EXHIBIT 1
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FROZEN FOOD EXPRESS INDUSTRIES, INC.
2002 INCENTIVE AND NONSTATUTORY OPTION PLAN
SCOPE AND PURPOSE OF PLAN
Frozen Food Express Industries, Inc., a Texas corporation (the
"Corporation"), has adopted this 2002 Incentive and Nonstatutory Option Plan
(the "Plan") to provide for the granting of:
(a) Incentive Options (hereafter defined) to certain Key Employees
(hereafter defined) and
(b) Nonstatutory Options (hereafter defined) to certain Key Employees
and other persons.
The purpose of the Plan is to provide an incentive for Key Employees,
including Key Employees who may be officers and directors of the Corporation,
and certain consultants and advisors of the Corporation or its Subsidiaries
(hereafter defined) to remain in the service of the Corporation or its
Subsidiaries, to extend to them the opportunity to acquire a proprietary
interest in the Corporation so that they will apply their best efforts for
the benefit of the Corporation, and to aid the Corporation in attracting able
persons to enter the service of the Corporation and its
Subsidiaries.
SECTION 1. DEFINITIONS
1.1 "Award" means the grant of any form of Option, under the Plan,
whether granted singly, in combination, or in tandem, to a Holder
pursuant to the terms, conditions, and limitations that the Committee
may establish in order to fulfill the objectives of the Plan.
1.2 "Award Agreement" means the written agreement between the
Corporation and a Holder evidencing the terms, conditions, and
limitations of the Award granted to that Holder.
1.3 "Board of Directors" means the board of directors of the Corporation.
1.4 "Business Day" means any day other than a Saturday, a Sunday, or a
day on which banking institutions in the State of Texas are authorized
or obligated by law or executive order to close.
1.5 "Change in Control" means the event that is deemed to have occurred
if:
(a) any "person" (as such term is used in Sections 13(d) and 14(d)
of the Exchange Act) that does not currently own a five percent (5%)
or greater equity interest in the Corporation or in any Related
Corporation becomes the "beneficial owner" (as determined pursuant
to Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Corporation or of any Related Corporation
representing fifteen percent (15%) or more of the combined voting
power of the Corporation's or Related Corporation's, as the case
may be, then outstanding voting securities; or
(b) a change in the composition of the Board of Directors occurring
within a two (2) year period, as a result of which members of the
Incumbent Board cease to constitute at least a majority of the
Board of Directors; or
(c) the Corporation or any Related Corporation shall merge with or
consolidate into any other corporation, other than a merger or
consolidation which would result in the holders of the Voting
Securities of the Corporation or any Related Corporation, as the
case may be, outstanding immediately prior thereto holding
immediately thereafter securities representing more than sixty
percent (60%) of the combined voting power of the Voting Securities
of the Corporation or any Related Corporation, as the case may be,
or such surviving entity (or its ultimate parent, if applicable)
outstanding immediately after such merger or consolidation; or
(d) the stockholders of the Corporation or any Related Corporation
approve a plan of complete liquidation of the Corporation or any
Related Corporation or the consummation of an agreement for the
sale or disposition by the Corporation or any Related Corporation
of all or substantially all of the Corporation's or Related
Corporation's assets and such plan or agreement becomes effective,
other than a liquidation or sale which would result in the
Corporation directly or indirectly owning such interest or assets.
1.6 "Code" means the Internal Revenue Code of 1986, as amended.
1.7 "Committee" means the committee appointed pursuant to Section 3 by
the Board of Directors to administer this Plan.
1.8 "Corporation" means Frozen Food Express Industries, Inc., a Texas
corporation.
1.9 "Date of Grant" has the meaning given it in Paragraph 4.3.
1.10 "Disability" has the meaning given it in Paragraph 7.5.
1.11 "Effective Date" means the first date that the Plan has been approved
by both the Board of Directors and the stockholders of the Corporation,
as provided in Paragraph 8.1.
1.12 "Eligible Individual" means (a) a Key Employee or (b) any other Person
that the Committee designates as eligible for an Award (other than for
Incentive Options) because the Person performs bona fide consulting or
advisory services for the Corporation or any of its Subsidiaries (other
than services in connection with the offer or sale of securities in a
capital-raising transaction) and the Committee determines that the
Person has a direct and significant effect on the financial development
of the Corporation or any of its Subsidiaries.
1.13 "Employee" means any employee of the Corporation or of any of its
Subsidiaries, including officers and directors of the Corporation who
are also employees of the Corporation or of any of its Subsidiaries.
1.14 "Exchange Act" means the Securities Exchange Act of 1934, or any
successor law, as it may be amended from time to time.
1.15 "Exercise Notice" has the meaning given it in Paragraph 5.5.
1.16 "Exercise Price" has the meaning given it in Paragraph 5.4.
1.17 "Fair Market Value" means, for a particular day, the market price of the
Stock, determined by the Committee in good faith on such basis as it
deems appropriate. Whenever possible, the determination of Fair Market
Value by the Committee shall be based on the prices reported in the Wall
Street Journal. Such determination shall be conclusive and binding on
all persons.
1.18 "Holder" means an Eligible Individual to whom an Award has been
granted or such Eligible Individual's Permitted Transferee.
1.19 "Incentive Option" means an incentive stock option as defined under
Section 422 of the Code and regulations thereunder.
1.20 "Incumbent Board" means the individuals who, as of the Effective Date,
constitute the Board of Directors and any other individual who becomes a
director of the Corporation after that date and whose election or
appointment by the Board of Directors or nomination for election by the
Corporation's stockholders was approved by a vote of at least a majority
of the directors then comprising the Incumbent Board.
1.21 "Key Employee" means any Employee whom the Committee identifies
as having a direct and significant effect on the performance of the
Corporation or any of its Subsidiaries.
1.22 "Non-Employee Director" has the meaning given it in Rule 16b-3.
1.23 "Nonstatutory Option" means a stock option that does not satisfy the
requirements of Section 422 of the Code or that is designated at the
Date of Grant or in the applicable Award Agreement to be an option
other than an Incentive Option.
1.24 "Non-Surviving Event" means an event of Restructure as described in
either subparagraph (b) or (c) of Paragraph 1.32.
1.25 "Normal Retirement" means the separation of the Holder from
employment with the Corporation and its Subsidiaries on account of
retirement at any time on or after the date on which the Holder reaches
age sixty-five.
1.26 "Option" means either an Incentive Option or a Nonstatutory Option, or
both.
1.27 "Outside Director" has the meaning given it under Section 162(m) of
the Code.
1.28 "Permitted Transferee" means an Eligible Individual's spouse, children,
or grandchildren, a trust established by the Eligible Individual for the
benefit of the Eligible Individual and/or his or her spouse, children,
or grandchildren, a family partnership or limited liability company
whose partners or members are the Eligible Individual, his or her spouse,
children, or grandchildren, and/or a trust that would be a Permitted
Transferee, or any other Person, the transfer to whom has been approved
by the Committee in its sole discretion.
1.29 "Person" means any person or entity of any nature whatsoever,
specifically including (but not limited to) an individual, a firm, a
company, a corporation, a partnership, or a trust or other entity. A
Person, together with that Person's affiliates and associates (as those
terms are defined in Rule 12b-2 under the Exchange Act for purposes of
this definition only), and any Persons acting as a partnership, limited
partnership, joint venture, association, syndicate or other group
(whether or not formally organized), or otherwise acting jointly or in
concert or in a coordinated or consciously parallel manner (whether or
not pursuant to any express agreement), for the purpose of acquiring,
holding, voting or disposing of securities of the Corporation with that
Person, shall be deemed a single "Person."
1.30 "Plan" means the Corporation's 2002 Incentive and Nonstatutory
Option Plan, as it may be amended from time to time.
1.31 "Related Corporation" shall mean FFE, Inc., a Delaware corporation
and wholly-owned subsidiary of the Corporation, and FFE Transportation
Services, Inc., a Delaware corporation and wholly-owned subsidiary of
FFE, Inc.
1.32 "Restructure" means the occurrence of any one or more of the
following:
(a) The merger or consolidation of the Corporation with any Person,
whether effected as a single transaction or a series of related
transactions, with the Corporation remaining the continuing or
surviving entity of that merger or consolidation and the Stock
remaining outstanding and not changed into or exchanged for stock
or other securities of any other Person or of the Corporation, cash,
or other property;
(b) The merger or consolidation of the Corporation with any Person,
whether effected as a single transaction or a series of related
transactions, with
(i) the Corporation not being the continuing or surviving entity of
that merger or consolidation or
(ii) the Corporation remaining the continuing or surviving
entity of that merger or consolidation but all or a part of
the outstanding shares of Stock of the Corporation being
changed into or exchanged for stock or other securities of any
other Person or of the Corporation, or into cash or other
property; or
(c) The transfer, directly or indirectly, of all or substantially all of
the assets of the Corporation (whether by sale, merger,
consolidation, liquidation or otherwise) to any Person whether
effected as a single transaction or a series of related transactions.
1.33 "Rule 16b-3" means Rule 16b-3 under Section 16(b) of the Exchange
Act, or any successor rule, as it may be amended from time to time.
1.34 "Securities Act" means the Securities Act of 1933, or any successor
law, as it may be amended from time to time.
1.35 "Stock" means the Corporation's authorized common stock, par value
$1.50 per share, as described in the Corporation's Articles of
Incorporation as it exists at the Effective Date, or any other
securities that are substituted for the Stock as provided in Section 6.
1.36 "Subsidiary" means, with respect to any Person, any corporation or
other entity of which a majority of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by that
Person.
1.37 "Total Shares" has the meaning given it in Paragraph 6.2.
1.38 "Voting Securities" means any securities that are entitled to vote
generally in the election of directors, in the admission of general
partners, or in the selection of any other similar governing body.
SECTION 2. SHARES OF STOCK SUBJECT TO THE PLAN
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2.1 Maximum Amount of Shares. Subject to the provisions of Paragraph 2.6
and Section 6 of the Plan, the aggregate number of shares of Stock that
may be issued, transferred or exercised pursuant to Awards under the
Plan shall be 850,000 shares.
2.2 Reduction in Available Shares. In computing the total number of shares
available at a particular time for Awards under the Plan, there shall be
counted against the limitations stated in Paragraph 2.1 the number of
shares of Stock subject to issuance upon exercise or settlement of
Awards and the number of shares of Stock that have been issued upon
exercise or settlement of Awards (except as otherwise provided
in Paragraph 2.3).
2.3 Restoration of Unused and Surrendered Shares. If Stock subject to any
Award is not issued or transferred, or ceases to be issuable or
transferable for any reason, including (but not exclusively) because an
Award is forfeited, terminated, expires unexercised, or is exchanged for
other Awards, the shares of Stock that were subject to that Award shall
no longer be charged against the number of available shares provided for
in Paragraph 2.2 and shall again be available for issue, transfer, or
exercise pursuant to Awards under the Plan to the extent of such
forfeiture, termination, expiration, or other cessation of its
subjection to an Award.
2.4 Description of Shares. The shares to be delivered under the Plan shall
be made available from (a) authorized but unissued shares of Stock,
(b) Stock held in the treasury of the Corporation, or (c) previously
issued shares of Stock reacquired by the Corporation, including shares
purchased on the open market, in each situation as the Board of Directors
or the Committee may determine from time to time in its sole discretion.
2.5 Registration and Listing of Shares. From time to time, the Board of
Directors and appropriate officers of the Corporation shall and are
authorized to take whatever actions are necessary to file required
documents with governmental authorities, stock exchanges, and other
appropriate Persons to make shares of Stock available for issuance
pursuant to Awards.
2.6 Reduction in Outstanding Shares of Stock. Nothing in this Section 2
shall impair the right of the Corporation to reduce the number of
outstanding shares of Stock pursuant to repurchases, redemptions, or
otherwise; provided, however, that no reduction in the number of
outstanding shares of Stock shall (a) impair the validity of any
outstanding Award, whether or not that Award is fully exercisable or
fully vested or (b) impair the status of any shares of Stock previously
issued pursuant to an Award or thereafter issued pursuant to a then-
outstanding Award as duly authorized, validly issued, fully paid, and
nonassessable shares.
SECTION 3. ADMINISTRATION OF THE PLAN
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3.1 Committee. The Committee shall administer the Plan with respect to all
Eligible Individuals who are subject to Section 162(m) of the Code. The
Board of Directors may administer the Plan with respect to all other
Eligible Individuals or may delegate all or part of that duty to the
Committee. Except for references in Paragraphs 3.1, 3.2, and 3.3 and
unless the context otherwise requires, references herein to the Committee
shall also refer to the Board of Directors. The Committee shall be
constituted so that, as long as Stock is registered under Section 12 of
the Exchange Act, each member of the Committee shall be both a
Non-Employee Director and an Outside Director and so that the Plan in
all other applicable respects will qualify transactions related to the
Plan for the exemptions from Section 16(b) of the Exchange Act provided
by Rule 16b-3, to the extent exemptions thereunder may be available, and
for the performance-based compensation exception under Section 162(m) of
the Code. If the Committee is nevertheless not so constituted, then the
Plan shall be administered, and each grant of Options to Eligible
Individuals who are subject to Section 16(b) of the Exchange Act shall
be approved, by the Board of Directors. No discretion regarding Awards
to Eligible Individuals who are subject to Section 16(b) of the Exchange
Act or Section 162(m) of the Code shall be afforded to a person who is
not both a Non-Employee Director and an Outside Director. The number of
persons that shall constitute the Committee shall be determined from time
to time by a majority of all the members of the Board of Directors, but
shall be no less than two persons.
3.2 Duration, Removal, Etc. The members of the Committee shall serve at
the pleasure of the Board of Directors, which shall have the power, at
any time and from time to time, to remove members from or add members to
the Committee. Removal of a member from the Committee may be with or
without cause. Any individual serving as a member of the Committee shall
have the right to resign from membership in the Committee by at least
three days prior written notice to the Board of Directors. The Board of
Directors, and not the remaining members of the Committee, shall have
the power and authority to fill vacancies on the Committee, however
caused. The Board of Directors shall promptly fill any vacancy that
causes the number of members of the Committee to be below two or any
other number that Rule 16b-3 or Section 162(m) may require from time to
time.
3.3 Meetings and Actions of Committee. The Board of Directors shall
designate which of the Committee members shall be the chairman of the
Committee. If the Board of Directors fails to designate a Committee
chairman, the members of the Committee shall elect one of the Committee
members as chairman, who shall act as chairman until he ceases to be a
member of the Committee or until the Board of Directors elects a new
chairman. The Committee shall hold its meetings at those times and places
as the chairman of the Committee may determine. At all meetings of the
Committee, a quorum for the transaction of business shall be required,
and a quorum shall be deemed present if at least a majority of the
members of the Committee are present. At any meeting of the Committee,
each member shall have one vote. All decisions and determinations of the
Committee shall be made by the majority vote or majority decision of all
of its members present at a meeting at which a quorum is present;
provided, however, that any decision or determination reduced to writing
and signed by all of the members of the Committee shall be as fully
effective as if it had been made at a meeting that was duly called and
held. The Committee may make any rules and regulations for the conduct
of its business that are not inconsistent with the provisions of the Plan,
the Certificate of Incorporation, the By-laws of the Corporation,
Rule 16b-3 and the performance-based compensation exception under
Section 162(m) of the Code, so long as either is applicable, as the
Committee may deem advisable.
3.4 Committee's Powers. Subject to the express provisions of the Plan, Rule
16b-3 and the performance-based compensation exception under Section
162(m) of the Code, the Committee shall have the authority, in its sole
and absolute discretion, (a) to adopt, amend, and rescind administrative
and interpretive rules and regulations relating to the Plan; (b) to
determine the Eligible Individuals to whom, and the time or times at
which, Awards shall be granted; (c) to determine the number of shares of
Stock that shall be the subject of each Award; (d) to determine the terms
and provisions of each Award Agreement (which need not be identical),
including provisions defining or otherwise relating to (i) the term and
the period or periods and extent of exercisability of the Options,
(ii) the extent to which the transferability of shares of Stock issued or
transferred pursuant to any Award is restricted, (iii) the effect of
termination of employment on the Award, and (iv) the effect of approved
leaves of absence (consistent with any applicable regulations of the
Internal Revenue Service); (e) to accelerate, pursuant to Section 6, the
time of exercisability of any Option that has been granted; (f) to
construe the respective Award Agreements and the Plan; (g) to make
determinations of the Fair Market Value of the Stock pursuant to the
Plan; (h) to delegate its duties under the Plan to such agents as it may
appoint from time to time, provided that the Committee may not delegate
its duties with respect to making Awards to Eligible Individuals who are
subject to Section 16(b) of the Exchange Act or take any action that
would disqualify an award for the performance-based compensation
exception under Section 162(m) of the Code; and (i) to make all other
determinations, perform all other acts, and exercise all other powers
and authority necessary or advisable for administering the Plan, including
the delegation of those ministerial acts and responsibilities as the
Committee deems appropriate. Subject to Rule 16b-3 and the performance-
based compensation exception under Section 162(m) of the Code, the
Committee may correct any defect, supply any omission or reconcile
any inconsistency in the Plan, in any Award, or in any Award Agreement
in the manner and to the extent it deems necessary or desirable to carry
the Plan into effect, and the Committee shall be the sole and final
judge of that necessity or desirability. The determinations of the
Committee on the matters referred to in this Paragraph 3.4 shall be final
and conclusive.
SECTION 4. ELIGIBILITY AND PARTICIPATION
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4.1 Eligible Individuals. Awards may be granted pursuant to the Plan only
to persons who are Eligible Individuals at the time of the grant thereof.
4.2 Grant of Awards. Subject to the express provisions of the Plan, the
Committee shall determine which Eligible Individuals shall be granted
Awards from time to time. In making grants, the Committee shall take
into consideration the contribution the potential Holder has made or may
make to the success of the Corporation or its Subsidiaries and such other
considerations as the Board of Directors may from time to time specify.
The Committee shall also determine the number of shares subject to each
of the Awards and shall authorize and cause the Corporation to grant
Awards in accordance with those determinations; provided, however, that
no Eligible Individual shall be granted Awards in any single fiscal year
of the Corporation the total number of shares subject to which shall
exceed 100,000 shares.
4.3 Date of Grant. The date on which the Committee completes all action
resolving to offer an Award to an individual, including the specification
of the number of shares of Stock to be subject to the Award, shall be the
date on which the Award covered by an Award Agreement is granted (the
"Date of Grant"), even though certain terms of the Award Agreement may
not be determined at that time and even though the Award Agreement may
not be executed until a later time. In no event shall a Holder gain any
rights in addition to those specified by the Committee in its grant,
regardless of the time that may pass between the grant of the Award and
the actual execution of the Award Agreement by the Corporation and the
Holder.
4.4 Award Agreements. Each Award granted under the Plan shall be
evidenced by an Award Agreement that is executed by the Corporation and
the Eligible Individual to whom the Award is granted incorporating those
terms that the Committee shall deem necessary or desirable. More than
one Award may be granted under the Plan to the same Eligible Individual
and be outstanding concurrently. In the event an Eligible Individual is
granted both one or more Incentive Options and one or more Nonstatutory
Options, those grants shall be evidenced by separate Award Agreements,
one for each of the Incentive Option grants and one for each of the
Nonstatutory Option grants.
4.5 Limitation for Incentive Options. Notwithstanding any provision
contained herein to the contrary, (a) a person shall not be eligible to
receive an Incentive Option unless he is an Employee of the Corporation
or a corporate Subsidiary (but not a partnership Subsidiary), and (b) a
person shall not be eligible to receive an Incentive Option if,
immediately before the time the Option is granted, that person owns
(within the meaning of Sections 422 and 425 of the Code) stock possessing
more than ten percent of the total combined voting power or value of all
classes of stock of the Corporation or a Subsidiary. Nevertheless,
subparagraph 4.5(b) shall not apply if, at the time the Incentive Option
is granted, the Exercise Price of the Incentive Option is at least one
hundred and ten percent of Fair Market Value and the Incentive Option is
not, by its terms, exercisable after the expiration of five years from
the Date of Grant.
4.6 No Right to Award. The adoption of the Plan shall not be deemed to
give any person a right to be granted an Award.
SECTION 5. TERMS AND CONDITIONS OF OPTIONS
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All Options granted under the Plan shall comply with, and the related
Award Agreements shall be deemed to include and be subject to, the terms and
conditions set forth in this Section 5 (to the extent each term and condition
applies to the form of Option) and also to the terms and conditions set forth
in Section 6 and Section 7; provided, however, that the Committee may
authorize an Award Agreement that expressly contains terms and provisions
that differ from the terms and provisions set forth in Paragraphs 6.2, 6.3,
and 6.4 and any of the terms and provisions of Section 7 (other than Paragraph
7.10).
5.1 Number of Shares. Each Award Agreement shall state the total number
of shares of Stock to which it relates.
5.2 Vesting. Each Award Agreement shall state the time or periods in which
or the conditions upon satisfaction of which, the right to exercise the
Option or a portion thereof shall vest and the number of shares of Stock
for which the right to exercise the Option shall vest at each such time,
period, or fulfillment of condition.
5.3 Expiration of Options. Nonstatutory Options and Incentive Options may
be exercised during the term determined by the Committee and set forth
in the Award Agreement; provided that no Option shall be exercised after
the expiration of a period of ten years commencing on the Date of Grant
of such Option.
5.4 Exercise Price. Each Award Agreement shall state the exercise price per
share of Stock (the "Exercise Price"). The Exercise Price per share of
Stock subject to an Incentive Option shall not be less than the greater
of (a) the par value per share of the Stock or (b) 100% of the Fair
Market Value per share of the Stock on the Date of Grant of the Option.
The Exercise Price per share of Stock subject to a Nonstatutory Option
shall not be less than the greater of (a) the par value per share of the
Stock or (b) fifty percent of the Fair Market Value per share of the
Stock on the Date of Grant of the Option, except that in the case of any
Award intended to satisfy the performance-based compensation exception
under Section 162(m) of the Code, the Exercise Price must not be less
than 100% of the Fair Market Value per share of the Stock on the Date of
Grant of the Option.
5.5 Method of Exercise. The Option shall be exercisable only by written
notice of exercise (the "Exercise Notice") delivered to the Corporation
during the term of the Option, which notice shall (a) state the number
of shares of Stock with respect to which the Option is being exercised,
(b) be signed by the Holder of the Option or, if the Holder is dead or
Disabled, by the person authorized to exercise the Option pursuant to
Paragraphs 7.3, 7.5 or 7.7, (c) be accompanied by the Exercise Price for
all shares of Stock for which the Option is exercised, and (d) include
such other information, instruments, and documents as may be required to
satisfy any other condition to exercise contained in the Award Agreement.
The Option shall not be deemed to have been exercised unless all of the
requirements of the preceding provisions of this Paragraph 5.5 have been
satisfied.
5.6 Incentive Option Exercises. During the Holder's lifetime, only the
Holder may exercise an Incentive Option.
5.7 Medium and Time of Payment. The Exercise Price of an Option shall be
payable in full upon the exercise of the Option (a) in cash or by an
equivalent means acceptable to the Committee, (b) on the Committee's
prior consent (expressed in the original Award Agreement in the case of
any Incentive Option), by surrendering or attesting to ownership of
shares of Stock owned by the Holder (including shares received upon
exercise of the Option or restricted shares already held by the Holder)
and having a Fair Market Value equal to the aggregate Exercise Price
payable in connection with such exercise, or (c) by any combination of
clauses (a) and (b). If the Committee elects to accept shares of Stock
in payment of all or any portion of the Exercise Price, then (for
purposes of payment of the Exercise Price) those shares of Stock shall
be deemed to have a cash value equal to their aggregate Fair Market
Value determined as of the date of the delivery of the Exercise Notice.
If the Committee elects to accept shares of restricted Stock in payment
of all or any portion of the Exercise Price, then an equal number of
shares issued pursuant to the exercise shall be restricted on the same
terms and for the restriction period remaining on the shares used
for payment.
5.8 Payment with Sale Proceeds. In addition, at the request of the Holder
and to the extent permitted by applicable law, the Committee may (but
shall not be required to) approve arrangements with a brokerage firm
under which that brokerage firm, on behalf of the Holder, shall pay to
the Corporation the Exercise Price of the Option being exercised, and
the Corporation shall promptly deliver the exercised shares to the
brokerage firm. To accomplish this transaction, the Holder must deliver
to the Corporation an Exercise Notice containing irrevocable instructions
from the Holder to the Corporation to deliver the stock certificates
directly to the broker. Upon receiving a copy of the Exercise Notice
acknowledged by the Corporation, the broker shall sell that number of
shares of Stock or loan the Holder an amount sufficient to pay the
Exercise Price and any withholding obligations due. The broker shall
then deliver to the Corporation that portion of the sale or loan proceeds
necessary to cover the Exercise Price and any withholding obligations
due. The Committee shall not approve any transaction of this nature if
the Committee believes that the transaction would give rise to the Holder's
liability for short-swing profits under Section 16(b) of the Exchange Act.
5.9 Payment of Taxes. The Committee may, in its discretion, require a
Holder to pay to the Corporation (or the Corporation's Subsidiary if the
Holder is an employee of a Subsidiary of the Corporation), at the time
of the exercise of an Option, the amount that the Committee deems
necessary to satisfy the Corporation's or its Subsidiary's current or
future obligation to withhold federal, state or local income or other
taxes that the Holder incurs by exercising an Option. Upon the exercise
of an Option requiring tax withholding, a Holder may (a) direct the
Corporation to withhold from the shares of Stock to be issued to the
Holder the number of shares necessary to satisfy the Corporation's
minimum statutory obligation to withhold taxes, that determination to be
based on the shares' Fair Market Value as of the date on which tax
withholding is to be made; (b) deliver to the Corporation sufficient
shares of Stock (based upon the Fair Market Value at date of withholding)
to satisfy the Corporation's tax withholding obligations, based on the
shares' Fair Market Value as of the date of exercise; or (c) deliver
sufficient cash to the Corporation to satisfy its tax withholding
obligations. Holders who elect to use such a stock withholding feature
must make the election at the time and in the manner that the Committee
prescribes. The Committee may, in its sole discretion, deny any Holder's
request to satisfy withholding obligations through Stock instead of cash.
In the event the Committee subsequently determines that the aggregate
Fair Market Value (as determined above) of any shares of Stock withheld
as payment of any tax withholding obligation is insufficient to discharge
that tax withholding obligation, then the Holder shall pay to the
Corporation, immediately upon the Committee's request, the amount of that
deficiency.
5.10 Limitation on Aggregate Value of Shares That May Become First Exercisable
During Any Calendar Year Under an Incentive Option. Except as is
otherwise provided in Paragraph 6.2, with respect to any Incentive Option
granted under this Plan, the aggregate Fair Market Value of shares of
Stock subject to an Incentive Option and the aggregate Fair Market Value
of shares of Stock or stock of any Subsidiary (or a predecessor of the
Corporation or a Subsidiary) subject to any other incentive stock option
(within the meaning of Section 422 of the Code) of the Corporation or its
Subsidiaries (or a predecessor corporation of any such corporation) that
first become purchasable by a Holder in any calendar year may not (with
respect to that Holder) exceed $100,000, or such other amount as may be
prescribed under Section 422 of the Code or applicable regulations or
rulings from time to time. As used in the previous sentence, Fair Market
Value shall be determined as of the date the Incentive Option is granted.
For purposes of this Paragraph 5.10 "predecessor corporation" means (a)
a corporation that was a party to a transaction described in Section 425(a)
of the Code (or which would be so described if a substitution or
assumption under that Section had been effected) with the Corporation,
(b) a corporation which, at the time the new incentive stock option
(within the meaning of Section 422 of the Code) is granted, is a
Subsidiary of the Corporation or a predecessor corporation of any such
corporations, or (c) a predecessor corporation of any such corporations.
Failure to comply with this provision shall not impair the enforceability
or exercisability of any Option, but shall cause the excess amount of
shares to be reclassified in accordance with the Code.
5.11 No Fractional Shares. The Corporation shall not in any case be required
to sell, issue, or deliver a fractional share with respect to any Option.
In lieu of the issuance of any fractional share of Stock, the Corporation
shall pay to the Holder an amount in cash equal to the same fraction (as
the fractional Stock) of the Fair Market Value of a share of Stock
determined as of the date of the applicable Exercise Notice.
5.12 Modification. Extension and Renewal of Options. Subject to the terms
and conditions of and within the limitations of the Plan, Rule 16b-3, the
performance-based compensation exception of Section 162(m) of the Code,
and any consent required by the last sentence of this Paragraph 5.12, the
Committee may (a) modify, vest, extend or renew outstanding Options
granted under the Plan, (b) accept the surrender of Options outstanding
hereunder (to the extent not previously exercised) and authorize the
granting of new Options in substitution for outstanding Options (to the
extent not previously exercised), and (c) amend the terms of an Incentive
Option at any time to include provisions that have the effect of changing
the Incentive Option to a Nonstatutory Option. Nevertheless, without the
consent of the Holder, the Committee may not modify any outstanding
Options so as to specify a higher or lower Exercise Price or accept the
surrender of outstanding Incentive Options and authorize the granting of
new Options in substitution therefor specifying a higher or lower Exercise
Price. In addition, no modification of an Option granted hereunder shall,
without the consent of the Holder, alter or impair any rights or
obligations under any Option theretofore granted hereunder to such Holder
under the Plan except, with respect to Incentive Options, as may be
necessary to satisfy the requirements of Section 422 of the Code or as
permitted in clause (c) of this Paragraph 5.12.
5.13 Other Agreement Provisions. The Award Agreements authorized under
the Plan shall contain such provisions in addition to those required by
the Plan (including, without limitation, restrictions or the removal of
restrictions upon the exercise of the Option and the retention or
transfer of shares thereby acquired) as the Committee may deem advisable.
Each Award Agreement shall identify the Option evidenced thereby as an
Incentive Option or Nonstatutory Option, as the case may be, and no Award
Agreement shall cover both an Incentive Option and a Nonstatutory Option.
Each Award Agreement relating to an Incentive Option granted hereunder
shall contain such limitations and restrictions upon the exercise of the
Incentive Option to which it relates as shall be necessary for the
Incentive Option to which such Award Agreement relates to constitute an
incentive stock option, as defined in Section 422 of the Code.
SECTION 6. ADJUSTMENT PROVISIONS
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6.1 Adjustment of Awards and Authorized Stock. The terms of an Award
and the number of shares of Stock authorized pursuant to Paragraph 2.1
for issuance under the Plan shall be subject to adjustment, from time to
time, in accordance with the following provisions:
(a) If at any time or from time to time, the Corporation shall
subdivide as a whole (by reclassification, by a Stock split, by
the issuance of a distribution on Stock payable in Stock or
otherwise) the number of shares of Stock then outstanding into a
greater number of shares of Stock, then (i) the maximum number of
shares of Stock available for the Plan as provided in Paragraph 2.1
shall be increased proportionately, and the kind of shares or other
securities available for the Plan shall be appropriately adjusted,
(ii) the number of shares of Stock (or other kind of shares or
securities) that may be acquired under any Award shall be increased
proportionately, (iii) the maximum number of shares of Stock subject
to Options that may be granted to any Eligible Individual in any
single fiscal year of the Corporation shall be increased
proportionately, and (iv) the price (including Exercise Price) for
each share of Stock (or other kind of shares or unit of other
securities) subject to then outstanding Awards shall be reduced
proportionately, without changing the aggregate purchase price or
value as to which outstanding Awards remain exercisable or subject
to restrictions.
(b) If at any time or from time to time, the Corporation shall
consolidate as a whole (by reclassification, reverse Stock split, or
otherwise) the number of shares of Stock then outstanding into a
lesser number of shares of Stock, (i) the maximum number of shares
of Stock available for the Plan as provided in Paragraph 2.1 shall
be decreased proportionately, and the kind of shares or other
securities available for the Plan shall be appropriately adjusted,
(ii) the number of shares of Stock (or other kind of shares or
securities) that may be acquired under any Award shall be decreased
proportionately, (iii) the maximum number of shares of Stock subject
to Options that may be granted to any Eligible Individual in any
single fiscal year of the Corporation shall be decreased
proportionately, and (iv) the price (including Exercise Price) for
each share of Stock (or other kind of shares or unit of other
securities) subject to then outstanding Awards shall be increased
proportionately, without changing the aggregate purchase price or
value as to which outstanding Awards remain exercisable or subject
to restrictions.
(c) Whenever the number of shares of Stock subject to outstanding
Awards and the price for each share of Stock subject to outstanding
Awards are required to be adjusted as provided in this Paragraph 6.1,
the Committee shall promptly prepare a notice setting forth, in
reasonable detail, the event requiring adjustment, the amount of the
adjustment, the method by which such adjustment was calculated, and
the change in price and the number of shares of Stock, other
securities, cash or property purchasable subject to each Award
after giving effect to the adjustments. The Committee shall promptly
give each Holder such a notice.
(d) Adjustments under subparagraphs 6.1(a) and (b) shall be made by the
Committee, and its determination as to what adjustments shall
be made and the extent thereof shall be final, binding and
conclusive. No fractional interest shall be issued under the Plan
on account of any such adjustments.
6.2 Changes in Control. Any Award Agreement may provide that, upon the
occurrence of a Change in Control, all outstanding Options shall
immediately become fully vested and exercisable in full, including that
portion of any Option that pursuant to the terms and provisions of the
applicable Award Agreement had not yet become exercisable (the total
number of shares of Stock as to which an Option is exercisable upon the
occurrence of a Change in Control is referred to herein as the "Total
Shares"). If a Change in Control involves a Restructure or occurs in
connection with a series of related transactions involving a Restructure
and if such Restructure is in the form of a Non-Surviving Event and as a
part of such Restructure shares of stock, other securities, cash or
property shall be issuable or deliverable in exchange for Stock, then the
Holder of an Award shall be entitled to purchase (in lieu of the Total
Shares that the Holder would otherwise be entitled to purchase) the
number of shares of stock, other securities, cash or property to which
that number of Total Shares would have been entitled in connection with
such Restructure (and at an aggregate Exercise Price equal to the
Exercise Price that would have been payable if that number of Total
Shares had been purchased on the exercise of the Option immediately
before the consummation of the Restructure).
6.3 Restructure and No Change in Control. In the event a Restructure
should occur at any time while there is any outstanding Award hereunder
and that Restructure does not occur in connection with a Change in
Control or in connection with a series of related transactions involving
a Change in Control, then:
(a) no outstanding Option shall immediately become fully vested
and exercisable in full merely because of the occurrence of the
Restructure; and
(b) at the option of the Committee, the Corporation may (but shall
not be required to) take any one or more of the following actions:
(i) accelerate in whole or in part the time of the vesting and
exercisability of any one or more of the outstanding Options
so as to provide that those Options shall be exercisable
before, upon, or after the consummation of the Restructure;
(ii) if the Restructure is in the form of a Non-Surviving
Event, cause the surviving entity to assume in whole or in
part any one or more of the outstanding Awards upon such terms
and provisions as the Committee deems desirable; or
(iii) redeem in whole or in part any one or more of the
outstanding Awards (whether or not then exercisable) in
consideration of a cash payment, as such payment may be
reduced for tax withholding obligations as contemplated in
Paragraph 5.9 in an amount equal to the excess of (1) the Fair
Market Value, determined as of a date immediately preceding
the consummation of the Restructure, of the aggregate number
of shares of Stock subject to the Award and as to which the
Award is being redeemed over (2) the Exercise Price for that
number of shares of Stock;
The Corporation shall promptly notify each Holder of any election or
action taken by the Corporation under this Paragraph 6.3. In the event
of any election or action taken by the Corporation pursuant to this
Paragraph 6.3 that requires the amendment or cancellation of any Award
Agreement, as may be specified in any notice to the Holder thereof, that
Holder shall promptly deliver that Award Agreement to the Corporation in
order for that amendment or cancellation to be implemented by the
Corporation and the Committee. The failure of the Holder to deliver any
such Award Agreement to the Corporation as provided in the preceding
sentence shall not in any manner effect the validity or enforceability
of any action taken by the Corporation and the Committee under this
Paragraph 6.3, including, without limitation, any redemption of an Award
as of the consummation of a Restructure. Any cash payment to be made by
the Corporation pursuant to this Paragraph 6.3 in connection with the
redemption of any outstanding Awards shall be paid to the Holder thereof
currently with the delivery to the Corporation of the Award Agreement
evidencing that Award; provided, however, that any such redemption shall
be effective upon the consummation of the Restructure notwithstanding
that the payment of the redemption price may occur subsequent to the
consummation. If all or any portion of an outstanding Award is to be
exercised or accelerated upon or after the consummation of a Restructure
that is in the form of a Non-Surviving Event and as a part of that
Restructure shares of stock, other securities, cash or property shall be
issuable or deliverable in exchange for Stock, then the Holder of the
Award shall thereafter be entitled to purchase (in lieu of the number of
shares of Stock that the Holder would otherwise be entitled to purchase)
the number of shares of stock, other securities, cash or property to
which such number of shares of Stock would have been entitled in
connection with the Restructure (and, for Options, at an aggregate
Exercise Price equal to the Exercise Price that would have been payable
if that number of Total Shares had been purchased on the exercise of the
Option immediately before the consummation of the Restructure).
6.4 Notice of Change in Control or Restructure. The Corporation shall
attempt to keep all Holders informed with respect to any Change in
Control or Restructure or of any potential Change in Control or
Restructure to the same extent that the Corporation's stockholders are
informed by the Corporation of any such event or potential event.
SECTION 7. ADDITIONAL PROVISIONS
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7.1 Termination of Employment. Subject to the last sentence of Paragraph 6.2,
if a Holder is an Eligible Individual because the Holder is an Employee
and if that employment relationship is terminated for any reason other
than the Holder's death or Disability (hereafter defined), then any and
all Awards held by that Holder in the Holder's capacity as an Employee
as of the date of the termination shall become null and void as of the
date of the termination; provided, however, that the portion, if any, of
any and all Awards held by the Holder that are exercisable as of the date
the Holder's employment is terminated shall be exercisable by that Holder
for a period of the lesser of (a) the remainder of the term of the Award
or (b) ninety (90) days following the date of the Holder's termination.
Any portion of an Award not exercised upon the expiration of the periods
specified in (a) or (b) shall be null and void.
7.2 Other Loss of Eligibility. If a Holder is an Eligible Individual because
the Holder is serving in a capacity other than as an Employee and if that
capacity is terminated for any reason other than the Holder's death, then
any and all Awards held by the Holder that were granted because of that
capacity as of the date of the termination shall become null and void as
of the date of the termination; provided, however, that the portion, if
any, of any and all Awards held by the Holder that are exercisable as of
the date of the Holder ceases to serve in such capacity shall be
exercisable by that Holder for a period of the lesser of (a) the
remainder of the term of the Award or (b) ninety (90) days following
the date of the Holder ceases to serve in such capacity. Any portion of
an Award not exercised upon the expiration of the periods specified in
(a) or (b) shall be null and void.
7.3 Death. Upon (a) the death of a Holder, who is an Eligible Individual
because the Holder is an Employee, during the Holder's employment or
within the ninety (90) days following the Holder's retirement described
in Paragraph 7.4 below, or (b) the death of a Holder who is an Eligible
Individual because the Holder is serving in a capacity other than as an
Employee, then any and all Awards held by the Holder that are not yet
exercisable as of the date of the Holder's death shall become null and
void as of the date of death; provided, however, that the portion, if any,
of any and all Awards held by the Holder that are exercisable as of the
date of death shall be exercisable by that Holder's legal representatives,
legatees or distributees for a period of the lesser of (a) the remainder
of the term of the Award or (b) one year following the date of the
Holder's death. Any portion of an Award not exercised upon the expiration
of the periods specified in (a) or (b) shall be null and void. Except as
expressly provided in this Paragraph 7.3, no Award held by a Holder shall
be exercisable after the death of that Holder.
7.4 Retirement. If a Holder is an Eligible Individual because the Holder is
an Employee and that employment relationship is terminated by reason of
the Holder's Normal Retirement, then the portion, if any, of any and all
Awards held by the Holder that are not yet exercisable as of the date of
that retirement shall become null and void as of the date of retirement;
provided, however, that the portion, if any, of any and all Awards held
by the Holder that are exercisable as of the date of that retirement
shall be exercisable for a period of the lesser of (a) the remainder of
the term of the Award or (b) 90 days following the date of retirement.
7.5 Disability. If a Holder is an Eligible Individual because the Holder is
an Employee and if that employment relationship is terminated by reason
of the Holder's Disability, then the portion, if any, of any and all
Awards held by the Holder that are not yet exercisable as of the date of
that termination for Disability shall become null and void as of the
date of termination; provided, however, that the portion, if any, of
any and all Awards held by the Holder that are exercisable as of the
date of that termination shall survive the termination for the lesser of
(a) the original term of the Award or (b) one year following the date of
termination, and the Award shall be exercisable by the Holder, his
guardian, or his legal representative. "Disability" shall have the
meaning given it in the employment agreement of the Holder; provided,
however, that if that Holder has no employment agreement, "Disability"
shall mean a physical or mental impairment of sufficient severity that,
in the opinion of the Corporation, either the Holder is unable to
continue performing the duties he performed before such impairment or
the Holder's condition entitles him to disability benefits under any
insurance or employee benefit plan of the Corporation or its Subsidiaries
and that impairment or condition is cited by the Corporation as the
reason for termination of the Holder's employment.
7.6 Leave of Absence. With respect to an Award, the Committee may, in its
sole discretion, determine that any Holder who is on leave of absence for
any reason will be considered to still be in the employ of the Corporation,
provided that rights to that Award during a leave of absence will be
limited to the extent to which those rights were earned or vested when
the leave of absence began.
7.7 Transferability of Awards. Except as otherwise provided in a particular
Award Agreement, and then only to the extent permitted by applicable law,
an Award requiring exercise shall be exercisable during a Holder's
lifetime only by that Holder or by that Holder's guardian or legal
representative. Except as otherwise provided in a particular Award
Agreement, and then only to the extent permitted by applicable law,
an Award requiring exercise shall not be transferrable other than by
will or the laws of descent and distribution, except that with the
Committee's consent, a Nonstatutory Option may be transferred by sale,
gift or other transfer to a Permitted Transferee.
7.8 Forfeiture and Restrictions on Transfer. Each Award Agreement may
contain or otherwise provide for conditions giving rise to the
forfeiture of the Stock acquired pursuant to an Award or otherwise and
may also provide for those restrictions on the transferability of shares
of the Stock acquired pursuant to an Award or otherwise that the
Committee in its sole and absolute discretion may deem proper or
advisable. The conditions giving rise to forfeiture may include, but
need not be limited to, the requirement that the Holder render
substantial services to the Corporation or its Subsidiaries for a
specified period of time. The restrictions on transferability may include,
but need not be limited to, options and rights of first refusal in favor
of the Corporation and stockholders of the Corporation other than the
Holder of such shares of Stock who is a party to the particular Award
Agreement or a subsequent holder of the shares of Stock who is bound by
that Award Agreement.
7.9 Delivery of Certificates of Stock. Subject to Paragraph 7.10, the
Corporation shall promptly issue and deliver a certificate representing
the number of shares of Stock as to which an Option has been exercised
after the Corporation receives an Exercise Notice and upon receipt by
the Corporation of the Exercise Price and any tax withholding as may be
requested. The value of the shares of Stock transferable because of an
Award under the Plan shall not bear any interest owing to the passage of
time, except as may be otherwise provided in an Award Agreement. If a
Holder is entitled to receive certificates representing Stock received
for more than one form of Award under the Plan, separate Stock
certificates shall be issued with respect to Incentive Options and
Nonstatutory Options.
7.10 Conditions to Delivery of Stock. Nothing herein or in any Award
granted hereunder or any Award Agreement shall require the Corporation
to issue any shares with respect to any Award if that issuance would,
in the opinion of counsel for the Corporation, constitute a violation of
the Securities Act or any similar or superseding statute or statutes,
any other applicable statute or regulation, or the rules of any
applicable securities exchange or securities association, as then in
effect. At the time of any exercise of an Option, the Corporation may,
as a condition precedent to the exercise of such Option, require from
the Holder of the Award (or in the event of his death, his legal
representatives, heirs, legatees, or distributees) such written
representations, if any, concerning the Holder's intentions with regard
to the retention or disposition of the shares of Stock being acquired
pursuant to the Award and such written covenants and agreements, if any,
as to the manner of disposal of such shares as, in the opinion of counsel
to the Corporation, may be necessary to ensure that any disposition by
that Holder (or in the event of the Holder's death, his legal
representatives, heirs, legatees, or distributees), will not involve a
violation of the Securities Act or any similar or superseding statute or
statutes, any other applicable state or federal statute or regulation, or
any rule of any applicable securities exchange or securities association,
as then in effect.
7.11 Securities Act Legend. Certificates for shares of Stock, when issued,
may have the following legend, or statements of other applicable
restrictions, endorsed thereon, and may not be immediately transferable:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS.
THE SHARES MAY NOT BE OFFERED FOR SALE, SOLD,
PLEDGED, TRANSFERRED, OR OTHERWISE DISPOSED OF
UNTIL THE HOLDER HEREOF PROVIDES EVIDENCE
SATISFACTORY TO THE ISSUER (WHICH, IN THE DISCRETION
OF THE ISSUER, MAY INCLUDE AN OPINION OF COUNSEL
SATISFACTORY TO THE ISSUER) THAT SUCH OFFER, SALE,
PLEDGE, TRANSFER, OR OTHER DISPOSITION WILL NOT
VIOLATE APPLICABLE FEDERAL OR STATE LAWS.
This legend shall not be required for shares of Stock issued pursuant to
an effective registration statement under the Securities Act.
7.12 Legend for Restrictions on Transfer. Each certificate representing shares
issued to a Holder pursuant to an Award granted under the Plan shall, if
such shares are subject to any transfer restriction, including a right
of first refusal, provided for under this Plan or an Award Agreement,
bear a legend that complies with applicable law with respect to the
restrictions on transferability contained in this Paragraph 7.12, such
as:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY
IMPOSED BY THAT CERTAIN INSTRUMENT ENTITLED
"FROZEN FOOD EXPRESS INDUSTRIES, INC. 2002 INCENTIVE
AND NONSTATUTORY OPTION PLAN" AS ADOPTED BY
FROZEN FOOD EXPRESS INDUSTRIES, INC. (THE
"CORPORATION") ON __________, 2002, AND AN AGREEMENT
THEREUNDER BETWEEN THE CORPORATION AND (HOLDER)
DATED ____________________ 20__, AND MAY NOT BE
TRANSFERRED, SOLD, OR OTHERWISE DISPOSED OF EXCEPT
AS THEREIN PROVIDED. THE CORPORATION WILL FURNISH
A COPY OF SUCH INSTRUMENT AND AGREEMENT TO THE
RECORD HOLDER OF THIS CERTIFICATE WITHOUT CHARGE
ON REQUEST TO THE CORPORATION AT ITS PRINCIPAL
PLACE OF BUSINESS OR REGISTERED OFFICE.
7.13 Rights as a Stockholder. A Holder shall have no right as a stockholder
with respect to any shares covered by his Award until a certificate
representing those shares is issued in his name. No adjustment shall be
made for dividends (ordinary or extraordinary, whether in cash or other
property) or distributions or other rights for which the record date is
before the date that certificate is issued, except as contemplated by
Section 6. Nevertheless, dividends and dividend equivalent rights
may be extended to and made part of any Award denominated in Stock or
units of Stock, subject to such terms, conditions, and restrictions as
the Committee may establish. The Committee may also establish rules and
procedures for the crediting of interest on deferred cash payments and
dividend equivalents for deferred payment denominated in Stock or units
of Stock.
7.14 Furnish Information. Each Holder shall furnish to the Corporation all
information requested by the Corporation to enable it to comply with any
reporting or other requirement imposed upon the Corporation by or under
any applicable statute or regulation.
7.15 Obligation to Exercise. The granting of an Award hereunder shall
impose no obligation upon the Holder to exercise the same or any part
thereof.
7.16 Remedies. The Corporation shall be entitled to recover from a Holder
reasonable attorneys' fees incurred in connection with the enforcement
of the terms and provisions of the Plan and any Award Agreement whether
by an action to enforce specific performance or for damages for its
breach or otherwise.
7.17 Information Confidential. As partial consideration for the granting of
each Award hereunder, the Holder shall agree with the Corporation that
he will keep confidential all information and knowledge that he has
relating to the manner and amount of his participation in the Plan;
provided, however, that such information may be disclosed as required by
law and may be given in confidence to the Holder's spouse, tax and
financial advisors, or to a financial institution to the extent that
such information is necessary to secure a loan. In the event any breach
of this promise comes to the attention of the Committee, it shall take
into consideration that breach in determining whether to recommend the
grant of any future Award to that Holder, as a factor militating against
the advisability of granting any such future Award to that individual.
7.18 Consideration. No Option shall be exercisable with respect to a Holder
unless and until the Holder shall have paid cash or property to, or
performed services for, the Corporation or any of its Subsidiaries that
the Committee believes is equal to or greater in value than the par value
of the Stock subject to such Award.
SECTION 8. EFFECTIVENESS, DURATION AND AMENDMENT OF PLAN
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8.1 Effectiveness. The Plan shall not be effective unless and until it has
been approved by both the Board of Directors and the holders of a
majority of the shares of Stock of the Corporation present or represented
by proxy and entitled to vote at the meeting of the stockholders of the
Corporation at which the Plan is presented for stockholder approval.
No Awards may be granted prior to the Effective Date.
8.2 Duration. No Awards may be granted hereunder after the date that is ten
(10) years from the earlier of (a) the Effective date and (b) the date
the Plan is approved by the stockholders of the Corporation.
8.3 Amendment and Termination. The Board of Directors may, insofar as
permitted by law, with respect to any shares which, at the time, are not
subject to Awards, suspend or discontinue the Plan or revise or amend it
in any respect whatsoever, and may amend any provision of the Plan or
any Award Agreement to make the Plan or the Award Agreement, or both,
comply with Section 16(b) of the Exchange Act and the exemptions from
that Section in the regulations thereunder, or the performance-based
compensation exception of Section 162(m) of the Code. The Board of
Directors may also amend, modify, suspend or terminate the Plan for the
purpose of meeting or addressing any changes in other legal requirements
applicable to the Corporation or the Plan or for any other purpose
permitted by law. The Plan may not be amended without the consent of the
holders of a majority of the shares of Stock then outstanding to (a)
increase materially the aggregate number of shares of Stock that may be
issued under the Plan or the maximum number of shares subject to Options
that may be granted to any Eligible Individual in any single fiscal year
of the Corporation (except for adjustments pursuant to Section 6 of the
Plan), (b) increase materially the benefits accruing to Eligible
Individuals under the Plan, or (c) modify materially the requirements
about eligibility for participation in the Plan; provided, however, that
such amendments may be made without the consent of stockholders of the
Corporation if changes occur in law or other legal requirements
(including 16b-3) that would permit otherwise.
SECTION 9. GENERAL
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9.1 Application of Funds. The proceeds received by the Corporation from
the sale of shares pursuant to Awards may be used for any general
corporate purpose.
9.2 Right of the Corporation and Subsidiaries to Terminate Employment.
Nothing contained in the Plan, or in any Award Agreement, shall confer
upon any Holder the right to continue in the employ of the Corporation
or any Subsidiary, or interfere in any way with the rights of the
Corporation or any Subsidiary to terminate the Holder's employment at
any time.
9.3 No Liability for Good Faith Determinations. Neither the members of the
Board of Directors nor any member of the Committee shall be liable for
any act, omission, or determination taken or made in good faith with
respect to the Plan or any Award granted under it, and members of the
Board of Directors and the Committee shall be entitled to indemnification
and reimbursement by the Corporation in respect of any claim, loss,
damage, or expense (including attorneys' fees, the costs of settling any
suit, provided such settlement is approved by independent legal counsel
selected by the Corporation, and amounts paid in satisfaction of a
judgment, except a judgment based on a finding of bad faith) arising
therefrom to the full extent permitted by law and under any directors
and officers liability or similar insurance coverage that may from
time to time be in effect. This right to indemnification shall be in
addition to, and not a limitation on, any other indemnification rights
any member of the Board of Directors or the Committee may have.
9.4 Other Benefits. Participation in the Plan shall not preclude the Holder
from eligibility in any other stock or stock option plan of the
Corporation or any Subsidiary or any old age benefit, insurance, pension,
profit sharing retirement, bonus, or other extra compensation plans that
the Corporation or any Subsidiary has adopted, or may, at any time,
adopt for the benefit of its Employees. Neither the adoption of the Plan
by the Board of Directors nor the submission of the Plan to the
stockholders of the Corporation for approval shall be construed as
creating any limitations on the power of the Board of Directors to
adopt such other incentive arrangements as it may deem desirable,
including, without limitation, the granting of stock options and the
awarding of stock and cash otherwise than under the Plan, and such
arrangements may be either generally applicable or applicable only in
specific cases.
9.5 Exclusion From Pension and Profit-Sharing Compensation. By acceptance of
an Award (whether in Stock or cash), as applicable, each Holder shall be
deemed to have agreed that the Award is special incentive compensation
that will not be taken into account in any manner as salary, compensation
or bonus in determining the amount of any payment under any pension,
retirement or other employee benefit plan of the Corporation or any
Subsidiary. In addition, each beneficiary of a deceased Holder shall be
deemed to have agreed that the Award will not affect the amount of any
life insurance coverage, if any, provided by the Corporation or a
Subsidiary on the life of the Holder that is payable to the beneficiary
under any life insurance plan covering employees of the Corporation or
any Subsidiary.
9.6 Execution of Receipts and Releases. Any payment of cash or any
issuance or transfer of shares of Stock to the Holder, or to his legal
representative, heir, legatee, or distributee, in accordance with the
provisions hereof, shall, to the extent thereof, be in full satisfaction
of all claims of such persons hereunder. The Committee may require any
Holder, legal representative, heir, legatee, or distributee, as a
condition precedent to such payment, to execute a release and receipt
therefor in such form as it shall determine.
9.7 Unfunded Plan. Insofar as it provides for Awards of cash and Stock, the
Plan shall be unfunded. Although bookkeeping accounts may be established
with respect to Holders who are entitled to cash, Stock or rights
thereto under the Plan, any such accounts shall be used merely as a
bookkeeping convenience. The Corporation shall not be required to
segregate any assets that may at any time be represented by cash, Stock
or rights thereto, nor shall the Plan be construed as providing for such
segregation, nor shall the Corporation nor the Board of Directors nor
the Committee be deemed to be a trustee of any cash, Stock or rights
thereto to be granted under the Plan. Any liability of the Corporation
to any Holder with respect to a grant of cash, Stock or rights thereto
under the Plan shall be based solely upon any contractual obligations
that may be created by the Plan and any Award Agreement; no such
obligation of the Corporation shall be deemed to be secured by any
pledge or other encumbrance on any property of the Corporation. Neither
the Corporation nor the Board of Directors nor the Committee shall be
required to give any security or bond for the performance of any
obligation that may be created by the Plan.
9.8 No Guarantee of Interests. Neither the Committee nor the Corporation
guarantees the Stock of the Corporation from loss or depreciation.
9.9 Payment of Expenses. All expenses incident to the administration,
termination, or protection of the Plan, including, but not limited to,
legal and accounting fees, shall be paid by the Corporation or its
Subsidiaries; provided, however, the Corporation or a Subsidiary may
recover any and all damages, fees, expenses, and costs arising out of
any actions taken by the Corporation to enforce its rights under this
Plan.
9.10 Corporation Records. Records of the Corporation or its Subsidiaries
regarding the Holder's period of employment, termination of employment
and the reason therefor, leaves of absence, re-employment, and other
matters shall be conclusive for all purposes hereunder, unless determined
by the Committee to be incorrect.
9.11 Information. The Corporation and its Subsidiaries shall, upon request or
as may be specifically required hereunder, furnish or cause to be
furnished, all of the information or documentation which is necessary or
required by the Committee to perform its duties and functions under the
Plan.
9.12 Corporation Action. Any action required of the Corporation shall be by
resolution of its Board of Directors or by a person authorized to act by
resolution of the Board of Directors.
9.13 Severability. If any provision of this Plan is held to be illegal or
invalid for any reason, the illegality or invalidity shall not affect
the remaining provisions hereof, but such provision shall be fully
severable and the Plan shall be construed and enforced as if the illegal
or invalid provision had never been included herein. If any of the terms
or provisions of this Plan conflict with the requirements of Rule 16b-3
(as those terms or provisions are applied to Eligible Individuals who
are subject to Section 16(b) of the Exchange Act) or Section 422 of the
Code (with respect to Incentive Options), then those conflicting terms
or provisions shall be deemed inoperative to the extent they so conflict
with the requirements of Rule 16b-3 or Section 422 of the Code. With
respect to Incentive Options, if this Plan does not contain any provision
required to be included herein under Section 422 of the Code, that
provision shall be deemed to be incorporated herein with the same force
and effect as if that provision had been set out at length herein;
provided, further, that, to the extent any Option that is intended to
qualify as an Incentive Option cannot so qualify, that Option (to that
extent) shall be deemed a Nonstatutory Option for all purposes of the
Plan.
9.14 Notices. Whenever any notice is required or permitted hereunder, such
notice must be in writing and personally delivered or sent by mail. Any
notice required or permitted to be delivered hereunder shall be deemed
to be delivered on the date on which it is personally delivered, or,
whether actually received or not, on the third Business Day after it is
deposited in the United States mail, certified or registered, postage
prepaid, addressed to the person who is to receive it at the address
which such person has theretofore specified by written notice delivered
in accordance herewith. The Corporation or a Holder may change, at any
time and from time to time, by written notice to the other, the address
which it or he had previously specified for receiving notices. Until
changed in accordance herewith, the Corporation and each Holder shall
specify as its and his address for receiving notices the address set
forth in the Award Agreement pertaining to the shares to which such
notice relates.
9.15 Waiver of Notice. Any person entitled to notice hereunder may waive
such notice.
9.16 Successors. The Plan shall be binding upon the Holder, his legal
representatives, heirs, legatees, and distributees, and Permitted
Transferees, upon the Corporation, its successors, and assigns, and upon
the Committee, and its successors.
9.17 Headings. The titles and headings of Sections and Paragraphs are
included for convenience of reference only and are not to be considered
in construction of the provisions hereof.
9.18 Governing Law. All questions arising with respect to the provisions of
the Plan shall be determined by application of the laws of the State of
Texas except to the extent Texas law is preempted by federal law.
Questions arising with respect to the provisions of an Award Agreement
that are matters of contract law shall be governed by the laws of the
state specified in the Award Agreement, except to the extent Texas
corporate law conflicts with the contract law of such state, in which
event Texas corporate law shall govern. The obligation of the Corporation
to sell and deliver Stock hereunder is subject to applicable laws and to
the approval of any governmental authority required in connection with
the authorization, issuance, sale, or delivery of such Stock.
9.19 Word Usage. Words used in the masculine shall apply to the feminine
where applicable, and wherever the context of this Plan dictates, the
plural shall be read as the singular and the singular as the plural.
IN WITNESS WHEREOF, Frozen Food Express Industries, Inc., acting by and
through its officer hereunto duly authorized, has executed this instrument,
this the 3 day of April, 2002.
FROZEN FOOD EXPRESS INDUSTRIES, INC.
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By: /s/ Stoney M. Stubbs, Jr.
President