Document:

exv10w2

 

Exhibit 10.2

EMPLOYMENT AGREEMENT

     This Agreement is made as of July 21, 2003, between Gannett Co., Inc., a
Delaware corporation (“Gannett”), and Douglas H. McCorkindale
(“McCorkindale”).

     This Agreement is intended to supersede an employment agreement between
the parties dated January 1, 2001. The 2001 agreement was intended to
cover McCorkindale’s employment by Gannett through his normal retirement
date of July 1, 2004. Gannett desires to retain McCorkindale’s services
for a period of 24 months beyond his normal retirement date, and
McCorkindale is willing to make his services available for this two-year
extension period.

     Gannett and McCorkindale therefore agree as follows:

     1.     Employment. Gannett hereby continues the employment
of McCorkindale as its Chairman, President, and Chief Executive Officer as of
the date first set forth above or in such other senior executive position as
the Board of Directors and McCorkindale shall mutually agree upon. McCorkindale
hereby accepts the employment specified herein, agrees to perform, in good
faith, the duties, consistent with his position, prescribed by the Board of
Directors, abide by the terms and conditions described in this Agreement and to
devote his full working time and best efforts to Gannett. These obligations
shall not restrict McCorkindale from engaging in his customary activities as a
director or trustee of other business or not-for-profit organizations. Gannett
agrees to nominate McCorkindale for election to the Board as a member of the
management slate at each annual meeting of stockholders during his employment
hereunder at which McCorkindale’s director class comes up for election.
McCorkindale agrees to serve on the Board if elected.

     2.     Term of Employment. The term of employment under
this Agreement shall commence on the date first set forth above and shall
extend until June 30, 2006, provided that the parties may agree to one or more
one year extensions of this Agreement commencing on July 1, 2006, and each July
1 thereafter. This Agreement shall be deemed to have been extended by the
parties after July 1, 2006 for an indefinite number of one year extensions
until either party gives notice, no less than 90 days prior to July 1, 2006 or
an anniversary thereof, whichever may be relevant, of an unwillingness to
extend for another year.

     3.     Compensation. During the term of McCorkindale’s
employment, Gannett shall pay him a base salary at the rate of $1,600,000 per
annum or such greater amount as the Executive Compensation Committee shall
determine. Such salary shall be payable in accordance with Gannett’s standard
payroll practices for senior executives. Gannett may pay McCorkindale a bonus
in such amount and at such time or times as the Executive Compensation
Committee shall determine.

     4.     Reimbursement for Expenses. McCorkindale shall be
expected to incur various reasonable business expenses customarily incurred by
persons

 

 

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holding like positions, including but not limited to traveling,
entertainment and similar expenses incurred for the benefit of Gannett.
Gannett shall reimburse McCorkindale for such expenses from time to time, at
McCorkindale’s request, and McCorkindale shall account to Gannett for such
expenses.

     5.     Termination of Agreement by Gannett.

		
	 	     (a)     Gannett shall have the right to terminate this Agreement under
the following circumstances:

		
	 	     (i)     Upon the death of McCorkindale.

		
	 	     (ii)     Upon notice from Gannett to McCorkindale in the event
of an illness or other disability which has incapacitated him
from performing his duties for six months as determined
in good faith by the Board.

		
	 	     (iii)     For good cause upon notice from Gannett. For this
purpose, “good cause” means (1) any material misappropriation of
funds or property of Gannett by McCorkindale; (2) unreasonable
(and persistent) neglect or refusal by McCorkindale to perform
his duties as provided in Section 1 hereof and which he does not
remedy within thirty days after receipt of written notice from
Gannett; (3) the breach by McCorkindale of any provision of
Sections 10 or 14 if such breach has had or is likely to have a
material adverse affect on the business or financial condition
of Gannett; (4) conviction of McCorkindale of a felony; or (5)
McCorkindale’s voluntary resignation as an employee of Gannett
without the prior written consent of Gannett.

		
	 	     (b)     If this Agreement is terminated pursuant to Section 5(a) above,
McCorkindale’s rights and Gannett’s obligations hereunder shall forthwith
terminate except as expressly provided in this Agreement.

		
	 	     (c)     If this Agreement is terminated pursuant to Section 5(a)(i) or
(ii) hereof, McCorkindale or, in the case of death, his estate shall be
entitled to receive a cash payment equal to the present value (based on
Gannett’s then current cost of borrowing) of his projected salary and
bonuses (prior to any elective deferrals or any other deductions) and the
deemed value of all fringe benefits for the balance of the term of this
Agreement, payable within 30 days of the date of termination. For this
purpose, projected salary and bonuses shall be determined by assuming
that annual percentage increases in future calendar years will equal the
average annual percentage increase in salary and bonus over the three
calendar years preceding the year of determination. The deemed value of
fringe benefits in any calendar year shall equal five percent of such
year’s salary (actual or projected as the case may be) plus the aggregate
amount of club dues (not counting dues for the Robert Trent Jones Golf
Club to the extent this membership is continued under Section 9) and home
security charges paid by Gannett on McCorkindale’s behalf in the calendar
year prior to the year of termination.

 

 

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	 	     (d)     Whenever compensation is payable to McCorkindale hereunder
during a time when he is partially or totally disabled, and such
disability (except for the provisions hereof) would entitle him to
disability income or to salary continuation payments from Gannett or from
its insurer under the terms of the Gannett long-term disability plan, or
any successor Gannett plan or policy in effect at the time of such
disability, the compensation payable to him hereunder shall be inclusive
of any such disability income or salary continuation and shall not be in
addition thereto.

		
	 	     (e)     The failure of this Agreement to be renewed on July 1, 2006 or
on any July 1 thereafter shall not be considered as a termination of the
Agreement under this Section.

     6.     Termination of Agreement by McCorkindale

		
	 	     (a)     McCorkindale shall have the right to terminate his employment
under this Agreement for “good reason” upon 30 days’ notice to Gannett
given within 90 days following the occurrence of any of the following
events, each of which shall constitute a “good reason” for such
termination:

		
	 	     (i)     McCorkindale is not elected or retained as President
and Chief Executive Officer (or such other senior executive
position as McCorkindale may have agreed to serve in) and a
director of Gannett.

		
	 	     (ii)     Gannett acts to materially reduce McCorkindale’s
duties and responsibilities hereunder.

		
	 	     (iii)     McCorkindale is required to report to anyone other
than Gannett’s Board of Directors.

		
	 	     (iv)     Gannett acts to change the geographic location of the
performance of McCorkindale’s duties from the Washington, D.C.
Metropolitan area.

		
	 	     (b)     The failure to renew this Agreement on July 1, 2006, or on any
July 1 thereafter shall not be considered as a termination of the
Agreement under this Section.

     7.     Consequence of Termination or of a Breach by
Gannett. If this Agreement is terminated by McCorkindale pursuant to
Section 6 hereof, or by Gannett for any reason other than the reasons specified
in Section 5(a), or if Gannett shall terminate McCorkindale’s employment under
this Agreement in any other way that constitutes Gannett’s breach of this
Agreement, the following shall apply:

		
	 	     (a)     McCorkindale shall be paid all earned but unpaid compensation,
accrued vacation and accrued but unreimbursed expenses required to be
reimbursed under this Agreement; and

		
	 	     (b)     McCorkindale shall receive a cash payment equal to the greater
of (1) McCorkindale’s total compensation in the year preceding the year
of

 

 

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	 	termination (comprised of salary, bonuses and the value of all fringe
benefits and deferred compensation) or (2) the present value (based on
Gannett’s then current cost of borrowing) of McCorkindale’s projected
salary and bonuses (prior to any elective deferrals or any other
deductions) and the deemed value of all fringe benefits for the balance
of the term of this Agreement, payable within 30 days of the date of
termination. For this purpose, projected salary and bonuses shall be
determined by assuming that annual percentage increases in future
calendar years will equal the average annual percentage increase in
salary and bonus over the three calendar years preceding the year of
determination. The deemed value of fringe benefits in any calendar year
shall equal five percent of such year’s salary (actual or projected as
the case may be) plus the aggregate amount of club dues (not counting
dues for the Robert Trent Jones Golf Club to the extent this membership
is continued under Section 9) and home security charges paid by Gannett
on McCorkindale’s behalf in the calendar year prior to the year of
termination. If McCorkindale has received a change in control payment
under Section 11(a)(i), the amount determined under the preceding
sentences of this Section 7 shall be reduced (but not below zero) by the
amount paid to McCorkindale under Section 11(a)(i); and

		
	 	     (c)     McCorkindale shall have his benefits under any non-qualified
supplemental retirement plan calculated by assuming his termination date
were the normal expiration date of this Agreement and by taking into
account the full service and compensation (projected for years after
termination as specified in Section 5(c)) that he would have had if he
had in fact continued to work until the expiration of this Agreement; and

		
	 	     (d)     McCorkindale shall not be required to
mitigate damages or the amount of any payment provided
for under this Agreement by seeking other employment or
otherwise, nor will any payments hereunder be subject to
offset in respect of any claims which Gannett may have
against McCorkindale, nor shall the amount of any
payment or benefit provided for in this Section 7 be
reduced by any compensation earned as a result of
McCorkindale’s employment with another employer.

     8.     Post-Termination Consulting Services. Upon the
expiration or termination of his employment for any reason, Gannett shall
retain McCorkindale for a period of five years to perform consulting services
at the request of the then Chief Executive Officer of Gannett. Such services
shall be performed at a time and place mutually convenient to both parties and
with a time commitment that is consistent with McCorkindale’s other activities.
For such services, McCorkindale shall be paid $150,000 per year in advance at
the beginning of each year of his retirement. Gannett shall also reimburse
McCorkindale, upon the receipt of appropriate documentation, for reasonable
expenses which he incurs in providing consulting services at the request of the
Chief Executive Officer, or which he incurs at the request of Gannett because
of his position as a retired executive officer of Gannett.

 

 

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     9.     Miscellaneous Additional Benefits.

		
	 	     (a)     Pre-Retirement. McCorkindale shall be
entitled to receive during his period of active full-time employment with
Gannett the following benefits:

		
	 	     • Customary Executive Benefits. All benefits, facilities or
privileges, in comparable amounts and under
comparable terms and conditions, as are made
available during such period to any other senior
executive of Gannett other than sign-on bonuses and
similar one-time benefits, provided that in no event
shall the benefits be less favorable than the
benefits McCorkindale receives on the effective date
of this Agreement.

		
	 	     • Stock Options. All Gannett stock options granted to McCorkindale
after the date first set forth above shall become
fully vested within four years from the date of
grant, and will continue to vest after McCorkindale’s
termination of employment and shall remain
exercisable until the fourth anniversary of
McCorkindale’s termination of employment.

		
	 	     • Retention Agreement; Restricted Stock. The Executive Compensation
Committee has determined that, due to McCorkindale’s
unique ability to contribute to the success of the
Company, it is highly desirable and in the best
interests of the Company’s shareholders to obtain
McCorkindale’s services as Chairman, President and
Chief Executive Officer for at least two years beyond
his normal retirement date of July 1, 2004. In order
to obtain his agreement to serve for that extended
period of employment and to defer his retirement for
at least two years, the Executive Compensation
Committee has determined to award McCorkindale
restricted stock units relating to Gannett Common
Stock. (1) If McCorkindale remains in Gannett’s
employ on July 1, 2004, he shall receive a restricted
stock unit award that will vest with respect to 1,603
shares of Gannett common stock per month for a
12-month period commencing on July 1, 2004. Upon
vesting, McCorkindale’s account under the Gannett
Deferred Compensation Plan shall be credited based
upon fair market value of the shares at the time of
vesting. (2) If he remains in Gannett’s employ on
July 1, 2005, he shall receive a restricted stock
unit award that will vest with respect to 1,603
shares of Gannett common stock per month for a
12-month period commencing on July 1, 2005. Upon
vesting, McCorkindale’s account under the Gannett
Deferred Compensation Plan shall be credited based
upon fair market value of the shares at the time of
vesting. Any portion of the restricted stock unit
grants remaining unvested shall be forfeited upon
McCorkindale’s termination of employment for any
reason. Payment of amounts credited to Gannett’s
Deferred Compensation Plan pursuant to this Section
9(a) shall be made on or after the January 1
following

 

 

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	 	McCorkindale’s actual retirement in such
form of payment as McCorkindale may elect in
accordance with the terms of the Deferred
Compensation Plan.

		
	 	     (b)     Post-Retirement. After McCorkindale ceases
full-time active employment (whether before or after reaching his normal
retirement date) for any reason other than good cause as defined in
Section 5(a)(iii)(5), he shall receive all benefits afforded to other
retired Gannett Chief Executive Officers and, in accordance with company
policies, to other retired executive officers generally. Whether or not
they may be provided to other retired Chief Executive Officers or senior
executives under the preceding sentence, Gannett shall provide
McCorkindale with the following benefits for the remainder of his life:

		
	 	     • Gannett shall continue to
maintain the active membership in the Robert Trent
Jones Golf Club that McCorkindale currently enjoys
and permit McCorkindale to continue enjoying its
sole use for his life.

		
	 	     • All computer and other equipment
in his office or home that McCorkindale uses at the
time of his retirement shall be transferred to him
when he retires. He shall be provided computer
system assistance as may be required.
	 
	 	     • Cars and financial planning
services under no less favorable circumstances than
those provided to McCorkindale prior to retirement.

		
	 	     • Reasonable access to Gannett
offices, facilities and services.

		
	 	     • Due to the two year extension of
his employment, the Company is obligated to provide
him additional life insurance benefits under its
existing life insurance program at a cost to the
Company of approximately $150,000. Gannett will
make available to him this sum of $150,000 for his
use in acquiring other benefits, before or after
retirement, in addition to those benefits otherwise
provided to him under this Agreement or by other
Gannett benefit policies covering him. He may use
this sum for any benefits of his choosing, whether
otherwise offered by Gannett or not, including
additional life insurance, travel or accident
insurance or other insured benefits coverage,
enhanced medical coverage, Healthworks fees,
post-retirement use of Gannett aircraft at the
then-incremental hourly rate and at times not
inconveniencing Gannett, enhanced financial and
legal counseling services, and health or country
club expenses.

     10.     Restrictive Covenant. McCorkindale agrees that
during his employment hereunder and for as long as he receives post-termination
consulting

 

 

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fees under Section 8, he will not, without the written consent of
Gannett, as a principal, officer, director, stockholder (except as the owner of
less than 5% of the stock of a company whose stock is publicly traded),
partner, employee or in any other capacity whatsoever, engage in or become
associated with, or advise or assist, any business or enterprise which is
engaged in providing any goods or services that are competitive with any goods
or services that are or may at any time be offered by Gannett. For the
purposes of this Section 10, a business or enterprise shall be deemed to be
engaged in providing goods or services that are competitive with any goods or
services offered by Gannett if the Board of Directors of Gannett so determines.
It is agreed that Gannett’s sole remedy in the event of McCorkindale’s breach
of this Section 10 shall be the termination of all compensation otherwise
payable to McCorkindale under Sections 3, 4 or 8 with respect to the period of
time after such breach.

     11.     Change in Control.

		
	 	     (a)     In general. Upon a change in control, as
defined below, prior to McCorkindale’s termination of employment as an
employee, Gannett shall

		
	 	     (i)     pay McCorkindale as of the date of the change in
control a lump sum cash bonus equal to four times his total
annual compensation (comprised of salary and bonuses prior to
any elective deferrals or any other deductions and the deemed
value of all fringe benefits as determined in Section 5(c)) paid
in the calendar year immediately preceding the change in
control, such payment to be in lieu of the cash payments payable
under Section 7(b).

		
	 	     (ii)     treat, to the extent allowed without the need of plan
amendment, all incentive pay, stock options and any other
contingent executive compensation in which McCorkindale has an
interest as if all targets were achieved on the date of the
change in control and as if all otherwise unvested benefits
became fully vested on such date. If any of such benefits
requires action by McCorkindale to exercise his rights under
such benefits, McCorkindale shall be given the greater of 90
days following the change in control or the period of time
permitted under the relevant plan to exercise his rights, but in
no event shall any stock option be exercisable more than 10
years (or such lesser period as may be prescribed by the
Internal Revenue Code for tax-favored stock options) after the
date of its grant.

		
	 	     (iii)     make available to McCorkindale the retiree benefits
specified in Section 9(b).

		
	 	     For purposes of this Agreement, the term “change in control” has the
same meaning given it under Gannett’s Transitional Compensation Plan, as
amended (or any successor plan) (the “Transitional Compensation Plan”)
provided that a management buyout under the terms of which Gannett

 

 

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	 	ceases
to be a public company shall not be considered as a change in control
under this Agreement.

		
	 	     (b)     Timing of Payment. Any cash or in-kind
payments due as of the date of the change in control shall be paid to
McCorkindale as soon as administratively practicable (but in no event
later than 30 days) following the change in control.

     12.          Certain Additional Payments by Gannett.

		
	 	     (a)     Anything in this Agreement to the contrary notwithstanding, in
the event it shall be determined that any payment made to or benefit
provided to McCorkindale pursuant to the terms of this Agreement or any
other plan, arrangement or agreement of Gannett or a person affiliated
with Gannett (a “Payment”) would be subject to the excise tax imposed by
Section 4999 of the Code or any similar federal, state or local tax that
may hereafter be imposed (such excise tax, together with any associated
interest and penalties, are hereinafter collectively referred to as the
“Excise Tax”), then Gannett shall pay to McCorkindale an additional
payment (the “Gross-Up Payment”) in an amount such that after payment by
McCorkindale of all taxes (including federal, state and local income
taxes, employment taxes, Excise Tax, and any interest or penalties
imposed with respect to such taxes), including any Excise Tax imposed
upon the Gross-Up Payment, McCorkindale retains a net amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments. It
is the intention of the parties that Gannett provide McCorkindale with a
full tax gross-up under the provisions of this Section 12(a) so that on a
net after-tax basis, the result to McCorkindale shall be the same as if
the Excise Tax had not been imposed on a Payment. See Section 13(b) of
the Transitional Compensation Plan, for the reduction (if any, but not
below zero) of any compensation and benefits to which McCorkindale is
entitled to receive under the terms of the Transitional Compensation Plan
by any severance compensation and benefits received by McCorkindale under
the terms of this Agreement.

		
	 	     (b)     All determinations required to be made under Section 12(a)
(including whether and when a Gross-Up Payment is required, the amount of
such Gross-Up Payment and the assumptions to be utilized in arriving at
such determination) shall be made by PricewaterhouseCoopers LLP, or, if
PricewaterhouseCoopers LLP is not Gannett’s nationally recognized
independent accounting firm immediately prior to the change in control,
such other nationally recognized accounting firm serving as Gannett’s
independent accounting firm (the “Accounting Firm”). The Accounting Firm
shall provide detailed supporting calculations to both Gannett and
McCorkindale within 10 business days of Gannett’s receipt of notice from
McCorkindale that there has been a Payment or at such earlier time as is
requested by Gannett. In the event that the Accounting Firm is serving
as accountant or auditor for the individual, entity or group effecting
the change in control, McCorkindale may appoint another nationally
recognized accounting firm to make the

 

 

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	 	determinations required hereunder
(which accounting firm shall then be referred to as the Accounting Firm
hereunder). All fees and expenses of the Accounting Firm shall be borne
solely by Gannett. Any Gross-Up Payment, as determined pursuant to
Section 12(a), shall be paid by Gannett to McCorkindale within 5 days of
the receipt of the Accounting Firm’s determination. Any determination by
the Accounting Firm shall be binding upon the Company and McCorkindale.

		
	 	     (c)     As a result of the uncertainty in the application of Section
4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments that
will not have been made by Gannett should have been made (the
“Underpayment”) or that Gross-Up Payments will have been made that should
not have been made (“Overpayments”), consistent with the calculations
required to be made hereunder. In the event McCorkindale thereafter is
required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by Gannett to or for the benefit of
McCorkindale. If the Accounting Firm shall determine that an
Overpayment has been made, McCorkindale shall promptly repay
the amount of the Overpayment to Gannett.

     13.     Legal Expenses and Interest. If, with respect to
any alleged failure by Gannett to comply with any of the terms of this
Agreement, McCorkindale hires legal counsel with respect to this Agreement or
institutes any negotiations or institutes or responds to legal action to assert
or defend the validity of, enforce his rights under, or recover damages for
breach of this Agreement and thereafter Gannett is found in a judgment no
longer subject to review or appeal to have breached this Agreement in any
material respect, then Gannett shall indemnify McCorkindale for his actual
expenses for attorneys’ fees and disbursements, together with such additional
payments, if any, as may be necessary so that the net after-tax payments to
McCorkindale equal such fees and disbursements.

     14.     Trade Secrets. McCorkindale agrees that unless
duly authorized in writing by Gannett, he will neither during his employment by
Gannett nor at any time thereafter divulge or use any trade secrets or
confidential information first acquired by him during and by virtue of his
employment with Gannett.

     15.     Funding. Gannett may in its discretion establish a
trust to fund any of the payments which are or may become payable to
McCorkindale under this Agreement.

     16.     Notice. Any and all notices referred to herein
shall be sufficient if furnished in writing and sent by registered mail to the
parties.

     17.     Transferability. The rights, benefits and
obligations of Gannett under this Agreement shall be transferable, and all
covenants and agreements hereunder shall inure to the benefit of and be
enforceable by or against, its successors and

 

 

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assigns. Whenever the term
“Gannett” is used in this Agreement, such term shall mean and include Gannett
Co., Inc. and its successors and assigns. The rights and benefits of
McCorkindale under this Agreement shall not be transferable other than rights
to property or compensation that may pass on his death to his estate or
beneficiaries through his will or the laws of descent and distribution and the
terms of any Gannett compensation or benefit plan.

     18.     Severability. If any provision of this Agreement
or the application thereof is held invalid or unenforceable, the invalidity or
unenforceability thereof shall not affect any other provisions of this
Agreement which can be given effect without the invalid or unenforceable
provision, and to this end the provisions of this Agreement are to be
severable.

     19.     Amendment; Waiver. This Agreement contains the
entire agreement of the parties with respect to the employment of McCorkindale
by Gannett and upon execution of this Agreement supersedes the Employment
Agreement dated as of January 1, 2001, between Gannett and McCorkindale. No
amendment or modification of this Agreement shall be valid unless evidenced by
a written instrument executed by the parties hereto. No waiver by either party
of any breach by the other party of any provision or conditions of this
Agreement shall be deemed a waiver of any similar or dissimilar provision or
condition at the same or any prior or subsequent time.

     20.     Tax Withholding. Gannett may withhold from any
payments due to McCorkindale hereunder, such amounts as its independent public
accountants may determine are required to be withheld under applicable federal,
state and local tax laws.

     21.     Governing Law. This Agreement shall be governed by
and construed under and in accordance with the laws of the State of Delaware
without regard to principles of conflicts of laws.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.

	 	 	 	 	 
	 	 	GANNETT CO., INC.
	 	 	 	 	 
	 	 	
By:
	 	/s/ James A. Johnson
	 	 	 	 	

	 	 	 	 	James A. Johnson
	 	 	 	 	Chairman of Executive Compensation
	 	 	 	 	Committee
	 	 	 	 	 
	 	 	/s/ Douglas H. McCorkindale
	 	 	

	 	 	Douglas H. McCorkindale<PAGE>
                                                                EXHIBIT 10.23(b)

                               AMENDMENT NO. 1 TO

                            INDEMNIFICATION AGREEMENT

         THIS AMENDMENT NO. 1 TO INDEMNIFICATION AGREEMENT (this "Amendment"),
is made effective as of the 31st day of December, 2002 for the purpose of
amending and modifying that certain Indemnification Agreement (the
"Indemnification Agreement"), effective as of December 31, 2002, by and among
Central Freight Lines, Inc., a Nevada corporation ("Central Freight"), and
Central Refrigerated Service, Inc., a Nebraska corporation ("Central
Refrigerated"). Capitalized terms used but not defined in this Amendment shall
have the meaning ascribed thereto in the Indemnification Agreement.

         WHEREAS, the Indemnification Agreement recites that Central Freight and
Central Refrigerated are parties to a Separation Agreement pursuant to which
Central Refrigerated will cease to be the wholly-owned subsidiary of Central
Freight effective as of 12:00:01 a.m. Mountain Standard Time on January 1, 2003;

         WHEREAS, the separation occurred at 11:59 p.m. Mountain Standard Time
on December 31, 2002;

         WHEREAS, the parties hereto desire to amend the Indemnification
Agreement to correct the recital relating to the time of separation.

         NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual agreements set forth herein, the parties hereto agree as follows:

         1. The second recital of the Indemnification Agreement is hereby
amended and restated in its entirety to read as follows:

          "WHEREAS, pursuant to the terms of the Separation Agreement, Central
          Refrigerated will cease to be the wholly-owned subsidiary of Central
          Freight effective as of 11:59 p.m. Mountain Standard Time on December
          31, 2002."

         2. Except as explicitly modified or amended by this Amendment, all
terms, conditions, and provisions of the Indemnification Agreement shall
continue in full force and effect.

         3. This Amendment may be executed via facsimile or otherwise in one or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

<PAGE>

         IN WITNESS WHEREOF, the undersigned have executed this Amendment
effective as of the date first above written.

CENTRAL FREIGHT LINES, INC.,          CENTRAL REFRIGERATED SERVICE,
a Nevada corporation                  INC., a Nebraska corporation

By:  /s/ Jeffrey A. Hale              By:  /s/ Robert T. Goates
     Jeffrey A. Hale, Senior Vice          Robert Goates, Vice President of
     President and Chief Financial         Finance and Chief Financial Officer
     Officer

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