EXHIBIT 10.3
  **FFE
TRANSPORATION SERVICES, INC.**
 
 **2005
EXECUTIVE BONUS AND RESTRICTED STOCK PLAN**
 
 This
Executive Bonus and Restricted Stock Plan (hereafter this “Plan”), dated as of
January 1, 2005 (the “Effective Date”), by FFE Transportation Services, Inc., a
Delaware corporation (“FFE”) which is a wholly-owned subsidiary of FFE, Inc.
(“Inc.”), a Delaware corporation which is a wholly-owned subsidiary of Frozen
Food Express Industries, Inc. (“Industries”), a Texas corporation, for the
benefit of certain officers of FFE.
 
 **PURPOSE**
 FFE has
established this Plan for the benefit of specified officers of FFE in order to
enhance the benefits to the covered officers, allow the officers to share in the
growth of FFE through the appreciation in the value of the common stock of
Industries, and to provide the officers with greater incentive to promote the
grown of Industries’ shareholder value. The purpose of the Plan is to align the
financial interests of key officers of FFE with those of Industries’
shareholders through the use of awards, payable in the common stock of
Industries, upon the attainment of predetermined performance goals.
 
 **TERMS**
 1.  DEFINITION.
For the purposes of this Plan, the following terms shall have the meanings set
forth below:
 (a)  The term
“Committee” shall mean a committee of the Board of Directors of Industries,
which shall consist of not less than two persons who are “Non-Employee
Directors” as defined in Rule 16b-3(b)(3) under the Securities Exchange Act of
1934 and who meet such additional criteria as the Board of Directors of
Industries shall determine so that any incentive bonuses paid pursuant to this
Plan shall be exempt from the limitation set forth in Section 162(m) of the
Internal Revenue Code of 1986, as amended.
 (b)  The term
“Compensation” shall mean a Participant’s base compensation (as determined by
the Committee) for the specified period and shall exclude any non-recurring
compensation such as bonus payments.
 (c)  The term
“Fair Market Value” shall mean the closing sales price of the securities per
share, as reported in the Wall Street Journal (or, if not so reported, as
otherwise reported by the National Association of Securities Dealers Automated
Quotation System) as of the date in question.
 (d)  The term
“Operating Ratio” shall mean with respect to any particular Participant, the
ratio of Industries’, or one or more of its operating entities’ or groups’, as
set forth on Exhibit A attached to this Plan, operating expenses to operating
revenues for the applicable fiscal year, as adjusted by the Committee for such
specific items, if any, that the Committee in its sole discretion deems
appropriate.
 (e)  The term
“Participant” shall mean each officer of FFE, including without limitation, any
officer of Industries that is an officer of FFE, whose name is set forth on
Exhibit A.
 2.  DETERMINATION
OF BONUS. With respect to each fiscal year commencing with fiscal year 2005,
each Participant shall be entitled to an incentive bonus (“Bonus”) calculated
pursuant to a formula determined on the basis of such Participant’s Operating
Ratio targets and specified percentages of such Participant’s Compensation, if
the Committee certifies that the applicable target has been obtained. The
targets and percentages for all Participants are shown on Exhibit A attached to
this Plan. On or before the last day of any fiscal year, the Committee may, in
its sole discretion, redetermine who will be a Participant (provided that such
person must be an officer of FFE) for the subsequent fiscal year and the
Operating Ratio targets and percentages to be used to calculate the
Participants’ Bonuses for the subsequent fiscal year by amending Exhibit A
attached to this Plan.
 3.  PAYMENT
OF BONUS AND ISSUANCE OF RESTRICTED STOCK.
 (a)  Each
Participant’s Bonus for any fiscal year shall be paid by FFE to such Participant
as soon as practicable after the consolidated financial statements of Industries
for such fiscal year have been prepared. ***[Note:
Section 409A will require either that (i) the bonus be paid within 2 1⁄2 months
after the close of the fiscal year, or (ii) if paid at a later date, then the
payment date must be a fixed date, ie., on May 1, and cannot be
accelerated.]***
 (b)  In
addition to the payment of any Bonus to a Participant, FFE shall award shares of
Restricted Stock to each Participant under the Industries’ 2005 Stock Incentive
Plan (the “Stock Incentive Plan”). The number of shares of Restricted Stock
shall be equal to 50% of the amount of the Participant’s Bonus for that fiscal
year divided by the applicable Share Value. The applicable Share Value shall
mean the amount that is the lower of (i) the Fair Market Value of a share of
Stock as of the last business day of the fiscal year immediately preceding the
fiscal year for which the Participant’s Bonus was awarded and (ii) the
average of the Fair Market Values of a share of Stock as of the last business
day of each calendar month of the fiscal year for which the Participant’s Bonus
was awarded.
 (c)  Shares of
Restricted Stock shall be awarded to a Participant as of the last business day
of the fiscal year for which the Participant’s Bonus was awarded (the “Grant
Date”).
 (d)  If the
specified bonus percentage for a Participant’s Operating Ratio for any fiscal
year is a negative number, no award for the fiscal year will be made. Rather,
the Committee shall have the option to reduce each Participant’s Compensation
for the next calendar year, or for such other period as the Committee may
determine, by such percentage.
 4.  ADJUSTMENT
TO NUMBER OF SHARES OF RESTRICTED STOCK.
 If the
Operating Ratio applicable to a Participant for the fiscal year ended
December 31, 2005 is less than 96 percent and the Committee certifies
thereto, the Participant’s restricted stock grant shall be increased as of the
end of such fiscal year by the number of shares set forth opposite the name of
such Participant on Exhibit B attached to this Plan.
 5.  VESTING
OF RESTRICTED STOCK.
 (a)  The
shares of Restricted Stock awarded to Participants shall vest over a three-year
period, one-third on each anniversary of the Grant Date, provided that the
Participant remains employed by FFE or a related corporation on the vesting
date.
 (b)  If a
Participant dies while employed by FFE or a related corporation, 100% of his
shares of Restricted Stock awarded under this Plan shall become
vested.
 (c)  The terms
and conditions of the Restricted Stock award shall be set forth in an Award
Agreement and shall be subject to the provisions of the Stock Incentive
Plan.
 6.  NON-TRANSFERABILTY.
Neither the shares of Restricted Stock nor any rights and benefits granted in
this Plan may 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
or distribution or pursuant to a qualified domestic relations order as defined
by the Internal Revenue Code of 1986, as amended (“Internal Revenue Code”), or
Title I of the Employee Retirement Income Security Act of 1974, as amended, or
the rules thereunder, and shall not be subject to execution, attachment, or
similar process.
 7.  NO
FIDUCIARY RELATIONSHIP. The Boards of Directors and the officers of FFE,
Industries and Inc. shall have no duty to manage or operate in order to maximize
the benefits granted to the Participants hereunder, but rather shall have full
discretionary power to make all management and operational decisions based on
their determination of their respective best interest. This Plan shall not be
construed to create a fiduciary relationship between such Boards or the officers
of FEE, Industries or Inc. and the Participant.
 8.  GOVERNING
LAW. This Plan shall be governed by and construed in accordance with the laws of
the State of Texas.
 9.  NO
EMPLOYMENT GUARANTEE. Nothing in this Plan shall be construed as an employment
contract or a guarantee of continued employment. The rights of any Participant
shall only be those as are expressly set forth in this Plan.
 10.  ADMINISTRATION.
The Committee shall administer this Plan and shall have the authority, in its
sole and absolute discretion, (a) to adopt, amend and rescind administrative and
interpretative rules and regulations relating to the Plan, (b) to determine the
Participants and the terms under which they may participate in this Plan, (c) to
make all other determinations, perform all other acts, and exercise all other
powers and authority necessary or advisable for administering the Plan,
including the delegation of those ministerial acts and responsibilities as the
Committee deems appropriate.
 11.  TAXES.
FFE shall be entitled to deduct from amounts payable hereunder any sums required
by federal, state, or local tax law to be withheld with respect to such
payments.
 12.  AMENDMENT.
In addition to the amendments to this Plan contemplated by Section 2, the Board
of Directors may amend or terminate this Plan in its sole
discretion.
 13.  GENERAL
CREDFITOR STATUS. The Participants shall, in no event, be regarded as standing
in any position, if at all, other than as a general creditor of FFE with respect
to any rights derived from the existence of this Plan and shall receive only
FFE’s unfunded and unsecured promise to pay benefits under this
Plan.
 14.  CAPTIONS.
The captions in this Plan are inserted for convenience of reference only and in
no way define, describe or limit the scope or intent of this Plan or any of the
provisions hereof.
 15.  SEVERABILITY.
If any provision of this Plan is held to be illegal, invalid or unenforceable
under present or future laws, such provision shall be fully severable and shall
not invalidate the remaining provisions of this Plan, and the remaining
provisions of this Plan shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its severance
from this Plan.
 16.  COSTS.
All expenses and costs incurred in connection with the operation of this Plan
shall be borne by FFE.
  **FROZEN
FOOD EXPRESS INDUSTRIES, INC.**
 
 By: /s/ Stoney M. Stubbs, Jr.
 Name: STONEY M. STUBBS, JR.
 Title:  Chairman of the
Board
  
  **INCENTIVE
BONUS CALCULATION**
 
 Participants:
Stoney M. (Mit) Stubbs, Jr., Charles G. Robertson and F. Dixon McElwee,
Jr.
 
 **Operating
Ratio Targets and Bonus Percentages Applicable to all
Participants:**
 **Operating**
      **Ratio**
      ******of
      Industries**
    **Participant’s**
      **Bonus
      Percentage**
      **For
      2005**100.0
      or more
    -15%99.9-96.1
    096.0-95.6
    1095.5-95.1
    2095.0-94.6
    3094.5-94.1
    4094.0-93.6
    5093.5-93.1
    6093.0-92.6
    7092.5-92.1
    8092.0-91.6
    9091.5
      or less
    100