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