-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CUSQ/qHQKC0Pj1FB6/0/YwEyDpIWSlJvOBo2HUxqBgEnfHSM1nTZ4dOrW7R5RSK5 cnhew91YyBk9Nt1Nf9Y7vQ== 0000039273-97-000004.txt : 19970328 0000039273-97-000004.hdr.sgml : 19970328 ACCESSION NUMBER: 0000039273-97-000004 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970327 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: FROZEN FOOD EXPRESS INDUSTRIES INC CENTRAL INDEX KEY: 0000039273 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING (NO LOCAL) [4213] IRS NUMBER: 751301831 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 001-10006 FILM NUMBER: 97565486 BUSINESS ADDRESS: STREET 1: 1145 EMPIRE CENTRAL PLACE CITY: DALLAS STATE: TX ZIP: 75247 BUSINESS PHONE: 2146308090 10-K405 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission file number 1-10006 FROZEN FOOD EXPRESS INDUSTRIES, INC. (Exact name of registrant as specified in its charter) Texas 75-1301831 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1145 Empire Central Place, Dallas, Texas 75247-4309 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (214) 630-8090 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Common Stock $1.50 Par Value Nasdaq Stock Market Securities registered pursuant to section 12(g) of the Act: None Indicate by check mark whether the registrant (l) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] As of March 19, 1997, 16,701,063 shares of the registrant's common stock, $l.50 par value, were outstanding. DOCUMENTS INCORPORATED BY REFERENCE The sections "Outstanding Capital Stock; Principal Shareholders", "Nominees for Directors", "Executive Compensation", and "Transactions with Management" of the Proxy Statement for the Annual Meeting of Shareholders to be held April 24, 1997, are incorporated by reference into Part III of this Form 10-K. Portions of the Annual Report to Shareholders for the year ended December 31, 1996, are incorporated by reference into Parts I and II of this Form 10-K. PART I ITEM 1. BUSINESS. Frozen Food Express Industries, Inc. (the "company") is the largest temperature-controlled trucking company in North America. References to the company herein, unless the context requires otherwise, include Frozen Food Express Industries, Inc., and its subsidiaries, all of which are wholly owned. In its 51 years of operation, the company has not experienced an unprofitable year. The company is also the only nationwide, full-service, temperature- controlled trucking company in the United States offering all of the following services: - Less-than-truckload: A load, typically consisting of 18 to 30 shipments, weighing as little as 50 pounds or as much as 20,000 pounds, from multiple shippers destined for various deliveries across the United States, Canada and Mexico. The company's temperature-controlled "LTL" operation is the largest in the United States and the only one offering regularly scheduled nationwide LTL service. The company is the only major LTL carrier which uses multi-compartment refrigerated trailers to carry goods requiring different temperatures on one trailer, enhancing customer service and operating efficiencies. - Full-truckload: A load, typically weighing between 20,000 and 40,000 pounds and usually from a single shipper, filling the trailer. Normally, a full-truckload has a single destination, although the company is also able to provide multiple deliveries. Management believes the company is one of the five largest temperature-controlled, full-truckload carriers in North America. - Distribution: Distribution generally involves the delivery of cargo within a 50-to-75-mile radius of a company terminal. Full-truckload or large LTL loads are divided into smaller shipments at a terminal and delivered by distribution trucks to "end users," such as grocery stores, food brokers or drug stores, typically within a single metropolitan area. 1 Following is a summary of certain financial and statistical data for the years ended December 31, 1992 through 1996 (LTL data also includes distribution shipments):
1996 1995 1994 1993 1992 -------- -------- -------- -------- -------- Revenue* Full-truckload $195,458 $180,598 $163,988 $129,549 $109,178 Less-than-truckload 92,496 87,783 88,328 80,965 72,864 Other 23,474 23,964 22,304 16,875 12,846 ------- ------- ------- ------- ------- Total $311,428 $292,345 $274,620 $227,389 $194,888 ======= ======= ======= ======= ======= Operating ratio 95.1% 94.7% 93.0% 93.2% 94.0% Full-truckload Loaded miles* 145,785 135,469 121,106 97,753 83,247 Shipments* 158.1 142.9 128.1 106.6 92.9 Revenue per shipment 1,236 1,264 1,280 1,215 1,175 Loaded miles per load 922 948 945 917 896 Less-than-truckload Hundredweight* 8,652 8,296 8,670 8,116 6,848 Revenue per hundredweight 10.69 10.58 10.19 9.98 10.64 Shipments* 304.6 292.1 305.2 292.0 253.3 Revenue per shipment 304 301 289 277 288 * In thousands
Freight revenue, from motor carrier operations, has accounted for more than 90% of total operating revenue during each of the last five years. The percent of total freight revenue contributed by full-truckload operations and by LTL operations during the past five years is summarized below:
Percent of Total Freight Revenue ---------------------------------------------------- 1996 1995 1994 1993 1992 ---- ---- ---- ---- ---- Full-truckload 68% 67% 65% 62% 60% LTL and distribution 32 33 35 38 40 ---- --- --- --- --- Total 100% 100% 100% 100% 100% === === === === ===
The company offers nationwide "one call does all" services to about 7,000 customers, none of which accounted for more than 10% of total revenue during any of the past five years. 2 During 1994 and 1995, the company expanded transportation services for customers shipping products to and from Mexico and Canada. Canadian operations are conducted with equipment operating directly under authority of the company. The company does not presently operate its tractors in Mexico. To provide service in Mexico, the company makes arrangements with railroads and Mexico- based motor carriers. Pursuant to these arrangements, the company interchanges its trailers with the Mexico freight service provider for movement within Mexico. During each of the three years ended December 31, 1996, approximately 6% of freight revenue was derived from international activities, for which the company collects primarily United States currency, principally from United States-based customers. During 1995 and 1996, continuing efforts to expand international activities were negatively impacted by the late 1994 devaluation of the Mexican peso, which significantly reduced the amount of United States freight destined by all motor carriers to Mexico. TEMPERATURE-SENSITIVE MARKET More than 80% of the cargo transported by the company is temperature- sensitive. Examples are meat, poultry, seafood, processed foods, candy and other confectioneries, dairy products, pharmaceuticals, medical supplies, fruits and vegetables, cosmetics, film and heat-sensitive aerospace manufacturing materials. The common and contract hauling of temperature-sensitive cargo is highly fragmented and comprised primarily of carriers generating less than $50 million in annual revenue. Industry publications report that only 10 temperature- controlled carriers generated $100 million or more of revenue in 1995. In addition, many major food companies, food distribution firms and grocery chains continue to transport their products with their own fleets ("private carriage"). Increasingly, large shippers are seeking to lower their cost structures by reducing their private carriage capabilities and turning to common and contract carriers ("core carriers") for their transportation needs. As these core carriers continue to improve their service capabilities through such means as satellite tracking and communications systems and electronic data interchange, shippers are expected to reduce their private carriage fleets in favor of common or contract carriage. Management believes that the temperature- controlled private carriage segment accounts for approximately 45% of the total temperature-controlled segment of the motor carrier industry. GROWTH STRATEGY The company has pursued a growth strategy that combines both internal growth and selected acquisitions. Since 1986, the company has purchased certain operating assets of several trucking companies. Among the purchased operations have been four full-truckload companies and the LTL and distribution assets of a regional company offering temperature-controlled service in the Southeast. During 1987-1988 the company began to commit its own equipment to the temperature-controlled, full-truckload segment. From the beginning of 1988 through 1996, the company-operated, full-truckload tractor fleet increased from 22 units to approximately 1,113 units. Recently, the company has placed renewed emphasis on expanding its fleet of independent contractor ("owner- operator") provided full-truckload tractors. As of December 31, 1996, the company's full-truckload fleet included 443 tractors provided by owner- operators. From 1992 through 1996, revenue from full-truckload operations increased from 60% to 68% of total freight revenue. 3 The management of a number of factors is critical to a trucking company's growth and profitability, including: - Drivers: Driver shortages and high turnover can reduce revenue and increase operating expenses through reduced operating efficiency and higher recruiting costs. During the first half of 1992, the company experienced a driver shortage that at various times kept as many as 40 tractors off the road. The company's operations were not significantly affected by driver shortages during 1994, 1995 or 1996. The company maintains an active driver recruiting program and bases its employee-driver incentive pay package on longevity, safety, fuel efficiency and other operational goals. In addition, the company has continued to intensify its recruitment of truck driving school graduates. These "student-drivers" train with an experienced instructor-driver by riding as "second driver" and are paid student-driver wages by the company. They are assigned a tractor only after they have been qualified to become single drivers. At the end of 1996, the company had drivers for all of its tractors and had about 100 student drivers undergoing over-the-road training. - Owner-operators: The company actively seeks to expand its fleet with equipment provided by owner-operators. The owner-operator provides the tractor and driver to pull the company's loaded trailer. The owner-operator pays the drivers' wages, fuel, equipment-related expenses and other transportation expenses and receives a percentage of the revenue from each load. At the end of 1996, the company had contracts for 443 owner-operator tractors in its full- truckload divisions and 266 in its LTL operations. The percent of full-truckload and LTL revenue generated from shipments transported by owner-operators during each of the last five years is summarized below:
Percent of Revenue from Shipments Transported by Owner-Operators ------------------------------------------------ 1996 1995 1994 1993 1992 ---- ---- ---- ---- ---- Full-truckload revenue 28% 24% 22% 23% 26% Less-than-truckload revenue 71% 68% 65% 67% 68%
- Fuel: Average per-gallon fuel costs (including fuel taxes) paid by the company were relatively stable during 1994 and 1995 but increased by 11% during 1996. The company attempts to mitigate the effect of increases in fuel costs primarily through the utilization of more fuel efficient tractors, by aggressively managing its fuel purchasing and, when market conditions allow, by obtaining freight rate increases and fuel adjustment charges from its customers. Due to competitive pressures resulting from the industry-wide oversupply of trucks, only about half of the increase in per-gallon fuel costs was recovered through such fuel adjustment charges during 1996. 4 - Risk Management: Liability for accidents is a significant concern in the trucking industry. Exposure can be large and occurrences unpredictable. The cost and human impact of work-related injury claims are also significant concerns. To address these concerns, the company maintains a risk management program designed to minimize the frequency and severity of accidents and to manage insurance coverage and claims to achieve the least possible cost. As part of the program, the company carries insurance policies under which it retains liability for up to $1 million on each property, casualty and general liability claim, substantially all individual work-related injury claims and $100,000 on each cargo claim. Because of this retained liability, a series of very serious traffic accidents, work-related injury claims or unfavorable developments in or outcomes of existing claims could materially adversely affect the company's operating results. When claims or potential claims arise, the company establishes reserves. As events related to claims evolve, the corresponding reserves are increased or decreased. The company believes that it maintains an effective risk management program and that its reserves are adequate. A major component of the company's risk management program is the enhancement of safety in its operations. The company has a safety department which conducts programs which include driver education and over-the-road observation. All drivers must meet or exceed specific guidelines relating to safety records, driving experience and personal standards, including a physical examination and mandatory drug testing. Drivers must also complete the company's training program, which includes tests for motor vehicle safety and over-the-road driving, and they must have a current Commercial Drivers License before being assigned a tractor. Student drivers undergo a more extensive training program as a second driver with an experienced instructor-driver. In accordance with federal regulations, the company conducts drug tests on all driver candidates and maintains a continuing program of random testing for use of such substances. Applicants who test positive for drugs are turned away and drivers who test positive for such substances are immediately disqualified from driving. For the last five years, the company has placed among the top three of the Truckload Carriers Association safety competition. The Truckload Carriers Association is the trucking industry's only association for truckload carriers. For 1996, the company was named the first place winner for fleets that drive 100 million miles, or more, a year. OPERATING STRATEGY The company's "one call does all" full-service capability, combined with the service-oriented corporate culture it gained from its many years as a successful LTL carrier, enables it to compete primarily on the basis of service, rather than solely on price. Management also believes that major shippers will require increasing levels of service and that they will rely on their core carriers to provide transportation and logistics solutions, such as providing the shipper real-time information about the movement and condition of any shipment. 5 The company believes that it is well positioned to take advantage of the evolving market for solutions to shippers' needs. In order to improve its level of information services, the company is currently replacing its older mainframe computer-based Management Information System (MIS) with a more sophisticated, versatile and expandable "open system" with fully integrated local area networks. During 1996, the company expanded its use of computer and satellite technology to enhance efficiency and customer service. The satellite-based tracking and communication system provides automatic hourly updates of the position of each full-truckload tractor and permits real-time communication between operations personnel and drivers. Dispatchers relay pick-up and delivery times, weather and road information, route and fueling directions, and other instructions to the drivers while shipment status and other information are relayed by the drivers to the company's computers via the satellite. Currently, the company does not plan to increase the size of its company- operated, full-truckload fleet during 1997. Any expansion of the fleet will depend upon acquisitions, if any, of other motor carriers, developments in the nation's economy and demand for the company's services. Continued emphasis will be placed on improving the operating efficiency and increasing the utilization of this fleet through enhanced driver training and retention, seeking longer haul and more specialized business, and reducing the percentage of empty, non- revenue producing miles. - Less-than-truckload: Temperature-controlled LTL trucking is service and capital intensive. LTL freight rates are higher than those for full- truckload and are based on mileage, weight, type of commodity, space required in the trailer, pick-up and delivery. Management believes that only one other refrigerated LTL motor carrier competes with the company on a nationwide basis. Temperature-controlled LTL trucking requires a system of terminals, capable of holding refrigerated and frozen products, located at strategic distribution points across the United States. The company has 15 such LTL terminals. Terminals are located in or near New York City, Philadelphia, Atlanta, Orlando, Memphis, Nashville, Cincinnati, Chicago, Kansas City, Dallas, Houston, Denver, Salt Lake City, Oakland and Los Angeles. Several of these LTL terminals also serve as full-truckload driver centers where company-operated, full-truckload fleets are based. Efficient information management is essential to a successful temperature- controlled LTL operation. On a typical day, the company's LTL system handles about 5,000 shipments - about 3,000 on the road, 1,000 being delivered and 1,000 being picked up. In 1996, the LTL operation handled about 305,000 individual shipments. - Full-truckload: Temperature-controlled, full-truckload service requires a substantially lower capital investment for terminals and lower costs of shipment handling and information management than that of LTL. Pricing is based primarily on mileage, weight and type of commodity. At the end of 1996, the company's full-truckload tractor fleet consisted of about 1,113 tractors owned or leased by the company and 443 tractors contracted to the company by owner-operators, making it one of the five largest temperature-controlled, full-truckload carriers in North America. 6 The company is continuing to expand its international and domestic transportation and logistics services which involve railroad-based "intermodal" long-haul transportation. In providing such service, the company contracts with railroads to transport loaded full-truckload trailers on railroad flat cars. The railroad is paid a fee for this service and the company uses its tractors to transport the trailers to and from railroad pick-up and drop-off points. During 1996 and 1995, approximately 5% of the company's full-truckload shipments were transported in this manner. By providing intermodal transportation services, the company is able to transport more loaded trailers (which require relatively lower capital investment) while engaging fewer tractors (which involve relatively higher capital investment). As a result of the expected continued emphasis on intermodal transportation, it is probable that the company's trailer fleet will continue to expand more rapidly than its tractor fleet. Also contributing to the increase in the trailer-to-tractor ratio from 1.3:1 at January 1, 1992, to 1.6:1 at yearend 1996 were continued expansion of dedicated fleet and short-haul, full-truckload services and, in general, the more rapid expansion of the company's full-truckload services in relation to its LTL service. Full-truckload services generally involve the utilization of more trailers to enable tractors to remain in service while idle trailers are being loaded and unloaded. In addition to the LTL terminals, which also serve as full-truckload employee-driver centers, full-truckload activities are conducted from terminals in Dallas, Fort Worth and Laredo, Texas. Laredo, located on the Texas-Mexico border, is the drop-off point for company trailers, which are picked up by a Mexican trucking company for movement into Mexico's interior. The company also maintains small centers for employee-driver recruitment in Waco and Amarillo, Texas; Phoenix, Arizona; and Shreveport, Louisiana. EQUIPMENT The company acquires premium company-operated tractors in order to help attract and retain qualified employee-drivers, promote safe operations, minimize maintenance and repair costs and assure dependable service to its customers. Management believes that the higher initial investment for its equipment is recovered through more efficient vehicle performance and improved resale value. The company has a three-year replacement policy for its full- truckload tractors. As a result, most repair costs are recovered through efficient vehicle performance and manufacturers' warranties. The three-year replacement policy also enables the company to maximize its fuel efficiency by benefiting from technological improvements in both engine efficiency and aerodynamics. During 1997, the company plans to replace about 300 tractors. Management expects that the new tractors' average miles-per-gallon will improve over that of the tractors being replaced. In order to minimize fuel consumption, the company includes a fuel efficiency driving bonus in its employee-driver incentive pay package. REGULATION The company's interstate operations are subject to regulation by the United States Department of Transportation, which regulates driver qualifications, safety, equipment standards and insurance requirements. The company is also subject to regulation of various state regulatory agencies with respect to certain aspects of its intrastate operations. State regulations generally involve the weight and dimensions of equipment and safety. Effective January 1, 1995, the United States government rescinded the authority of states to restrict intrastate operating authority or to regulate rates and tariffs with regard to intrastate operations. The company does not anticipate that this will significantly affect its operating results. 7 SEASONALITY The company's full-truckload operations are somewhat affected by seasonal changes. The early winter, late spring and summer growing seasons for fruits and vegetables in California and Texas typically create increased demand for trailers equipped to transport cargo requiring refrigeration. In addition, winter driving conditions can be hazardous and impair the company's operations from time to time in certain portions of the company's service areas. The company's LTL operations are also impacted by the seasonality of certain commodities. As a result, LTL shipment volume during the winter months is normally lower than other months. Shipping volumes of LTL freight are usually highest during July through October. EMPLOYEES A comparison of company's employees as of December 31, 1996 and 1995, is as follows:
Dec. 31, 1996 Dec. 31, 1995 ------------- ------------- Freight Operations: Drivers and Trainees 1,667 1,614 Non-driver personnel Full time 658 653 Part time 147 150 ----- ----- Total Freight Operations 2,472 2,417 Non-freight Operations 132 136 ----- ===== Total 2,604 2,553 ===== =====
The increase in non-driver personnel resulted primarily from the increased use of employee-driver recruiting, safety, sales, dispatch and other operations support personnel associated with the increased size of the company-operated, full-truckload fleet. The increase in employee-drivers is the result of the addition of company-operated equipment during 1996. 8 REFRIGERATION EQUIPMENT SALES AND SERVICE The company, through a subsidiary, is a franchised distributor for Wabash trailers and Carrier-Transicold brand truck and trailer refrigeration equipment. Its primary area of sales and service responsibility is Texas. This subsidiary is engaged in the sales, service and rental of trailers and a variety of refrigeration and air conditioning equipment and provides refrigeration units and service for the company's trailers. Such operations contributed 7.5% of the company's 1996 consolidated revenue and 6.2% of the consolidated operating profit (after elimination of inter-company transactions). The company competes in its service area with several other dealers and distributors of similar refrigeration equipment, but is the only distributor for Carrier-Transicold products in portions of Texas. OUTLOOK Certain statements contained in this Report on Form 10-K, including statements regarding the anticipated development and expansion of the company's business or the industry in which the company operates, the intent, belief or current expectations of the company, its directors or its officers, primarily with respect to the future operating performance of the company and other statements contained herein regarding matters that are not historical facts, are "forward-looking" statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). Because such statements involve risks and uncertainties, actual results may differ materially from those expressed or implied from such forward-looking statements. ITEM 2. PROPERTIES. The company's corporate office, which was purchased and remodeled during 1992, and is located on 1.7 acres of land in northwestern Dallas, Texas. The building contains 34,000 useable square feet. The company's primary terminal and maintenance facility is located near Dallas on approximately 60 acres of land owned by the company in Lancaster, Texas. The buildings, which are also owned by the company, contain approximately 100,000 square feet, of which 60,000 square feet are used for warehousing and distribution, 14,000 square feet are devoted to offices housing the terminal dispatch, safety and related activities and 26,000 square feet are used for maintenance and repair facilities. The company owns approximately 20 acres of unimproved land abutting this facility. The company also owns a facility consisting of a terminal, offices and a repair shop in Fort Worth, Texas. This property is used by Lisa Motor Lines, Inc. ("Lisa"), a wholly-owned subsidiary of the company, and its divisions, Middleton Transportation Company and Great Western Express. This facility consists of two structures totaling 23,000 square feet on approximately seven acres of land. The company owns a cold storage LTL terminal located in Bridgeview, Illinois, near Chicago. The terminal includes approximately 37,000 square feet of office, dock and storage facilities. 9 The Florida terminal, which is near Orlando, Florida, is owned by the company and consists of three buildings on approximately 15 acres of land, a dock facility of approximately 16,000 square feet, a shop of approximately 4,000 square feet and an office building. The company also owns a terminal and land in Avenel, New Jersey, which is near New York City. The building, on about five acres of land, contains approximately 17,000 square feet. At December 31, 1996, the company also maintained leased terminal or office facilities in or near the following cities: Amarillo, TX Nashville, TN Atlanta, GA Norman, OK Avenel, NJ Oakland, CA Baton Rouge, LA Oklahoma City, OK Chicago, IL Philadelphia, PA Cincinnati, OH Phoenix, AZ Denver, CO Salt Lake City, UT Fort Worth, TX Shreveport, LA Houston, TX Springfield, IL Kansas City, MO Tulsa, OK Laredo, TX Waco, TX Los Angeles, CA Wichita Falls, TX Memphis, TN Winter Haven, FL Lease terms range from one month to six years. These terminals range in size from a small amount of office space to a terminal with office and dock facilities totaling approximately 44,000 square feet. The company expects that present facilities will be sufficient to support its operations in the near term. 10 The following table sets forth certain information regarding revenue equipment utilized by the company at December 31, 1996 and 1995:
Age in Years ---------------------------------------- TRACTORS Less than 1 1 thru 3 4 or more Total ----------- ------------ ----------- ------------- 1996 1995 1996 1995 1996 1995 1996 1995 ---- ---- ---- ----- ---- ---- ----- ----- Company-operated 477 150 722 949 3 50 1,202 1,149 Owner-operator provided 90 91 219 221 394 355 703 667 --- --- --- ----- --- --- ----- ----- Total 567 241 941 1,170 397 405 1,905 1,816 === === === ===== === === ===== =====
Age in Years ---------------------------------------- TRAILERS Less than 1 1 thru 5 6 or more Total ----------- ------------ ----------- ------------- 1996 1995 1996 1995 1996 1995 1996 1995 ---- ---- ----- ---- ---- ---- ----- ----- Company-provided 414 163 1,823 1,916 761 691 2,998 2,770 Owner-operator provided -- 2 13 15 7 10 20 27 --- --- ----- ----- --- --- ----- ----- Total 414 165 1,836 1,931 768 701 3,018 2,797 === === ===== ===== === === ===== =====
The increases in the number of company-operated tractors and trailers during 1996 and 1995 resulted primarily from the addition of new equipment during each year for use in the company's full-truckload operations. Approximately 80% of the company's 2,998 trailers are insulated and equipped with refrigeration units capable of providing the temperature control necessary to handle perishable freight. Trailers that are used primarily in LTL operations are equipped with movable partitions permitting the transportation of goods requiring maintenance of different temperatures. The company also operates a fleet of non-refrigerated trailers in its "dry freight" full-truckload operation. Company-operated trailers are primarily 102 inches wide. Older refrigerated trailers are 48 feet long, while newer refrigerated and substantially all non-refrigerated trailers are 53 feet long. The company's general policy is to replace its company-operated, heavy- duty tractors every three years. Company-operated, full-truckload trailers are usually retired after seven years of service. Occasionally, retired equipment is kept by the company for use in local delivery operations. 11 ITEM 3. LEGAL PROCEEDINGS. The company is party to routine litigation incidental to its businesses, primarily involving claims for personal injury and property damage incurred in the transportation of freight. The aggregate amount of these claims is significant. The company maintains insurance programs and accrues for expected losses in amounts designed to cover liability resulting from personal injury and property damage claims. The company does not believe that adverse results in one or more of these pending cases would have a material effect on the financial condition of the company. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. No matters were submitted to a vote of shareholders of the company during the fourth quarter of 1996. PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS. The information regarding cash dividends, common stock price per share and common stock trading volume set forth under the caption "Quarterly Financial, Stock and Dividend Information" appearing on page 28 of the Annual Report to Shareholders for the year ended December 31, 1996, is incorporated by reference into this Report. ITEM 6. SELECTED FINANCIAL DATA. The information set forth under the caption "Eleven-Year Statistics and Financial Data" appearing on pages 16 and 17 of the Annual Report to Shareholders for the year ended December 31, 1996, is incorporated by reference into this Report. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The information set forth under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" appearing on pages 18 through 20 of the Annual Report to Shareholders for the year ended December 31, 1996, is incorporated by reference into this Report. 12 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. (a) The following Consolidated Financial Statements of Frozen Food Express Industries, Inc., and Report of Arthur Andersen LLP, Independent Public Accountants, with respect thereto set forth on pages 21 through 28 of the Annual Report to Shareholders for the year ended December 31, 1996, are incorporated by reference into this Report: Consolidated Statements of Income -- Years ended December 31, 1996, 1995 and 1994. Consolidated Balance Sheets -- December 31, 1996 and 1995. Consolidated Statements of Cash Flows -- Years ended December 31, 1996, 1995 and 1994. Consolidated Statements of Shareholders' Equity -- Years ended December 31, 1996, 1995 and 1994. Notes to Consolidated Financial Statements. Report of Arthur Andersen LLP, Independent Public Accountants. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. In accordance with General Instruction G to Form 10-K, the information required by Item 10 is incorporated herein by reference from the portion of the company's Proxy Statement for the Annual Meeting of Shareholders to be held April 24, 1997, appearing under the caption "Nominees for Directors". ITEM 11. EXECUTIVE COMPENSATION. In accordance with General Instruction G to Form 10-K, the information required by Item 11 is incorporated herein by reference from the portions of the company's Proxy Statement for the Annual Meeting of Shareholders to be held April 24, 1997, appearing under the captions "Executive Compensation" and "Transactions with Management". 13 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. In accordance with General Instruction G to Form 10-K, the information required by Item 12 is incorporated herein by reference from the portions of the company's Proxy Statement for the Annual Meeting of Shareholders to be held April 24, 1997, appearing under the captions "Outstanding Capital Stock; Principal Shareholders" and "Nominees for Directors". ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. In accordance with General Instruction G to Form 10-K, the information required by Item 13 is incorporated herein by reference from the portions of the company's Proxy Statement for the Annual Meeting of Shareholders to be held April 24, 1997, appearing under the captions "Nominees for Directors", "Transactions with Management" and "Executive Compensation". 14 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K. (a) 1. & 2. Financial Statements and Financial Statement Schedules: The financial statements listed in the index to financial statements and financial statement schedules in Item 8 on page 13 hereof are filed as part of this Annual Report. Financial statement schedules are omitted since the required information is not present or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the financial statements and notes thereto. 3. Exhibits: 3.l Articles of Incorporation of the Registrant and all amendments to date (filed as Exhibit 3.1 to Registrant's annual report on Form 10-K for the fiscal year ended December, 31, 1993; SEC File Number 1-10006 and incorporated herein by reference). 3.2 Bylaws of the Registrant, as amended (filed as Exhibit 3.2 to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1991; SEC File Number 1-10006 and incorporated herein by reference). 10.1 Frozen Food Express Industries, Inc., 1987 Non-Employee Director Stock Plan (filed as Exhibit 10.2 to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1991; SEC File Number 1-10006 and incorporated herein by reference). 10.2 Amended and Restated Credit Agreement, dated December 30, 1992, among the registrant and its subsidiaries and Wells Fargo Bank (formerly First Interstate Bank of Texas, N.A.), as agent; Texas Commerce Bank, National Association; and The First National Bank of Boston (filed as Exhibit 10.5 to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1992; SEC File Number 1-10006 and incorporated herein by reference). 10.3 First Amendment to amended and restated credit agreement described at Exhibit 10.5 (filed as Exhibit 10.6 to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1993; SEC File Number 1-10006 and incorporated herein by reference). 10.4 Form of Master Lease Agreement by and between Stoney M. Stubbs, Jr., and Charles G. Robertson and Conwell Corporation. (Filed as Exhibit 10.12 to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1991; SEC File Number 1-10006 and incorporated herein by reference). 15 10.5 Frozen Food Express Industries, Inc., 1992 Incentive and Nonstatutory Stock Option Plan (filed as Exhibit 4.3 to Registrant's Registration #33-48494 as filed with the Commission, and incorporated herein by reference). 10.6 FFE Transportation Services, Inc., 1994 Incentive Bonus Plan, as amended (filed as Exhibit 10.6 to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1994; SEC File Number 1-10006 and incorporated herein by reference). 10.7 FFE Transportation Services, Inc., Executive Bonus and Phantom Stock Plan, as amended (filed as Exhibit 10.7 to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1994; SEC File Number 1-10006 and incorporated herein by reference). 10.8 FFE Transportation Services, Inc., Employee Stock Ownership Plan (filed as Exhibit 10.8 to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1994; SEC File Number 1-10006 and incorporated herein by reference). 10.9 Savings Plan for Employees of Frozen Food Express Industries, Inc. (filed as Exhibit 10.9 to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1994; SEC File Number 1-10006 and incorporated herein by reference). 10.10 Conwell Corporation Employee Stock Ownership Plan (filed as Exhibit 10.10 to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1994; SEC File Number 1-10006 and incorporated herein by reference). 10.11 Amendment to Frozen Food Express Industries, Inc., 1992 Incentive and Nonstatutory Stock Option Plan (filed as Exhibit 10.11 to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1994; SEC File Number 1-10006 and incorporated herein by reference). 10.12 Frozen Food Express Industries, Inc. Employee Stock Option Plan (filed as Exhibit 4.1 to Registrant's Registration #333-21831 as filed with the Commission, and incorporated herein by reference). 10.13 FFE Transportation Services, Inc. 401(k) Wrap Plan. 10.14 First through Sixth Amendments to Savings Plan for Employees of Frozen Food Express Industries, Inc. 11.1 Computation of net income per share of common stock, assuming full dilution (incorporated by reference to Footnote 8 to the financial statements appearing in the Annual Report to Shareholders of the Registrant for the year ending December 31, 1996). 16 13.1 Annual Report to Shareholders of the Registrant for the year ended December 31, 1996. Except for those portions of such Annual Report to Shareholders expressly incorporated by reference into this Report, such Annual Report to Shareholders is furnished solely for the information of the Securities and Exchange Commission and shall not be deemed a "Filed" Document. 21.1 Subsidiaries of Frozen Food Express Industries, Inc. 25.1 A Power of Attorney is found on page 19 of this Report. 27 Financial Data Schedule. (b) Reports on Form 8-K: No reports on Form 8-K were filed by the company during the last quarter of the period covered by this Report. 17 INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES COVERED BY REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
Annual Report to Shareholders --------------- Consolidated Statements of Income -- Years ended December 31, 1996, 1995 and 1994 21 Consolidated Balance Sheets -- December 31, 1996 and 1995 22 Consolidated Statements of Cash Flows -- Years ended December 31, 1996, 1995 and 1994 23 Consolidated Statements of Shareholders' Equity -- Years ended December 31, 1996, 1995 and 1994 24 Notes to Consolidated Financial Statements 25 Report of Arthur Andersen LLP, Independent Public Accountants 28 Supplementary Information -- Quarterly financial data (unaudited) 28
Financial statement schedules are omitted since the required information is not present or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the financial statements and notes thereto. The financial statements listed in the above index, which are included in the Annual Report to Shareholders of Frozen Food Express Industries, Inc., for the year ended December 31, 1996, are hereby incorporated by reference, and are filed herewith as Exhibit 13.1. 18 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS that each of the undersigned directors and officers of Frozen Food Express Industries, Inc., hereby appoints Stoney M. Stubbs, Jr., and Burl G. Cott his true and lawful attorneys-in-fact and agents, for him and in his name, place and stead, in any and all capacities, with full power to act alone, to sign any and all amendments to this Annual Report on Form 10-K and to file each such amendment to the Report, with all exhibits thereto, and any and all other documents in connection therewith, with the Securities and Exchange Commission, hereby granting unto said attorneys-in-fact and agents full power and authority to do and perform any and all acts and things requisite and necessary to be done in and about the premises as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents may lawfully do or cause to be done by virtue hereof. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. FROZEN FOOD EXPRESS INDUSTRIES, INC. Date: March 26, 1997 By /s/ Burl G. Cott -------------- -------------------------------------------- Burl G. Cott Senior Vice President Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Date: March 26, 1997 /s/ Stoney M. Stubbs, Jr. -------------- -------------------------------------------- Stoney M. Stubbs, Jr., Chairman of the Board of Directors and President (Principal Executive Officer) Date: March 26, 1997 /s/ Burl G. Cott -------------- -------------------------------------------- Burl G. Cott, Senior Vice President and Director (Principal Financial and Accounting Officer) Date: March 26, 1997 /s/ Charles G. Robertson -------------- -------------------------------------------- Charles G. Robertson Executive Vice President and Director Date: March 26, 1997 /s/ Edgar O. Weller -------------- -------------------------------------------- Edgar O. Weller Vice Chairman of the Board of Directors 19 Date: March 26, 1997 /s/ Brian R. Blackmarr -------------- -------------------------------------------- Brian R. Blackmarr, Director Date: March 26, 1997 /s/ Leroy Hallman -------------- -------------------------------------------- Leroy Hallman, Director Date: March 26, 1997 /s/ W. Grogan Lord -------------- -------------------------------------------- W. Grogan Lord, Director Date: March 26, 1997 /s/ T. Michael O'Connor -------------- ----------------------------------- T. Michael O'Connor, Director 20 EX-10.13 2 EXHIBIT 10.13 FFE TRANSPORTATION SERVICES, INC. 401(k) WRAP PLAN TABLE OF CONTENTS Page ARTICLE I - PURPOSE OF PLAN 1 1.1 PURPOSE OF PLAN 1 ARTICLE II - DEFINITIONS 1 2.1 ACCOUNT 1 2.2 AFFILIATE 1 2.3 BENEFICIARY 1 2.4 BOARD 1 2.5 CODE 1 2.6 COMMITTEE 1 2.7 COMPANY 2 2.8 COMPENSATION 2 2.9 DISABILITY 2 2.10 EARLY RETIREMENT 2 2.11 EFFECTIVE DATE 2 2.12 ELIGIBLE EMPLOYEE 2 2.13 EMPLOYER CONTRIBUTION 2 2.14 ENTRANCE DATE 2 2.15 NONQUALIFIED EMPLOYER CONTRIBUTION 2 2.16 NONQUALIFIED SAVINGS CONTRIBUTION 2 2.17 PARTICIPANT 3 2.18 PARTICIPANT ENROLLMENT AND ELECTION FORM 3 2.19 PARTICIPATING EMPLOYER 3 2.20 PARTICIPATING EMPLOYER CONTRIBUTION 3 2.21 PHANTOM SHARE 3 2.22 PLAN 3 2.23 PLAN YEAR 3 2.24 RETIREMENT 3 2.25 SAVINGS CONTRIBUTION 3 2.26 SAVINGS PLAN 3 2.27 TRANSFER DATE 3 2.28 VALUATION DATE 3 ARTICLE III - ELIGIBILITY AND PARTICIPATION 3 3.1 REQUIREMENTS 4 3.2 RE-EMPLOYMENT 4 3.3 CHANGE OF EMPLOYMENT CATEGORY 4 ARTICLE IV - NONQUALIFIED SAVINGS CONTRIBUTIONS 4 4.1 NONQUALIFIED SAVINGS ELECTIONS 4 4.2 PAYROLL DEDUCTIONS 4 -i- 4.3 TIMING OF CONTRIBUTION 4 ARTICLE V - NONQUALIFIED EMPLOYER CONTRIBUTIONS 4 5.1 NONQUALIFIED EMPLOYER CONTRIBUTION PERCENTAGE 5 5.2 TIMING OF MATCH 5 ARTICLE VI - PARTICIPATING EMPLOYER CONTRIBUTIONS 5 6.1 PARTICIPATING EMPLOYER CONTRIBUTION 5 6.2 TIMING OF CONTRIBUTION 5 ARTICLE VII - PLAN ACCOUNTS 5 7.1 ESTABLISHMENT OF ACCOUNTS 5 7.2 NONQUALIFIED SAVINGS ACCOUNT 5 7.3 NONQUALIFIED EMPLOYER CONTRIBUTION ACCOUNT 5 7.4 PARTICIPATING EMPLOYER CONTRIBUTION ACCOUNT 6 7.5 ALLOCATION OF INCOME 6 7.6 ADJUSTMENTS TO NUMBER OF PHANTOM SHARES. 6 ARTICLE VIII - TRANSFERS TO SAVINGS PLAN 6 8.1 IN GENERAL 6 8.2 NONQUALIFIED SAVINGS ACCOUNT TRANSFERS 6 8.3 NONQUALIFIED EMPLOYER CONTRIBUTION ACCOUNT TRANSFERS 6 8.4 FREQUENCY OF TRANSFERS 6 8.5 RESTRICTION 6 8.6 NON-TRANSFERABILITY. 7 ARTICLE IX - ALLOCATION OF FUNDS 7 9.1 ALLOCATION OF EARNINGS OR LOSSES ON ACCOUNTS 7 9.2 ACCOUNTING FOR DISTRIBUTIONS 7 9.3 INTERIM VALUATIONS 7 ARTICLE X - VESTING 7 10.1 NONQUALIFIED SAVINGS CONTRIBUTIONS 8 10.2 NONQUALIFIED EMPLOYER CONTRIBUTIONS 8 10.3 PARTICIPATING EMPLOYER CONTRIBUTIONS 8 ARTICLE XI - PAYMENTS OF BENEFITS 8 11.1 PAYMENTS OF BENEFITS 8 11.2 PAYMENT UPON CHANGE IN CONTROL. 8 ARTICLE XII - THE COMMITTEE 9 12.1 COMMITTEE 9 -ii- ARTICLE XIII - ADMINISTRATION 9 13.1 ADMINISTRATIVE AUTHORITY 9 13.2 UNIFORMITY OF DISCRETIONARY ACTS 10 13.3 LITIGATION 10 13.4 PAYMENT OF ADMINISTRATION EXPENSES 10 13.5 CLAIMS PROCEDURE 10 13.6 LIABILITY OF COMMITTEE, INDEMNIFICATION 11 13.7 EXPENSES 12 13.8 TAXES 12 13.9 ATTORNEY'S FEES 12 ARTICLE XIV - MISCELLANEOUS PROVISIONS 12 14.1 GOVERNING LAW. 12 14.2 NO EMPLOYMENT GUARANTEE. 12 14.3 COUNTERPART EXECUTION. 12 14.4 AMENDMENT; TERMINATION. 12 -iii- ARTICLE I - PURPOSE OF PLAN 1.1 PURPOSE OF PLAN. The Company intends and desires by the adoption of this Plan to recognize the value to the Company of the past and present services of Eligible Employees covered by the Plan and to encourage and assure their continued service with the Company by making more adequate provisions for their future retirement security. This Plan has been adopted to provide certain select management and highly compensated employees of the Participating Employers covered under the Savings Plan for Employees of Frozen Food Express Industries, Inc. (the "Savings Plan") the opportunity to accumulate deferred compensation which cannot be accumulated under the Savings Plan because of the limitations on deferrals under Code Section 402(g) (the "Deferral Limit"), the limitations on annual additions under Code Section 415 (the "415 Limit"), the limitations on tax-qualified pension plan benefits under Code Section 401(a)(17) (the "Pay Cap"), and because Savings Contributions and Employer Contributions have been required to be returned under the Savings Plan because of the nondiscrimination rules under Code Sections 401(k)(3) ("ADP Restrictions") or 401(m)(2) ("ACP Restrictions"). This Plan is intended to be "a plan which is unfunded and maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees" within the meaning of Sections 201(2) and 301(a)(3) of the Employee Retirement Income Security Act of 1974 ("ERISA") and shall be interpreted and administered in a manner consistent with that intent. ARTICLE II - DEFINITIONS 2.1 ACCOUNT means those separate accounts established and maintained under the Plan in the name of each Participant as required pursuant to the provisions of Article VII. 2.2 AFFILIATE means any company which is included within a "controlled group of corporations" as determined under Code Section 1563 (without regard to subsections (a)(4) and (e)(3)(C) of such Section 1563) and Code Section 409(l)(4), with the Company. 2.3 BENEFICIARY means a Participant's beneficiary or beneficiaries identified under the Savings Plan. 2.4 BOARD means the Board of Directors of FFE Transportation Services, Inc. 2.5 CODE means the Internal Revenue Code of 1986 and the regulations thereunder, as amended from time to time. 2.6 COMMITTEE means the Committee appointed by the Board to administer the Plan. 1 2.7 COMPANY means FFE Transportation Services, Inc., or any company which is a successor as a result of merger, consolidation, liquidation, transfer of assets, or other reorganization. 2.8 COMPENSATION means "Compensation" as that term is defined in the Savings Plan. 2.9 DISABILITY means a determination of disability in accordance with the provisions of the Savings Plan. 2.10 EARLY RETIREMENT means termination of employment following attainment of age 55 with ten (10) Years of Service (as determined in accordance with the provisions of the Savings Plan). 2.11 EFFECTIVE DATE means January 1, 1997. 2.12 ELIGIBLE EMPLOYEE means, for any Plan Year (or applicable portion thereof), a person employed by a Participating Employer who is determined by the Committee to be a member of a select group of management or highly compensated employees, who is designated by the Committee to be eligible under the Plan, and who is a participant in the Savings Plan. The Committee shall notify those individuals, if any, who will be Eligible Employees for the next Plan Year. If the Committee determines that an employee first becomes an Eligible Employee during a Plan Year, the Committee shall notify such employee of its determination and of the date during the Plan Year on which the employee shall first become an Eligible Employee. 2.13 EMPLOYER CONTRIBUTION means those contributions by the Participating Employers to the Savings Plan for a Plan Year on account of the Savings Contributions made during that Plan Year by the participants in the Savings Plan. 2.14 ENTRANCE DATE means the "Entrance Date" as that term is defined in the Savings Plan. 2.15 NONQUALIFIED EMPLOYER CONTRIBUTION means an amount contributed by the Participating Employers on account of the Participant's Nonqualified Savings Contribution, pursuant to the provisions of Article V. 2.16 NONQUALIFIED SAVINGS CONTRIBUTION means Compensation that is due to be earned and which would otherwise be paid to the Participant, which the Participant elects to defer under the Plan, determined without regard to the Deferral Limit, the 415 Limit, the Pay Cap or the ADP Restrictions under the Savings Plan, and which is contributed on behalf of each Participant by the Participating Employers pursuant to the provisions of Article IV. -2- 2.17 PARTICIPANT means any person so designated in accordance with the provisions of Article III, including, where appropriate according to the context of the Plan, any former employee who is or may become (or whose Beneficiaries may become) eligible to receive a benefit under the Plan. 2.18 PARTICIPANT ENROLLMENT AND ELECTION FORM means the form on which a Participant elects to defer Compensation hereunder and on which the Participant makes certain other designations as required thereon. 2.19 PARTICIPATING EMPLOYER means the Company and any Affiliate that adopts the Plan. 2.20 PARTICIPATING EMPLOYER CONTRIBUTION means an amount contributed by a Participating Employer pursuant to the provisions of Article VI. 2.21 PHANTOM SHARE means a fictitious share of the common stock of Frozen Food Express Industries, Inc. which carries with it certain rights and benefits as described herein but which does not entitle the holder thereof either to equity rights or voting rights in Frozen Food Express Industries, Inc. 2.22 PLAN means this FFE Transportation Services, Inc. 401(k) Wrap Plan. 2.23 PLAN YEAR means the "Plan Year" as that term is defined in the Savings Plan. 2.24 RETIREMENT means termination of employment after attainment of age 65, as determined in accordance with the provisions of the Savings Plan. 2.25 SAVINGS CONTRIBUTION means those contributions by the Company to the Savings Plan for a Plan Year on behalf of and on account of the qualified cash or deferral elections within the meaning of Code Section 401(k) made by the participants in the Savings Plan. 2.26 SAVINGS PLAN means the Savings Plan for Employees of Frozen Food Express Industries, Inc. 2.27 TRANSFER DATE means the date on which amounts credited to each Participant's Account for the Plan Year are transferred to the Savings Plan. 2.28 VALUATION DATE means the last business day of each calendar month and any other date that the Committee, in its sole discretion, designates as a Valuation Date. -3- ARTICLE III- ELIGIBILITY AND PARTICIPATION 3.1 REQUIREMENTS. Every Eligible Employee as of the Effective Date shall be eligible to become a Participant on the Effective Date. Every other Eligible Employee shall be eligible to become a Participant on the first Entrance Date occurring on or after the date on which he or she becomes an Eligible Employee. No individual shall become a Participant, however, if he or she is not an Eligible Employee on the date his or her participation is to begin. Participation in the Plan is voluntary. In order to participate, an otherwise Eligible Employee must execute a valid Participant Enrollment and Election Form in such manner as the Committee may require and must agree to make Nonqualified Savings Contributions as provided in Article IV. 3.2 RE-EMPLOYMENT. If a Participant whose employment with the Participating Employers is terminated is subsequently re-employed, he or she shall become a Participant in the Plan in accordance with the provisions of Section 3.1 of this Article. 3.3 CHANGE OF EMPLOYMENT CATEGORY. During any period in which a Participant remains in the employ of a Participating Employer, but either ceases to be an Eligible Employee or a participant in the Savings Plan, he or she shall not be eligible to make additional Nonqualified Savings Contributions under this Plan. ARTICLE IV - NONQUALIFIED SAVINGS CONTRIBUTIONS 4.1 NONQUALIFIED SAVINGS ELECTIONS. In accordance with rules established by the Committee, a Participant may elect to make a Nonqualified Savings Contribution with respect to a Plan Year by use of a Participant Enrollment and Election Form (but not to exceed 15% of Compensation). In addition, a participant in the Savings Plan who becomes a Participant during the Plan Year may elect to make a Nonqualified Savings Contribution with respect to the remaining portion of the Plan Year by use of a Participant Enrollment and Election Form. 4.2 PAYROLL DEDUCTIONS. Nonqualified Savings Contributions shall be made through payroll deductions. The Participant may change the amount of his or her Nonqualified Savings Contribution amount effective only as of the first day of the calendar year immediately following the year in which an election to change the amount is made, by delivering to the Committee prior to the beginning of the calendar year a new Participant Enrollment and Election Form. Once made, a Nonqualified Savings Contribution payroll deduction election shall continue in force indefinitely, until changed by the Participant on a subsequent Participant Enrollment and Election Form delivered to the Committee. 4.3 TIMING OF CONTRIBUTION Nonqualified Savings Contributions shall be made at the same time and in the same manner as Savings Contributions. -4- ARTICLE V - NONQUALIFIED EMPLOYER CONTRIBUTIONS 5.1 NONQUALIFIED EMPLOYER CONTRIBUTION PERCENTAGE. The Participating Employers shall make a Nonqualified Employer Contribution on behalf of a Participant, and on account of the Participant's Nonqualified Savings Contributions for a Plan Year, at the same rate as the Employer Contribution to the Savings Plan for the Plan Year. 5.2 TIMING OF MATCH. Nonqualified Employer Contributions shall be made at the same time and in the same manner as Employer Contributions to the Savings Plan. ARTICLE VI - PARTICIPATING EMPLOYER CONTRIBUTIONS 6.1 PARTICIPATING EMPLOYER CONTRIBUTION. In its sole discretion, each Participating Employer shall make a Participating Employer Contribution on behalf of Participant, in an amount determined by the Participating Employer in accordance with (a) and/or (b) below: (a) A percentage of each Participant's Compensation for the Plan Year; and/or (b) A percentage of some or all of the Participant's Nonqualified Savings Contribution for the Plan Year. 6.2 TIMING OF CONTRIBUTION. The Participating Employer Contributions shall be made as soon as administratively feasible after declared by the Board of Directors of each Participating Employer. ARTICLE VII - PLAN ACCOUNTS 7.1 ESTABLISHMENT OF ACCOUNTS. There shall be established and maintained by the Committee separate Accounts in the name of each Participant, as required and as described in this Article VII. 7.2 NONQUALIFIED SAVINGS ACCOUNT. The Committee shall establish an Account to which are credited a Participant's Nonqualified Savings Contributions, which shall be deemed invested in Phantom Shares equal to the amount of the Participant's Nonqualified Savings Contributions divided by the Phantom Share value as of the most recent Valuation Date. 7.3 NONQUALIFIED EMPLOYER CONTRIBUTION ACCOUNT. The Committee shall establish an Account to which are credited a Participant's Nonqualified Employer Contributions, which shall be deemed invested in Phantom Shares equal to the amount of the Participant's Nonqualified Employer Contributions divided by the Phantom Share value as of the most recent Valuation Date. -5- 7.4 PARTICIPATING EMPLOYER CONTRIBUTION ACCOUNT. The Committee shall establish an Account to which are credited a Participant's Participation Employer Contributions, which shall be deemed invested in Phantom Shares equal to the amount of the Participant's Participating Employer Contributions divided by the Phantom Share value as of the most recent Valuation Date. 7.5 ALLOCATION OF INCOME. The Committee shall have the discretion to allocate such income, gains, or losses among Accounts pursuant to such allocation rules as the Committee deems to be reasonable and administratively practicable. 7.6 ADJUSTMENTS TO NUMBER OF PHANTOM SHARES. If Frozen Food Express Industries, Inc. shall (i) declare a dividend or make a distribution on its outstanding shares of common stock in additional shares of stock, (ii) subdivide or reclassify the outstanding shares of stock into a greater number of shares of stock, or (iii) combine or reclassify the outstanding shares of stock into a lesser number of shares of stock, then the number of a Participant's Phantom Shares shall be adjusted immediately after the record date for such dividend or distribution or the effective date of such subdivision, combination or reclassification, so that such number is increased or decreased as appropriate, in the sole discretion of the Committee, to reflect such event. ARTICLE VIII - TRANSFERS TO SAVINGS PLAN 8.1 IN GENERAL. A transfer made pursuant to this Article shall not constitute a Payment of Benefits, as that phrase is referenced in Article XI. 8.2 NONQUALIFIED SAVINGS ACCOUNT TRANSFERS. As soon as administratively feasible after the end of a Plan Year, but in no event later than 2 1/2 months following the end of that Plan Year, the Committee shall transfer to the Savings Plan all the Nonqualified Savings Contributions credited to each Participant's Nonqualified Savings Account for that Plan Year, but in no event shall an amount be transferred that would cause the Savings Plan to exceed the ADP Restrictions for such Plan Year. 8.3 NONQUALIFIED EMPLOYER CONTRIBUTION ACCOUNT TRANSFERS. As soon as administratively feasible after the end of a Plan Year, but in no event later than 2 1/2 months following the end of that Plan Year, the Committee shall transfer to the Savings Plan all the Nonqualified Employer Contributions credited to each Participant's Nonqualified Employer Contribution Account for that Plan Year, but in no event shall an amount be transferred that would cause the Savings Plan to exceed the ACP Restrictions for such Plan Year. -6- 8.4 FREQUENCY OF TRANSFERS. In its sole discretion, the Committee may make multiple transfers under Sections 8.2 and 8.3 during the Plan Year. 8.5 RESTRICTION. No transfer shall occur under Sections 8.2 or 8.3 unless the terms of the Savings Plan specifically provide that such transfers will be accepted. 8.6 NON-TRANSFERABILITY. Except as expressly provided herein, the Phantom Shares and/or any rights or benefits under the Plan may not be transferred, assigned, pledged or hypothecated in any manner, by operation of law or otherwise, other than by will or by the laws of descent and distribution, and shall not be subject to execution, attachment or similar process. ARTICLE IX - ALLOCATION OF FUNDS 9.1 ALLOCATIONS OF CONTRIBUTIONS. As of each Valuation Date, each Participant's Account shall be credited with Nonqualified Savings Contributions and Nonqualified Employer Contributions in accordance with the allocation provisions of the Savings Plan. Nonqualified Employer Contributions shall only be allocated to those Eligible Employees who meet the requirements of receiving an allocation of Employer Contributions under the Savings Plan. As of the last day of the Plan year, each Participant's Account shall be credited with Participating Employer Contributions in accordance with the allocation method specified by the Participating Employer in accordance with Section 6.1(a) and/or (b) of the Plan. Participating Employer Contributions shall only be allocated to those Eligible Employees who are employed on the last business day of the Plan year, and each Eligible Employee who would have been an Eligible Employee on such day but for his death, Disability, Early Retirement, or Retirement during such year. 9.1 ALLOCATION OF EARNINGS OR LOSSES ON ACCOUNTS. Each Participant's Account shall be deemed invested in Phantom Shares. The Participant's Accounts will be credited or debited with the increase or decrease in the price of a share of common stock of Frozen Food Express Industries, Inc. as quoted on the American Stock Exchange as of each Valuation Date. As of each Valuation Date, an amount equal to the net increase or decrease in such price of the shares since the preceding Valuation Date shall be allocated among all Participants' Accounts. 9.2 ACCOUNTING FOR DISTRIBUTIONS. As of the date of any distribution under the Plan to a Participant or his or her Beneficiary or Beneficiaries, such distribution shall be charged to the applicable Participant's Account. The Participant's Account is valued upon a distribution based upon the Phantom Stock value as of the most recent Valuation Date. 9.3 INTERIM VALUATIONS. If it is determined by the Committee that the Phantom Share value as of any date on which distributions are to be made differs materially from the Phantom Share value on the prior Valuation Date upon which the distribution is to be based, the Committee, in its discretion, shall have the right to designate any date in the interim as a Valuation Date, for the purpose of revaluing the Phantom Shares so that the Account from which the distribution is being made will, prior to the distribution, reflect its share of such material difference in value. -7- ARTICLE X - VESTING 10.1 NONQUALIFIED SAVINGS CONTRIBUTIONS. A Participant shall always be one hundred percent (100%) vested in amounts credited to his or her Nonqualified Savings Account. 10.2 NONQUALIFIED EMPLOYER CONTRIBUTIONS. A Participant shall always have the same vesting percentage in his or her Nonqualified Employer Contribution Account as he or she has in his or her Employer Contribution Account under the Savings Plan. A Participant's Nonqualified Employer Contribution Account shall be one hundred percent (100%) vested immediately prior to a Change in Control (as defined in Section 11.2) of Frozen Food Express Industries, Inc. 10.3 PARTICIPATING EMPLOYER CONTRIBUTIONS. A Participant shall always have the same vesting percentage in his or her Participating Employer Contribution Account as he or she has in his or her Employer Contribution Account under the Savings Plan. A Participant's Nonqualified Participating Employer Contribution Account shall be one hundred percent (100%) vested immediately prior to a Change in Control (as defined in Section 11.2) of Frozen Food Express Industries, Inc. ARTICLE XI - PAYMENTS OF BENEFITS 11.1 PAYMENTS OF BENEFITS. The benefit payable under this Plan on account of an Participant's termination of employment, retirement, disability, or death shall be distributed in a cash lump sum as soon as practicable and no later than sixty (60) days after the earlier of such termination of employment, retirement, incurrence of disability (as determined by the Committee), or death. Any death benefit payable under this Plan shall be payable to the Participant's Beneficiary. 11.2 PAYMENT UPON CHANGE IN CONTROL. Notwithstanding any other provision of this Plan, a Participant's Account shall be distributed to the Participant in a cash lump-sum within sixty (60) days after a Change in Control of Frozen Food Express Industries, Inc. For purposes of this section, a "Change in Control" shall mean the purchase or other acquisition by any person, entity, or group of persons, within the meaning of section 13(d) or 14(d) of the Securities Exchange Act of 1934 ("Act"), or any comparable successor provisions, of beneficial ownership (within the meaning of Rule 13(d)-3 promulgated under the Act) of 50 percent or more of either the outstanding shares of common stock or the combined voting power of the then outstanding voting securities entitled to vote generally, or the approval of the stockholders of a reorganization, merger, or consolidation, in each case, with respect to which persons who were stockholders immediately prior to such reorganization, merger, or consolidation do not, immediately thereafter, own more than 50 percent of the combined voting power entitled to vote generally in the election of directors of the reorganized, merged, or consolidated company's then outstanding securities, or a liquidation or dissolution or sale of all or substantially all of its assets. -8- ARTICLE XII - THE COMMITTEE 12.1 COMMITTEE. The Committee shall administer, construe, and interpret this Plan and shall determine, subject to the provisions of this Plan in a manner consistent with the administration of the Savings Plan, the Eligible Employees who become Participants in the Plan from time to time and the amount, if any, due a Participant (or his or her Beneficiary) under this Plan. No member of the Committee shall be liable for any act done or determination made in good faith. No member of the Committee who is a Participant in this Plan may vote on matters affecting his or her personal benefit under this Plan, but any such member shall otherwise be fully entitled to act in matters arising out of or affecting this Plan notwithstanding his or her participation herein. In carrying out its duties herein, the Committee shall have discretionary authority to exercise all powers and to make all determinations, consistent with the terms of the Plan, in all matters entrusted to it, and its determinations shall be given deference and shall be final and binding on all interested parties. ARTICLE XIII - ADMINISTRATION 13.1 ADMINISTRATIVE AUTHORITY. Except as otherwise specifically provided herein, the Committee shall have the sole responsibility for and the sole control of the operation and administration of the Plan, and shall have the power and authority to take all actions and to make all decisions and interpretations which may be necessary or appropriate in order to administer and operate the Plan, including, without limiting the generality of the foregoing, the power, duty, and responsibility to: (a) Resolve and determine all disputes or questions arising under the Plan, including the power to determine the rights of Eligible Employees, Participants, and Beneficiaries, and their respective benefits, and to remedy any ambiguities, inconsistencies, or omissions in the Plan. (b) Adopt such rules of procedure and regulations as in its opinion may be necessary for the proper and efficient administration of the Plan and as are consistent with the Plan. (c) Implement the Plan in accordance with its terms and the rules and regulations adopted as above. -9- (d) Make determinations with respect to the eligibility of any Eligible Employee as a Participant and make determinations concerning the crediting and distribution of Plan Accounts. (e) Appoint any persons or firms, or otherwise act to secure specialized advice or assistance, as it deems necessary or desirable in connection with the administration and operation of the Plan, and the Committee shall be entitled to rely conclusively upon, and shall be fully protected in any action or omission taken by it in good faith reliance upon the advice or opinion of such firms or persons. The Committee shall have the power and authority to delegate from time to time by written instrument all or any part of its duties, powers, or responsibilities under the Plan, both ministerial and discretionary, as it deems appropriate, to any person or committee, and in the same manner to revoke any such delegation of duties, powers, or responsibilities. Any action of such person or committee in the exercise of such delegated duties, powers, or responsibilities shall have the same force and effect for all purposes hereunder as if such action had been taken by the Committee. Further, the Committee may authorize one or more persons to execute any certificate or document on behalf of the Committee, in which event any person notified by the Committee of such authorization shall be entitled to accept and; conclusively rely upon any such certificate or document executed by such person as representing action by the Committee until such third person shall have been notified of the revocation of such authority. 13.2 UNIFORMITY OF DISCRETIONARY ACTS. Whenever in the administration or operation of the Plan discretionary actions by the Committee are required or permitted, such actions shall be consistently and uniformly applied to all persons similarly situated, and no such action shall be taken which shall discriminate in favor of any particular person or group of persons. 13.3 LITIGATION. Except as may be otherwise required by law, in any action judicial proceeding affecting the Plan, no Participant or Beneficiary shall be entitled to any notice or service of process, and any final judgment entered in such action shall be binding on all persons interested in, or claiming under, the Plan. 13.4 PAYMENT OF ADMINISTRATION EXPENSES. All expenses incurred in the administration and operation of the Plan, including any taxes payable by the Participating Employers in respect of the Plan shall be paid by the Participating Employers. 13.5 CLAIMS PROCEDURE. (a) Notice of Claim. Any Eligible Employee or beneficiary, or the duly authorized representative of an Eligible Employee or beneficiary, may file with the Committee a claim for a Plan benefit. Such a claim must be in writing on a form provided by the Committee and must be delivered to the Committee, in person or by mail, postage prepaid. Within ninety (90) days after the receipt of such -10- a claim, the Committee shall send to the claimant, by mail, postage prepaid, a notice of the granting or the denying, in whole or in part, of such claim, unless special circumstances require an extension of time for processing the claim. In no event may the extension exceed ninety (90) days from the end of the initial period. If such an extension is necessary, the claimant will be given a written notice to this effect prior to the expiration of the initial ninety (90) day period. The Committee shall have full discretion to deny or grant a claim in whole or in part in accordance with the terms of the Plan. If notice of the denial of a claim is not furnished in accordance with this Section, the claim shall be denied and the claimant shall be permitted to exercise his or her right to review pursuant to Sections 13.5(c) and 13.5(d) of the Plan, as applicable. (b) Action on Claim. The Committee shall provide to every claimant who is denied a claim for benefits a written notice setting forth, in a manner calculated to be understood by the claimant: (i) The specific reason or reasons for the denial; (ii) A specific reference to the pertinent Plan provisions on which the denial is based; (iii) A description of any additional material or information necessary of the claimant to perfect the claim and an explanation of why such material or information is necessary; and (iv) An explanation of the Plan's claim review procedure. (c) Review of Denial. Within sixty (60) days after the receipt by a claimant of written notification of the denial (in whole or in part) of a claim, the claimant or the claimant's duly authorized representative, upon written application to the Committee, delivered in person or by certified mail, postage prepaid, may review pertinent documents and may submit to the Committee, in writing, issues and comments concerning the claim. (d) Decision on Review. Upon the Committee's receipt of a notice of a request for review, the Committee shall make a prompt decision on the review and shall communicate the decision on review in writing to the claimant. The decision on review shall be written in a manner calculated to be understood by the claimant and shall include specific reasons for the decision and specific references to the pertinent Plan provisions on which the decision is based. The decision on review shall be made not later than sixty (60) days after the Committee's receipt of a request for a review, unless special circumstances require an extension of time for processing, in which case a decision shall be rendered not later than one hundred twenty (120) days after receipt of the request for review. If an extension is necessary, the claimant shall be given written notice of the extension by the Committee prior to the expiration of the initial sixty (60) day period. If notice of the decision on review is not furnished in accordance with this Section, the claim shall be denied on review. -11- 13.6 LIABILITY OF COMMITTEE, INDEMNIFICATION. To the extent permitted by law, the Committee shall not be liable to any person for any action taken or omitted in connection with the interpretation and administration of this Plan unless attributable to his or her own bad faith or willful misconduct. 13.7 EXPENSES. The cost of the establishment of the Plan and the adoption of the Plan by Participating Employers, including but not limited to legal and accounting fees, shall be borne by the Participating Employers. 13.8 TAXES. All amounts payable hereunder shall be reduced by any and all Federal, state, and local taxes imposed upon an Eligible Employee or his or her beneficiary which are required to be paid or withheld by Participating Employers. The determination of Participating Employers regarding applicable income and employment tax withholding requirements shall be final and binding on the Eligible Employee. 13.9 ATTORNEY'S FEES. The Participating Employers shall pay the reasonable attorney's fees incurred by any Eligible Employee in an action brought against a Participating Employer to enforce such Eligible Employee's rights under the Plan, provided that such fees shall only be payable in the event that the Eligible Employee prevails in such action. ARTICLE XIV - MISCELLANEOUS PROVISIONS 14.1 GOVERNING LAW. The Plan shall be governed by and construed in accordance with the laws of the State of Texas, except to the extent that federal law preempts it application. 14.2 NO EMPLOYMENT GUARANTEE. Nothing in the Plan shall be construed as an employment contract or a guarantee of continued employment with a Participating Employer. 14.3 COUNTERPART EXECUTION. The Plan may be executed by the Participating Employers in multiple counterparts, each of which shall be deemed an original but all of which together shall constitute but one and the same instrument. 14.4 AMENDMENT; TERMINATION. The Board of Directors of FFE Transportation Services, Inc. shall have the power and right from time to time to modify, amend, or terminate the Plan, provided that no such change in the Plan may deprive a Participant of the amounts allocated to his or her Account or be retroactive in effect to the prejudice of any Participant. 14.5 ADOPTION BY PARTICIPATING EMPLOYERS. Any Affiliate may, by resolution of its board of directors, adopt the Plan for its Eligible Employees, and thereby, from and after the effective date specified in such resolution, become a Participating Employer. It shall not be necessary for the Participating Employer to execute the Plan. The administrative powers and control of the Company, as provided in the Plan, including the right of amendment and of appointment and removal of the Committee, shall be the sole right of the Company and shall not be diminished by reason of the participation of any Participating Employer. Any Participating Employer may withdraw from the Plan at any time. Separate records shall be kept as to each Participating Employer. -12- IN WITNESS WHEREOF, FFE TRANSPORTATION SERVICES, INC. has caused this Plan to be executed by its duly appointed officers on this 1st day of January, 1997. ATTEST/WITNESS: FFE TRANSPORTATION SERVICES, INC. /s/Leonard W. Bartholomew By: /s/ S. M. Stubbs, Jr. - ------------------------- -------------------------- Secretary President Print Name: Print Name: Leonard W. Bartholomew S. M. Stubbs, Jr. - ------------------------- -------------------------- Date: January 1, 1997 -------------------------- [SEAL] -13- EX-10.14 3 EXHIBIT 10.14 FIRST THROUGH SIXTH AMENDMENTS TO SAVINGS PLAN FOR EMPLOYEES OF FROZEN FOOD EXPRESS INDUSTRIES, INC. FIRST AMENDMENT TO SAVINGS PLAN FOR EMPLOYEES OF FROZEN FOOD EXPRESS INDUSTRIES, INC. This Amendment is adopted this 24th day of October, 1996, and effective January 1, 1995, by Frozen Food Express Industries, Inc., a Texas Business Corporation, having its principal office in Dallas, Texas (hereinafter referred to as "Employer"). R E C I T A L S: A. WHEREAS, the Employer has previously established the Savings Plan ("Plan") for the benefit of those employees who qualify thereunder and for their beneficiaries; and B. WHEREAS, the Employer desires to amend the Plan to eliminate Incentive Contributions and to make a de minimis change in the timing of Plan distributions consistent with Treasury Regulations Section 1.411(d)- 4(b)(2)(ix). NOW, THEREFORE, pursuant to Section 13.1 of the Plan, the following amendment is hereby made and shall be effective January 1, 1995: 1. Plan Section 3.1(c) shall be amended to read: Effective January 1, 1988, any Employee of FFE Transportation Services, Inc. who has completed One-Half Year of Service on or before the last day of a Plan Year, and who is an employee on the last day of that Plan Year, shall be an Incentive Participant in that Plan Year. An Incentive Participant who does not also qualify as a Participant under Section 3.1(a) or (b) shall only be eligible for an Incentive Contribution pursuant to Section 4.2(a)(3) and shall not be eligible for any other contribution. Effective January 1, 1995, Incentive Contributions shall not be made to the Plan. 2. Plan Section 4.2(a)(3) shall be amended to read: Plus, effective January 1, 1988, for Incentive Participants only, an Incentive Contribution in an amount determined under the Incentive Bonus Plan of FFE Transportation Services, Inc., as effective for the Plan Year in question. Incentive Contributions shall be made by FFE Transportation Services, Inc. Notwithstanding anything to the contrary in this Section 4.2(a), Incentive Contributions shall only be made annually. Effective January 1, 1995, Incentive Contributions shall not be made to the Plan. 1 3. Plan Section 11.1(a) shall be amended to read: Section 11.1. Participant Election. (a) (i) Subject to the provisions of this Article 11, upon the Retirement or Disability of a Participant, or the death of a Participant or former Participant, distribution of amounts to which a Participant, former Participant or Beneficiary became entitled pursuant to Section 6.1 of the Plan shall commence as soon as administratively practicable following the event which caused entitlement to a distribution, and shall be completed as soon as administratively practicable following the end of the Plan Year in which the Participant or Former Participant Retired, became Disabled or died. (ii) Subject to the provisions of this Article 11, distribution of amounts to which a Participant becomes entitled pursuant to Sections 6.2 and 6.3(c) of the Plan shall be completed as soon as administratively practicable following the end of the Plan Year in which the event occurred which caused entitlement to a distribution. (iii) The Committee shall direct by written notice as provided in Article 9 that distributions shall be made in a lump sum distribution in Company Stock (and cash in lieu of fractional shares) from any account balances invested in the Company Stock Fund and in cash from any account balances invested in the other investment fund(s). 4. Plan Section 11.1(b) shall be amended to read: (b) An amount to which a Participant, Former Participant or Beneficiary is entitled pursuant to Section 6.4(b) shall be paid in cash to such Participant, Former Participant or Beneficiary as soon as administratively practicable after the determination of such amount or, if later, the date a payment is made to such Participant, Former Participant or Beneficiary under Section 11.1(a). IN WITNESS WHEREOF, FROZEN FOOD EXPRESS INDUSTRIES, INC. has caused this First Amendment to be executed by its duly appointed officers on this 24th day of October, 1996. FROZEN FOOD EXPRESS INDUSTRIES, INC. By: /s/ S. M. Stubbs, Jr. --------------------- President ATTEST: /s/ Leonard W. Bartholomew - -------------------------- Secretary 2 SECOND AMENDMENT TO SAVINGS PLAN FOR EMPLOYEES OF FROZEN FOOD EXPRESS INDUSTRIES, INC. This Amendment is adopted this 24th of October, 1996, and effective as provided herein by Frozen Food Express Industries, Inc., a Texas Business Corporation, having its principal office in Dallas, Texas (hereinafter referred to as "Employer"). R E C I T A L S: A. WHEREAS, the Employer has previously established the Savings Plan ("Plan") for the benefit of those employees who qualify thereunder and for their beneficiaries; and B. WHEREAS, the Employer desires to amend the Plan to eliminate internal inconsistencies; clarify the distributions of accounts of $3,500 or less; and liberalize the provisions regarding semi- annual transfers out of the Company Stock Fund. NOW, THEREFORE, pursuant to Plan Section 13.1, the following amendment is hereby made and shall be effective as herein provided: 1. The second paragraph of Plan Section 4.8(d)(i) captioned ``Allocable Income'' shall be amended effective October 1, 1987, to be and read: ALLOCABLE INCOME. To determine the amount of the corrective distribution required under this Section, the Administrator must calculate the allocable income for the Plan Year in which the Excess Aggregate Contributions arose. The income allocable to Excess Aggregate Contributions is equal to the sum of the allocable gain or loss for the Plan Year. (A) METHOD OF ALLOCATING INCOME. The Administrator may use any reasonable method for computing the income allocable to Excess Aggregate Contributions, provided that the method does not violate Code Section 401(a)(4), is used consistently for all Participants and for all corrective distributions under the Plan for the Plan Year, and is used by the Plan for allocating income to Participants' Accounts. (B) ALTERNATIVE METHOD OF ALLOCATING INCOME. A Plan may allocate income to Excess Aggregate Contributions by multiplying the income for the Plan Year allocable to Employee Contributions, Matching Contributions, and amounts treated as Matching Contributions by a fraction. The numerator of the fraction is the Excess Aggregate Contributions for the Employee for the Plan Year. The denominator of the fraction is equal to the sum of: (I) The total account balance of the Employee attributable to Employee and Matching Contributions, and amounts treated as Matching Contributions as of the beginning of the Plan Year; plus (II) The Employee and Matching Contributions, and amounts treated as Matching Contributions for the Plan Year. 3 2. Plan Section 4.8(d)(iv)(B) shall be amended effective October 1, 1987, to be and read: (B) Allocated, after all other Forfeitures under the Plan, to the Employer Matching Contribution Account of each Nonhighly Compensated Participant in the ratio which each such Participant's Compensation for the Plan Year bears to the total Compensation of all such Participants for the Plan Year. 3. Plan Section 5.6(c)(v) shall be amended effective October 1, 1987, to be and read: (v) Notwithstanding the first sentence and the foregoing paragraphs (i), (ii), (iii), and (iv), the Committee may distribute Elective Deferrals (within the meaning of Code Section 402(g)(3)) or return voluntary or mandatory Employee Contributions, to the extent the distribution or return would reduce the excess amounts in the Participant's account. 4. Plan Section 7.2(f) shall be amended effective July 1, 1996, to be and read: (f) A Participant may transfer any part or all of the funds or stock credited to his Savings Account, Rollover Accounts and W & B Plan Rollover Account between the Company Stock Fund and any other investment fund chosen by the Committee pursuant to Section 7.2(a), effective the next following January 1 or July 1, by filing a written application therefor with the Committee at least 30 days prior to the effective date of such transfer, on such forms and within such time limits as the Committee may prescribe; provided, however, that a Participant who has not yet attained age sixty-two (62) may not direct that shares of Company Stock credited to his Savings Account be sold unless his Vested Percentage is equal to or greater than 60%, and the maximum number of shares of Company Stock that he may direct be sold shall not exceed twenty per cent (20%) of the shares of Company Stock credited to his Savings Account at the effective date of such transfer. Any transfer of funds within an Account from the Company Stock Fund to any other investment fund chosen by the Committee pursuant to Section 7.2(a), will require that the Company Stock allocated to such Account be sold for its then market value and the sales proceeds transferred to the other investment fund (which will remain allocated to that same Account). Any transfer of funds within an Account from another investment fund to the Company Stock Fund will require that the transferred funds be used to purchase Company Stock (such stock to be allocated to the same Account from which the fund transfer was made). 4 5. Plan Section 11.1(d) shall be amended effective January 1, 1995, to be and read: (d) Notwithstanding anything to the contrary herein contained, a Participant's benefits will in all events be paid in a lump sum as soon as practicable following the end of the Plan Year in which such Participant terminates employment if the total value of his vested interest in his Accounts is less than or equals $3,500. IN WITNESS WHEREOF, FROZEN FOOD EXPRESS INDUSTRIES, INC. has caused this Second Amendment to be executed by its duly appointed officers on this 24th day of October, 1996. FROZEN FOOD EXPRESS INDUSTRIES, INC. By: /s/ S. M. Stubbs, Jr. ------------------------- President ATTEST: Leonard W. Bartholomew - ---------------------- Secretary 5 THIRD AMENDMENT TO SAVINGS PLAN FOR EMPLOYEES OF FROZEN FOOD EXPRESS INDUSTRIES, INC. This Amendment is adopted this 24th day of October, 1996, and effective October 1, 1987, by Frozen Food Express Industries, Inc., a Texas Business Corporation, having its principal office in Dallas, Texas (hereinafter referred to as "Employer"). R E C I T A L S: A. WHEREAS, the Employer has previously established the Savings Plan for Employees of Frozen Food Express Industries, Inc. ("Plan") for the benefit of those employees who qualify thereunder and for their beneficiaries; and B. WHEREAS, the Employer desires to amend the Plan as required by the Internal Revenue Service to ensure continued qualification of the Plan; NOW, THEREFORE, pursuant to Section 13.1 of the Plan, the following amendment is hereby made and shall be effective October 1, 1987 or as otherwise specifically stated herein: 1. Section 2.9(c) of the Plan is amended as underlined to read: (c) Notwithstanding the foregoing, Annual Compensation taken into account for determining all benefits provided under the Plan for any determination period shall not exceed $200,000, or such larger amount the Secretary of the Treasury may prescribe for the relevant year. (However, for Plan Years beginning prior to January 1, 1989, the $200,000 limit shall apply only for Top Heavy Plan Years and shall not be adjusted.) The $200,000 limit shall be adjusted by the Secretary at the same time and in the same manner as under Code Section 415(d) except that the dollar increase in effect on January 1 of any calendar year is effective for years beginning in such calendar year. If the period for determining compensation used in calculating an Employee's allocation for a determination period is a short Plan Year the Annual Compensation limit is an amount equal to the otherwise applicable Annual Compensation limit multiplied by a fraction, the numerator of which is the number of months in the short Plan Year and the denominator of which is twelve (12). If Compensation for any prior determination period is taken into account in determining an Employee's allocations or benefits for the current determination period, the Compensation for such prior year is subject to the applicable Annual Compensation limit in effect for that prior year. For this purpose, for years beginning before January 1, 1990, the applicable Annual Compensation limit is $200,000. The $200,000 (or adjusted) Annual Compensation limit applies to the combined Annual Compensation of the Family Unit of an Employee who is either a five percent owner or is both a Highly Compensated Employee and one of the ten most highly compensated employees. The Family Unit consists of the Employee who is a five percent owner or is both a Highly Compensated Employee and one of the ten most highly compensated employees and (i) the Employee's spouse, or (ii) any lineal descendant of the Employee who has not 6 attained age 19 before the close of the year. If, for a Plan Year, the combined Annual Compensation of the Employee and the members of the Family Unit who are Participants entitled to an allocation for that Plan Year exceeds the $200,000 (or adjusted) limit, Annual Compensation for each such Participant, for purposes of the contribution and allocation provisions of Articles 3 and 5, means his or her Adjusted Compensation. Adjusted Compensation is the amount which bears the same ratio to the $200,000 (or adjusted) limit as the affected Participant's Annual Compensation without regard to the $200,000 (or adjusted) limit bears to the combined Annual Compensation of all the affected Participants in the family unit. If the Plan uses permitted disparity, the Committee must determine the integration level of each affected Family Member Participant prior to prorating the $200,000 (or adjusted) limit, but the combined integration level of the affected Participants may not exceed the $200,000 (or adjusted) limit. The combined Excess Compensation of the affected Participants in the family unit may not exceed the $200,000 (or adjusted) limit minus the affected Participants' combined integration level, as determined under the preceding sentence. If the combined Excess Compensation exceeds this limit, the Committee will prorate the Excess Compensation limit among the affected Participants in the family unit in proportion to each individual's Adjusted Compensation minus his or her integration level. 2. Section 4.5(c)(3) of the Plan is amended as underlined to read: (3) "Eligible Participant" shall mean any Employee who is eligible to make an Employee Contribution, or a Savings Contribution, if the Employer takes the contributions into account in calculating the Contribution Percentage, or to receive a Matching Contribution, including Forfeitures, or a Qualified Matching Contribution, or who is directly or indirectly eligible to receive an allocation of Matching Contributions or to make Employee Contributions under the Plan for all or a portion of a Plan Year; including an Employee who would be a Plan Participant but for the failure to make required contributions; an Employee whose right to make Employee Contributions or to receive Matching Contributions has been suspended because of an election (other than certain one time elections) not to participate, a distribution, or a loan; and any Employee who cannot make an Employee Contribution or receive a Matching Contribution because of the Code Section 415 limits on annual additions. In the case of an Eligible Participant who makes no Employee Contributions and who receives no Matching Contributions, the contribution ratio included in determining the Average Contribution Percentage is zero. 3. Section 4.6 of the Plan is amended as underlined to read: (a) Excess Matching Employer Contributions and all income allocable thereto shall be forfeited no later than March 15 of the Plan Year immediately following the Plan Year for which such Excess Matching Employer Contributions were made. (b) For purposes of this Section 4.6, "Excess Matching Employer Contributions" shall mean (i) Matching Employer Contributions that are not vested and exceed the limits of Section 4.5, and (ii) Matching Employer Contributions that were made on account of Excess Savings Contributions, as defined in Section 4.4(b). 7 (c) The income allocable to such Excess Matching Employer Contributions shall be determined by multiplying the total Trust income allocable to the Participant's Employer Contribution Account for the Plan Year by a fraction, the numerator of which is the Excess Matching Employer Contributions made on behalf of the Participant for the Plan Year and the denominator of which is the Participant's total account balance in his Employer Contribution Account on the last day of such Plan Year. (d) The Excess Matching Employer Contributions shall be determined by reducing contributions on behalf of Highly Compensated Employees in order of their Contribution Percentages beginning with the highest of such percentages. (e) Amounts forfeited by Highly Compensated Employees under this Section 4.6 shall be (i) treated as annual additions under Section 5.6 and (ii) allocated as provided in Section 5.5. 4. Section 4.7(b) of the Plan is amended as underlined to read: (b) DEFINITIONS. For the purposes of this Section, the following definitions shall apply: (i) ACTUAL DEFERRAL PERCENTAGE means the ratio, expressed as a percentage, of (A) the amount of Savings Contributions actually paid to the Trust Fund on behalf of the Eligible Participant for the Plan Year to (B) the Eligible Participant's Compensation for the Plan Year, whether or not the Employee was a Participant for the entire Plan Year. Employer Contributions on behalf of any Participant shall include: (A) any Savings Contributions made pursuant to the Eligible Participant's Elective Deferrals, (including Excess Elective Deferrals of Highly Compensated Employees), but excluding (1) Excess Elective Deferrals of Nonhighly Compensated Employees that arise solely from Elective Deferrals made under the plan or plans of this Employer, and (2) Savings Contributions that are taken into account in the Contribution Percentage Test (provided the Actual Deferral Percentage Test is satisfied both with and without exclusion of these Employer Elective Contributions); and (B) at the election of the Employer, Qualified Non-Elective Contributions and Qualified Matching Contributions. A Savings Contribution will be taken into account under the Actual Deferral Percentage Test for a Plan Year only if it relates to compensation that either would have been received by the Employee in the Plan Year, but for the deferral election, or is attributable to services performed by the Employee in the Plan Year and would have been received by the Employee within two and one-half (2 1/2) months after the close of the Plan Year, but for the deferral election. To compute Actual Deferral Percentages, an Employee who would otherwise be an Eligible Participant but for the failure to make Savings Contributions, shall be deemed to have a deferral ratio of zero. 8 (ii) AVERAGE ACTUAL DEFERRAL PERCENTAGE means the average, expressed as a percentage, of the Actual Deferral Percentages of the Eligible Participants in a group. (iii) ELIGIBLE PARTICIPANT means any Employee of the Employer who is directly or indirectly eligible under the Plan to have Savings Contributions (or Qualified Non- Elective Contributions or Qualified Matching Contributions, or both, if treated as Employer Elective Contributions for the Actual Deferral Percentage Test) allocated to his or her Salary Deferral Account for all or any portion of the Plan Year. Eligible Participant includes an Employee whose eligibility to make Savings Contributions has been suspended because of an election (other than certain one- time elections) not to participate, a distribution, or a loan; and an Employee who cannot defer because of Code Section 415 limitations. (iv) QUALIFIED NON-ELECTIVE CONTRIBUTIONS means Employer Contributions, other than Savings Contributions and Matching Contributions, allocated to Participants' accounts which are 100% Nonforfeitable at all times and which are subject to the distribution restrictions described in Section 4.1(f). Non- Elective Contributions are not 100% Nonforfeitable at all times if the Employee has a 100% Nonforfeitable interest because of Years of Service taken into account under a vesting schedule. Any Non-Elective Contributions allocated to a Participant's Salary Deferral Account under the Plan automatically satisfy the definition of Qualified Non-Elective Contributions. (v) QUALIFIED MATCHING CONTRIBUTIONS means Employer Matching Contributions allocated to Participants' accounts which are 100% Nonforfeitable at all times and which are subject to the distribution restrictions described in Section 4.1(f). Matching Contributions are not 100% Nonforfeitable at all times if the Employee has a 100% Nonforfeitable interest because of Years of Service taken into account under a vesting schedule. Any Matching Contributions allocated to a Participant's Employer Salary Deferral Account under the Plan automatically satisfy the definition of Qualified Matching Contributions. 5. Section 4.7(d)(i) of the Plan is amended as underlined to read: (d) FAIL-SAFE PROVISIONS If the initial allocations of the Savings Contributions do not satisfy one of the tests set forth in paragraph (a) of this Section, the Administrator shall adjust the accounts of the Participants pursuant to one (1) or more of the following options: 9 (i) DISTRIBUTION OF EXCESS CONTRIBUTIONS. If the Committee determines that the initial allocations of the Employer Elective Contributions do not satisfy one of the Actual Deferral Percentage Tests set forth in paragraph (a) of this Section, the Administrator must distribute the Excess Contributions, as adjusted for allocable income, during the next Plan Year. However, the Employer will incur an excise tax equal to 10% of the amount of Excess Contributions for a Plan Year not distributed to the appropriate Highly Compensated Employees during the first 2 1/2 months of that next Plan Year. The Excess Contributions are the amount of Employer Elective Contributions made at the election of the Highly Compensated Employees which causes the Plan to fail to satisfy the Actual Deferral Percentage Test. The Administrator will distribute to each Highly Compensated Employee his or her respective share of the Excess Contributions by starting with the Highly Compensated Employee(s) who has the greatest Actual Deferral Percentage, reducing his or her Actual Deferral Percentage to the next highest Actual Deferral Percentage, then, if necessary, reducing the Actual Deferral Percentage of the Highly Compensated Employee(s) at the next highest Actual Deferral Percentage level (including the Actual Deferral Percentage of the Highly Compensated Employee(s) whose Actual Deferral Percentage the Administrator already has reduced), and continuing in this manner until the average Actual Deferral Percentage for the Highly Compensated Group satisfies the Actual Deferral Percentage Test. Excess Contributions of Participants who are subject to the Family Member aggregation rules shall be allocated among the Family Members in proportion to the Elective Deferrals (and amounts treated as Elective Deferrals) of each Family Member that is combined to determine the combined Actual Deferral Percentage. The amount of Excess Contributions to be distributed to an Employee for a Plan Year shall be reduced by any Excess Deferrals previously distributed to the Employee for the Employee's taxable year ending with or within the Plan Year. ALLOCABLE INCOME. To determine the amount of the corrective distribution required under this Section, the Administrator must calculate the allocable income for the Plan Year in which the Excess Aggregate Contributions arose. The income allocable to Excess Aggregate Contributions is equal to the sum of the allocable gain or loss for the Plan Year. (A) METHOD OF ALLOCATING INCOME. The Administrator may use any reasonable method for computing the income allocable to Excess Aggregate Contributions, provided that the method does not violate Code Section 401(a)(4), is used consistently for all Participants and for all corrective distributions under the Plan for the Plan Year, and is used by the Plan for allocating income to Participants' Accounts. 10 (B) ALTERNATIVE METHOD OF ALLOCATING INCOME. A Plan may allocate income to Excess Aggregate Contributions by multiplying the income for the Plan Year allocable to Employee Contributions, Matching Contributions, and amounts treated as Matching Contributions by a fraction. The numerator of the fraction is the Excess Aggregate Contributions for the Employee for the Plan Year. The denominator of the fraction is equal to the sum of: (I) The total account balance of the Employee attributable to Employee and Matching Contributions, and amounts treated as Matching Contributions as of the beginning of the Plan Year; plus (II) The Employee and Matching Contributions, and amounts treated as Matching Contributions for the Plan Year. Effective for Plan Years commencing on and after January 1, 1996, if a Matching Contribution that relates to a contribution treated as an excess contribution cannot be distributed as an excess aggregate contribution so that a discriminatory rate of match cannot be corrected by distribution, such Matching Contribution shall be forfeited as permitted under Code Sections 411(a)(3)(G) and 401(k)(8)(E), unless the Employer desires to correct the discriminatory rate of match by making additional allocations to the accounts of nonhighly compensated employees under Treasury Regulations Section 1.401(a)(4)-11(g)(3)(vii)(B). 6. Section 4.8(b)(iv) of the Plan is amended as underlined to read: (iv) Contribution Percentage Amounts means the sum of the Employee Contributions, Matching Contributions and Qualified Matching Contributions, to the extent not taken into account for purposes of the Actual Deferral Percentage Test, made under the Plan on behalf of an Eligible Participant for the Plan Year. Contribution Percentage Amounts shall include Forfeitures of Excess Aggregate Contributions or Matching Contributions allocated to the Participant's Account which shall be taken into account in the year in which the Forfeiture is allocated. Notwithstanding the foregoing, Contribution Percentage Amounts shall not include Matching Contributions that are forfeited either to correct Excess Aggregate Contributions or because the contributions to which they relate are Excess Deferrals, Excess Contributions, or Excess Aggregate Contributions. The Employer may include Qualified Non-Elective Contributions in the Contribution Percentage Amounts. The Employer also may elect to use Employer Elective Contributions in the Contribution Percentage Amount if the Actual Deferral Percentage Test is met before the Employer Elective Contributions are used in the Average Contribution Percentage Test and continues to be met following the exclusion of those Employer Elective Contributions that are used to meet the Average Contribution Percentage Test. In the case of an Eligible Participant who makes no Employee Contributions and receives no Matching Contributions, the Contribution Percentage Amount shall be zero. 11 7. Section 6.2(d) of the Plan is amended as underlined to read: (d) If, in any subsequent Plan Year, the Plan ceases to be a Top-Heavy Plan, the vesting schedule in paragraph (c) shall continue to apply unless the Employer elects, in writing, to revert to the vesting schedule set forth in paragraph (b). Any reversion shall be treated as a Plan amendment and shall be subject to the restrictions of Section 13.1 and this paragraph. No such amendment shall be effective unless, in the event it changes the Plan's applicable vesting schedule (determined in accordance with regulations under Section 411 of the Code), each Participant's nonforfeitable percentage of his accounts (determined as of the later of the date such amendment is adopted or becomes effective) is not less than such percentage computed under Section 6.2 without regard to such amendment and unless, in such event, each Participant having not less than 5 Years of Service for Plan Years beginning before January 1, 1989 and 3 Years of Service for Plan Years beginning on and after January 1, 1989, is permitted to elect (pursuant to regulations under Section 411 of the Code) to have his nonforfeitable percentage computed under the Plan without regard to such amendment. 8. Section 6.3(c) of the Plan is amended as underlined to read: (c) FORFEITURES. If, at the time a Participant becomes Separated from Service, he is not entitled to a distribution of the entire balance in his Employer Contribution Account, he shall not be eligible to receive a distribution of the vested portion from such Account until the end of the Plan Year in which he incurs his first Break-in-Service. As of the end of the Year in which the Participant has Separated from Service, his Employer Contribution Account shall be divided into two portions, one representing the vested portion, and the other representing the forfeiture portion, of such Account. Such Employer Contribution Account shall continue to receive income allocations pursuant to Section 5.2 until distributed in full. If the Participant returns to the employ of an Employer before incurring his first Break-in-Service, the vested and forfeiture portions of his Employer Contribution Account, plus income allocations, shall, upon his return, become the beginning balance in his new Employer Contribution Account. If the Participant does not return to the employ of an Employer before incurring his first Break-in-Service, his previous Employer Contribution Account shall be closed, with the result that the vested portion of his Employer Contribution Account, plus income allocations, shall be distributed pursuant to Article 11 hereof and the forfeiture portion of his Employer Contribution Account, shall become available for allocation to the Employer Contribution Accounts of other eligible Participants on the earlier of the date on which the Participant incurs five (5) consecutive Breaks-in-Service or the date on which the Participant receives a Cashout Distribution (the Forfeiture Event). A Cashout Distribution means a lump sum distribution pursuant to Section 11.1, made on termination of the Employee's participation in the Plan. The amount forfeited under this Section shall remain in the Trust Fund and shall become available for allocation to the Employer Contribution Accounts of other eligible Participants as of the end of the Year in which the Forfeiture Event occurs. 12 Effective January 1, 1995, a Participant's forfeiture, if any, of the nonvested portion of his Employer Contribution Account occurs under the Plan on the earlier of: (1) the last day of the vesting computation period in which the Participant first incurs a Forfeiture Break in Service; or (2) the date the Participant receives a cash-out distribution. A Participant incurs a Forfeiture Break in Service when he incurs five consecutive Breaks-in-Service. A cash-out distribution is a distribution of the entire present value of the Participant's Nonforfeitable Account. The Committee determines the percentage of a Participant's forfeiture, if any, under this Section 6.3(c) solely by reference to the vesting schedule of Section 6.2. A Participant does not forfeit any portion of his Employer Contribution Account for any other reason or cause except as expressly provided by this Section 6.3(c) or as provided under Sections 5.6 or 11.11. Subject to any restoration allocation required under Section 6.3(d), the Committee will allocate Participant forfeitures to the Employer Contribution Accounts of other eligible Participants in accordance with Section 5.5 as of the end of the Plan Year in which the forfeitures occur. 9. Section 13.4(b) of the Plan is amended as underlined to read: (b) However, notwithstanding anything to the contrary above, a Participant's Accounts shall not be distributed before the first to occur of the following events: (1) Retirement; (2) death; (3) Disability; (4) Separation from Service; (5) attainment of age 59-1/2; (6) with respect to a Participant's Savings Account only, incurring of a hardship (as defined in Section 10.2); (7) the termination of the Plan, provided that neither the Employer nor an Affiliated Employer maintains a successor plan; (8) the sale, to an entity that is not an Affiliated Employer, of substantially all of the assets used by the Employer in the trade or business in which the Participant is employed; or 13 (9) the sale, to an entity that is not an Affiliated Employer, of an incorporated Affiliated Employer's interest in a subsidiary in which the Participant is employed. For purposes of this Section 13.4(b), the term "Affiliated Employer" shall mean the Employers and any corporation which is a member of a controlled group of corporations (as defined in Section 414(b) of the Code) which includes an Employer; any trade or business (whether or not incorporated) which is under common control (as defined in Section 414(c) of the Code) with an Employer; any organization (whether or not incorporated) which is a member of an affiliated service group (as defined in Section 414(m) of the Code) which includes an Employer; and any other entity required to be aggregated with an Employer pursuant to regulations under Section 414(o) of the Code. 10. Section 14.6 of the Plan is amended in its entirety to read: Section 14.6. Contributions Contingent Upon Approval. Any contribution to the Trust Fund associated with this Plan is conditioned on initial qualification of the Plan under Code Section 401(a) and of the exemption of the Trust created under the Plan under Code Section 501(a). If the Commissioner of the Internal Revenue Service, upon the Employer's request for initial approval of this Plan and Trust, determines that the Plan is not qualified or the Trust is not exempt, then the Trustee may return to each Employer, within one (1) year after the date of final disposition of the request for initial approval, any contribution made by the Employers, and any increment attributable to the contribution. The Plan and Trust shall then terminate and all rights of Participants, Former Participants and Beneficiaries with respect to such Employers' contributions shall cease. 11. Article Fourteen of the Plan is amended by adding Section 14.14 to read: Section 14.14. MISTAKE OF FACT. Notwithstanding any contrary provision in this Agreement, if a contribution is made by an Employer by a mistake of fact, the contribution may be returned to the Employer within one (1) year after the payment of the contribution. The amount of the mistaken contribution is equal to the excess of (a) the amount contributed over (b) the amount that would have been contributed had there not occurred a mistake of fact. Earnings attributable to mistaken contributions may not be returned to the Employer, but losses attributable thereto shall reduce the amount to be returned. 12. Article Fourteen of the Plan is amended by adding Section 14.15 to read: Section 14.15. DISALLOWANCE OF DEDUCTION. Notwithstanding any contrary provision in this Agreement, any contributions by an Employer to the Plan and Trust are conditioned on the deductibility of the contribution by the Employer under the Code. To the extent any deduction is disallowed, the Employer, within one (1) year following a final determination of the disallowance, whether by agreement with the Internal Revenue Service or by final decision in a court of competent jurisdiction, 14 may demand repayment of the disallowed contribution, and the Trustee shall return the contribution within one (1) year following the disallowance. Earnings attributable to excess contributions may not be returned to the Employer, but losses attributable thereto shall reduce the amount to be returned. 13. Section 15.4 of the Plan is amended as underlined to read: Section 15.4. AMENDMENTS. If the Plan is determined to be top-heavy, the vesting schedule in Section 6.2(c) shall continue to apply notwithstanding a determination in a later Plan Year that the Plan is no longer top-heavy unless the Company shall amend the Plan to provide otherwise. No such amendment shall be effective unless, in the event it changes the Plan's applicable vesting schedule (determined in accordance with regulations under Section 411 of the Code), each Participant's nonforfeitable percentage of his accounts (determined as of the later of the date such amendment is adopted or becomes effective) is not less than such percentage computed under Section 6.2(c) without regard to such amendment and unless, in such event, each Participant having not less than 5 Years of Service for Plan Years beginning before January 1, 1989 and 3 Years of Service for Plan Years beginning on and after January 1, 1989 is permitted to elect (pursuant to regulations under Section 411 of the Code) to have his nonforfeitable percentage computed under the Plan without regard to such amendment. IN WITNESS WHEREOF, FROZEN FOOD EXPRESS INDUSTRIES, INC. has caused this Third Amendment to be executed by its duly appointed officers on this 24th day of October, 1996. FROZEN FOOD EXPRESS INDUSTRIES, INC. By: /s/ S. M. Stubbs, Jr. --------------------- President ATTEST: /s/ Leonard W. Bartholomew - -------------------------- Secretary 15 FOURTH AMENDMENT TO SAVINGS PLAN FOR EMPLOYEES OF FROZEN FOOD EXPRESS INDUSTRIES, INC. This Amendment is adopted this 24th day of October, 1996, and effective January 1, 1996, by Frozen Food Express Industries, Inc., a Delaware Corporation, having its principal office in Dallas, Texas (hereinafter referred to as "Plan Sponsor"). R E C I T A L S: A. WHEREAS, the Plan Sponsor has previously established the Savings Plan for Employees of Frozen Food Express Industries, Inc. ("Plan") for the benefit of those employees who qualify thereunder and for their beneficiaries; and B. WHEREAS, the Plan Sponsor desires to clarify the amendment procedure of Plan Section 13.1 and to facilitate the amendment process by clarifying that no written action is required by a participating employer to amend the Plan; NOW, THEREFORE, pursuant to Section 13.1 of the Plan, the following amendment is hereby made and shall be effective January 1, 1996: 1. Section 13.1 of the Plan is amended by adding the following provision to read: Whenever participating employers have elected to adopt this Plan, amendment of this Plan by the Plan Sponsor shall be effective upon the written action of the Plan Sponsor. Each Participating Employer shall be deemed to have authorized irrevocably the Plan Sponsor or any person(s) duly authorized by resolution of the Board of Directors of the Plan Sponsor, to amend or modify this Plan in any manner it deems necessary or desirable, retroactively or prospectively, subject to the provisions of this Article. IN WITNESS WHEREOF, FROZEN FOOD EXPRESS INDUSTRIES, INC. has caused this Fourth Amendment to be executed by its duly appointed officers on this 24th day of October, 1996. FROZEN FOOD EXPRESS INDUSTRIES, INC. By: /s/ S. M. Stubbs, Jr. --------------------- President ATTEST: /s/ Leonard W. Bartholomew - -------------------------- Secretary 16 FIFTH AMENDMENT TO SAVINGS PLAN FOR EMPLOYEES OF FROZEN FOOD EXPRESS INDUSTRIES, INC. This Amendment is adopted this 31st day of December, 1996, and effective January 1, 1997, by Frozen Food Express Industries, Inc., a Delaware Corporation, having its principal office in Dallas, Texas (hereinafter referred to as "Plan Sponsor"). R E C I T A L S: A. WHEREAS, the Plan Sponsor has previously established the Savings Plan for Employees of Frozen Food Express Industries, Inc. ("Savings Plan") for the benefit of those employees who qualify thereunder and for their beneficiaries; and B. WHEREAS, FFE Transportation Services, Inc. has adopted the FFE Transportation Services, Inc. 401(k) Wrap Plan ("Wrap Plan"), intended to be an unfunded deferred compensation plan for select management and highly compensated employees of Participating Employers covered under the Savings Plan to accumulate deferred compensation which cannot be accumulated under the Savings Plan because of the limitations of Sections 402(g), 415, 401(a)(17), 401(k)(3) and 401(m)(2) of the Internal Revenue Code of 1986, as amended; and C. WHEREAS, the Plan Sponsor desires to amend the Savings Plan to prohibit Savings Contributions through payroll deductions by Highly Compensated Employees of Participating Employers covered under the Savings Plan, and in lieu thereof, to accommodate the transfer of amounts from the Wrap Plan to the Savings Plan. NOW, THEREFORE, pursuant to Section 13.1 of the Plan, the following amendments are hereby made and shall be effective January 1, 1997: 1. Section 4.1(e) of the Plan is amended as underlined to read: (e) Savings Contributions elected by Participants who are Highly Compensated Employees may be prospectively limited by the Committee without the Participant's consent if necessary to meet the limits of Section 4.1(d). Effective January 1, 1997, any Participant who is a Highly Compensated Employee may not elect to have Savings Contributions made on his behalf by payroll deductions under this Plan during any Plan Year. In lieu of Savings Contributions effected by payroll deductions on behalf of any Highly Compensated Employee who is a Participant under the Plan during any Plan Year, as soon as administratively feasible after the end of a Plan Year, but in no event later than 2 1/2 months following the end of that Plan Year, the Committee shall permit the transfer to the Plan of all the Nonqualified Savings Contributions credited to the Nonqualified Savings Account of each Highly Compensated Employee who is a Participant for that Plan Year under the FFE Transportation Services, Inc. 401(k) Wrap Plan, but in no event shall an amount be transferred that would cause this Plan to exceed the limitations of Code Section 401(k)(3) set forth in Plan Section 4.7 for such Plan Year. 17 2. Section 4.2(a) of the Plan is amended by adding subsection (4) to read: (4) Effective January 1, 1997, any Participant who is a Highly Compensated Employee may not elect to have Savings Contributions made on his behalf by payroll deductions under this Plan during any Plan Year. Notwithstanding the foregoing provisions of Plan Section 4.2(a), effective January 1, 1997, in lieu of Employer Contributions specified therein with respect to Savings Contributions on behalf of Participants who are Highly Compensated Employees, as soon as administratively feasible after the end of a Plan Year, but in no event later than 2 1/2 months following the end of that Plan Year, the Committee shall permit the transfer to this Plan of all the Nonqualified Employer Contributions credited to the Nonqualified Employer Contribution Account of each Highly Compensated Employee who is a Participant for that Plan Year under the FFE Transportation Services, Inc. 401(k) Wrap Plan, but in no event shall such an amount be transferred that would cause this Plan to exceed the limitations of Code Section 401(m)(2) set forth in Plan Section 4.8 for such Plan Year. IN WITNESS WHEREOF, FROZEN FOOD EXPRESS INDUSTRIES, INC. has caused this Fifth Amendment to be executed by its duly appointed officer on this 31st day of December, 1996. FROZEN FOOD EXPRESS INDUSTRIES, INC. By: /s/ S. M. Stubbs, Jr. --------------------- President ATTEST: Leonard W. Bartholomew - ---------------------- Secretary 18 SIXTH AMENDMENT TO SAVINGS PLAN FOR EMPLOYEES OF FROZEN FOOD EXPRESS INDUSTRIES, INC. This Amendment is adopted this 31st day of December, 1996, and effective as herein provided, by Frozen Food Express Industries, Inc., a Delaware Corporation, having its principal office in Dallas, Texas (hereinafter referred to as "Plan Sponsor"). R E C I T A L S: A. WHEREAS, the Plan Sponsor has previously established the Savings Plan for Employees of Frozen Food Express Industries, Inc. ("Plan") for the benefit of those employees who qualify thereunder and for their beneficiaries; and B. WHEREAS, pursuant to the action of the Board of Directors on November 13, 1996 authorizing a Special Employer Contribution for the Plan Year ended December 31, 1996, the Plan Sponsor desires to amend the Plan effective January 1, 1996, to provide for a discretionary Special Employer Contribution for eligible Nonhighly Compensated Employees, subject to the vesting schedule; C. WHEREAS, the Plan Sponsor desires to further amend the Plan effective January 1, 1997, to clarify that Highly Compensated Employees who are Participants in the Plan but who are not eligible to participate in the FFE Transportation Services, Inc. 401(k) Wrap Plan may elect to have Savings Contributions made on their behalf by payroll deductions under the Plan; NOW, THEREFORE, pursuant to Section 13.1 of the Plan, the following amendment is hereby made and shall be effective as hereinafter provided. Additions are underlined. 1. Section 2.1 of the Plan is amended effective January 1, 1996 to read: Section 2.1. Accounts means the value of all of the accounts maintained by the Committee for a particular Participant, including his Employer Contribution Account, Rollover Account, and Savings Account; effective January 1, 1988, Incentive Account and effective January 1, 1996, Special Employer Contribution Account. 2. Section 2.19 of the Plan is amended effective January 1, 1996 to read: Section 2.19. Employer Contribution Account means the account or record maintained or caused to be maintained by the Trustee showing the composition and value of the individual interest of a particular Participant, Former Participant or Beneficiary in the Trust Assets attributable to Matching Employer Contributions made pursuant to Section 4.2(a). 19 3. Section 2.20 of the Plan is amended effective January 1, 1996 to read: Section 2.20. Employer Contributions means the contributions made by the Employers pursuant to Section 4.2(a); effective January 1, 1988, the Matching Employer Contributions and the Incentive Contributions made by the Employers pursuant to Section 4.2(a); and effective January 1, 1996, the Matching Employer Contributions and the Special Employer Contributions made by the Employers pursuant to Section 4.2. 4. Section 2.64 of the Plan is amended effective January 1, 1996 to read: Section 2.64. Vested Percentage means that percentage of a Participant's Employer Contribution Account and, effective January 1, 1996, Special Employer Contribution Account in which the Participant's rights are nonforfeitable and fully vested, which percentage is determined by reference to the vesting schedule set forth in Section 6.2. 5. Article 2 of the Plan is amended effective January 1, 1996 by adding Section 2.66 to read: Section 2.66. Matching Employer Contributions means the contributions made by the Employers pursuant to Section 4.2(a). 6. Article 2 of the Plan is amended effective January 1, 1996 by adding Section 2.67 to read: Section 2.67. Special Employer Contributions means the contributions made by the Employers pursuant to Section 4.2(c). 7. Article 2 of the Plan is amended effective January 1, 1996 by adding Section 2.68 to read: Section 2.68. Special Employer Contribution Account means the account or record maintained or caused to be maintained by the Trustee showing the composition and value of the individual interest of a particular Participant, Former Participant or Beneficiary in the Trust Assets attributable to Special Employer Contributions made pursuant to Section 4.2(c). 8. Section 3.3(b) of the Plan is amended effective January 1, 1996 to read: (b) In the case of an Authorized Leave of Absence under Subsection 2.3, the Participant's interest in his Employer Contribution Account and, effective January 1, 1996, his Special Employer Contribution Account shall continue to vest, as provided in Article 6, until he is Separated from Service. In the case of any other Authorized Leave of Absence or any other leave of absence approved by his Employer, his interest in his Employer Contribution Account and, effective January 1, 1996, his Special Employer Contribution Account shall continue to vest, as provided in Article 6, but only if he resumes employment with an Employer not later than the first working day following the expiration of the period of such leave. If such employment is not so resumed, the date he 20 is Separated from Service for purposes of such vesting shall be deemed to be the last day of employment prior to the commencement of such authorized or approved absence and such Participant or Former Participant shall not receive credit for any Hours of Service under Section 2.27(a)(2) after such last day; and 9. Section 4.1(e) of the Plan is amended effective January 1, 1997 to read: (e) Savings Contributions elected by Participants who are Highly Compensated Employees may be prospectively limited by the Committee without the Participant's consent if necessary to meet the limits of Section 4.1(d). Effective January 1, 1997, any Participant in this Plan who is both a Highly Compensated Employee and a Participant for the Plan Year in the FFE Transportation Services, Inc. 401(k) Wrap Plan ("Highly Compensated Wrap Plan Participant") may not elect to have Savings Contributions made on his behalf by payroll deductions under this Plan during such Plan Year. In lieu of Savings Contributions effected by payroll deductions on behalf of any Highly Compensated Wrap Plan Participant, as soon as administratively feasible after the end of a Plan Year, but in no event later than 2 1/2 months following the end of that Plan Year, the Committee shall permit the transfer to the Plan of all the Nonqualified Savings Contributions credited to the Nonqualified Savings Account of each Highly Compensated Wrap Plan Participant in the FFE Transportation Services Inc, 401(k) Wrap Plan, but in no event shall an amount be transferred that would cause this Plan to exceed the limitations of Code Section 401(k)(3) set forth in Plan Section 4.7 for such Plan Year. 10. Section 4.2 of the Plan is amended effective January 1, 1996 to read: Section 4.2. Employer Contributions. (a) MATCHING EMPLOYER CONTRIBUTIONS. In addition to the total amount of Savings Contributions elected for each month pursuant to Section 4.1, but subject to the limits of Section 4.2(d), each Employer shall, as a Matching Employer Contribution to the Plan, pay to the Trustee for each calendar quarter an amount equal to the sum of: (1) fifty percent (50%) of the lesser of: (i) the total amount of (a) all Percentage Savings Contributions for such calendar quarter and (b) one- fourth of all Lump Sum Savings Contributions for such calendar quarter and for each of the preceding three calendar quarters, elected under Section 4.1 (and not subsequently distributed under Section 4.4) that are made on behalf of each Participant who is entitled to share in the Matching Employer Contribution pursuant to Section 5.4; or (ii) an amount equal to 4% of each such Participant's Compensation for such calendar quarter; plus 21 (2) fifty percent (50%) of the product obtained by multiplying (i) times (ii) where: (i) Effective January 1, 1987 through December 31, 1992, (i) is equal to the total amount of (a) all Percentage Savings Contributions for such calendar quarter and (b) one- fourth of all Lump Sum Savings Contributions for such calendar quarter and for each of the preceding three calendar quarters, elected under Section 4.1 (and not subsequently distributed under Section 4.4) that are made on behalf of each Participant who is not an officer, shareholder or highly compensated employee within the meaning of Code Section 401(a)(4) and who is entitled to share in the Matching Employer Contribution pursuant to Section 5.4, if the total of all Percentage Savings Contributions for such calendar quarter and all Lump Sum Savings Contributions for such calendar quarter and for each of the preceding three calendar quarters are invested, pursuant to such Participant's direction, in the Company Stock Fund at the end of such calendar quarter; and Effective January 1, 1993, (i) is equal to the total amount of (a) all Percentage Savings Contributions for such calendar quarter and (b) one-fourth of all Lump Sum Savings Contributions for such calendar quarter and for each of the preceding three calendar quarters, elected under Section 4.1 (and not subsequently distributed under Section 4.4) that are made on behalf of each Participant who is entitled to share in the Matching Employer Contribution pursuant to Section 5.4, if the total of all Percentage Savings Contributions for such calendar quarter and all Lump Sum Savings Contributions for such calendar quarter and for each of the preceding three calendar quarters are invested, pursuant to such Participant's direction, in the Company Stock Fund at the end of such calendar quarter; and (ii) Effective October 1, 1987 through December 31, 1992, (ii) is equal to a fraction (not to exceed 1), the numerator of which is an amount equal to 4% of each such Participant's Compensation for such calendar quarter, and the denominator of which is the total of all Percentage Savings Contributions for such calendar quarter and one-forth of all Lump Sum Savings Contributions for such calendar quarter and for each of the preceding three calendar quarters elected by such Participant; Effective January 1, 1993, (ii) is equal to a fraction (not to exceed 1), the numerator of which is an amount equal to 4% of each such Participant's Compensation for such calendar quarter, and the denominator of which is the total of all Percentage Savings Contributions for such calendar quarter and one-fourth of all Lump Sum Savings Contributions for such calendar quarter and for each of the preceding three calendar quarters elected by such Participant. 22 (b) Incentive Contributions. Plus, effective January 1, 1988, for Incentive Participants only, an Incentive Contribution in an amount determined under the Incentive Bonus Plan of FFE Transportation Services, Inc., as effective for the Plan Year in question. Incentive Contributions shall be made by FFE Transportation Services, Inc. Notwithstanding anything to the contrary in this Section 4.2(b), Incentive Contributions shall only be made annually. Effective January 1, 1995, Incentive Contributions shall not be made to the Plan. (c) Special Employer Contributions. Plus, effective January 1, 1996, the Employer in its sole discretion, may contribute for the Plan Year for eligible Nonhighly Compensated Employees an amount equal to the amount, if any, the Employer may from time to time deem advisable as a Special Employer Contribution. The Employer may contribute to this Plan whether or not it has net profits. (d) Notwithstanding the foregoing provisions of this Section 4.2 the Employer Contribution specified therein shall be limited by and in no event shall exceed the following limits: (1) The total amount deductible by such Employer under Code Section 404; or (2) The maximum amount that may be allocated to a particular Participant's Accounts under the annual additions limit of Section 5.6 (and, if applicable, Article 15). (e) Employer Contributions may be made in cash, in Company Stock, or in a combination of cash and Company Stock, as determined by the Employer in its sole discretion. If contributions are made in shares of Company Stock, the value of such Company Stock shall be determined by the average of closing prices of such stock for the twenty (20) consecutive trading days immediately preceding the date on which the shares are contributed 11. Section 4.7(b)(i) of the Plan is amended effective January 1, 1996 to read: Section 4.7. Limitations on Employer Elective Contributions. (b) DEFINITIONS. (i) ACTUAL DEFERRAL PERCENTAGE means the ratio, expressed as a percentage, of (A) the amount of Savings Contributions actually paid to the Trust Fund on behalf of the Eligible Participant for the Plan Year to (B) the Eligible Participant's Compensation for the Plan Year, whether or not the Employee was a Participant for the entire Plan Year. Employer contributions on behalf of any Participant shall include: (A) any Savings Contributions made pursuant to the Eligible Participant's Elective Deferrals, (including Excess Elective Deferrals of Highly Compensated Employees), but excluding (1) Excess Elective Deferrals of Nonhighly Compensated Employees that arise solely from Elective Deferrals made under the plan or plans of this Employer, and (2) Savings Contributions that are taken into account in the 23 Contribution Percentage Test (provided the Actual Deferral Percentage Test is satisfied both with and without exclusion of these Employer Elective Contributions); and (B) at the election of the Employer, Qualified Non-Elective Contributions and Qualified Matching Contributions. A Savings Contribution will be taken into account under the Actual Deferral Percentage Test for a Plan Year only if it relates to compensation that either would have been received by the Employee in the Plan Year, but for the deferral election, or is attributable to services performed by the Employee in the Plan Year and would have been received by the Employee within two and one-half (2 1/2) months after the close of the Plan Year, but for the deferral election. To compute Actual Deferral Percentages, an Employee who would be a Participant but for the failure to make Elective Deferrals shall be treated as a Participant on whose behalf no Employer Elective Contributions are made. 12. Section 4.7(b)(iv) of the Plan is amended effective January 1, 1996 to read: Section 4.7. Limitations on Employer Elective Contributions. (b) DEFINITIONS. (iv) QUALIFIED NON-ELECTIVE CONTRIBUTIONS means Employer contributions, other than Savings Contributions and Matching Contributions, allocated to Participants' accounts which are 100% Nonforfeitable at all times and which are subject to the distribution restrictions described in Section 4.1(f). Non-Elective Contributions are not 100% Nonforfeitable at all times if the Employee has a 100% Nonforfeitable interest because of Years of Service taken into account under a vesting schedule. Any Non-Elective Contributions allocated to a Participant's Salary Deferral Account under the Plan automatically satisfy the definition of Qualified Non-Elective Contributions. 13. Section 4.8(b)(vii) is amended effective January 1, 1996 to read: Section 4.8. Limitations on Employee Contributions and Matching Employer Contributions. (b) Definitions (vii) Matching Contribution means an Employer contribution made to this or any other defined contribution plan on behalf of a Participant on account of an Employee Contribution made by the Participant, or on account of a Participant's election to defer a portion of his or her Annual Compensation under a plan maintained by the Employer. 24 14. Section 4.8(b)(viii) is amended effective January 1, 1996 to read: Section 4.8. Limitations on Employee Contributions and Matching Employer Contributions. (b) DEFINITIONS (viii) QUALIFIED NON-ELECTIVE CONTRIBUTIONS means Employer contributions, other than Employer Elective Contributions and Matching Contributions, allocated to Participants' accounts which are 100% Nonforfeitable at all times and which are subject to the distribution restrictions described in Section 4.1(f). Non-Elective Contributions are not 100% Nonforfeitable at all times if the Employee has a 100% Nonforfeitable interest because of Years of Service taken into account under a vesting schedule. Any Non-Elective Contributions allocated to a Participant's Salary Deferral Account under the Plan automatically satisfy the definition of Qualified Non- Elective Contributions. 15. Section 4.8(d)(iv) is amended effective January 1, 1996 to read: Section 4.8. Limitations on Employee Contributions and Matching Employer Contributions. (d) Fail Safe Provisions. (iv) Forfeiture of Non-Vested Matching Employer Contributions. Matching Employer Contributions that are not vested may be forfeited to correct Excess Aggregate Contributions. Notwithstanding the foregoing sentence, Excess Aggregate Contributions for a Plan Year may not remain unallocated or be allocated to a suspense account for allocation to one or more Employees in any future year. Forfeitures of Matching Contributions to correct Excess Aggregate Contributions shall be: (A) Applied to reduce Matching Employer Contributions for the Plan Year in which the excess arose, but allocated according to the following paragraph (B), to the extent the excess exceeds Matching Employer Contributions or the Employer has already contributed for the Plan Year. (B) Allocated, after all other Forfeitures under the Plan, to the Employer Matching Contribution Account of each Nonhighly Compensated Participant who made Elective Deferrals or Employee Contributions in the ratio which each such Participant's Compensation for the Plan Year bears to the total Compensation of all such Participants for the Plan Year. 25 16. Section 5.1 of the Plan is amended effective January 1, 1996 to read: Section 5.1. Accounts. The Committee shall maintain or cause to be maintained adequate records to disclose the interest in the Trust of each Participant, Former Participant, and Beneficiary. Such records shall be in the form of individual accounts, and credits and charges shall be made to such accounts in the manner herein described. When appropriate, a Participant shall have, as separate accounts, an Employer Contribution Account, a Rollover Account or Accounts, a Savings Account, and, effective January 1, 1996, a Special Employer Contribution Account. The maintenance of separate accounts is only for accounting purposes, and a segregation of the Trust Assets to each account shall not be required. Each Account shall reflect its allocable share of income, loss, appreciation, and depreciation of the Trust Assets. Distributions made from an account shall be charged to such account as of the end of the month during which the distribution is made. 17. Section 5.3 of the Plan is amended effective January 1, 1996 to read: Section 5.3. Allocation of Employer Contribution. Effective October 1, 1987 through December 31, 1988, each Participant who is a Participant on the last business day of each calendar quarter and each Former Participant who would have been a Participant on the last business day of such calendar quarter but for his death, Disability, Early Retirement, or Retirement during such calendar quarter is entitled to share in the Employer Contribution for such calendar quarter. Subject to Section 4.5, of the Committee shall instruct the Trustee to allocate the portion of the Employer Contribution for each calendar quarter to the Employer Contribution Account of each Participant or Former Participant for whom such contribution was made pursuant to Section 4.2(a) Effective January 1, 1988, the following provisions shall apply: (a) Each Participant who is a Participant on the last business day of each calendar quarter and each Former Participant who would have been a Participant on the last business day of such calendar quarter but for his death, Disability, Early Retirement, or Retirement during such calendar quarter is entitled to share in the Matching Employer Contribution for such calendar quarter. Subject to Section 4.5, the Committee shall instruct the Trustee to allocate the portion of the Matching Employer Contribution for each calendar quarter to the Employer Contribution Account of each Participant or Former Participant for whom such contribution was made pursuant to Section 4.2(a)(1) and (2). (b) Incentive Contributions for a Plan Year will be allocated, in proportion to each Incentive Participant's Compensation and as soon after the end of the Plan Year as the amount of the Incentive Contribution is calculated under the Incentive Bonus Plan, to the Incentive Account of each Incentive Participant for whom such a contribution was made pursuant to Section 4.2(b). 26 Additionally, effective for Plan Years beginning on and after January 1, 1996, each Participant who is a Nonhighly Compensated Employee and who is a Participant on the last business day of the Plan Year and each Former Participant who is a Nonhighly Compensated Employee and who would have been a Participant on the last business day of the Plan Year but for his death, Disability, Early Retirement, or Retirement during the Plan Year, is entitled to share in the Special Employer Contribution, if any, for such Plan Year ("Special Employer Contribution Participant"). The Committee shall instruct the Trustee to allocate the portion of the Special Employer Contribution, if any, to the Special Employer Contribution Account of each Special Employer Contribution Participant in the same ratio that each Special Employer Contribution Participant's Compensation for the Plan Year bears to the total Compensation of all Special Employer Contribution Participants for the Plan Year. 18. Section 5.5 of the Plan is amended effective January 1, 1996 to read: Section 5.5. Forfeitures. Matching Employer Contributions forfeited pursuant to Sections 5.6 or 6.3 shall be allocated as of the end of each Plan Year to the Employer Contribution Account of each Participant who is a Participant on the last business day of the Plan Year and each Former Participant who would have been a Participant on the last business day of such Plan Year but for his death, Disability, Early Retirement, or Retirement during such Plan Year, according to the ratio that each such Participant's Compensation for the Plan Year bears to the total Compensation of all such Participants for the Plan Year. Matching Employer Contributions forfeited pursuant to Section 4.6 shall be allocated as of the end of each Plan Year to the Employer Contribution Account of each Participant who is a Nonhighly Compensated Employee and who is a Participant on the last business day of the Plan Year and each Former Participant who was a Nonhighly Compensated Employee and who would have been a Participant on the last business day of such Plan Year but for his, death, Disability, Early Retirement, or Retirement during such Plan Year, according to the ratio that each such Participant's Compensation for the Plan Year bears to the total Compensation of all such Participants for the Plan Year. Special Employer Contributions forfeited shall be allocated as a Special Employer Contribution for the Plan Year in which the forfeiture occurs, as if the Participant forfeiture were an additional Special Employer Contribution for the Plan Year. 19. Section 5.7 is amended effective January 1, 1996 to read: Section 5.7. Notification to Participants. At least once annually the Committee shall advise each Participant or Former Participant of the then composition and value of his Accounts and of the Vested Percentage of his Employer Contribution Account and his Special Employer Contribution Account. 27 20. Section 6.2(b) of the Plan is amended to read: (b) The "Vested Percentage" at the date he is Separated from Service, of the total amount credited to the Participant's Employer Contribution Account, Special Employer Contribution Account and W & B Plan Rollover Account, if any. The Vested Percentage shall be determined in accordance with the following schedule: Nonforfeitable Years of Service Percentage -------------------------------- --------------- Less than 3 years 0% At least 3 but less than 4 years 20% At least 4 but less than 5 years 40% At least 5 but less than 6 years 60% At least 6 but less than 7 years 80% At least 7 or more years 100% 21. Section 6.3 of the Plan is amended effective January 1, 1996 to read: Section 6.3. Computation of Years of Service for Vesting. (a) General. For purposes of computing a Participant's or Former Participant's Vested Percentage of his Employer Contribution Account and his Special Employer Contribution Account, each Participant or Former Participant shall be credited with all Years of Service to which he is entitled pursuant to Section 2.65(b), other than Years of Service not counted under Sections 6.3(b) and (c) below. (b) Re-employment After a Break in Service. In determining a Participant's Years of Service for vesting purposes upon a Participant's re-employment with an Employer after a Break in Service, the following rules shall apply: (1) If the Participant was not entitled to any Vested Percentage prior to his Break-in- Service, he shall be credited with pre-break Years of Service only if the number of consecutive years of Break-in-Service are less than five. If any Years of Service are not required to be taken into account by reason of the above sentence, such Years of Service shall not be taken into account in applying this paragraph (1) to a subsequent period of Break-in-Service. (2) If the Participant was entitled to a Vested Percentage prior to his Break-in-Service, or if he meets the requirements of paragraph (1) above, then his prebreak Years of Service shall be taken into account in determining his Vested Percentage of his Employer Contribution Account and his Special Employer Contribution Account upon his completion of one Year of Service after his re-employment commencement date. 28 (c) Forfeitures. If, at the time a Participant becomes Separated from Service, he is not entitled to a distribution of the entire balance in his Employer Contribution Account and his Special Employer Contribution Account, he shall receive no distribution from such Account until the end of the Plan Year in which he incurs a Break-in-Service. As of the end of the Year in which the Participant has Separated from Service, his Employer Contribution Account and his Special Employer Contribution Account shall be divided into two portions, one representing the vested portion, and the other representing the forfeiture portion, of such Account. Such Employer Contribution Account and Special Employer Contribution Account shall continue to receive income allocations pursuant to Section 5.2 until distributed in full. If the Participant returns to the employ of an Employer before incurring a Break-in-Service, the vested and forfeiture portions of his Employer Contribution Account and his Special Employer Contribution Account, plus income allocations, shall, upon his return, become the beginning balance in his new Employer Contribution Account and his new Special Employer Contribution Account. If the Participant does not return to the employ of an Employer before incurring a Break-in-Service, his previous Employer Contribution Account and his previous Special Employer Contribution Account shall be closed, with the result that the vested portion of his Employer Contribution Account and his Special Employer Contribution Account, plus income allocations, shall be distributed pursuant to Article 11 hereof and the forfeiture portion of his Employer Contribution Account and his Special Employer Contribution Account, shall become available for allocation to the Employer Contribution Accounts and Special Employer Contribution Accounts of other eligible Participants as of the end of the Year in which he incurs a Break-in-Service. (d) Benefit Accruals and Repayments: (i) Notwithstanding subsection (b) above, for purposes of determining a Participant's Vested Percentage under the Plan, the Plan will disregard service performed by the Participant with respect to which he has received a distribution if the present value of his entire Vested Percentage of such distribution was not more than $3,500. This paragraph (1) shall apply, however, only if such distribution was made on termination of the Participant's participation in the Plan. (ii) For purposes of determining a Participant's Vested Percentage under the Plan, the Plan will not disregard service as provided in paragraph (d) (1) above if the Participant repays the full amount of the distribution described in such paragraph (d) (1). Upon such repayment, the Participant's account balance prior to the distribution will be restored (unadjusted by any gains or losses between the time of distribution and the time of repayment) and his Vested Percentage will be recomputed by taking into account service so disregarded. This paragraph (2) shall apply, however, only in the case of a Participant who- (A) resumes employment before the date on which he would have incurred five (5) consecutive years of Break-in-Service; and (B) repays the full amount of such distribution before the date on which he would have incurred five (5) consecutive years of Break-in- Service. 29 The Employer will make a special restoration contribution to the Plan in order to restore any account balances hereunder. For purposes of Plan Section 5.6 and Code section 415(c) and (e), the repayment by the Participant and the restoration will not be treated as "annual additions." 22. Section 7.2(a) of the Plan is amended effective January 1, 1996 to read: Section 7.2. Investment of Accounts. (a) All Employer Contributions to the Trust and forfeitures shall be invested and reinvested by the Trustee in the Company Stock Fund. Participants shall have no right to direct investment of their Employer Contribution Accounts or, effective January 1, 1988, their Incentive Accounts, or, effective January 1, 1996, their Special Employer Contribution Accounts, except as set forth in Section 7.2(h). All Savings Accounts and Rollover Accounts, including W & B Plan Rollover Accounts, shall be invested and reinvested by the Trustee in accordance with Participant direction, as provided herein. There shall be at least two investment funds for the Participants to choose between. One such investment fund shall be the Company Stock Fund. However, the Company Stock Fund shall be unavailable for investment until the Registration Statement for the Plan, as filed with the Securities and Exchange Commission, becomes effective. The Committee may, from time to time and in its sole discretion, determine the number and type of any other investment fund(s) available for the Participants to choose among. 23. Section 7.2(h) of the Plan is amended effective January 1, 1996 to read: Section 7.2. Investment of Accounts. (h) Each Participant who is employed by an Employer at age sixty-two (62) may elect, on a one-time basis, at any time between age sixty-two (62) and age sixty-four (64), to change the investment of his Accounts, including his Employer Contribution Account and, effective January 1, 1996, his Special Employer Contribution Account, from the Company Stock Fund to any other investment fund chosen by the Committee pursuant to Section 7.2(a), effective the next following January 1 or July 1, by filing a written application therefor with the Committee at least 30 days prior to the effective date of such transfer. If such an election is made, future Employer Contributions and forfeitures allocable to such Participant's Accounts shall be invested in the fund he has chosen, rather than in the Company Stock Fund. 24. Section 10.1(c) of the Plan is amended effective January 1, 1996 to read: Section 10.1. Withdrawals from Accounts. (c) Employer Contribution Accounts, Special Employer Contribution Accounts, Incentive Accounts and Rollover Accounts. No in-service withdrawals shall be permitted from a Participant's Employer Contribution Account; Rollover Account; effective January 1, 1988, Incentive Account, and, effective January 1, 1996, Special Employer Contribution Account. 30 25. Section 13.1 of the Plan is amended effective January 1, 1996 to read: Section 13.1. Amendment of the Plan The Company may, without the consent of any other party, make from time to time any amendment or amendments to the Plan which do not operate retroactively to reduce or divest the then vested interest in any Employer Contribution Account or any Special Employer Contribution Account or to reduce or divest any benefit than payable hereunder unless all participants, Former Participants, and Beneficiaries then having Employer Contribution Accounts or Special Employer Contribution Accounts or benefit payments affected thereby shall consent to such amendment or amendments. Each such amendment shall be in writing, signed by a duly authorized officer of the Company and shall become effective as of the date specified therein. In addition, no such amendment shall (i) reduce the vested percentage of any Participant with respect to Employer contributions made either before or after the effective date of the amendment; (ii) eliminate or reduce an early retirement benefit or a retirement-type subsidy or eliminate an optional form of benefit with respect to benefits attributable to service before the amendment; or (iii) restrict the availability of an "alternative form of benefit" to a certain select group or classification of Participants or Beneficiaries which favor the "prohibited group," or restrict or deny a Participant through the withholding of consent or the exercise of discretion by some person or persons other than the Participant (and, where relevant, his Spouse) of an alternative form of benefit. For purposes of this Section 13.1, Plan provisions will be considered to favor the prohibited group if the group of Employees to whom the benefit is available does not satisfy either the 70% test of Code Section 410(b)(1)(A) or the nondiscriminatory classification test of Code Section 410(b)(1)(B). For purposes of this Section 13.1, an alternative form of benefit encompasses the different forms of benefit payment available under the Plan which provide that (a) a participant's benefits under the Plan may be paid in more than one form, or (b) payment of a particular form of benefits may commence at some time earlier or later than the normal date for the commencement of such benefit. 26. Section 13.4(a) of the Plan is amended effective January 1, 1996 to read: Section 13.4. Liquidation of Trust Fund Upon Termination. (a) Upon a complete or partial termination of the Plan with respect to any Employer, the Employer Contribution Accounts and the Special Employer Contribution Accounts of the Participants, Former Participants and Beneficiaries affected thereby shall become fully vested and nonforfeitable, and, subject to the restrictions of Section 13.4(b) below, the proportionate interests of such Participants, Former Participants and Beneficiaries in the Trust Assets, as determined by the Committee, shall be distributed as soon as practicable after provision is made for the expenses of administration, termination and liquidation. Distributions due to termination of the Plan will be made in accordance with the methods of distribution provided for in the Plan. 31 27. Section 13.5 of the Plan is amended as underlined effective January 1, 1996 to read: Section 13.5. Permanent Discontinuance of Contributions. Upon a permanent discontinuance of contributions with respect to any Employer, the Employer Contribution Accounts and the Special Employer Contribution Accounts shall become fully vested and nonforfeitable and, unless such Employer provides by appropriate resolution that the Plan and Trust will continue for the purpose of holding, investing, and distributing Trust Assets pursuant to other provisions of the Plan and Trust Agreement, the proportionate interest of the Participants, Former Participants and Beneficiaries of such Employer in the Trust Assets, as determined by the Committee, shall be distributed (subject to the restrictions of Section 13.4(b)) as soon as practicable after provision is made for the expenses of administration, termination and liquidation. 28. Section 15.2(a) is amended effective January 1, 1996 to read: Section 15.2. Top-Heavy Plan Status/Super Top-Heavy Plan Status. (a) Aggregate Account means, as of the Determination Date, the sum of: (i) the account balances of the Participant Contribution Account, Employer Contribution Account and Special Employer Contribution Account, as of the most recent Valuation Date occurring within a twelve (12) month period ending on the Determination Date; (ii) the contributions that would be allocated as of a date not later than the Determination Date, even though those amounts are not yet made or required to be made; (iii) any plan distributions made during the Determination Period (However, in the case of distributions made after the Valuation Date and prior to the Determination Date, such distributions are not included as distributions for Top- Heavy purposes to the extent that the distributions are already included in the Participant's Aggregate Account balance as of the Valuation Date.); and (iv) any Employee contributions, whether voluntary or mandatory (However, amounts attributable to Participant Deductible Voluntary Contributions shall not be considered to be a part of the Participant's Aggregate Account balance.). (v) Regarding unrelated rollovers and plan-to-plan transfers (those which are (A) initiated by the Employee and (B) made from a plan maintained by one employer to a plan maintained by another employer), if this Plan provides for rollovers or plan-to-plan transfers, an unrelated rollover or plan-to-plan transfer shall be considered as a distribution for purposes of this Section. If this Plan is the plan accepting an unrelated rollover or plan-to-plan transfer, an unrelated rollover or 32 plan-to-plan transfer accepted after December 31, 1983 shall not be considered as part of the Participant's Aggregate Account balance. However, unrelated rollovers or plan-to- plan transfers accepted prior to January 1, 1984 shall be considered as part of the Participant's Aggregate Account balance. (vi) Regarding related rollovers and plan-to-plan transfers (those either (A) not initiated by the Employee or (B) made to a plan maintained by the same Employer), if this Plan provides for rollovers or plan-to-plan transfers, a related rollover or plan- to-plan transfer shall be considered as a distribution for purposes of this Section. If this Plan is the plan accepting a related rollover or plan-to-plan transfer, a related rollover or plan-to-plan transfer shall be considered as part of the Participant's Aggregate Account balance, irrespective of the date on which the related rollover or plan-to-plan transfer is accepted. IN WITNESS WHEREOF, FROZEN FOOD EXPRESS INDUSTRIES, INC. has caused this Sixth Amendment to be executed by its duly appointed officers on this 31st day of December, 1996. FROZEN FOOD EXPRESS INDUSTRIES, INC. By: /s/ S. M. Stubbs, Jr. --------------------- President ATTEST: /s/ Leonard W. Bartholomew - -------------------------- Secretary 33 EX-21.1 4 SUBSIDIARIES OF FROZEN FOOD EXPRESS INDUSTRIES, INC.
Jurisdiction of Name of Subsidiary Incorporation - ----------------------------------- --------------- FFE Transportation Services, Inc. Delaware W & B Refrigeration Service Company Delaware Conwell Corporation Delaware Lisa Motor Lines, Inc. Delaware Compressors Plus, Inc. * Texas Compressors Plus, Inc. * Delaware FFE. Inc. Texas Conwell Cartage, Inc. * Texas Frozen Food Express, Inc. Texas Middleton Transportation Company * Texas Each active subsidiary does business under its corporate name. * Inactive
EX-27 5
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEETS OF FROZEN FOOD EXPRESS INDUSTRIES, INC. AND SUBSIDIARIES AS OF DECEMBER 31, 1996, AND THE CONSOLIDATED STATEMENTS OF INCOME, CASH FLOWS AND STOCKHOLDERS' EQUITY FOR THE YEAR ENDED DECMEBER 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 YEAR DEC-31-1996 DEC-31-1996 6,670 0 41,854 2,390 8,440 65,486 97,367 45,487 129,554 31,324 0 0 0 25,921 58,032 129,554 23,474 311,428 0 296,283 3,370 1,434 3,370 11,775 3,242 8,533 0 0 0 8,533 .52 .52
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