EXHIBIT 10.5
 

FORM OF
2005 STOCK INCENTIVE PLAN
OF
FROZEN FOOD EXPRESS INDUSTRIES, INC.

INCENTIVE OPTION AWARD AGREEMENT

This Incentive Option Award Agreement (this “Agreement”) is made and entered
into by and between Frozen Food Express Industries, Inc., a Texas corporation
(“FFE” or the “Corporation”) and _____________________ (the “Optionee”), as of
_______________, 2005 (the “Date of Grant”). If the Optionee is presently or
subsequently becomes employed by a subsidiary of the Corporation, the term
“Corporation” shall be deemed to refer collectively to FFE, and the subsidiary
or subsidiaries which employ the Optionee.

W I T N E S S E T H:

WHEREAS, the Corporation has adopted the Frozen Food Express Industries, Inc.
2005 Stock Incentive Plan (the “Plan”), a copy of which is attached hereto and
incorporated herein by reference, to provide an incentive for key employees and
certain consultants and advisors of the Corporation to remain in the service of
the Corporation and to extend them the opportunity to acquire a proprietary
interest in the Corporation so that they will apply their best efforts for the
benefit of the Corporation; and

WHEREAS, the committee established pursuant to the Plan (the “Committee”)
believes that the granting of the stock option herein described to the Optionee
is consistent with the stated purposes for which the Plan was adopted;

NOW, THEREFORE, in consideration of the mutual covenants and conditions
hereinafter set forth and for other good and valuable consideration, the
Corporation and the Optionee agree as follows:

1. Grant of Option. Under the terms and conditions of Section 5 of the Plan, FFE
hereby grants to the Optionee the right and option (the “Option”) to purchase an
aggregate of ________ shares (such number being subject to adjustment as
provided in Section 9 of the Plan) of the common stock, $1.50 par value (“Common
Stock”), of FFE (“Plan Shares.”)

Subject to Paragraph 9 herein, the Option granted hereunder is intended to
qualify as an “incentive stock option” under Section 422 of the Internal Revenue
Code of 1986, as amended (the “Code”) and shall be so construed; provided,
however, that nothing in this Agreement shall be interpreted as a
representation, guarantee, or other undertaking on the part of the Corporation
that this Option is or will be determined to be an “incentive stock option”
within such section or any other section of the Code.

2. Exercise Price. The price at which the Optionee shall be entitled to purchase
the Plan Shares covered by the Option shall be ________________________/100 U.S.
dollars ($__.__) per Plan Share (the “Exercise Price”).

3. Vesting and Exercisability of Option. The Option hereby granted is fully
vested upon the Date of Grant. The Option shall be exercisable commencing on the
date that is one (1) year and one (1) day following the Date of Grant, unless
the Optionee’s employment terminates prior to that date, in which case the
provisions of Paragraphs 4(c), (d) and (e) hereof shall apply. The Option shall
remain in force and effect until the close of business on the Option Expiration
Date. The Option Expiration Date shall be the earliest of (i) the date that is
ten (10) years following the Date of Grant, or (ii) in the case of the
Optionee’s termination of employment, death or disability, the date specified in
Paragraph 4 hereof.

4. Exercise of Option; Termination of Employment Events.

 
(a)
The Optionee may exercise the Option with respect to all or any part of the Plan
Shares covered hereby by delivery to the Committee of written notice of exercise
and payment of the purchase price as provided in Paragraphs 5 and 6 herein;
provided, however, that no Option may be exercised for a fraction of a Plan
Share.

 
(b)
An Option will cease to be exercisable with respect to the Plan Shares when the
Optionee purchases the Plan Shares, or when the Option expires or is terminated.

 
(c)
Upon termination of the Optionee’s employment for any reason other than the
Optionee’s death or Disability (as defined in the Plan), then the Option shall
be exercisable until the first to occur of (i) the Option Expiration Date or
(ii) ninety (90) days following the date of termination. Any portion of the
Option not exercised upon the expiration of the periods specified in (i) or (ii)
shall be null and void.

 
(d)
Upon the Optionee’s death during employment, then the Option shall be
exercisable by the Optionee’s legal representatives, legatees or distributees
until the first to occur of (i) the Option Expiration Date or (ii) one year
following the date of death. Any portion of the Option not exercised upon the
expiration of the periods specified in (i) or (ii) shall be null and void.
Except as expressly provided in this Paragraph 4(d), the Option shall not be
exercisable after the death of the Optionee.

 
(e)
If the Optionee’s employment is terminated by reason of Disability, then the
Option shall be exercisable by the Optionee, his guardian or legal
representative, until the first to occur of (i) the Option Expiration Date or
(ii) one year following the date of termination.

5. Method of Exercise. The Option shall be exercisable only by written notice of
exercise (the “Exercise Notice”) delivered to the Corporation, which notice
shall (a) state the number of Plan Shares with respect to which the Option is
being exercised, (b) be signed by the Optionee or, if the Optionee is dead or
disabled, by the person authorized to exercise the Option, (c) be accompanied by
the Exercise Price for all Plan Shares for which the Option is exercised, and
(d) include such other information, instruments, and documents as may be
required to satisfy any other condition to exercise contained herein. The
Committee may require that the Exercise Notice be provided on a form or forms
prescribed by the Committee.

6. Medium and Time of Payment. The Exercise Price shall be payable in full upon
the exercise of the Option (a) in cash or by an equivalent means acceptable to
the Committee, (b)  with shares of Common Stock owned by the Optionee for at
least six months and having a Fair Market Value at least equal to the aggregate
Exercise Price payable in connection with such exercise, or (c) by any
combination of clauses (a) and (b). Instead of surrendering shares of Common
Stock that the Optionee has owned for at least six months, the Optionee may
attest to the ownership of those shares on a form provided by the Committee and
have the same number of shares subtracted from the Option shares to be issued to
the Optionee. In addition, at the request of the Optionee and to the extent
permitted by applicable law, the Committee may approve arrangements with a
brokerage firm under which that brokerage firm, on behalf of the Optionee, shall
pay to FFE the Exercise Price of the Option being exercised, and FFE shall
promptly deliver the exercised shares to the brokerage firm (a “Cashless
Exercise”). To accomplish the Cashless Exercise, the Optionee must deliver to
FFE an Exercise Notice containing irrevocable instructions from the Optionee to
FFE to deliver the stock certificates directly to the broker.

7. Nontransferability. The Option granted by this Agreement shall be exercisable
only in accordance with Paragraph 3 herein and, except as provided in Paragraph
4 hereof, only by the Optionee during the Optionee’s lifetime and while an
employee of the Corporation. No Option granted by this Agreement is transferable
by the Optionee other than by will or pursuant to applicable laws of descent and
distribution. Except as may be necessary to accomplish the Cashless Exercise,
the Option, and any rights and privileges in connection therewith, cannot be
transferred, assigned, pledged, or hypothecated by the Optionee, or by any other
person or persons, in any way, whether by operation of law, or otherwise, and
may not be subject to execution, attachment, garnishment or similar process. In
the event of any such occurrence, this Agreement will automatically terminate
and will thereafter be null and void. The Optionee may, however, dispose of this
Option in the Optionee’s will or pursuant to a written beneficiary designation
executed by the Optionee. Such a designation must be filed with the Corporation
on the proper form and will be recognized only if it is received at the
Corporation’s headquarters before the Optionee’s death.

8. Delivery of Plan Shares. No Plan Shares shall be transferred to the Optionee
upon exercise of the Option until (i) the purchase price is paid in full in the
manner herein provided, (ii) all the applicable taxes required to be withheld
have been paid or withheld in full, (iii) the approval of any governmental
authority required in connection with the Option, or the issuance of Plan Shares
thereunder, has been received by FFE, and (iv) if required by the Committee, the
Optionee has delivered to the Committee assurances in form and content
satisfactory to FFE as provided in Section 10.10 of the Plan.

9. Notice of Disqualifying Disposition. In order for FFE to avail itself of any
income tax deduction to which it may be entitled, the Optionee must notify FFE
of his disposal of any Plan Shares purchased pursuant to this Agreement within
two (2) years from the Date of Grant and one (1) year from the date of exercise
of this Option. Said notification shall occur promptly after the disposition and
shall include the number of Plan Shares disposed of, the dates of acquisition
and disposition of the Plan Shares, and the consideration received for such
disposition. If in connection with such disposition FFE becomes liable for
withholding taxes and has no amounts owing to the Optionee with which to
discharge its withholding obligation, the Optionee shall provide FFE with the
amount needed to discharge FFE’s withholding obligation and shall indemnify FFE
against any penalties it may incur through its inability to apply amounts owing
the Optionee in discharge of its withholding obligations.

10. Information Confidential. As partial consideration for the granting of the
Option, the Optionee agrees that he will keep confidential all information and
knowledge that he has relating to the manner and amount of his participation in
the Plan; provided, however, that such information may be disclosed as required
by law and may be given in confidence to the Optionee’s spouse, tax and
financial advisors, or to a financial institution to the extent that such
information is necessary to obtain a loan.

11. Definitions; Copy of Plan. To the extent not specifically provided herein,
all capitalized terms used in this Agreement shall have the same meaning
ascribed to them in the Plan. By the execution of this Agreement, the Optionee
acknowledges receipt of a copy of the Plan.

12. Administration. This Agreement is subject to the terms and conditions of the
Plan. The Plan will be administered by the Committee in accordance with its
terms. The Committee has sole and complete discretion with respect to all
matters reserved to it by the Plan and decisions of the Committee with respect
to the Plan and to this Agreement shall be final and binding upon the Optionee
and the Corporation. In the event of any conflict between the terms and
conditions of this Agreement and the Plan, the provisions of the Plan shall
control.

13. Continuation of Employment. This Agreement shall not be construed to confer
upon the Optionee any right to continue in the employ of the Corporation and
shall not limit the right of the Corporation, in its sole discretion, to
terminate the employment of the Optionee at any time.

14. Obligation to Exercise. The Optionee shall have no obligation to exercise
any Option granted by this Agreement.

15. Governing Law. This Agreement shall be interpreted and administered under
the laws of the State of Texas (excluding its conflict of law rules) except to
the extent such law is preempted by federal law.

16. Amendments. This Agreement may be amended only by a written agreement
executed by the Corporation and the Optionee. Any such amendment shall be made
only upon the mutual consent of the parties, which consent (of either party) may
be withheld for any reason.

17. Termination. The Corporation may terminate the Plan at any time; however,
such termination will not modify the terms and conditions of the Option granted
hereunder unless the Optionee’s prior written consent is obtained.

IN WITNESS WHEREOF, the Corporation has caused this Agreement to be duly
executed by its officers thereunto duly authorized, and the Optionee has
hereunto set his hand as of the day and year first above written.

FROZEN FOOD EXPRESS INDUSTRIES, INC.

By:  ____________________________  
Name:  S. M. Stubbs, Jr.
Its: Chairman of the Board

OPTIONEE
 
_____________________________
 
_____________________________