EXHIBIT 10.5
CHANGE IN CONTROL AGREEMENT

THIS CHANGE IN CONTROL AGREEMENT (this “Agreement”) is made as of  February 25,
2009  by and between Frozen Food Express Industries, Inc., a Texas corporation
(the “Company”)  and Ronald J. Knutson (the “Executive”).

 
RECITALS

A.           The Board of Directors of Company (the “Board”) has determined that
the interests of the Company will be advanced by providing the key executives of
the Company with certain benefits in the event of the termination of employment
of any such executive in connection with or following a Change in Control (as
hereinafter defined).

B.           The Board believes that such benefits will enable the Company to
continue to attract and retain competent and qualified executives, will assure
continuity and cooperation of management and will encourage such executives to
diligently perform their duties without personal financial concerns, thereby
enhancing shareholder value and ensuring a smooth transition.

C.           The Executive is a key executive of the Company.
 
AGREEMENTS

NOW, THEREFORE, for good and valuable consideration, including the mutual
covenants set forth herein, the parties hereto agree as follows:

1.           Definitions.  The following terms shall have the following meanings
for purposes of this Agreement.

“Affiliate” means any entity controlled by, controlling or under common control
with, the Company.

“Annual Pay” means the sum of (a) an amount equal to the sum of the current
annual base salary, the current annual car allowance and Christmas bonus payable
to the Executive by the Company or any Related Corporation at the time of the
termination of his employment, provided such base salary shall not be less than
the base salary of the Executive at the time of Change in Control, plus (b) an
amount equal to the Bonus for the Executive for the fiscal year in which his
termination of employment occurs.

 
 

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“Bonus” means the sum of (a) an amount equal to ninety percent  (90%) of the
Executive’s base pay for the year of termination of his employment plus (b) an
amount equal to the Incentive Bonus Plan’s total incentive bonus payable to the
Executive under the plan for the year of termination of his employment.

“Cause” means the Executive’s (a) willful and intentional material breach of
this Agreement, (b) willful and intentional misconduct or gross negligence in
the performance of or willful neglect of, the Executive’s duties, which has
caused material injury (monetary or otherwise) to the Company or any Related
Corporation, or (c) conviction of, or plea of nolo contendere to, a felony;
provided, however, that no act or omission shall constitute “Cause” for purposes
of this Agreement unless the Board or the Chief Executive Officer of the Company
provides to the Executive (i) written notice clearly and fully describing the
particular acts or omissions which the Board or the Chief Executive Officer of
the Company reasonably believes in good faith constitutes “Cause” and (ii) an
opportunity, within thirty (30) days following his receipt of such notice, to
meet in person with the Board or the Chief Executive Officer of the Company to
explain or defend the alleged acts or omissions relied upon by the Board or the
Chief Executive Officer of the Company and, to the extent practicable to cure
such acts or omissions.  Further, no act or omission shall be considered as
“willful” or “intentional” if the Executive reasonably believed such acts or
omissions were in the best interests of the Company.

“Change in Control” means (a) any “person” (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)) that does not currently own a five percent (5%) or greater
equity interest in the Company or any Related Corporation who becomes the
“beneficial owner” (as determined pursuant to Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company or any Related
Corporation representing fifteen percent (15%) or more of the combined voting
power of the Company’s or Related Corporation’s, as the case may be, then
outstanding voting securities; or (b) a change in the composition of the Board
occurring within a two (2) year period, as a result of which fewer than a
majority of the directors are Incumbent Directors; or (c) the Company or any
Related Corporation shall merge with or consolidate into any other corporation,
other than a merger or consolidation which would result in the holders of the
voting securities of the Company or any Related Corporation, as the case may be,
outstanding immediately prior thereto holding immediately thereafter securities
representing more than sixty percent (60%) of the combined voting power of the
voting securities of the Company or any Related Corporation, as the case may be,
or such surviving entity (or its ultimate parent, if applicable) outstanding
immediately after such merger or consolidation; or (d) the equity holders of the
Company or any Related Corporation approve a plan of complete liquidation of the
Company or any Related Corporation or the consummation of an agreement for the
sale or disposition by the Company or any Related Corporation of all or
substantially all of the Company’s or Related Corporation’s assets and such plan
or agreement becomes effective, other than liquidation or sale which would
result in the Company directly or indirectly owning such interest or assets.

“Code” means the Internal Revenue Code of 1986, as amended.

“Confidential Information” means all information, whether oral or written,
previously or hereafter developed, acquired or used by the Company or any
Affiliate and relating to the business of the Company or any Affiliate that is
not generally known to others in the Company’s area of business, including
without limitation trade secrets, methods or practices developed by the Company
or any Affiliate, financial results or plans, customer or client lists,
personnel information, information relating to negotiations with clients or
prospective clients, proprietary software, databases, programming or data
transmission methods, or copyrighted materials (including without limitation,
brochures, layouts, letters, art work, copy, photographs or illustrations).  It
is expressly understood that the foregoing list shall be illustrative only and
is not intended to be an exclusive or exhaustive list of “Confidential
Information.”

 
 

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“First Window Period” shall mean the ten (10) day period immediately following a
Change in Control.

“Good Reason” means any of the following events occurring, without the
Executive’s prior written consent specifically referring to this Agreement,
within the Transition Period following a Change in Control:

(a)           (i) any reduction in the amount of the Executive’s Annual Pay,
(ii) any reduction in the amount of Executive’s other long-term aggregate
incentive compensation opportunities, or (iii) any significant reduction in the
aggregate value of the Executive’s benefits as in effect from time to time
(unless in the case of either (ii) or (iii), such reduction is pursuant to a
general change in compensation or benefits applicable to all similarly situated
employees of the Company and its Affiliates);

 (b)           (i) the removal of the Executive from the position held by him
immediately prior to the Change in Control, or (ii) any other significant
reduction in the nature or status of the Executive’s duties or responsibilities
from those in effect immediately prior to the Change in Control;

(c)           the failure by the Company or Related Corporation to pay Executive
any portion of Executive’s current compensation, or to pay Executive any portion
of an installment of deferred compensation under any compensation program of the
Company or Related Corporation within seven (7) days of the date such
compensation is due;

(d)           the failure by the Company or Related Corporation to provide
Executive with the number of paid vacation days to which Executive is entitled
on the basis of years of service with the Company or Related Corporation in
accordance with the Company’s or Related Corporation’s normal vacation policy in
effect at the time of the Change in Control;

(e)           transfer of the Executive’s principal place of employment to a
metropolitan area other than that of the Executive’s place of employment
immediately prior to the Change in Control without the Executive’s consent; or

(f)           failure by the Company or Related Corporation to obtain the
assumption agreement referred to in Section 11 of this Agreement prior to the
effectiveness of any succession referred to therein, unless the purchaser,
successor or assignee referred to therein is bound to perform this Agreement by
operation of law.

“Incumbent Directors” means directors who either (a) are directors of the
Company as of the date hereof or (b) are elected, or nominated for election, to
the Board with the affirmative votes of at least a majority of the Incumbent
Directors at the time of such election or nomination (but shall not include an
individual whose election or nomination is in connection with an actual or
threatened proxy contest relating to the election of directors of the Company).

“Related Corporation” shall mean FFE, Inc., a Delaware corporation and wholly
owned subsidiary of the Company, and FFE Transportation Services, Inc., a
Delaware corporation and wholly owned subsidiary of FFE, Inc.

“Second Window Period” shall mean the thirty (30) day period immediately
following the Transition Period.

“Termination Pay” means a payment made by the Company to the Executive pursuant
to Sections 2(a)(ii) and (iii).

“Transition Period” shall mean the six (6) month period immediately following a
Change  in Control.

“Without Cause” means a termination of the Executive’s employment by the Company
or Related Corporation other than due to disability or for Cause.

 
 

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2.           Termination Payment and Benefits.

(a)           Termination Following Change in Control.  In the event that the
Executive’s employment with the Company or Related Corporation is terminated
during the Transition Period by the Company or Related Corporation Without
Cause, or by the Executive for Good Reason during the Transition Period or in
the event the Executive terminates his employment for any reason during the
First Window Period or the Second Window Period, the Executive shall be entitled
to the following payments and other benefits:

(i)           A cash payment in an amount equal to the sum of (a) the
Executive’s accrued and unpaid base salary, car allowance and Christmas bonus as
the date of termination plus (b) his accrued and unpaid bonus, if any, for the
prior fiscal year plus (c) a percentage of the year worked times the Bonus for
the current year. This amount shall be paid on the date of the Executive’s
termination of employment.

(ii)           A cash payment in an amount equal to two and nine-tenths  (2.9)
times the Executive’s Annual Pay.  This amount shall be paid in accordance with
Section 2(c) hereof.

(iii)           A cash payment in an amount equal to the Executive’s unvested
account balance under the Company’s or Related Corporation’s 401(k) Savings Plan
and 401(k) Wrap Plan.  This amount shall be paid in accordance with Section 2(c)
hereof.

(iv)           Executive and his eligible dependents shall be entitled for a
period of two (2) years following his date of termination of employment to
continued coverage, at the same premium rate charged when actively employed,
under the Company’s or any Related Corporation’s group health, dental, long-term
disability, Exec-U-Care Medical Reimbursement Insurance Plan and life insurance
as in effect from time to time (but not any other welfare benefit plans or any
retirement plans); provided that coverage under any particular benefit plan
shall expire with respect to the period after the Executive becomes covered
under another employer’s plan providing for a similar type of benefit.  In the
event the Company or Related Corporation is unable to provide such coverage on
account of any limitations under the terms of any applicable contract with an
insurance carrier or third party administrator, the Company or Related
Corporation shall pay the Executive an amount equal to the cost of such
coverage.

                (v)           All of the Executive’s unvested options,
restricted stock, stock units, performance share or other awards, if any, based
on or related to equity securities of the Company or its Affiliates under any
plan in which the Executive participates and which was identified as an
executive compensation plan in the exhibits to the Company’s most recent filing
with the SEC that shall automatically vest on a Change in Control (as defined in
the applicable plan).  The Company shall promptly cause any related award
agreements to be amended as necessary to provide for such accelerated
vesting.  In the event of any conflict between this provision and the provisions
of any stock option, restricted or similar award agreements entered into before
or after the effective date of this Agreement, the foregoing provision shall
control.
 

(b)           No Duplication; Other Severance Pay.  There shall be no
duplication of severance pay in any manner.  In this regard, the Executive shall
not be entitled to termination payments hereunder for more than one position
with the Company and its Affiliates.  If the Executive is entitled to any notice
or payment in lieu of any notice of termination of employment required by
Federal, state or local law, including but not limited to the Worker Adjustment
and Restraining Notification Act, the severance compensation to which the
Executive would otherwise be entitled under this Agreement shall be reduced by
the amount of any such payment, in lieu of notice.  If Executive is entitled to
any severance or termination payments under any employment or other agreement
with the Company or any of its Affiliates, the severance compensation to which
Executive would otherwise be entitled under this Agreement shall be reduced by
the amount of such payment.  Except as set forth above, the foregoing payments
and benefits shall be in addition to and not in lieu of any payments or benefits
to which the Executive and his dependents may otherwise be entitled to under the
Company’s or Related Corporation’s compensation and employee benefit
plans.  Nothing herein shall be deemed to restrict the right of the Company or
Related Corporation from amending or terminating any such plan in a manner
generally applicable to similarly situated active employees of the Company and
its Affiliates, in which event the Executive shall be entitled to participate on
the same basis (including payment of applicable contributions) as similarly
situated active executives of the Company and its Affiliates.

 
 

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(c)           Mutual Release.  Termination Pay shall be conditioned upon the
execution by the Executive and the Company of a valid mutual release, in the
form attached hereto as Exhibit A, pursuant to which the Executive and the
Company shall each mutually release each other, to the maximum extent permitted
by law, from any and all claims either party may have against the other as of
the date of termination that relate to or arise out of the employment or
termination of employment of the Executive, except such claims arising under
this Agreement, any employee benefit plan, or any other written plan or
agreement (a “Mutual Release”).  The full amount of Termination Pay shall be
paid in a lump sum in cash to the Executive within ten (10) days following
receipt by the Company of a Mutual Release which is properly executed by the
Executive; provided, however, that in the event applicable law allows the
Executive to revoke the Mutual Release for a period of time, and the Mutual
Release is not revoked during such period, the full amount of Termination Pay
shall be paid to the Executive following the expiration of such period.

                3.           Additional Change in Control Benefits.  Except to
the extent released under the terms of the Mutual Release, Executive shall be
entitled to such additional change in control benefits as are provided under the
Frozen Food Express Industries, Inc. 2005 Stock Incentive Plan, the FFE
Transportation Services, Inc. Supplemental Executive Retirement Plan, the FFE
Transportation Services, Inc. 1999 Executive Bonus and Phantom Stock Plan, the
FFE Transportation Services, Inc. 2005 Executive Bonus and Restricted Stock Plan
, the FFE Transportation Services, Inc. 1994 Incentive Bonus Plan, Frozen Food
Express Industries, Inc. 401(k) Savings Plan and the FFE Transportation
Services, Inc. 401(k) Wrap Plan, as approved and adopted by the Board.

                 4.          Excise Taxes.

(a)           Gross-Up Payment.  Anything in this Agreement to the contrary
notwithstanding and except as set forth below, if it is determined that any
payment or distribution (a “Payment”) by the Company to or for the benefit of
the Executive (whether paid or payable or distributed or distributable pursuant
to the terms of this Agreement or otherwise) including, without limitation,
vesting of options, would be subject to the excise tax imposed by Section 4999
of the Code, or if any interest or penalties are incurred by the Executive with
respect to such excise tax (such excise tax, together with any such interest and
penalties, being hereinafter collectively referred to as the “Excise Tax”), then
the Executive shall be entitled to receive an additional payment (a “Gross-Up
Payment”) in an amount sufficient to pay all taxes (including any interest or
penalties imposed with respect to such taxes), including, without limitation,
any income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment.

(b)           Calculation of Gross-Up Payment.  Subject to the provisions of
paragraph (c) of this Section 5, all determinations required to be made under
this Section 5, including whether and when a Gross-Up Payment is required and
the amount of such Gross-Up Payment and the assumptions to be used in arriving
at such determination, shall be made by a certified public accounting firm
selected by the Company and reasonably acceptable to the Executive (the
“Accounting Firm”), which shall be retained to provide detailed supporting
calculations both to the Company and the Executive.  If the Accounting Firm is
serving as accountant or auditor for the individual, entity or group effecting
the Change in Control, the Executive shall have the right to appoint another
nationally recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the Accounting
Firm hereunder).  All fees and expenses of the Accounting Firm shall be paid
solely by the Company.  Any Gross-Up Payment, as determined pursuant to this
Section 5, shall be paid by the Company to the Executive within five (5) days of
the receipt of the Accounting Firm’s determination.  Any determination by the
Accounting Firm shall be binding upon the Company and the Executive.  As a
result of the uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which should have been made will not have been
made by the Company (“Underpayment”), consistent with the calculations required
to be made hereunder.  If the Company exhausts its remedies pursuant to
paragraph (c) of this Section 5 and the Executive thereafter is required to pay
an Excise Tax in an amount that exceeds the Gross-Up Payment received by the
Executive, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be paid by the Company to or
for the benefit of the Executive.

 
 

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(c)           Contested Taxes.  The Executive shall notify the Company in
writing of any claim by the Internal Revenue Service that, if successful, would
result in an Underpayment.  Such notification shall be given as soon as
practicable but not later than ten (10) business days after the Executive is
informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid or
appealed.  The Executive shall not pay such claim prior to the expiration of the
30-day period following the date on which it gives such notice to the Company
(or such shorter period ending on the date that any payment of taxes with
respect to such claim is due).  If the Company notifies the Executive in writing
prior to the expiration of such period that it desires to contest such claim,
the Executive shall:

(i)             give the Company any information reasonably requested by the
Company relating to such claim,

(ii)            take such action in connection with contesting such claims as
the Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,

(iii)           cooperate with the Company in good faith in order to effectively
contest such claim, and

(iv)           permit the Company to participate in any proceedings relating to
such claim;

provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses.  Without limitation on the foregoing provisions
of this paragraph (c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forego any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and sue for a refund or to contest
the claim in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
such claim and sue for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis, and shall indemnify and
hold the Executive harmless, on an after-tax basis, from any Excise Tax or
indemnity and hold the Executive harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any imputed income with
respect to such advance; and further provided that any extension of the statute
of limitations relating to payment of taxes for the taxable year of the
Executive with respect to which such contested amount is claimed to be due is
limited solely to such contested amount.  Furthermore, the Company’s control of
the contest shall be limited to issues with respect to the amount of the
Gross-Up Payment, and the Executive shall be entitled to settle or contest, as
the case may be, any other issue raised by the Internal Revenue Service or any
other taxing authority.

(d)           Refunds.  If, after the receipt by the Executive of an amount
advanced by the Company pursuant to this Section 5, the Executive becomes
entitled to receive any refund with respect to such claim, the Executive shall
promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto).

5.           Legal Fees.   The Company shall reimburse the Executive for all
legal fees and other costs incurred in enforcing this Agreement.

 
 

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6.           Certain Covenants by the Executive.

(a)           Covenant Not to Compete.  For the consideration described in this
Agreement to be paid to Executive, Executive agrees that during the term of his
employment with the Company or Related Corporation and for a period of one (1)
year following the close of business on the date of the termination his of
employment he will not (except as a consultant to the Company or an Affiliate),
jointly or independently, directly or indirectly, engage in and/or participate
in the cold-storage warehousing business or the motor carrier business for
transportation of dry (non-perishable and non-temperature controlled),
perishable and/or temperature controlled truckload, less-than-truckload (“LTL”)
and/or distribution shipments rated as LTL shipments or distribution shipments,
respectively, according to the provisions of tariffs and shipper contracts to
which the Company or an Affiliate is a party, either as a common motor carrier,
contract motor carrier, freight transportation broker, third-party logistics
provider or otherwise, in interstate commerce, in intrastate commerce and/or in
international commerce (the “Competing Business”) within the forty-eight (48)
contiguous states of the continental United States.  It is recognized and agreed
that Executive has conducted motor carrier operations in interstate commerce, in
intrastate commerce and in international commerce for several years and has
accumulated expertise and familiarity with operations involving the Competing
Business on a national and international basis. Executive further agrees,
acknowledges and solemnly declares that he has appreciable knowledge, experience
and expertise in the motor freight business, the freight transportation broker
business and the third-party logistics provider business, and that his being in
competition with the Company or any Affiliate would be extremely detrimental to
the Company or the Affiliate, and accordingly, Executive covenants, warrants and
agrees that during the term of his employment and during the one (1) year period
described herein, he will not, jointly or independently, directly or indirectly,
take or permit to be taken on his behalf any action making use of such
expertise, knowledge or information in a Competing Business (provided that the
Executive shall not be restricted hereby from owning or acquiring 5% or less of
the outstanding voting securities of a public company that engages in such
business), provided that, the foregoing restriction will terminate immediately
if the Executive’s employment with the Company or Related Corporation is
terminated by the Company or the Related Corporation Without Cause or by the
Executive for Good Reason.  The foregoing provision is not intended to override,
supersede, reduce, modify or affect in any manner any other noncompetition
covenant or agreement entered into between Executive and the Company or any of
its Affiliates.  Any such covenant or agreement shall remain in full force and
effect in accordance with its terms.  Executive agrees that at any time during
the non-competition period he will not, without the prior written consent of the
Company:
 
                (i)     request or advise any customer or client of the Company
or of any Affiliate (including but not limited to any customers or clients of
the Company or of any Affiliate who are shippers, receivers, freight
transportation brokers or third-party logistics providers) having or expected to
have business dealings with the Company or any Affiliate pertaining to the
Competing Business to withdraw, curtail or cancel such business or business
dealings, or to take any business to a competitor of the Company or any
Affiliate; or
                (ii)    provide any person a partial or complete list, whether
orally or in writing, of customers having business dealings with the Company or
any Affiliate pertaining to the Competing Business or who are known to him to
have had business dealings with the Company or the Affiliate pertaining to the
Competing Business.

 
        (b)         Protection of Confidential Information.  The Executive
agrees that he will not at any time during or following his employment by the
Company or Related Corporation, without the Company’s or Related Corporation’s
prior written consent, divulge any Confidential Information to any other person
or entity or use any Confidential Information for his own benefit.  Upon
termination of employment, for any reason whatsoever, regardless of whether
either party may be at fault, the Executive will return to the Company or
Related Corporation all physical Confidential Information in the Executive’s
possession.

(c)           Non-Solicitation of Employees.  The Executive agrees, for so long
as the Executive remains employed by the Company or Related Corporation, and for
a period of two years following termination of the Executive’s employment, that
the Executive shall not, either for the Executive’s own account, or on behalf of
any other person or entity, solicit, suggest or request that any other person
employed by the Company or one of the Affiliates leave such employment for the
purpose of becoming employed by the Executive or any other person or entity, or
in any way violate any agreement between the Company or the Affiliate and such
person.

 
 

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(d)           Extent of Restrictions. If the scope of any restriction contained
in this non-competition agreement is found by any Court of competent
jurisdiction to be too broad to permit enforcement of such restriction to its
full extent, then such restriction shall be enforced to the maximum extent
permitted by law, and Executive agrees and consents that such scope may be
judicially modified accordingly in any proceeding brought to enforce such
restriction.  Executive acknowledges that any breach of the agreements contained
in this non-competition agreement would cause irreparable injury to the Company
and/or a Related Corporation and that the remedy at law for any breach would be
inadequate, and agrees and consents that temporary and injunctive relief may be
granted in any proceeding which may be brought to enforce any provision of this
non-competition agreement without the necessity of proof of actual
damages.  Executive hereby acknowledges that the Company or Related Corporation
would be entitled to enforce all of the agreements and covenants contained in
this non-competition agreement for the Company or a Related Corporation’s own
benefit or for the benefit of any of the Affiliates.  Nothing contained in this
non-competition agreement shall prevent the Company or a Related Corporation or
any Affiliates from bringing an action at law and recovering actual damages to
the extent the same are provable, as all remedies herein granted shall each be
independent causes of action.  The invalidity of any provision of this Agreement
or of this non-competition agreement shall not affect the validity of any other
provisions of this non-competition agreement.  “Affiliate” for purposes of this
Section 7 shall mean the Company and all of its present or future direct and
indirect subsidiaries.  For purposes of this Section 7 “Person” includes
individuals, firms, partnerships, associations, corporations, companies,
entities, enterprises, joint ventures and any other business organizations.

7.           Joinder for Limited Purposes.   For purposes under Sections 2, 3,
4, 5 and 6 the term “Company” shall also include “Related Corporations” who will
be jointly and severally liable for the obligations under such provisions of
this Agreement.

8.           Tax Withholdings.   Each payment to the Executive under this
Agreement will be subject to the withholding of all taxes imposed on Executive
with respect to such payment and required by applicable law to be withheld by
the Company.

9.           Severability.  In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason, the
remaining provisions of this Agreement shall be unaffected thereby and shall
remain in full force and effect.

 
 

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10.           Successors.  This Agreement shall be binding upon and inure to the
benefit of the Company and any successor of the Company.  The Company and any
Related Corporation will require any successor to all or substantially all of
the business and/or assets of the Company or any Related Corporation, as the
case may be to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company or any Related Corporation would
be required to perform if no succession had taken place.

11.           Entire Agreement.  This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof.  This
Agreement may not be modified in any manner except by a written instrument
signed by both the Company and the Executive.

12.           Notices.  Any notice required under this Agreement shall be in
writing and shall be delivered by certified mail return receipt requested to
each of the parties as follows:

To the Executive:

Ronald J. Knutson
2341 Kane Lane
Batavia, IL 60510

To the Company:

Frozen Food Express Industries, Inc.
1145 Empire Central Place
Dallas, Texas 75247-4309
Attention: President

13.           Governing Law.  The provisions of this Agreement shall be
construed in accordance of the laws of the State of Texas, except to the extent
preempted by ERISA or other federal laws, as applicable, without reference to
the conflicts of laws provisions thereof.

IN WITNESS WHEREOF, the Executive and the Company have executed this Agreement
as of the date and year first above written and the Related Corporations join
for the purposes specified in Section 8.

COMPANY

FROZEN FOOD EXPRESS INDUSTRIES, INC.

By: /s/Stoney M. Stubbs, Jr.
Its: President

RELATED CORPORATION

FFE TRANSPORTATION SERVICES, INC.

By: /s/Stoney M. Stubbs, Jr.
Its: President

EXECUTIVE

/s/ Ronald J. Knutson
Ronald J. Knutson