requirement of Law applicable to the Trustee, (ii) as required in
the performance of the Trustee's duties hereunder, (iii) as required in
enforcing the rights of the Certificateholders or (iv) as provided in any
Supplement. The Trustee agrees to take such measures as shall be reasonably
requested by the Transferor to protect and maintain the security and
confidentiality for such information and, in connection therewith, will allow
the Transferor to inspect the Trustee's security and confidentiality
arrangements from time to time during normal business hours. The Trustee shall
use its best efforts to provide the Transferor with notice at least five
Business Days prior to any disclosure pursuant to this Section.

SECTION 2.02. Acceptance by Trustee. (a) The Trustee hereby
acknowledges its acceptance on behalf of the Trust of all right, title and
interest in and to the Trust Assets, now existing and hereafter created and
transferred to the Trust pursuant to Section 2.01 and declares that it shall
maintain such right, title and interest, upon the trust herein set forth, for
the benefit of all Certificateholders.

(b) The Trustee shall have no power to create, assume or
incur indebtedness or other liabilities in the name of the Trust other than as
contemplated in this Agreement.

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<PAGE> 29
SECTION 2.03. Representations and Warranties of the
Transferor Relating to the Transferor. The Transferor hereby represents and
warrants to the Trust as of the date hereof and, by accepting on the date of
the initial Transfer of Receivables the proceeds of such Transfer, as of such
date, that:

(a) Organization and Good Standing. The Transferor is a
corporation duly organized, validly existing and in good standing under the
laws of the State of North Carolina and has full power and authority to own its
properties and conduct its business as presently owned or conducted, to
execute, deliver and perform its obligations under this Agreement and the
Receivables Purchase Agreement, and to execute and deliver to the Trustee
pursuant hereto the Certificates.

(b) Due Qualification. The Transferor is duly qualified
to do business and is in good standing as a corporation or foreign corporation,
as applicable, and has obtained all necessary licenses and approvals, in each
jurisdiction in which failure to so qualify or to obtain such licenses and
approvals would have a material adverse effect on the Transferor's ability to
perform its obligations hereunder, under the applicable Supplement or under the
Receivables Purchase Agreement.

(c) Due Authorization. The execution, delivery and
performance of this Agreement and the applicable Supplement and the Receivables
Purchase Agreement by the Transferor, and the execution and delivery by the
Transferor to the Trustee of the Certificates and the consummation by the
Transferor of the transactions provided for in this Agreement and the
applicable Supplement and the Receivables Purchase Agreement, have been duly
authorized by all necessary corporate action on the part of the Transferor and
this Agreement and the other documents and agreements executed in connection
herewith have been duly executed and delivered on behalf of the Transferor.

(d) No Conflict. The Transferor's execution and delivery
of this Agreement, the applicable Supplement, the Receivables Purchase
Agreement and the Certificates, performance of the transactions contemplated by
this Agreement and the applicable Supplement and the Receivables Purchase
Agreement, and fulfillment of the terms hereof and thereof applicable to the
Transferor, do not conflict with or violate any Requirements of Law applicable
to the Transferor or conflict with, result in any breach of any of the terms
and provisions of, or constitute (with or without notice or lapse of time or
both) a default under, any indenture, contract, agreement, mortgage, deed of
trust or other instrument to which the Transferor is a party or by which it or
its properties are bound.

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(e) No Proceedings. There are no proceedings or
investigations pending or, to the best knowledge of the Transferor, threatened
against the Transferor before any Governmental Authority.

(f) Consents. No authorization, consent, license, order
or approval of or registration or declaration with any Governmental Authority
is required to be obtained, effected or given by the Transferor in connection
with the execution and delivery of this Agreement, the applicable Supplement,
the Receivables Purchase Agreement and the Certificates by the Transferor or
its performance of its obligations under this Agreement, the applicable
Supplement and the Receivables Purchase Agreement or the transactions
contemplated hereby and thereby except for (i) the filings of the financing
statements or other documents required to have been filed on or prior to the
Closing Date pursuant to Section 2.01, all of which were so filed and are in
full force and effect, and (ii) the filing of any amendments, assignments or
continuation statements which may become applicable pursuant to Section 2.01.

(g) Liens on Properties. Except as created hereby, there
are no Liens of any nature whatsoever on any Receivable. The Transferor is not
a party to any contract, agreement, lease or instrument (other than this
Agreement) the performance of which, either unconditionally or upon the
happening of an event, will result in or require the creation of any Lien on
any Receivable, or otherwise result in a violation of this Agreement.

(h) Contractual Obligations. (i) The Transferor is
not a party to any indenture, loan or credit agreement or any lease or other
agreement or instrument, or subject to any Requirements of Law, that would have
an adverse effect on the ability of the Transferor to carry out its obligations
under this Agreement, the applicable Supplement or the Receivables Purchase
Agreement, and (ii) neither the Transferor nor, to the best of the knowledge of
the Transferor, any other party is in default in any respect under or with
respect to the Receivables Purchase Agreement or any other contract, agreement,
lease or other instrument to which the Transferor is a party.

(i) Investment Company Act. The Transferor is not an
"investment company", or an "affiliated person" of, or "promoter" or "principal
underwriter" for, an "investment company", as such terms are defined in the
Investment Company Act.

(j) Locations. The chief place of business and chief
executive office of the Transferor are located at the address of the Transferor
referred to in Section 13.05, and the locations of the offices where the
Transferor keeps the originals of its

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books, records and documents regarding the Receivables and the other Trust
Assets are listed on Schedule 2.03(j) hereto (or at such other locations,
notified to the Trustee in accordance with Section 2.05(e), in jurisdictions
with respect to which all applicable action required by the last two paragraphs
of Section 2.01 has been taken and completed).

(k) Tradenames. The legal name of the Transferor is as
set forth on the signature page of this Agreement and the Transferor has no
tradenames, fictitious names, assumed names or "doing business as" names.

(l) Subsidiaries. The Transferor has no subsidiaries.

(m) Information. (i) Each certificate, information,
exhibit, financial statement, document, book or record or report furnished by
the Transferor to the Trustee or the Servicer in connection with this Agreement
and (ii) any information contained in a private placement memorandum,
prospectus or other disclosure document including the documents set forth in
Schedule IV hereto regarding the Transferor provided by the Transferor to
Investor Certificateholders is accurate in all material respects as of its
date, when considered as a whole with other such documents, and no such
document contains any material misstatement of fact or omits to state a
material fact or any fact necessary to make the statements contained therein
not materially misleading.

(n) Solvency. The Transferor is solvent and will not
become insolvent after giving effect to the transactions contemplated by this
Agreement; the Transferor is currently repaying all of its indebtedness as such
indebtedness becomes due; and, after giving effect to the transactions
contemplated by this Agreement, the Transferor will have adequate capital to
conduct its business.

(o) Compliance. The Transferor has complied in all
material respects with all applicable laws, rules and orders with respect to
it, its business and properties and all Receivables transferred to the Trust
hereunder and the Contracts related thereto.

The representations and warranties set forth in this Section
2.03 shall survive the Transfer of the Receivables to the Trust and the
issuance of the Certificates. Upon discovery by the Transferor, the Servicer
or the Trustee of a material breach of any of the foregoing representations and
warranties, the party discovering such breach shall give prompt written notice
to the other parties and to any Enhancement Providers. The Trustee's
obligations in respect of any such breach are limited as provided in Section
11.02(g).

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SECTION 2.04. Representations and Warranties of the
Transferor Relating to this Agreement and the Trust Assets. The Transferor
hereby represents and warrants to the Trust as of the date hereof and, by
accepting on the date of the initial Transfer of Receivables the proceeds of
such Transfer, as of such date and, in the case of the representations and
warranties contained in Sections 2.04(a), (b), (c), (e), (f) and (g) and
Section 2.04(d) below, by accepting on each date during the Revolving Period
for any Series the proceeds of each Transfer of Receivables, as of such date,
that:

(a) Enforceability. Each of this Agreement, the
applicable Supplement and the Receivables Purchase Agreement constitutes a
legal, valid and binding obligation of the Transferor enforceable against the
Transferor in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, reorganization, insolvency, moratorium or
other similar laws affecting creditors' rights generally, now or hereafter in
effect, and except as such enforceability may be limited by general principles
of equity (whether considered in a suit at law or in equity). The Receivables
Purchase Agreement is in full force and effect, and is not subject to any
specific dispute, offset, counterclaim or defense.

(b) Valid Transfer. The Receivables Purchase Agreement
creates a valid sale, transfer and assignment to the Transferor of all right,
title and interest of Carolina Freight in and to the Receivables now existing
and hereafter-created during the Revolving Period and the proceeds thereof.
This Agreement constitutes a valid transfer and assignment to the Trust of all
right, title and interest of the Transferor in and to the Receivables now
existing and hereafter created and purchased by the Transferor pursuant to the
Receivables Purchase Agreement, and in and to all other Trust Assets and the
proceeds thereof or, if this Agreement does not constitute such a transfer and
assignment, constitutes a valid grant to the Trust of a first priority
perfected "security interest" (as defined in the UCC of the jurisdiction the
law of which governs the perfection of the interest in the Receivables and
other Trust Assets created hereunder) in all right, title and interest of the
Transferor in and to the Receivables now existing and hereafter created and
purchased by the Transferor pursuant to the Receivables Purchase Agreement, and
in and to all other Trust Assets and the proceeds thereof which, in the case of
existing Receivables and the other existing Trust Assets and the proceeds
thereof, is enforceable (except as such enforceability may be limited by
applicable bankruptcy, reorganization, insolvency, moratorium or other similar
laws affecting creditors' rights generally, now or hereafter in effect, and
except as such enforceability may be limited by general principles of equity,
whether considered in a suit of law

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or in equity) by the Trustee upon execution and delivery of this Agreement, and
which, in the case of the Receivables and all other Trust Assets hereafter
created and the proceeds thereof, will be enforceable (except as such
enforceability may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other similar laws affecting creditors' rights
generally, now or hereafter in effect, and except as such enforceability may be
limited by general principles of equity, whether considered in a suit of law or
in equity) by the Trustee upon such creation. Upon the filing of the financing
statements and, in the case of the Receivables hereafter created and the
proceeds thereof, upon the creation thereof and payment therefor, the Trust
shall have an ownership or first priority perfected security interest in the
Trust Assets and the proceeds thereof.

(c) No Claim or Interest. Except as otherwise provided
in this Agreement and the applicable Supplement, neither the Transferor nor any
Person claiming through or under the Transferor has any claim to or interest in
the Concentration Account or any Series Account.

(d) Outstanding Balance; Net Receivables Balance. As of
the Closing Date and on each Series Issuance Date, the Net Receivables Balance
is at least equal to the sum of (i) the aggregate of the Loss and Dilution
Reserves for all outstanding Series, (ii) the aggregate of the Yield Reserves
for all outstanding Series and (iii) the Trust Aggregate Invested Amount
(computed as if reduced by the aggregate amount of Cure Funds held in the
Reserve Accounts of all outstanding Series).

(e) Liens. Each Receivable and all other Trust Assets
have been Transferred to the Trust free and clear of any Lien except as created
hereby or by the Receivables Purchase Agreement.

(f) Eligibility. (i) On the Closing Date each Receivable
then existing satisfies the conditions in clauses (vi) and (vii) of the
definition of Eligible Receivable and (ii) as of the date of Transfer to the
Trust hereunder of each Receivable hereafter created, such Receivable will
satisfy the conditions in clauses (vi) and (vii) of the definition of Eligible
Receivable.

(g) Investment Company Act. Each Transfer of Receivables
to the Trust hereunder constitutes a purchase or other acquisition of notes,
drafts, acceptances, open accounts receivable or other obligations representing
part or all of the sales price of merchandise, insurance or services within the
meaning of Section 3(c)(5) of the Investment Company Act.

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(h) Offering of Certificates. Neither the Transferor nor
any agent acting on its behalf has, directly or indirectly, offered any
Certificate or any similar security of the Transferor for sale to, or solicited
any offer to buy any Certificate or any similar security of the Transferor
from, or otherwise approached or negotiated with respect thereto, with any
Person which, and neither the Transferor nor any agent acting on its behalf has
taken or will take any action which, would subject the issuance or sale of any
Certificate to the provisions of Section 5 of the Securities Act or to the
qualification provisions of any securities or Blue Sky law of any applicable
jurisdiction.

The representations and warranties set forth in this Section
2.04 shall survive the Transfer of the Receivables to the Trust and the
issuance of the Certificates. Upon discovery by the Transferor, the Servicer
or the Trustee of a material breach of any of the foregoing representations and
warranties, the party discovering such breach shall give prompt written notice
to the other parties and to any Enhancement Provider. The Trustee's
obligations in respect of any such breach are limited as provided in Section
11.02(g).

SECTION 2.05. Affirmative Covenants of the Transferor. The
Transferor hereby covenants that, until the termination of the Amortization
Period:

(a) Compliance with Law. The Transferor will comply in
all material respects with all Requirements of Law applicable to the
Transferor, its business and properties and the Trust Assets, where failure to
comply would have a material adverse effect on the Trust Assets or the ability
of the Transferor to perform its obligations hereunder or under the Receivables
Purchase Agreement.

(b) Preservation of Corporate Existence. The Transferor
will preserve and maintain its corporate existence, rights, franchises and
privileges in the jurisdiction of its formation, and qualify and remain
qualified in good standing as a foreign corporation in each jurisdiction where
the failure to maintain such qualification would materially adversely affect
(i) the interests of the Trustee or of the Investor Certificateholders
hereunder or in the Trust Assets, (ii) the collectability of the Receivables or
(iii) the ability of the Transferor to perform its obligations hereunder or
under the Receivables Purchase Agreement.

The Transferor shall provide to the Trustee access to the
documentation regarding the Receivables in such cases where the Trustee is
required in connection with the enforcement of the rights of Certificateholders
or by applicable statutes or regula-

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tions to review such documentation, such access being afforded without charge
but only (i) upon reasonable request, (ii) during normal business hours, (iii)
subject to the Transferor's normal security and confidentiality procedures and
(iv) at reasonably accessible offices in the continental United States
designated by the Transferor.

(c) Keeping of Records and Books of Account. The
Transferor will (i) keep proper books of record and account, which shall be
maintained or caused to be maintained by the Transferor and shall be separate
and apart from those of any Affiliate of the Transferor, in which full and
correct entries shall be made of all financial transactions and the assets and
business of the Transferor in accordance with generally accepted accounting
principles consistently applied, and (ii) maintain and implement administrative
and operating procedures (including, without limitation, an ability to recreate
records evidencing the Receivables in the event of the destruction of the
originals thereof) and keep and maintain all documents, books, records and
other information reasonably necessary or advisable for the collection of all
Receivables (including, without limitation, records adequate to permit the
daily identification of each new Receivable and all Collections of and
adjustments to each existing Receivable).

(d) Location of Records. The Transferor will keep its
chief place of business and chief executive office, and the office where it
keeps the books, records and documents regarding the Trust Assets, at the
address of the Transferor referred to in Section 13.05 or, upon 30 days' prior
written notice to the Trustee, at any other location within the United States
with respect to which all applicable action required by the last two paragraphs
of Section 2.01 shall have been taken and completed.

(e) Maintenance of Separate Director. The Transferor
will maintain at least one independent director who is not an officer, director
or employee of (i) Carolina Freight or (ii) any Affiliate, or a parent, child,
spouse or sibling of any such Person; provided, however, that if such
independent director dies or resigns the Transferor shall have 30 days to
replace that person with another independent director.

(f) Payment of Taxes, Etc. The Transferor will pay
promptly when due all taxes, assessments and governmental charges or levies
imposed upon it or any Trust Asset, or in respect of its income or profits
therefrom, and any and all claims of any kind (including, without limitation,
claims for labor, materials and supplies), except that no such amount need be
paid if (i) such nonpayment could not subject any Indemnified Party to civil or
criminal penalty or liability or involve any risk of the sale,

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<PAGE> 36
forfeiture or loss of any of the property, rights or interests covered
hereunder or under the Receivables Purchase Agreement, (ii) the charge or levy
is being contested in good faith and by proper proceedings and (iii) the
obligation to pay such amount is adequately reserved against in accordance with
and to the extent required by generally accepted accounting principles.

(g) Reporting Requirements. The Transferor will furnish
to the Trustee:

(i) as soon as possible and in any event (A) within
two Business Days after becoming aware of the occurrence of
each Early Amortization Event, each commencement of a Partial
Amortization Period, and each event which, with the giving of notice
or lapse of time or both, would constitute an Early Amortization
Event, the statement of the chief administrative and credit officer of
the Transferor setting forth details of such Early Amortization Event
or Partial Amortization Period commencement or event and the action
which the Transferor has taken and proposes to take with respect
thereto, and (B) within two Business Days after the occurrence
thereof, notice of any other event, development or information which
is reasonably likely to materially adversely affect the ability of the
Transferor to perform its obligations under this Agreement or the
Receivables Purchase Agreement; and

(ii) promptly, from time to time, such other information,
documents, records or reports respecting the Receivables, the other
Trust Assets or the condition or operations, financial or otherwise,
of the Transferor as the Trustee may from time to time reasonably
request.

(h) Receivables Purchase Agreement. The Transferor will
at its expense timely perform and comply in all material respects with all
provisions, covenants and other promises required to be observed by it under
the Receivables Purchase Agreement, maintain the Receivables Purchase Agreement
in full force and effect, enforce the Receivables Purchase Agreement
substantially in accordance with its terms and comply with its obligations
under Contracts and invoices giving rise to Receivables.

(i) UCC Opinion. On or before March 31 of each calendar
year, beginning with March 31, 1995, the Transferor shall deliver to the
Trustee an Opinion of Counsel to the effect that no financing statements or
continuation statements, other than those currently filed, are necessary to be
filed by the Transferor or the Servicer in order to fully preserve and protect

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<PAGE> 37
the interest of the Trustee, Transferor or any of the Certificateholders
hereunder in and to the Receivables.

(j) Rating Maintenance. For so long as the Investor
Certificates of any Series are outstanding, the Transferor shall cause the
Rating Agency to maintain its rating of the Investor Certificates of each such
Series.

SECTION 2.06. Negative Covenants of the Transferor. The
Transferor hereby further covenants that, unless it shall have received the
written consent of the Majority in Interest, until the termination of the
Amortization Period:

(a) No Liens. Except for the Transfer hereunder and the
security interest granted pursuant to Section 2.01(b), the Transferor will not
sell, pledge, assign or transfer to any other Person, or grant, create, incur,
assume or suffer to exist any Lien on, any Trust Asset or any other property or
asset of the Transferor (other than funds deposited to the Transferor's Account
pursuant to the applicable Supplement), whether now existing or hereafter
created, or any interest therein, and the Transferor shall defend the right,
title and interest of the Trust in and to the Trust Assets, whether now
existing or hereafter created, against all claims of third parties claiming
through or under the Transferor.

(b) Activities of the Transferor. The Transferor will
not engage in, enter into or be a party to any business, activity or
transaction of any kind other than the businesses, activities and transactions
contemplated and authorized by this Agreement or the Receivables Purchase
Agreement or any document related hereto or thereto.

(c) Indebtedness. Except as provided herein or in the
Receivables Purchase Agreement, the Transferor will not create, incur or assume
any indebtedness (other than operating expenses incurred in the performance of
its obligations under this Agreement) or sell or transfer any receivables to a
trust or other Person which issues securities in respect of any such
receivables.

(d) Guarantees. The Transferor will not become or remain
liable, directly or contingently, in connection with any indebtedness or other
liability of any other Person, whether by guarantee, endorsement (other than
endorsements of negotiable instruments for deposit or collection in the
ordinary course of business), agreement to purchase or repurchase, agreement to
supply or advance funds, or otherwise.

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(e) Investments. The Transferor will not make or suffer
to exist any loans or advances to, or extend any credit to, or make any
investments (by way of transfer of property, contributions to capital, purchase
of stock or securities or evidences of indebtedness, acquisition of the
business or assets, or otherwise) in, any Affiliate or any other Person except
for purchases of Receivables pursuant to the terms of the Receivables Purchase
Agreement and investments in Eligible Investments in accordance with the terms
of this Agreement.

(f) Extension or Amendment of Receivables. The
Transferor will not extend, amend or otherwise modify (or consent or fail to
object to any such extension, amendment or modification by Carolina Freight or
the Servicer except as permitted in Section 3.01(c)) the terms of any
Receivable, or amend, modify or waive (or consent or fail to object to any such
amendment, modification or waiver by Carolina Freight or the Servicer) any
payment term or condition of any invoice related thereto if the effect of such
amendment, modification or waiver would impair the collectibility or delay the
payment of any then existing Receivable. The Transferor will not rescind or
cancel, or permit the rescission or cancellation of, any Receivable except as
ordered by a court of competent jurisdiction or other Governmental Authority.
Notwithstanding the foregoing provisions of this Section 2.06(f), each of the
Transferor and Carolina Freight may extend, amend, modify, cancel or rescind
(and the Transferor need not object to any such action by Carolina Freight) any
Diluted Receivable in connection with a valid dispute.

(g) Change in Corporate Name. The Transferor will not
(i) make any change to its corporate name or principal place of business or use
any tradenames, fictitious names, assumed names or "doing business as" names
unless, prior to the effective date of any such name change, change in
principal place of business, or use, the Transferor delivers to the Trustee
such financing statements (Forms UCC-l and UCC-3) executed by the Transferor
which the Trustee may reasonably request to reflect such name change or use,
together with such other documents and instruments that the Trustee may
reasonably request in connection therewith or (ii) change its jurisdiction of
formation unless the Trustee shall have received from the Transferor (A)
written notice of such change at least 30 days prior to the effective date
thereof, and (B) prior to the effective date thereof, if requested by the
Trustee, an Opinion of Counsel, in form and substance reasonably satisfactory
to the Trustee, as to such formation and the Transferor's valid existence and
good standing and as to the matters referred to in the first sentence of
Section 2.04(a).

(h) Receivables Purchase Agreement. The Transferor will
not (i) cancel or terminate the Receivables Purchase Agree-

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ment or consent to or accept any cancellation or termination thereof, (ii)
amend or otherwise modify any term or condition of the Receivables Purchase
Agreement or give any consent, waiver or approval thereunder, (iii) waive any
default under or breach of the Receivables Purchase Agreement or (iv) take any
other action under the Receivables Purchase Agreement not required by the terms
thereof, in each case, to the extent that it would impair the value of any
Trust Asset or the rights or interests of the Transferor thereunder or of the
Trustee or the Investor Certificateholders hereunder or thereunder.

(i) Organization. Except as permitted by Section
2.06(j), the Transferor will not amend its articles of incorporation or bylaws.

(j) Maintenance of Separate Existence. The Transferor
will not (i) fail to do all things necessary to maintain its existence as a
corporation separate and apart from Carolina Freight and any Affiliate of
Carolina Freight, and any Affiliate of the Transferor including, without
limitation, conducting business correspondence in its own name, holding regular
meetings of, or obtaining regular written consents from, its shareholders and
Board of Directors and maintaining appropriate books and records; (ii) suffer
any limitation on the authority of its own directors and officers to conduct
its business and affairs in accordance with their independent business
judgment, or authorize or suffer any Person other than its own directors and
officers to act on its behalf with respect to matters (other than matters
customarily delegated to others under powers of attorney) for which a
corporation's own directors and officers would customarily be responsible;
(iii) fail to (A) maintain or cause to be maintained by an agent of the
Transferor under the Transferor's control physical possession of all its books
and records, (B) maintain capitalization adequate for the conduct of its
business, (C) account for and manage all of its liabilities separately from
those of any other Person, including, without limitation, payment by it of all
payroll and other administrative expenses and taxes from its own assets, (D)
segregate and identify separately all of its assets from those of any other
Person, or (E) maintain offices through which its business is conducted
separate from those of Carolina Freight and any Affiliates of Carolina Freight
and any Affiliates of the Transferor (provided that, to the extent that the
Transferor and any of its Affiliates have offices in the same location, there
shall be a fair and appropriate allocation of overhead costs among them, and
each such entity shall bear its fair share of such expenses); or (iv) commingle
its funds with those of Carolina Freight or any Affiliate of Carolina Freight
or any Affiliates of the Transferor, or use its funds for other than the
Transferor's uses; provided, however, that collections on certain accounts

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<PAGE> 40
receivable belonging to Carolina Freight may from time to time be deposited
into the Carolina Freight Collection Accounts or the Concentration Account.

(k) Ownership; Merger. The Transferor will not (i) sell
any shares of any class of its capital stock to any Person (other than Carolina
Freight), or enter into any transaction of merger or consolidation, or convey
or otherwise dispose of all or substantially all of its assets (except as
contemplated herein) provided, that the Transferor shall not be prohibited from
transferring or pledging the Transferor Certificate, or (ii) terminate,
liquidate or dissolve itself (or suffer any termination, liquidation or
dissolution), or (iii) acquire or be acquired by any Person, except indirectly
in connection with a consolidation or merger of Carolina Freight (which
consolidation or merger shall be permitted by Section 8.02 if Carolina Freight
is then serving as the Servicer), in connection with which the Trustee shall
have received an Opinion of Counsel, which counsel is not an employee of
Carolina Freight or any of its Affiliates, that such consolidation or merger
does not affect the separate existence of Transferor.

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ARTICLE III

ADMINISTRATION AND SERVICING OF RECEIVABLES

SECTION 3.01. Acceptance of Appointment and Other Matters
Relating to the Servicer. (a) Carolina Freight agrees to act as the Servicer
under this Agreement (subject to Article X) and the Certificateholders by their
acceptance of the Certificates consent to Carolina Freight so acting as
Servicer.

(b) The Servicer shall (subject to Article X) enforce its
respective rights and interests in, to and under the Receivables and the other
Trust Assets on behalf of the Trust. The Servicer shall service, administer
and collect the Receivables and, in connection therewith, the Servicer shall
take or cause to be taken all such actions as may be necessary or advisable to
collect each Receivable from time to time, all in accordance with applicable
laws, rules and regulations, with reasonable care and diligence, and in
accordance with the Credit Policy Manual. The Servicer shall as soon as
practicable turn over to the Transferor the collections of any receivable which
is not a Transferor Receivable.

(c) Provided no Early Amortization Event or Servicer
Default shall have occurred and be continuing, and no Partial Amortization
Period shall have commenced and be continuing, the Servicer may, in accordance
with the Credit Policy Manual, extend the maturity, adjust the Outstanding
Balance, or otherwise modify the terms of any Defaulted Receivable or amend,
modify or waive any payment term or condition of any invoice related thereto,
all as it may determine to be appropriate to maximize Collections thereof,
provided that, for all purposes hereunder, any such Receivable shall remain a
"Defaulted Receivable" in the amount of its Outstanding Balance (without giving
effect to any such extension, adjustment, amendment, modification or waiver)
until paid or charged off as uncollectible.

(d) The Servicer shall have full power and authority,
acting alone or through any party properly designated by it hereunder, to do
any and all things in connection with such servicing and administration which
it may deem necessary or desirable. Without limiting the generality of the
foregoing and subject to Section 10.01, the Servicer or its designee is hereby
authorized and empowered (i) to make withdrawals and payments or to instruct
the Trustee to make withdrawals and payments from the Concentration Account,
subject to the limitations set forth in Section 4.02 and as otherwise set forth
in this Agreement, (ii) to instruct the Trustee to make withdrawals and
payments from the Series Accounts, subject to the limitations set forth in
Section 4.02 and as otherwise set forth in this Agreement, (iii) to

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instruct the Trustee to take any action required or permitted under any
Enhancement, (iv) to make any filings, reports, notices, applications and
registrations with, and to seek any consents or authorizations from, the
Securities and Exchange Commission and any state securities authority on behalf
of the Trust as may be necessary or advisable to comply with any Federal or
state securities laws or reporting requirements, and (v) only with the prior
consent of a Majority in Interest of the Investor Certificateholders, to
subcontract with any other Person (at Servicer's expense) for servicing,
administering or collecting the Receivables, provided that such Person shall
not become Servicer hereunder and the Servicer shall remain liable for the
performance of the duties and obligations of the Servicer pursuant to the terms
hereof. The Trustee shall execute any documents furnished by the Servicer
which are necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties hereunder and acceptable in form and
substance to the Trustee. The Trustee shall, upon the written request of the
Servicer, furnish the Servicer with any documents then in the Trustee's
possession which are necessary or appropriate to enable the Servicer to carry
out its servicing and administrative duties hereunder.

(e) The Servicer shall not, and no Successor Servicer
shall be obligated to, use separate servicing procedures, offices, employees or
accounts for servicing the Receivables from the procedures, offices, employees
and accounts used by the Servicer or such Successor Servicer, as the case may
be, in connection with servicing other trade receivables.

(f) The relationship of the Servicer (and of any successor to
the Servicer as servicer under this Agreement) to the Trustee under this
Agreement is intended by the parties to be that of an independent contractor to
or with the Trust and shall not be construed to be that of a joint venturer,
partner, or agent, such that the acts of the Servicer are in any way
vicariously attributable to the Trustee in its individual capacity prior to
such time as the Trustee may serve as Servicer pursuant to the provisions of
Article X.

SECTION 3.02. Servicing Compensation; Servicer's Expenses.

(a) Compensation. As full compensation for its servicing
activities hereunder, the Servicer shall be entitled to receive a monthly
servicing fee (the "Servicing Fee") for each Collection Period (or portion
thereof) from the Closing Date until the termination of the Amortization
Period, payable in arrears on the Distribution Date with respect to such
Collection Period (or portion), in an amount equal to the aggregate of the

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Series Servicing Fees specified in the Supplements. In the case of any
Servicer other than Carolina Freight or any Affiliate thereof, the Servicing
Fee may be a higher fee, as shall be agreed to by the Trustee in its sole
discretion, but in no event in excess of a per annum fee equal to the product
of 0.75% and the Trust Aggregate Invested Amount. The Servicing Fee shall be
payable only from Investor Collections pursuant to, and subject to the priority
of payment set forth in, the Supplements.

(b) Expenses. The Servicer's expenses include: first, the
Trustee's Fee (to the extent not paid from Collections); then all documented
expenses and liabilities (other than any liability of the Trust with respect to
any amount payable solely out of Collections or any personal liability of the
Trust to repay the Certificates) of the Trust not expressly stated herein to be
for the account of the Certificateholders, including without limitation
expenses related to enforcement of the Receivables and the other amounts due to
the Trustee pursuant to Section 11.05, the reasonable fees and disbursements of
independent accountants, and other fees and documented expenses including but
not limited to the costs of filing UCC continuation statements; provided that,
in no event shall the Servicer be liable for any federal, state or local income
or franchise tax, or any interest or penalties with respect thereto, assessed
on the Trust, the Trustee or the Certificateholders except as expressly
provided herein. Such expenses shall be payable, first, from the Servicing Fee,
and, second, to the extent not paid from the Servicing Fee, by the Transferor
for its own account, and, third, to the extent the Transferor shall fail to pay
any of such expenses, by the Servicer for its own account, and the Servicer
shall not be entitled to any payment for any such expenses other than the
Servicing Fee and reimbursement from the Transferor. In addition, to the
extent not paid from the Servicing Fee, the Transferor shall pay for its own
account, and, if the Transferor fails to do so, the Servicer will pay, all fees
and expenses incurred by or on behalf of the Servicer in connection with its
servicing activities hereunder (including without limitation expenses related
to enforcement of the Receivables and the costs of a Service Transfer) or
otherwise in connection herewith (including without limitation the fees and
expenses set forth above), and the Servicer will not be entitled to any fee or
other payment from, or claim on, any of the Trust Assets (other than the
Servicing Fee and reimbursement from the Transferor). The Transferor's and
Servicer's covenant to pay the expenses and disbursements provided for in this
Section 3.02(b) shall survive the termination of this Agreement.

SECTION 3.03. Representations and Warranties of the Servicer.
Carolina Freight, as initial Servicer, hereby makes, and each Successor
Servicer by acceptance of its appointment

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hereunder shall make, the following representations and warranties as of the
date hereof and as of the date of the initial Transfer of Receivables (or, in
the case of any Successor Servicer, the date of such appointment):

(a) Organization and Good Standing. The Servicer is a
corporation or national banking association duly organized, validly existing
and in good standing under the applicable laws of its jurisdiction of
organization or incorporation and has, in all material respects, full power and
authority to own its properties and conduct its receivables servicing business
as such properties are presently owned and as such business is presently
conducted and as is proposed to be conducted under this Agreement and the
Receivables Purchase Agreement, and to execute, deliver and perform its
obligations under this Agreement and the applicable Supplement.

(b) Due Qualification. The Servicer is duly qualified to do
business and is in good standing as a foreign corporation (or is exempt from
such requirements), and has obtained all necessary licenses and approvals, in
each jurisdiction in which the servicing of the Receivables in accordance with
the terms of this Agreement and any Supplement requires such qualification,
except where failure to so qualify or to obtain such licenses or approvals
would not have a material adverse effect on its ability to perform its
obligations as Servicer under this Agreement and the applicable Supplement.

(c) Due Authorization. The Servicer's execution, delivery
and performance of this Agreement and the applicable Supplement and the other
agreements and instruments executed or to be executed by the Servicer as
contemplated hereby have been duly authorized by all necessary action on the
part of the Servicer.

(d) Binding Obligation. This Agreement and the applicable
Supplement constitute a legal, valid and binding obligation of the Servicer
enforceable against it in accordance with its terms except as such
enforceability may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other similar laws now and hereafter in effect
affecting creditors' rights generally, and except as such enforceability may be
limited by general principles of equity (whether considered in a suit at law or
in equity).

(e) No Conflict. Except to the extent that any of the
following actions would not materially, adversely affect the Servicer's
performance of its obligations under this Agreement, the Servicer's execution
and delivery of this Agreement, performance of the transactions contemplated by
this Agreement and

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the applicable Supplement, and fulfillment of the terms hereof and thereof
applicable to the Servicer, do not conflict with or violate any Requirements of
Law applicable to the Servicer, or conflict with, result in any breach of any
of the material enforceable terms and provisions of, or constitute (with or
without notice or lapse of time or both) a material default under, any
indenture, contract, agreement, mortgage, deed of trust or other instrument to
which the Servicer is a party or by which it or its properties are bound.

(f) No Proceedings. There are no proceedings or, to the best
knowledge of the Servicer, investigations pending or threatened against the
Servicer before any Governmental Authority (i) asserting the illegality,
invalidity or unenforceability, or seeking any determination or ruling that
would affect the legality, binding effect, validity or enforceability, of this
Agreement and the applicable Supplement, (ii) seeking to prevent the
consummation of any of the transactions contemplated by this Agreement and the
applicable Supplement, or (iii) seeking any determination or ruling that is
reasonably likely to materially and adversely affect the financial condition or
operations of the Servicer or the performance by the Servicer of its
obligations under this Agreement and the applicable Supplement.

(g) No Consents. No authorization, consent, license, order
or approval of or registration or declaration with any Governmental Authority
is required to be obtained, effected or given by the Servicer in connection
with the execution and delivery of this Agreement and the applicable Supplement
by the Servicer or the performance of its obligations hereunder and thereunder.

(h) Carolina Freight Collection Accounts. The names,
addresses and ABA numbers of all the Carolina Freight Collection Account Banks,
together with the account numbers of the Carolina Freight Collection Accounts
and the name of a contact person at such Carolina Freight Collection Account
Bank, are specified in Schedule I hereto as of the Closing Date. Also
specified in Schedule I hereto are the name, address and ABA numbers of the
Concentration Account Bank, together with the account number and the name of a
contact person for the Concentration Account as of the Closing Date.

(i) Payment Instructions. The Servicer has notified the
Obligor on each Receivable to make payments on such Receivable to one of the
Carolina Freight Collection Accounts.

The representations and warranties set forth in this Section
3.03 shall survive the Transfer of the Receivables to the Trust and the
issuance of the Certificates. Upon a discovery by

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<PAGE> 46
the Transferor, the Servicer or the Trustee of a material breach of any of the
foregoing representations and warranties, the party discovering such breach
shall give prompt written notice to the other parties. The Trustee's
obligations in respect of any such breach are limited as provided in Section
11.02(g).

SECTION 3.04. Covenants of the Servicer. The Servicer hereby
covenants that, until the termination of the Amortization Period:

(a) Change in Accounts. The Servicer will not (i) terminate
and substitute any Concentration Account (or make any change in its
instructions to Carolina Freight Collection Account Banks regarding payments to
be made to the Concentration Account) except as required pursuant to Section
4.02 or any Reserve Account except as required pursuant to the applicable
Supplement or (ii) add or terminate any institution as a Carolina Freight
Collection Account Bank from those listed in Schedule I hereto, except as
otherwise permitted pursuant to Section 4.02 or unless the Trustee shall have
received notice of such addition, termination or change and executed copies of
Carolina Freight Collection Account Notices to each new Carolina Freight
Collection Account Bank.

(b) Collections. In the event that the Servicer or any
Affiliate thereof receives any Collections, the Servicer agrees to hold, or
cause such Affiliate to hold, all such Collections in trust and to deposit, or
cause such Affiliate to deposit, such Collections to the appropriate Collection
Account as soon as practicable, but in no event later than two Business Days
after receipt thereof.

(c) Compliance with Requirements of Law. The Servicer will
duly satisfy in all material respects all obligations on its part to be
fulfilled under or in connection with each Receivable, will maintain in effect
all qualifications required under Requirements of Law in order properly to
service each Receivable and will comply in all material respects with all other
Requirements of Law in connection with servicing each Receivable.

(d) Extension or Amendment of Receivables. Except as
permitted by Section 3.01(c), the Servicer will not extend, amend or otherwise
modify (or consent or fail to object to any such extension, amendment or
modification by Carolina Freight or the Transferor) the terms of any then
existing Receivable, or amend, modify or waive (or consent or fail to object to
any such amendment, modification or waiver by Carolina Freight or the
Transferor) any payment term or condition of any invoice related thereto if the
effect of any such amendment, modification or waiver would impair the
collectibility or delay the payment of

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any Receivable. Except as permitted by Section 3.01(c), the Servicer will not
rescind or cancel, or permit the rescission or cancellation of, any Receivable
except as ordered by a court of competent jurisdiction or other Governmental
Authority.

(e) Protection of Certificateholders' Rights. Except as
authorized by this Agreement and the applicable Supplement, the Servicer will
take no action which would impair the rights of Certificateholders in any
Receivable or Trust Asset.

(f) Deposits to Concentration Account or any Series Account.
The Servicer will not deposit or otherwise credit, or cause to be so deposited
or credited, or consent or fail to object to any such deposit or credit, to the
Concentration Account or any Series Account cash or cash proceeds other than
Collections.

(g) Receivables Not To Be Evidenced by Promissory Notes. The
Servicer will take no action to cause any Receivable to be evidenced by any
"instrument" (as defined in the UCC of the State the law of which governs the
perfection of the interest in such Receivable created hereunder), except in
connection with its enforcement, in which event the Transferor shall deliver
such instrument to the Trustee as soon as reasonably practicable but in no
event more than three Business Days after execution thereof.

(h) Reporting Requirements. The Servicer will furnish to the
Trustee:

(i) as soon as possible and in any event (A) within
three Business Days after becoming aware of the occurrence of each
Servicer Default, each commencement of a Partial Amortization Period
or Cure Period, and each event which, with the giving of notice or
lapse of time or both, would constitute a Servicer Default, the
statement of the chief financial officer or chief accounting officer
setting forth details of such Servicer Default or commencement or
event and the action which the Servicer has taken and proposes to take
with respect thereto, and (B) within five Business Days after the
occurrence thereof, notice of any other event, development or
information which is reasonably likely to materially adversely affect
the ability of the Servicer to perform its obligations under this
Agreement; and

(ii) promptly, from time to time, such other
information, documents, records or reports respecting the Receivables,
the other Trust Assets or the condition or

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operations, financial or otherwise, of the Servicer as the Trustee may
from time to time reasonably request.

The Servicer shall provide to the Trustee access to the
documentation regarding the Receivables in such cases where the Trustee is
required in connection with the enforcement of the rights of Certificateholders
or by applicable statutes or regulations to review such documentation, such
access being afforded without charge but only (i) upon reasonable request, (ii)
during normal business hours, (iii) subject to the Servicer's normal security
and confidentiality procedures and (iv) at reasonably accessible offices in the
continental United States designated by the Servicer.

(i) Filing of Continuation Statements. The Servicer shall
prepare and file such continuation statements and any other documents
reasonably requested by the Trustee, Transferor or any of the
Certificateholders or which may be required by law to fully preserve and
protect the interest of the Trustee, Transferor or any of the
Certificateholders hereunder in and to the Receivables.

(j) Change in its Credit Policy Manual. The Servicer
shall comply with and perform its servicing obligations with respect to the
Receivables in accordance with the Credit Policy Manual, except insofar as any
failure to so comply or perform would not adversely affect the
Certificateholders. Subject to compliance with all Requirements of Law, the
Transferor or the Servicer, as applicable, may change the terms and provisions
of the Credit Policy Manual only if (i) with respect to a material change of
collection policies, the Rating Agency Condition is satisfied with respect
thereto and (ii) with respect to a material change of collection procedures, no
adverse effect on any Series of Certificate would result.

(k) Change in Corporate Name. The Servicer will not (i)
(if the Servicer is Carolina Freight) make any change to its company name or
principal place of business or use any tradenames, fictitious names, assumed
names or "doing business as" names unless, prior to the effective date of any
such name change, change in principal place of business, or use, the Servicer
delivers to the Trustee such financing statements (Forms UCC-l and UCC-3)
executed by the Servicer which the Trustee may reasonably request to reflect
such name change or use, together with such other documents and instruments
that the Trustee may reasonably request in connection therewith or (ii) change
its jurisdiction of incorporation unless the Trustee shall have received from
the Servicer (A) written notice of such change at least 30 days prior to the
effective date thereof, and (B) prior to the effective date thereof, if
requested by the Trustee, an

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Opinion of Counsel, in form and substance reasonably satisfactory to the
Trustee, as to such incorporation and the Servicer's valid existence and good
standing and as to the matters referred to in the first sentence of Section
2.04(a).

(l) Credit and Collection Policies. The Servicer will
comply in all material respects with the Credit Policy Manual in regard to each
Receivable.

(m) Receivables Purchase Agreement. The Servicer will at
its expense timely perform and comply in all material respects with all
provisions, covenants and other promises required to be observed by it under
the Receivables Purchase Agreement, maintain the Receivables Purchase Agreement
in full force and effect, enforce the Receivables Purchase Agreement in
accordance with its terms, and make to any party to the Receivables Purchase
Agreement, upon the Trustee's request, such reasonable demands and requests for
information and reports or for action as the Servicer is entitled to make
thereunder.

(n) The Servicer will notify the Obligor on each
Receivable purchased by the Trust after the Closing Date to make payments on
such Receivable to one of the Carolina Freight Collection Accounts.

SECTION 3.05. Reports and Records for the Trustee. (a)
Daily Records. On each Business Day, the Servicer shall make or cause to be
made available at the office of the Servicer for inspection by the Trustee, any
Enhancement Provider and each Investor Certificateholder upon request a record
setting forth (i) the Collections in respect of the Receivables processed by
the Servicer on the immediately preceding Business Day, (ii) the amount of
Eligible Receivables as of the close of business on the immediately preceding
Business Day and (iii) the Floating Allocation Percentage for each Series on
the immediately preceding Business Day.

(b) Determination Date Certificate. On or before each
Determination Date with respect to each outstanding Series, the Servicer shall
deliver to the Rating Agency and the Trustee and the Trustee shall deliver to
each Investor Certificateholder a Determination Date Certificate for such
Determination Date substantially in the form set forth in the related
Supplement.

(c) Servicing Information. For so long as Carolina
Freight is the Servicer, the Servicer shall deliver to the Trustee at least
once in every month (which will be in electronic format, if available) a copy
of the Servicer's records with respect to the servicing of the Receivables;
provided, that if the rating of the subordinated debt of Carolina Freight by
S&P

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falls below B+, the Servicer shall deliver such servicing records to the
Trustee at least once in every week.

SECTION 3.06. Annual Certificate of Servicer. On or before
March 31 of each calendar year, beginning with March 31, 1994, the Servicer
shall deliver to the Trustee, the Rating Agency and each Enhancement Provider
an Officer's Certificate, executed by the chief financial officer of the
Servicer, substantially in the form of Exhibit B hereto. A copy of each such
certificate will be sent to each Investor Certificateholder by the Trustee.

SECTION 3.07. Annual Servicing Report of Independent Public
Accountants. (a) On or before March 31 of each calendar year, beginning with
March 31, 1994, the Servicer shall cause a firm of Independent Public
Accountants (who may also render other services to the Servicer or the
Transferor) to furnish a report (addressed to the Trustee) to the Trustee, the
Servicer, the Rating Agency and each Enhancement Provider substantially to the
effect that (i) such accountants have examined certain documents and records
relating to the servicing of Receivables under this Agreement, compared the
information contained in the Servicer's certificates delivered pursuant to
Section 3.05(b) during the period covered by such report with such documents
and records and that, on the basis of such examination, and subject to such
limitations and qualifications as may be reasonably set forth in such report,
such accountants are of the opinion that the servicing has been conducted
substantially in compliance with the terms and conditions as set forth in
Articles III and IV of this Agreement, except for such exceptions as they
believe to be immaterial and such other exceptions as shall be set forth in
such statement and (ii) such accountants have compared the mathematical
calculations of each amount set forth in the Servicer's certificates delivered
pursuant to Section 3.05(b) during the period covered by such report with the
Servicer's computer reports which were the source of such amounts and that on
the basis of such comparison, such accountants are of the opinion that such
amounts are in agreement, except for such exceptions as they believe to be
immaterial and such other exceptions as shall be set forth in such statement.
The Trustee will send a copy of each such report to each Investor
Certificateholder.

(b) As soon as practicable and in any event within 120 days after
the close of each of its fiscal years, each of the Servicer and the Transferor
shall deliver to the Rating Agency their annual audited financial statements
(including balance sheets as of the end of such period, related revenue and
expense statements, and a statement of cash flows) certified by

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Independent Public Accountants and prepared in accordance with generally
accepted accounting principles.

SECTION 3.08. Tax and Usury Treatment. The Transferor has
entered into this Agreement, and the Investor Certificates have been (or will
be) issued to and acquired by the Investor Certificateholders, with the
intention that, for federal, state, foreign and local income and franchise tax
and usury law purposes, the Investor Certificates will be indebtedness of the
Transferor (or, if so provided in a Supplement, as an interest in a
partnership) secured by the Receivables. The Transferor, by entering into this
Agreement, and each Certificateholder, by the acceptance of its Certificate,
agree to treat the Certificates for purposes of federal, state and local income
and franchise taxes and for any other tax imposed on or measured by income and
usury law purposes as indebtedness of the Transferor. In accordance with the
foregoing, the Transferor agrees that it will report its income for such
federal, state, foreign and local income or franchise taxes, or for purposes of
any other taxes on or measured by income, on the basis that it is the owner of
the Receivables. Furthermore the Trustee hereby agrees to treat the Trust as a
security device only, and shall not file tax returns or obtain an employer
identification number on behalf of the Trust.

SECTION 3.09. Notices to Carolina Freight. In the event that
Carolina Freight is no longer acting as Servicer, any Successor Servicer shall
deliver or make available to Carolina Freight and the Transferor each
certificate and report required to be delivered thereafter pursuant to Sections
3.05(b), 3.06 and 3.07.

SECTION 3.10. Adjustments. If the Servicer makes a mistake
with respect to the amount of any Collection and deposits or pays an amount
that is less than or more than the actual amount of such Collection, the
Servicer shall appropriately adjust the amount subsequently deposited into the
Trustee's Account or Transferor's Account or paid to reflect such mistake and
send written notice thereof to the Trustee. Any Receivable in respect of which
a dishonored check is received shall be deemed not to have been paid.

SECTION 3.11. Securities and Exchange Commission Filings.
For so long as Carolina Freight is the Servicer, the Servicer shall deliver to
the Trustee copies of each report of the Servicer filed with the Securities and
Exchange Commission on Forms 10-K and 10-Q promptly after any such filing has
been made.

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ARTICLE IV

RIGHTS OF CERTIFICATEHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS

SECTION 4.01. Rights of Certificateholders. (a) The
Investor Certificates shall represent fractional undivided beneficial interests
in the Trust (with respect to each Series, the "Certificateholders' Interest"),
which, shall consist of the right to receive, to the extent necessary to make
the required payments with respect to the Investor Certificates of such Series
at the times and in the amounts specified in the related Supplement, the
portion of Collections allocable to Investor Certificateholders of such Series
pursuant to this Agreement and the related Supplement from funds on deposit in
the Concentration Account allocable to Certificateholders of such Series and
funds on deposit in any related Series Account and funds available pursuant to
any related Enhancement (collectively with respect to all Series, the
"Aggregate Certificateholders' Interest"), it being understood that the
Investor Certificates of any Series or Class shall not represent any interest
in any Series Account or Enhancement for the benefit of any other Series or
Class. The Transferor Certificate shall represent the fractional undivided
beneficial interest in the remainder of the Trust Assets not allocated pursuant
to this Agreement or any Supplement to the Aggregate Certificateholders'
Interest, including the right to receive Collections with respect to the
Receivables and other amounts at the times and in the amounts specified in this
Agreement or in any Supplement to be paid to the Holder of the Transferor
Certificate (the "Transferor Interest"); provided, however, that the Transferor
Certificate shall not represent any interest in the Concentration Account, any
Series Account or any Enhancement, except as specifically provided in this
Agreement or any Supplement.

(b) The Floating Allocation Percentage for each Series, which
is the percentage that determines the portion of the Aggregate
Certificateholders' Interest allocable to such Series, and the Transferor
Percentage, which is the percentage that determines the Transferor Interest,
shall be initially computed by the Servicer as of the opening of business of
the Servicer on the Closing Date. Thereafter until the commencement of the
Amortization Period or Partial Amortization Period, the Floating Allocation
Percentage for each Series and the Transferor Percentage, and through the
recomputations thereof the Certificateholders' Interest for each Series and the
Transferor Interest, shall be automatically recomputed by the Servicer as of
the close of business of the Servicer on each Business Day. Each of the
Certificateholders' Interests, the Floating Allocation Percentage for each
Series, the Transferor Interest and the

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Transferor Percentage (i) shall remain constant from the time as of which any
such computation or recomputation is made until the time as of which the next
such recomputation, if any, shall be made and (ii) as computed as of the close
of business of the Servicer on the Business Day immediately preceding the
commencement of the Amortization Period or Partial Amortization Period, shall
remain constant at all times during the Amortization Period or a Partial
Amortization Period.

SECTION 4.02. Establishment of Carolina Freight Collection
Accounts and Concentration Account. (a) On or prior to the Closing Date, the
Servicer, for the benefit of the Certificateholders, shall establish and
maintain or cause to be established and maintained in the name of the Trustee,
on behalf of the Trust, with an Eligible Institution a segregated trust
account accessible by the Trustee and, subject to the limitations set forth in
this Section 4.02, the Servicer (such account being the "Concentration Account"
and such institution holding such account being the "Concentration Account
Bank"), such account bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Certificateholders. The
Trustee shall possess all right, title and interest in and to all funds from
time to time on deposit in the Concentration Account and in all proceeds
thereof. The Concentration Account shall be under the sole dominion and
control of the Trustee for the benefit of the Certificateholders; provided,
however, that the Concentration Account shall be accessible by the Servicer for
the purpose of making deposits from the Carolina Freight Collection Accounts
and for the purpose of depositing to the Trustee's Account and the Transferor's
Account pursuant to the applicable Supplement the Investor Collections and the
Transferor Collections, respectively, from time to time. Except as expressly
provided in this Agreement, the Servicer agrees that it shall have no right of
setoff or banker's lien against, and no right to otherwise deduct from, any
funds held in the Concentration Account for any amount owed to it by the
Trustee, the Trust or any Certificateholder. The Servicer shall deposit, or
cause to be deposited, Collections into the Concentration Account by the close
of business on the day of receipt thereof in a Carolina Freight Collection
Account. Carolina Freight will, and will cause the Originating Subsidiaries to
deposit any Collections received by any of them into the Concentration Account
within three Business Days following the Business Day on which such Collections
are so received or, if such day is not a Business Day, the Business Day
following such day. Notwithstanding the foregoing, if and to the extent that
funds that are not Collections are deposited into the Concentration Account,
the Servicer may direct the Trustee to withdraw such funds from the
Concentration Account.

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If, at any time, the institution holding the Concentration
Account ceases to be an Eligible Institution, the Servicer, upon actual
knowledge thereof, for the benefit of the Certificateholders, shall within 30
Business Days (i) establish a new Concentration Account meeting the conditions
specified above with an Eligible Institution, (ii) transfer any cash and/or any
investments held therein or with respect thereto to such new Concentration
Account and (iii) in the case of any new Concentration Account, deliver to all
Carolina Freight Collection Account Banks new Carolina Freight Collection
Account Notices (with copies thereof to the Trustee) referring to such new
Concentration Account, and from the date such new Concentration Account is
established, it shall be the "Concentration Account." Pursuant to the
authority granted to the Servicer in Section 3.01, the Servicer shall have the
power to instruct the Trustee to make withdrawals and payments from the
Concentration Account for the purposes of carrying out the Servicer's or the
Trustee's duties specified in this Agreement.

Funds on deposit in the Concentration Account or, in the case
of funds on deposit on any Deposit Date or Distribution Date, funds required
pursuant to the applicable Supplement to be deposited to the Trustee's Account
or the Transferor's Account on such date, shall at the direction of the
Servicer be invested by the Trustee or the Eligible Institution maintaining
such accounts in Eligible Investments as instructed by the Servicer in writing
(which may be a standing instruction) (or if not so instructed, then invested
by the Trustee or the Eligible Institution maintaining such accounts in any
Eligible Investments listed in clause (a) of the definition of Eligible
Investment in Section 1.01). All such Eligible Investments shall be held by
the Trustee or the Eligible Institution maintaining such accounts for the
benefit of the Certificateholders. Such funds shall be invested in Eligible
Investments that will mature so that such funds will be available in amounts
sufficient for the Servicer to make each distributions required under the
applicable Supplement on the Distribution Date with respect to such Collection
Period. Funds deposited in the Concentration Account on a Determination Date
with respect to the next following Distribution Date are not required to be
invested overnight. On each Distribution Date, all interest and other
investment earnings (net of losses and investment expenses) on funds on deposit
in the Concentration Account, to the extent such investment income is not
needed to pay the Certificateholders on such Distribution Date, shall be paid
to the Transferor, except as otherwise specified in any Supplement. The
Trustee is hereby authorized, unless otherwise directed by the Servicer, to
effect transactions in Eligible Investments through a capital markets affiliate
of the Trustee.

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(b) On or prior to the Closing Date, the Servicer, for the
benefit of the Certificateholders, shall establish and maintain or cause to be
established and maintained in the name of the Trustee, on behalf of the Trust,
with an Eligible Institution segregated accounts accessible by the Trustee and,
the Servicer, subject to the limitations set forth in this Section 4.02 (each
such account, a "Carolina Freight Collection Account") to which Collections,
other than certain Collections remitted directly to Carolina Freight or one of
the Originating Subsidiaries and subject to all Requirements of Law, are to be
remitted directly by Obligors. The Carolina Freight Collection Accounts shall
be under the sole dominion and control of the Trustee for the benefit of the
Certificateholders; provided, however, that each Carolina Freight Collection
Account shall be accessible by the Servicer for the purpose of transferring
Collections to the Concentration Account in the manner set forth in Section
4.02(a). The name, location and account number of each Carolina Freight
Collection Account is attached to this Agreement on Schedule I attached hereto.
Each Carolina Freight Collection Account shall be maintained with documentation
and instructions in form and substance satisfactory to the Trustee. Such
documentation shall provide, among other things, that available amounts shall
be promptly transferred to the Concentration Account. Carolina Freight shall
not without the prior written consent of the Trustee (i) change any Carolina
Freight Collection Account, or establish any additional Carolina Freight
Collection Account or (ii) change such instructions or documentation at any
time so long as the Trustee has any interest in the Receivables.

(c) Carolina Freight hereby agrees and acknowledges that (i)
Carolina Freight has executed and delivered to the Trustee a letter and executed
acknowledgement thereto substantially in the form of Exhibit C hereto,
addressed to each banking institution with which the Carolina Freight
Collection Account is maintained (each, a "Carolina Freight Collection Account
Letter") and (ii) Carolina Freight shall execute and deliver a substantially
similar Carolina Freight Collection Account Letter prior to the establishment
by Carolina Freight of any additional or alternative Carolina Freight
Collection Account. Carolina Freight hereby agrees, and the Trustee hereby
acknowledges, that such letter transfers all right, title and interest in all
monies, securities and instruments in each Carolina Freight Collection Account
to the Trustee. Carolina Freight agrees to execute such further documents and
take such other actions as may be reasonably requested by the Trustee in order
to effect such transfer.

SECTION 4.03. Allocation of Collections. Collections will be
allocated to each Series from and after the related Series Cut-Off Date as
specified in the related Supplement, and amounts so allocated to any Series
will not, except as specified

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in the related Supplement, be available to the Investor Certificateholders of
any other Series. Allocations thereof between the Certificateholders' Interest
and the Transferor Interest, among the Series or to any Enhancement Agreement
and among the Classes in any Series or to any Enhancement Provider shall be set
forth in the related Supplement or Supplements.

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ARTICLE V

DISTRIBUTIONS AND REPORTS TO CERTIFICATEHOLDERS

Distributions shall be made to, and reports shall be provided
to, Certificateholders as set forth in the applicable Supplement.

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ARTICLE VI

THE CERTIFICATES

SECTION 6.01. The Certificates. The Investor Certificates of
any Series or Class shall be issued in fully registered form and shall be in
substantially the form of Exhibit A to the applicable Supplement and shall upon
issue be executed and delivered by the Transferor to the Trustee for
authentication and redelivery as provided in Section 6.02. The Investor
Certificates shall be issued in minimum denominations of $250,000 and in
integral multiples of $1,000 in excess thereof (except that one Certificate may
be issued in a denomination that includes any residual amount), and shall be
issued upon initial issuance as one or more Investor Certificates in an
aggregate original principal amount equal to the Initial Aggregate Invested
Amount. The Transferor Certificate shall be a single certificate,
substantially in the form of Exhibit A hereto, and shall represent the entire
Transferor Interest. Each Certificate shall be executed by manual or facsimile
signature on behalf of the Transferor by the President, any Vice President, the
Chief Administrative and Credit Officer or the Secretary of the Transferor, or
by any other officer or assistant officer duly authorized to execute such
Certificate on behalf of the Transferor. Certificates bearing the manual or
facsimile signature of the individual who was, at the time when such signature
was affixed, authorized to sign on behalf of the Transferor shall not be
rendered invalid, notwithstanding that such individual ceased to be so
authorized prior to the authentication and delivery of such Certificates or
does not hold such office at the date of such Certificates. No Certificates
shall be entitled to any benefit under this Agreement or the applicable
Supplement or be valid for any purpose, unless there appears on such
Certificate a certificate of authentication in substantially the form provided
for herein executed by or on behalf of the Trustee by the manual signature of a
duly authorized signatory, and such certificate upon any Certificate shall be
conclusive evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. All Certificates shall be dated the
date of their authentication.

SECTION 6.02. Authentication of Certificates. The Trustee
shall authenticate and deliver the Investor Certificates of each Series to, and
upon the written order of, the Transferor against payment to the Transferor of
the purchase price therefor. The Trustee shall authenticate and deliver the
Transferor Certificate to the Transferor simultaneously with its delivery of
the first Series of Investor Certificates to be issued hereunder. The
Certificates of any Series or Class shall be duly authenticated by or on behalf
of the Trustee, in authorized denominations

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equal to (in the aggregate) in the case of the Investor Certificates, the
Initial Aggregate Invested Amount of such Class, and, in the case of the
Transferor Certificate, in the denomination equal to the Transferor's Interest
from time to time, and together evidencing the entire ownership of the Trust.

SECTION 6.03. Registration of Transfer and Exchange of
Certificates. (a) The Trustee shall cause to be kept at its corporate trust
operations office in Chicago, Illinois, such office or agency to be maintained
in accordance with the provisions of Section 11.16 a register (the "Certificate
Register") in which, subject to such reasonable regulations as it may
prescribe, a transfer agent and registrar (which may be the Trustee) (the
"Transfer Agent and Registrar") shall provide for the registration of the
Certificates and of transfers and exchanges of the Certificates as herein
provided. The Transfer Agent and Registrar shall initially be the Trustee, and
any co-transfer agent and co-registrar chosen by the Trustee and acceptable to
the Servicer. Any reference in this Agreement to the Transfer Agent and
Registrar shall include any co-transfer agent and co-registrar unless the
context requires otherwise.

The Trustee shall be permitted to resign as Transfer Agent and
Registrar upon 30 days' (60 days' during an Amortization Period) written notice
to the Transferor and the Servicer; provided, however, that such resignation
shall not be effective and the Trustee shall continue to perform its duties as
Transfer Agent and Registrar until the Servicer has appointed a successor
Transfer Agent and Registrar reasonably acceptable to the Transferor.

Upon surrender for registration of transfer of any Investor
Certificate at any office or agency of the Transfer Agent and Registrar
maintained for such purpose, the Transferor shall execute, and the Trustee
shall authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Investor Certificates (of the same Series and
Class) in authorized denominations of like aggregate Undivided Fractional
Interests in the Aggregate Certificateholders' Interest.

At the option of an Investor Certificateholder, Investor
Certificates may be exchanged for other Investor Certificates (of the same
Series and Class) of authorized denominations of like aggregate Undivided
Fractional Interests in the Certificateholders' Interest, upon surrender of the
Investor Certificates to be exchanged at any such office or agency. Whenever
any Investor Certificates are so surrendered for exchange, the Transferor shall
execute, and the Trustee shall authenticate and deliver, the Investor
Certificates which the Certificateholder making the exchange is entitled to
receive.

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Every Investor Certificate presented or surrendered for
registration of transfer or exchange shall be accompanied by a written
instrument of transfer in a form satisfactory to the Trustee or the Transfer
Agent and Registrar duly executed by the Certificateholder thereof or his
attorney-in-fact duly authorized in writing. Each Holder must satisfy the
transfer restrictions set forth in the Certificates.

Each Investor Certificate shall be registered at all times as
herein provided, and any transfer or exchange of such Investor Certificate will
be valid for purposes hereunder only upon registration of such transfer or
exchange by the Trustee or the Transfer Agent and Registrar as provided herein.
Payments on any Distribution Date shall be made to Holders of record on the
immediately preceding Record Date.

No service charge shall be made for any registration of
transfer or exchange of Investor Certificates, but the Transfer Agent and
Registrar or any co-transfer agent and co-registrar may require payment of a
sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Investor Certificates.

All Investor Certificates surrendered for registration of
transfer or exchange, or for payment, shall be cancelled and disposed of in a
manner satisfactory to the Trustee.

(b) The Transfer Agent and Registrar will maintain at its
expense in the Borough of Manhattan, The City of New York, an office or offices
or agency or agencies where Investor Certificates may be surrendered for
registration of transfer or exchange.

(c)(i) Notwithstanding any other provision of this Section
6.03, no registration of transfer of any Investor Certificate shall be made
unless the transferor or the transferee shall deliver, at its expense, to the
Transferor, the Servicer and the Trustee either (A) a representation letter,
substantially in the form attached as Exhibit D to this Pooling and Servicing
Agreement stating whether such transferee is a "benefit plan investor" as
defined in Section 2510.3-101(f)(2) of the Labor Regulations promulgated under
ERISA, or (B) if such transferee is an insurance company licensed to issue
contracts of insurance in any state, the information described in (c)(ii)
below. The Transfer Agent and Registrar will maintain, as a part of the
Certificate Register, a list of all Investor Certificates (or the portion of
any thereof) that are held by benefit plan investors on the basis of any
representation provided pursuant to the foregoing clause (A) or on the basis of
any information provided to the Transfer Agent and Registrar pursuant to the
second

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sentence of clause (ii) below. The Transfer Agent and Registrar will not
register the transfer of any Investor Certificate if, immediately after the
registration of transfer of such Investor Certificate, 25% or more of the
outstanding principal balance of the Investor Certificates of all Series are
held by benefit plan investors. Notwithstanding anything else to the contrary
herein, any purported transfer of an Investor Certificate to a benefit plan
investor in violation of the preceding sentence shall be void and of no effect.

(ii) In the event that such transferee is an insurance company
licensed to issue contracts of insurance in any state, such transferee shall
provide to the Transferor, the Servicer and the Trustee, in lieu of such
representation letter described in (c)(i)(A) above, information in writing
sufficient for the Transferor to determine that such transferee will purchase
Investor Certificates with funds that either (A) will not, for purposes of
ERISA, be classified as "plan assets," or (B) if such funds are composed (in
whole or in part) of plan assets, what proportion or dollar value of such funds
may be deemed to be plan assets. The Transferor shall analyze such information
and shall inform the Transfer Agent and Registrar as to the proportion of such
Investor Certificates that will thereby be deemed to be acquired by benefit
plan investors for purpose of the 25% determination described above. Any
determination made by the Transferor pursuant to this clause (ii) shall be made
on a reasonable basis and in good faith and on a basis consistent with that
used in making such determination with respect to the initial
Certificateholders.

SECTION 6.04. Mutilated, Destroyed, Lost or Stolen
Certificates. If (a) any mutilated Certificate is surrendered to the Transfer
Agent and Registrar, or the Transfer Agent and Registrar receives evidence to
its satisfaction of the destruction, loss or theft of any Certificate and (b)
there is delivered to the Transfer Agent and Registrar, the Trustee, the
Transferor and Carolina Freight such indemnity (provided, that a letter of
indemnity from (i) an insurance company or (ii) an institutional investor of
investment grade credit rating shall satisfy such requirement) as may be
required by them to save each of them harmless, then, in the absence of notice
to the Trustee that such Certificate has been acquired by a bona fide
purchaser, the Transferor shall execute and the Trustee shall authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of like tenor and (in the case of any new
Investor Certificate) Undivided Fractional Interest. In connection with the
issuance of any new Certificate under this Section 6.04, the Trustee or the
Transfer Agent and Registrar may require the payment by the Certificateholder
of a sum sufficient to cover any tax or other

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governmental charge that may be imposed in relation thereto. Any duplicate
Certificate issued pursuant to this Section 6.04 shall constitute complete and
indefeasible evidence of ownership in the Trust, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time.

SECTION 6.05. Persons Deemed Owners. At all times prior to
due presentation of a Certificate for registration of transfer, the Trustee,
the Paying Agent, the Transfer Agent and Registrar and any agent of any of them
shall treat the Person in whose name any Certificate is registered as the owner
of such Certificate for the purpose of receiving distributions pursuant to the
terms of the applicable Supplement and for all other purposes whatsoever and
neither the Trustee, the Paying Agent, the Transfer Agent and Registrar nor any
agent of any of them shall be affected by any notice to the contrary.
Notwithstanding the foregoing, in determining whether the Holders of the
requisite Undivided Fractional Interests have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Certificates
owned by the Transferor, the Servicer or any Affiliate thereof shall be
disregarded and deemed not to be outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request,
demand, authorization, direction, notice, consent or waiver, only Certificates
which the Trustee knows to be so owned shall be so disregarded. Certificates
so owned which have been pledged in good faith shall not be disregarded and may
be regarded as outstanding if the pledgee establishes to the satisfaction of
the Trustee the pledgee's right so to act with respect to such Certificates and
that the pledgee is not the Transferor, the Servicer or an Affiliate thereof.

SECTION 6.06. Appointment of Paying Agent. The Paying Agent
shall make distributions to Investor Certificateholders, the Servicer and the
Trustee from the Trustee's Account pursuant to the applicable Supplement and
shall report the amounts of such distributions to the Trustee. Any Paying
Agent shall have the power, revocable by the Trustee, to withdraw funds from
the Trustee's Account for the purpose of making the distributions referred to
above. The Trustee may revoke such power and remove the Paying Agent if the
Trustee determines in its sole discretion that the Paying Agent shall have
failed to perform its obligations under this Agreement in any material respect.
The Paying Agent shall initially be the Trustee, and any co-paying agent chosen
by the Trustee and acceptable to the Servicer. The Trustee shall be permitted
to resign as Paying Agent upon 30 days' written notice to the Servicer. In the
event that the Trustee shall no longer be the Paying Agent, the Servicer shall
appoint a successor to act as Paying Agent (which shall be a bank or trust
company). The Servicer shall cause such successor

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Paying Agent or any additional Paying Agent appointed by the Servicer to
execute and deliver to the Trustee an instrument in which such successor Paying
Agent or additional Paying Agent shall agree with the Trustee that, as Paying
Agent, such successor Paying Agent or additional Paying Agent will hold all
sums, if any, held by it for payment to the Certificateholders, the Servicer or
the Trustee in trust for the benefit of the Certificateholders entitled
thereto, the Servicer or the Trustee, respectively, until such sums shall be
paid to such Certificateholders, the Servicer or the Trustee, respectively.
The Paying Agent shall return all unclaimed funds to the Trustee and upon
removal of a Paying Agent such Paying Agent shall also return all funds in its
possession to the Trustee. The provisions of Sections 11.01, 11.02, 11.03 and
11.05 shall apply to the Trustee also in its role as Paying Agent, for so long
as the Trustee shall act as Paying Agent. Any reference in this Agreement to
the Paying Agent shall include any co-paying agent unless the context requires
otherwise.

SECTION 6.07. Access to List of Certificateholders' Names and
Addresses. The Trustee will furnish or cause to be furnished by the Transfer
Agent and Registrar to the Servicer, any Investor Certificateholder, the
Transferor or the Paying Agent, within five Business Days after receipt by the
Trustee of a written request therefor from the Servicer, the Transferor, any
Investor Certificateholder or the Paying Agent, respectively, a list of the
names and addresses of the Certificateholders.

Every Certificateholder, by receiving and holding a
Certificate, agrees that neither the Trustee, the Transfer Agent and Registrar,
the Transferor, the Servicer, Carolina Freight, nor any of their respective
agents, shall be held accountable by reason of the disclosure of any such
information as to the names and addresses of the Certificateholders hereunder,
regardless of the sources from which such information was derived.

SECTION 6.08. Authenticating Agent. (a) The Trustee may
appoint one or more authenticating agents with respect to the Certificates
which shall be authorized to act on behalf of the Trustee in authenticating the
Certificates in connection with the issuance, delivery, registration of
transfer, exchange or repayment of the Certificates. Whenever reference is
made in this Agreement to the authentication of Certificates by the Trustee or
the Trustee's certificate of authentication, such reference shall be deemed to
include authentication on behalf of the Trustee by an authenticating agent and
a certificate of authentication executed on behalf of the Trustee by an
authenticating agent. Each authenticating agent must be acceptable to the
Transferor and the Servicer.

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(b) Any institution succeeding to the corporate agency
business of an authenticating agent shall continue to be an authenticating
agent without the execution or filing of any power or any further act on the
part of the Trustee or such authenticating agent.

(c) An authenticating agent may at any time resign by giving
written notice of resignation to the Trustee and to the Transferor. The
Trustee may at any time terminate the agency of an authenticating agent by
giving notice of termination to such authenticating agent and to the
Transferor. Upon receiving such a notice of resignation or upon such a
termination, or in case at any time an authenticating agent shall cease to be
acceptable to the Trustee or the Transferor, the Trustee may promptly appoint a
successor authenticating agent. Any successor authenticating agent upon
acceptance of its appointment hereunder shall become vested with all the
rights, powers and duties of its predecessor hereunder, with like effect as if
originally named as an authenticating agent. No successor authenticating agent
shall be appointed unless acceptable to the Trustee and the Transferor.

(d) The Transferor agrees to pay to each authenticating agent
from time to time reasonable compensation for its services under this Section
6.08.

(e) The provisions of Sections 11.01, 11.02 and 11.03 shall
be applicable to any authenticating agent.

(f) Pursuant to an appointment made under this Section 6.08,
the Certificates may have endorsed thereon, in lieu of or in addition to the
Trustee's certificate of authentication, an alternate certificate of
authentication in substantially the following form:

This is one of the Certificates described in the Pooling and
Servicing Agreement.

- ----------------------
- ----------------------
as Authenticating Agent
for the Trustee

By:
-------------------
Authorized Officer

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SECTION 6.09. New Issuances. (a) The Transferor may from
time to time direct the Trustee, on behalf of the Trust, to issue one or more
new Series of Investor Certificates pursuant to a Supplement. The Investor
Certificates of all outstanding Series shall be equally and ratably entitled as
provided herein to the benefits of this Agreement without preference, priority
or distinction, all in accordance with the terms and provisions of this
Agreement and the applicable Supplement except, with respect to any Series or
Class, as provided in the related Supplement.

(b) On or before the Series Issuance Date relating to any new
Series, the parties hereto will execute and deliver a Supplement which will
specify the Principal Terms of such new Series. The terms of such Supplement
may modify or amend the terms of this Agreement solely as applied to such new
Series. The obligation of the Trustee to issue the Investor Certificates of
such new Series and to execute and deliver the related Supplement is subject to
the satisfaction of the following conditions:

(i) on or before the tenth Business Day immediately
preceding the Series Issuance Date, the Transferor shall have given
the Trustee, the Servicer, the Rating Agency and any Enhancement
Provider written notice of such issuance and the Series Issuance Date;

(ii) the Transferor shall have delivered to the Trustee
the related Supplement, in form satisfactory to the Trustee, executed
by each party hereto other than the Trustee;

(iii) the Transferor shall have delivered to the Trustee
any related Enhancement Agreement executed by each party hereto other
than the Trustee;

(iv) the Rating Agency shall have notified the
Transferor, the Servicer, the Trustee and any Enhancement Provider in
writing that such issuance will not result in a reduction or
withdrawal of the rating of any outstanding Series or Class with
respect to which it is a Rating Agency;

(v) such issuance will not result in the occurrence
of an Early Amortization Event and the Transferor shall have
delivered to the Trustee and any Enhancement Provider an Officer's
Certificate, dated the Series Issuance Date (upon which the Trustee may
conclusively rely), to the effect that the Transferor reasonably
believes that such issuance will not result in the occurrence of an
Early Amortization Event and is not reasonably expected to result in
the occurrence of an Early Amortization Event at any time in the
future;

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(vi) the Transferor shall have delivered to the Trustee
and any Enhancement Provider an Opinion of Counsel to the effect that
the issuance of the Investor Certificates of such Series (A) has been,
or need not be, registered under the Act and will not result in the
requirement that any other Series of Investor Certificates not
registered under the Act be so registered (unless the Transferor has
elected, in its sole discretion, to register such Certificates), and
(B) will not result in the Trust becoming subject to registration as
an investment company under the Investment Company Act of 1940, as
amended, and (C) will not require this Agreement or the related
Supplement to be qualified under the Trust Indenture Act of 1939, as
amended; and

(vii) the Transferor shall have delivered to the Trustee a
Tax Opinion, dated the Series Issuance Date, with respect to such
issuance.

Upon satisfaction of the above conditions, the Trustee shall execute the
Supplement and the Transferor shall execute and deliver the Investor
Certificates of such Series for authentication and redelivery to or upon the
order of the Transferor. Notwithstanding the provisions of this Section
6.09(b), prior to the execution of any Supplement, the Trustee shall be
entitled to receive and rely upon an Opinion of Counsel stating that the
execution of such Supplement is authorized or permitted by this Agreement and
any Supplement related to any outstanding Series. The Trustee may, but shall
not be obligated to, enter into any such Supplement which affects the Trustee's
own rights, duties or immunities under this Agreement.

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ARTICLE VII

OTHER MATTERS RELATING TO THE TRANSFEROR

SECTION 7.01. Obligations not Assignable. The obligations of
the Transferor hereunder shall not be assignable nor shall any Person succeed
to the obligations of the Transferor hereunder.

SECTION 7.02. Limitations on Liability. None of the
directors, officers, employees or agents of the Transferor, past, present or
future, shall be under any liability to the Trust, the Trustee, the
Certificateholders or any other Person for any action taken or for refraining
from the taking of any action in such capacities pursuant to this Agreement or
for any obligation or covenant under this Agreement; provided, however, that
this provision shall not protect any such Person against any liability which
would otherwise be imposed by reason of willful misconduct or bad faith, in the
performance of such Person's duties or the reckless disregard by such Person of
any of his, her or its obligations and duties hereunder. The Transferor and
any director, officer, employee or agent of the Transferor may rely in good
faith on any document of any kind prima facie properly executed and submitted
by any Person (other than the Transferor or any Affiliate thereof) respecting
any matters arising hereunder.

SECTION 7.03. Indemnification of the Trustee, the Trust and
the Investor Certificateholders. Without limiting any other rights which the
Trustee, the Trust or any Investor Certificateholder (each, an "Indemnified
Party") may have hereunder or under applicable law, the Transferor hereby
agrees to indemnify each Indemnified Party from and against any and all claims,
losses and liabilities (including reasonable attorneys' fees) (all of the
foregoing being collectively referred to as "Indemnified Amounts") arising out
of or resulting from this Agreement, the activities of the Trust or the Trustee
in connection herewith, the Transferor's use of proceeds of Transfers of
Receivables or reinvestments of Collections, the interest conveyed hereunder in
Trust Assets, or in respect of any Receivable or the Receivables Purchase
Agreement, excluding, however, (a) Indemnified Amounts to the extent resulting
from willful misconduct, bad faith, gross negligence, the reckless disregard by
such Indemnified Party of any of his, her or its obligations and duties or
breach of fiduciary duty on the part of such Indemnified Party, (b) recourse
for uncollectible Receivables or (c) any income or franchise taxes (or any
interest or penalties with respect thereto) incurred by such Indemnified Party
arising out of or as a result of this Agreement or the interest conveyed
hereunder in Trust Assets or in respect of any

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Receivable or the Receivables Purchase Agreement. Without limiting or being
limited by the foregoing (other than clauses (a), (b) and (c)), the Transferor
shall pay on demand to each Indemnified Party any and all amounts necessary to
indemnify such Indemnified Party from and against any and all Indemnified
Amounts relating to or resulting from:

(i) reliance on any representation or warranty or
statement made or deemed made by the Transferor under or in connection
with this Agreement or the Receivables Purchase Agreement which shall
have been incorrect in any material respect when made;

(ii) the failure by the Transferor to comply with this
Agreement or the Receivables Purchase Agreement, or the failure by the
Transferor to comply with any applicable law, rule or regulation with
respect to any Receivable or the related invoice or the Receivables
Purchase Agreement, or the nonconformity of any Receivable or the
related invoice or the Receivables Purchase Agreement with any such
applicable law, rule or regulation;

(iii) the failure to vest in the Investor
Certificateholders an undivided fractional beneficial interest to the
extent of their respective Undivided Fractional Interests, in the
Receivables and the other Trust Assets, free and clear of any Lien;

(iv) the failure to have filed, or any delay in filing,
financing statements or other similar instruments or documents under
the UCC of any applicable jurisdiction or other applicable laws with
respect to any Receivable or any other Trust Asset, whether at the
time of Transfer thereof or reinvestment of the proceeds thereof or at
any subsequent time;

(v) any investigation, litigation or proceeding
related to this Agreement or any Receivables Purchase Agreement or the
Trust or the use of proceeds of Transfers of Receivables or
reinvestments of proceeds thereof or the ownership of Trust Assets or
in respect of any Receivable or invoice, other than any litigation or
proceeding between Carolina Freight or the Transferor or any Affiliate
thereof, on the one hand, and the Trustee or any Investor
Certificateholder or any Affiliate thereof, on the other hand, in
which Carolina Freight or the Transferor or an Affiliate thereof
prevails in a final non-appealable judgment by a court of competent
jurisdiction;

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(vi) the commingling of Collections of Receivables at any
time with other funds prior to distribution under the applicable
Supplement; or

(vii) any tax (other than any income or franchise tax, or
any interest or penalties with respect thereto) imposed by reason of
ownership of the Receivables or other Trust Assets.

In case any proceeding shall be instituted involving any
person in respect of which indemnity may be sought pursuant to this Section the
Indemnified Party shall promptly notify the Transferor in writing and the
Transferor, upon request of the Indemnified Party, shall retain counsel
reasonably satisfactory to the Indemnified Party to represent the Indemnified
Party and any others the Transferor may designate in such proceeding and shall
pay the reasonable fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any Indemnified Party shall have the right
to retain its own counsel, but the reasonable fees and expenses of such counsel
shall be at the expense of such Indemnified Party unless (i) the Transferor and
the Indemnified Party shall have mutually agreed to the retention of such
counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the Transferor and the Indemnified Party and
representation of both parties by the same counsel would be inappropriate due
to actual or potential differing interests between them. It is understood that
the Transferor shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the reasonable fees and
expenses of more than one separate firm for all such Indemnified Parties.

Indemnification pursuant to this Section shall only be from
assets of the Transferor (and, as a result, any such indemnification may be
payable from any Trust Asset only if, to the extent that, and after, such Trust
Asset shall have been distributed to the Holder of the Transferor Certificate).
The agreement contained in this Section 7.03 shall survive the collection of
all Receivables, the termination of this Agreement and the payment of all
amounts otherwise payable hereunder.

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ARTICLE VIII

OTHER MATTERS RELATING TO THE SERVICER

SECTION 8.01. Liability of the Servicer. The Servicer shall
be liable under this Agreement only to the extent of the obligations
specifically undertaken by the Servicer in its capacity as Servicer.

SECTION 8.02. Merger or Consolidation of, or Assumption of
the Obligations of, the Servicer. The Servicer shall not consolidate with or
merge into any other Person or convey or transfer its properties and assets
substantially as an entirety to any Person unless:

(a) (i) the Person formed by such consolidation or into
which the Servicer is merged or the Person which acquires by conveyance or
transfer the properties and assets of the Servicer substantially as an entirety
shall be, if the Servicer is not the surviving entity, a corporation organized
and existing under the laws of the United States of America or any State or the
District of Columbia, and such corporation shall have expressly assumed, by an
agreement supplemental hereto, executed and delivered to the Trustee, in form
reasonably satisfactory to the Trustee, the performance of every covenant and
obligation of the Servicer hereunder;, (ii) the Servicer shall have delivered
to the Trustee an Officer's Certificate and an Opinion of Counsel each in form
reasonably satisfactory to the Trustee and stating that such consolidation,
merger, conveyance or transfer complies with this Section 8.02 and that all
conditions precedent herein provided for relating to such transaction have been
complied with; and (iii) the Rating Agency Condition shall have been satisfied;
and

(b) if the Servicer is Carolina Freight, all conditions for
such merger or consolidation or conveyance or transfer, as the case may be,
contained in the Receivables Purchase Agreement shall be satisfied; and

(c) the corporation formed by such consolidation or into
which the Servicer is merged or which acquires by conveyance or transfer the
properties and assets of the Servicer substantially as an entirety shall have
all licenses and approvals of Governmental Authorities required to service the
Receivables, except to the extent the failure to have any such license would
not have a material adverse effect on its ability to perform the obligations of
Servicer hereunder.

SECTION 8.03. Limitations on Liability. None of the
directors, officers, employees or agents of the Servicer, past, present or
future, shall be under any liability to the Trust, the

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Trustee, the Certificateholders or any other Person for any action taken or for
refraining from the taking of any action in such capacities pursuant to this
Agreement or for any obligation or covenant under this Agreement, it being
understood that, with respect to the Servicer, that this Agreement and the
obligations created hereunder are solely the corporate obligations of the
Servicer; provided, however, that this provision shall not protect the Servicer
or any such Person against any liability which would otherwise be imposed by
reason of willful misconduct, bad faith, gross negligence or the reckless
disregard by such Person of any of his, her or its obligations and duties. The
Servicer and any director or officer or employee or agent of the Servicer may
rely in good faith on any document of any kind prima facie properly executed
and submitted by any Person (other than the Servicer or any Affiliate thereof)
respecting any matters arising hereunder. The Servicer shall not be under any
obligation to appear in, prosecute or defend any legal action which is not
incidental to its duties as Servicer in accordance with this Agreement and
which in its reasonable judgment may involve it in any material expense or
liability.

SECTION 8.04. Servicer Indemnification. The Servicer shall
indemnify and hold harmless each Indemnified Party from and against Indemnified
Amounts suffered or sustained by reason of any breach by the Servicer of its
representations and warranties or obligations under this Agreement, excluding,
however, Indemnified Amounts to the extent resulting from (i) willful
misconduct, bad faith, gross negligence, the reckless disregard by such
Indemnified Party of any of his, her or its obligations and duties or breach of
fiduciary duty on the part of such Indemnified Party, (ii) recourse for
uncollectible Receivables or (iii) any income or franchise taxes (or any
interest or penalties with respect thereto) incurred by such Indemnified Party
arising out of or as a result of this Agreement or the interest conveyed
hereunder in Trust Assets or in respect of any Receivable or any Contract or
the Receivables Purchase Agreement. Indemnification pursuant to this Section
shall not be payable from the Trust Assets. The agreement contained in this
Section 8.04 shall survive the collection of all Receivables, the termination
of this Agreement and the payment of all amounts otherwise due hereunder.

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proceeding. In any such proceeding, any Indemnified Party shall have the right
to retain its own counsel, but the reasonable fees and expenses of such counsel
shall be at the expense of such Indemnified Party unless (i) the Servicer and
the Indemnified Party shall have mutually agreed to the retention of such
counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the Servicer and the Indemnified Party and
representation of both parties by the same counsel would be inappropriate due
to actual or potential differing interests between them. It is understood that
the Servicer shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the reasonable fees and
expenses of more than one separate firm for all such Indemnified Parties.

SECTION 8.05. The Servicer Not to Resign. The Servicer shall
not resign from the obligations and duties hereby imposed on it except upon
determination that (i) its performance of its duties hereunder is no longer
permissible under applicable law and (ii) there is no reasonable action which
the Servicer could take to make its performance of its duties hereunder
permissible under applicable law. Any determination permitting the resignation
of the Servicer shall be evidenced by an Opinion of Counsel who is not an
employee of the Servicer or any Affiliate of the Servicer with respect to
clause (i) above, delivered to, and in form reasonably satisfactory to, the
Trustee. No resignation shall become effective until the Trustee or a
Successor Servicer shall have assumed the responsibilities and obligations of
the Servicer in accordance with Section 10.02 hereof. If within 60 days of the
date of the determination that the Servicer may no longer act as Servicer
hereunder for any reason the Trustee has not appointed a Successor Servicer,
the Trustee shall serve as Successor Servicer hereunder. Notwithstanding the
foregoing, the Trustee shall, if it is legally unable so to act, petition a
court of competent jurisdiction to appoint any established institution that is
an Eligible Servicer (other than the Trustee) as the Successor Servicer
hereunder.

SECTION 8.06. Examination of Records. The Servicer shall
indicate electronically in its records that the Receivables and other Trust
Assets have been Transferred to the Trustee, on behalf of the Trust, pursuant
to this Agreement for the benefit of the Certificateholders. The Servicer (and
the Transferor) shall, prior to the sale or transfer to a third party of any
receivable held in its custody, examine its records to determine that such
receivable is not a Receivable.

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ARTICLE IX

EARLY AMORTIZATION EVENTS

SECTION 9.01. Early Amortization Events. If any one of the
following events shall occur:

(a) any failure by the Transferor, Carolina Freight or the
Servicer (i) to make any payment, transfer or deposit required to be paid by it
under the terms of this Agreement, or the Receivables Purchase Agreement, on or
before the date occurring three Business Days after the date such payment,
transfer or deposit is required to be made hereunder or thereunder, or (ii) to
observe or perform in any material respect any other covenant or agreement to
be performed by it under this Agreement, or the Receivables Purchase Agreement,
which failure (in the case of this clause (ii)) has a material adverse effect
on the interests of the Certificateholders of any Series and which continues
unremedied for a period of thirty days after the date on which written notice
of such failure, requiring the same to be remedied, shall have been given to
the Transferor, Carolina Freight or such Servicer, as applicable, by the
Trustee or any Enhancement Provider, or to the Transferor, Carolina Freight or
such Servicer, as applicable, and the Trustee by the Holders of Investor
Certificates evidencing not less than 25% of the Aggregate Invested Amount of
any Series; or

(b) (i) any representation, warranty or certification made by
the Transferor, Carolina Freight or the Servicer under or in connection with
this Agreement, or the Receivables Purchase Agreement, or in any certificate or
information delivered pursuant hereto or thereto or in connection herewith or
therewith, shall prove to have been incorrect in any material respect when made
and which continues to be incorrect in any material respect for a period of 30
days (or, with respect to any representations and warranties made under Section
2.04, such longer period as may be agreed to by the Trustee and the Majority in
Interest of any Series that is materially and adversely affected by such
incorrectness) after the date on which notice of such failure, requiring the
same to be remedied, shall have been given to the Transferor by the Trustee or
to the Transferor and the Trustee by an Investor Certificateholder and (ii) as
a result of such incorrectness the interests of the Certificateholders of any
Series are materially and adversely affected; or

(c) any other default shall occur, and shall not be remedied
within the applicable grace period, if any, under the Receivables Purchase
Agreement, or the Receivables Purchase Agreement shall for any reason cease to
be in full force and

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effect or an Early Termination (as defined therein) shall occur; or

(d) an Insolvency Event shall occur with respect to the
Transferor, the Servicer (provided the Servicer is Carolina Freight or any
Affiliate thereof) or the Trust; or

(e) the SEC or other regulatory body reaches a final
determination that the Trust is an "investment company" within the meaning of
the Investment Company Act; or

(f) (i) any purchase of any Receivables by the Transferor
under the Receivables Purchase Agreement shall cease to create a valid sale,
transfer and assignment to the Transferor of all right, title and interest of
Carolina Freight in and to such Receivables and the proceeds thereof; or (ii)
any Transfer of any Receivables on any date shall for any reason cease to
create a valid transfer and assignment to the Trust of all right, title and
interest of the Transferor in and to such Receivables and the proceeds thereof
or, if such Transfer does not constitute such a sale, transfer and assignment,
cease to create a valid and perfected first priority "security interest" (as
defined in the UCC of the jurisdiction the law of which governs the perfection
of the interest in such Receivables created hereunder) in such Receivables and
the proceeds thereof, or (iii) the Investor Certificates delivered hereunder
shall for any reason cease to evidence the transfer to the Investor
Certificateholders of, or the Investor Certificateholders shall otherwise cease
to have, a beneficial interest in a trust owning or having a perfected first
priority security interest in the Receivables and the other Trust Assets now
existing and hereafter arising and the proceeds thereof to the extent of their
respective Undivided Fractional Interests; or

(g) for any Accounting Period, the Default Ratio shall exceed
4.5%, or for any Accounting Period, the Dilution Ratio shall exceed 7.5%, or
for any Accounting Period, the Loss to Liquidation Ratio shall exceed 1.75%, or
for any Accounting Period the Dynamic Loss and Dilution Reserve Percentage
exceeds 30%; or

(h) Carolina Freight or any Person with which Carolina
Freight consolidates or into which Carolina Freight merges, as permitted under
Section 8.02, shall cease to own 100% of the capital stock of the Transferor;
or

(i) a Servicer Default shall have occurred and be continuing,
which Servicer Default shall have a material adverse effect on the interests of
the Certificateholders; or

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(j) the Servicer shall have resigned in accordance with
Section 8.05 above; or

(k) the Trust at any time receives a final determination that
it will be treated as an association taxable as a corporation for federal
income tax purposes; or

(l) the Transferor shall have failed to deposit pro rata to
the Reserve Account of each outstanding Series, within fifteen days following
the commencement of a Cure Period, Cure Funds in an amount equal to the
applicable Partial Amortization Amount and the Transferor has not elected to
commence a Partial Amortization Period;

then, in the case of any event as described in subsection (b), (g), or (j),
either the Trustee (unless otherwise directed by the Majority in Interest of
each affected Series) or by the Majority in Interest of each affected Series,
by notice then given in writing to the Transferor and the Servicer (and to the
Trustee if given by such Investor Certificateholders), may declare (provided
such event shall not have been remedied) that an early amortization event (an
"Early Amortization Event") has occurred as of the date of such notice, and, in
the case of any event other than as described in subsection (b), (g) or (j),
subject to applicable law, an Early Amortization Event shall occur without any
notice or other action on the part of the Trustee or the Investor
Certificateholders, immediately upon the occurrence of such event and
additional Receivables will not be transferred to the Trust. Promptly and in
any event within two Business Days after the Servicer becomes aware of any
Early Amortization Event, the Servicer shall notify in writing the Trustee of
the occurrence of such Early Amortization Event. Promptly and in any event
within two Business Days after the Trustee becomes aware of any Early
Amortization Event, the Trustee shall notify in writing the Rating Agency of
the occurrence of such Early Amortization Event.

SECTION 9.02. Additional Rights Upon the Occurrence of any
Early Amortization Event. (a) Upon the occurrence and during the continuance
of any Early Amortization Event, in addition to all other rights and remedies
under this Agreement or otherwise and all other rights and remedies provided
under the UCC of the applicable jurisdiction and other applicable laws (which
rights shall be cumulative), each of the Servicer, at the direction of the
Trustee, and the Trustee may exercise any and all rights and remedies of the
Transferor under or in connection with the Receivables Purchase Agreement,
including, without limitation, any and all rights of the Transferor to demand
or otherwise require payment of any amount under, or performance of any
provision of, the Receivables Purchase Agreement.

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(b) If an Insolvency Event with respect to the Transferor
occurs, the Transferor shall immediately cease to transfer Receivables to the
Trust and shall promptly give notice to the Trustee, who shall within two
Business Days forward such notice to the Certificateholders and the Servicer of
such event. Notwithstanding the above, Receivables transferred to the Trust
prior to the occurrence of such Insolvency Event and collections relating to
such Receivables shall continue to be part of the Trust. Unless, within 10
Business Days of the date of the notice provided for in the preceding
paragraph, the Trustee receives written instructions from the Majority in
Interest of each Series instructing the Trustee not to sell, dispose of or
liquidate the Receivables, the Trustee shall promptly proceed to sell, dispose
of, or otherwise liquidate the Receivables in a commercially reasonable manner
and on commercially reasonable terms; provided, however, that if the amount
available to the Trust for distribution after such sale, disposition or
liquidation would be less than the aggregate principal amount of the Investor
Certificates plus any unpaid Discount Amount thereon through the Distribution
Date next succeeding the date of such sale, the Trustee shall not proceed with
such sale, disposition or liquidation unless all Investor Certificateholders of
all outstanding Series have consented in writing thereto. The proceeds from
such sale, disposition or liquidation of the Receivables shall be treated as
Collections on the Receivables and shall be distributed in accordance with the
terms of this Agreement after being deposited in the Concentration Account.

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ARTICLE X

SERVICER DEFAULTS

SECTION 10.01. Servicer Defaults. If any one of the
following events (each being a "Servicer Default") shall occur and be
continuing:

(a) any failure by the Servicer to make any payment, transfer
or deposit, or, if applicable, to give instructions or notice to the Trustee to
make such payment, transfer or deposit, or to give notice to the Trustee as to
any action to be taken under any Enhancement Agreement, or any failure to
provide the Determination Date Certificate to the Trustee, on or before the
date occurring three Business Days after the date such payment, transfer or
deposit or such instruction or notice is required to be made or given, as the
case may be, under the terms of this Agreement;

(b) any failure by the Servicer duly to observe or perform in
any material respect any other covenant or agreement of the Servicer set forth
in this Agreement, which failure has a material adverse effect on the interest
of the Certificateholders and which continues unremedied until 20 days after
the date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer by the Trustee, or to the
Servicer and the Trustee by the Holders of Investor Certificates evidencing not
less than 25% of the Aggregate Invested Amount of each affected Series; or the
Servicer shall assign its duties under this Agreement, except as permitted by
Section 8.02;

(c) any representation, warranty or certification made by the
Servicer under or in connection with this Agreement, or in any certificate or
information delivered pursuant to or in connection with this Agreement, shall
prove to have been incorrect in any material respect when made and which has a
material adverse effect on the interests of the Certificateholders of any
Series and which material adverse effect continues for a period of 30 days
after the date on which notice thereof, requiring the same to be remedied,
shall have been given (i) to the Servicer by the Trustee or (ii) to the
Servicer and the Trustee by the Majority in Interest of all Investor
Certificates (or, with respect to any such representation, warranty or
certification that does not relate to all Series, the Majority in Interest of
all Series to which such representation, warranty or certification relates); or

(d) an Insolvency Event shall occur with respect to the
Servicer;

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then, as long as such Servicer Default shall not have been remedied and is
continuing, either the Trustee (unless otherwise directed by the Majority in
Interest of each Series) or the Majority in Interest of each Series, by notice
then given in writing to the Servicer (and to the Trustee if given by such
Investor Certificateholders) (each such notice being a "Termination Notice"),
may terminate all but not less than all the rights and obligations of the
Servicer as Servicer under this Agreement. The Trustee shall be deemed to have
knowledge of a Servicer Default if it has actual knowledge or if a Responsible
Officer has received written notice thereof.

The Majority in Interest of each Series may, on behalf of all
Certificateholders, waive any default by the Transferor or the Servicer in the
performance of their obligations hereunder and its consequences, except the
failure to make any distributions required to be made to Certificateholders or
to make any required deposits of any amounts to be so distributed. Upon any
such waiver of a past default, such default shall cease to exist, and any
default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereon except to the extent
expressly so waived.

After receipt by the Servicer of a Termination Notice, and on
the date that a Successor Servicer shall have been appointed by the Trustee
pursuant to Section 10.02, all authority and power of the Servicer under this
Agreement shall pass to and be vested in such Successor Servicer (a "Service
Transfer"); and, without limitation, the Trustee is hereby authorized,
empowered and instructed (upon the failure of the Servicer to cooperate) to
execute and deliver, on behalf of the Servicer, as attorney-in fact or
otherwise, all documents and other instruments upon the failure of the Servicer
to execute or deliver such documents or instruments, and to do and accomplish
all other acts or things necessary or appropriate to effect the purposes of
such Service Transfer. The Servicer agrees to cooperate, at its expense, with
the Trustee and such Successor Servicer in (i) effecting the termination of the
responsibilities and rights of the Servicer to conduct servicing hereunder,
including, without limitation, the transfer to such Successor Servicer of all
authority of the Servicer to service the Receivables as provided under this
Agreement, including all authority over all Collections which shall on the date
of such Service Transfer be held by the Servicer for deposit to any Carolina
Freight Collection Account, the Concentration Account, the Trustee's Account or
the Transferor's Account, or which have been deposited by the Servicer to any
Carolina Freight Collection Account, the Concentration Account, or any other
account, or which shall thereafter be received with

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respect to the Receivables, and (ii) assisting the Successor Servicer until all
servicing activities have been transferred to such Successor Servicer, such
assistance to include, without limitation, (x) assisting any accountants
selected by the Successor Servicer to verify collection records and reports
made prior to the Service Transfer and (y) assisting to make the computer
systems of the Servicer and the Successor Servicer compatible to the extent
necessary to effect the Servicer Transfer. The Servicer shall, at its expense,
within five Business Days of such Service Transfer, (A) assemble such
documents, instruments and other records (including computer tapes and discs),
which evidence the Receivables and the other Trust Assets, and which are
necessary or desirable to collect the Receivables, and shall make the same
available to the Successor Servicer or the Trustee or its designee at a place
selected by the Successor Servicer or the Trustee and in such form as the
Successor Servicer or the Trustee may reasonably request, and (B) segregate all
cash, checks and other instruments received by it from time to time
constituting Collections of Receivables in a manner acceptable to the Successor
Servicer and the Trustee, and, promptly upon receipt, remit all such cash,
checks and instruments to the Successor Servicer or the Trustee or its
designee.

At any time following a Service Transfer:

(1) The Servicer shall, at the Trustee's request and
at the Servicer's expense, give notice of the Trust's ownership of the
Receivables to the related Obligors and direct that payments be made
directly to the Trustee or its designee;

(2) If the Servicer fails to provide the notice to
Obligors required in paragraph (1) above, the Trustee may direct the
Obligors of Receivables, or any of them, that payment of all amounts
payable under any such Receivables be made directly to the Trustee or
its designee;

(3) The Servicer shall, at its expense and at the
Trustee's or Successor Servicer's request as soon as possible but in
any event not more than three Business Days after such request, (x)
assemble such documents, instruments and other records (including,
without limitation, computer tapes and disks) which evidence the
Receivables and the other Trust Assets, and which are necessary or
desirable to collect the Receivables, and shall make the same
available to the Successor Servicer or the Trustee or its designee at
a place selected by the Successor Servicer or the Trustee and in such
form as the Successor Servicer or the Trustee may reasonably request,
and (y) segregate all cash, checks and other instruments received by
it from time to time

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constituting Collections of such Receivables in a manner acceptable to
the Successor Servicer and the Trustee and, promptly upon receipt,
remit all such cash, checks and instruments, duly endorsed or with
duly executed instruments of transfer, to the Trustee or its designee;
and

(4) Each of the Transferor and each
Certificateholder hereby authorizes the Trustee to take any and all
steps in the Transferor's name and on behalf of the Transferor and the
Certificateholders necessary or desirable, in the determination of the
Trustee, to collect all amounts due under any and all Receivables,
including, without limitation, endorsing the Transferor's name on
checks and other instruments representing Collections in respect of
such Receivables and enforcing such Receivables.

Notwithstanding the foregoing, a delay in or failure of
performance referred to in Section 10.01(a) for a period of ten Business Days
after the applicable grace period, or under Section 10.01(b) for a period of
thirty days after the applicable grace period, shall not constitute a Servicer
Default if such delay or failure could not have been prevented by the exercise
of reasonable diligence by the Servicer and such delay or failure was caused by
an act of God or the public enemy, acts of declared or undeclared war, public
disorder, rebellion or sabotage, epidemics, landslides, lightning, fire,
hurricanes, earthquakes, floods, union strikes, work stoppages or similar
causes. The preceding sentence shall not relieve the Servicer from using its
best efforts to perform its obligations in a timely manner in accordance with
the terms of this Agreement, and the Servicer shall provide the Trustee, the
Transferor, any Enhancement Provider and the Investor Certificateholders with
an Officer's Certificate giving prompt notice of such failure or delay by it,
together with a description of its efforts so to perform its obligations.

SECTION 10.02. Trustee to Act; Appointment of Successor
Servicer. (a) On and after the receipt by the Servicer of a Termination
Notice pursuant to Section 10.01 or upon a resignation by the Servicer pursuant
to Section 8.05, the Servicer shall continue to perform all servicing functions
under this Agreement until (i) in the case of any such receipt, the date
specified in such Termination Notice or otherwise specified by the Trustee in
writing or, if no such date is specified in such Termination Notice or
otherwise specified by the Trustee, until the earlier of a date agreed upon by
the Servicer and the Trustee or a date specified by the Trustee in a written
notice to the Servicer, and (ii) in the case of any such resignation, until the
Trustee or a Successor Servicer shall have assumed the responsibilities and
obligations of the Servicer pursuant to this

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Section. The Trustee shall as promptly as possible after the giving of a
Termination Notice or such a resignation appoint an Eligible Servicer as a
successor servicer (the "Successor Servicer"), subject to the consent of any
Enhancement Providers and if specified in any Series Supplement, the consent of
the Majority in Interest of the Certificateholders of such Series, which
consent shall not be unreasonably withheld, and such Successor Servicer shall
accept its appointment by a written assumption in a form acceptable to the
Trustee. In the event that a Successor Servicer has not been appointed or has
not accepted its appointment by the earlier of 60 days after the date of such
Termination Notice or at the time when the Servicer ceases to act as Servicer,
the Trustee without further action shall automatically be appointed the
Successor Servicer. The Trustee may delegate any of its servicing obligations
to an affiliate or agent in accordance with the terms of this Agreement.
Notwithstanding the foregoing, the Trustee shall, if it is legally unable so to
act as Successor Servicer, petition a court of competent jurisdiction to
appoint any established institution that is an Eligible Servicer (other than
the Trustee) as the Successor Servicer hereunder.

(b) Upon its appointment, the Successor Servicer shall be the
successor in all respects to the Servicer with respect to servicing functions
under this Agreement and shall be subject to all the responsibilities, duties
and liabilities relating thereto placed on the Servicer by the terms and
provisions hereof, and all references in this Agreement to the Servicer shall
be deemed to refer to such Successor Servicer; provided, however, that neither
the Trustee (solely in its capacity as such) nor any Successor Servicer shall
be deemed in default hereunder as a result of the predecessor Servicer's
failure to deliver necessary Trust Assets, documents, or records to the Trustee
(solely in its capacity as such) or to such Successor Servicer. Any Successor
Servicer, by its acceptance of its appointment, will automatically agree to be
bound by the terms and provisions of any Enhancement Agreement.

(c) In connection with any Termination Notice, the Trustee
will review any bids which it obtains from Eligible Servicers and shall be
permitted to appoint any Eligible Servicer submitting such a bid as a Successor
Servicer for servicing compensation not in excess of the Servicing Fee, unless
the Trustee shall agree to pay the excess over the Servicing Fee of the
compensation of any such Successor Servicer.

(d) All authority and power granted to the Successor Servicer
under this Agreement shall automatically terminate upon termination of the
Trust pursuant to Section 12.01, and shall pass to and be vested in the
Transferor and, without limitation,

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the Transferor is hereby authorized and empowered to execute and deliver, on
behalf of the Successor Servicer, as attorney-in-fact or otherwise, all
documents and other instruments, and to do and accomplish all other acts or
things necessary or appropriate to effect the purposes of such transfer of
servicing rights. The Successor Servicer agrees to cooperate with the
Transferor in effecting the termination of the responsibilities and rights of
the Successor Servicer to conduct servicing of the Receivables. The Successor
Servicer shall transfer its electronic records relating to the Receivables to
the Transferor in such electronic form as the Transferor may reasonably request
and shall transfer all other records, correspondence and documents to the
Transferor in the manner and at such times and the Transferor shall reasonably
request.

(e) Upon the effectiveness of the appointment of a
Successor Servicer, the Successor Servicer shall as soon as practicable upon
demand deliver to Carolina Freight all documents, instruments and records in
its possession which evidence or relate to receivables owned by Carolina
Freight which are not Trust Assets, and copies of documents, instruments and
records in its possession which evidence or relate to such receivables.

SECTION 10.03. Notification to Certificateholders. Promptly
and in any event within two Business Days after the Servicer becomes aware of
any Servicer Default, the Servicer shall give written notice thereof to a
Responsible Officer of the Trustee, and the Trustee shall promptly deliver a
copy of such notice to the Certificateholders and the Rating Agency. Upon any
termination or appointment of a Successor Servicer pursuant to this Article X,
the Trustee shall give prompt written notice thereof to the Transferor and the
Certificateholders.

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ARTICLE XI

THE TRUSTEE

SECTION 11.01. Duties of Trustee. (a) The Trustee, prior to
the occurrence of a Servicer Default of which it has actual knowledge and after
the curing of all Servicer Defaults which may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in this
Agreement and no implied duties or covenants shall be read into this Agreement
against the Trustee. If a Servicer Default to the actual knowledge of the
Trustee has occurred (which has not been cured or waived), the Trustee shall
exercise such of the rights and powers vested in it by this Agreement and use
the same degree of care and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.

(b) The Trustee, upon receipt of any resolutions,
certificates, statements, opinions, reports, documents, orders or other
instruments furnished to the Trustee which are specifically required to be
furnished pursuant to any provision of this Agreement or any Supplement, shall
examine them to determine whether they substantially conform to the
requirements of this Agreement or any Supplement. The Trustee shall give
prompt written notice to the Certificateholders and the Rating Agency of any
material lack of conformity of any such instrument to the applicable
requirements of this Agreement or any Supplement discovered by the Trustee
which would entitle a specified percentage of the Investor Certificateholders
to take any action pursuant to this Agreement or any Supplement.

(c) Subject to Section 11.01(a), no provision of this
Agreement shall be construed to relieve the Trustee from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct; provided, however, that:

(i) the Trustee shall not be personally liable for
an error of judgment made in good faith by a Responsible Officer or
Responsible Officers of the Trustee, unless it shall be proved that
the Trustee was negligent in ascertaining the pertinent facts;

(ii) the Trustee shall not be personally liable with
respect to any action taken, suffered or omitted to be taken by it in
good faith in accordance with the direction of the Majority in
Interest of each Series relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Agreement; and

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(iii) the Trustee shall not be charged with knowledge of
any failure by the Servicer to comply with the obligations of the
Servicer referred to in Section 10.01 unless a Responsible Officer of
the Trustee obtains actual knowledge of such failure or the Trustee
receives written notice of such failure from the Servicer or any
Holders of Investor Certificates evidencing not less than 10% of the
Aggregate Invested Amount of each Series.

(d) The Trustee shall not be required to expend or risk its
own funds or otherwise incur financial liability in the performance of any of
its duties hereunder or under any Supplement or in the exercise of any of its
rights or powers, if there is reasonable ground for believing that the
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it, and none of the provisions contained in this
Agreement shall in any event require the Trustee to perform, or be responsible
for the manner of performance of, any obligations of the Servicer under this
Agreement except during such time, if any, as the Trustee shall be the
successor to, and be vested with the rights, duties, powers and privileges of,
the Servicer in accordance with the terms of this Agreement.

(e) Except for actions expressly authorized by this
Agreement, the Trustee shall take no action reasonably likely to impair the
interests of the Trust in any Receivable now existing or hereafter created or
to impair the value of any Receivable now existing or hereafter created.

(f) Except as expressly provided in this Agreement, the
Trustee shall have no power to vary the corpus of the Trust including, without
limitation, by (i) accepting any substitute obligation for a Receivable
initially Transferred to the Trust under Section 2.01, (ii) adding any other
investment, obligation or security to the Trust, or (iii) withdrawing from the
Trust any Receivable.

(g) In the event that the Paying Agent or the Transfer Agent
and Registrar shall fail to perform any obligation, duty or agreement in the
manner or on the day required to be performed by the Paying Agent or the
Transfer Agent and Registrar, as the case may be, under this Agreement or under
any Supplement, the Trustee shall be obligated promptly upon its actual
knowledge thereof to perform such obligation, duty or agreement in the manner
so required.

(h) The Trustee shall have no responsibility or liability for
investment losses on Eligible Investments.

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(i) Notwithstanding any other provision contained herein,
the Trustee is not acting as, and shall not be deemed to be, a fiduciary for
any Enhancement Provider in its capacity as such or as a Beneficiary, and the
Trustee's sole responsibility with respect to any such Enhancement Provider
shall be to perform those duties with respect to any such Enhancement Provider
as are specifically set forth herein and no implied duties or obligations shall
be read into this Agreement against the Trustee with respect to any such
Enhancement Provider.

SECTION 11.02. Certain Matters Affecting the Trustee. Except
as otherwise provided in Section 11.01:

(a) the Trustee may rely on and shall be protected in acting
on, or in refraining from acting in accord with, any resolution, Officer's
Certificate, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal, bond
or other paper or document believed by it to be genuine and to have been signed
or presented to it pursuant to this Agreement by the proper party or parties;

(b) the Trustee may consult with counsel and as a condition
to taking, suffering or omitting to take any action in any demand an Opinion of
Counsel and any advice or opinion of counsel shall be full and complete
authorization and protection in respect of any action taken or suffered or
omitted by it hereunder in good faith and in accordance with such advice or
opinion of counsel;

(c) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Agreement, or to institute,
conduct or defend any litigation hereunder or in relation hereto, at the
request, order or direction of any of the Certificateholders, pursuant to the
provisions of this Agreement, unless such Certificateholders shall have offered
to the Trustee reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby; provided, however, that
nothing contained herein shall relieve the Trustee of the obligations, upon the
occurrence of a Servicer Default (which has not been cured or waived), to
exercise such of the rights and powers vested in it by this Agreement, and to
use the same degree of care and skill in their exercise as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs;

(d) the Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon it by
this Agreement;

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(e) the Trustee shall not be bound to make any investigation
into the facts of matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal,
approval, bond or other paper or document, unless requested in writing so to do
by Holders of Investor Certificates evidencing more than 25% of the Trust
Aggregate Invested Amount;

(f) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian, and the Trustee shall not be responsible
for any misconduct or negligence on the part of any such agent, attorney or
custodian appointed with due care by it hereunder;

(g) the Trustee shall not be required to make any initial or
periodic examination of any documents or records related to the Receivables for
the purpose of establishing the presence or absence of defects, the compliance
by the Transferor with its representations and warranties or for any other
purpose; and

(h) nothing in this Agreement shall be construed to require
the Trustee to monitor the performance of the Servicer or act as a guarantor of
the Servicer's performance.

SECTION 11.03. Trustee Not Liable for Recitals in
Certificates. The Trustee assumes no responsibility for the correctness of the
recitals contained herein and in the Certificates (other than the certificate
of authentication on the Certificates). Except as set forth in Section 11.15,
the Trustee makes no representations as to the validity or sufficiency of this
Agreement or of the Certificates (other than the certificate of authentication
on the Certificates) or of any Receivable or related document. The Trustee
shall not be accountable for the use or application by the Transferor of any of
the Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Transferor in respect of the Receivables
or deposited in or withdrawn from any Carolina Freight Collection Account, the
Concentration Account, the Transferor's Account, the Trustee's Account or any
other account hereafter established to effectuate the transactions contemplated
by and in accordance with the terms of this Agreement and any Supplement.

SECTION 11.04. Trustee May Own Certificates. The Trustee in
its individual or any other capacity may become the owner or pledgee of
Investor Certificates and may otherwise deal, and transact banking business,
with the Servicer and the

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Transferor with the same rights as it would have if it were not the Trustee.

SECTION 11.05. Compensation; Trustee's Expenses. (a) The
Trustee shall be entitled to receive a monthly Trustee's fee (which shall not
be limited by any provision of law in regard to the compensation of a trustee
of an express trust, such fee being the "Trustee's Fee") in respect of each
Collection Period (or portion thereof) from the Closing Date until the
termination of the Amortization Period, payable in arrears on each Distribution
Date in an amount agreed upon in writing by the Trustee and the Transferor.
The Trustee's Fee shall be the aggregate of the Series Trustee's Fees specified
in the Supplements. The Trustee's Fee shall be payable, first, from Investor
Collections pursuant to, and subject to the priority of payment set forth in,
Section 5.01 of the applicable Supplement and, second, to the extent not paid
from Investor Collections, by the Transferor, and, third, to the extent not
paid from Investor Collections or by the Transferor, by the Servicer pursuant
to Section 3.02(b).

(b) Expenses. The Transferor will pay or reimburse the
Trustee upon its request, and if the Transferor shall fail to do so, Carolina
Freight will so pay or reimburse the Trustee (with a right to reimbursement
from the Transferor) pursuant to Section 3.02(b), for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any of the provisions of this Agreement or any Supplement or in connection with
any amendment hereto (including the reasonable fees and expenses of its agents,
any co-trustee and counsel and fees incurred in connection with a Servicer
Default or an Early Amortization Event) except any such expense, disbursement
or advance as may arise from its gross negligence or bad faith and except as
provided in the following sentence. If the Trustee is appointed Successor
Servicer pursuant to Section 10.02, the provision of this Section 11.05 shall
not apply to expenses, disbursements and advances made or incurred by the
Trustee in its capacity as Successor Servicer, which shall be paid, first, out
of the Servicing Fee, and, second, to the extent not paid out of the Servicing
Fee, by the Transferor pursuant to Section 3.02(b). The Transferor's and
Servicer's covenant and disbursements provided for in this Section 11.05 shall
survive the termination of this Agreement.

SECTION 11.06. Eligibility Requirements for Trustee. The
Trustee hereunder shall at all times be an Eligible Institution. If the
Trustee publishes reports of condition at least annually, pursuant to law or to
the requirements of the aforesaid supervising or examining authority, then, for
the purpose of this Section 11.06, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and

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surplus as set forth in its most recent report of condition so published. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 11.06, the Trustee shall resign immediately in the
manner and with the effect specified in Section 11.07.

SECTION 11.07. Resignation or Removal of Trustee. (a) The
Trustee may at any time resign and be discharged from the trust hereby created
by giving written notice thereof to the Transferor and the Servicer. Upon
receiving such notice of resignation, the Servicer shall promptly appoint a
successor trustee acceptable to a majority in interest of the Investor
Certificateholders of each Series by written instrument, in duplicate, one copy
of which instrument shall be delivered to the resigning Trustee and one copy to
the successor trustee. If no successor trustee shall have been so appointed
and have accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.

(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 11.06 hereof and shall fail to resign
after written request therefor by the Servicer, or if at any time the Trustee
shall be legally unable to act, or shall be adjudged a bankrupt or insolvent,
or if a receiver of the Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Trustee or of its property
or affairs for the purpose of rehabilitation, conservation or liquidation, then
the Servicer may remove the Trustee and promptly appoint a successor trustee
acceptable to a Majority in Interest of the Investor Certificateholders of all
outstanding Series by written instrument, in duplicate, one copy of which
instrument shall be delivered to the Trustee so removed and one copy to the
successor trustee.

(c) If at any time the Trustee shall fail to perform its
obligations under this Agreement, Investor Certificateholders representing the
Majority in Interest of all outstanding Series may remove the Trustee and
direct the Servicer to promptly appoint a successor trustee acceptable to a
Majority in Interest of the Investor Certificateholders of all outstanding
Series by written instrument, in duplicate, one copy of which instrument shall
be delivered to the Trustee so removed and one copy to the successor trustee.

(d) Notwithstanding anything herein to the contrary, any
resignation or removal of the Trustee and appointment of successor trustee
pursuant to any of the provisions of this Section 11.07 shall not become
effective until acceptance of

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appointment by the successor trustee as provided in Section 11.08 hereof.

SECTION 11.08. Successor Trustee. (a) Any successor trustee
appointed as provided in Section 11.07 shall execute, acknowledge and deliver
to the Transferor, to the Servicer and to its predecessor Trustee an instrument
accepting such appointment hereunder, and thereupon the resignation or removal
of the predecessor Trustee shall become effective and such successor trustee,
without any further act, deed or conveyance, shall become fully vested with all
the rights, powers, duties and obligations of its predecessor hereunder, with
like effect as if originally named as Trustee herein. The predecessor Trustee
shall deliver (with the expense therefor payable out of the Servicing Fee, and
by the Transferor and the Servicer, pursuant to Sections 3.02(b) and 11.05(b))
to the successor trustee all documents or copies thereof and statements held by
it hereunder; and the Transferor and the predecessor Trustee shall execute and
deliver such instruments and do such other things as may reasonably be required
for fully and certainly vesting and confirming in the successor trustee all
such rights, powers, duties and obligations.

(b) No successor trustee shall accept appointment as provided
in this Section 11.08 unless at the time of such acceptance such successor
trustee shall be eligible under the provisions of Section 11.06 hereof.

(c) Upon acceptance of appointment by a successor trustee as
provided in this Section 11.08, such successor trustee shall mail notice of
such succession hereunder to all Investor Certificateholders.

SECTION 11.09. Merger or Consolidation of Trustee. Any
Person into which the Trustee may be merged or converted or with which it may
be consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any Person succeeding
to the corporate trust business of the Trustee, shall be the successor of the
Trustee hereunder, provided such corporation shall be eligible under the
provisions of Section 11.06, without the execution or filing of any paper or
any further act on the part of any of the parties hereto, anything herein to
the contrary notwithstanding.

SECTION 11.10. Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provisions of this Agreement, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust may at the time be located, the Trustee shall have the power
and may execute and deliver all instruments to appoint one or more

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persons to act as a co-trustee or co-trustees, or separate trustee or separate
trustees, of all or any part of the Trust, and to vest in such Person or
Persons, in such capacity and for the benefit of the Certificateholders, such
title to the Trust, or any part thereof, and, subject to the other provisions
of this Section 11.10, such powers, duties, obligations, rights and trusts as
the Trustee may consider necessary or desirable. No co-trustee or separate
trustee hereunder shall be required to meet the terms of eligibility as a
successor trustee under Section 11.06 and no notice to Certificateholders of
the appointment of any co-trustee or separate trustee shall be required under
Section 11.08 hereof.

(b) Every separate trustee and co-trustee shall, to the
extent permitted by law, be appointed and act subject to the following
provisions and conditions:

(i) all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed
upon and exercised or performed by the Trustee and such separate
trustee or co-trustee jointly (it being understood that such separate
trustee or co-trustee is not authorized to act separately without the
Trustee joining in such act), except to the extent that under any law
of any jurisdiction in which any particular act or acts are to be
performed (whether as Trustee hereunder or as Successor Servicer
hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust or any
portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate trustee or co-trustee, but solely at
the direction of the Trustee;

(ii) no trustee hereunder shall be personally liable by
reason of any act or omission of any other trustee hereunder; and

(iii) the Trustee may at any time accept the resignation
of or remove any separate trustee or co-trustee.

(c) Any notice, request or other writing given to the Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article XI. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided

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therein, subject to all the provisions of this Agreement, specifically
including every provision of this Agreement relating to the conduct of,
affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Servicer.

(d) Any separate trustee or co-trustee may at any time
constitute the Trustee, its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under or
in respect of this Agreement on its behalf and in its name. If any separate
trustee or co-trustee shall die, become incapable of acting, resign or be
removed, all its estates, properties, rights, remedies and trusts shall vest in
and be exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.

SECTION 11.11. Tax Returns. No federal income tax return
shall be filed on behalf of the Trust unless either (i) the Trustee or the
Servicer shall receive an Opinion of Counsel based on a change in applicable
law occurring after the date hereof that the Code requires such a filing or
(ii) the Internal Revenue Service shall determine that the Trust is required to
file such a return. In the event the Trust shall be required to file tax
returns, the Servicer shall prepare or shall cause to be prepared any tax
returns required to be filed by the Trust and shall remit such returns to the
Trustee for signature at least five days before such returns are due to be
filed; the Trustee shall promptly sign such returns and deliver such returns
after signature to the Servicer and such returns shall be filed by the
Servicer. The Servicer in accordance with the Supplements shall also prepare
or shall cause to be prepared all tax information required by law to be
distributed to Investor Certificateholders and shall deliver such information
to the Trustee at least five days prior to the date it is required by law to be
distributed to the Certificateholders. The Trustee, upon request, will furnish
the Servicer with all such information known to the Trustee as may be
reasonably required in connection with the preparation of all tax returns of
the Trust, and shall upon request, execute such returns. In no event shall the
Trustee, the Servicer or the Transferor be liable for any liabilities, costs or
expenses of the Trust or the Investor Certificateholders arising out of the
application of any tax law, including federal, state, foreign or local income
or excise taxes or any other tax imposed on or measured by income (or any
interest penalty or addition with respect thereto or arising from a failure to
comply therewith).

SECTION 11.12. Trustee May Enforce Claims Without Possession
of Certificates. All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the

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Certificates or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
as trustee. Any recovery of judgment shall, after provision for the payment
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, be for the ratable benefit of the
Certificateholders in respect of which such judgment has been obtained.

SECTION 11.13. Suits for Enforcement. (a) If a Servicer
Default shall occur and be continuing, the Trustee, in its discretion may,
subject to the provisions of Sections 11.01 and 11.14, proceed to protect and
enforce its rights and the rights of the Certificateholders under this
Agreement by suit, action or proceeding in equity or at law or otherwise,
whether for the specific performance of any covenant or agreement contained in
this Agreement or in aid of the execution of any power granted in this
Agreement or for the enforcement of any other legal, equitable or other remedy
as the Trustee, being advised by counsel, shall deem most effectual to protect
and enforce any of the rights of the Trustee or the Certificateholders.

(b) Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any
Certificateholder any plan of reorganization, arrangement, adjustment or
composition affecting the Certificates or the rights of any Holder thereof, or
to authorize the Trustee to vote in respect of the claim of any
Certificateholder in any such proceeding.

SECTION 11.14. Rights of Certificateholders to Direct
Trustee. The Majority in Interest of each Series shall have the right to
direct the time, method, and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred on the
Trustee; provided, however, that subject to Section 11.01, the Trustee shall
have the right to decline to follow any such direction if the Trustee after
being advised by counsel determines that the action so directed may not
lawfully be taken, or if the Trustee in good faith shall, by a Responsible
Officer or Responsible Officers of the Trustee, determine that the proceedings
so directed would be illegal or involve it in personal liability or be unduly
prejudicial to the rights of Certificateholders not parties to such direction;
and, provided, further, that nothing in this Agreement shall impair the right
of the Trustee to take any action deemed proper by the Trustee and which is not
inconsistent with such direction of the Investor Certificateholders unless the
Majority in Interest of each Series shall have directed the Trustee to not take
such action.

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SECTION 11.15. Representations and Warranties of Trustee.
The Trustee represents and warrants that:

(a) the Trustee is a national banking association;

(b) the Trustee has full power, authority and right to
execute, deliver and perform this Agreement, and has taken all necessary action
to authorize the execution, delivery and performance by it of this Agreement;
and

SECTION 11.16. Maintenance of Office or Agency. The Trustee
will maintain at its expense in the Borough of Manhattan, The City of New York,
an office or agency (the "Corporate Trust Office") where notices and demands to
or upon the Trustee in respect of the Certificates and this Agreement may be
served. The Trustee initially designates its office or agency at 14 Wall
Street, 8th Floor, New York, New York 10005 as such office. The Trustee will
give prompt written notice to the Servicer and to Certificateholders of any
change in the location of the Certificate Register or any such office or
agency.

SECTION 11.17. Monthly Report of Trustee. On or promptly
following each Distribution Date, commencing on the Distribution Date occurring
in January, 1994, the Trustee shall provide to the Rating Agency a written
assurance that, but without conducting any independent investigation, no
Responsible Officer, has actual knowledge that an event has occurred which,
with the passage of time or the giving of notice or both, would constitute an
Early Amortization Event or a Servicer Default. The Trustee is hereby
authorized to conclusively rely upon an officer's Certificate of the Servicer
as a basis for providing any such assurance.

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ARTICLE XII

TERMINATION

SECTION 12.01. Termination of Trust. The Trust and the
respective obligations and responsibilities of the Transferor, the Servicer and
the Trustee created hereby (other than the obligation of the Trustee to make
payments to Certificateholders as hereinafter set forth) shall terminate,
except with respect to the duties described in Sections 3.02(b), 7.03, 8.04,
11.05 and 12.02(b), upon the earlier to occur of (i) December 31, 2013 and (ii)
the day following the Distribution Date on which the Aggregate Invested Amount
for each Series is zero.

SECTION 12.02. Final Distribution. (a) The Servicer shall
give the Trustee and the Trustee shall give each Certificateholder at least
twenty days' prior written notice of the date on which (i) the Trust is
expected to terminate in accordance with subsection 12.01 and (ii) the
Certificateholders may surrender their Certificates for payment of the final
distribution on and cancellation of such Certificates. Such notice shall be
accompanied by an Officer's Certificate setting forth the information specified
in Section 3.06 covering the period during the then-current calendar year
through the date of such notice. Not later than five days after the Trustee
shall receive such notice, the Trustee shall mail notice to the
Certificateholders specifying (i) the date upon which such final distribution
will be made upon presentation and surrender of such Certificates at the office
or offices therein designated, (ii) the amount of any such final distribution
and (iii) that the Distribution Date otherwise applicable to such final
distribution is not applicable, payments being made only upon presentation and
surrender of such Certificates at the office or offices therein specified;
provided, however, that such presentation and surrender shall not be required
for a Certificateholder that is an insurance company or institutional investor.
Each such Certificateholder shall surrender its Certificate to the Trustee
following receipt of the final distribution thereon. The Trustee shall give
such notice to the Transfer Agent and Registrar and the Paying Agent at the
time such notice is given to the Certificateholders.

(b) Notwithstanding the Servicer's delivery to the Trustee,
or the Trustee's delivery to the Certificateholders, of the notices required
under Section 12.02(a), all funds then on deposit in the Concentration Account,
any Series Account, the Transferor's Account or the Trustee's Account shall
continue to be held in trust for the benefit of the Certificateholders, and the
Paying Agent or the Trustee shall pay such funds to the

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Certificateholders upon surrender of their Certificates pursuant to, and
subject to the priorities set forth in, the applicable Supplement, as if such
surrender date were on a Distribution Date (and any excess shall be paid in
accordance with the terms of any Enhancement Agreement). In the event that all
Certificateholders shall not surrender their Certificates for cancellation
within six months after the date specified in the above-mentioned written
notice from the Trustee, the Trustee shall give a second written notice to the
remaining Certificateholders to surrender their Certificates for cancellation
and receive the final distribution with respect thereto. If within one year
after the second notice all the Certificates shall not have been surrendered
for cancellation, the Trustee may take appropriate steps, or may appoint an
agent to take appropriate steps, to contact the remaining Certificateholders
concerning surrender of their Certificates, and the cost thereof shall be paid
out of the funds in the Trustee's Account (if such Certificateholders are
Investor Certificateholders) or the Transferor's Account (if any such
Certificateholder is the Holder of the Transferor Certificate) held for the
benefit of such Certificateholders. The Trustee and the Paying Agent shall pay
to the Transferor any monies held by them for the payment of principal or
interest that remains unclaimed for two years. After payment to the
Transferor, Investor Certificateholders entitled to the money must look to the
Transferor for payment as general creditors unless an applicable abandoned
property law designates another person.

SECTION 12.03. Transferor's Termination Rights. Upon the
termination of the Trust pursuant to Section 12.01, the payment in full of all
amounts due to the Investor Certificateholders, payment of Trustee's fees and
expenses and the surrender of the Transferor Certificate, the Trustee shall
assign and convey to the Holder of the Transferor Certificate or its designee,
without recourse, representation or warranty, all right, title and interest of
the Trust in and to the Receivables, whether then existing or thereafter
created, and all other Trust Assets, and all proceeds thereof except for
amounts held in any account by the Trustee or the Paying Agent pursuant to
Section 12.02(b). The Trustee at the expense of the Transferor shall execute
and deliver such instruments of transfer and assignment, in each case without
recourse, representation or warranty, as shall be prepared by the Transferor
for execution by the Trustee which are reasonably requested by the Transferor
to vest in the Transferor all right, title and interest which the Trust had in
the Receivables and all other Trust Assets.

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ARTICLE XIII

MISCELLANEOUS PROVISIONS

SECTION 13.01. Amendment; Waiver of Early Amortization
Events. (a) This Agreement or any Supplement may be amended from time to time
by the Servicer, the Transferor and the Trustee without the consent of any of
the Investor Certificateholders, (i) to cure any ambiguity, (ii) to correct or
supplement any provision herein which may be inconsistent with any other
provision herein or (iii) to add any other provisions with respect to matters
or questions arising under the Agreement or any Supplement which are not
inconsistent with the provisions of the Agreement or such Supplement; provided,
(A) that any amendment pursuant to clause (iii) above shall not, as evidenced
by an Opinion of Counsel, adversely affect in any material respect the
interests of any Certificateholders and provided, further, that any such action
in clauses (i) through (iii) above shall not cause any adverse tax effect for
any Investor Certificateholder or otherwise adversely affect the interests of
any Investor Certificateholder. The Trustee may request an Officer's
Certificate and Opinion of Counsel with respect to an amendment entered into
pursuant to this Section 13.01(a) concerning the tax effect of any such action.

(b) This Agreement or any Supplement may be amended from time
to time by the Servicer, the Transferor and the Trustee, with the consent of
the Majority in Interest of each adversely affected Series, for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Certificateholders; provided, however, that no such amendment shall (i) reduce
in any manner the amount of, or delay the timing of, distributions to be made
to any Certificateholder or deposits of amounts to be so distributed or the
amount available under any Enhancement without the consent of such
Certificateholder, (ii) change the definition of or the manner of calculating
the Certificateholders' Interest or the Aggregate Certificateholders' Interest
or any Investor Certificateholder's interest therein without the consent of
each affected Investor Certificateholder, (iii) reduce the aforesaid percentage
required to consent to any such amendment without the consent of each Investor
Certificateholder or (iv) cause any adverse tax effect for any Investor
Certificateholder without the consent of each affected Investor
Certificateholder. The Trustee may request an Officer's Certificate and
Opinion of Counsel with respect to an amendment entered into pursuant to this
Section 13.01(b) concerning compliance with the requirements of this Agreement.
Any amendment to be effected pursuant to this paragraph shall be deemed to
adversely affect all outstanding Series, other than any

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Series with respect to which such action shall not, as evidenced by an Opinion
of Counsel (which counsel shall not be an employee of, or counsel for, Carolina
Freight or the Transferor), addressed and delivered to the Trustee, adversely
affect the interests of any Investor Certificateholder of such Series.

(c) Promptly after the execution of any such amendment or
consent (other than an amendment pursuant to Section 13.01(a)), the Trustee
shall furnish written notification of the substance of such amendment to each
Investor Certificateholder and each Enhancement Provider.

(d) It shall not be necessary for the consent of Investor
Certificateholders under this Section 13.01 to approve the particular form of
any proposed amendment, but it shall be sufficient if such consent shall
approve the substance thereof. The manner of obtaining such consents and of
evidencing the authorization of the execution thereof by Investor
Certificateholders shall be subject to such reasonable requirements as the
Trustee may prescribe.

(e) Notwithstanding anything in this Section to the
contrary, no amendment may be made to this Agreement or any Supplement which
would adversely affect in any material respect the interests of any Enhancement
Provider without the consent of such Enhancement Provider.

(f) Any supplement executed in accordance with the provisions
of Section 6.09 shall not be considered an amendment to this Agreement for the
purposes of this Section.

(g) Prior to the execution of any amendment to this
Agreement or any Supplement, the Trustee and any Enhancement Provider shall be
entitled to receive and rely upon an Opinion of Counsel stating that the
execution of such amendment is authorized or permitted by this Agreement. The
Trustee may, but shall not be obligated to, enter into any such amendment which
affects the Trustee's own rights, duties or immunities under this Agreement,
any Supplement or otherwise.

SECTION 13.02. Protection of Right, Title and Interest to
Trust. (a) The Servicer shall cause this Agreement, all amendments hereto and
all financing statements and continuation statements and any other necessary
documents covering the Certificateholders' and the Trustee's right, title and
interest in and to the Trust to be promptly recorded, registered and filed, and
at all times to be kept recorded, registered and filed, all in such manner and
in such places as may be required by law to preserve and protect fully the
right, title and interest of the Certificateholders and the Trustee hereunder
in

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and to all property comprising the Trust. The Servicer shall deliver to the
Trustee file-stamped copies of, or filing receipts for, each document recorded,
registered or filed as provided above, as soon as available following such
recording, registration or filing. The Transferor shall cooperate fully with
the Servicer in connection with the obligations set forth above and will
execute any and all documents reasonably required to fulfill the intent of
Section 13.02(a).

(b) Within 30 days after the Transferor makes any change in
its name, identity or corporate structure which would make any financing
statement or continuation statement filed in accordance with the terms of this
Agreement seriously misleading within the meaning of Section 9-402(7) (or any
comparable provision) of the UCC as in effect in the jurisdiction the law of
which governs the perfection of the interest in the Trust Assets created
hereunder, the Transferor shall give the Trustee notice of such change and
shall file such financing statements or amendments as may be necessary to
continue the perfection of the Trust's interest in the Trust Assets and the
proceeds thereof contemplated by Section 2.01 hereof.

(c) The Transferor and the Servicer will give the Trustee
prompt written notice of any relocation of any office from which it services
Receivables or keeps records concerning the Receivables or of its principal
executive office and whether, as a result of such relocation, the applicable
provisions of the UCC would require the filing of any amendment of any
previously filed financing or continuation statement or of any new financing
statement and shall file such financing statements or amendments as may be
necessary to perfect or to continue the perfection of the Trust's interest in
the Receivables and the other Trust Assets and the proceeds thereof
contemplated by Section 2.01 hereof. The Transferor and the Servicer will at
all times maintain each office from which it services Receivables and its
principal executive offices within the United States of America.

SECTION 13.03. Limitation on Rights of Certificateholders.
(a) The death or incapacity of any Investor Certificateholder shall not
operate to terminate this Agreement or the Trust, nor shall such death or
incapacity entitle such Investor Certificateholders' legal representatives or
heirs to claim an accounting or to take any action or commence any proceeding
in any court for a partition or winding up of the Trust, nor otherwise affect
the rights, obligations and liabilities of the parties hereto or any of them.

(b) No Certificateholder shall have the right to vote (except
as expressly provided in this Agreement, including without limitation under
Section 11.14) or in any manner otherwise

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control the operation and management of the Trust, or the obligations of the
parties hereto, nor shall anything herein set forth, or contained in the terms
of the Certificates, be construed so as to constitute the Certificateholders
from time to time as partners or members of an association other than for
Federal, state or local income or franchise tax purposes only, nor shall any
Investor Certificateholder be under any liability to any third person by reason
of any action taken by the parties to this Agreement pursuant to any provision
hereof.

(c) No Investor Certificateholder shall have any right by
virtue of any provisions of this Agreement to file or otherwise institute any
suit, action or proceeding in equity or at law upon or under or with respect to
this Agreement, unless such Investor Certificateholder previously shall have
made, and unless the Holders of Investor Certificates evidencing more than 50%
of the Trust Aggregate Invested Amount shall have made, a written request to
the Trustee to institute such action, suit or proceeding in its own name as
Trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
incurred therein or thereby, and the Trustee, for 60 days after such request
and offer of indemnity, shall have failed to file or otherwise refused to
institute any such action, suit or proceeding; it being understood and
intended, and being expressly covenanted, by each Certificateholder with every
other Certificateholder and the Trustee, that no one or more Certificateholders
shall have any right in any manner whatever by virtue or by availing itself or
themselves of any provisions of this Agreement to affect, disturb or prejudice
the rights of the holders of any of the Investor Certificates, or to obtain or
seek to obtain priority over or preference to any such Investor
Certificateholder, or to enforce any right under this Agreement, except in the
manner herein provided and for the equal, ratable and common benefit of all
Investor Certificateholders. For the protection and enforcement of the
provisions of this Section 13.03, each and every Investor Certificateholder and
the Trustee shall be entitled to such relief as can be given either at law or
in equity. Notwithstanding any other provision of this Pooling and Servicing
Agreement, the Certificates or any Supplement, each Investor Certificateholder
shall have the right to receive the payments of all amounts due hereunder,
under the Certificates held by such Holder and under the Supplement relating to
the Series of Certificates held by such Holder and the right to institute suit
for the enforcement of any such payment without the consent of the Trustee or
any other Holder.

(d) By its acceptance of the Transferor Certificate, the
Holder thereof agrees that it will take no action with respect to such Holder's
rights under the Agreement that is

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inconsistent with, or adverse to, the interests of the Investor
Certificateholders.

SECTION 13.04. Governing Law; Jurisdiction; Consent to
Service of Process. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.

SECTION 13.05. Notices; Payments. (a) All demands, notices,
instructions, directions, requests, authorizations and communications
(collectively, "Notices") under this Agreement shall be in writing and shall be
deemed to have been duly given if personally delivered at, mailed by registered
mail, return receipt requested, or sent by facsimile transmission (i) in the
case of the Transferor, to Carolina Freight Funding Corporation, Highway 150
E., Cherryville, North Carolina 28021, Attention: Treasurer, (ii) in the case
of the Servicer (if the Servicer is Carolina Freight) to Carolina Freight,
Highway 150 E., Cherryville, North Carolina 28021, Attention: Treasurer, (iii)
in the case of the Trustee, to The First National Bank of Chicago, One First
National Plaza, Suite 0126, Chicago, Illinois 60670-0126, Attention: Trust
Officer, Corporate Trust, and (iv) in the case of the Paying Agent or the
Transfer Agent and Registrar, to The First National Bank of Chicago, One North
State Street, Chicago, Illinois 60602, Attention: Corporate Trust Department,
as to each party, at such other address or facsimile number as shall be
designated by such party in a written notice to each other party. If the
Servicer is not Carolina Freight, Notes shall be given to the Servicer at the
address designated by such Servicer, with a copy to Carolina Freight at the
address designated above.

(b) Any notice required or permitted to be mailed to an
Investor Certificateholder shall be given by first-class mail, postage prepaid,
at the address of such Certificateholder as shown in the Certificate Register.
Notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given, whether or not the
Certificateholder receives such notice.

(c) If the Transferor is not the Holder of the Transferor
Certificate, the Holder of the Transferor Certificate shall be entitled to
receive all notices which the Investor Certificateholders receive.

SECTION 13.06. Rule 144A Information. For so long as any of
the Investor Certificates of any Series or Class are "restricted securities"
within the meaning of Rule 144(a)(3) under the Act, the Transferor, the
Servicer and any Enhancement

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Provider agree to cooperate with each other to provide to each Investor
Certificateholder of such Series or Class and to each prospective purchaser of
Investor Certificates designated by such an Investor Certificateholder, upon
the request of such Investor Certificateholder or prospective purchaser, any
information required to be provided to such holder or prospective purchaser to
satisfy the condition set forth in Rule 144A(d)(4) under the Act (or any
successor provision).

SECTION 13.07. Severability of Provisions. If any one or
more of the covenants, agreements, provisions or terms of this Agreement shall
for any reason whatsoever be held invalid, then such covenants, agreements,
provisions or terms shall be deemed severable from the remaining covenants,
agreements, provisions or terms of this Agreement and shall in no way affect
the validity or enforceability of the other covenants, agreements, provisions
or terms of this Agreement or of the Certificates or rights of the
Certificateholders.

SECTION 13.08. Assignment. Notwithstanding anything to the
contrary contained herein, (i) this Agreement may not be assigned by the
Transferor, and (ii) except as provided in Section 8.02, this Agreement may not
be assigned by the Servicer without the prior consent of the Majority in
Interest of each Series.

SECTION 13.09. Certificates Nonassessable and Fully Paid. It
is the intention of the parties to this Agreement that the Certificateholders
shall not be personally liable for obligations of the Trust, that the interests
in the Trust represented by the Certificates shall be nonassessable for any
losses or expenses of the Trust or for any reason whatsoever and that
Certificates upon authentication thereof by the Trustee pursuant to Section
6.02 are and shall be deemed fully paid.

SECTION 13.10. Further Assurances. The Transferor and the
Servicer agree to do and perform, from time to time, any and all acts and to
execute any and all further instruments and documents required or reasonably
requested by the Trustee more fully to effect the purposes of this Agreement,
including, without limitation, the execution of any financing statements or
continuation statements relating to the Receivables for filing under the
provisions of the UCC of any applicable jurisdiction.

SECTION 13.11. Nonpetition Covenant. Notwithstanding any
prior termination of this Agreement, the Servicer, the Trustee and the
Transferor shall not, prior to the date which is one year and one day after the
termination of this Agreement with respect to the Trust, acquiesce, petition or
otherwise invoke or cause the Trust to invoke the process of any Governmental

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Authority for the purpose of commencing or sustaining a case against the Trust
under any Federal or state bankruptcy, insolvency or similar law or appointing
a receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Trust or any substantial part of its property or
ordering the winding-up or liquidation of the affairs of the Trust.

SECTION 13.12. No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of any Person, any right,
remedy, power or privilege hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power or privilege
under this Agreement preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exhaustive of any
rights, remedies, powers and privileges provided by law.

SECTION 13.13. Counterparts. This Agreement may be executed
in two or more counterparts and by different parties on separate counterparts),
each of which shall be an original, but all of which together shall constitute
one and the same instrument.

SECTION 13.14. Third-Party Beneficiaries. This Agreement
will inure to the benefit of and be binding upon the parties hereto, the
Certificateholders and their respective successors and permitted assigns.
Except as otherwise provided in this Agreement, no other person will have any
right or obligation hereunder.

SECTION 13.15. Actions by Certificateholders. (a) Wherever
in this Agreement a provision is made that an action may be taken or a Notice
given by Investor Certificateholders, such action or Notice may be taken or
given by any Investor Certificateholder, unless such provision requires a
specific percentage of Investor Certificateholders.

(b) Any Notice, consent, waiver or other act by the Holder of
a Certificate shall bind such Holder and every subsequent Holder of such
Certificate and of any Certificate issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof in respect of anything done
or omitted to be done by the Trustee or the Servicer in reliance thereon,
whether or not notation of such action is made upon such Certificate.

SECTION 13.16. Merger and Integration. Except as
specifically stated otherwise herein, this Agreement sets forth

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the entire understanding of the parties relating to the subject matter hereof,
and all prior understandings, written or oral, are superseded by this
Agreement. This Agreement may not be modified, amended, waived or supplemented
except as provided herein.

SECTION 13.17. Headings. The headings herein are for
purposes of reference only and shall not otherwise affect the meaning or
interpretation of any provision hereof.

SECTION 13.18. Construction of Agreement. The Transferor
hereby grants to the Trustee a security interest in all of the Transferor's
right, title and interest in, to and under the Receivables now existing and
hereafter created, all monies due or to become due and all amounts received
with respect thereto, and all other Trust Assets, and all "proceeds" thereof,
to secure all the Transferor's and Servicer's obligations hereunder, including,
without limitation, the Transferor's obligation to sell or transfer to the
Trust all Receivables existing on the date hereof or hereafter created and
transferred to the Transferor from time to time under the Receivables Purchase
Agreement. This Agreement shall constitute a security agreement under
applicable law.

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<PAGE> 104
IN WITNESS WHEREOF, the Transferor, the Servicer and the
Trustee have caused this Agreement to be duly executed by their respective
officers as of the day and year first above written.

CAROLINA FREIGHT FUNDING CORPORATION,
Transferor

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

CAROLINA FREIGHT CORPORATION,
Servicer

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

THE FIRST NATIONAL BANK OF CHICAGO,
Trustee

By:
--------------------------------
Name: Robert J. Chapman
Title: Assistant Vice President

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<PAGE> 105
EXHIBIT A

FORM OF TRANSFEROR CERTIFICATE

THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. NEITHER THIS CERTIFICATE NOR ANY
PORTION HEREOF MAY BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EXEMPTION FROM THE
REGISTRATION PROVISIONS OF SUCH ACT.

CAROLINA FREIGHT TRADE RECEIVABLES MASTER TRUST

TRANSFEROR CERTIFICATE

THIS CERTIFICATE REPRESENTS AN UNDIVIDED INTEREST
IN CERTAIN ASSETS OF THE CAROLINA FREIGHT TRADE RECEIVABLES
MASTER TRUST

the corpus of which consists primarily of certain receivables generated from
time to time by Carolina Freight Corporation ("Carolina Freight") and purchased
by Carolina Freight Funding Corporation (the "Transferor" or "CFFC"), which in
turn transfers and assigns such receivables to the Carolina Freight Trade
Receivables Master Trust. This certificate does not represent any recourse
obligation of, and is not guaranteed by, CFFC, Carolina Freight or any
Affiliate of any of them.

This certifies that ___________________________ is the
registered owner of the fractional undivided interest (the "Transferor
Interest") in the assets of the Carolina Freight Trade Receivables Master Trust
(the "Trust") not represented by the Investor Certificates pursuant to that
certain Pooling and Servicing Agreement, dated December 1, 1993 (as
supplemented or modified, the "Agreement"), by and among CFFC, as Transferor,
Carolina Freight, as Servicer, and The First National Bank of Chicago (the
"Trustee"). To the extent not defined herein, the capitalized terms used
herein have the meanings ascribed to them in the Agreement.

A-1
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of the Receivables, (iii) all funds which are from time to time on deposit in
the Concentration Account and any other account or accounts held for the
benefit of Certificateholders, and (iv) all other assets and interests
constituting the Trust Assets.

This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement. Although a summary of certain
provisions of the Agreement is set forth below, this Certificate does not
purport to summarize the Agreement, is qualified in its entirety by the terms
and provisions of the Agreement and reference is made to the Agreement for
information with respect to the interests, rights, benefits, obligations,
proceeds and duties evidenced hereby and the rights, duties and obligations of
the Trustee, the Servicer and the other parties bound by the Agreement.

This Certificate is the Transferor Certificate, which
represents an interest in the Trust, including the right to receive Collections
and other amounts at the times and in the amounts specified in the Agreement to
be paid to the holder of the Transferor Certificate. In addition to this
Certificate, Investor Certificates are being issued to investors pursuant to
the Agreement, which will represent the interests of Investor
Certificateholders in the Trust. This Certificate shall not represent any
interest in the Concentration Account or other account or Trust Asset except as
provided in the Agreement.

Subject to certain conditions in the Agreement, the
obligations created by the Agreement and the Trust created thereby shall
terminate upon the earliest of (i) December 31, 2013 and (ii) the day following
the Distribution Date on which the Aggregate Invested Amount for each Series is
zero.

By its acceptance of this Transferor Certificate, the Holder
hereof agrees that it will take no action with respect to such Holder's rights
under the Agreement that is inconsistent with, or adverse to, the interests of
the Investor Certificateholders.

Upon termination of the Trust pursuant to Article XII of the
Agreement, subject to the provisions of the Agreement, payment in full of the
Investor Certificateholders and the surrender of this Certificate, the Trustee
shall assign and convey to the Holder of the Transferor Certificate (without
recourse, representation or warranty) all right, title and interest of the
Trust in the Trust Assets, whether then existing or thereafter created,
including the Receivables and all proceeds thereof, except for amounts held by
the Trustee pursuant to subsection 12.02(b) of the Agreement. The Trustee
shall execute and deliver such instruments of transfer and assignment, in each

A-2
<PAGE> 107
case without recourse, as shall be reasonably requested by the Transferor to
vest in the Transferor all right, title and interest which the Trust has in the
Trust Assets.

Unless the certificate of authentication hereon has been
executed by or on behalf of the Trustee, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement, or be valid for any
purpose.

IN WITNESS WHEREOF, the Transferor has caused this Certificate
to be duly executed.

Dated:
--------------------

CAROLINA FREIGHT FUNDING CORPORATION

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

TRUSTEE'S CERTIFICATE OF AUTHENTICATION

This is one of the Certificates described in the
within-mentioned Pooling and Servicing Agreement.

Dated: , 1993
------------

THE FIRST NATIONAL BANK OF CHICAGO,
not in its individual capacity but
solely as Trustee

By: OR
------------------------
Authorized Officer

----------------------------
Authenticating Agent for the
Trustee

By:
----------------------------
Authorized Officer

A-3
<PAGE> 108
EXHIBIT B

FORM OF ANNUAL SERVICER'S CERTIFICATE

(As required to be delivered on or before March 31 of each
calendar year beginning with March 31, 1994, pursuant to
Section 3.06 of the Pooling and Servicing Agreement)

Carolina Freight Corporation

_______________________________________

CAROLINA FREIGHT TRADE RECEIVABLES MASTER TRUST

_______________________________________

The undersigned, chief financial officer of Carolina Freight
Corporation ("Carolina Freight"), as Servicer, pursuant to the Pooling and
Servicing Agreement, dated December 1, 1993 (as amended and supplemented, the
"Agreement"), by and among CFFC, as transferor, Carolina Freight, as servicer,
and The First National Bank of Chicago, as trustee, do hereby certify that:

1. Carolina Freight is, as of the date hereof, the
Servicer under the Agreement.

2. The undersigned chief financial officer is duly
authorized pursuant to the Agreement to execute and deliver this
Certificate to the Trustee, the Rating Agency and any Enhancement
Providers.

3. A review of the activities of the Servicer during the
calendar year ended December 31, ____, and of its performance under
the Agreement was conducted under my supervision.

4. Based on such review, the Servicer has, to the best
of my knowledge, performed in all material respects all of its
obligations under the Agreement throughout such year and no material
default in the performance of such obligations has occurred or is
continuing except as set forth in paragraph 5 below.

5. The following is a description of each material
default in the performance of the Servicer's obligations under the
provisions of the Agreement known to me to have been made by the
Servicer during the calendar year ended

B-1
<PAGE> 109
December 31, ___, which sets forth in detail the (a) nature of such
material default, (b) the action taken by the Servicer, if any, to
remedy each such material default and (c) the current status of each
such default: [If applicable, insert "None."]

Capitalized terms used but not defined herein are used as defined in
the Agreement.

IN WITNESS WHEREOF, each of the undersigned has duly executed this
Certificate this ____ day of ___________, ____.

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

B-2
<PAGE> 110
EXHIBIT C

FORM OF CAROLINA FREIGHT COLLECTION ACCOUNT LETTER

(Carolina Freight Collection Account Bank)

Re: Lock Box No.
Lock Box Account No.

Ladies and Gentlemen:

We hereby notify you that we have transferred exclusive ownership and
control of our lock-box number (the "Lock-Box") and the corresponding lock-box
account no. (the "Lock-Box Account") maintained with [Carolina
Freight Collection Account Bank] to _______________________________, as trustee
for Carolina Freight Trade Receivables Master Trust, established pursuant to a
pooling and servicing agreement, dated ________ __, 1993, among Carolina
Freight Funding Corporation, as transferror, Carolina Freight Corporation
("Carolina Freight") as Servicer, and The First National Bank of Chicago, as
trustee (the "Trustee").

We hereby irrevocably instruct you to collect the monies, checks,
instruments and other items of payment mailed to the Lock-Box and deposit into
the Lock-Box Account all monies, checks, instruments and other items of payment
(unless otherwise instructed by the Trustee), and to make all payments to be
made by you out of or in connection with the Lock-Box Account directly to
Carolina Freight Trade Receivables Master Trust Concentration Account, account
no. , such account being in the name of the Trustee at
_________________________________________, Attention ___________________, for
the account of the Trustee. Anything in this letter agreement to the contrary
notwithstanding, we and the Trustee understand and agree that you will make the
proceeds of items deposited into the Lock-Box account available for withdrawal
in accordance with your applicable availability schedule(s) in effect from time
to time.

We also hereby notify you that the Trustee shall be irrevocably
entitled to exercise any and all rights in respect of

C-1
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or in connection with the Lock-Box and the Lock-Box Account, including without
limitation, the right to specify when payments are to be made out of or in
connection with the Lock-Box and the Lock-Box Account. The monies, checks,
instruments and other items of payment mailed to the Lock-Box and the funds
deposited into the Lock-Box Account will not be subject to deduction, set off,
banker's lien, or any other right in favor of any person other than the
Trustee; provided, however, that you may deduct from or set-off against amounts
from time to time in the Lock-Box Account (i) your usual and customary costs
and expenses in respect of interest on overdrafts and any return items, and
your usual and customary fees and expenses associated with any such return
item, overdraft and/or the maintenance of the Lock-Box Account or any related
lock-box and (ii) the face amount (or portion thereof) of any check, instrument
or other item which was deposited in the Lock-Box Account and which has been
returned unpaid for reasons of insufficient funds or has otherwise not been
collected. You hereby acknowledge and agree that all such interest costs, fees
and expenses shall be for the account of ( ) and in the event the
amounts in the Lock-Box Account are insufficient to reimburse you for the same,
Carolina Freight agrees to reimburse you for such interest, costs, fees and/or
expenses immediately upon you demand therefor in immediately available funds.
In the event Carolina Freight fails to reimburse you as set forth above, you
may so notify the Trustee and the Trustee may, but shall have no obligation to,
pay the same.

You shall not be liable to either us or the Trustee, directly or
indirectly, for any damages arising out of your provision of services pursuant
to this letter agreement, other than damages arising as a result of your gross
negligence or willful misconduct, and in no event shall you be liable for any
consequential, indirect or special damages, even if you have been advised of
the possibility of such damages.

This letter agreement is binding upon us, you and the Trustee and each
of our respective successors and assigns and shall inure to the benefit of each
of us and our respective successors and assigns. It supersedes all prior
agreements, oral or written, with respect to the subject matter hereof and may
not be modified without the prior written consent of the Trustee. This letter
agreement may be terminated only as follows: (i) you may terminate this letter
agreement and the Lock-Box Account at any time which is thirty (30) days or
more after the date you shall have given written notice of such termination to
us and the (ii) the Trustee may terminate this letter agreement and the
Lock-Box Account at any time which is thirty (30) days or more after the date
the Trustee shall have given written notice of such termination given to
Carolina Freight and you. Notice

C-2
<PAGE> 112
hereunder shall be delivered to each party hereto at the address and to the
attention of the person set forth below, or at such other address or to the
attention of such other party as the party to be addressed may specify by
written notice delivered t each other party hereto. No termination shall
affect or impair any of the agreements, rights or obligations hereunder of any
party with respect to any period of time prior to the date of such termination.

This letter agreement shall be governed by and construed in accordance
with the internal law of the State of ______________ and applicable federal
law. This letter agreement shall become effective immediately upon being
executed by all of the parties hereto.

Very truly yours,

CAROLINA FREIGHT CORPORATION

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

Acknowledged and agreed to this
day of ___________, 1993

(Carolina Freight Collection Account Bank)

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

C-3
<PAGE> 113
ACKNOWLEDGEMENT AND AUTHORIZATION

The First National Bank of Chicago, as trustee (the "Trustee")
for the Carolina Freight Trade Receivables Master Trust, referenced in the
attached letter executed by Carolina Freight Corporation and acknowledged by
[Carolina Freight Collection Account Bank] and the Trustee (the "Lock-Box
Notice"), hereby acknowledges the transfer of exclusive ownership and control
of the "Lock-Box" and the "Lock-Box Account", in each case, as defined in and
pursuant to the Lock-Box Notice. Pursuant to the second paragraph of the
Lock-Box Notice, the Trustee hereby authorizes (Carolina Freight Collection
Account Bank) to continue to accept instructions from Carolina Freight for the
payment of funds from said Lock-Box and Lock-Box Account until the Trustee
notifies (Carolina Freight Collection Account Bank) in writing to the contrary.

Very truly yours,

--------------------------------,
as Trustee

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

Agreed and Acknowledged:

(Carolina Freight Collection Account Bank)

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

C-4
<PAGE> 114

Execution Copy

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

CAROLINA FREIGHT FUNDING CORPORATION,
Transferor

CAROLINA FREIGHT CORPORATION,
Servicer

and

THE FIRST NATIONAL BANK OF CHICAGO
Trustee

SERIES 1993-1 SUPPLEMENT
Dated as of December 1, 1993
to

POOLING AND SERVICING AGREEMENT

Dated as of December 1, 1993

CAROLINA FREIGHT TRADE RECEIVABLES MASTER TRUST

=================================================
<PAGE> 115
TABLE OF CONTENTS
Page
----

ARTICLE I
Creation of the Series 1993-1 Certificates

SECTION 1.01. Designation . . . . . . . . . . . . . . . . . . 1

ARTICLE II

Definitions

SECTION 2.01. Definitions . . . . . . . . . . . . . . . . . . 2

ARTICLE III

Servicing Fee

SECTION 3.01. Servicing Compensation . . . . . . . . . . . . 6

ARTICLE IV

Rights of Series 1993-1 Certificateholders and
Allocation and Application of Collections

SECTION 4.01. Establishment of Series Accounts . . . . . . . 7
SECTION 4.02. Settlement Procedures . . . . . . . . . . . . . 8

ARTICLE V

Distributions and Reports to
Series 1993-1 Certificateholders

SECTION 5.01. Distributions . . . . . . . . . . . . . . . . . 13
SECTION 5.02. Annual Certificateholders' Statement. . . . . . 16

ARTICLE VI

Amortization Events

SECTION 6.01. Additional Early Amortization Events . . . . . 17

ARTICLE VII

Termination

SECTION 7.01. Optional Repurchase . . . . . . . . . . . . . . 18

i
<PAGE> 116
<TABLE>
<S> <C>
Page
----

ARTICLE VIII

Miscellaneous Provisions

SECTION 8.01. Ratification of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 8.02. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 8.03. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 8.04. The Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

EXHIBIT A Form of Investor Certificate
EXHIBIT B Form of Determination Date Certificate
EXHIBIT C Form of Daily Report
</TABLE>

ii
<PAGE> 117
SERIES 1993-1 SUPPLEMENT, dated as of December 1, 1993 (the
"Series Supplement"), among CAROLINA FREIGHT FUNDING CORPORATION, a North
Carolina special-purpose corporation, as Transferor, CAROLINA FREIGHT
CORPORATION, a North Carolina corporation, as Servicer, and THE FIRST NATIONAL
BANK OF CHICAGO, as Trustee.

Pursuant to Section 6.09 of the Pooling and Servicing
Agreement dated as of December 1, 1993 (as amended and supplemented, the
"Agreement"), among the Transferor, the Servicer and the Trustee, the
Transferor may from time to time direct the Trustee to issue, on behalf of the
Trust, one or more Series of Investor Certificates representing fractional
undivided interests in the Trust. The Principal Terms of any new Series are to
be set forth in a Supplement to the Agreement.

Pursuant to this Series Supplement, the Transferor and the
Trustee shall create a Series of Investor Certificates and specify the
Principal Terms thereof.

ARTICLE I

Creation of the Series 1993-1 Certificates

SECTION 1.01. Designation. (a) There is hereby created a
Series of Investor Certificates to be issued pursuant to the Agreement and this
Series Supplement to be known as the "6.18% Trade Receivables Asset Backed
Certificates, Series 1993-1".

(b) In the event that any term or provision contained
herein shall conflict with or be inconsistent with any term or provision
contained in the Agreement, the terms and provisions of this Series Supplement
shall govern.

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ARTICLE II

Definitions

SECTION 2.01. Definitions. (a) Whenever used in this Series
Supplement the following words and phrases shall have the following meanings.

"Additional Early Amortization Event" shall have the meaning
specified in Section 6.01.

"Aggregate Invested Amount" shall mean, when used with respect
to any date, an amount equal to the Initial Aggregate Invested Amount minus the
aggregate amount of Series 1993-1 Investor Collections received and distributed
to Series 1993-1 Certificateholders as principal payments in respect of the
Aggregate Invested Amount from time to time on or prior to such date; provided,
however, that (a) the "Aggregate Invested Amount" shall not be reduced by any
amount of Series 1993-1 Investor Collections so received and distributed if at
any time such distribution of such amount of Series 1993-1 Investor Collections
is rescinded or must otherwise be returned for any reason; and (b) whenever the
term "Aggregate Invested Amount" appears in this Agreement without reference to
reduction by (i) Cure Funds in the Reserve Account or (ii) any portion of a
Partial Amortization Amount held in the Concentration Account, the "Aggregate
Invested Amount" shall not be reduced by such Cure Funds or portion of a
Partial Amortization Amount.

"Amortization Date" shall mean the last day of the 81st month
following the Accounting Period during which the Closing Date shall have
occurred.

"Certificate Rate" shall mean 6.18% per annum, calculated on
the basis of a 360-day year of twelve 30-day months.

"Closing Date" shall mean December 28, 1993.

"Determination Date Certificate" shall mean with respect to
each Accounting Period the certificate prepared by the Servicer, substantially
in the form of Exhibit B hereto.

"Discount Amount" shall mean with respect to any Collection
Period, an amount equal to the sum of (i) the amount of interest on the
outstanding Aggregate Invested Amount at the Certificate Rate payable on the
Certificates on the Distribution Date following such Collection Period, (ii)
the Series Servicing Fee for such Collection Period, (iii), the Series
Trustee's Fee for such Collection Period and (iv) expenses of the Trustee, not

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in excess of $2,500, actually incurred by the Trustee during such Collection
Period; provided, that for the purpose of calculating the Loss and Dilution
Reserve, the Trustee's expenses included in this clause (iv) shall be deemed to
be $2,500 in each Collection Period.

"Early Amortization Event" shall mean any Early Amortization
Event specified in Section 9.01 of the Agreement, together with any Additional
Early Amortization Event specified in Section 6.01 of this Series Supplement.

"Early Amortization Period" shall mean an Early Amortization
Period with respect to Series 1993-1.

"Expected Final Payment Date" shall mean the Distribution Date
occurring in December, 2000.

"Floating Allocation Percentage" shall mean at any time the
percentage equivalent (which percentage shall never exceed 100%) of a fraction,
the numerator of which is the sum of (a) the Aggregate Invested Amount at such
time (computed as if reduced by (i) the amount of Cure Funds held in the
Reserve Account at such time and (ii) the amount of funds held in the
Concentration Account at such time as all or a portion of the Partial
Amortization Amount) plus (b) the Yield Reserve at such time plus (c) the Loss
and Dilution Reserve at such time, and the denominator of which is the Net
Receivables Balance at such time; provided, however, that during any
Amortization Period or Partial Amortization Period, the "Floating Allocation
Percentage" shall remain fixed as computed on the first day of such
Amortization Period or Partial Amortization Period.

"Initial Aggregate Invested Amount" shall mean the aggregate
initial principal amount of the Series 1993-1 Certificates, which is
$60,000,000.

"Investor Collections" shall mean, with respect to any date,
that portion of the Collection deposited to the Concentration Account or
received by the Servicer on such date equal to the product of (i) the Floating
Allocation Percentage on such date times (ii) the aggregate amount of such
Collections.

"Loss and Dilution Reserve" shall mean as of any date an
amount equal to the product of (a) which is (i) the sum of the Aggregate
Invested Amount (computed as if reduced by (i) the amount of Cure Funds held in
the Reserve Accounts at such time and (ii) the amount of funds held in the
Concentration Account at such time as all or a portion of the Partial
Amortization Amount) and the Yield Reserve divided by (ii) 1 minus the greater
of (A)

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the Dynamic Loss and Dilution Reserve Percentage or (B) the Specified Loss and
Dilution Percentage, such result multiplied by (b) the greater of (i) the
Dynamic Loss and Dilution Reserve Percentage or (ii) the Specified Loss and
Dilution Reserve Percentage.

"Reserve Account" shall have the meaning specified in Section
4.01(b).

"Revolving Period" shall mean the period beginning on the
Closing Date and terminating on the earliest of (a) the close of business on
the Business Day immediately preceding the Amortization Date and, (b) the close
of business on the day on which any Early Amortization Event shall occur.

"Series Cut-Off Date" shall mean December 4, 1993.

"Series 1993-1" shall mean the Series of Investor
Certificates, the terms of which are specified in this Series Supplement.

"Series 1993-1 Accounts" shall have the meaning specified in
Section 4.01(c).

"Series 1993-1 Certificateholders" shall mean the Holders of
Series 1993-1 Certificates.

"Series 1993-1 Certificateholders' Interest" shall mean that
portion of the Certificateholders' Interest evidenced by the Series 1993-1
Certificates.

"Series 1993-1 Certificates" shall mean any one of the
certificates executed by the Transferor and authenticated by the Trustee,
substantially in the form of Exhibit A.

"Series 1993-1 Investor Collections" shall mean, as of any
date, (a) that portion of the Collections deposited to the Carolina Freight
Collection Accounts or received by the Servicer on such date equal to the
product of (i) the Floating Allocation Percentage on such date times (ii) the
aggregate amount of such Collections and (b) subject to the provisions
regarding such funds in Sections 4.01 and 4.02, any funds in the Reserve
Account on such date and (c) the funds deposited to the Trustee's Account as
payment of the Repurchase Price pursuant to Section 7.01.

"Series Servicing Fee" shall have the meaning specified in
Section 3.01.

"Series Trustee's Fee" shall mean the product of (a) the
Trustee's Fee and (b) the Series Allocation Percentage.

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"Specified Loss and Dilution Reserve Percentage" shall mean
16%; provided, that the Transferor may reduce the Specified Loss and Dilution
Reserve Percentage with the consent of the Majority in Interest.

"Trustee Account" shall have the meaning specified in Section
4.01(a).

"Undivided Fractional Interest" shall mean the undivided
fractional interest in the Aggregate Investor Interest evidenced by an Investor
Certificate, the numerator of the fraction in such undivided fractional
interest being the principal amount of such Investor Certificate at the time of
determination and the denominator of such fraction being the Aggregate Invested
Amount at such time.

"Yield Reserve" shall mean as of any date, the Turnover Rate
for such date multiplied by the Discount Amount with respect to the Collection
Period in which such date occurs.

(b) Notwithstanding anything to the contrary in this
Series Supplement or the Agreement, the term "Rating Agency" shall mean,
whenever used in this Series Supplement or the Agreement with respect to Series
1993-1, Duff & Phelps. As used in this Series Supplement and in the Agreement
with respect to Series 1993-1, "highest investment category" shall mean Duff-1
by Duff & Phelps, as applicable.

(c) All capitalized terms used herein and not otherwise
defined herein have the meanings ascribed to them in the Agreement. Each
capitalized term defined herein shall relate only to the Series 1993-1
Certificates and no other Series of Certificates issued by the Trust. The
definitions in Section 2.01 are applicable to the singular as well as the
plural forms of such terms and to the masculine as well as to the feminine and
neuter genders of such terms.

(d) The words "hereof", "herein" and "hereunder" and
words of similar import when used in this Series Supplement shall refer to this
Series Supplement as a whole and not to any particular provision of this Series
Supplement; references to any Article, Section or Exhibit are references to
Articles, Sections and Exhibits in or to this Series Supplement unless
otherwise specified; and the term "including" means "including without
limitation".

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ARTICLE III

Servicing Fee

SECTION 3.01. Servicing Compensation.

The portion of the Servicing Fee allocable to the Series
1993-1 Certificateholders with respect to any Distribution Date (the "Series
Servicing Fee") shall be equal to one-twelfth of the product of (a) 0.25% and
(b) the Aggregate Invested Amount; provided, however, that in the case of any
Servicer other than Carolina Freight or any Affiliate thereof, the Series
Servicing Fee may be a higher fee, as shall be agreed to by the Trustee in its
sole discretion, but in no event in excess of a per annum fee equal to the
product of 0.75% and the Aggregate Invested Amount. With respect to the first
Distribution Date, the Series Servicing Fee shall be $7,500.

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ARTICLE IV

Rights of Series 1993-1 Certificateholders and
Allocation and Application of Collections

SECTION 4.01. Establishment of Series Accounts.
(a) The Servicer, for the benefit of the Series 1993-1
Certificateholders, shall establish and maintain in the name of the Trustee,
on behalf of the Trust, with an Eligible Institution a segregated account
accessible only by the Trustee (the "Trustee's Account"), which shall be
identified as the "Trustee's Account for the Carolina Freight Trade
Receivables Master Trust, Series 1993-1" and shall bear a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Series 1993-1 Certificateholders. The Trustee's Account initially shall be
established at The First National Bank of Chicago.

(b)(i) The Servicer, for the benefit of the Certificateholders,
shall establish and maintain in the name of the Trustee, on behalf of the
Trust, with an Eligible Institution a segregated account accessible only by
the Trustee (the "Reserve Account"), which shall be identified as the
"Reserve Account for the Carolina Freight Trade Receivables Master Trust,
Series 1993-1" and shall bear a designation clearly indicating that the funds
deposited therein are held for the benefit of the Series 1993-1
Certificateholders.

(ii) At the direction of the Servicer (which may be a standing
direction), funds on deposit in the Reserve Account shall be invested by the
Trustee in Eligible Investments selected by the Servicer. All such Eligible
Investments shall be held by the Trustee for the benefit of the Series 1993-1
Certificateholders. On each Distribution Date all interest and other
investment earnings (net of losses and investment expenses) on funds on deposit
therein shall be applied as set forth in Section 4.02 of this Series
Supplement. Funds on deposit in the Reserve Account shall be invested at the
written direction of the Servicer in Eligible Investments that will mature so
that such funds will be available on or before the close of business on the
Business Day next preceding the following Distribution Date. Funds deposited
in the Reserve Account on a Business Day which immediately precedes a
Distribution Date upon the maturity of any Eligible Investments are not
required to be invested overnight.

(c)(i) The Trustee shall possess all right, title and
interest in and to all funds on deposit from time to time in, and all Eligible
Investments credited to, the Trustee's Account and the Reserve Account
(collectively, the "Series 1993-1 Accounts") and in all proceeds thereof. The
Series 1993-1 Accounts shall be

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under the sole dominion and control of the Trustee for the benefit of the
Series 1993-1 Certificateholders and the Holder of the Transferor Certificate.
If, at any time, any of the Series 1993-1 Accounts are held by an institution
other than an Eligible Institution, the Trustee (or the Servicer on its behalf)
shall within 10 Business Days establish a new Series 1993-1 Account meeting the
conditions specified in paragraph (a)(i) or (b)(i) above, as applicable, and
shall transfer any cash and/or any investments to such new Series 1993-1
Account. Neither the Transferor, the Servicer nor any person or entity
claiming by, through or under the Transferor, the Servicer or any such person
or entity shall have any right, title or interest in, or any right to withdraw
any amount from, any Series 1993-1 Account, except as expressly provided
herein. Schedule 1, which is hereby incorporated into and made part of this
Series Supplement, identifies each Series 1993-1 Account by setting forth the
account number of each such account, the account designation of each such
account and the name and location of the institution with which such account
has been established. If a substitute Series 1993-1 Account is established
pursuant to this Section, the Servicer shall provide to the Trustee an amended
Schedule 1, setting forth the relevant information for such substitute Series
1993-1 Account.

(ii) Notwithstanding anything herein to the contrary, the
Servicer shall have the power, revocable by the Trustee, to make withdrawals
and payments or to instruct the Trustee to make withdrawals and payments from
the Series 1993-1 Accounts for the purposes of carrying out the Servicer's or
Trustee's duties hereunder.

(d) Unless otherwise agreed to in writing by the Rating
Agency, at no time may greater than 10% of the outstanding principal balance of
the Certificates be invested in Eligible Investments (other than obligations of
the United States government) of any single entity or its Affiliates.

(e) Any request by the Servicer to invest funds on deposit in
any Series 1993-1 Account shall be in writing and shall certify that the
requested investment is an Eligible Investment which matures at or prior to the
time required hereby.

SECTION 4.02. Settlement Procedures. (a) On each Deposit
Date during each Collection Period during the Revolving Period, unless a
Partial Amortization Period shall have occurred and be continuing, the Servicer
shall instruct the Trustee by an Officer's Certificate (in the form of Exhibit
C hereto) delivered to the Trustee by 12:00 noon New York City time, to, and
the Trustee shall at such time: (i) allocate Collections received since
receipt of the last such Officer's Certificate and held in

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the Concentration Account on such day, based on the Floating Allocation
Percentage on such day (as set forth in the Officer's Certificate of the
Servicer delivered pursuant to this paragraph (a)), either as Series 1993-1
Investor Collections, Collections allocable to another Series or Transferor
Collections (ii) commencing on the Business Day following the Distribution Date
in such Collection Period, out of such Series 1993-1 Investor Collections,
allocate to, and hold in trust in the Concentration Account for the Investor
Certificateholders, the Trustee and the Servicer, an amount equal to the
Discount Amount for such Collection Period to the extent such amount has not
been previously allocated by the Servicer, (iii) deposit the remainder of such
Series 1993-1 Investor Collections to the Transferor Account to be invested in
Receivables by the Transferor to extent required by the Receivables Purchase
Agreement and (iv) (a) if the Transferor is the Holder of the Transferor
Certificate, deposit the Transferor's Collections to the Transferor's Account
or (b) if the Holder of the Transferor Certificate is a Person other than the
Transferor, pay the Transferor's Collections to such Holder. On the Business
Day immediately prior to the Distribution Date with respect to such Collection
Period, the Servicer shall direct the Trustee to deposit to the Trustee's
Account for the account of the Investor Certificateholders, the Trustee and the
Servicer the amounts allocated and held in trust as described in clause (ii) of
the first sentence of this Section 4.02(a); provided, however, that the
Servicer shall deposit to the Trustee's Account that portion of the Discount
Amount allocable to the Trustee's expenses only to the extent of expenses
actually incurred by the Trustee (as certified to the Servicer in writing by
the Trustee) during the Collection Period relating to such Distribution Date or
remaining unpaid with respect to any prior Collection Period. The Officer's
Certificate delivered by the Servicer to the Trustee pursuant to the first
sentence of this Section 4.02 on the first day of each Collection Period shall
set the Discount Amount for such Collection Period.

(b) On each Deposit Date during each Collection Period if and
so long as a Partial Amortization Period shall have occurred and be continuing,
and during the Amortization Period, the Servicer shall instruct the Trustee by
an Officer's Certificate delivered to the Trustee by 12:00 noon New York City
time, to, and the Trustee shall at that time: (i) allocate Collections received
since receipt of the last such Officer's Certificate, based on the Floating
Allocation Percentage for such Partial Amortization Period or the Amortization
Period, as the case may be, (as set forth in the Officer's Certificate of the
Servicer delivered pursuant to this paragraph (b)), either as Series 1993-1
Investor Collections, Collections allocable to another Series or as Transferor
Collections, (ii) set aside and hold in

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trust in the Concentration Account for the Investor Certificateholders, the
Trustee and the Servicer (A) during the Amortization Period, all of such Series
1993-1 Investor Collections and (B) during a Partial Amortization Period, (1)
such Series 1993-1 Investor Collections up to an amount equal to the Partial
Amortization Amount to the extent such amount has not been previously allocated
by the Servicer and (2) an amount equal to the Discount Amount in the manner
set forth in clause (a)(ii) of this Section 4.02, and (iii) (a) if the
Transferor is the Holder of the Transferor Certificate, deposit to the
Transferor's Account such Transferor Collections or (b) if the Holder of the
Transferor Certificate is a Person other than the Transferor, pay the
Transferor's Collections to such Holder. On the Business Day immediately prior
to the Distribution Date with respect to such Collection Period, the Servicer
shall deposit to the Trustee's Account for the account of the Investor
Certificateholders, the Trustee and the Servicer (i) the amount set aside as
described in clause (ii) of the first sentence of this Section 4.02(b) and (ii)
the amount of Cure Funds on deposit in the Reserve Account, but not to exceed
the sum of (a) the Discount Amount for such Distribution Date, (b) the
Aggregate Invested Amount, in the case of the Amortization Period, and the
Partial Amortization Amount, in the case of a Partial Amortization Period and
(c) the aggregate amount of other amounts owed hereunder to the Investor
Certificateholders. If, on any date, the sum of the Floating Allocation
Percentage and the floating allocation percentage for all other outstanding
Series exceeds 100%, the aggregate of Investor Collections for all outstanding
Series shall be allocated, for purposes of this Section 4.02, pro rata on the
basis of the respective Series Allocation Percentages and the Trustee shall
provide prompt written notice of the level of such Floating Rate Allocation
Percentage to the Investor Certificateholders.

(c) On the Business Day prior to any Distribution Date during
the Amortization Period, the Transferor may deposit to the Trustee's Account
funds in an amount sufficient, when added to the amounts deposited to the
Trustee's Account pursuant to the preceding sentence, to reduce the Aggregate
Invested Amount to zero on such Distribution Date. Any amounts set aside
pursuant to clause (ii) of the first sentence of this Section 4.02(b) and not
required to be so deposited for the account of the Investor Certificateholders,
the Trustee and the Servicer pursuant to the preceding sentence shall be
deposited to the Transferor's Account by the Trustee as directed by the
Servicer. Upon the termination of the Amortization Period, the Servicer shall
instruct the Trustee to, and the Trustee shall, withdraw from the Reserve
Account all remaining Cure Funds on deposit therein and deposit such funds to
the Trustee's Account for use by the Paying Agent

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in making the distribution required under the last sentence of Section 5.01(b).

(d) On any Distribution Date during the Revolving Period,
the Transferor may instruct the Trustee by an Officer's Certificate (which may
be a standing instruction) delivered to the Trustee by noon New York City time,
to, and the Trustee shall, deposit to the Transferor's Account Cure Funds held
in the Reserve Account to the extent that the amount of Cure Funds released
from the Reserve Account shall not cause a Partial Amortization Period to
commence.

SECTION 4.03. Calculation of Interest. (a) The amount of
interest payable with respect to the Series 1993-1 Certificates on any
Distribution Date shall be an amount equal to one-twelfth of the product of (i)
the Certificate Rate and (ii) the Aggregate Invested Amount (not reduced by the
amount of Cure Funds held in the Reserve Account at such time) as of the close
of business on the preceding Distribution Date (after giving effect to all
repayments of principal made to Certificateholders on such preceding
Distribution Date, if any); provided, however, with respect to the first
Distribution Date, the amount of interest payable shall be equal to $185,400.
The amount of interest shall be calculated on the basis of a 360-day year of
twelve 30-day months.

SECTION 4.04. Notice to Series 1993-1 Certificateholders.
(a) The Transferor, the Servicer and the Trustee agree to provide to each
Investor Certificateholder a copy of each notice, report or other document
required to be delivered by the Transferor, the Servicer or the Trustee
pursuant to the following sections of the Pooling and Servicing Agreement:

(i) the last paragraph of Section 2.03;
(ii) the last paragraph of Section 2.04;
(iii) Section 2.05 (g)(i) and (ii);
(iv) the last paragraph of Section 3.03;
(v) Section 3.04 (h)(i);
(vi) Section 3.07(b);
(vii) Section 3.11;
(viii) Sections 6.09(b)(i) and (iv);
(ix) the last sentence of Section 9.01;
(x) Section 11.07; and
(xi) Section 11.17.

(b) The Servicer shall give written notice to such Investor
Certificateholder of material changes to the Credit Policy Manual pursuant to
Section 3.04(j) of the Pooling and Servicing Agreement.

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(c) The Trustee shall furnish to each Certificateholder a
copy of each amendment made pursuant to Sections 13.01(a) or (b) of the
Agreement within 10 days following the execution of such amendment.

SECTION 4.05 Inspection Rights; Confidentiality. (a) The
Transferor shall provide to each Holder of Certificates with an aggregate
principal amount representing at least 10% of the Aggregate Invested Amount
access to the documentation regarding the Receivables, including the right to
meet with the Transferor's auditors, such access being afforded without charge
but only (i) upon reasonable request, (ii) during normal business hours, (iii)
subject to the Transferor's normal security and confidentiality procedures and
(iv) at reasonably accessible offices in the continental United States
designated by the Transferor.

(b) The Certificateholders, by their acceptance of the Series
1993-1 Certificates, agree not to disclose to any Person any information
concerning the Receivables or the business or operations of the Transferor or
the Servicer made available to the Certificateholders pursuant to the terms of
the Agreement; provided, however, that nothing herein contained shall limit or
impair the right or obligation of any Certificateholder to disclose such
information: (i) to its directors, auditors, attorneys, employees,
professional consultants and agents who would have access to such information
in the normal course of the performance of such Person's duties, (ii) when
required by any law, ordinance or governmental order, regulation, rule, policy
investigation or any regulatory authority request, (iii) as may be required to
any municipal, state, provincial or federal regulatory body having or claiming
to have jurisdiction over the Holder or to the National Association of
Insurance Commissioners or similar organizations or their successors, (iv) to
use the same in connection with the enforcement of the terms and conditions of
this Agreement and the Certificates, (v) which is publicly available or readily
ascertainable from public sources, or which is received by any
Certificateholder from a third Person who or which is not bound to keep the
same confidential, (vi) in connection with any proceeding, case or matter
pending (or on its fact purported to be pending) before any court, tribunal,
arbitration board or any governmental agency, commission, authority, board or
similar entity, (vii) in connection with any contemplated transfer of any of
the Certificates by a Holder thereof (it being understood and agreed that any
such proposed transferee shall itself agree in writing to be bound by the terms
and provisions hereof), or (viii) to any other holder of the Certificates;
provided further that such Person shall promptly give the Transferor prior
notice of any disclosure permitted under clauses (ii), (iii) and (vi) hereof so
that the Transferor

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may seek an appropriate protective order, unless such notice is prohibited by
any law, decree, order or subpoena.

SECTION 4.06 Consents.

(a) The following actions under the Pooling and Servicing
Agreement, notwithstanding any provisions therein to the contrary, are subject
to the consent of the Majority in Interest:

(i) the adjustment by the Transferor of the level of any
Concentration Limit pursuant to the definition of "Concentration Limit"; and

(ii) the appointment by the Trustee of a Successor Servicer
pursuant to Section 10.02(a) of the Pooling and Servicing Agreement.

(b) The Transferor shall not, nor shall the Transferor permit
any of its Affiliates to, solicit, request or negotiate for or with respect to
any proposed waiver or amendment of any of the provisions of this Agreement or
the Investor Certificates unless each Holder of an Investor Certificate
(irrespective of the principal amount of Investor Certificates then held by it
and at substantially the same time as each other Holder of an Investor
Certificate) shall be informed thereof by the Transferor and shall be afforded
the opportunity of considering the same and shall be supplied by the Transferor
with sufficient information to enable it to make an informed decision with
respect thereto and any information delivered to any other Holder of an
Investor Certificate. The Transferor shall not, nor shall the Transferor
permit any of its Affiliates to, directly or indirectly, pay or cause to be
paid any remuneration, whether by way of supplemental or additional interest,
fee or otherwise, to any Holder of and Investor Certificate as consideration
for or as an inducement to the entering into by such Holder of any such
amendment or waiver, unless such remuneration is concurrently paid, on the same
terms, ratably to all Holders of all of the Investor Certificates then
outstanding, whether or not such Holders shall have consented to such waiver or
amendment.

ARTICLE V

Distributions and Reports to
Series 1993-1 Certificateholders

SECTION 5.01. Distributions. (a) During the Revolving
Period, on the Distribution Date with respect to each Collection Period, if and
so long as a Partial Amortization Period shall not have occurred and be
continuing, the Paying

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Agent shall distribute the amount of Series 1993-1 Investor Collections
deposited to the Trustee's Account on such Distribution Date, in the following
order of priority, in accordance with the Servicer's Determination Date
Certificate, to:

(i) the Trustee as the accrued and unpaid Series
Trustee's Fee and expenses of the Trustee, not in excess of $2,500;

(ii) the Servicer (if the Servicer is other than
Carolina Freight) as the accrued and unpaid Series Servicing Fee;

(iii) the Investor Certificateholders, ratably in
accordance with their respective Undivided Fractional Interests, as
payment of accrued and unpaid interest for such Interest Period on the
Aggregate Invested Amount (not reduced by the amount of Cure Funds
held in the Reserve Account at such time) at the Certificate Rate; and

(iv) Trustee's accrued and unpaid expenses in
excess of $2,500;

(v) Service Transfer expenses incurred by a
Successor Servicer which have not been paid by the initial Servicer;
and

(vi) the Servicer (if the Servicer is Carolina
Freight) as the accrued and unpaid Series Servicing Fee.

(b) If and so long as a Partial Amortization Period shall
have occurred and be continuing, and during the Amortization Period, the Paying
Agent shall distribute the amount of Series 1993-1 Investor Collections
deposited to the Trustee's Account on such Distribution Date, in the following
order of priority, in accordance with the Servicer's Determination Date
Certificate, to:

(i) the Trustee as the accrued and unpaid Series
Trustee's Fee and expenses of the Trustee, not in excess of $2,500;

(ii) the Servicer (if the Servicer is other than
Carolina Freight) as the accrued and unpaid Series Servicing Fee and,
if a default in payment to the Certificateholders shall have occurred,
Service Transfer expenses incurred by a Successor Servicer which have
not been paid by the initial Servicer;

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(iii) the Investor Certificateholders, ratably in
accordance with their respective Undivided Fractional Interests, as
payment of accrued and unpaid interest for such Interest Period on the
Aggregate Invested Amount (not reduced by the amount of Cure Funds
held in the Reserve Account at such time) at the Certificate Rate;

(iv) the Investor Certificateholders, ratably in
accordance with their respective Undivided Fractional Interests, in
reduction (in an amount equal to the Partial Amortization Amount in
connection with such Partial Amortization Period, or to zero in
connection with the Amortization Period) of the Aggregate Invested
Amount;

(v) the Investor Certificateholders in payment of
all other amounts owed to them hereunder;

(vi) Trustee's expenses in excess of $2,500;

(vii) Service Transfer expenses incurred by a
Successor Servicer which have not been paid by the initial Servicer;
and

(viii) the Servicer (if Carolina Freight) as the
accrued and unpaid Series Servicing Fee for such Collection Period.

Upon the payment in full to the Investor Certificate-holders
of the Aggregate Invested Amount, all accrued and unpaid interest thereon and
all other amounts owed them hereunder, the payment in full to the Servicer of
the Series Servicing Fee, and the payment in full to the Trustee of the Series
Trustee's Fee, all amounts remaining on deposit in the Trustee's Account shall
be distributed by the Paying Agent to the Holder of the Transferor Certificate,
and all amounts, if any, remaining in the Carolina Freight Collection Accounts,
the Concentration Account and the Reserve Account shall be distributed by the
Trustee to the Holder of the Transferor Certificate; provided, however, that if
at any time after the payment that would have otherwise resulted in such
payment in full, such payment is rescinded or must otherwise be returned for
any reason, effective upon such rescission or return such payment in full shall
automatically be deemed, as between the Investor Certificateholders and the
Transferor, never to have occurred, and the Transferor shall be required, to
the extent it received any amounts under this Section 5.01(b), to remit to the
Investor Certificateholders an amount equal to the rescinded or returned
payment.

15
<PAGE> 132
Certificateholders hereunder shall be made by wire transfer to each
Certificateholder to such account as may be designated in writing, received by
the Paying Agent on or prior to the relevant Record Date, by each
Certificateholder without presentation or surrender of any Certificate or the
making of any notation thereon. In the absence of such timely wire transfer
instructions, payment will be made by check to the address of record of the
Certificateholder.

SECTION 5.02. Annual Certificateholders' Statement. On or
before January 31 of each calendar year, beginning with January 31, 1994, the
Servicer shall provide to the Paying Agent and the Paying Agent shall forward
or cause to be forwarded to each Person who at any time during the preceding
calendar year was a Certificateholder, a statement prepared by the Servicer
containing the information which is required to be contained in the
Determination Date Certificates provided to Certificateholders pursuant to
Section 3.05(b) of the Agreement, aggregated for such calendar year or the
applicable portion thereof during which such Person was a Certificateholder,
together with other information as is required to be provided under the
Internal Revenue Code and such other customary information as is necessary to
enable the Certificateholders to prepare their tax returns. Such obligation of
the Servicer shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Paying Agent
pursuant to any requirements of the Internal Revenue Code as from time to time
in effect.

ARTICLE VI

Amortization Events

SECTION 6.01. Additional Early Amortization Events. There
are no Early Amortization Events applicable to the Series 1993-1 Certificates
in addition to those specified in Section 9.01 of the Pooling and Servicing
Agreement.

ARTICLE VII

Termination

SECTION 7.01. Optional Repurchase. On any Distribution
Date on which the Aggregate Invested Amount is $6,000,000 or less, the
Transferor shall have the option to purchase the entire Certificateholders'
Interest, by depositing to the Trustee's Account on such Distribution Date in
immediately available funds not later than 12:00 noon, New York City time, a
purchase price (determined after giving effect to any payment of principal and
interest on such Distribution Date) equal to the sum of (i) the

16
<PAGE> 133
Aggregate Invested Amount (less the amount of funds on deposit in the Reserve
Account) on such Distribution Date, plus (ii) the amount of accrued and unpaid
interest on the Aggregate Invested Amount as of such Distribution Date, plus
(iii) the amount of accrued and unpaid Series Servicing Fee and Series
Trustee's Fee as of such Distribution Date, plus (iv) all other amounts owing
to the Investor Certificateholders hereunder (such purchase price being the
"Repurchase Price"). The Transferor shall give the Servicer, the Trustee and
the Investor Certificateholders at least ten days prior written notice of the
date on which the Transferor intends to exercise such option to purchase. The
funds deposited to the Trustee's Account as payment of the Repurchase Price
shall be allocated and distributed pursuant to Article V with the other
Investor Collections received during the Collection Period preceding such
Distribution Date.

ARTICLE VIII

Miscellaneous Provisions

SECTION 8.01. Ratification of Agreement. As supplemented by
this Series Supplement, the Agreement is in all respects ratified and confirmed
and the Agreement as so supplemented by this Series Supplement shall be read,
taken and construed as one and the same instrument.

SECTION 8.02. Counterparts. This Series Supplement may be
executed in two or more counterparts (and by different parties on separate
counterparts), each of which shall be an original, but all of which together
shall constitute one and the same instrument.

SECTION 8.03. GOVERNING LAW. THIS SERIES SUPPLEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.

SECTION 8.04. The Trustee. The Trustee shall not be
responsible in any manner whatsoever for or in respect of the validity or
sufficiency of this Series Supplement, or for or in respect of the recitals
contained herein, all of which recitals are made solely by the Transferor and
the Servicer.

17
<PAGE> 134
IN WITNESS WHEREOF, the Transferor, the Servicer and the
Trustee have caused this Series Supplement to be duly executed by their
respective officers as of the day and year first above written.

CAROLINA FREIGHT FUNDING CORPORATION,
Transferor

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

CAROLINA FREIGHT CORPORATION,
Servicer

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

THE FIRST NATIONAL BANK OF CHICAGO,
Trustee

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

18
<PAGE> 135
EXHIBIT A

FORM OF SERIES 1993-1 INVESTOR CERTIFICATE

REGISTERED U.S. $_____________*

THIS OBLIGATION HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND MAY NOT BE
OFFERED OR SOLD EXCEPT PURSUANT TO AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT

CUSIP No.__________

SERIES 1993-1

6.18% TRADE RECEIVABLES ASSET BACKED CERTIFICATE
THIS CERTIFICATE REPRESENTS AN
UNDIVIDED INTEREST IN CERTAIN ASSETS OF THE

CAROLINA FREIGHT TRADE RECEIVABLES MASTER TRUST

the corpus of which consists primarily of certain receivables generated from
time to time by Carolina Freight Carriers Corporation, G.I. Trucking Company
and Red Arrow Freight Lines, Inc. (the "Originating Subsidiaries"), transferred
from the Originating Subsidiaries to Carolina Freight Corporation ("Carolina
Freight") and purchased by Carolina Freight Funding Corporation, a North
Carolina special purpose corporation (the "Transferor") from Carolina Freight,
which in turn transfers and assigns such receivables to the Carolina Freight
Trade Receivables Master Trust. This certificate (the "Investor Certificate")
does not represent any recourse obligation of, and is not guaranteed by, the
Transferor, Carolina Freight or any Affiliate thereof

This certifies that
(the "Investor Certificateholder"), is
the registered owner of a fractional undivided interest in the assets of the
Carolina Freight Trade Receivables Master Trust (the "Trust"), created pursuant
to the Pooling and Servicing Agreement, dated as of

__________________________________

* Denominations of $250,000 and multiples of ($1,000) in
excess thereof

A-1
<PAGE> 136
December 1, 1993 (as supplemented or modified, the "Agreement"), by and among
the Transferor, Carolina Freight, as Servicer (the "Servicer"), and The First
National Bank of Chicago (the "Trustee"). Unless the certificate of
authentication hereon has been executed by or on behalf of the Trustee by
manual or facsimile signature, this Investor Certificate shall not be entitled
to any benefit under the Agreement or be valid for any purpose.

Reference is hereby made to the further provisions of this
Investor Certificate set forth below, which further provisions shall for all
purposes have the same effect as if set forth at this place.

This Investor Certificate, together with all other Investor
Certificates, in each case, issued pursuant to the Agreement, represent the
entire aggregate principal amount of the 6.18% Trade Receivables Asset Backed
Certificates (the "Investor Certificates") issued on the Closing Date.

Each purchaser, by its purchase of this security, represents,
acknowledges and agrees that: (1) it is purchasing "restricted" securities
which have not been and will not be registered under the Securities Act; and
(2) if it should decide to dispose of any of such Securities, it will not
offer, sell, transfer, pledge, hypothecate or otherwise dispose of any of such
Securities except, (A) pursuant to Rule 144A under the Securities Act, (B) to a
sophisticated institutional investor that is an "accredited investor" (within
the meaning of Rule 501(a) (1), (2), (3) or (7) under the Securities Act) in a
transaction not involving any general solicitation or advertising as evidenced
by a certificate of the proposed transferor thereof delivered to the Trustee or
(C) pursuant to any other exemption from the registration requirements of the
Securities Act in each case in accordance with any applicable state laws
governing the offer or sale of securities.

The corpus of the Trust consists of (i) a portfolio of
receivables meeting certain eligibility requirements (the "Receivables")
identified under the Agreement from time to time, (ii) funds collected or to be
collected from Obligors in respect of the Receivables, (iii) all funds which
are from time to time on deposit in the Concentration Account and any other
account or accounts held for the benefit of the Certificateholders, and (iv)
all other assets and interests constituting the Trust Assets. Although a
summary of certain provisions of the Agreement is set forth below, this
Investor Certificate does not purport to summarize the Agreement and the
applicable Supplement and is qualified in its entirety by the terms and
provisions of the Agreement. Reference is made to the Agreement and the
applicable

A-2
<PAGE> 137
Supplement for information with respect to the interests, rights, benefits,
obligations, proceeds and duties evidenced hereby and the rights, duties and
obligations of the Trustee, the Servicer and the other parties bound by the
Agreement. A copy of the Agreement may be requested by writing to the Trustee
at The First National Bank of Chicago, Attention: Corporate Trust Department,
at the expense of the Transferor. To the extent not defined herein, the
capitalized terms used herein have the meanings ascribed to them in the
Agreement.

This Investor Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement, as
amended from time to time, the Investor Certificateholder by virtue of the
acceptance hereof assents and is bound.

The Trust's assets are allocated in part to the Investor
Certificateholders, with the remainder allocated to the Transferor, which
interest is represented by the Transferor Certificate. The Investor
Certificates collectively represent an undivided fractional beneficial interest
in the Trust and the right to receive, to the extent necessary to make the
required payments with respect to the Investor Certificates, at the times and
in the amounts specified in the Agreement, of Series 1993-1 Investor
Collections from time to time. The Transferor Certificate represents the
interest in the Trust Assets not represented by the Investor Certificates.

The initial Aggregate Invested Amount on the Closing Date is
$60,000,000. The Aggregate Invested Amount with respect to any date will be an
amount equal to (a) the initial Invested Amount, minus (b) the amount of any
distributions to the Investor Certificateholders as principal payments in
respect of the Invested Amount on or prior to such date pursuant to the terms
of the Agreement.

Interest with respect to the Investor Certificates shall be
distributed to the Investor Certificateholders on each Distribution Date.
Payment of any installment of interest on Investor Certificates will be made or
caused to be made by the Trustee to the person in whose name such Investor
Certificate is registered at the close of business on the Record Date. Payment
of such interest will be made by wire transfer to a designated account
maintained by the Holder, provided that such Holder has provided the Paying
Agent with the wire transfer designation, in writing, received by the Paying
Agent on or prior to the relevant Record Date. In the absence of such timely
wire transfer instructions, payment will be made by check to the address of
record of the Holder.

A-3
<PAGE> 138
The Revolving Period under the Agreement shall terminate on
the earliest to occur of the close of business on (a) the Amortization Date,
(b) the Business Day immediately preceding the day on which any Early
Amortization Event shall occur, and (c) the Business Day specified for such
termination by the Transferor on at least fifteen Business Days' notice, as
described in the next paragraph.

On any Distribution Date on which the Invested Amount is
$6,000,000 or less, the Transferor, upon prior written notice, may repurchase
the Investor Certificateholders' entire interest in the Trust. The aggregate
Purchase Price payable to the Investor Certificateholders will be equal to the
Invested Amount plus accrued and unpaid interest through the date of such
repurchase.

Payment of principal in respect of Investor Certificates will
be made by transfer to an account maintained by the Holder. The final
distribution on an Investor Certificate will be made after due notice by the
Trustee of the pendency of such distribution and, if such Investor
Certificateholder is not an insurance company or an institutional investor,
only upon presentation and surrender of an Investor Certificate at the
Corporate Trust Office of the Trustee.

The Investor Certificates do not represent an obligation of,
or an interest in, the Transferor, the Servicer or any Affiliate of either of
them. This Investor Certificate is limited in right of payment to certain
Collections of the Receivables (and certain other amounts), all as more
specifically set forth hereinabove and in the Agreement.

The Agreement may be amended by the Transferor, the Servicer
and the Trustee, without the consent of any Investor Certificateholder, (i) to
cure any ambiguity, (ii) to correct or supplement any provision therein which
may be inconsistent with any other provision therein, or (iii) to add any other
provisions with respect to matters or questions arising under the Agreement
which are not inconsistent with the provisions of the Agreement; provided, (A)
that any amendment pursuant to clause (iii) above shall not, as evidenced by an
Opinion of Counsel, adversely affect in any material respect the interests of
any Investor Certificateholders and provided, further, that such action shall
not cause any adverse tax effect or otherwise adversely affect the interests of
such Investor Certificateholders.

The Agreement also may be amended by the Servicer, the
Transferor and the Trustee, with the consent of the Investor Certificateholders
owning a Majority in Interest of the Investor Certificates, for the purpose of
adding any provisions to, chang-

A-4
<PAGE> 139
ing in any manner or eliminating any of the provisions of, the Agreement, or
modifying in any manner the rights of the Investor Certificateholders;
provided, however, that no such amendment shall (a) reduce in any manner the
amount of, or delay the timing of, distributions which are required to be made
to any Certificateholder without the consent of such Certificateholder, (b)
change the definition of or the manner of calculating the Certificateholders'
Interest or the Aggregate Certificateholders' Interest or any Investor
Certificateholder's interest therein without the consent of each affected
Investor Certificateholder, (c) reduce the aforesaid percentage required to
consent to any such amendment without the consent of each Investor
Certificateholder or (d) cause any adverse tax effect for any Investor
Certificateholder without the consent of each affected Investor
Certificateholder. Any such amendment and any such consent by the holder of
this Investor Certificate shall be conclusive and binding on such Investor
Certificateholder and upon all future holders of this Investor Certificate and
of any Investor Certificate issued in exchange hereof or in lieu hereof whether
or not notation thereof is made upon this Investor Certificate.

The Investor Certificates are only issuable in registered form
without coupons in denominations of $250,000 and integral multiples of $1,000
in excess thereof. Investor Certificates are transferable upon surrender of
the Investor Certificate, and any other required documents, to an office of the
Trustee, where newly executed and authenticated Investor Certificates in the
name of the designated transferee will be delivered.

As provided in the Agreement and subject to certain limitations
therein set forth, this Investor Certificate is exchangeable for new Investor
Certificates evidencing a like aggregate fractional undivided interest in the
Trust, as requested by the Investor Certificateholder surrendering this
Investor Certificate. No service charge will be imposed for any such transfer
or exchange, but the Transfer Agent and Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection therewith.

This Investor Certificate shall be construed in accordance
with and governed by the laws of the State of New York.

A-5
<PAGE> 140
IN WITNESS WHEREOF, the Transferor has caused this Investor
Certificate to be duly executed.

CAROLINA FREIGHT FUNDING
CORPORATION

BY:
----------------------------

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

A-6
<PAGE> 141
TRUSTEE'S CERTIFICATE OF AUTHENTICATION

This is one of the Investor Certificates described in the within-mentioned
Agreement.

Dated:
------------------------------

THE FIRST NATIONAL BANK OF CHICAGO,
not in its individual capacity but
solely as Trustee

By: OR
---------------------- ---------------------------
Authorized Signatory
---------------------------
as Authenticating Agent for
the Trustee

By:
------------------------
Authorized Officer

A-7
<PAGE> 142
ASSIGNMENT

FOR VALUE RECEIVED, the undersigned Holder hereby sell(s),
assign(s) and transfer(s) unto __________________________ ______________ whose
taxpayer identification number is ______________________________ and whose
address including postal zip code is _________________ the within Security and
all rights thereunder, hereby irrevocable constituting and appointing
______________________ attorney-in-fact to transfer said Security on the books
of the Trustee with full power of substitution in the premises.

In connection with the transfer of this Security, the
undersigned holder certifies that:

[CHECK ONE]

/ / (A) This Security is being transferred to a "qualified
institutional buyer" (as defined in Rule 144A under
the Securities Act of 1933) in compliance with the
exemption from registration under the Securities Act
of 1933 provided by Rule 144A.

/ / (B) This Security is being transferred to a sophisticated
institutional investor which is an "accredited
investor" (within the meaning of Rule 501(a)(1), (2),
(3) or (7) under the Securities Act of 1933) in a
transaction not involving any general solicitation or
advertising.

/ / (C) This Security is being transferred in compliance
with another exemption from registration under the
Securities Act of 1933.

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

NOTICE: The signature of the holder of
this assignment must correspond with
the name as written upon the face of
the within instrument in every
particular, without any change
whatsoever.

* If Box C is checked, the Trustee shall receive from the proposed
transferee, prior to the Trustee being required to effect the transfer
of this Security, a written opinion of counsel stating that such
transfer is exempt from the registration requirements of the
Securities Act of 1933.

<PAGE> 143
SIGNATURE GUARANTEED

_____________________________________

IF NONE OF THE FOREGOING BOXES IS CHECKED, THE TRUSTEE SHALL NOT BE OBLIGATED
TO REGISTER THIS SECURITY IN THE NAME OF ANY PERSON OTHER THAN THE HOLDER
HEREOF UNLESS AND UNTIL THE CONDITIONS TO ANY SUCH TRANSFER OF REGISTRATION SET
FORTH HEREIN, ON THE FACE HEREOF AND IN THE AGREEMENT, SHALL HAVE BEEN
SATISFIED.

<PAGE> 144
EXHIBIT B

FORM OF DETERMINATION DATE CERTIFICATE

<PAGE> 145

Execution Copy

________________________________________________________________________________

RECEIVABLES PURCHASE AGREEMENT

BETWEEN

CAROLINA FREIGHT CORPORATION

AND

CAROLINA FREIGHT FUNDING CORPORATION

DATED AS OF DECEMBER 1, 1993

________________________________________________________________________________
<PAGE> 146
TABLE OF CONTENTS

Page
----

ARTICLE I

DEFINITIONS

1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

1.2 Other Definitional Provisions . . . . . . . . . . . . . . . . . . 2

1.3 Computation of Time Periods . . . . . . . . . . . . . . . . . . . 3

ARTICLE II

PURCHASE AND SALE OF RECEIVABLES

2.1 Purchase and Sale of Receivables . . . . . . . . . . . . . . . . . 4

2.2 Payment of Purchase Price . . . . . . . . . . . . . . . . . . . . 4

ARTICLE III

THE SERVICER

3.1 Appointment of Servicer . . . . . . . . . . . . . . . . . . . . . 5

3.2 Servicing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . 5

ARTICLE IV

COVENANTS, REPRESENTATIONS AND WARRANTIES

4.1 Representations and Warranties of the Seller . . . . . . . . . . . 5

4.2 Affirmative Covenants of the Seller . . . . . . . . . . . . . . . 8

4.3 Negative Covenants of the Seller . . . . . . . . . . . . . . . . . 9

4.4 Obligations Unaffected . . . . . . . . . . . . . . . . . . . . . . 10

ARTICLE V

CONDITIONS TO EFFECTIVENESS AND PURCHASES

5.1 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

5.2 Conditions to All Purchases . . . . . . . . . . . . . . . . . . . 12

i
<PAGE> 147
Page
----
ARTICLE VI

EVENTS OF TERMINATION . . . . . . . . . . . . 12

ARTICLE VII

MISCELLANEOUS

7.1 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . 14

7.2 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

7.3 Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . 14

7.4 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . 15

7.5 Governing Law, Jurisdiction, Consent to Service of Process . . . . 16

7.6 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . . 16

7.7 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . 16

7.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

7.9 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

7.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 17

7.11 Construction of Agreement as Security Agreement . . . . . . . . . 17

7.12 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

SCHEDULES
- ---------

SCHEDULE 4.1(h) - Location of Chief Executive Office;
Location of Books and Records
EXHIBITS
- --------

EXHIBIT A - Form of Subordinated Note

ii
<PAGE> 148
RECEIVABLES PURCHASE AGREEMENT, dated as of December 1, 1993, by and
between Carolina Freight Corporation, a North Carolina corporation (in its
capacity as originator of the Receivables and as seller hereunder, the
"Seller"; in its capacity as servicer hereunder and under the Pooling and
Servicing Agreement (as hereinafter defined) the "Servicer") and Carolina
Freight Funding Corporation, a North Carolina special purpose corporation (the
"Purchaser").

WHEREAS, the Seller desires to sell to the Purchaser, and the
Purchaser desires to buy from the Seller, on the Closing Date and from time to
time thereafter, all of the Seller's right, title and interest in, to and under
the Receivables (as defined in the Pooling and Servicing Agreement) existing on
the date hereof or thereafter created; and

WHEREAS, Purchaser is a subsidiary of Seller and a portion of the
Receivables will be transferred to the Purchaser by the Seller as a capital
contribution to the Purchaser; and

WHEREAS, pursuant to that certain Pooling and Servicing Agreement,
dated of even date herewith (the "Pooling and Servicing Agreement"), among the
Purchaser, the Servicer and The First National Bank of Chicago, as Trustee, the
Purchaser has agreed to sell to the Trust created pursuant to the Pooling and
Servicing Agreement, for the benefit of the Certificateholders referred to in
the Pooling and Servicing Agreement, all of its right, title and interest in,
to and under the Receivables;

NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

1.1 Definitions. Capitalized terms used herein but not otherwise
defined shall have the meanings set forth in the Pooling and Servicing
Agreement. In addition, the term "Agreement" means this Receivables Purchase
Agreement, as the same may from time to time be amended, supplemented or
otherwise modified. The following capitalized terms shall have the following
meanings:

"Early Termination" shall have the meaning specified in Article VI.

<PAGE> 149
"Effective Period" shall mean the period beginning on the Closing Date
and terminating on the earliest of (a) the close of business on the Business
Day on which a Termination Event occurs, (b) the close of business on the
Business Day immediately preceding the day on which any Early Amortization
Event shall occur and (c) the close of business on the Business Day immediately
preceding the day on which the Amortization Period for the last outstanding
Series begins.

"Purchase Percentage" shall mean initially 98.5%; provided, however,
that the Purchase Percentage may change from time to time, on a basis
consistent with that used to establish the initial Purchase Percentage, to
reflect historic loss experience of the Seller's accounts receivable portfolio
and prevailing interest rates, as agreed upon by the Seller and the Purchaser.

"Receivables" shall have the meaning specified in the Pooling and
Servicing Agreement.

"Termination Event" shall have the meaning specified in Article VI.

1.2 Other Definitional Provisions. (a) All terms defined in this
Agreement shall have the defined meanings when used in any certificate or other
document made or delivered pursuant hereto unless otherwise defined therein;

(b) As used herein and in any certificate or other document made or
delivered pursuant hereto or thereto, accounting terms not defined in this
Agreement, and accounting terms partly defined in this Agreement to the extent
not defined, shall have the respective meanings given to them under generally
accepted accounting principles or regulatory accounting principles, as
applicable. To the extent that the definitions of accounting terms herein are
inconsistent with the meanings of such terms under generally accepted
accounting principles or regulatory accounting principles, the definitions
contained herein shall control;

(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, Schedule and
Exhibit references contained in this Agreement are references to Sections,
Schedules and Exhibits in or to this Agreement unless otherwise specified; and

(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.

1.3 Computation of Time Periods. Unless otherwise stated in this
Agreement, in the computation of a period of time from a specified date to a
later specified date, the word "from" mean "from and including" and the words
"to" and "until" mean "to but excluding."

2
<PAGE> 150
ARTICLE II

PURCHASE AND SALE OF RECEIVABLES

2.1 Purchase and Sale of Receivables. Subject to the terms and
conditions of this Agreement, the Seller agrees to sell to the Purchaser, and
the Purchaser agrees to purchase from the Seller, during the Effective Period,
all right, title and interest of the Seller in, to and under all Receivables
now existing or hereafter created, including, without limitation, all
monies-due and to become due thereunder, and all amounts received with respect
thereto and all proceeds thereof.

2.2 Payment of Purchase Price. (a) On the Closing Date, the
Seller shall sell to the Purchaser, and the Purchaser shall purchase from the
Seller, all of the Seller's right, title and interest in, to and under all
Receivables existing at the close of business on the Cut-Off Date for a payment
consisting of (i) $60,000,000 multiplied by the Purchase Percentage plus (ii)
1000 shares of the capital stock of the Purchaser, which shall represent 100%
of the outstanding capital stock of the Purchaser.

(b) At the close of business on each Business Day during the
Effective Period, the Servicer shall determine the Receivables arising since
the close of business on the preceding Business Day, which Receivables shall be
deemed available for purchase by the Purchaser on such day (the "Purchase
Date").

(c) The purchase price payable to the Seller for the Receivables to
be purchased on any Purchase Date shall be an amount equal to the product of
(i) the Outstanding Balance of all Receivables determined pursuant to paragraph
(b) and (ii) the Purchase Percentage (such amount, the "Purchase Price").

(d) The Purchase Price shall be paid to Seller in immediately
available funds to the extent of funds available to the Purchaser after payment
of all other obligations then due under the Pooling and Servicing Agreement.
The excess of the Purchase Price for the Receivables transferred to the
Purchaser on the Closing Date over the payment therefore set forth in clause
(a) above shall either be (i) a deemed capital contribution from the Seller to
the Purchaser or (ii) a loan by the Seller to the Purchaser (a "Subordinated
Loan"), evidenced by the Subordinated Note of the Purchaser substantially in
the form attached hereto as Exhibit A. To the extent that funds are not
sufficient to pay in full the Purchase Price payable on any Purchase Date
following the Closing Date, the amount of the difference between the Purchase
Price and such available funds shall be deemed to be either (x) a Subordinated
Loan by the Seller to the Purchaser or

3
<PAGE> 151
(y) a capital contribution by the Seller to the Purchaser. Any Subordinated
Loan pursuant to clause (ii) or clause (x) above shall be fully subordinated to
every other obligation of the Purchaser.

ARTICLE III

THE SERVICER

3.1 Appointment of Servicer. (a) The Purchaser hereby appoints
the Seller as its agent to service and administer the Receivables. The Seller
hereby consents to such appointment and agrees to service and administer the
Receivables in accordance with the terms and conditions contained herein.

(b) The Seller agrees to perform all obligations to be performed
by it as Servicer under the Pooling and Servicing Agreement and any amendment
or supplement thereto and to comply with all terms, covenants and conditions
applicable to the Servicer thereunder.

3.2 Servicing Fee. In consideration for performing its function as
Servicer hereunder and under the Pooling and Servicing Agreement, the Seller
shall receive the Servicing Fee referred to in the Pooling and Servicing
Agreement.

ARTICLE IV

COVENANTS, REPRESENTATIONS AND WARRANTIES

4.1 Representations and Warranties of the Seller. The Seller
represents and warrants to the Purchaser as of the Closing Date and each
Purchase Date that:

(a) Organization and Good Standing. The Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
State of North Carolina and has full power and authority to own its properties
and conduct its business as presently owned or conducted, and to execute,
deliver and perform its obligations under this Agreement.

(b) Due Qualification. The Seller is duly qualified to do
business and is in good standing as a foreign corporation, and has obtained all
necessary licenses and approvals, in each jurisdiction in which failure to so
qualify or to obtain such licenses and approvals would have a material adverse
effect on the Seller's ability to perform its obligations hereunder.

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(c) Due Authorization. The execution, delivery and performance of
this Agreement by the Seller and the consummation by the Seller of the
transactions provided for in this Agreement, have been duly authorized by all
necessary corporate action on the part of the Seller and this Agreement and the
other documents and agreements executed in connection herewith have been duly
executed and delivered on behalf of the Seller.

(d) No Conflict. The Seller's execution and delivery of this
Agreement, performance of the transactions contemplated hereby, and fulfillment
of the terms hereof applicable to the Seller, do not conflict with or violate
any Requirements of Law applicable to the Seller or conflict with, result in
any breach of any of the terms and provisions of, or constitute (with or
without notice or lapse of time or both) a default under, any indenture,
contract, agreement, mortgage, deed of trust or other instrument to which the
Seller is a party or by which its properties are bound, which conflict,
violation or breach would have a material adverse effect on Seller's ability to
perform its obligations hereunder or on the ownership by the Trust of the
Receivables.

(e) No Proceedings. There are no proceedings or investigations
pending or, to the best knowledge of the Seller, threatened against the Seller
before any Governmental Authority (i) asserting the illegality, invalidity or
unenforceability, or seeking any determination or ruling that would affect the
legality, binding effect, validity or enforceability, of this Agreement, the
Pooling and Servicing Agreement or the Certificates, (ii) seeking to prevent
the issuance of the Certificates or the consummation of any of the transactions
contemplated by this Agreement, the Pooling and Servicing Agreement or the
Certificates, (iii) seeking any determination or ruling that is reasonably
likely to materially and adversely affect the financial condition or operations
of the Seller or the performance by the Seller of its obligations under this
Agreement or (iv) seeking to affect adversely the income or franchise tax
attributes of the Trust under the United States federal or North Carolina
income or franchise tax systems.

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effect, and (ii) the filing of any amendments, assignments or continuation
statements which may become applicable pursuant to Section 2.01 of the Pooling
and Servicing Agreement.

(g) Liens. Each Receivable is owned by the Seller free and clear
of any Lien except as provided for herein; and no effective financing statement
or other instrument similar in effect covering any Receivable or Collections
with respect thereto is on file in any recording office except such as may be
filed in favor of the Purchaser and the Trustee and as otherwise provided in
this Agreement and the Pooling and Servicing Agreement.

(h) Locations. The chief place of business and chief executive
office of the Seller, and the offices where the Seller keeps all its books,
records and documents evidencing Receivables are located at the addresses
specified in Schedule 4.1 hereto (or at such other locations, identified to the
Purchaser in accordance with Sections 4.2(e) and 7.9, in jurisdictions with
respect to which all applicable action required by the last two paragraphs of
Section 2.01 of the Pooling and Servicing Agreement has been taken and
completed).

(i) Information. Each certificate, report, information, exhibit,
financial statement, document, book, record or report furnished by the Seller
to Purchaser in connection with this Agreement is accurate in all material
respects as of its date, when considered as a whole with all other such
documents, and no such document contains any material misstatement of fact or
omits to state a material fact or any fact necessary to make the statements
contained therein not materially misleading.

(j) Enforceability. This Agreement constitutes the legal, valid
and binding obligation of the Seller, enforceable against the Seller in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or affecting creditors' rights generally and except as such
enforceability may be limited by general principles of equity (whether
considered in a suit at law or in equity).

(k) Valid Transfers. This Agreement constitutes a valid sale,
transfer and assignment to the Purchaser of all right, title and interest of
the Seller in and to the Receivables, whether now existing or hereafter created
during the Effective Period, and the proceeds thereof.

(l) Outstanding Balance. As of the Closing Date, the aggregate
Outstanding Balance of the Receivables is at least $112,549,000.

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(m) Carolina Freight Collection Accounts. Schedule I to the
Pooling and Servicing Agreement is a complete and accurate list of each
Carolina Freight Collection Account as of the Closing Date.

(n) Solvency. The Seller is solvent and will not become insolvent
after giving effect to the transactions contemplated by this Agreement; the
Seller is currently repaying all of its indebtedness as such indebtedness
becomes due; and, after giving effect to the transactions contemplated by this
Agreement, the Seller will have adequate capital to conduct its business.

(o) Compliance. The Seller has complied in all material respects
with all applicable Requirements of Law with respect to it, its business and
properties and all Receivables sold hereunder and the Contracts related
thereto.

(p) No Rescission. Neither any Receivable sold hereunder nor the
related Contract has been satisfied, subordinated or rescinded or except as
disclosed in writing to the Purchaser, amended in any manner and the amounts
billed under such Receivables have not, except as permitted under the Pooling
and Servicing Agreement, been compromised, adjusted, extended, satisfied,
subordinated, rescinded or modified.

(q) No Payment. The Seller has no knowledge of any fact which
would lead it to expect that the amount billed under any Receivable sold
hereunder would not be paid in full when due.

(r) The Seller shall not transfer or pledge the Subordinated Note to
any Person.

4.2 Affirmative Covenants of the Seller. The Seller hereby
covenants that, until the termination of the Effective Period:

(a) Compliance with Law. The Seller will comply in all material
respects with all Requirements of Law applicable to it, its business and
properties and the Receivables.

(b) Preservation of Corporate Existence. Except as otherwise
permitted by Section 8.02 of the Pooling and Servicing Agreement, the Seller
will preserve and maintain its corporate existence, rights, franchises and
privileges in the jurisdiction of its incorporation, and qualify and remain
qualified in good standing as a foreign corporation in each jurisdiction where
the failure to maintain such qualification would materially adversely affect
(i) the interests of the Purchaser hereunder or in the Receivables, (ii) the
collectability of any Receivable or (iii) the ability of the Seller to perform
its obligations hereunder.

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(c) Keeping of Records and Books of Account. The Seller will
maintain and implement administrative and operating procedures (including,
without limitation, an ability to recreate records evidencing the Receivables
in the event of the destruction of the originals thereof), and keep and
maintain, all documents, books, records and other information reasonably
necessary or advisable for the collection of all Receivables (including,
without limitation, records adequate to permit the daily identification of each
new Receivable and all Collections of and adjustments to each existing
Receivable).

(d) Performance and Compliance with Receivables. The Seller will
at its expense timely and fully perform and comply with all material
provisions, covenants and other promises required to be observed by it
hereunder, except where the failure to so perform or comply would not have a
material adverse effect on the collectability of the Receivables or Seller's
ability to perform its obligations hereunder.

(e) Location of Records. The Seller will keep its chief place of
business and chief executive office, and the offices where it keeps its records
concerning the Receivables related thereto (and all original documents relating
thereto), at the addresses of the Seller referred to in Schedule 4.1(h) or,
upon 30 days' prior written notice to the Purchaser and the Trustee, at such
other locations in a jurisdiction with respect to which all action required by
Section 2.01 of the Pooling and Servicing Agreement shall have been taken and
completed.

(f) Credit Policy Manual. The Seller will comply in all material
respects with the Credit Policy Manual in regard to the Receivables.

4.3 Negative Covenants of the Seller. The Seller will not:

(a) Sales, Liens, Etc. Except as otherwise contemplated herein,
or pursuant to or as contemplated by the Pooling and Servicing Agreement, sell,
assign (by operation of law or otherwise) or otherwise dispose of, or create or
suffer to exist any Lien, upon or with respect to, any Receivable or upon or
with respect to any Carolina Freight Collection Account to which any
Collections of any such Receivables are sent, or assign any right to receive
income in respect thereof.

(b) Extension or Amendment of Receivables. Except as consistent
with the Credit Policy Manual or as otherwise permitted under the Pooling and
Servicing Agreement, (i) extend, amend or otherwise modify the terms of any
Receivable, (ii) amend, modify or waive any payment term or condition of any
invoice related thereto, which extension, amendment, modification or waiver
would

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impair the collectability or delay the payment of any then existing Receivable
in a manner inconsistent with the Credit Policy Manual, or (iii) rescind or
cancel any Receivable except as ordered by a court of competent jurisdiction or
other Governmental Authority.

(c) Change in Credit Policy Manual. Make any change in the Credit
Policy Manual, which change would materially impair the collectability of the
Receivables.

(d) Change in Carolina Freight Collection Account Banks. Except as
permitted under the Pooling and Servicing Agreement, add or terminate any bank
as a Carolina Freight Collection Account Bank from those listed in Schedule I,
unless the Purchaser and the Trustee shall have received notice of such
addition or termination and undated executed copies of Carolina Freight
Collection Account Letters to each new Carolina Freight Collection Account
Bank.

(e) Deposits to Carolina Freight Collection Accounts. Deposit or
otherwise credit, or cause or permit to be so deposited or credited, to any
Carolina Freight Collection Account cash or cash proceeds other than
collections of accounts receivable.

(f) No Actions Against Obligors. Except in accordance with the
Credit Policy Manual, commence or settle any legal action to enforce collection
of any Receivable.

(g) No Bankruptcy Filing Against the Purchaser or the Trust.
Commence, or cause to be commenced, any case, proceeding or other action of the
type described in Section VI(d) below against the Purchaser or the Trust.

(h) Limitation on Use of Proceeds. Use any of the proceeds of any
purchase hereunder to acquire any security in any transaction which is subject
to Sections 13 and 14 of the Securities Exchange Act of 1934.

(i) No Claims Against the Assets. Claim any credit on, or make
any deduction from, the principal or interest payable in respect of the
Certificates by reason of the payment of any taxes levied or assessed upon any
part of the Trust Assets.

4.4 Obligations Unaffected. The obligations of the Seller to the
Purchaser under this Agreement shall not be affected by reason of any
invalidity, illegality or irregularity of any Receivable or any sale of a
Receivable.

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ARTICLE V

CONDITIONS TO EFFECTIVENESS AND PURCHASES

5.1 Closing Date. This Agreement shall become effective on
December 28, 1993 or such other date agreed upon by the parties in writing (the
"Closing Date") on which:

(a) There shall have been delivered to the Purchaser a
file-stamped copy of the financing statement relating to the Receivables,
naming the Seller as seller/debtor, the Purchaser as purchaser/secured party
that was filed on or prior to the Closing Date with the North Carolina
Secretary of State.

(b) There shall have been delivered to the Purchaser a copy of the
Certificate of Incorporation of the Seller, certified as of a recent date by
the Secretary of State of North Carolina.

(c) There shall have been delivered to the Purchaser a certificate
of the Secretary of State of North Carolina as to the good standing of the
Seller and as to the documents on file in the office of such Secretary of
State.

(d) There shall have been delivered to the Purchaser a certificate
of the Secretary or Assistant Secretary of the Seller, dated as of the Closing
Date, and certifying (i) that attached thereto is a true and complete copy of
the bylaws of the Seller as in effect on the date of such certification, (ii)
that attached thereto is a true and complete copy of resolutions adopted by the
Board of Directors of the Seller authorizing the transactions provided for
herein and the execution, delivery and performance of this Agreement and any
other documents required or contemplated hereunder, (iii) that the Certificate
of Incorporation of the Seller has not been amended since the date of the last
amendment thereto indicated on the certificate of the Secretary of State
furnished pursuant to clause (c) above and (iv) as to the incumbency of the
officers of the Seller executing this Agreement, and any other documents
contemplated hereunder and appropriate evidence of the incumbency of such
Secretary or Assistant Secretary.

(e) There shall have been delivered to the Seller a certificate of
the Secretary or Assistant Secretary of the Purchaser, dated the Closing Date,
and certifying (i) that attached thereto is a true and complete copy of
resolutions adopted by the Board of Directors of the Purchaser authorizing the
transactions provided for herein and the execution, delivery and performance of
this Agreement, the Pooling and Servicing Agreement and any other documents
required or contemplated hereunder and (ii) as to the incumbency of the
officers of the Purchaser executing this

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Agreement, the Pooling and Servicing Agreement and any other documents
contemplated hereunder and appropriate evidence of the incumbency of such
Secretary or Assistant Secretary.

(f) The Pooling and Servicing Agreement and all documentation to
be delivered in connection therewith shall have been executed and delivered and
all conditions thereto shall have been satisfied.

(g) All legal matters incident to the execution and delivery of
this Agreement and to the purchases by the Purchaser of the Receivables from
the Seller shall be satisfactory to counsel for the Purchaser.

5.2 Conditions to All Purchases. The obligation of the Purchaser
to pay the Purchase Price with respect to any Receivables on any Purchase Date
is subject to the following conditions precedent:

(a) On such Purchase Date the Seller shall have complied with all
of its covenants hereunder and shall have fulfilled all of its obligations
hereunder; and

(b) No Termination Event shall have occurred and then be
continuing.

The acceptance by the Seller of any payment for any Receivables shall
be deemed to be a representation and warranty by the Seller as of such
acceptance date as to the matters in this Section 5.2.

ARTICLE VI

EVENTS OF TERMINATION

If any of the following events (each herein called a "Termination
Event") shall have occurred:

(a) The Seller shall fail to pay any amount required to be paid by
the Seller hereunder within three (3) Business Days after the date when due;

(b) Any representation, warranty, certification or statement made
or deemed made by the Seller in this Agreement or in

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any statement, record, certificate, financial statement or other document
delivered pursuant to this Agreement shall prove to have been incorrect in any
material respect on or as of the date made or deemed made and has a material
adverse effect on the Certificateholders and continues unremedied for 30 days
after the date on which written notice of such failure, requiring the same to
be remedied, shall have been given to the Seller by the Purchaser;

(c) The Seller shall fail to observe or perform in any material
respect any covenant or agreement applicable to it contained herein (other than
as specified in Section (a) or (b) of this Article VI), provided that no such
failure shall constitute a Termination Event under this Section (c) unless such
failure shall (i) have a material adverse effect on the Certificateholders and
(ii) continue for 30 days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to the Seller
by the Purchaser or the Trustee;

(d) (i) The filing of a decree or order for relief by a court
having jurisdiction in the premises in respect of the Seller or any substantial
part of its property in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official for the Seller or for any substantial part of its property, or
ordering the winding-up or liquidation of the Seller's affairs, and such decree
or order shall remain unstayed and in effect for a period of 60 consecutive
days; or (ii) the commencement by the Seller of a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or the consent by the Seller to the entry of an order for relief in an
involuntary case under any such law, or the consent by the Seller to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for the Seller or for any
substantial part of its property, or the making by the Seller of any general
assignment for the benefit of creditors, or the failure by the Seller generally
to pay its debts as such debts become due or the admission by the Seller in
writing (as to which the Trustee shall have notice) of its inability to pay its
debts generally, or the adoption by the Board of Directors of the Seller of a
resolution which authorizes action by the Seller in furtherance of any of the
foregoing; or

(e) There shall have occurred an Early Amortization Event under
the Pooling and Servicing Agreement;

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then, so long as any of the foregoing events shall have occurred, the Effective
Period shall automatically terminate without any notice, demand, protest or
other requirement of any kind (any termination of the Effective Period pursuant
to this Article VI is herein called an "Early Termination").

If the Seller becomes party to (i) any voluntary bankruptcy or similar
proceeding (other than as claimant) or (ii), if such proceeding is not
voluntary and is not dismissed within 60 days of its institution, the Seller
will cease to sell or transfer Receivables to the Purchaser and will give
notice of its cessation to the Trustee.

ARTICLE VII

MISCELLANEOUS

7.1 Further Assurances. The Seller agrees to do and perform, from
time to time, any and all acts and to execute any and all further instruments
reasonably required or requested by the Purchaser more fully to effect the
purposes of this Agreement and the sales of the Receivables hereunder,
including, without limitation, the execution of any financing statements or
continuation statements relating to the Receivables for filing under the
provisions of the UCC, or any similar law, of any applicable jurisdiction. The
Seller will indicate in its computer files that the Receivables have been sold
to the Purchaser.

7.2 Payments. Each payment to be made by either of the Purchaser
or the Seller hereunder shall be made on the required payment date, or on the
next succeeding Business Day if the required payment date is not a Business
Day, in lawful money of the United States and in immediately available funds at
the office of the payee set forth below its signature hereto or to such other
office as may be specified by either party in a notice to the other party
hereto.

7.3 Costs and Expenses. The Seller agrees to pay or reimburse the
Purchaser for all its reasonable out-of-pocket costs and expenses incurred
including, without limitation, all fees and disbursements of counsel, in
connection with (a) the development, preparation, execution, delivery and
administration of this Agreement or of any amendment or restatement hereof or
of any waiver relating hereto, (b) the sale of the Receivables hereunder and
(c) the perfection as against all third parties whatsoever of the right, title
and interest of the Purchaser and any transferee of the Purchaser in, to and
under the Receivables. In addition, without limiting any other rights which
the Purchaser may have hereunder or under applicable law, the Seller hereby
agrees to

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indemnify the Purchaser from and against any and all claims, losses and
liabilities (including reasonable attorneys' fees) (all of the foregoing being
collectively referred to as "Indemnified Amounts"), which (i) may at any time
be imposed on, incurred by or asserted against the Purchaser in any way
relating to or arising out of this Agreement (including any breach of the
representations contained in Section 4.1(g) hereof or the transactions
contemplated hereby or any action taken or omitted by the Purchaser under or in
connection with any of the foregoing, (ii) would not have been imposed on,
incurred by or asserted against the Purchaser but for its having purchased the
Receivables hereunder or (iii) relate to the services underlying the
Receivables or any act or omission to act by the Seller in respect of any
Receivable, excluding, however, (a) recourse for uncollectible Receivables or
(b) any income or franchise taxes (or interest or penalties with respect
thereto) incurred by the Purchaser arising out of or as a result of this
Agreement or the interest conveyed hereunder in respect of any Receivable.
Without in any way limiting the foregoing, except as otherwise provided in this
Section 7.3, the Seller shall pay to the Purchaser, on demand, any and all
amounts necessary to indemnify the Purchaser from and against any and all
Indemnified Amounts relating to or resulting from: (x) any and all recording
and filing fees and any and all liabilities with respect to, or resulting from
any delay in paying, any sales, gross receipts, intangible personal property,
privilege or license taxes, but not including taxes imposed upon the Purchaser
under the laws of the United States or any jurisdiction within the United
States in which the Purchaser is organized or maintains its principal office or
in which the Purchaser books this transaction; (y) any and all recording and
filing fees and any and all liabilities with respect to, or resulting from any
delay in paying, any taxes which may arise at any time and from time to time in
the future in respect of this Agreement, the transactions contemplated hereby
and the subject matter hereof and thereof; and (z) costs, expenses and
reasonable counsel fees in defending against the same, whether arising by
reason of the acts to be performed by the Seller hereunder or imposed against
the Purchaser or the Seller, the property involved or otherwise. The
agreements in this Section 7.3 shall survive the collection of all Receivables,
the termination of this Agreement and the payment of all amounts payable
hereunder. For purposes of this Section 7.3, any reference to the Purchaser
shall include any officer, director, employee, agent or affiliate thereof.

7.4 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the Seller and the Purchaser and their respective
successors (whether by merger, consolidation or otherwise) and assigns. Except
as otherwise permitted by the Pooling and Servicing Agreement, the Seller
agrees that it will

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not assign or transfer all or any portion of its rights or obligations
hereunder without the prior written consent of the Purchaser. The Seller
acknowledges that the Purchaser shall assign to the Trust, as collateral
security for the Purchaser's obligations under the Pooling and Servicing
Agreement, all of the Purchaser's rights, remedies, powers and privileges
hereunder (including, without limitation, the right to give any notice which
the Purchaser may provide to the Seller hereunder), provided that the Purchaser
shall not assign or delegate any of its duties or obligations hereunder to the
Trust.

7.5 GOVERNING LAW, JURISDICTION, CONSENT TO SERVICE OF PROCESS.
(a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.

(b) Jurisdiction. Each of the parties hereto hereby irrevocably
and unconditionally submits to the nonexclusive jurisdiction of any New York
State court or federal court of the United States of America sitting in New
York City, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Agreement, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such
New York State or, to the extent permitted by law, in such federal court. Each
of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.

(c) Consent to Service of Process. Each party to this Agreement
irrevocably consents to service of process in the manner provided for notices
in Section 7.9. Nothing in this Agreement will affect the right of any party
to this Agreement to serve process in any other manner permitted by law.

7.6 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Purchaser, any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right,
remedy, power or privilege. The rights, remedies, powers and privileges herein
provided are cumulative and not exhaustive of any rights, remedies, powers and
privileges provided by law.

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7.7 Amendments and Waivers. Neither this Agreement nor any terms
hereof may be amended, supplemented or modified except in writing signed by the
Purchaser and the Seller.

7.8 Severability. If any provision hereof is void or
unenforceable in any jurisdiction, such voiding or unenforceability shall not
affect the validity or enforceability of (i) such provision in any other
jurisdiction or (ii) any other provision hereof in such or any other
jurisdiction.

7.9 Notices. Unless otherwise expressly permitted hereby, all
notices, requests and demands to or upon any party hereto to be effective shall
be in writing delivered by hand or by facsimile and, unless otherwise expressly
provided herein, shall be deemed to have been duly given or made when delivered
by hand to the address set forth below its signature hereto or such address as
may be hereafter notified by it to the other party hereto, or, in the case of
notice by facsimile, when telecopied to the number set forth below its
signature hereto.

7.10 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original, and all of which
taken together shall constitute one and the same agreement.

7.11 Construction of Agreement as Security Agreement. It is the
intent of the parties that the transactions contemplated herein constitute
sales of the Receivables to the Purchaser. If, however, such transactions are
deemed to be loans, (i) the Seller hereby grants to the Purchaser a first
priority security interest in all of the Seller's right, title and interest in
and to the Receivables now existing and hereafter created, all monies due or to
become due and all amounts and other proceeds received with respect thereto, to
secure all the Seller's obligations hereunder, and (ii) this Agreement shall
constitute a security agreement under applicable law.

7.12 Termination. This Agreement will terminate after the Trust
terminates; provided, however, that the indemnities of the Seller to the
Purchaser set forth in this Agreement shall survive such termination and
provided, further, that the Purchaser shall remain entitled to receive any
collections on Receivables sold hereunder which have become Defaulted
Receivables after it shall have completed its collection efforts in respect
thereof.

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IN WITNESS WHEREOF, the parties hereto have caused this Receivables
Purchase Agreement to be executed by their respective officers thereunto duly
authorized, all as of the day and year first above written.

CAROLINA FREIGHT CORPORATION,
as Seller

By:
--------------------------
Name: John B. Yorke
Title: Vice President

CAROLINA FREIGHT FUNDING
CORPORATION,
as Purchaser

By:
--------------------------
Name: Shawn W. Poole
Title: President

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EXHIBIT A
TO RPA

CAROLINA FREIGHT FUNDING CORPORATION

SUBORDINATED NOTE

DUE: December 31, 2013
No. 1

CAROLINA FREIGHT FUNDING CORPORATION (the "Issuer"), for value
received, hereby promises to pay to CAROLINA FREIGHT CORPORATION (the
"Holder"), or its registered assigns, at its address for payments set forth in
the Receivables Purchase Agreement hereinafter referred to, all principal sums
which shall have been advanced from time to time under the Receivables Purchase
Agreement, upon the earlier to occur of (i) December 31, 2013 or (ii) the date
upon which the Aggregate Invested Amount for each series is zero (the "Stated
Maturity" of said principal sum), unless earlier prepaid pursuant to the
provisions for repayment referred to herein, and to pay interest (computed on
the basis of a 360-day year and the actual number of days in each calendar
year) on the unpaid principal sum from the date such principal sum is advanced,
such interest being payable on (i) December 30, 1993 and the thirtieth day of
each month thereafter and (ii) on the earlier of (1) the date of prepayment and
(2) Stated Maturity at a rate per annum equal to the Certificate Rate until the
principal hereof is paid in full. The Holder shall enter on the grid attached
hereto, as Attachment A, information reflecting the date and amount of each
advance, the interest rate applicable thereto and the amount of any payments
made hereon. Notwithstanding anything contained herein to the contrary, the
principal sum hereof and all accrued interest thereon shall not exceed forty
percent (40%) of the excess of the Net Receivables Balance over the Aggregate
Invested Amount at any given time.

Payments of the principal of and interest on this Subordinated Note
(the "Note") will be made in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts by check mailed to, or wire transfer in federal funds to the
account of, the Holder as directed by the Holder. If any payment on this Note
shall remain unpaid on the due date thereof, the same shall thereafter be
payable with interest thereon (to the extent permitted by law) at the
Certificate Rate, from such due date to the date of payment thereof.

<PAGE> 166
This Note is issued under the Receivables Purchase Agreement, dated as
of December 1, 1993, between Issuer and Holder (the "Receivables Purchase
Agreement"). This Note represents all or a portion of the Purchase Price for
Receivables purchased by the Issuer pursuant to the terms of the Receivables
Purchase Agreement. Each capitalized term utilized herein which is defined in
the Receivables Purchase Agreement or the Pooling and Servicing Agreement,
dated as of December 1, 1993, among the Issuer, as transferor, the Holder, as
Servicer and The First National Bank of Chicago, as Trustee (the "Pooling and
Servicing Agreement") shall have the meaning ascribed to it in the Receivables
Purchase Agreement or the Pooling and Servicing Agreement, as the case may be.

This Note is subject to prepayment in full at the option of the Issuer
at any time upon three business days' prior notice to the Holder, without a
premium.

This Note is subordinate and junior in right and time of payment to
all "Senior Debt" of the Issuer, which is any Indebtedness (as defined below)
of the Issuer (including the 6.18% Trade Receivables Asset Backed Certificates,
Series 1993-1 and any other Series of Certificates issued by the Carolina
Freight Trade Receivables Master Trust), and all renewals, extensions,
refinancing are refundings thereof, except any such Indebtedness that expressly
provides that it is not senior or superior in right of payment hereto.
"Indebtedness" is any indebtedness in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereto) and any obligations of the Issuer
under the Pooling and Service Agreement, the Receivables Purchase Agreement and
the Supplement.

All scheduled payments of principal and interest in respect of Senior
Debt must be paid before this Note may be paid, and all scheduled payments of
principal and interest on this Note shall be payable only to the extent that
the Issuer, after paying all of its accounts payable and other current
expenses, has the funds to make such payments. The Issuer agrees, and the
Holder by accepting this Note agrees, to the subordination provisions herein
contained.

The Holder of this Note, by its acceptance hereof, hereby covenants
and agrees that it will not at any time institute against the Issuer any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any United States federal or state bankruptcy or
similar law.

<PAGE> 167
This Note shall for purposes be governed by, and construed in
accordance with, the laws of the State of North Carolina.

IN WITNESS WHEREOF, the Issuer has caused this instrument to
be duly executed manually by its undersigned officer duly authorized thereunto.

Dated: December __, 1993

CAROLINA FREIGHT FUNDING
CORPORATION

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

<PAGE> 168
Attachment A

Principal Interest Principal Interest
Date Advanced Paid Paid Rate
- ---- --------- -------- --------- --------

<PAGE> 1
CAROLINA FREIGHT CORPORATION EXHIBIT 11
COMPUTATION OF EARNINGS PER COMMON SHARE

<TABLE>
<CAPTION>
Year Ended December 31
----------------------------
1993 1992 1991
---------- ---------- ----------
<S> <C> <C> <C>
Primary:
Earnings:
Income $(4,161,587) $3,648,346 $1,575,233
Deduct dividends on preferred
shares (88,448) (88,448) (88,448)
---------- ---------- ----------
Income applicable to common stock $(4,250,035) $3,559,898 $1,486,785
========== ========== ==========
Shares:
Weighted average number of common
shares outstanding 6,561,672 6,561,634 6,560,788
========== ========== ==========
Primary earnings per common share:
Net income $(0.65) 0.54 0.23
========== ========== ==========
Assuming full dilution:
Earnings:
Net income $(4,161,587) $3,648,346 $1,575,233
Deduct dividends on preferred
shares (88,448) (88,448) (88,448)
Add after tax expense applicable
to 6.25% convertible debentures 2,440,332 1,955,372 1,937,500
---------- ---------- ----------
Net income $(1,809,703) $5,515,270 $3,424,285
========== ========== ==========
Shares:
Weighted average number of common
shares outstanding 6,561,672 6,561,634 6,571,731

Assuming conversion of 6.25% convertible
debentures 1,052,505 1,052,505 1,052,632
---------- ---------- ----------
Weighted average number of common
shares outstanding as adjusted 7,614,177 7,614,139 7,624,363
========== ========== ==========
Earnings per common share assuming
full dilution (see note):
Net income $ (0.24) $ 0.72 $ 0.45
========== ========== ==========

</TABLE>

The calculation of fully diluted earnings per share for 1993, 1992 and 1991
is submitted in accordance with Securities Exchange Act of 1934 Release No.
9083 although it is contrary to paragraph 40 of APB Opinion No. 15 because
it produces an anti-dilutive result.

<PAGE> 1

CAROLINA FREIGHT CORPORATION

END-YEAR SUMMARY

<TABLE>

(Dollar amounts in thousands, except per share data) 1993 1992 1991
<CAPTION>
<S> <C> <C> <C>
Revenue and Earnings:
Operating revenue $ 845,350 $ 801,138 $ 769,150
Pre-tax earnings (loss) (5,329) (9,900) 2,535
Net earnings (4,162) 3,648 1,575
- --------------------------------------------------------------------------------------------------
Per Share of Common Stock:
Earnings $ (.65) $ .54 $ .23
Dividends 0.20 .50 .60
Market value at year-end 12.75 14.63 20.00
Common book value at year-end 18.20 19.04 19.00
- --------------------------------------------------------------------------------------------------
Financial Position:
Working capital (Note 2) $ (12,448) $ 1,091 $ 10,508
Current ratio (Note 2) .89 to 1 1.01 to 1 1.11 to 1
Net plant and equipment $ 246,428 $ 262,937 $266,793
Total assets 363,938 389,254 378,896
Common stockholders' equity 119,401 124,964 124,679
Total stockholders' equity 121,612 127,175 126,890
Long-term debt, excluding debentures 21,182 45,838 46,711
Convertible subordinated debentures 49,994 49,994 50,000
Number of common stockholders 3,642 2,565 2,384
- --------------------------------------------------------------------------------------------------
Capital Expenditures, Net of Disposals:
Revenue and service equipment $ 11,548 $ 19,665 $ 27,714
Land and structures (3,097) 10,152 7,106
Other 7,354 4,192 3,589
- --------------------------------------------------------------------------------------------------
Total $ 15,805 $ 34,009 $ 38,409
- --------------------------------------------------------------------------------------------------
Operations:
Tons transported (thousands) 3,758 3,424 3,298
Intercity miles traveled (thousands) 270,436 250,568 239,785
Shipments handled (thousands) 5,350 5,133 5,243
Equipment owned and operated at year-end:
Tractors 4,179 4,070 4,042
Trailers 13,639 13,034 12,220
Trucks 164 163 181
Total 17,982 17,267 16,443
Employees at year-end 11,174 10,516 10,821
- --------------------------------------------------------------------------------------------------
</TABLE>

(Note 1) Data for 1987 and 1986 have been restated to reflect the adoption of
ASB 94, Consolidation of All Majority-Owned Subsidiaries.
(Note 2) Working capital for 1989, 1988, and 1987 has been restated for the
Reclassification of claims payable in excess of one year to long-term
Liabilities in the amounts of $12,645,000, $8,262,000, and $6,828,000,
Respectively.

. . . .
18

<PAGE> 2
CAROLINA FREIGHT CORPORATION
<TABLE>
<CAPTION>
1990 1989 1988 1987 1986 1985 1984
<S> <C> <C> <C> <C> <C> <C>

$ 738,876 $ 670,363 $ 650,236 $ 594,261 $ 595,317 $ 523,369 $ 468,787
3,465 1,835 15,190 14,059 29,556 25,911 21,491
2,379 1,165 9,953 8,621 16,644 14,448 12,097
- --------------------------------------------------------------------------------------------------

$ .35 $ .16 $ 1.50 $ 1.30 $ 2.53 $ 2.26 $ 2.16
.60 .60 .54 .50 .44 .40 .36
13.00 18.75 24.63 20.75 35.00 28.75 22.25
19.37 19.66 20.11 19.15 18.30 16.12 12.70
- --------------------------------------------------------------------------------------------------

$ 10,714 $ 3,348 $ 28,413 $ 36,550 $ 32,825 $ 15,435 $ 6,295
1.12 to 1 1.04 to 1 1.33 to 1 1.44 to 1 1.36 to 1 1.21 to 1 1.10 to 1
$ 258,595 $ 250,532 $ 229,055 $ 204,320 $ 190,481 $ 154,630 $ 123,079
366,320 347,347 347,374 329,440 320,138 249,809 201,144
127,091 128,668 131,464 124,987 118,347 103,412 69,809
129,302 130,879 133,675 127,198 120,558 105,623 72,020
38,952 26,657 35,054 32,173 33,433 50,479 48,856
50,000 50,000 50,000 50,000 50,000 - -
2,333 2,378 2,460 2,359 2,350 2,600 2,557
- --------------------------------------------------------------------------------------------------

$ 26,194 $ 23,289 $ 34,186 $ 21,216 $ 42,510 $ 30,385 $ 24,747
13,101 29,224 14,081 15,435 12,890 12,424 11,786
6,387 3,446 10,802 5,935 5,189 9,638 3,191
- --------------------------------------------------------------------------------------------------
$ 45,682 $ 55,959 $ 59,069 $ 42,586 $ 60,589 $ 52,447 $ 39,724
- --------------------------------------------------------------------------------------------------

3,235 3,224 3,139 3,286 3,553 3,252 3,004
234,688 214,820 205,645 186,226 189,471 161,022 146,012
5,254 5,058 5,115 5,107 4,841 4,267 3,803

4,030 3,867 3,855 3,597 3,426 3,052 2,807
11,392 10,899 10,563 9,519 9,027 7,275 6,421
202 223 258 308 329 395 401
15,624 14,989 14,676 13,424 12,782 10,722 9,629
10,533 10,248 9,935 10,203 9,525 8,219 7,765
- --------------------------------------------------------------------------------------------------
</TABLE>

. . . .
19
<PAGE> 3

CAROLINA FREIGHT CORPORATION

MANAGEMENT'S REVIEW

OPERATING REVENUE

(GRAPH)

CORPORATE TONS HANDLED

(GRAPH)

CARDINAL REVENUE

(GRAPH)

RESULTS OF OPERATIONS
- -------------------------------------------------------------------------------
OVERVIEW
Carolina Freight Corporation's results for 1993 reflect many changes within the
transportation industry and the Company. The Company's revenue increased 5.5%
to $845,350,000 for 1993. Operating income improved from a loss of $615,000 in
1992 to operating income of $5,038,000 in 1993. The operating loss in 1992 was
adversely affected by $4,408,000 of certain nonrecurring charges. Earnings per
share were a loss of $.65 in 1993 compared with income of $.54 in 1992. The
1992 results were positively impacted by changes in accounting principles
relating to income taxes, post-retirement benefits, and revenue recognition.
During the third quarter of 1993 the Company incurred an additional tax
pro-vision of $580,000 relating to a restatement of the Company's deferred tax
liability under the provisions of Financial Accounting Standards Board (FASB)
Statement No. 109. This additional tax provision represents restating the
Company's deferred tax liability to the new 35% top marginal tax rate for
corporations. In the fourth quarter of 1993 the Company completed the
conversion of its $35 million revolving sale of receivables facility and $25
million of its bank credit lines to a new $60 million receivables
securitization facility. The costs associated with this conversion were
$750,000, which were expensed in total in the fourth quarter results.
As mentioned above, the 1992 results were impacted by the adoption of FASB
109, FASB 106, and a new revenue recognition policy retroactive to January 1,
1992. The net effect of these provisions increased 1992 net income by
$9,836,000. Exclusive of these changes the Company incurred a net loss in 1992
of $6,188,000, or $.96 per share.

LESS-THAN-TRUCKLOAD OPERATIONS
Carolina Freight Carriers Corporation and Red Arrow Freight Lines, on a
combined basis, achieved revenue of $658,266,000 in 1993, an increase of 3.4%
over 1992 revenue of $636,384,000. Revenue in 1992 exceeded 1991 revenue by
2.0%. G.I. Trucking realized a 10.3% increase in revenue for 1993 compared with
a revenue increase of 6.5% in 1992.
Shipments weighing less than 10,000 pounds are classified as
less-than-truckload (LTL) shipments. All larger shipments are classified as
truckload (TL). The table below shows tons transported and revenue per ton for
years 1991 through 1993 for the Corporation's LTL operations. Amounts have been
restated for prior years to eliminate the double counting of shipments and tons
for interline movements between subsidiaries.

LTL OPERATING STATISTICS

<TABLE>
<CAPTION>
1993 1992 1991
LTL TL LTL TL LTL TL
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Tons (Thousands) 2,396 592 2,286 559 2,228 544
Revenue per Ton $296.40 $117.36 $297.73 $ 117.71 $297.25 $ 119.30
Revenue per Shipment $135.97 $995.43 $135.42 $1,014.52 $128.75 $1,037.42
- --------------------------------------------------------------------------------------
</TABLE>

20
<PAGE> 4
CAROLINA FREIGHT CORPORATION

TOTAL ASSETS

(Graph)

CORPORATE SHIPMENTS HANDLED

(Graph)

CARDINAL OPERATING INCOME

(Graph)

Despite a 4.6% general rate increase on January 1, 1993 and additional
price improvement efforts beginning in August 1993, LTL freight rates were .4%
lower than rates in 1992. Management believes that the enhancement of freight
rates must be accomplished to return the industry and the Corporation to levels
of profitability experienced in prior years. A general rate increase of
approximately 4.7% was instituted by the LTL companies on January 3, 1994.
Net earnings of the LTL companies are shown in the following table:

NET EARNINGS (THOUSANDS)
<TABLE>
<CAPTION>
1993 1992 1991
Net Earnings (Loss) Net Earnings (Loss) Net Earnings
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Carolina $(7,513) $ (668) $262
G.I. 28 1,423 127
- ------------------------------------------------------------------------------------
</TABLE>

The earnings in the LTL operations were negatively impacted by higher pay
rates, increased employee benefit costs, increased purchased transportation
costs, and higher claims costs.
In order to improve profitability, Carolina Freight Carriers and Red Arrow
Freight Lines have instituted several initiatives for 1994 including: (1)
implementation of a new origin terminal load plan during the first quarter of
1994, which will reduce freight handling costs, (2) installation during 1994 at
major breakbulk facilities of a new computerized dock/yard control system,
which will substantially improve the efficiency and real-time tracing
capability, (3) conversion of its linehaul tractor fleet from a seven-year
trade cycle to a four-year trade cycle, which will allow the Company to reduce
maintenance costs and to improve fuel efficiency, and (4) a restructuring of
its intermodal linkage between Carolina Freight Carriers and G.I. Trucking.
This restructuring will significantly decrease rail cost, while reducing the
number of company-owned trailers required to transport the freight.
Carolina Freight Carriers is a signatory to the National Master Freight
Agreement with the International Brotherhood of Teamsters. The current
agreement expires April 1, 1994. Negotiations are in progress for a new
contract.

CARDINAL FREIGHT CARRIERS, INC.
Cardinal, operating exclusively as a truckload carrier, had 1993 revenue of
$40,403,000, a 33.8% increase over 1992. Revenue for 1992 exceeded 1991 revenue
by 8.8%. Net earnings for 1993 were $2,224,000 compared to $1,479,000 in 1992
and $284,000 in 1991.
Cardinal's 1993 results were positively impacted by improved yields,
higher equipment utilization, lower maintenance costs, and a significant
increase in fleet size. Tonnage was up 33.2% for 1993 along with a 29.7%
increase in vehicle miles.
It is anticipated that Cardinal's revenue growth and improved margins will
continue into 1994 given the limited capacity in the regional truckload
marketplace and the company's planned equipment additions. In order to better
serve its customers, Cardinal has created a new division to serve the flatbed
trailer market, in addition to the existing dry van division.

. . . .
21
<PAGE> 5
MANAGEMENT'S REVIEW

CAROLINA FREIGHT CORPORATION

COMPLETE LOGISTICS REVENUE

(GRAPH)

DEBT TO EQUITY

(GRAPH)

COMMON BOOK VALUE PER SHARE AT YEAR-END

(GRAPH)

THE COMPLETE LOGISTICS COMPANY
CLC, a full-service equipment and driver leasing company, generated 1993
revenue of $16,456,000, an increase of 8.3% over 1992 revenue. Net earnings
were $945,000 in 1993 compared with $391,000 in 1992 and $555,000 in 1991.
The Complete Logistics Company experienced an improvement in margins
during 1993 due to reduced employee compensation costs and vehicle liability
claims. Productivity and accident-prevention programs introduced in 1993
reduced these costs. Cost control was also aided by the installation of a
separate data processing system for CLC and its regional offices.
In 1994, CLC plans to open at least six new regional offices. It is
anticipated that expansion of service territory will increase revenue while
expanding the market presence of the company to the Midwest, Southwest, and
Southeast.

GENERAL INFORMATION
The fiscal year of the Corporation consists of three 12-week quarters and a
final 16-week quarter. The income tax provision rate for 1993 was 21.9%
compared to 37.5% for 1992 and 37.9% for 1991. The Income Taxes footnote to the
Financial Statements contains an analysis of the income tax provision and a
discussion of FASB 109 on accounting for income taxes.
For a discussion of FASB 106 and FASB112 regarding post-retirement
benefits other than pensions and post-employment benefits, refer to the
Employee Retirement Plans footnote to the Financial Statements.
For discussion of the effect of changing the Corporation's policy for
revenue recognition in 1992, as required by the FASB Emerging Issues Task
Force, refer to the Summary of Significant Accounting Policies footnote to the
Financial Statements.

LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------------------------------------------------------

The Corporation is in sound financial condition. Net working capital at
December 31, 1993 was a negative $12.4 million; cash was $6.5 million. Net
working capital was $1.1 million at December 31, 1992; cash was $6.8 million.
At December 31, 1991 net working capital was $10.5 million; cash was $5.6
million.
Capital expenditures during 1993, net of dispositions, amounted to $15.8
million. Expenditures for revenue and service equipment totaled $17.3 million;
expen-ditures for acquisition, construction, and renovation of land and
buildings amounted to $4.7 million; and $7.3 million was expended for office,
shop, and terminal equipment. These expenditures were financed through
internally generated funds. The proceeds from dispositions totaled $13.5
million, which included the sale of termi- nal facilities in Atlanta,
Cincinnati, Austin, Houston, and San Antonio. Planned net capital expenditures
for 1994 are $16.2 million. It is anticipated that approximately $9.6 million
will be expended for revenue and service equipment; $2.7 million on terminal
construction and renovation; and $3.9 million for office, computer, and
terminal equipment.

. . . .
22
<PAGE> 6
CAROLINA FREIGHT CORPORATION

COMPLETE LOGISTICS OPERATING INCOME

(Graph)

GROSS CAPITAL EXPENDITURES

(Graph)

EMPLOYEES AT YEAR-END

(Graph)

Management anticipates that 1994 capital expenditures and other working
capital requirements will be financed through internally generated funds and
borrowings under the revolving credit agreement. Management does not anticipate
that the maximum borrowing level under the revolving credit agreement will be
exceeded in 1994.
In December 1993 the Corporation entered into an agreement to sell, on a
revolving basis, a $60 million ownership interest in a designated pool of its
customer receivables. The pool of receivables eligible for sale is held by a
trust in which the Corporation retains the residual ownership interest. The
agreement for this revolving sale of receivables expires in December 2000.
As of December 31, 1993, there were no outstanding borrowings under the
terms of the Corporation's $25 million revolving credit agreement; $18.0
million was outstanding as of December 31, 1992; and $18.5 million as of
December 31, 1991.
The long-term debt-to-equity ratio of the Corporation at December 31, 1993
was 58.5% compared with 75.4% at December 31, 1992 and 76.2% at December 31,
1991.
On March 17, 1994, Carolina Freight Carriers and Red Arrow Freight Lines
entered into a new $45,000,000 revolving credit and letter of credit agreement
with a group of banks. Under this agreement, which currently provides
approximately $18,000,000 of revolving line of credit availability, $27,000,000
of letters of credit and expires on June 30,1996, substantially all of their
revenue and service equipment, $45.8 million of their land and structures, and
the Corporation's customer receivables held by trust are pledged as collateral.
This agreement and other existing agreements contain restrictions regarding the
maintenance of specified debt-to-equity, tangible net worth, and cash flow
ratios. See "Notes to Consolidated Financial Statements - Long-Term Debt and
Subsequent Event." These debt obligations are primarily those of Carolina
Freight Carriers and Red Arrow, and the restrictions have not affected, and are
not expected to affect, the ability of the Corporation to meet its consolidated
obligations.
The Corporation began a 10-year program in 1989 to upgrade its underground
storage tanks. Of the approximately 400 tanks maintained by the operating
subsid-iaries, all will be either retrofitted with protective devices,
replaced, or eliminated. In 1993, the fifth year of the 10-year plan, the
Corporation experienced varying amounts of contamination at most of the
underground tank locations where work was performed. The contamination resulted
from overfilling of tanks, spills, or leaks in either the tanks or connected
pipes. The amounts of contamination encountered are considered to be at levels
that normally would be expected considering the age of those tanks. Management
expects this trend to continue during the balance of the 10-year period but to
a lesser extent in future years due to stricter controls on fuel handling
implemented during 1989.
Carolina Freight Carriers has also been named as a potentially responsible
party at a number of former waste disposal sites. In these instances the
Company's involvement is limited and relatively minor. The liability for
involvement, if any, is joint and several and may not be settled for a number
of years.

. . . .
23
<PAGE> 7

CAROLINA FREIGHT CORPORATION CONSOLIDATED BALANCE SHEETS

December 31, 1993 and 1992
(Dollars in thousands)

1993 1992
<S> <C> <C>
Assets
Current Assets:
Cash $ 6,502 $ 6,826
Temporary investments restricted under letter of
credit arrangments (at cost, which approximates market) 10,169 10,870
Customer and interline receivables, net 10,091 51,433
Customer receivables held by trust, net 35,787 -
Other receivables, net 6,985 9,504
Reinsurance balances receivable 13,815 14,509
Prepayments -
Tires on equipment in use 13,632 13,678
Other 5,755 6,011
Inventories of operating supplies 2,869 2,841
- --------------------------------------------------------------------------------------------
Total current assets 105,605 115,672
- --------------------------------------------------------------------------------------------

Plant and Equipment, at cost:
Revenue and service equipment 267,112 277,925
Land and structures 179,220 182,626
Other equipment 57,356 57,245
Leasehold improvements 1,512 1,347
- --------------------------------------------------------------------------------------------
505,200 519,143
Less - Accumulated depreciation and amortization (258,772) (256,206)
- --------------------------------------------------------------------------------------------
Net plant and equipment 246,428 262,937
- --------------------------------------------------------------------------------------------

Other Assets 11,905 10,645
- --------------------------------------------------------------------------------------------
$363,938 $389,254
============================================================================================
</TABLE>

The notes to consolidated financial statements are an integral part of these
balance sheets.

. . . .
24
<PAGE> 8
CAROLINA FREIGHT CORPORATION

December 31, 1993 and 1992
(Dollars in thousands,
except share data)

1993 1992
<S> <C> <C>
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 33,266 $ 32,357
Accrued wages, salaries and vacation pay 34,191 30,584
Claims and insurance accruals 33,084 33,383
Income taxes
Current 522 84
Deferred - 2,077
Other payables and accrued expenses 11,496 11,571
Current maturities of long-term debt 5,494 4,525
- --------------------------------------------------------------------------------------------
Total current liabilities 118,053 114,581
- --------------------------------------------------------------------------------------------
Long-Term Debt:
6.25% Convertible Subordinated Debentures, Due 2011 49,994 49,994
Other long-term debt 21,182 45,838
- --------------------------------------------------------------------------------------------
Total long-term debt 71,176 95,832
- --------------------------------------------------------------------------------------------
Reserves and Deferred Credits:
Income taxes 15,168 15,870
Other deferred liabilities 8,211 8,877
Insurance claims 29,718 26,919
- --------------------------------------------------------------------------------------------
Total reserves and deferred credits 53,097 51,666
- --------------------------------------------------------------------------------------------
Leases, Commitments and Contingencies
Stockholders' Equity:
Preferred stock, $100 par value, 4% cumulative, authorized
25,000 shares, outstanding 22,112 shares 2,211 2,211
Common stock, $.50 par value, authorized 20,000,000
shares, outstanding 6,561,672 shares in 1993 and 1992 3,281 3,281
Paid-in capital 44,349 44,349
Retained earnings 71,771 77,334
- --------------------------------------------------------------------------------------------
Total stockholders' equity 121,612 127,175
- --------------------------------------------------------------------------------------------
$363,938 $389,254
============================================================================================
</TABLE>

The notes to consolidated financial statements are an integral part of these
balance sheets.

. . . .
25
<PAGE> 9

CAROLINA FREIGHT CORPORATION CONSOLIDATED STATEMENTS
OF EARNINGS

For the years ended
December 31, 1993, 1992, and 1991
(Dollars in thousands, except share data)

1993 1992 1991
<S> <C> <C> <C>
Operating Revenue $845,350 $801,138 $769,150
- --------------------------------------------------------------------------------------------
Operating Expenses:
Employee compensation-
Linehaul 149,514 139,474 131,614
Pickup and delivery 141,033 134,257 131,268
Platform and terminal 181,192 169,370 161,768
Other 66,388 62,894 62,100
- --------------------------------------------------------------------------------------------
Total employee compensation 538,127 505,995 486,750
Fuel and fuel taxes 43,364 41,035 41,794
Tires, repair parts and other operating expenses 39,523 35,524 34,500
Operating taxes and licenses 12,352 11,962 10,661
Insurance premiums and claims 24,386 26,413 20,044
Communications and utilities 11,185 11,545 10,934
Depreciation and amortization, net of gain
(loss) on disposition of operating assets
{1993-$3,222; 1992-($886); 1991-($544)} 31,887 40,670 39,070
Purchased transportation 100,717 88,233 76,051
Equipment and building rents 5,041 5,063 6,057
General supplies and expenses 33,730 30,905 30,592
Nonrecurring charges - 4,408 -
- --------------------------------------------------------------------------------------------
Total operating expenses 840,312 801,753 756,453
- --------------------------------------------------------------------------------------------
Earnings (Loss) From Operations 5,038 (615) 12,697
- --------------------------------------------------------------------------------------------
Other Income and (Expenses):
Interest expense (6,553) (6,565) (6,975)
Interest income 415 509 836
Other expense, net (4,229) (3,229) (4,023)
- --------------------------------------------------------------------------------------------
(10,367) (9,285) (10,162)
- --------------------------------------------------------------------------------------------
Earnings (Loss) Before Income Taxes (5,329) (9,900) 2,535
Income Tax Provision (Benefit) (1,167) (3,712) 960
- --------------------------------------------------------------------------------------------
Net earnings (loss) before cumulative effect
of changes in accounting principles (4,162) (6,188) 1,575
Cumulative effect of changes in accounting principles - 9,836 -
- --------------------------------------------------------------------------------------------
Net Earnings (Loss) ($ 4,162) $ 3,648 $ 1,575
============================================================================================
Net earnings (loss) per share before cumulative
effect of changes in accounting principles ($ .65) ($ .96) .23
Cumulative effect of changes in accounting principles - 1.50 -
- --------------------------------------------------------------------------------------------
Net Earnings (Loss) Per Share ($ .65) $ .54 $ .23
============================================================================================
</TABLE>

The notes to consolidated financial statements are an integral part of these
statements.

. . . .
26
<PAGE> 10
CONSOLIDATED STATEMENTS CAROLINA FREIGHT CORPORATION
OF CASH FLOWS

<TABLE>
<CAPTION>
For the years ended
December 31, 1993, 1992, and 1991
(Dollars in thousands)

1993 1992 1991
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net earnings (loss) for the year $ (4,162) $ 3,648 $ 1,575
Noncash items included in earnings (loss):
Depreciation and amortization 35,109 39,784 38,526
Deferred income taxes (3,612) (3,439) (1,915)
Cumulative effect of accounting principle
change on deferred tax accounts - (12,203) -
Net proceeds from sales of receivables 25,000 - -
Increase in customer and interline receivables (14,445) (5,055) (3,001)
Increase in accounts payable 909 7,344 259
Increase in claims payable and insurance accruals 2,500 11,331 6,558
Net increase (decrease) in other
working capital items 2,457 (253) (5,076)
Other, net (3,888) (339) 2,599
- --------------------------------------------------------------------------------------------
Net cash provided by operating activities 39,868 40,818 39,525
- --------------------------------------------------------------------------------------------
Cash Flows From Investing Activities:
Acquisition of plant and equipment:
Revenue and service equipment (17,283) (22,235) (29,789)
Land and structures (4,665) (10,152) (7,626)
Other equipment and leasehold improvements (7,354) (4,192) (3,589)
Proceeds from disposal of plant and equipment 13,497 2,570 2,595
- --------------------------------------------------------------------------------------------
Net cash used for investing activities (15,805) (34,009) (38,409)
- --------------------------------------------------------------------------------------------
Cash Flows From Financing Activities:
Proceeds from issuance of long-term debt 578 1,567 215
Repayment of long-term debt (6,265) (3,258) (3,005)
Net proceeds from (repayments of)
revolving credit agreements (18,000) (500) 3,500
Common stock issued - 6 37
Dividends on common and preferred stock (1,401) (3,369) (4,024)
- --------------------------------------------------------------------------------------------
Net cash used for financing activities (25,088) (5,554) (3,277)
- --------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and
Temporary Investments (1,025) 1,255 (2,161)
Cash and Temporary Investments at
Beginning of Year 17,696 16,441 18,602
- --------------------------------------------------------------------------------------------
Cash and Temporary Investments at End of Year $ 16,671 $ 17,696 $ 16,441
============================================================================================
Supplemental Disclosure of Cash Flows Information
Cash paid during the year for:
Interest $ 6,563 $ 6,511 $ 7,029
Income taxes 682 831 5,612
Supplemental Disclosure of Noncash Investing Activities:
Capital lease obligations of $3,196,000 and $9,055,000
were incurred in 1992 and 1991, respectively, when the
Company entered into leases for new computer equipment.
============================================================================================
</TABLE>

The notes to consolidated financial statements are an integral part of these
statements.

. . . .
27
<PAGE> 11
CAROLINA FREIGHT CORPORATION CONSOLIDATED STATEMENTS
OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
For the years ended
December 31, 1993, 1992, and 1991
(Dollars in thousands, except share data)

PREFERRED COMMON PAID-IN RETAINED
STOCK STOCK CAPITAL EARNINGS
<S> <C> <C> <C> <C>
Balances at December 31, 1990 $2,211 $3,280 $44,307 $79,504
Net earnings for the year - - - 1,575
Dividends declared:
Preferred stock - $4.00 per share - - - (88)
Common stock - $.60 per share - - - (3,936)
Stock options exercised (1,500 shares) - 1 36 -
- ------------------------------------------------------------------------------------------------------------------
Balances at December 31, 1991 2,211 3,281 44,343 77,055
Net earnings for the year - - - 3,648
Dividends declared:
Preferred stock - $4.00 per share - - - (88)
Common stock - $.50 per share - - - (3,281)
Debentures converted (126 shares) - - 6 -
- ------------------------------------------------------------------------------------------------------------------
Balances at December 31, 1992 2,211 3,281 44,349 77,334
Net loss for the year - - - (4,162)
Dividends declared:
Preferred stock - $4.00 per share - - - (88)
Common stock - $.20 per share - - - (1,313)
- ------------------------------------------------------------------------------------------------------------------
Balances at December 31, 1993 $2,211 $3,281 $44,349 $71,771
==================================================================================================================
</TABLE>

The Notes to consolidated financial statements are an integral part of these
statements.

. . . .
28
<PAGE> 12
NOTES TO CONSOLIDATED CAROLINA FREIGHT CORPORATION
FINANCIAL STATEMENTS
For the years ended
December 31, 1993, 1992, and 1991

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
- --------------------------------------------------------------------------------

PRINCIPLES OF CONSOLIDATION:
The accompanying consolidated financial statements include the accounts of
Carolina Freight Corporation (the Corporation) and its wholly owned
subsidiaries, Carolina Freight Carriers Corporation (CFCC), Red Arrow Freight
Lines, Inc. (Red Arrow), G.I. Trucking Company (GITC), Cardinal Freight
Carriers, Inc., Carrier Computer Services, Inc., The Complete Logistics
Company, Innovative Logistics Incorporated, Carolina Freight Funding
Corporation, Motor Carrier Insurance, Ltd. (MCI), Carolina Freight Canada,
Ltd., Carolina Freight de Mexico, S.A. de C.V. and Carolina Breakdown Service,
Inc. All significant intercompany accounts and transactions have been
eliminated in consolidation.

SECURITIZATION OF RECEIVABLES:
In December 1993, the Corporation entered into an agreement to sell, on a
revolving basis, a $60 million ownership interest in a designated pool of its
customer receivables. The pool of receivables eligible for sale is held by a
trust in which the Corporation retains the residual ownership interest. As of
December 31, 1993, customer and interline receivables are shown net of
$95,786,000 of receivables transferred to the trust. The Corporation's interest
in the pool of receivables held by the trust is included in customer
receivables held by trust, net, on the accompanying 1993 balance sheet.
The agreement for this revolving sale of receivables expires in December
2000. Investment banking, legal and other costs associated with executing this
transaction of $750,000 are included in other expense, net, on the accompanying
1993 statements of earnings.
Prior to December 1993, the Corporation had entered into an agreement to
sell, on a revolving basis, an undivided ownership interest in a designated
pool of its customer and interline receivables. The agreement allowed for the
sale of such receivables up to a maximum of $40.3 million plus unpaid financing
charges. The purchaser had limited recourse such that 15% of the purchase price
could be held back and not paid unless the related receivables were collected.
As of December 31, 1992, customer and interline receivables were shown net of
$40,355,000, which represent the receivables sold. As a result of this sale,
the Corporation had received a total of $35,000,000 and was owed $5,355,000 as
of December 31, 1992 by the purchaser under the holdback provision of the
agreement. This amount is included in other receivables on the accompanying
balance sheets.
The Corporation maintains an allowance for doubtful accounts ($5,182,000
in 1993 and $4,982,000 in 1992) based upon the expected collectibility of all
customer and interline receivables, including receivables sold.
The ongoing costs of these programs of $1,494,000 in 1993 and $1,706,000
in 1992 are included in other expense, net, on the accompanying statements of
earnings.

REINSURANCE RECEIVABLES:
Reinsurance receivables represent amounts due to MCI, the Corporation's
wholly owned captive insurance subsidiary, from United Insurance Company
(United) for reinsurance premiums and amounts advanced to United for payment of
insurance claims.

PLANT AND EQUIPMENT:
The cost of revenue equipment does not include the cost of tires, which is
carried as a prepaid expense and amortized over the estimated tire lives.
Depreciation of plant and equipment is computed on the straight-line basis for
financial statement purposes over the following estimated useful lives: revenue
and service equipment (three to 10 years, 5-15% salvage); structures (15 to 50
years); other equipment (three to 10 years, 0-10% salvage); and leasehold
improvements (lease term).

MAINTENANCE AND REPAIRS:
Expenditures for normal maintenance and repairs are expensed, whereas
those for renewals or betterments that affect the nature of an asset or
increase its useful life are capitalized. Upon the retirement of fixed assets,
the related accumulated depreciation is removed from the accounts and any gain
or loss is reflected in the Corporation's statement of earnings with the
exception of gains on trade-ins, which are included in the bases of the new
assets.

. . . .
29
<PAGE> 13
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

CLAIMS AND INSURANCE ACCRUALS:
Claims and insurance accruals reflect the Corporation's estimated cost of
uninsured claims incurred but not paid prior to year-end for cargo loss and
damage, bodily injury and property damage, workers' compensation,
noncontractual employees' medical expenses, and revenue adjustments. The
present value of such claims is accrued using a discount rate of 7%. The total
undiscounted liability (both current and long-term) was $73,474,000 as of
December 31, 1993, and $71,526,000 as of December 31, 1992.

ENVIRONMENTAL ACCRUALS:
Costs incurred to remediate environmental contamination, caused primarily
by defective underground storage tanks, are recorded when it is probable that a
liability has been incurred and the related amount can be reasonably estimated.
Claims for potential recoveries from third parties are recognized as
receivables when collection of the recoverable amounts is probable.

INCOME TAXES:
Effective January 1, 1992, the Corporation adopted Financial Accounting
Standards Board (FASB) Statement of Financial Accounting Standards (SFAS) No.
109, "Accounting for Income Taxes," which requires a change from the deferred
method to the asset and liability method of accounting for income taxes. Under
the asset and liability method, deferred income taxes are recognized for the
tax consequences of "temporary differences" by applying enacted statutory tax
rates to differences between financial statement carrying amounts and tax bases
of existing assets and liabilities. Under SFAS No. 109, the effect on deferred
taxes of a change in tax rates is recognized in income in the period that
includes the enactment date. The Company recorded an additional $580,000 of
deferred tax expense in 1993 to reflect the corporate tax rate increase to 35%.
Prior to January 1, 1992, the Corporation used the deferred method for
accounting for income taxes. Under the deferred method, the provision for
deferred income taxes represented the tax effect of differences in the timing
of income and expense recognition for tax and financial reporting purposes;
deferred taxes were recognized using the tax rate applicable in the year of the
calculation and were not adjusted for subsequent changes in tax rates.

POST-RETIREMENT BENEFITS OTHER THAN PENSIONS:
Effective January 1, 1992, the Corporation adopted SFAS No. 106,
"Employers' Accounting for Post-Retirement Benefits Other than Pensions." Under
SFAS No. 106, the Corporation is required to accrue the estimated cost of
post-retirement benefits other than pensions during its employees' active
service periods. Prior to January 1, 1992, the Corporation expensed the cost of
these benefits as claims were paid.

RECOGNITION OF REVENUE:
Effective January 1, 1992, the Corporation changed its revenue recognition
policy to recognize revenue on apercentage-of-completion basis. The change
resulted from a review by the Emerging Issues Task Force of the FASB of the
various methods used by transportation companies to recognize revenue and
expense. Prior to 1992 the Corporation recognized freight charges as revenue
when freight was received for shipment.

EARNINGS PER SHARE:
Earnings per share have been computed based on the weighted average number
of common shares outstanding, which was 6,561,672 in 1993, 6,561,634 in 1992,
and 6,560,788 in 1991.

STATEMENTS OF CASH FLOWS:
The Corporation considers all highly liquid investments with a maturity of
three months or less when purchased to be temporary investments, including
temporary investments restricted under letter of credit arrangements associated
with MCI.

. . . .
30
<PAGE> 14
CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES:
- -------------------------------------------------------------------------------

As discussed in the Accounting Policies footnote, the Corporation changed its
methods of accounting for income taxes, post-retirement benefits other than
pensions, and revenue recognition as of January 1, 1992. The cumulative effect
on 1992 net earnings of each of these changes is discussed in the following
footnotes and is summarized as follows:

<TABLE>
<S> <C>
Change in accounting for deferred tax liabilities $12,203
Liability for post-retirement benefits,
net of related income taxes (570)
Change in method of revenue recognition,
net of related income taxes (1,797)
- ------------------------------------------------------------------------------------------------------------
$ 9,836
============================================================================================================

INCOME TAXES:
- -------------------------------------------------------------------------------

As discussed in the Summary of Significant Accounting Policies, the Corporation
adopted SFAS No. 109, "Accounting for Income Taxes," effective January 1, 1992.
The cumulative effect on prior years of this change in accounting principle
increased 1992 net earnings by $12,203,000 or $1.86 per share, and is reported
as part of the cumulative effect of changes in accounting principles in the
accompanying 1992 consolidated statements of earnings.
The provision for income taxes consists of the following (in thousands):

<CAPTION>
1993 1992 1991
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current provision (benefit) -
Federal $ 1,856 $ (276) $ 2,175
State 589 3 700
- ------------------------------------------------------------------------------------------------------------
2,445 (273) 2,875
- ------------------------------------------------------------------------------------------------------------
Deferred taxes arising from -
Accelerated depreciation and other book/tax
differences for plant and equipment (1,542) 616 (313)
Prepaid tires expensed for tax purposes (18) (137) 562
Reserves not currently deductible (3,493) (1,905) (151)
Revenue not currently taxable 531 413 (463)
Effect of alternative minimum tax 839 (1,668) (464)
Effect of increase in tax rate 580 - -
Other, net (509) (496) (459)
- ------------------------------------------------------------------------------------------------------------
(3,612) (3,177) (1,288)
- ------------------------------------------------------------------------------------------------------------
Investment tax credit -
Amortization - (262) (627)
- ------------------------------------------------------------------------------------------------------------
Total provision (benefit) $(1,167) $(3,712) $ 960
============================================================================================================

The total provision for income taxes varies from the statutory corporate
tax rate for the following reasons:

<CAPTION>
1993 1992 1991
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Statutory federal tax rate (35.0%) (34.0%) 34.0%
Increase (reduction) in taxes resulting from -
Effect of increase in tax rate to 35% on deferred tax liabilities 10.9 - -
Amortization of investment tax credit, net of
tax basis reduction impact - (2.6) (21.5)
Nondeductible business expenses 6.4 1.9 9.2
Nontaxable life insurance (proceeds) costs, net (2.9) (1.7) 8.0
State income taxes, net of federal tax benefit (3.4) (3.9) 7.5
State NOL carryforward - - (2.6)
Other items, net 2.1 2.8 3.3
- ------------------------------------------------------------------------------------------------------------
Actual tax rate (21.9%) (37.5%) 37.9%
============================================================================================================
</TABLE>

. . . .
31
<PAGE> 15
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

The tax effect of temporary differences giving rise to the Company's
consolidated deferred tax liability at December 31, 1993 and December 31, 1992
are as follows:
<TABLE>
<CAPTION>
December 31, December 31,
1993 1992
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets -
Claims and insurance reserves $ 17,878 $ 14,705
Alternative minimum tax credit carryforward 5,702 6,541
Allowance for bad debts 2,010 1,892
Accrued vacation payable 5,049 4,608
Deferred compensation costs 1,921 1,837
Other 215 149
- ------------------------------------------------------------------------------------------------------------
Total deferred tax assets 32,775 29,732
- ------------------------------------------------------------------------------------------------------------
Deferred tax liabilities-
Depreciation and other differences for plant and equipment (31,192) (31,977)
Accrued pension costs (5,862) (6,379)
Prepaid tires (5,303) (5,198)
Unearned revenue (4,754) (4,125)
- ------------------------------------------------------------------------------------------------------------
Total deferred tax liabilities (47,111) (47,679)
- ------------------------------------------------------------------------------------------------------------
Net deferred tax liabilities $(14,336) $(17,947)
============================================================================================================
</TABLE>

The Company did not record any valuation allowances against deferred tax
assets. In the opinion of management, the reversal of taxable temporary
differences will allow the realization of the deferred tax assets.
Alternative minimum tax was paid by the Corporation in 1991 when its
alternative minimum tax liability exceeded the regular tax liability by
$464,000. In 1992, the Corporation remained in an alternative tax position as
the Corporation's alternative minimum tax benefit was less than its regular tax
benefit by $1,668,000. In 1993, the Corporation was in a regular tax position
and was able to partially utilize its existing alternative minimum tax credit
carryforward. The cumulative alternative minimum tax in excess of regular tax
of $5,702,000 at December 31, 1993 is available as a credit in future years
when regular tax exceeds alternative minimum tax.

LONG-TERM DEBT:
- ------------------------------------------------------------------------------

Long-term debt at December 31, 1993 and 1992 consisted of the following (in
thousands):
<TABLE>
<CAPTION>
1993 1992
Long-Term Current Long-Term Current
Portion Portion Portion Portion
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
6.25% Convertible Subordinated Debentures,
due 2011, issued in April 1986 $49,994 $ - $49,994 $ -
Revolving credit agreements with banks - - 18,000 -
9.40% Note - $365,000 due quarterly through
January 1995 with balance of $545,000 due April 1995 - 2,370 2,370 1,460
7.25% to 8.125% Industrial Revenue Bonds due through
1996, collateralized by certain terminal properties 236 294 530 294
Industrial Revenue Bonds due through October 2001,
bearing interest at 65% to 88% of prime rate,
collateralized by certain terminal properties 7,418 732 9,949 682
Industrial Revenue Bonds due through October 1998,
bearing interest at 65.6% of prime rate plus 2%,
collateralized by certain terminal properties 740 188 905 188
8% to 10% Notes - due monthly through August 2003,
collateralized by certain terminal properties and
computer equipment 337 60 397 54
Capitalized Computer Leases expiring December 31,
1997 with interest of 6.91% 6,372 1,846 8,198 1,830
Other (primarily borrowings against life insurance
policies bearing interest at 7.40% to 11.75%) 6,079 4 5,489 17
- ------------------------------------------------------------------------------------------------------------
Total $71,176 $ 5,494 $95,832 $ 4,525
============================================================================================================
</TABLE>

The 6.25% Convertible Subordinated Debentures may be converted into common
stock at $47.50 per share. The price of the common stock of the Corporation on
the date of issue was $38.

. . . .
32
<PAGE> 16
CAROLINA FREIGHT CORPORATION

The Corporation may redeem the debentures at a price of 101.875% declining
to 100% at April 15, 1996. FASB 107, "Disclosures about Fair Value of Financial
Instruments," requires that the fair value of the debentures be disclosed. The
debentures had a quoted market value of $42,995,000 at December 31, 1993 and
$39,245,000 at December 31, 1992. At December 31, 1993 the Corporation had
other fixed rate obligations of $17,598,000. In the opinion of management,
based on the borrowing rates currently available to the Corporation for loans
with similar terms and maturities, the recorded amounts closely approximate
fair value.
At December 31, 1993, CFCC had a loan commitment of $25 million under an
unsecured revolving credit agreement (credit agreement) with a group of banks.
The credit commitment had been as high as $35 million during 1993 and it was
reduced by $10 million on December 29, 1993. There was no indebtedness under
the credit agreement as of December 31, 1993. As of December 31, 1992,
indebtedness was $18 million. The maxi-mum amount outstanding under the
agreement at any month-end, the average amount outstanding during the year, and
the weighted average interest rates were (in thousands):
<TABLE>
<CAPTION>
1993 1992 1991
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum amount outstanding at month-end $35,000 $25,500 $27,500
Average amount outstanding 27,592 22,668 22,705
Average interest rate 4.8% 4.4% 6.9%
- ------------------------------------------------------------------------------------------
</TABLE>

The agreement expires March 31,1994 (see Subsequent Event below) and
carries a commitment fee of .375% of the unused commitment which was increased
from .25% in June 1993.
CFCC's credit agreement and the 9.40% note are currently unsecured. The
credit and note agreements permit, with certain exceptions, the lenders to
obtain pro rata security should CFCC create any liens on any of its assets. The
agreements and certain industrial revenue bonds contain various covenants and
restrictions. Requirements include maintenance of specified debt (including
capital lease obligations) to equity and working capital ratios. Covenants also
require maintenance of ratios for funded debt to cash flow, earnings coverage
of fixed charges, and total liabilities to tangible net worth. The credit
agreement states that the occurrence of a material adverse change in the
Corporation's financial condition, as determined by the participating banks, is
an event of default. If an event of default occurs, then the lenders may
declare the outstanding borrowings under the credit agreement, the 9.40% note,
certain other debt, and all interest thereon to be due and payable. The
Corporation has guaranteed repayment of CFCC's debt. The guaranty contains
certain restrictions including debt-to-equity ratios, cash flow and working
capital requirements, and limitations on the payment of cash dividends. Under
the most restrictive covenants of the agreements, future dividends of the
Corporation are limited to approximately $3.7 million plus 50% of earnings, as
defined, after December 31, 1993.
The aggregate annual maturities of long-term debt for each of the five
years ending December 31 are as follows: 1994-$5,494,000; 1995-$3,321,000;
1996-$4,001,000; 1997-$6,488,000; and 1998-$4,023,000.

SUBSEQUENT EVENT:
On March 17, 1994, the Carolina Freight Carriers Corporation and Red Arrow
Freight Lines entered into a new $45,000,000 revolving credit and letter of
credit agreement with a group of banks. Under this agreement, which currently
provides approximately $18,000,000 of revolving line of credit availability,
$27,000,000 of letters of credit and expires June 30, 1996, substantially all
of their revenue and service equipment, $45.8 million of their land and
structures and the Corporation's customer receivables held by trust, are
pledged as collateral. This agreement and existing agreements contain
restrictions regarding the maintenance of specified debt, tangible net worth,
and cash flow ratios. CFCC paid off the 9.40% note and $456,000 of certain
other debt with amounts borrowed under this agreement. The interest rate for
borrowings under this agreement will be, at the Corporation's option, the lead
bank's base rate or another variable rate which fluctuates (in part) based on
changes in certain financial ratios of the Corporation. This agreement states
that the occurrence of a material adverse change in the Corporation's financial
condition, as determined by the participating banks, is an event of default. If
an event of default occurs, then the lenders may declare the outstanding
borrowings under the agreement, certain other debt, and all interest thereon to
be due and payable.

. . . .
33
<PAGE> 17
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

EMPLOYEE RETIREMENT PLANS:
- -------------------------------------------------------------------------------

The Corporation has three pension plans to provide retirement benefits
to employees not covered by collective bargaining agreements.
The following Table sets forth the defined benefit plans' funded status
at December 31
(in thousands):
<TABLE>
<CAPTION>
1993 1992
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of benefit obligations -
Vested benefits $ 51,594 $ 46,292
Nonvested benefits 2,636 2,664
- ---------------------------------------------------------------------------------------------
Accumulated benefit obligations 54,230 48,956
Effect of projected future compensation levels 13,950 13,892
- ---------------------------------------------------------------------------------------------
Projected benefit obligations 68,180 62,848
Plans' assets at fair market value 73,046 66,319
- ---------------------------------------------------------------------------------------------
Plans' assets in excess of projected benefit obligations $ 4,866 $ 3,471
=============================================================================================
Consisting of -
Unrecognized net assets at January 1, 1986 net of
amortization over 13-19 years $ 2,636 $ 3,134
Unrecognized net gain due to past experience
different from assumptions made 13,356 5,515
Less: Unfunded accrued pension cost (11,126) (5,178)
- ---------------------------------------------------------------------------------------------
Total $ 4,866 $ 3,471
=============================================================================================
</TABLE>
The plans' assets consist primarily of corporate stocks, United States
government securities, common trust bond funds, and real estate investments.
The plans hold 94,234 shares of the Corporation's common stock. A 7.5% weighted
average discount rate and a 5.5% rate of increase in future payroll costs were
used in determining the actuarial present value of the projected benefit
obligations. The expected long-term rate of return on assets was 7.5%.
The net periodic pension cost of defined benefit plans includes the
following components (in thousands):
<TABLE>
<CAPTION>
1993 1992 1991
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service costs (benefits earned during the year) $ 4,466 $ 4,447 $ 4,317
Interest cost on projected benefit obligations 4,686 4,619 4,009
Actual return on plan assets (8,135) (3,921) (13,244)
Net amortization and deferral (2,225) (2,977) 7,661
- ---------------------------------------------------------------------------------------------
Net periodic pension cost $ 3,242 $ 2,168 $ 2,743
=============================================================================================
</TABLE>
An additional benefit plan provides certain death and retirement benefits
for the officers and directors of the Corporation. As of December 31, 1993, the
projected and accumulated benefit obligations of the plan were $2,651,000, of
which $2,482,000 represented vested benefits. The plan is not funded; however,
the Corporation has accrued a liability in an amount approximating the
projected benefit obligation. The unrecognized net liability and unrecognized
net gain components of the above are not significant. The Corporation has
purchased insurance on the participants' lives (face coverage amount -
$14,282,000) which will effectively be used to fund the payment of plan
benefits. The Corporation is the owner and beneficiary of these policies.

. . . .
34
<PAGE> 18
CAROLINA FREIGHT CORPORATION

The Corporation has an Executive Deferred Compensation Plan agreement
with certain directors and officers. Under the plan the participants are
guaranteed a minimum of 12% annual return on compensation deferred with
payments beginning upon retirement of the participants. The Corporation has
purchased insurance on the participants' lives (face coverage amount -
$5,958,000) which will be used to fund the payment of plan benefits. The
Corporation is owner and beneficiary of the policies.
CFCC and Red Arrow contributed $30,810,000 in 1993, $28,343,000 in 1992,
and $27,008,000 in 1991 to multi-employer pension plans for employees covered
by collective bargaining agreements.
As discussed in the Summary of Significant Accounting Policies, the
Corporation adopted SFAS No. 106, "Employees' Accounting for Post-Retirement
Benefits Other than Pensions," effective January 1, 1992. Until July 1, 1993
employees retiring from the Corpo-ration after attaining age 62 who had
rendered at least 12 years of service to the Corporation were entitled to
post-retirement health care and dental benefit coverage until age 65. These
benefits are subject to deductibles and other limitations. This program was
discontinued effective with retirements after July 1, 1993. The accumulated
post-retirement benefit obligation at January 1, 1992 of $920,000 (net of
related income taxes of $350,000) was recognized by the Corporation as a
cumulative effect of a change in accounting principle in 1992. This change
decreased 1992 net earnings by $570,000 or $.09 per share. The pro forma
effects of retroactive application of the change on the financial statements
for the years prior to 1992 have not been presented because implementing the
new accounting method would not have a material effect on earnings reported for
1991.
In determining the present value of the accumulated post-retirement
benefit obligations, the company used a 14% health care cost trend rate for
1993 and 1992 decreasing 1% per year after 1993 until leveling off at 5%. A 1%
increase in the trend rate would increase the accumulated benefit obligation as
of December 31, 1993 and 1992 by approximately 2%. The weighted average
discount rate used in calculating the obligation for 1993 and 1992 was 7.5%.
On September 1, 1992 the Corporation offered a Retirement Incentive
Program to eligible employees which provided for enhanced pension benefits and
extended health care, dental coverage and life insurance until age 65. Of the
172 individuals eligible, 112 elected to participate prior to its expiration in
late 1992. The implementation of the Retirement Incentive Program resulted in a
nonrecurring charge of $4,408,000 in 1992, which is comprised of a $3,331,000
increase in the post-retirement benefit obligation and $1,077,000 increase in
the net pension liability. The Corporation's post-retirement benefit
obligations are not funded.
In November 1992, the Financial Accounting Standards Board issued a new
standard on accounting for post-employment benefits (FASB 112). This standard
requires that the expected costs of these benefits be charged to expense during
the years that the employees render service. This is a change from the
Corporation's current policy of recognizing these costs as they are incurred.
The Corporation intends to comply with these rules in fiscal 1994. Management
has not yet determined the effect that the change in accounting will have on
the Corporation's reported financial position and results of operations.

CAPITAL STOCK:
- -------------------------------------------------------------------------------

The 4% cumulative preferred stock is redeemable by the Corporation, in whole or
in part, at any time at $104 per share plus accrued dividends. There are no
dividends in arrears on the preferred stock. The Corporation has established
four incentive stock option plans for its key personnel. These plans allow for
acceleration of option exercises in the event of a change in control of the
Corporation.
. . . .
35
<PAGE> 19
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

A summary of changes in stock options for the three-year period ended
December 31, 1993 follows:
<TABLE>
<CAPTION>
Price Number of
Ranges Shares
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Under option at December 31, 1990
(224,960 shares exercisable) 14.50 to 34.38 379,370
Granted 16.38 2,000
Exercised 17.25 to 18.63 (2,000)
Lapsed 18.63 to 25.88 (34,020)
Under option at December 31, 1991
(243,915 shares exercisable) 14.50 to 34.38 345,350
Granted 20.00 1,000
Lapsed 14.50 to 19.63 (12,350)
Under option at December 31, 1992
(274,780 shares exercisable) 16.38 to 34.38 334,000
Granted 13.38 to 14.50 314,250
Lapsed 17.31 to 20.00 (65,800)
Cancelled 16.38 to 34.38 (164,400)
Under option at December 31, 1993
(215,300 shares exercisable) 13.38 to 19.63 418,050
- ----------------------------------------------------------------------------------------------
</TABLE>
At December 31, 1993, 482,538 shares were reserved for issuance under the stock
option plan.

LEASES, COMMITMENTS AND CONTINGENCIES

The Corporation leases certain terminals and equipment under operating lease
agreements expiring at various dates through 2000. Aggregate future minimum
rentals payable under these operating leases are as follows (in thousands):
<TABLE>
<S> <C>
- ---------------------------------------------------------------------------------------------
1994 $ 7,554
1995 5,940
1996 5,291
1997 3,337
1998 1,044
1999-2000 201
- ---------------------------------------------------------------------------------------------
Total $23,367
=============================================================================================
</TABLE>

The Corporation is contingently liable under letters of credit for
$37,065,000 in connection with its insurance programs and industrial revenue
bond terminal financings. As of December 31, 1993, the Corporation has pledged
approximately $10,150,000 of temporary investments as collateral under such
letter of credit arrangements. The letters of credit serve to guarantee the
payment of insurance claims by CFCC, GITC, Red Arrow and MCI, which are
provided for on their respective balance sheets.
Carolina Freight Carriers Corporation has been named by the Environmental
Protection Agency and by several state environmental agencies as a potentially
responsible party at six federal and state Superfund sites. CFCC's exposure in
these matters is either de minimis or is not expected to be material.
The Corporation is involved in various litigation arising in the normal
course of business. In the opinion of management, the ultimate recovery or
liability, if any, resulting from such matters will not materially affect the
financial position or results of operations of the Corporation.

RECOGNITION OF REVENUE:
- -------------------------------------------------------------------------------

As discussed in the Summary of Significant Accounting Policies, the Corporation
changed its revenue recognition policy effective January 1, 1992. The
cumulative effect of this change in accounting principle created an after-tax
charge of approximately $1,800,000 or $.27 per share in the first quarter of
1992 and is reported as part of the cumulative effect of changes in accounting
principles in the 1992 consolidated statements of earnings. If the Corporation
had reported its 1991 operating results using the percentage-of-completion
method for the full year, net earnings would have been reduced by $959,000 or
$.15 per share.

. . . .
36
<PAGE> 20
CAROLINA FREIGHT CORPORATION

SUMMARY OF QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
- -------------------------------------------------------------------------------

The following table presents certain financial information for each quarter
during 1993 and 1992 (in thousands except per share data):
<TABLE>
<CAPTION>
1993
- -------------------------------------------------------------------------------------------------------
First Second Third Fourth Total
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating revenue $187,331 $196,773 $198,557 $262,689 $845,350
Operating income 1,357 1,403 1,159 1,119 5,038
Net loss (390) (548) (1,583) (1,641) (4,162)
- -------------------------------------------------------------------------------------------------------
Loss per share $ (.06) $ (.09) $ (.24) $ (.26) $ (.65)
- -------------------------------------------------------------------------------------------------------

1992
- -------------------------------------------------------------------------------------------------------
First Second Third Fourth Total
- -------------------------------------------------------------------------------------------------------
Operating revenue $172,117 $183,898 $185,862 $259,261 $801,138
Operating income (loss) 963 2,481 2,051 (6,110) (615)
Net earnings (loss) before cumulative effect
of changes in accounting principles (600) 290 77 (5,955) (6,188)
Cumulative effect of changes in
accounting principles 9,836 - - - 9,836
Net earnings (loss) 9,236 290 77 (5,955) 3,648
- -------------------------------------------------------------------------------------------------------
Net earnings (loss) per share before cumulative
effect of changes in accounting principles $ (0.10) $ .04 $.01 $ (.91) $ (.96)
Cumulative effect of changes in
accounting principles 1.50 - - - 1 .50
Earnings (loss) per share 1.40 .04 01 (.91) .54
- -------------------------------------------------------------------------------------------------------
</TABLE>
The Corporation's fiscal year consists of three quarters of 12 weeks each
and a final quarter of 16 weeks.

REPORT OF INDEPENDENT
PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders of Carolina Freight Corporation:
We have audited the accompanying consolidated balance sheets of Carolina
Freight Corporation (a North Carolina corporation) and subsidiaries as of
December 31, 1993 and 1992, and the related consolidated statements of
earnings, cash flows and stockholders' equity for each of the three years in
the period ended December 31, 1993. These financial statements are the
responsibility of the Corporation's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Carolina Freight
Corporation and subsidiaries as of December 31, 1993 and 1992, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1993, in conformity with generally accepted
accounting principles.
As discussed in the notes to the consolidated financial statements,
effective January 1, 1992, the Corporation changed its methods of accounting
for revenue recognition, post-retirement benefits other than pensions, and
income taxes.

Charlotte, North Carolina, Arthur Andersen & Co.
January 31, 1994 (except with respect to the
matter discussed in the Subsequent Event footnote,
as to which the date is March 17, 1994).

. . . .
37

<PAGE> 1
EXHIBIT 21

SUBSIDIARIES OF CAROLINA FREIGHT CORPORATION

Carrier Computer Services, Inc.
300 Commerce Drive
Cherryville, North Carolina 28021
State of Incorporation: North Carolina

Cardinal Freight Carriers, Inc.
North Carolina Highway #73 West
Concord, North Carolina 28025
State of Incorporation: Virginia

Carolina Freight Canada, Ltd.
6517A Mississauga Road North
Mississauga, Ontario L5N 1A6

G.I. Trucking Company
14727 Alondra Boulevard
La Mirada, California 90638
State of Incorporation: California

The Complete Logistics Company, Inc.
6280 Manchester Blvd., Suite 116
Buena Park, California 90621
State of Incorporation: California

Motor Carrier Insurance, Ltd.
P. O. Box 1022 Clarendon House
Church Street West
Hamilton HM DX, Bermuda
Incorporated in Bermuda

Red Arrow Freight Lines, Inc.
4444 Irving Boulevard
Dallas, Texas 75356-9570
State of Incorporation: Texas

Carolina Freight de Mexico, S.A. de C.V.
Manzanillo #123, Oficina #303
Col. Roma Sur
Mexico, D.F. 06760

Carolina Freight Carriers Corporation
North Carolina Highway #150 East
Cherryville, North Carolina 28021
State of Incorporation: North Carolina

Innovative Logistics Incorporated
377 Carowinds Boulevard
Suite 127
Fort Mill, South Carolina 29715
State of Incorporation: South Carolina

Carolina Freight Funding Corporation
North Carolina Highway #150 East
Cherryville, North Carolina 28021
State of Incorporation: North Carolina

Carolina Breakdown Service, Inc.
P.O. Box 970
Cherryville, North Carolina 28021
State of Incorporation: North Carolina

<PAGE> 1
EXHIBIT 23

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation of
our report dated January 31, 1994 (except with respect to the matter discussed
in the subsequent event footnote, as to which the date is March 17, 1994),
incorporated by reference in this Form 10-K, into the Company's previously
filed Registration Statements on Form S-8 covering the Carolina Freight
Corporation Stock Option Plan (filed February 28, 1983) and the Carolina
Freight Corporation 1984 Incentive Stock Option Plan (filed April 12, 1984).

/s/ ARTHUR ANDERSEN & CO.

Charlotte, North Carolina,
March 28, 1994.