Carter mentored young men to a better life, Carraway said.
His death "will bring a lot of people together, you know, from all different walks of life, Bloods, Crips, ex-gang members, current gang members, whatever, people on the streets, foster kids, whatever the case may be," Carraway said.
"It's a sad day for them," he added.
Carter was also a friend and acquaintance of Knight through their work in making rap records, said Carraway, who was a writer for Heavyweight Records during its business run between 1997 and 2000.
"They became friends through mutual friends, and they hit it off and they were cool," Carraway said. "From my understanding, they had no issues whatsoever. They were friends. They respected each other.
"To my knowledge, there was no altercations ever whatsoever between him and Suge Knight," Carraway said.
Knight is being held in lieu of $2 million bond in the death of Carter pending a court appearance, which isn't expected until at least Monday, according to Jane Robison, a spokeswoman for the Los Angeles County district attorney's office.
"Knight arrested for murder in connection to fatal traffic incident in Compton," the Los Angeles County Sheriff tweeted.
Police in Los Angeles say a man matching Knight's description drove over Carter and another man with his red pickup truck in Compton, a city adjacent to south Los Angeles that's renowned in rap music.
The pickup truck driver ran over the two men again as he sped away from the scene.
The condition of the second man, Cle Sloan, 51, wasn't disclosed by police.
"So far, people we talked to said it looked like it was an intentional act. So we're handling it as a homicide," Los Angeles police Lt. John Corina said.
The hit-and-run stemmed from an argument Knight allegedly had on the set of the N.W.A. biopic "Straight Outta Compton" and then spilled over to the parking lot of Tam's Burgers.
The film is about how "the group NWA emerges from the streets of Compton, California in the mid-1980s and revolutionizes pop culture with their music and tales about life in the hood," according to IMDB.
One character is named Suge Knight, and other characters are named after other prominent rap figures, IMDB says. Paul Giamatti is among the cast. Universal Pictures listed a release date of August 14.
Urging a better life
On the violent streets of south Los Angeles, Carter had urged a better life for youths and young men, Carraway said.
"He was just a father figure basically to me and an array of others who were inner-city youth, troubled youth, gang members, ex-gang members, that type of thing," Carraway said.
"He was a person that reached out to a lot of people to help then get on their feet, helped them put food on their tables, helped them become entrepreneurs. He gave a lot of direction to a lot of us who didn't have fathers growing up and things of that nature," Carraway said. "He taught us positive stuff."
More recently, Carraway saw Carter at Carter's grandson's birthday party on December 20, Carraway said.
"Because of people like Terry, I was able to put my foot forward and make something of myself," Carraway said.
Knight, 49, turned himself in to Los Angeles Sheriff's Department investigators early Friday.
CNN affiliate KCAL-TV
and the Los Angeles Times
quoted Knight's attorney, James Blatt, as saying Knight feared for his life and was trying to flee when the incident happened.
"We feel strongly Mr. Knight did not do anything wrong in this matter. He was attacked by a number of individuals, that has already been corroborated by certain witnesses. He left the scene because he was in fear for his safety and life," he said.
In a conversation with CNN before the arrest, Blatt declined to confirm to CNN whether Knight was driving.
Police say Knight allegedly tracked the two men to the lot.
"A red pickup truck is involved in this, and those people were also at the other altercation, so yes, it all suggests that he was the person driving that truck," Corina said.
"It looks like he drove backward and struck the victims. And then went forward and struck them again as he left," Corina said.
Officers later found Knight's Ford Raptor abandoned in Westwood. Early Friday, Knight, accompanied by his lawyer, turned himself in at the West Hollywood Sheriff's Station, where homicide detectives were interviewing him.
Series of run-ins
Knight founded the wildly successful Death Row Records in 1991, signing artists such as Snoop Doggy Dogg (since then known as Snoop Dogg and Snoop Lion) and Tupac Shakur.
But then his fortunes began to dwindle with a series of run-ins with the law.
Knight was driving the car in which Shakur was a passenger when the rapper was shot to death in Las Vegas in 1996.
Shortly afterward, Knight spent several years in prison for violating parole on assault and weapons convictions. That prison time -- along with Shakur's death, feuds between Knight and a number of rappers and desertions by Dr. Dre, Snoop and others -- contributed to the label's bankruptcy in 2006.
In August, Knight and two other people were wounded in a shoorting while they were inside a celebrity-filled Sunset Strip party
hosted by singer Chris Brown on the eve of the MTV Video Music Awards.
In October, he was busted along with comedian Micah "Katt" Williams for allegedly stealing a photographer's camera
"Straight Outta Compton," the movie set where the argument began Thursday, chronicles the rise of N.W.A
, one of the most controversial rap acts of all time.