<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by Registrant: [X]
Filed by a Party other than the Registrant: [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Materials Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
FFP Marketing Company, Inc.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11.
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
FFP Marketing Company, Inc.
2801 Glenda Avenue
Fort Worth, TX 76117
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON AUGUST 3, 2000
TO OUR SHAREHOLDERS:
On behalf of the Board of Directors, you are cordially invited to attend
the Annual Meeting of Shareholders of FFP Marketing Company, Inc. (the
"Company") to be held at the Company's offices, 2801 Glenda Avenue, Fort Worth,
Texas, at 10:00 a.m. on August 3, 2000 for the following purposes:
1. To elect three directors to hold office until the Annual Meeting of
Shareholders to be held in 2003, or until their successors are duly elected
and qualified.
2. To approve the Company's Stock Option Plan, as described in the attached
Proxy Statement.
3. To act upon any and all other business properly presented at the meeting.
Only stockholders of record at the close of business on July 3, 2000 are
entitled to notice of, and to vote at, this annual meeting. The stock transfer
books will not be closed. A list of shareholders entitled to vote at the annual
meeting will be available for examination at the offices of the Company for ten
days prior to the annual meeting.
You are cordially invited to attend the annual meeting. Whether or not you
expect to attend the annual meeting in person, however, we urge you to mark,
sign, date, and mail the enclosed form of proxy promptly so that your shares of
common stock may be represented and voted according to your wishes and in order
that the presence of a quorum may be assured at the annual meeting. Your proxy
will be returned to you if you are present at the annual meeting and request its
return in the manner provided for revocation of proxies on the initial page of
the enclosed proxy statement.
By Order of the Board of Directors,
CRAIG T. SCOTT
Secretary
Fort Worth, Texas
July 10, 2000
<PAGE>
FFP Marketing Company, Inc.
2801 Glenda Avenue
Fort Worth, Texas 76117
______________________________
PROXY STATEMENT
FOR
2000 ANNUAL MEETING OF SHAREHOLDERS
ON
AUGUST 3, 2000
______________________________
SOLICITATION AND REVOCABILITY OF PROXIES
The enclosed form of proxy is solicited by the Board of Directors of FFP
Marketing Company, Inc. (the "Company"). Your proxy will be used at the Annual
Meeting of Shareholders to be held at the time and place and for the purposes in
the accompanying Notice of Annual Meeting of Shareholders. When proxies in the
accompanying form are properly executed and received, the shares represented by
the proxies will be voted at the annual meeting according to the directions
noted on the proxy. If no direction is indicated, those shares will be voted
for the election of directors and the approval of the FFP Marketing Company,
---
Inc. Stock Option Plan, adopted by the Board of Directors on August 6, 1999 (the
"Stock Option Plan"), and in the discretion of the named proxies with respect to
any other matter that may come before the annual meeting.
Our offices are located at 2801 Glenda Avenue, Fort Worth, Texas 76117,
which is also our mailing address.
Management does not intend to present any business at the annual meeting
for a vote other than the matters in the notice and has no information that
others will do so. If other matters requiring a vote of the shareholders are
properly presented at the annual meeting, it is the intention of the persons
named in the accompanying form of proxy to vote the shares represented by the
proxies held by them according to their judgment on those matters.
This proxy statement and accompanying form of proxy are being mailed on or
about July 10, 2000. Our annual report for our fiscal year ended December 26,
1999 is enclosed but does not form any part of the materials for solicitation of
proxies.
You may revoke your proxy at any time prior to the voting of the proxy by
(1) giving written notice of revocation to the Secretary of the Company at our
principal executive offices; (2) executing and delivering a later-dated proxy;
or (3) by attending the annual meeting and voting in person. However, no
revocation shall be effective until we receive your revocation at or before the
annual meeting. A revocation will not affect a vote on any matters taken prior
to its receipt. Merely attending the annual meeting will not of itself revoke
your proxy.
Our directors, officers, and regular employees may solicit the return of
proxies, either by mail, telephone, telegraph, or through personal contact. The
directors, officers, and employees will not receive additional compensation for
their solicitation efforts, but will be reimbursed for out-of-pocket expenses.
Brokerage houses and other custodians, nominees, and fiduciaries will, in
connection with shares of common stock registered in their names, be requested
to forward solicitation material to the beneficial owners of those shares of
common stock.
We will pay the cost of preparing, printing, assembling, and mailing the
annual report, the notice, this proxy statement, and the enclosed form of proxy,
as well as the cost of forwarding solicitation materials to the beneficial
owners of shares of common stock and other costs of solicitation.
1
<PAGE>
VOTING SECURITIES OUTSTANDING; QUORUM
The record date for determining the shareholders entitled to notice of, and
vote at, the annual meeting was the close of business on July 3, 2000 (the
"Record Date"). At the close of business on the Record Date there were 3,818,747
shares of common stock issued and outstanding, each of which is entitled to one
vote on all matters properly presented at the annual meeting. Shareholders have
no cumulative voting rights in the election of directors.
The presence in person or by proxy of the holders of a majority of the
issued and outstanding shares of common stock entitled to vote on the record
date is necessary to constitute a quorum at the annual meeting. Abstentions and
broker non-votes are treated as present at the annual meeting and are counted in
determining a quorum. If a quorum is not present, the shareholders entitled to
vote who are present in person or represented by proxy at the annual meeting
have the power to adjourn the meeting from time to time without notice until a
quorum is present or represented. In that case, it is the intention of the
persons named in the accompanying form of proxy to vote the shares represented
by the proxies held by them for an adjournment. At any adjourned meeting at
which a quorum is present, any business may be transacted that might have been
transacted at the annual meeting as originally notified.
Assuming the presence of a quorum, the affirmative vote of the holders of a
plurality of the shares of common stock represented and voting at the annual
meeting is required for the election of directors, and the affirmative vote of
the holders of a majority of the shares represented at the meeting is required
for the approval of the Stock Option Plan and the transaction of any and all
other business properly presented at the annual meeting or any adjournment.
Broker non-votes (i.e., the submission of a proxy by a broker or nominee
specifically indicating the lack of discretionary authority to vote on the
matter) and abstentions will have no effect on the outcome of the election of
directors or approval of the Stock Option Plan. With regard to the election of
directors, votes may be cast in favor of or withheld from each nominee. Votes
that are withheld will be excluded entirely from the vote and will have no
effect.
As of the Record Date, certain directors and executive officers of the
Company and certain members of their families beneficially owned approximately
1,782,000 shares of the Company's common stock, not including shares of common
stock issuable upon exercise of outstanding stock options, constituting
approximately 46.7% of the shares of common stock outstanding. It is expected
that such directors and executive officers and certain members of their families
will vote or direct the vote of all of those shares of common stock in favor of
the proposals described in this proxy statement. Nonetheless, the approval of
the proposals is not assured. See "Security Ownership of Certain Beneficial
Owners and Management."
ELECTION OF DIRECTORS
(Proposal 1)
Nominees for Director
---------------------
The Board of Directors has nominated three persons to be elected to the
Board of Directors at the annual meeting: Robert J. Byrnes and Michael
Triantafellou, who are currently directors, and Tom M. Coleman, who is not
currently a director, will serve until the annual meeting to be held in 2003 or
until their successors are elected. The five remaining Directors will continue
in office for the terms specified below. The persons named in the enclosed
proxy intend to vote for the election of the three nominees listed below, unless
instructions to the contrary are given in the proxy. The nominees have
indicated that they are able and willing to serve as directors. However, if
some unexpected occurrence should require the substitution of some other person
for a nominee, the person voting the proxies will vote for a nominee that the
Company may select.
2
<PAGE>
The following table lists the name and age of the three nominees, the
annual meeting at which their respective current terms of office will expire,
and the year in which each director was first elected as a director of the
Company:
<TABLE>
<CAPTION>
Director
Nominee Directors Age Term Expires Since
----------------- --- ------------ --------
<S> <C> <C> <C>
Robert J. Byrnes 59 Annual meeting of shareholders to be held in 2000 1997
Michael Triantafellou 46 Annual meeting of shareholders to be held in 2000 1997
Tom M. Coleman 56 Newly nominated to be a director --
</TABLE>
Business History of Nominees
Robert J. Byrnes has been the President of the Company and the general
partner of its predecessor since April 1989 and has been a director of the
Company and the general partner of its predecessor since May 1987. From May
1987 to April 1989, Mr. Byrnes served as Vice President - Truck Stop Operations
for the general partner of the Company's predecessor. Since 1985, Mr. Byrnes
has been the President of Swifty Distributors, Inc., one of the companies from
which the Company acquired its initial retail outlets. From 1975 through 1984,
Mr. Byrnes was President of Independent Enterprises, Inc., which owned and
operated convenience stores and a truck stop. During that period, he was also
President of Enterprise Distributing, Inc., a wholesaler of motor fuels. Prior
to 1975, Mr. Byrnes was President of Foremost Petroleum Corporation, which is
now a subsidiary of Citgo Petroleum Corporation, and was a distribution manager
for ARCO Oil & Gas Company. He is currently a director of Plaid Pantries, Inc.,
an operator of convenience stores headquartered in Beaverton, Oregon.
Michael Triantafellou has been Vice President - Retail Operations and a
director of the Company and the general partner of its predecessor since
February 1997. He had served as Director of Truck Stops and Food Service
Operations for the general partner of the Company's predecessor since January
1994. Mr. Triantafellou has been engaged in the truck stop and food service
industries since 1976, having held various middle and upper management positions
in the truck stop businesses of Truckstops of America from 1975 to 1980; Bar-B
Management from 1980 to 1985; Greyhound-Dial Corp. from 1985 to 1993 and Knox
Oil of Texas from 1993 to 1994. Mr. Triantafellou is a graduate of the Wharton
School of the University of Pennsylvania.
Tom M. Coleman has been nominated to become a new member of the Board of
Directors. From 1988 to 1999, Mr. Coleman served as the President of E-Z Mart
Stores, Inc., a 500-store convenience store chain based in Texarkana, Texas. He
was employed by E-Z Mart for 21 years. Mr. Coleman previously worked for APCO
Oil Company (now Total Petroleum). He has been involved in investments and
consulting since leaving E-Z Mart in August 1999. Mr. Coleman is currently a
director and part owner of Fowler Equipment Company, which is engaged in
environmental compliance, gasoline, underground storage tanks and refrigeration
activities. He is also a director of the Red River Redevelopment Corporation, an
industrial park developer in Bowie County, Texas.
The Company's Board of Directors unanimously recommends a vote "FOR" each
of the three nominees named above. Proxies executed and returned will be so
voted unless contrary instructions are indicated on the proxy.
Continuing Directors
--------------------
The following table lists the name and age of the five directors whose
terms of office will continue after the annual meeting, the annual meeting at
which their respective terms of office will expire, and the year in which each
person was first elected as a director of the Company:
3
<PAGE>
<TABLE>
<CAPTION>
Director
Continuing Directors Age Term Expires Since
-------------------- --- ------------ ----------
<S> <C> <C> <C>
E. Michael Gregory 48 Annual meeting of shareholders to be held in 2001 1997
John H. Harvison 66 Annual meeting of shareholders to be held in 2001 1997
Garland R. McDonald 62 Annual meeting of shareholders to be held in 2001 1997
J.D. St. Clair 65 Annual meeting of shareholders to be held in 2002 1997
John D. Harvison 43 Annual meeting of shareholders to be held in 2002 1997
</TABLE>
Business History of Continuing Directors
E. Michael Gregory has been a director of the Company and the general
partner of its predecessor since September 1995. Mr. Gregory is the founder and
President of Gregory Consulting, Inc., an engineering and consulting firm that
is involved in the development of products related to the distribution and
storage of petroleum products and of computer software for a variety of
purposes, including work on such products and software for the Company. Prior
to founding Gregory Consulting in 1988, Mr. Gregory was the Chief Electronic
Engineer for Tidel Systems, a division of The Southland Corporation, where he
was responsible for new product concept development and was involved in projects
involving the monitoring of fuel levels in underground storage tanks. He is a
Registered Professional Engineer in Texas.
John D. Harvison has served as a director of the Company and the general
partner of the Company's predecessor since April 1995. Mr. Harvison has been
Vice President of Dynamic Production, Inc., an independent oil and gas
exploration and production company since 1977. He previously served as
Operations Manager for Dynamic from 1977 to 1987. He also serves as an officer
of various other companies that are affiliated with Dynamic that are involved in
real estate management and various other investment activities. Mr. Harvison is
the son of John H. Harvison, the Chairman of the Board of the Company.
John H. Harvison has been Chairman of the Board and Chief Executive Officer
of the Company and the general partner of its predecessor since the predecessor
began operations in May 1987. Mr. Harvison is a founder and an executive
officer of each of the companies from which the Company's initial base of retail
outlets was acquired and has been active in the retail gasoline business since
1958 and in the convenience store business since 1973. In addition, he has been
involved in oil and gas exploration and production, the ownership and management
of an oil refinery and other personal investments. Mr. Harvison is also a
director of FFP Real Estate Trust, the general partner of FFP Partners, L.P.
("FFP Partners"), the Company's predecessor. Mr. Harvison is the father of John
D. Harvison, who is also a director of the Company.
Garland R. McDonald has been employed by the Company to oversee and direct
a variety of special projects since 1990. He has served as a director of the
Company and the general partner of its predecessor since January 1990 and had
previously served as a director of the general partner of the Company's
predecessor from May 1987 through May 1989. He also served as a Vice President
of the general partner of the Company's predecessor from May 1987 to October
1987. Mr. McDonald is a founder and the Chief Executive Officer of Hi-Lo
Distributors, Inc., and Gas-Go, Inc., two of the companies from which the
Company initially acquired its retail outlets. He has been actively involved in
the convenience store and retail gasoline businesses since 1967.
J.D. St. Clair has been Vice President - Fuel Supply and Distribution and a
director of the Company and the general partner of its predecessor since May
1987. Mr. St. Clair is a founder and an executive officer of several of the
companies from which the Company acquired its initial retail outlets. He has
been involved in the retail gasoline marketing and convenience store business
since 1971. Mr. St. Clair performed operations research and system analysis for
Bell Helicopter, Inc., from 1967 to 1971, for NASA from 1962 to 1967 and for
Western Electric Company from 1957 to 1962. Mr. St. Clair is also a director of
FFP Real Estate Trust, the general partner of FFP Partners.
4
<PAGE>
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors held four meetings during its 1999 fiscal year. All
directors during that time attended at least 75% of the total number of meetings
of the Board of Directors and the committees of which they were members.
The Audit Committee was composed of John W. Hughes in 1999. This
committee recommends to the Board of Directors the accounting firm to be
employed as the Company's independent auditors and consults with, and reviews
the report of, the Company's independent auditors and the Company's financial
staff. The Audit Committee held two meetings in 1999.
The Compensation Committee is composed of John H. Harvison, Robert F.
Byrnes, and John W. Hughes. This committee makes recommendations to the Board
of Directors regarding the compensation to be paid to the Company's officers.
The Compensation Committee held no meetings in 1999.
The Company does not have a standing nominating committee.
5
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table gives information regarding the beneficial ownership of
the Company's common stock as of the Record Date by (1) each person known by the
Company to own beneficially five percent or more of the outstanding common
stock; (2) each of the Company's directors and nominees for director; (3) each
of the executive officers named in the Summary Compensation Table below; and (4)
all directors and executive officers of the Company as a group. Unless
otherwise noted, the address of each person listed below is 2801 Glenda Avenue,
Fort Worth, Texas 76117.
<TABLE>
<CAPTION>
Shares Beneficially
Owned
-------------------
Percent
Name and Address of Beneficial Owner Number(1) Of Class (2)
--------- ------------
<S> <C> <C>
John H. Harvison.......................................... 1,585,153 (3) 41.1%
John D. Harvison.......................................... 1,570,153 (4) 40.9%
Randall W. Harvison....................................... 1,469,943 (5) 38.5%
7HBF, Ltd................................................. 699,333 (6) 18.3%
HBF Financial, Ltd........................................ 738,443 (7) 19.3%
Garland R. McDonald....................................... 332,877 (8) 8.7%
Robert J. Byrnes.......................................... 127,043 (9) 3.3%
J. D. St. Clair........................................... 193,627 (10) 5.0%
Michael Triantafellou..................................... 13,334 (11) *
John W. Hughes............................................ 0 -
E. Michael Gregory........................................ 25,000 (12) *
Tom M. Coleman............................................ 0 -
Craig T. Scott............................................ 0 -
All directors and executive officers as a group 46.7%
(10 persons)......................................... 1,781,987
</TABLE>
___________________
* Represents less than one percent of the Company's outstanding common stock.
(1) Beneficial ownership as reported in the above table has been determined
according to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended. The individuals and entities named in the table have sole voting
and investment power with respect to all shares shown as beneficially owned
by them, except as noted below and subject to community property laws.
(2) Percentages indicated are based on 3,818,747 shares of common stock issued
and outstanding on the Record Date, except for the percentages of those
parties that are based on presently exercisable options as indicated in the
following footnotes. In the case of parties holding presently exercisable
options, the percentage ownership is calculated on the assumption that the
shares underlying those options are presently held or purchasable within
the next 60 days are outstanding for the purpose of computing the
percentage ownership of that individual but not for the purpose of
computing the percentage ownership of any other person or group shown in
the table.
(3) Includes 40,000 shares of common stock issuable upon the exercise of
options within 60 days; 699,333 shares of common stock beneficially owned
by 7HBF, Ltd., a Texas limited partnership of which John H. Harvison and
members of his family are partners; 738,443 shares of common stock
beneficially owned by HBF Financial, Ltd., a Texas limited liability
company that is 98%-owned by trusts for the benefit of the children of John
H. Harvison and 2%-owned by one of his sisters and 32,167 shares of common
stock owned by a company of which John H. Harvison is an officer and
director. 7HBF, Ltd., may be deemed to share beneficial ownership of
144,417 shares of common stock with Garland R. McDonald; 49,750 shares of
common stock with Garland R. McDonald and Barbara J. Smith, who is John H.
Harvison's sister; 83,417 shares of common stock with J. D. St. Clair and
16,833 shares of common stock with Robert J. Byrnes. The beneficial
ownership of 175,000 shares of common stock included in the foregoing
shares owned by 7HBF, Ltd. is in dispute based on the prior ownership of
Economy Oil Company, the record holder of the shares. Following a trial
court decision in favor of Economy Oil, the case is now on appeal to the
Second Court of Appeals in the State of Texas.
Several affiliated companies owned by John H. Harvison, members of his
family and certain other officers of the Company hold sole voting and
investment power with respect to 928,110 shares of common stock of the
Company, which have been pledged as security to Southwest Securities
Incorporated in connection with margin loans, the current balances of which
total approximately $690,000. The loan documents
6
<PAGE>
prohibit such companies from selling, transferring or encumbering those
shares without the consent of Southwest Securities, other than those shares
that may be sold to satisfy the loan and other obligations to Southwest
Securities. Southwest Securities also holds the right to sell the shares if
minimum requirements of the margin account are not maintained.
(4) Includes 25,000 shares of common stock issuable upon the exercise of
options within 60 days; 699,333 shares of common stock beneficially owned
by 7HBF, Ltd.; 738,443 shares of common stock beneficially owned by HBF
Financial, Ltd.; 32,167 shares of common stock owned by a company, one-
third of which is owned by trusts for the benefit of John D. Harvison and
his siblings and 75,210 shares of common stock owned by a company of which
John D. Harvison is a director.
(5) Includes 699,333 shares of common stock beneficially owned by 7HBF, Ltd. of
which Randall W. Harvison and members of his family are partners; 738,443
shares of common stock beneficially owned by HBF Financial, Ltd., which is
98%-owned by trusts for the benefit of the siblings of Randall W. Harvison,
and 32,167 shares of common stock owned by a company, one-third of which is
owned by trusts for the benefit of Randall W. Harvison and his siblings.
(6) Includes 699,333 shares of common stock owned by nine companies that are
owned or controlled by 7HBF, Ltd.
(7) Includes 738,443 shares of common stock owned by a company that is owned by
HBF Financial, Ltd. In addition, HBF Financial, Ltd. owns 31% of the
general partner of 7HBF, Ltd.
(8) Includes 25,000 shares of common stock issuable upon the exercise of
options within 60 days; 194,167 shares of common stock held by two
companies of which Mr. McDonald is a director, executive officer, and a 50%
owner and 38,500 shares of common stock held by an Individual Retirement
Account for the benefit of Mr. McDonald. Mr. McDonald may be deemed to
share beneficial ownership of 144,417 shares of common stock with 7HBF,
Ltd. and of 49,750 shares of common stock with 7HBF, Ltd. and Barbara J.
Smith. The address for Mr. McDonald is 10865 Ferry Oak Road, Oil City,
Louisiana 71061.
(9) Includes 35,000 shares of common stock issuable upon the exercise of
options within 60 days and 16,833 shares of common stock held by a company
of which Mr. Byrnes is a director, executive officer, and 50% owner. Mr.
Byrnes may be deemed to share beneficial ownership of 16,833 shares of
common stock with 7HBF Financial, Ltd.
(10) Includes 30,000 shares of common stock issuable upon the exercise of
options within 60 days; 5,000 shares of common stock held directly and
83,417 shares of common stock held by a company of which Mr. St. Clair is a
director, executive officer and a one-third owner. Mr. St. Clair may be
deemed to share beneficial ownership of the 83,417 shares of common stock
with 7HBF Financial, Ltd.
(11) Includes 13,334 shares of common stock issuable upon the exercise of
options within 60 days.
(12) Includes 25,000 shares of common stock issuable upon the exercise of
options within 60 days.
7
<PAGE>
EXECUTIVE OFFICER
The following information contains the name, age, current position, term of
office, and background of the Company's executive officer who is not a director
of the Company.
Craig T. Scott, age 53, has served as Chief Financial Officer, Vice-
President - Finance, General Counsel, Secretary, and Treasurer of the Company
since October 1998. He also serves in a similar capacity for FFP Real Estate
Trust, the general partner of FFP Partners. From October 1996 until September
1998, Mr. Scott engaged in private law practice in Dallas and McKinney, Texas.
He was previously employed by Box Energy Corporation from 1981 until October
1996 and served as its Executive Vice President from July 1993 until October
1996. Mr. Scott previously practiced law for seven years with large law firms
in Dallas, Texas, practiced law in McKinney, Texas for four years and was the
president and co-owner of an oil and gas exploration company for two years. He
was previously employed for six years by Arthur Andersen & Co., an international
public accounting firm. Mr. Scott received a BBA degree from the University of
Texas in 1968, a JD degree from the University of Texas School of Law in 1972,
and a Masters of Law degree from the Southern Methodist University School of Law
in 1980. He is a member of the American Institute of Certified Public
Accountants, the Texas Society of CPAs, and the State Bar of Texas.
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid by the Company and its
predecessor for the 1999, 1998, and 1997 fiscal years to the Chief Executive
Officer and each of up to four other most highly compensated officers whose
salary and bonus in 1999 exceeded $100,000 (the "Named Executive Officers").
The Company did not begin operations until December 29, 1997, and did not pay
any salaries prior to 1998. Persons previously employed by FFP Partners and its
general partner became employees of the Company on that date following the
December 1997 restructuring of FFP Partners. The information presented in the
table below for 1997 reflects the compensation paid to the Named Executive
Officers by FFP Partners.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
--------------------------- --------------
Securities
Underlying
Options/SARs
Name and Principal Position Year Salary ($) Bonus ($) (# shares) (1)
------------------------------------------ ---- ---------- --------- --------------
<S> <C> <C> <C> <C>
John H. Harvison
Chairman and Chief 1999 $135,000 $ 2,546 $ 0
Executive Officer 1998 135,000 0 0
1997 135,000 0 40,000
Robert J. Byrnes 0
President and Chief 1999 135,000 0 35,000
Operating Officer 1998 135,000 0 0
1997 135,000 0
Michael Triantafellou
Vice President - 1999 90,000 25,000 0
Retail Operations 1998 90,000 25,000 20,000
1997 87,172 0 0
Craig T. Scott
Vice President- 1999 125,000 22,000 30,000
Finance, General 1998 33,654 0 0
Counsel, Secretary, 1997 0 0 0
and Treasurer (2)
</TABLE>
________________
(1) No options were granted to Named Executive Officers in 1998. Non-qualified
unit options were granted by FFP Partners pursuant to its Nonqualified Unit
Option Plan to Mr. Harvison (40,000 units granted in 1992), to Mr. Byrnes
(35,000 units granted in 1992) and to Mr. Triantafellou (6,666 in 1994 and
20,000 in 1997). The exercise price of the unit options under the plan
equaled the fair market value of the underlying units on the date of grant.
Upon the restructuring of FFP Partners in December 1997, the unit options
were divided into separate options to purchase a like number of units of
FFP Partners and shares of the Company's common stock. The exercise price
for
8
<PAGE>
the then existing unit options of FFP Partners was divided between the two
entities' options in proportion to the closing prices on the American Stock
Exchange of the Class A Units of FFP Partners and shares of the common
stock of the Company. Qualified stock options to purchase 30,000 shares of
the Company were granted to Mr. Scott on August 6, 1999, subject to
approval of the Stock Option Plan by the shareholders within one year of
the date of the grant. The options vest one-third on each of the first
three anniversary dates of the grant. In the event of a change of control
of the Company, any unexercisable portion of the options will become
immediately exercisable.
(2) Mr. Scott became an employee of the Company on September 16, 1998.
Stock Options Granted in 1999
The following table discloses certain information regarding stock options
granted to a Named Executive Officer during 1999. The Company has not granted
stock appreciation rights, or SAR's.
<TABLE>
<CAPTION>
Individual Grants Potential Realizable Value
---------------------------------------------------------------------
Number of % of Total at Assumed Annual Rates
Securities Options of Stock Price Appreciation
Underlying Granted to Exercise for Option Term (2)
-----------------------------------
Options Employees Price Expiration
Name Granted (1) in 1999 Per Share Date at 5% at 10%
---------------- ---------------- ---------------- --------------- ------------- ----------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Craig T. Scott 30,000 100% $2.938 (3) 8/6/09 $82,431 $167,472
</TABLE>
________________
(1) Options vest one-third per year over a three-year period, or earlier upon a
change in control. Options expire on the earlier of 10 years from the date
of grant or within a specified period following termination of the
optionee's employment with the Company.
(2) Future value assumes 5% and 10% appreciation per year over the 10-year
option period, as mandated by the rules and regulations of the Securities
and Exchange Commission and does not represent the Company's estimate or
projection of the future value of the Company's common stock. The actual
value realized may be greater than or lesser than the potential realizable
values set forth in the above table.
(3) Options were granted on August 6, 1999 and are subject to approval of the
Stock Option Plan within one year of that date.
9
<PAGE>
Aggregated Stock Options Exercised in 1999 and Stock Option Values as of
December 26, 1999
The following table discloses options to purchase common stock of the
Company held by each of the Named Executive Officers and the potential
realizable values for the options at the end of fiscal year 1999. None of the
Named Executive Officers exercised any options during fiscal year 1999. No SAR's
were exercised during 1999 and none were outstanding at year end.
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at Fiscal In-the-Money Options
Year End (#)(1) at Fiscal Year End ($)(1)(2)
--------------- ----------------------------
Exercisable/ Exercisable/
Name Unexercisable Unexercisable
---- ------------- -------------
<S> <C> <C>
John H. Harvison 40,000 / 0 $0/0
Robert J. Byrnes 35,000 / 0 0/0
Michael Triantafellou 13,334 / 0 0/0
Craig T. Scott (3) 0 / 30,000 0/0
</TABLE>
_____________
(1) "Exercisable" reflects options that were both vested and exerciseable as of
December 26, 1999 and "Unexercisable" reflects options that have not vested
as of December 26, 1999.
(2) Value is determined by subtracting the person's exercise price from the
fair market value of our common stock at fiscal year end on December 26,
1999 ($2.25), based upon the closing sales price of the Company's common
stock on the American Stock Exchange on such date.
(3) Options granted to Craig T. Scott on August 6, 1999, are contingent upon
the approval of the Stock Option Plan by the shareholders within one year
of the grant date.
Compensation of Directors
Each director who is not an officer or employee of the Company receives an
annual retainer of $4,000 plus $1,000 for each meeting of the Board of
Directors, or committee meeting not held in conjunction with a meeting of the
Board of Directors, which he attends and $500 for each telephone meeting in
which he participates. Each director is also reimbursed for expenses related to
attending Board of Directors meetings.
Directors who are officers or employees of the Company receive no
additional compensation for attending Board of Directors or committee meetings.
Employment Agreements
The Company has employment agreements with each executive officer providing
that, if the employment of any such officer is terminated for any reason, other
than the commission of an act of fraud or dishonesty with respect to the Company
or for the intentional neglect or nonperformance of his duties, the officer
shall receive an amount equal to twice his then current annual salary plus a
continuation of certain benefits provided by the Company for a period of two
years.
Compensation Committee Report on Executive Compensation
During 1999, the Compensation Committee consisted of John H. Harvison (who
served as chairman), Robert J. Byrnes and John W. Hughes. The Company's primary
objective is to maximize the value of its shares over time. Accomplishing this
objective requires developing and marketing products and services that provide
cost effective solutions to our customers' needs and desires. The overall goal
of the Compensation Committee is to develop
10
<PAGE>
compensation practices that will allow the Company to attract and retain the
people needed to meet the Company's objectives.
The Compensation Committee is responsible for establishing the level of
compensation of the executive officers of the Company. The compensation review
and evaluation is conducted by reviewing the overall performance of each
individual and comparing the overall performance of the Company with others in
its industry, as well as considering general economic and competitive
conditions. The financial performance of the Company on a yearly basis and as
compared with the Company's peer group (see "Comparative Total Returns," below)
and the industry as a whole, the Company's stock price and market share, and the
individual performance of each of the executive officers, are among the factors
reviewed. No particular weight is assigned to one factor over another.
The Company's fundamental policy is to offer the Company's executive
officers competitive compensation opportunities based upon their personal
performance, the financial performance of the Company and their contribution to
that performance. It is the Company's objective to make a substantial portion
of each officer's compensation contingent upon the Company's performances as
well as upon his or her own level of performance. Accordingly, each executive
officer's compensation package is comprised of three elements: (1) base salary,
which reflects individual performance and is designed primarily to be
competitive with salary levels of similarly sized companies; (2) annual variable
performance awards payable in cash and tied to the Company's achievement of
performance goals; and (3) long-term stock-based incentive awards, which
strengthen the mutuality of interests between the executive officers and the
Company's shareholders. Generally, as an officer's level of responsibility
increases, a greater portion of his or her total compensation will be dependent
upon the Company's performance and stock price appreciation, rather than the
base salary.
The Compensation Committee has in the past, and may continue in the future,
to approve salaries above the agreed-upon base salaries based upon the factors
listed above. Bonuses for the Company's executive officers are determined by
the Compensation Committee on a case-by-case basis.
During 1999, all of the Company's executive officers, received salaries
equal to their 1998 salary except Craig T. Scott, who first became an employee
in 1998. In comparison to the salary levels of the officers of companies within
the Company's peer group, the salaries, bonuses, and other forms of compensation
of the Company's officers are below average. Mr. Triantafellou received a
$25,000 bonus in 1999 in consideration of his job performance in supervising the
Company's retail operations and in response to the competitive job market. Mr.
Scott received a $22,000 bonus in 1999 in consideration of his job performance
in managing the Company's financial affairs and legal matters and in response to
the competitive job market.
In 1999, the Compensation Committee took note of the successful completion
of the acquisition of 25 additional convenience stores and truck stops, the
improvement in liquidity of the Company during the year, the successful
refinancing of bank debt in June 1999, obtaining a new line of credit in
December 1999 and the improvement in total revenues of the Company and terminal
operations in 1999. As with other employees who reached certain tenure levels,
Mr. Harvison received a bonus in 1999 of $2,596 in recognition of his 40 years
of service for the Company and its predecessors. The Compensation Committee
also noted the fact that the Chief Executive Officer has not otherwise received
a salary increase or bonus in several years. However, the Compensation
Committee did not recommend a salary increase, additional bonus or other
increase in his compensation in 1999.
MEMBERS OF THE COMPENSATION COMMITTEE
John H. Harvison
Robert J. Byrnes
John W. Hughes
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
See "Certain Relationships and Related Transactions," below, for
information regarding disclosures pursuant to Item 404 of Commission Regulation
S-K. John H. Harvison, John D. Harvison, Robert J. Byrnes, and J.D. St. Clair
each also served as executive officers, directors, and/or compensation committee
members of several affiliated corporations, in which others of these individuals
also serve in one or more of these capacities.
11
<PAGE>
COMPARATIVE TOTAL RETURNS
Performance Graph
The following performance graph shows the changes from the inception of
trading of the Company's common stock on January 14, 1997 to December 27, 1999
in the value of $100 invested in: (1) the Company's common stock; (2) the
Russell 2000 Index; and (3) the common stock of a peer group of issuers. The
issuers in the peer group are all publicly traded companies included in Standard
Industrial Classification "Retail-Convenience Stores," whose businesses, taken
as a whole, resemble the Company's activities. The issuers in the peer group
are: Casey's General Stores, Inc., Crown Central Petroleum Corporation, Dairy
Mart Convenience Stores, Inc., Getty Petroleum Marketing Inc., Marsh
Supermarkets, Inc. and Uni-Marts, Inc.
[GRAPH APPEARS HERE]
This graph above was plotted using the following data:
Cumulative Total Return
--------------------------------------------------------------------------------
1/14/98 12/98 12/99
FFP MARKETING COMPANY, INC. 100.00 248.00 100.00
PEER GROUP 100.00 77.00 61.04
RUSSELL 2000 100.00 99.00 95.21
12
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company leases buildings or land and buildings for some of its retail
outlets from FFP Partners. John H. Harvison, Chairman and Chief Executive
Officer of the Company, and Craig T. Scott, Vice President - Finance, Chief
Financial Officer, Secretary, Treasurer, and General Counsel of the Company,
hold similar positions with the general partner of FFP Partners. Furthermore,
companies owned directly or indirectly by Mr. Harvison and members of his
immediate family and/or certain other executive officers of the Company hold
corresponding ownership interests in FFP Partners or its subsidiaries.
The Company's leases on all but 14 of the properties owned by FFP Partners
were entered into in conjunction with the December 1997 restructuring of FFP
Partners, in which the non-real estate assets and businesses of FFP Partners
were transferred to the Company, while the real estate used in the retail
operations was retained by FFP Partners. The Company's leases on 14 properties
were entered into upon the acquisition of such properties by FFP Partners in
February 1999. Lease rates payable by the Company for locations owned by FFP
Partners were established based on knowledge of the properties by the management
of FFP Partners and the Company and their general experience in acting as lessor
and lessee for similar properties. Management of the Company believes that the
lease rates are comparable to leases that could be entered into with unrelated
third parties. The Company did not engage any third party advisors or refer to
any third party surveys or analyses of rental rates in making this
determination. The Company paid $2,952,000 in rent to FFP Partners during
fiscal year 1999. In addition, with respect to 14 properties acquired by FFP
Partners in February 1999, which are treated as capital leases under generally
accepted accounting principles, the Company paid $675,000 and $35,000 to FFP
Partners in fiscal year 1999 as interest expense and in reduction of capital
lease obligations, respectively. At year end 1999, the outstanding capital lease
obligation of the Company to FFP Partners for the 14 properties was $3,897,000.
As a condition to the Company's acquisition of store operations at those 14
properties, the Company was required to guarantee the acquisition indebtedness
of $9,550,000 incurred by FFP Partners in its purchase of those stores,
including land, building, equipment and inventory. At year end 1999, $9,327,000
remained outstanding on those loans of FFP Partners, which will be fully
amortized over a 15-year period. The Company's scheduled real estate lease
payments to FFP Partners equal or exceed the debt service costs of FFP Partners
during the term of the leases.
The Company leases land or land and buildings for some of its retail
outlets and some administrative and executive office facilities from various
entities directly or indirectly owned by John H. Harvison, John D. Harvison, and
members of their immediate families and Messrs. Byrnes, St. Clair, and McDonald.
Messrs. Harvison, Harvison, Byrnes, St. Clair and McDonald are officers and/or
directors of the Company. During fiscal year 1999, the Company paid $944,000 to
these entities with respect to these leases. The Company believes the leases
with these affiliates are on terms that are currently more favorable to the
Company than terms that could have been obtained from unaffiliated third parties
for similar properties.
The Company and FFP Partners are parties to a reimbursement agreement
pursuant to which FFP Partners reimburses the Company for all direct costs of
FFP Partners plus $200,000 for indirect overhead costs of FFP Partners. FFP
Partners paid $200,000 to the Company in fiscal year 1999 as the indirect
overhead cost reimbursement.
In February 1999, the Company purchased inventory and equipment from FFP
Partners at the 14 properties described above at a price of $2,692,000 and
executed a note payable to FFP Partners for that amount. This note, which was
payable in monthly installments with interest at the prime rate, was repaid in
full by the Company in October 1999.
At the beginning of fiscal year 1999, the Company held a promissory note
from FFP Partners with an unpaid balance of $14,201,000 and a maturity date in
November 2000. FFP Partners made monthly principal payments to the Company of
$95,000, plus accrued interest on the unpaid balance at a bank's prime rate,
until the debt was repaid in full in October 1999. At that time, the note
balance was $13,249,000, which was partially offset by the early repayment of
the note payable by the Company to FFP Partners discussed above, which had a
remaining balance at that time of $2,550,000.
13
<PAGE>
John H. Harvison owns 50% of Product Supply Services, Inc., which provides
consulting services and acts as an agent for the Company in connection with the
procurement of motor fuel for sale by the Company. Product Supply provides
these services to the Company under an agreement providing that the Company will
pay Product Supply $5,000 per month, supply it with office space and support
services such as telephone and clerical assistance, and pay its reasonable out-
of-pocket costs in providing the services. The agreement may be canceled either
by the Company or Product Supply upon 60 days' written notice. During fiscal
year 1999, the Company paid $68,000 to Product Supply for its services and out-
of-pocket costs.
E. Michael Gregory, a director of the Company, is the owner and president
of Gregory Consulting, Inc., which provides engineering, consulting, and other
similar services to the Company. During fiscal year 1999, the Company paid
Gregory Consulting $156,000 for those services.
The Company is not licensed to sell alcoholic beverages in the State of
Texas. Consequently, the Company has entered into agreements with Nu-Way
Beverage Company, a company wholly owned by John H. Harvison, under which Nu-Way
Beverage sells alcoholic beverages at the Company's Texas outlets. Under this
agreement, the Company receives rent and a management fee relative to the sale
of alcoholic beverages and loans funds to Nu-Way Beverage to pay for its
alcoholic beverage purchases. The Company receives interest on those funds at
1/2% above the prime rate charged by a major commercial bank, and the loan is
secured by the alcoholic beverage inventory located in the Company's Texas
outlets. During fiscal year 1999, the highest balance due under this loan was
$896,000 and the balance at the end of the fiscal year was $878,000. During
fiscal year 1999, Nu-Way Beverage sold $17,596,000 of alcoholic beverages at the
Company's Texas outlets. After deducting cost of sales and other expenses
related to these sales, including $3,036,000 of rent, management fees, and
interest paid to the Company, Nu-Way Beverage earned $176,000 in fiscal year
1999 from selling alcoholic beverages at the Company's Texas outlets.
The Company purchases goods and services, including automobiles, office
supplies, computer software and consulting services, and fuel supply consulting
and procurement services, from certain entities affiliated with John H.
Harvison, members of his immediate family and certain of their affiliates. The
Company paid $224,000 for these products and services in fiscal year 1999.
Management believes that these costs were substantially similar to those that
could be obtained from unrelated parties for similar goods and services.
In 1980 and 1982, entities affiliated with John H. Harvison, members of his
immediate family and their affiliates granted to E-Z Serve, Inc., the right to
sell motor fuel at retail for a period of 10 years at outlets owned, leased or
controlled, directly or indirectly, by these affiliated entities. All rights to
commissions under these agreements and the right to sell motor fuel at wholesale
to E-Z Serve at such locations were assigned to FFP Partners in May 1987 in
connection with the acquisition of its initial base of retail operations. Upon
the expiration or termination of those agreements in 1990, FFP Partners entered
into agreements with Thrift Financial Co., a company owned and controlled by
members of John H. Harvison's immediate family, granting to FFP Partners the
exclusive right to sell motor fuel at certain retail locations. The agreements
were then assigned by FFP Partners to the Company in the December 1997
restructuring of FFP Partners. The terms of these agreements are comparable to
other agreements that the Company has with unrelated parties. During fiscal
year 1999, the Company paid Thrift Financial $239,000 under these agreements.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers, directors and persons who own
more than 10% of a registered class of the Company's equity securities to file
reports of ownership and changes of ownership with the SEC. Officers, directors
and 10% shareholders of the Company are required by these regulations to furnish
the Company with copies of all Section 16(a) forms filed by them.
Based solely on a review of copies of the forms received, the Company
believes that all filings required under Section 16(a) for fiscal year 1999 by
its officers, directors and 10% shareholders were timely.
14
<PAGE>
AUDITORS
Grant Thornton LLP ("Grant Thornton") served as the Company's auditors for
fiscal year 1999, and KPMG LLP served as the Company's auditor in prior years.
The Board of Director's Audit Committee approved the change of auditors for the
1999 fiscal year but has not yet made a recommendation to the Board of Directors
concerning the auditor for fiscal year 2000. A representative of Grant Thornton
will be available at the annual meeting to respond to questions.
KPMG had served as the Company's independent accountant to audit its
consolidated financial statements for fiscal years 1998 and 1997. In order to
reduce audit fees, the Company sought proposals in late 1999 from four
accounting firms, including KPMG and Grant Thornton, with respect to the audit
of the Company's financial statements for fiscal year 1999. In December 1999,
the Company verbally advised KMPG that management would recommend a dismissal of
KPMG as the Company's auditors for fiscal year 1999 and the engagement of Grant
Thornton in that capacity. Later in December 1999, the Audit Committee approved
those actions.
The reports of KPMG on the financial statements of the Company for its two
most recent years do not contain an adverse opinion or a disclaimer of opinion,
and were not qualified or modified as to uncertainty, audit scope, or accounting
principles. There were no disagreements between the Company and KPMG during the
Company's two most recent fiscal years or any subsequent interim period
preceding the dismissal as to any matter of accounting principles or practices,
financial statement disclosure, or auditing scope of procedure.
Reference is made to the Company's Current Report on Form 8-K dated
December 29, 1999, regarding the change in auditors, which report is
incorporated in this proxy statement by reference.
PROPOSAL TO APPROVE THE STOCK OPTION PLAN
(Proposal 2)
General
On August 6, 1999, the Board of Directors approved, effective as of that
date, the Stock Option Plan. The purpose of the Stock Option Plan is to enable
the Company to continue to obtain and retain the services of the types of
employees, officers and directors who will contribute to the Company's long
range success and to provide incentives that are linked directly to increases in
share value that will inure to the benefit of all shareholders of the Company.
The Company will register the shares issuable pursuant to the Stock Option
Plan under the Securities Act of 1933, as amended (the "1933 Act"). These
shares issued upon exercise of options after the effective date of such
registration could immediately be sold in the open market subject to, in the
case of affiliates (as defined in Rule 144 under the 1933 Act), compliance with
the provisions of Rule 144, other than the holding period requirement.
On June 29, 2000, the last sale price of the common stock on the American
Stock Exchange was $3.25 per share.
Assuming the presence of a quorum, the affirmative vote of the holders of a
majority of the shares of common stock present at the meeting, in person or
represented by proxy, and entitled to vote is necessary in order to approve the
Stock Option Plan. If the shareholders fail to ratify the Stock Option Plan,
the Company will not grant further options pursuant to the Stock Option Plan and
grants previously made by the Compensation Committee that are expressly subject
to shareholder approval will be rendered null and void. Proxies will be voted
for or against approval of the Stock Option Plan according to the specifications
marked on the proxy and, if no specification is made, will be voted in favor of
approval.
Description of the Stock Option Plan
A copy of the Stock Option Plan is attached to this proxy statement as
Exhibit A. A summary of the principal provisions of the Stock Option Plan is
---------
set forth below. This summary is qualified in all respects by the actual
provisions of the Stock Option Plan.
15
<PAGE>
Options granted under the Stock Option Plan ("Options") may include stock
options intended to qualify for incentive stock option treatment and options
that do not qualify for such treatment. Options may be granted under the Stock
Option Plan for up to an aggregate maximum of 1,000,000 shares of common stock,
subject to adjustment in certain events as described in the Stock Option Plan.
The Stock Option Plan is required to be qualified under Section 401(a) of the
Internal Revenue Code of 1986, as amended (the "Code") and is subject to the
provisions of the Employee Retirement Income Security Act of 1974, as amended.
Eligibility, Participation and Exercise Price
Under the Stock Option Plan, Options may be granted to "eligible
individuals" of the Company or a parent or subsidiary of the Company. "Eligible
individuals" are the employees, officers and directors of the Company or of any
of its affiliates. However, no person shall be eligible to receive an Option if
he or she, at the time the Option is granted, would own common stock possessing
more than 10% of the total combined voting power or value of all classes of
common stock of the Company or of an affiliate, unless at the time the Option is
granted, the exercise price per share of common stock is at least 110% of the
fair market value of each share of common stock to which the Option relates and
the Option is not exercisable after the expiration of five years from the date
of grant.
The exercise price per share of common stock subject to any Option intended
to be qualified as an incentive option under the Code and the Plan shall not be
less than the greater of (1) the par value per share of the common stock or (2)
100% of the fair market value per share of the common stock on the date of the
grant of the Option. The exercise price per share of any Option for common
stock not qualifying as an incentive option under the Code shall be determined
upon the granting of the Option.
Administration
The Stock Option Plan shall be administered by a committee of not less than
two individuals selected by the Board of Directors (the "Committee"). In the
event that the common stock is registered under Section 12 of the Exchange Act,
all members of the Committee shall be "outside directors." If no such Committee
is selected, the Board of Directors shall serve as the Committee. Subject to the
provisions of the Stock Option Plan, the Committee has authority to determine
all terms and provisions under which Options are granted. These terms and
provisions would include (1) the number of shares subject to each Option; (2)
when the Option becomes exercisable; (3) the vesting schedule for each grant;
(4) the exercise price of the Option; and (5) the duration of the Option, which
cannot exceed 10 years.
Transferability
Transferability provisions will be contained in each optionee's stock
option agreement as determined by the Committee on a case-by-case basis. It is
the present intent of the Committee to permit, in addition to transfers by wills
and by the laws of descent and distribution, the pledging of options for the
sole purpose of exercising Options, subject to the limitations deemed by the
Committee to be appropriate.
Change in Control Transactions
Each Option outstanding shall terminate upon (1) a merger or consolidation
in which the Company is not the surviving entity; or (2) a sale or transfer of
all or substantially all of the capital stock or assets of the Company to any
entity or person that is not a parent or subsidiary and the Company is not the
surviving entity (each such transaction collectively referred to as a "Change of
Control"), provided that each optionee to whom no share options have been
tendered by the surviving entity on terms and provisions that substantially
preserve the rights and benefits of such optionee's Options under the Stock
Option Plan shall have the right, prior to the Change of Control in which the
Company is not the surviving entity, to exercise his or her outstanding Options
in whole or in part, on the condition, however, that the Change of Control is
completed. If the Change of Control is actually completed, the exercise of the
Option will be considered effective and, if applicable, the optionee shall be
considered a shareholder with respect to the Option exercised immediately
preceding the effective time of the Change of Control. In the event of a Change
of Control in which the Company is not the surviving entity, however, the
Committee shall have the right in its sole discretion to pay to each optionee
possessing unexercised Options, as soon as possible following completion of the
Change of Control,
16
<PAGE>
an amount equal to the fair market value of all shares purchasable (without
regard to vesting provisions) under the unexercised Options less the exercise
price of the unexercised Options (the "Net Value"). Upon payment of the Net
Value, all Options outstanding under the Stock Option Plan will be null and
void, and the optionee will have no further rights under the Stock Option Plan.
Vesting
The Stock Option Plan itself does not impose any specific vesting
requirements. Vesting provisions will be contained in each optionee's stock
option agreement as determined by the Committee on a case-by-case basis.
Amendment
The Stock Option Plan provides that the Board of Directors may amend the
Stock Option Plan at any time in any manner as the Board of Directors may
consider desirable, provided that the following amendments will require approval
by the holders of a majority of the shares represented at a meeting of
shareholders at which a quorum is present: (1) to materially increase the
aggregate number of shares eligible for issuance under the Stock Option Plan;
(2) to materially increase the benefits accruing to participants under the
Stock Option Plan; or (3) to materially modify the requirements for eligibility
under the Stock Option Plan.
Termination of Options
Except as expressly provided in each optionee's stock option agreement,
each Option shall terminate upon the optionee's termination of employment or
status as a director.
Shares of Common Stock Subject to the Stock Option Plan
A total of 1,000,000 shares of common stock (subject to certain adjustments
discussed below) have been reserved for sale upon the exercise of Options
granted under the Stock Option Plan. If an Option expires fully or partially
unexercised, the shares then subject to the Option are available for later
grant. Upon a change in the number of shares outstanding as a result of a
declaration of a stock dividend or any recapitalization resulting in a stock
split, combination or exchange of shares, there will be a proportionate
adjustment in the shares available for grant and the shares subject to
outstanding Options.
Payment of Exercise Price
The exercise price may be paid in cash or by check, or, if either expressly
permitted by the terms of the Option or otherwise permitted by the Committee, in
its sole discretion at the time of exercise, in whole or in part by delivery of
shares of common stock, which will be considered payment of all or a portion of
the exercise price in an amount equal to the fair market value of the delivered
shares.
Certain Federal Income Tax Consequences
The following discussion is a general description of the federal income tax
consequences associated with the participation in the Stock Option Plan. This
discussion is general in nature, and does not discuss all possible federal
income tax consequences of participation in the Stock Option Plan that may be
relevant based on the particular circumstances of a participant. In addition,
the discussion does not consider the effect of any foreign, state, local, or
other tax laws, or any United States tax consequences other than income tax
(e.g., estate or gift tax) consequences, that may be applicable to participants.
The summary below discusses the tax consequences of the grant and exercise
or other disposition of both incentive stock options and non-qualified stock
options. If the stock option meets the requirements of Internal Revenue Code
Section 422(b) the stock option is generally an incentive stock option. If not,
the stock option is generally a non-qualified stock option.
17
<PAGE>
Incentive Stock Option
An optionee will not recognize any income upon the grant or timely exercise
of an incentive stock option and the Company will not be entitled to a tax
deduction with respect to the grant or exercise. Exercise of an incentive stock
option may, however, give rise to taxable compensation income and a tax
deduction for the Company, if the incentive stock option is not exercised on a
timely basis (generally, while the optionee is employed by the Company or within
90 days after termination of employment) or if the optionee subsequently engages
in a "disqualifying disposition," as described below.
A sale or exchange by an optionee of shares acquired upon the exercise of
an incentive stock option more than one year after the transfer of the shares to
such optionee and more than two years after the date of grant of the incentive
stock option will result in any difference between the net sale proceeds and the
exercise price being treated as long-term capital gain or loss to the optionee.
If the sale or exchange takes place within two years after the date of grant of
the incentive stock option or within one year from the date of transfer of the
incentive stock option shares to the optionee, the sale or exchange will
generally constitute a "disqualifying disposition" of the shares that will have
the following results:
(1) any excess of (A) the lesser of (1) the fair market value of the
shares at the time of exercise of the incentive stock option and (2)
the amount realized on the disqualifying disposition of the shares
over (B) the Option exercise price of the shares, will be ordinary
income to the optionee; and
(2) the Company will be entitled to a tax deduction in the amount of that
income.
Any further gain or loss after the date of exercise generally will qualify as
capital gain or loss and will not result in any deduction by the Company.
Non-qualified Stock Option
An optionee will not recognize any income upon the grant of a non-qualified
stock option. Upon exercise of a non-qualified stock option, the amount that the
fair market value of the shares acquired on the date of exercise exceeds the
option exercise price is treated as ordinary income to the optionee. The Company
will generally be entitled to a tax deduction at such time in the amount of the
ordinary income. The optionee's tax basis for the shares of common stock
received pursuant to the exercise of the non-qualified stock option will equal
the sum of the ordinary income recognized and the exercise price.
If the shares of common stock received upon the exercise of a non-qualified
stock option are sold, any appreciation or depreciation after the exercise date
generally will be taxed as capital gain or loss and will be long-term capital
gain or loss if the holding period for the shares is more than one year.
Exercise with Shares Already Owned
If an optionee exercises a non-qualified stock option, in whole or in part,
by delivering shares of common stock already owned by him or her, the optionee
will be treated as having made a nontaxable exchange of the number of shares
transferred for an equal number of shares received (the "Exchange Stock"). The
basis and holding period of the Exchange Stock will be the same as the basis and
holding period of the stock transferred. The fair market value of all shares
received in excess of the Exchange Stock (the "Excess Stock") are treated as
compensation income to the optionee, and the Company generally will have a
corresponding deduction to the extent the amount constitutes an ordinary and
necessary business expense and is not disallowed by Code Section 162(m). The
Excess Stock has a basis equal to the amount included in the optionee's
compensation income and a holding period that begins on the date the non-
qualified stock option is exercised.
The Treasury Department has issued proposed regulations that, if adopted in
their current form, appear to provide for the following rules with respect to
the exercise of an incentive stock option by surrender of previously owned
shares of common stock. In general, when shares of common stock are surrendered
upon exercise of an incentive stock option, the optionee will: (a) recognize no
gain or loss as a result of the exchange, (b) the number of shares received that
is equal
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in number to the shares surrendered will have a basis equal to the shares
surrendered and will have a holding period that includes the holding period of
the shares exchanged, and (c) any additional shares received will have a zero
basis and will have a holding period that begins after the date of the exchange.
If any of the shares received are disposed of within two years of the date of
grant of the incentive stock option or within one year after exercise, the
shares with the lowest basis will be deemed to be disposed of first, and the
disposition will be a disqualifying disposition giving rise to ordinary income
as discussed above. However, if the shares surrendered in payment of the
exercise price of the incentive stock option are shares received from the
exercise of another incentive stock option and the surrender constitutes a
"disqualifying disposition" (as would be the case if the exchange takes place
within two years after the date of grant of the incentive stock option or within
one year from the date of transfer of the incentive stock option shares to the
optionee), the optionee would recognize gain on the disqualifying disposition as
discussed in "Certain Federal Income Tax Consequences--Incentive Stock Option"
above.
Certain Grants Under the Stock Option Plan
Options have been granted, subject to shareholder approval, under the Stock
Option Plan, to certain of the Named Executive Officers as set forth above in
the "Executive CompensationStock Options Granted in 1999." As a group, the
current executive officers have been granted, subject to shareholder approval,
Options to purchase 30,000 shares of common stock under the Stock Option Plan.
The Company's Board of Directors unanimously recommends a vote "FOR" the
approval of the Stock Option Plan. Proxies executed and returned will be so
voted "FOR" the approval of the Stock Option Plan unless contrary instructions
are indicated on the proxy.
REQUIREMENTS, INCLUDING DEADLINES, FOR
SUBMISSION OF PROXY PROPOSALS, NOMINATION OF DIRECTORS
AND OTHER BUSINESS OF SHAREHOLDERS
Proposals for 2001 Annual Meeting
Under the rules of the SEC, any proposals of holders of common stock of the
Company intended to be included in the proxy statement and form of proxy for the
Annual Meeting of Shareholders of the Company to be held in 2001 must be
received by the Company, addressed to Craig T. Scott, Secretary, 2801 Glenda
Avenue, Fort Worth, Texas 76117, no later than December 31, 2000, in order to be
included in the Company's proxy statement and form of proxy relating to that
meeting, which is tentatively scheduled for May 17, 2001.
Under the Company's Bylaws, and as permitted by the rules of the SEC,
certain procedures are provided, which a shareholder must follow to nominate
persons for election as directors or to introduce an item of business at an
annual meeting of shareholders. These procedures provide that nominations for
director nominees and/or an item of business to be introduced at an annual
meeting of shareholders must be submitted in writing to the Secretary of the
Company at 2801 Glenda Avenue, Fort Worth, Texas 76117 between 70 and 90 days in
advance of the prior year's annual meeting if the later meeting is being held
within 30 days preceding or 60 days after the anniversary date of the prior
year's meeting. If the subsequent year's meeting is being held more than 30
days preceding or 60 days after the anniversary date of the prior year's
meeting, the nominations or items of business from shareholders must be received
by the Secretary of the Company between 70 and 90 days in advance of the meeting
or by the tenth day following the date of the public disclosure of the date of
the meeting.
For any special meeting, the nomination or item of business must be
received between 70 and 90 days in advance of the meeting and no later than the
tenth day following the date of public disclosure of the date of the meeting.
The 2001 Annual Meeting is expected to be held May 17, 2001. Assuming that
it is held on schedule, the Company must receive notice of a shareholder's
intention to introduce a nomination or other item of business at that meeting
between February 17 and March 9, 2001. If notice is not received within those
dates, or if other requirements of the SEC rules are met, the persons named as
proxies in the proxy materials relating to that meeting will use their
discretion in voting the proxies if those matters are raised at the meeting.
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The notice from the shareholder must include: (1) as to each person whom
the shareholder proposes to nominate for election or reelection as a director,
all information relating to the person that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise required by
Regulation 14A under the Exchange Act, including the person's written consent to
being named in the proxy statement as a nominee and to serving as a director if
elected; (2) as to any other business that the shareholder proposes to bring
before the meeting, a brief description of the business desired to be brought
before the meeting, the reasons for conducting the business at the meeting and
any material interest in the business of the shareholder and the beneficial
owner, if any, on whose behalf the proposal is made; and (3) as to the
shareholder giving the notice and the beneficial owner, if any, on whose behalf
the nomination or proposal is made (a) the name and address of the shareholder,
as they appear on the Company's share transfer books, and the name and address
of the beneficial owner; (b) the class or series and number of shares of
beneficial interest of the Company which are owned beneficially and of record by
the shareholder and the beneficial owner; and (c) the date or dates upon which
the shareholder acquired ownership of the shares. A nomination must contain the
following information about the nominee: name; age; business and residence
addresses; principal occupation or employment; the number of shares of common
stock held by the nominee; the information that would be required under the
rules of the SEC in a proxy statement soliciting proxies for the election of the
nominee as a director and a signed consent of the nominee to serve as a director
of the Company, if elected.
At the time this proxy statement was published, the Board of Directors knew
of no other business to be brought before the 2000 annual meeting. If, however,
any other business should properly come before the annual meeting, the persons
named in the accompanying proxy will vote the proxy in their discretion as they
may deem appropriate, unless they are directed by the proxy to do otherwise.
The chairman of the meeting may refuse to allow the transaction of any business
not presented beforehand, or to acknowledge the nomination of any person not
made in compliance with the procedures outlined above.
With respect to business to be brought before the annual meeting, the
Company has not received any notices from shareholders that the Company is
required to include in this proxy statement.
By Order of the Board of Directors,
CRAIG T. SCOTT
Secretary
Fort Worth, Texas
July 10, 2000
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EXHIBIT A
FFP MARKETING COMPANY, INC.
STOCK OPTION PLAN
Scope and Purpose of Plan
-------------------------
The purpose of the FFP Marketing Company, Inc. Stock Option Plan is to
provide an incentive for employees of FFP Marketing Company, Inc. (the
"Company") and its Affiliates (defined below) to remain in the service of the
Company or its Affiliates, to extend to them the opportunity to acquire a
proprietary interest in the Company so that they will apply their best efforts
for the benefit of the Company, and to aid the Company in attracting and
retaining personnel.
PARAGRAPH 1. Definitions.
-----------
1.1. "Act" shall mean the Securities Exchange Act of 1934, as amended or
any similar or superseding statute or statutes.
1.2. "Affiliates" shall mean (a) any corporation, other than the Company,
in an unbroken chain of corporations ending with the Company if each of the
corporations, other than the Company, owns stock possessing fifty percent (50%)
or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain, and (b) any corporation, other than the
Company, in an unbroken chain of corporations beginning with the Company, if
each of the corporations, other than the last corporation in the unbroken chain,
owns stock possessing fifty percent (50%) or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain;
provided, however, with respect to the grants of Nonstatutory Options only,
Affiliates shall also include (i) any limited liability company, partnership or
other entity, other than the Company, in an unbroken chain of entities ending
with the Company if each of the entities, other than the Company, controls fifty
percent (50%) or more of the total combined voting power or equity interests in
one of the other entities in such chain, and (ii) any limited liability company,
partnership or other entity, other than the Company, in an unbroken chain of
entities beginning with the Company, if each of the entities, other than the
last entity in the unbroken chain, controls fifty percent (50%) or more of the
total combined voting power or equity interests in one of the other entities in
such chain.
1.3. "Agreement" shall mean the written agreement between the Company and
an Optionee evidencing the Option granted by the Company.
1.4. "Board of Directors" or "Director(s)" shall mean the board of
directors of the Company.
1.5. "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.6. "Committee" shall mean the committee appointed pursuant to Paragraph
3 of the Plan by the Board of Directors to administer this Plan, or in the
absence of any such appointment, the Board of Directors.
1.7. "Company" shall mean FFP Marketing Company, Inc., a Texas
corporation.
1.8. "Disability" shall mean a total and permanent disability as defined
in the Company's long term disability plan, or if the Company has no long term
disability plan in effect at the time of the Optionee's disability, shall have
the meaning provided in section 22(e)(3) of the Code. Notwithstanding the
preceding sentence, for any Incentive Option, "Disability" shall have the
meaning provided in section 22(e)(3) of the Code.
1.9. "Eligible Individuals" shall mean the employees, officers and
directors of the Company or of any of its Affiliates. For purposes of this
Plan, the term "employee" means an individual employed by the Company or its
Affiliates whose income from those entities is subject to Federal Insurance
Contributions Act ("FICA") withholding.
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1.10. "Exercise Price" shall mean the price per share of Stock as
established pursuant to Paragraph 6.2 of the Plan.
1.11. "Fair Market Value" shall mean:
(a) If shares of Stock of the same class are listed or admitted to
unlisted trading privileges on any national or regional securities exchange
at the date of determining the Fair Market Value, the last reported sale
price on such exchange on the last business day prior to the date in
question; or
(b) If shares of Stock of the same class shall not be listed or
admitted to unlisted trading privileges as provided in Subparagraph 1.11(a)
and sales prices for such shares in the over-the-counter market shall be
reported by the Nasdaq stock market ("NASDAQ") National Market System at
the date of determining the Fair Market Value, the last reported sale price
so reported on the last business day prior to the date in question; or
(c) If shares of Stock of the same class shall not be listed or
admitted to unlisted trading privileges as provided in Subparagraph 1.11(a)
and sales prices for such shares shall not be reported by the NASDAQ
National Market System as provided in Subparagraph 1.11(b), and bid and
asked prices therefor in the over-the-counter market shall be reported by
NASDAQ (or, if not so reported, by the National Quotations Bureau
Incorporated or the OTC Bulletin Board) at the date of determining the Fair
Market Value, the average of the closing bid and asked prices on the last
business day prior to the date in question; and
(d) If shares of Stock of the same class shall not be listed or
admitted to unlisted trading privileges as provided in Subparagraph 1.11(a)
and sales prices or bid and asked prices for such shares shall not be
reported by NASDAQ (or the National Quotations Bureau Incorporated) as
provided in Subparagraph 1.11(b) or Subparagraph 1.11(c) at the date of
determining the Fair Market Value, the value determined in good faith by
the Board of Directors.
1.12. "For Cause" shall mean either (a) an Optionee's material failure or
refusal to perform his duties if Optionee has failed to cure such failure or
refusal to perform within thirty (30) days after the Company notifies Optionee
in writing of such failure or refusal to perform, or (b) that the Optionee is
involuntarily terminated from employment based upon his commission of any of the
following:
(i) an intentional act of fraud, embezzlement or theft in
connection with his duties or in the course of his employment with the
Company;
(ii) intentional wrongful damage to property of the Company or any
other willful gross misconduct that causes material economic harm to the
Company or that brings substantial discredit to the Company's reputation;
(iii) intentional wrongful disclosure of trade secrets or
confidential information of the Company;
(iv) willful violation of any law, rule or regulation (other than
traffic violations or similar offenses) or final cease and desist order,
including, but not limited to, a final, nonappealable conviction of an
Optionee for commission of a felony involving moral turpitude; or
(v) intentional breach of fiduciary duty owed to the Company
involving personal profit.
For the purpose of this Agreement, no act, or failure to act, on the part
of the Optionee shall be deemed "intentional" unless the Board of Directors
finds, in its sole discretion, that the act or failure to act was done, or
omitted to be done, by the Optionee in other than good faith and without
reasonable belief that his action or omission was in the best interest of the
Company. Any determination that an Optionee has been terminated For Cause shall
be made by the Board of Directors in its sole and absolute discretion.
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1.13. "Incentive Options" shall mean stock options that are intended to
satisfy the requirements of section 422 of the Code.
1.14. "Nonstatutory Options" shall mean stock options that do not satisfy
the requirements of section 422 of the Code.
1.15. "Optionee" shall mean an Eligible Individual to whom an Option has
been granted.
1.16. "Options" shall mean either Incentive Options or Nonstatutory
Options, or both.
1.17. "Plan" shall mean the FFP Marketing Company, Inc. Stock Option Plan.
1.18. "Retirement" shall mean "Retirement" as defined by any other pension
or retirement plan or policy of the Company, and if such term is not so defined
therein, shall mean an Optionee's termination of employment with the Company on
or after attainment of age 65.
1.19. "Securities Act" shall mean the Securities Act of 1933, as amended,
or any similar or superseding statute or statutes.
1.20. "Stock" shall mean the Company's authorized common stock, $0.01 par
value, together with any other securities that may be received upon the exercise
of Options granted under the Plan.
PARAGRAPH 2. Stock and Maximum Number of Shares Subject to the Plan.
------------------------------------------------------
2.1. Description of Stock and Maximum Shares Allocated. The Stock which
-------------------------------------------------
may be issued upon the exercise of an Option may be either unissued or
reacquired shares of Stock, as the Board of Directors may, in its sole and
absolute discretion, from time to time determine.
Subject to the adjustments provided in Paragraph 6.6, the aggregate number
of shares of Stock to be issued pursuant to the exercise of all Options granted
under the Plan may equal but shall not exceed 1,000,000 shares of Stock.
2.2. Restoration of Unpurchased Shares. If an Option granted under the
---------------------------------
Plan expires or terminates for any reason during the term of this Plan and prior
to the exercise of the Option in full, the shares of Stock subject to, but not
issued under, such Option shall again be available for Options granted under the
Plan after such shares become available again.
PARAGRAPH 3. Administration of the Plan.
--------------------------
3.1. Committee. If so determined by the Board of Directors, the Plan
---------
shall be administered by the Committee. The Committee shall consist of not less
than two (2) individuals. In the event a Committee is not appointed by the
Board of Directors, then the Board of Directors shall be the Committee. In the
event that the Stock is registered under section 12 of the Act, all members of
the Committee shall be "outside directors." "Outside directors" shall mean a
member of the Board of Directors who qualifies as an "outside director" under
the regulations promulgated under section 162 of the Code and as a "non-employee
director" under Rule 16b-3 promulgated under the Act.
3.2. Duration, Removal, Etc. The members of the Committee shall serve at
-----------------------
the pleasure of the Board of Directors, which shall have the power, at any time
and from time to time, to remove members from the Committee or to add members to
the Committee. Vacancies on the Committee, however caused, shall be filled by
action of the Board of Directors.
3.3. Meetings and Actions of Committee. The Committee shall elect one of
---------------------------------
its members as its Chairman and shall hold its meetings at such times and places
as it may determine. All decisions and determinations of the Committee shall be
made by the majority vote or decision of all of its members present at a
meeting; provided, however, that any decision or determination reduced to
writing and signed by all of the members of the Committee shall be as fully
effective as if it had been made at a meeting duly called and held. The
Committee may make any rules and
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regulations for the conduct of its business, as it may deem advisable, that are
not inconsistent with the provisions of this Plan and with the bylaws of the
Company.
3.4. Committee's Powers. Subject to the express provisions of this Plan,
------------------
the Committee shall have the authority, in its sole and absolute discretion, (a)
to adopt, amend, and rescind administrative and interpretive rules and
regulations relating to the Plan; (b) to determine the terms and provisions of
the respective Agreements (which need not be identical), including provisions
defining or otherwise relating to (i) subject to Paragraph 6, the term and the
period or periods and extent of exercisability of the Options, (ii) the extent
to which the transferability of shares of Stock issued upon exercise of Options
is restricted, (iii) the effect of termination of employment upon the
exercisability of the Options, and (iv) the effect of approved leaves of absence
(consistent with any applicable regulations of the Internal Revenue Service);
(c) to accelerate the time of exercisability of any Option that has been
granted; (d) to construe the terms of any Agreement and the Plan; and (e) to
make all other determinations and perform all other acts necessary or advisable
for administering the Plan, including the delegation of such ministerial acts
and responsibilities as the Committee deems appropriate. The Committee may
correct any defect or supply any omission or reconcile any inconsistency in the
Plan or in any Agreement in the manner and to the extent it shall deem expedient
to carry it into effect, and it shall be the sole and final judge of such
expediency. The Committee shall have full discretion to make all determinations
on the matters referred to in this Paragraph and such determinations shall be
final, binding and conclusive.
PARAGRAPH 4. Eligibility and Participation.
-----------------------------
4.1. Eligible Individuals. Options may be granted under the Plan only to
--------------------
persons who are Eligible Individuals at the time of grant. Notwithstanding any
provision contained in the Plan to the contrary, a person shall not be eligible
to receive an Incentive Option hereunder if he, at the time such Option is
granted, would own (within the meaning of sections 422 and 424 of the Code)
Stock possessing more than ten percent (10%) of the total combined voting power
or value of all classes of Stock of the Company or of an Affiliate, unless at
the time such Incentive Option is granted the Exercise Price per share of Stock
is at least one hundred ten percent (110%) of the Fair Market Value of each
share of Stock to which the Incentive Option relates and the Incentive Option is
not exercisable after the expiration of five (5) years from the date it is
granted (the "Maximum Term").
4.2. No Right to Option. The adoption of the Plan shall not be deemed to
------------------
give any person a right to be granted an Option.
PARAGRAPH 5. Grant of Options and Certain Terms of the Agreements.
----------------------------------------------------
5.1. Award Criteria. Subject to the express provisions of this Paragraph,
--------------
the Committee shall, in its sole discretion, determine which Eligible
Individuals shall be granted Options under the Plan from time to time. In
making grants, the Committee shall take into consideration the level of
responsibility within the organization and the contribution the potential
Optionee has made or may make to the success of the Company or its Affiliates
and such other considerations as the Board of Directors may from time to time
specify. The Committee shall also determine the number of shares subject to
each of such Options and shall authorize and cause the Company to grant Options
in accordance with such determinations.
5.2. Grant. The date on which the Committee completes all action
-----
constituting an offer of an Option to an individual, including the specification
of the Exercise Price and the number of shares of Stock to be subject to the
Option, shall be the date on which the Option covered by an Agreement is
granted, even though certain terms of the Agreement may not be at such time
determined and even though the Agreement may not be executed until a later time.
For purposes of the preceding sentence, an offer shall be deemed made if the
Committee has completed all such action except communication of the grant of the
Option to the potential Optionee. In no event, however, shall an Optionee gain
any rights in addition to those specified by the Committee in its grant,
regardless of the time that may pass between the grant of the Option and the
actual execution of the Agreement by the Company and the Optionee.
Each Option granted under the Plan shall be evidenced by an Agreement,
executed by the Company and the Eligible Individual to whom the Option is
granted, incorporating such terms as the Committee shall deem necessary or
desirable. More than one Option may be granted to the same Eligible Individual
and be outstanding concurrently. In the event an Eligible Individual is granted
both one or more Incentive Options and one or more Nonstatutory Options,
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such grants shall be evidenced by separate Agreements, one for each of the
Incentive Option grants and one for each of the Nonstatutory Option grants.
5.3. Transferability Restrictions. Each Agreement may contain or
----------------------------
otherwise provide for conditions giving rise to the forfeiture of the Stock
acquired pursuant to an Option granted under the Plan and for such restrictions
on the transferability of shares of the Stock acquired pursuant to an Option as
the Committee, in its sole and absolute discretion, shall deem proper or
advisable. Such conditions giving rise to forfeiture may include, but need not
be limited to, the requirement that the Optionee render substantial services to
the Company or its Affiliates for a specified period of time. Such restrictions
on transferability may include, but need not be limited to, options and rights
of first refusal in favor of the Company and shareholders of the Company other
than an Optionee who is a party to the particular Agreement or a subsequent
person who is bound by such Agreement.
PARAGRAPH 6. Terms and Conditions of Options.
-------------------------------
All Options granted under the Plan shall comply with, be deemed to include,
and shall be subject to the following terms and conditions:
6.1. Number of Shares. Each Agreement shall state the number of shares of
----------------
Stock to which it relates.
6.2. Exercise Price. Each Agreement shall state the Exercise Price per
--------------
share of the Stock. Except as provided in Paragraph 4.1, the Exercise Price per
share of the Stock subject to any Incentive Option under this Plan shall not be
less than the greater of (a) the par value per share of the Stock or (b) one
hundred percent (100%) of the Fair Market Value per share of the Stock on the
date of the grant of the Incentive Option. The Exercise Price per share of the
Stock subject to a Nonstatutory Option shall be determined by the Committee upon
the granting of the Nonstatutory Option.
6.3. Medium and Time of Payment, Method of Exercise, and Withholding
---------------------------------------------------------------
Taxes. The Exercise Price of an Option shall be payable upon the exercise of the
Option:
(a) in cash or cash equivalent; or
(b) with Shares of Stock owned by the Optionee; or
(c) with the consent of the Committee, with a multiple series of
exchanges of shares of Stock owned by the Optionee; or
(d) with the consent of the Committee, by a combination of cash and
shares of Stock owned by the Optionee; or
(e) with the consent of the Committee, with the proceeds of an
employer loan; or
(f) with the consent of the Committee, by delivery to the Company of
an exercise notice that requests the Company to issue to the Optionee the
full number of shares of Stock as to which the Option is then exercisable,
less the number of Shares that have an aggregate Fair Market Value, as
determined by the Committee in its sole discretion at the time of exercise,
equal to the aggregate purchase price of the shares of Stock to which such
exercise relates. (This method of exercise allows the Optionee to use a
portion of the shares of Stock issuable at the time of exercise as payment
for the shares of Stock to which the Option relates and is often referred
to as "cashless exercise." For example, if the Optionee elects to exercise
1,000 shares of Stock at an exercise price of $.25 and the current Fair
Market Value of the Stock on the date of exercise is $1.00, the Optionee
can use 250 of the 1,000 shares of Stock at $1.00 per share of Stock to pay
for the exercise of the entire Option (250 multiplied by $1.00 equals
$250.00) and receive only the remaining 750 shares of Stock.)
Exercise of an Option shall not be effective until the Company has received
written notice of exercise. Such notice must specify the number of whole shares
to be purchased and be accompanied by payment in full of the aggregate Exercise
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Price of the number of shares purchased in cash (as set forth above) or by
delivery of shares of Stock in negotiable form with a value at least equal to
the Exercise Price, which shares of Stock shall be valued based on the Fair
Market Value of the Stock (or a combination of cash and Stock); provided,
however, that nothing in this sentence shall preclude the payment for the Stock
as provided in Subparagraph 6.3(f) and payment through so-called cashless
exercise shall be considered as payment in full to the extent allowed by the
Committee. The Company shall not in any case be required to sell, issue, or
deliver a fractional share of Stock with respect to any Option.
The Committee may, in its discretion, require an Optionee to pay to the
Company at the time of exercise of an Option (or portion of an Option) the
amount that the Company deems necessary to satisfy its obligation to withhold
Federal, state or local income or other taxes incurred by reason of the
exercise. If the exercise of an Option does not give rise to an obligation to
withhold Federal income or other taxes on the date of exercise, the Company may,
in its discretion, require an Optionee to place shares of Stock purchased under
the Option in escrow for the benefit of the Company until such time as Federal
income or other tax withholding is no longer required with respect to such
shares or until such withholding is required on amounts included in the gross
income of the Optionee as a result of the exercise of an Option or the
disposition of shares of Stock acquired pursuant to the exercise. At such later
time, the Company, in its discretion, may require an Optionee to pay to the
Company the amount that the Company deems necessary to satisfy its obligation to
withhold Federal, state or local income or other taxes incurred by reason of the
exercise of the Option or the disposition of shares of Stock. Upon receipt of
such payment by the Company, such shares of Stock shall be released from escrow
to the Optionee.
6.4. Term, Time of Exercise and Transferability of Options. In addition
-----------------------------------------------------
to such other terms and conditions as may be included in a particular Agreement
granting an Option, an Option shall be exercisable during an Optionee's lifetime
only by the Optionee or by the Optionee's guardian or legal representative. The
Committee shall in each Agreement prescribe a vesting schedule that governs when
the Option becomes fully vested and exercisable.
An Option shall not be transferrable other than by will or the laws of
descent and distribution.
Notwithstanding anything in this Paragraph to the contrary, all Options
shall become exercisable immediately upon an Optionee's termination of
employment due to death, Disability or Retirement or upon the occurrence of any
of the Change in Control Events listed in Paragraph 6.6.
The provisions of the remainder of this Paragraph shall apply to the extent
an Optionee's Agreement does not expressly provide otherwise. If an Optionee
ceases to be an Eligible Individual, the Option shall terminate ninety (90) days
after such Optionee ceases to be an Eligible Individual; provided, however, if
an Optionee's employment (or tenure as an officer or director of the Company) is
terminated For Cause, the Option shall terminate immediately and any unexpired
Options shall be forfeited. Notwithstanding the foregoing, if an Optionee
ceases to be an Eligible Individual by reason of death or Disability, the
Optionee or the Optionee's designated beneficiary shall have the right for
twelve (12) months after the date of death or Disability to exercise an Option
to the extent such Option is otherwise exercisable on such date. At the end of
such twelve (12) month or ninety (90) day period, as applicable, the Option
shall terminate and cease to be exercisable. Each Optionee shall have the right
to designate a beneficiary on the form provided by the Committee. If no
beneficiary is designated, Optionee's estate shall have the rights of a
beneficiary. Notwithstanding any other provision of this Plan, no Option shall
be exercisable after the expiration of ten (10) years from the date it is
granted, or in the case of an Incentive Option, the Maximum Term specified in
Paragraph 4.1, if applicable. Except as provided above, the portion of the
Option which is not exercisable on the date the Optionee ceases to be an
Eligible Individual shall terminate and be forfeited to the Company on the date
of such cessation.
Except as provided above, the Committee shall have the authority to
prescribe in any Agreement that the Option evidenced by the Agreement may be
exercised in full or in part as to any number of shares subject to the Option at
any time or from time to time during the term of the Option, or in such
installments at such times during said term as the Committee may prescribe.
Except as provided above and unless otherwise provided in any Agreement, an
Option may be exercised at any time or from time to time during the term of the
Option. Such exercise may be as to any or all whole (but no fractional) shares
which have become purchasable under the Option.
Within a reasonable time (or such time as may be permitted by law) after
the Company receives written notice that the Optionee has elected to exercise
all or a portion of an Option, such notice to be accompanied by payment in full
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of the aggregate Option Exercise Price of the number of shares of Stock
purchased, the Company shall issue and deliver a certificate representing the
shares acquired in consequence of the exercise and any other amounts payable in
consequence of such exercise. In the event that an Optionee exercises both an
Incentive Option, or portion of one, and a Nonstatutory Option, or a portion of
one, separate Stock certificates shall be issued, one for the Stock subject to
the Incentive Option and one for the Stock subject to the Nonstatutory Option.
The number of the shares of Stock issuable due to an exercise of an Option under
this Plan shall not be increased due to the passage of time, except as may be
provided in an Agreement; provided, however, that the number of such shares of
Stock which are issuable may increase due to the occurrence of certain events
which are fully described in Paragraph 6.6.
Nothing in the Plan or in any Option granted under the Plan shall require
the Company to issue any shares upon exercise of any Option if such issuance
would, in the reasonable judgment of the Committee based upon the advice of
counsel for the Company, constitute a violation of the Securities Act, or any
other applicable statute or regulation, as then in effect. At the time of any
exercise of an Option, the Company may, as a condition precedent to the exercise
of such Option, require from the Optionee (or in the event of his death, his
legal representatives, heirs, legatees, or distributees) such written
representations, if any, concerning his intentions with regard to the retention
or disposition of the shares being acquired by exercise of such Option and such
written covenants and agreements, if any, as to the manner of disposal of such
shares as, in the opinion of counsel to the Company, may be necessary to ensure
that any disposition by such Optionee (or in the event of his death, his legal
representatives, heirs, legatees, or distributees), will not involve a violation
of the Securities Act or any other applicable state or federal statute or
regulation, as then in effect. Certificates for shares of Stock, when issued,
may have the following or similar legend, or statements of other applicable
restrictions, endorsed on them, and may not be immediately transferable:
These shares have not been registered under the Securities Act
of 1933, as amended, or any applicable state securities laws, in
reliance upon an exemption from registration. These shares may
not be sold, transferred, assigned or otherwise disposed of unless,
in the opinion of the Company and its legal counsel, such sale,
transfer, assignment or disposition will not be in violation of
the Securities Act of 1933, as amended, applicable rules and
regulations of the Securities and Exchange Commission, and any
applicable state securities laws.
6.5. Limitation on Aggregate Value of Shares That May Become First
-------------------------------------------------------------
Exercisable During Any Calendar Year Under an Incentive Option. Except as is
--------------------------------------------------------------
otherwise provided in Paragraph 6.6, with respect to any Incentive Option
granted under this Plan, the sum of (a) and (b) may not (with respect to any
Optionee) exceed $100,000, with such Fair Market Value to be determined as of
the date the Incentive Option or such other incentive stock option is granted,
where:
(a) is the aggregate Fair Market Value of shares of Stock subject to
such Incentive Option that first become purchasable in a calendar year
under such Incentive Option; and
(b) is the aggregate Fair Market Value of shares of Stock or stock
of any Affiliate (or a predecessor of the Company or an Affiliate) subject
to any other incentive stock option (within the meaning of section 422 of
the Code) of the Company or its Affiliates (or a predecessor corporation of
any such corporation) that first become purchasable in a calendar year
under such Incentive Option.
For purposes of this Paragraph, "predecessor corporation" means (i) a
corporation that was a party to a transaction described in section 424(a) of the
Code (or which would be so described if a substitution or assumption under such
section had been effected) with the Company, (ii) a corporation which, at the
time the new incentive stock option (within the meaning of section 422 of the
Code) is granted, is an Affiliate of the Company or a predecessor corporation of
any such corporations, or (iii) a predecessor corporation of any such
corporations.
A-7
<PAGE>
6.6. Adjustments Upon Changes in Capitalization, Merger, Etc.
--------------------------------------------------------
Notwithstanding any other provision in the Plan to the contrary, in the event of
any change in the number of outstanding shares of Stock:
(a) effected without receipt of consideration by the Company by
reason of a stock dividend, split, combination, exchange of shares, merger,
or other recapitalization, in which the Company is the surviving
corporation; or
(b) by reason of a spin-off of a part of the Company into a separate
entity, or assumptions and conversions of outstanding grants due to an
acquisition by the Company of a separate entity,
(1) the aggregate number and class of the reserved shares, (2) the number and
class of shares subject to each outstanding Option and (3) the Exercise Price of
each outstanding Option shall be automatically adjusted to accurately and
equitably reflect the effect of such change; provided, however, that any or all
such adjustments shall not occur with respect to an Incentive Option, unless:
(i) the excess of the aggregate Fair Market Value of the shares
subject to the Incentive Option immediately after any such adjustment over
the aggregate Exercise Price of such shares is not more than the excess of
the aggregate Fair Market Value of all shares subject to the Incentive
Option immediately before such adjustment over the aggregate Exercise Price
of all such shares subject to the Incentive Option; and
(ii) the new or adjusted Incentive Option does not give the Optionee
additional benefits which such Optionee did not have under the old
Incentive Option (collectively these Subparagraphs (i) and (ii) are the
"Code Section 424(a) Restrictions").
In the event of a dispute concerning such adjustment, the Committee has full
discretion to determine the resolution of the dispute. Such determination shall
be final, binding and conclusive. The number of reserved shares or the number
of shares subject to any outstanding Option shall be automatically reduced to
the extent necessary to eliminate any fractional shares.
The following provisions of this Paragraph shall apply unless an Optionee's
Agreement provides otherwise. In the event of:
(a) a dissolution or liquidation of the Company; or
(b) a merger or consolidation (other than a merger effecting a re-
incorporation of the Company in another state or any other merger or a
consolidation in which the shareholders of the surviving corporation and
their proportionate interests therein immediately after the merger or
consolidation are substantially identical to the shareholders of the
Company and their proportionate interests therein immediately prior to the
merger or consolidation) in which the Company is not the surviving
corporation (or survives only as a subsidiary of another corporation in a
transaction in which the shareholders of the parent of the Company and
their proportionate interests therein immediately after the transaction are
not substantially identical to the shareholders of the Company and their
proportionate interests therein immediately prior to the transaction;
provided, however, that the Board of Directors may at any time prior to
such a merger or consolidation provide by resolution that the foregoing
provisions of this parenthetical shall not apply if a majority of the Board
of Directors of such parent immediately after the transaction consists of
individuals who constituted a majority of the Board of Directors
immediately prior to the transaction); or
(c) a transaction in which any person (other than a shareholder of
the Company on the date of the Optionee's Agreement) becomes the owner of
fifty percent (50%) or more of the total combined voting power of all
classes of stock of the Company (provided, however, that the Board of
Directors may at any time prior to such transaction provide by resolution
that this Subparagraph shall not apply if such acquiring person is a
corporation and a majority of the Board of Directors of the acquiring
corporation immediately after the transaction consists of individuals who
constituted a majority of the Board of Directors immediately prior to the
acquisition of such fifty percent (50%) or more total combined voting
power), (collectively the directly
A-8
<PAGE>
preceding Subparagraphs (a), (b) and (c) are "Change in Control Events")
all Options shall become fully exercisable and the Board of Directors
shall, in its sole discretion, as of the effective date of such
transaction, if (and only if) such Options have not at that time expired or
been terminated, either: (1) change the number and kind of shares of Stock
(including substitution of shares of another corporation) and exercise
price in the manner it deems appropriate; provided, however, that in no
event may any change be made under this Paragraph to an Incentive Option
which would either constitute a "modification" within the meaning of
section 424(h)(3) of the Code or a violation of the Code Section 424(a)
Restrictions; or (2) purchase the Options from each Optionee by tendering
cash equal to the Fair Market Value of the Stock represented by the Options
less the exercise price of the Option specified in each Agreement, without
regard to the determination as to the periods and installments of
exercisability made pursuant to an Optionee's Agreement.
6.7. Rights as a Shareholder. An Optionee shall have no right as a
-----------------------
shareholder with respect to any shares of Stock covered by his Option until a
certificate representing such shares is issued to him. No adjustment shall be
made for dividends (ordinary or extraordinary, whether in cash or other
property) or distributions or other rights for which the record date is prior to
the date such certificate is issued, except as provided in Paragraph 6.6.
6.8. Modification, Extension and Renewal of Options. Subject to the terms
----------------------------------------------
and conditions of, and within the limitations of, the Plan, the Committee may
modify, extend or renew outstanding Options granted under the Plan or accept the
surrender of Options outstanding under the Plan (to the extent not previously
exercised) and authorize the granting of substitute Options (to the extent not
previously exercised). Except as provided in Paragraph 6.6, no modification of
an Option granted under the Plan shall, without the consent of the Optionee,
alter or impair any rights or obligations under any Option previously granted
under the Plan to such Optionee under the Plan, except as may be necessary, with
respect to Incentive Options, to satisfy the requirements of section 422 of the
Code.
6.9. Furnish Information. Each Optionee shall furnish to the Company all
-------------------
information requested by the Company to enable it to comply with any reporting
or other requirement imposed upon the Company by or under any applicable statute
or regulation.
6.10. Obligation to Exercise: Termination of Employment. The granting of
--------------------------------------------------
an Option under the Plan shall impose no obligation upon the Optionee to
exercise it or any part of it. In the event of an Optionee's termination of
employment with the Company or an Affiliate, the unexercised portion of an
Option granted under the Plan shall terminate in accordance with Paragraph 6.4.
6.11. Agreement Provisions. The Agreements authorized under the Plan
--------------------
shall contain such provisions in addition to those required by the Plan
(including, without limitation, restrictions or the removal of restrictions upon
the exercise of the Option and the retention or transfer of shares thereby
acquired) as the Committee shall deem advisable.
Each Agreement shall identify the Option it evidences as an Incentive
Option or a Nonstatutory Option, as the case may be, and no Agreement shall
cover both an Incentive Option and a Nonstatutory Option. Each Agreement
relating to an Incentive Option granted under this Plan shall contain such
limitations and restrictions upon the exercise of the Incentive Option to which
it relates as shall be necessary for the Incentive Option to which such
Agreement relates to constitute an incentive stock option, as defined in section
422 of the Code.
PARAGRAPH 7. Remedies and Specific Performance.
---------------------------------
7.1. Remedies. The Company shall be entitled to recover from an Optionee
--------
reasonable attorneys' fees incurred in connection with the enforcement of the
terms and provisions of the Plan and any Agreement, whether by an action to
enforce specific performance, or an action for damages for its breach or
otherwise.
7.2. Specific Performance. The Company shall be entitled to enforce the
--------------------
terms and provisions of this Paragraph, including the remedy of specific
performance, in Tarrant County, Texas.
A-9
<PAGE>
PARAGRAPH 8. Duration of Plan.
----------------
No Options may be granted under the Plan more than ten (10) years after the
earlier of the date the Plan is adopted or the date the Plan is approved by the
shareholders of the Company.
PARAGRAPH 9. Amendment and Termination of Plan.
---------------------------------
The Board of Directors may at any time terminate or from time to time amend
or suspend the Plan; provided, however, that no such amendment shall, without
approval of the shareholders of the Company, except as provided in Paragraph 6,
(a) increase the aggregate number of shares of Stock as to which Options may be
granted under the Plan; (b) increase the maximum period during which Options may
be exercised; or (c) extend the effective period of the Plan. No Option may be
granted during any suspension of the Plan or after the Plan has been terminated,
and no amendment, suspension or termination shall, without an Optionee's
consent, alter or impair, other than as provided in the Plan and the Optionee's
Agreement, any of the rights or obligations under any Option previously granted
to such Optionee under the Plan.
PARAGRAPH 10. General.
-------
10.1. Application of Funds. The proceeds received by the Company from the
--------------------
sale of shares pursuant to Options may be used for general corporate purposes.
10.2. Right of the Company and Affiliates to Terminate Employment.
-----------------------------------------------------------
Nothing contained in the Plan, or in any Agreement, shall confer upon any
Optionee the right to continue in the employ of the Company or any Affiliate, or
interfere in any way with the rights of the Company or any Affiliate to
terminate an Optionee's employment at any time.
10.3. Liability of the Company. Neither the Company, any of its
------------------------
Affiliates, its directors, officers or employees nor any member of the Committee
shall be liable for any act, omission, or determination taken or made in good
faith with respect to the Plan or any Option granted under it, and members of
the Board of Directors and the Committee shall be entitled to indemnification
and reimbursement by the Company in respect of any claim, loss, damage, or
expense (including attorneys' fees, the costs of settling any suit (provided
such settlement is approved by independent legal counsel selected by the
Company) and amounts paid in satisfaction of a judgment, except a judgment based
on a finding of bad faith) arising from such claim, loss, etc. to the full
extent permitted by law and under any directors' and officers' liability or
similar insurance coverage that may from time to time be in effect. In
addition, neither the Company, its directors, officers or employees, nor any of
the Company's Affiliates shall be liable to any Optionee or other person if it
is determined for any reason by the Internal Revenue Service or any court having
jurisdiction that any incentive stock options granted hereunder do not qualify
for tax treatment as incentive stock options under section 422 of the Code.
10.4. Information Confidential. As partial consideration for the granting
------------------------
of each Option under the Plan, the Agreement may, in the Committee's sole and
absolute discretion, provide that the Optionee shall agree with the Company that
he will keep confidential all information and knowledge that he has relating to
the manner and amount of his participation in the Plan; provided, however, that
such information may be disclosed as required by law and may be given in
confidence to the Optionee's spouse, tax and financial advisors, or to a
financial institution to the extent that such information is necessary to secure
a loan. In the event any breach of this promise comes to the attention of the
Committee, it shall take into consideration such breach, in determining whether
to recommend the grant of any future Option to such Optionee, as a factor
militating against the advisability of granting any such future Option to such
individual.
10.5. Other Benefits. Participation in the Plan shall not preclude the
--------------
Optionee from eligibility in any other stock option plan of the Company or any
Affiliate or any old age benefit, insurance, pension, profit sharing,
retirement, bonus, or other extra compensation plans which the Company or any
Affiliate has adopted, or may, at any time, adopt for the benefit of its
employees.
A-10
<PAGE>
10.6. Execution of Receipts and Releases. Any payment of cash or any
----------------------------------
issuance or transfer of shares of Stock to the Optionee, or to his legal
representative, heir, legatee, or distributee, in accordance with the provisions
of the Plan, shall, to the extent thereof, be in full satisfaction of all claims
of such persons under the Plan. The Committee may require any Optionee, legal
representative, heir, legatee, or distributee, as a condition precedent to such
payment, to execute a release and receipt for such payment in such form as it
shall determine.
10.7. No Guarantee of Interests. Neither the Committee nor the Company
-------------------------
guarantees the Stock from loss or depreciation.
10.8. Payment of Expenses. All expenses incident to the administration,
-------------------
termination, or protection of the Plan, including, but not limited to, legal and
accounting fees, shall be paid by the Company or its Affiliates; provided,
however, the Company or an Affiliate may recover any and all damages, fees,
expenses and costs arising out of any actions taken by the Company or an
Affiliate to enforce its rights under the Plan.
10.9. Company Records. Records of the Company or its Affiliates regarding
---------------
the Optionee's period of employment, termination of employment and the reason
for such termination, leaves of absence, re-employment, and other matters shall
be conclusive for all purposes under the Plan, unless determined by the
Committee to be incorrect.
10.10. Information. The Company and its Affiliates shall, upon request or
-----------
as may be specifically required under the Plan, furnish or cause to be furnished
all of the information or documentation that is necessary or required by the
Committee to perform its duties and functions under the Plan.
10.11. Company Action. Any action required of the Company relating to the
--------------
Plan shall be by resolution of its Board of Directors or by a person authorized
to act by resolution of the Board of Directors.
10.12. Severability. If any provision of this Plan is held to be illegal
------------
or invalid for any reason, the illegality or invalidity shall not affect the
remaining provisions of the Plan, but such provision shall be fully severable,
and the Plan shall be construed and enforced as if the illegal or invalid
provision had never been included in the Plan.
10.13. Notices. Whenever any notice is required or permitted under the
-------
Plan or any Agreement, such notice must be in writing and personally delivered,
telecopied (if confirmed), or sent by mail or by a nationally recognized courier
service. Any notice required or permitted to be delivered under this Plan or
any Agreement shall be deemed to be delivered on the date on which it is
personally delivered, or, if mailed, whether actually received or not, on the
third business day after it is deposited in the United States mail, certified or
registered, postage prepaid, addressed to the person who is to receive it at the
address which such person has previously specified by written notice delivered
in accordance with this Paragraph or, if by courier, at the close of business on
the next business day after it is sent, addressed as described in this
Paragraph. The Company or an Optionee may change, at any time and from time to
time, by written notice to the other, the address which it or he had previously
specified for receiving notices. Until changed in accordance with the Plan, the
Company and each Optionee shall specify as its and his address for receiving
notices the address set forth in the Agreement pertaining to the shares to which
such notice relates.
10.14. Waiver of Notice. Any person entitled to notice under the Plan may
----------------
waive such notice.
10.15. Successors. The Plan shall be binding upon the Optionee, his legal
----------
representatives, heirs, legatees, distributees, and transferees (if applicable)
and upon the Company, its successors, and assigns, and upon the Committee, and
its successors.
10.16. Headings. The titles and headings of Paragraphs are included for
--------
convenience of reference only and are not to be considered in construction of
the Plan's provisions.
10.17. Governing Law. All questions arising with respect to the
-------------
provisions of the Plan shall be determined by application of the laws of the
State of Texas except to the extent Texas law is preempted by Federal law.
Questions arising with respect to the provisions of an Agreement that are
matters of contract law shall be governed by the laws of the state specified in
the Agreement, except to the extent preempted by Federal law and except to the
extent that Texas corporate law conflicts with the contract law of such state,
in which event Texas corporate law shall govern.
A-11
<PAGE>
The obligation of the Company to sell and deliver Stock under the Plan is
subject to applicable laws and to the approval of any governmental authority
required in connection with the authorization, issuance, sale, or delivery of
such Stock.
10.18. Word Usage. Words used in the masculine shall apply to the
----------
feminine where applicable, and wherever the context of this Plan dictates, the
plural shall be read as the singular and the singular as the plural.
PARAGRAPH 11. Approval of Shareholders.
------------------------
The Plan shall take effect on August 6, 1999, the date it was adopted by
the Board of Directors.
If this Plan is not approved by the holders of a majority of the votes
entitled to be voted at a meeting of holders of outstanding shares of equity
securities of the Company no later than one year from the date the Plan is
adopted, this Plan and the Options granted under the Plan shall be null and
void.
IN WITNESS WHEREOF, FFP Marketing Company, Inc., acting by and through its
duly authorized officer, has executed this Plan on August 6, 1999.
FFP Marketing Company, Inc.,
a Texas corporation
By: /s/ Craig T. Scott
-------------------------------------
Craig T. Scott, Vice President
A-12
<PAGE>
FFP MARKETING COMPANY, INC.
P
R 2801 GLENDA AVENUE
O FORT WORTH, TEXAS 76117
X
Y This proxy is solicited on behalf of the Board of Directors of
FFP Marketing Company, Inc.
The undersigned hereby appoints John H. Harvison and J.D. St. Clair, and
each of them, as Proxies, each with the power to appoint his substitute, and
hereby authorizes them to represent and vote, as designated below, all of the
shares of common stock of FFP Marketing Company, Inc., held of record by the
undersigned on July 3, 2000, at the Annual Meeting of Shareholders to be held on
August 3, 2000, or any adjournment thereof.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholder. If no direction is given, this proxy will
be voted FOR the election of the nominees listed, FOR the approval of the Stock
Option Plan and at the discretion of the Proxies with respect to any other
matter that is properly brought before the meeting.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
------------------
| SEE REVERSE SIDE |
------------------
-------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
Please mark [X]
your votes as
indicated in
this example.
<TABLE>
<CAPTION>
1. Election of Directors
<S> <C> <C>
FOR all nominees WITHHOLD Nominees: Robert J. Bymes, Tom M. Coleman, Michael Triantafellou
listed to the right AUTHORITY
(except as marked to vote for all nominees (Instruction: To withhold authority to vote for any individual
to the contrary) listed to the right nominee, write that nominee's name on the space provided below.)
[_] [_] -----------------------------------------------------------------
</TABLE>
2. Approval of Stock Option Plan
FOR AGAINST ABSTAIN
[_] [_] [_]
3. In their discretion, the Proxies are authorized to vote upon such other
business as properly may come before the Annual Meeting.
MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW [_]
Dated: , 2000
-------------------------------------------
Signature:
---------------------------------------------
Signature:
---------------------------------------------
Please sign exactly as name appears at left. When
shares are held by joint tenants, both should sign, or
if one signs he should attach the evidence of his
authority. When signing as attorney, administrator,
agent, trustee or guardian, please give full title as
such. If a corporation, please sign full corporate name
by President or other authorized officer. If a
partnership, please sign full partnership name by
authorized person.
COMPLETE, SIGN and DATE the proxy card and return promptly using the enclosed
envelope.
--------------------------------------------------------------------------------
FOLD AND DETACH HERE
