EXHIBIT 10(f) TEXAS OIL & CHEMICAL CO. PHANTOM STOCK PLAN 1. Purpose. This Phantom Stock Plan, (the "Plan"), of Texas Oil & Chemical Co. for a select group of management personnel is intended to advance the best interest of Texas Oil & Chemical Co. and subsidiary companies by providing such personnel who have a substantial responsibility for the management and growth of the companies with additional incentive by promoting a productivity viewpoint among such executive and key personnel. 2. Definitions. 2.1 "Administrative Committee" shall mean the Board of Directors of the Company or any committee established by the Board of Directors of the Company to administer this Plan. 2.2 "Anniversary Date" shall mean September 30 of each calendar year, which will be the last day of the fiscal year of the Company. 2.3 "Award Level" shall mean any of the following as determined by the Administrative Committee in granting an award: (i) the attainment of a level of net profits of the Company for a given year, (ii) the attainment of a level of net profits of a specified Sub or a combination of Subs for a given year, or (iii) a fixed dollar amount. 2.4 "Common Stock" shall mean the common stock of the Company, no par value. 2.5 "Company" shall mean Texas Oil & Chemical Co. 2.6 "Date of Award" shall mean the Anniversary Date as of which a Participant is determined to be entitled to specified incentive compensation because of the attainment of an Award Level. 2.7 "Employee" shall mean any person including an officer of the Company or a Sub (whether or not he is also a director) who is employed by the Company or a Sub on a full time basis, who is compensated for such employment by regular salary and who, in the opinion of the Administrative Committee is one of a select group of management personnel of the Company or of a Sub in a position to contribute materially to the continued growth and development and to the future financial success of the Company. 2.8 "Net Profits of the Company" shall mean the net profits of the Company as reflected on its federal income tax return for the year before provision for federal income tax plus or minus the net Lifo inventory adjustment for the year and plus or minus the net entitlement changes for the year, but exclusive of all items of extraordinary income as delineated in the audited annual statements. For -2- this purpose the net profits of the Company shall be consolidated with the net profits of all subsidiaries of the Company. 2.9 "Net Profits of the Sub" shall mean the net profits of a given Sub or a combination of subs as selected by the Administrative Committee when making an award to a Participant as reflected in its or their financial statements as prepared for the purpose of filing its or their federal income tax return or returns for the year before provision for federal income tax plus or minus the net Lifo inventory adjustment for the year and plus or minus the net entitlement changes for the year, but exclusive of all items of extraordinary income as delineated on the audited annual statement. 2.10 "Participant" shall mean an Employee who is awarded deferred compensation hereunder. 2.11 "Retirement" shall mean severance from the employ of the Company and all Subs upon or after attaining the normal retirement age whether established by the Company or Sub through its qualified Plan (which is presently age 65) or through contract with a particular employee or becoming totally disabled under such a plan, if applicable. 2.12 "Stated Value" shall mean the value of one share of common stock of the Company as determined by the Administrative Committee for the Company as of a given -3- Anniversary Date. This Stated Value is not necessarily the fair market value of the Company but is the value established only for purposes of this Plan pursuant to the procedures as set forth below in this Section. The purpose of the valuation is to provide a consistent method of determining the relative changes in the value of the Company and its related Subs, both as individual companies and as a whole, over a period of years, in order to accomplish the purpose stated in section 1 hereof. While the Stated Value may bear some relation to fair market value, it does not purport to be fair market value for the purpose of selling one asset, one Sub, or the whole Company, of borrowing money, of determining estate or inheritance tax liabilities, or for any other specific purpose. Stated Value shall be determined as follows: (a) The Administrative Committee shall determine the fair market value of the various assets either individually or by classes, based on the most recent formal outside valuation of the Company, and updated to the date of this valuation. These values shall be substituted for the book value of the fixed assets and the difference shall be added to or subtracted from the net equity as reflected in the audited financial statements of the Company to determine a value. -4- (b) The Administrative Committee shall determine the 3 year historical Net Profits of the Company as defined in section 2.8 and estimate one (1) year of Net Profits of the Company in the future using the same type of procedure. The sum of these four (4) years' Net Profits are to be divided by four (4) to arrive at an average Net Profit. The resulting average Net Profit shall be multiplied by five (5) to determine a value of the Company. (c) The Administrative Committee shall then determine the average value of the Company by adding the values determined under subsections 2.12 (a) and (b) dividing by two (2). This value shall then be divided by the total number of shares of Common Stock outstanding to determine a value per share. The value per share so determined shall then be discounted by 35% to arrive at the Stated Value. In the event the Company becomes publicly held, the most recent published price shall become the Stated Value. Each year as of the Anniversary Date the Administrative Committee shall certify said Stated Value and shall place it on the special) ledger of the Phantom Stock Plan and -5- shall provide each Participant with a copy thereof. A Participant shall have the right within thirty (30) days of the date he received his notice of the Stated Value to object to its calculation. After such thirty (30) day period, if no written objections are received, said Stated Value shall be final and conclusive for all purposes of the Plan. 2.13 "Sub" shall mean any corporation in which the Company owns directly or indirectly stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock. 2.14 "Termination Date" shall mean the date a Participant's severance of employment with the Company and all Subs for any reason other than retirement for age or disability or death. 2.15 "Unit" shall mean one share of the phantom common stock set aside for a Participant. The number of units set aside each year is determined by dividing the incentive compensation awarded to a Participant as of a given Anniversary Date by the Stated Value of one share of common stock as of that same Anniversary Date. 3. Administration. 3.1 Composition: The Administrative Committee shall be composed of the Board of Directors of the Company -6- or those persons chosen by the Board of Directors to constitute the Committee. The Administrative Committee shall administer and construe this Plan. No member of the Administrative Committee shall be liable for any act done or any determination made in good faith. 3.2 Administration of Plan: Construction by the Administrative Committee of any provision of this Plan shall be final and conclusive. It shall determine, subject to the provisions of this Plan: (a) Participants: The Employees who shall participate in the Plan from time to time; (b) Incentive Compensation Formula: The percentages and Award Level which shall be used to determine incentive compensation for each of the Participants in the Plan, it being intended that the percentages and Award Level may be different for groups of Participants and for individual Participants; and (c) Service: Whether authorized leave of absence, or absence on military or government service shall constitute severance from the Company and all Subs; (d) Stated Value: The Stated Value of one share of Common Stock of the Company for the -7- purpose of this Plan. The Stated Value shall be determined consistently from year to year based upon the method described in section 2.12. 3.3 Delegation: The Administrative Committee may in its discretion delegate one or more of its duties to an officer or Employee or a committee composed of officers and Employees of the company or of a Sub but may not delegate its authority to construe this Plan or to make the determinations specified in section 3.2. 4. Establishment of Incentive Compensation Formula. Each year prior to the Anniversary Date the Administrative Committee shall determine the Employees who shall be eligible to have incentive compensation accrued for their account at the next Anniversary Date and shall determine the Award Level to be applicable to each Employee and the percentage of the Award Level which will be awarded to each Employee at the next Anniversary Date and shall make this known to each Participant in writing prior to or at the commencement of the fiscal year. The Award Level and percentage set for each of the various Participants need not be the same. Each year as soon as possible after the Anniversary Date the Administrative Committee shall determine the amount of incentive compensation awarded to each individual Participant and the amount of dividends paid on shares of Common Stock -8- equal to the number of Units previously awarded to the Participant and shall convert the awarded incentive compensation and dividends paid since the last Anniversary Date into whole and/or fractional units as may be required. Fractional Units shall be rounded to the third decimal. Then the Administrative Committee shall notify each Participant in writing of the amount of incentive compensation awarded to him during that year, the amount of dividends that had been paid on Common Stock equal to the number of units that he held during that year, and the number of Units that the incentive compensation and dividends were converted into as of the Anniversary Date, together with a restatement of the number of Units which have been previously awarded to him prior to the Anniversary Date and the new value of a Unit as of said Anniversary Date. 5. Income Earned During Employment. The Administrative Committee shall set up an appropriate record ("Special Ledger") which will from time to time reflect the name of each Participant, the number of Units which have been awarded to the individual as incentive compensation and the value of one Unit, determined as of the last Anniversary Date. Each year's award of Units shall be maintained separately. -9- 6. Benefits. 6.1 Retirement, Death or Termination by Company or Sub without Cause. A Participant who retires from the employ of the Company or a Sub on or after his retirement date as described in section 2.11 for age or disability, who dies at any time while in the employ of the Company or a Sub or who is terminated by the Company or a Sub without cause shall receive a benefit equal to the number of Units credited to his account on such date multiplied by the value of one such Unit determined as of the last preceding Anniversary Date prior to his death, retirement or termination. 6.2 Termination by Participant Prior to Retirement or Death. A Participant who terminates his services with the Company and all Subs with or without cause for any reason other than retirement for age or disability or death shall be entitled to a benefit equal to the applicable percentage in the table below for the period of participation in the Plan after the date given incentive compensation and dividends were converted into Units to the date of termination. For purposes of determining vesting under this schedule each year's Units shall each be treated separately, i.e., Units initially set aside in the special ledger on September 30, 1979, would become fully vested on September 30, 1984. Full years will be counted from September 30th of a given year to September 30th of the next year. -10-