EXHIBIT 10.18


 


MARTEN TRANSPORT, LTD.


2005 STOCK INCENTIVE PLAN


 


1.             Purpose
of Plan.


 


The
purpose of the Marten Transport, Ltd. 2005 Stock Incentive Plan (the “Plan”) is
to advance the interests of Marten Transport, Ltd. (the “Company”) and its
stockholders by enabling the Company and its Subsidiaries to attract and retain
qualified individuals through opportunities for equity participation in the
Company, and to reward those individuals who contribute to the achievement of
the Company’ economic objectives.


 


2.             Definitions.


 


The
following terms will have the meanings set forth below, unless the context
clearly otherwise requires:


 


2.1  “Board”
means the Board of Directors of the Company.


 


2.2  “Broker
Exercise Notice” means a written notice pursuant to which a Participant,
upon exercise of an Option, irrevocably instructs a broker or dealer to sell a
sufficient number of shares or loan a sufficient amount of money to pay all or
a portion of the exercise price of the Option and/or any related withholding
tax obligations and remit such sums to the Company and directs the Company to
deliver stock certificates to be issued upon such exercise directly to such
broker or dealer or their nominee.


 


2.3  “Cause”
means (i) dishonesty, fraud, misrepresentation, embezzlement or deliberate
injury or attempted injury, in each case related to the Company or any
Subsidiary, (ii) any unlawful or criminal activity of a serious nature,
(iii) any intentional and deliberate breach of a duty or duties that,
individually or in the aggregate, are material in relation to the Participant’s
overall duties, or (iv) any material breach of any confidentiality or
noncompete agreement entered into with the Company or any Subsidiary.


 


2.4  “Change
in Control” means an event described in Section 13.1 of the Plan.


 


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


 


2.6  “Committee”
means the group of individuals administering the Plan, as provided in
Section 3 of the Plan.


 


2.7  “Common
Stock” means the common stock of the Company, par value $0.01 per share, or
the number and kind of shares of stock or other securities into which such
Common Stock may be changed in accordance with Section 4.3 of the Plan.


 





















 


2.8  “Disability”
means the disability of the Participant such as would entitle the Participant
to receive disability income benefits pursuant to the long-term disability plan
of the Company or Subsidiary then covering the Participant or, if no such plan
exists or is applicable to the Participant, the permanent and total disability
of the Participant within the meaning of Section 22(e)(3) of the
Code.


 


2.9  “Effective
Date” means May 3, 2005 or such later date as the Plan is initially
approved by the Company’s stockholders.


 


2.10  “Eligible
Recipients” means all employees (including, without limitation, officers
and directors who are also employees) of the Company or any Subsidiary and any
non-employee directors, consultants, advisors and independent contractors of
the Company or any Subsidiary.


 


2.11  “Exchange
Act” means the Securities Exchange Act of 1934, as amended.


 


2.12  “Fair Market Value” means, with respect to the Common
Stock, as of any date: (i) (or, if no shares were traded or quoted on such
date, as of the next preceding date on which there was such a trade or quote)
the closing sale price of the Common Stock as reported on the Nasdaq National
Market System or on any national exchange; or (ii) if the Common Stock is
not so listed, admitted to unlisted trading privileges, or reported on any
national exchange or on the Nasdaq National Market System, the closing sale
price as of such date at the end of the regular trading session, as reported by
the Nasdaq SmallCap Market, OTC Bulletin Board, the Bulletin Board Exchange
(BBX) or the National Quotation Bureaus, Inc., or other comparable
service; or (iii) if the Common Stock is not so listed or reported, such
price as the Committee determines in good faith in the exercise of its
reasonable discretion.


 


2.13  “Incentive Award” means an Option, Stock Appreciation
Right, Restricted Stock Award, Performance Unit Award or Stock Bonus granted to
an Eligible Recipient pursuant to the Plan.


 


2.14  “Incentive
Stock Option” means a right to purchase Common Stock granted to an Eligible
Recipient pursuant to Section 6 of the Plan that qualifies as an
“incentive stock option” within the meaning of Section 422 of the Code.


 


2.15  “Non-Statutory
Stock Option” means a right to purchase Common Stock granted to an Eligible
Recipient pursuant to Section 6 of the Plan that does not qualify as an
Incentive Stock Option.


 


2.16  “Option”
means an Incentive Stock Option or a Non-Statutory Stock Option.


 


2.17  “Participant”
means an Eligible Recipient who receives one or more Incentive Awards under the
Plan.


 


2.18  “Performance Criteria” means the performance criteria
that may be used by the Committee in granting Incentive Awards contingent upon
achievement of performance goals, consisting of net sales, operating income,
income before income taxes, net income, net income per share (basic or
diluted), profitability as measured by return ratios (including return on
assets, return


 


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on equity, return on investment
and return on sales), cash flows, market share, cost reduction goals, margins
(including one or more of gross, operating and net income margins), stock
price, total return to stockholders, economic value added, working capital and
strategic plan development and implementation. 
The Committee may select one criterion or multiple criteria for measuring
performance, and the measurement may be based upon Company, Subsidiary or
business unit performance, either absolute or by relative comparison to other
companies or any other external measure of the selected criteria.


 


2.19  “Performance Unit Award” means a right granted to an
Eligible Recipient pursuant to Section 9 of the Plan to receive the Fair
Market Value of one or more shares of Common Stock, payable in shares of Common
Stock, the payment, issuance, retention and/or vesting of which is subject to the
satisfaction of specified conditions which may include achievement of
Performance Criteria or other objectives.


 


2.20  “Previously Acquired Shares” means shares of Common
Stock that are already owned by the Participant or, with respect to any
Incentive Award, that are to be issued upon the grant, exercise or vesting of
such Incentive Award.


 


2.21  “Restricted Stock Award” means an award of Common
Stock granted to an Eligible Recipient pursuant to Section 8 of the Plan
that is subject to the restrictions on transferability and the risk of
forfeiture imposed by the provisions of such Section 8.


 


2.22  “Retirement”
means normal or approved early termination of employment or service pursuant to
and in accordance with the regular retirement/pension plan or practice of the
Company or Subsidiary then covering the Participant, provided that if the
Participant is not covered by any such plan or practice, the Participant will
be deemed to be covered by the Company’s plan or practice for purposes of this
determination.


 


2.23  “Securities
Act” means the Securities Act of 1933, as amended.


 


2.24  “Stock
Appreciation Right” means a right granted to an Eligible Recipient pursuant
to Section 7 of the Plan to receive a payment from the Company in the form
of shares of Common Stock, having a value equal to the difference between the
Fair Market Value of one or more shares of Common Stock and a specified
exercise price of such shares.


 


2.25  “Stock
Bonus” means an award of Common Stock granted to an Eligible Recipient
pursuant to Section 10 of the Plan.


 


2.26  “Subsidiary”
means any entity that is directly or indirectly controlled by the Company or
any entity in which the Company has a significant equity interest, as
determined by the Committee.


 


2.27  “Tax
Date” means the date any tax withholding obligation arises under the Code
for a Participant with respect to an Incentive Award.


 


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3.             Plan
Administration.


 


3.1  The
Committee.  The Plan will be
administered by the Board or by a committee of the Board.  So long as the Company has a class of its
equity securities registered under Section 12 of the Exchange Act, any
committee administering the Plan will consist solely of two or more members of
the Board who are “non-employee directors” within the meaning of
Rule 16b-3 under the Exchange Act, who are “independent” as required by
the listing standards of the Nasdaq Stock Market or any other national exchange
that lists the Company and who are “outside directors” within the meaning of Section 162(m)
of the Code. Such a committee, if established, will act by majority approval of
the members (unanimous approval with respect to action by written consent), and
a majority of the members of such a committee will constitute a quorum.  As used in the Plan, “Committee” will refer
to the Board or to such a committee, if established.  To the extent consistent with applicable
corporate law of the Company’s jurisdiction of incorporation, the Committee may
delegate to any officers of the Company the duties, power and authority of the
Committee under the Plan pursuant to such conditions or limitations as the
Committee may establish; provided, however, that only the Committee may
exercise such duties, power and authority with respect to Eligible Recipients
who are subject to Section 16 of the Exchange Act or whose compensation in
the fiscal year may be subject to the limits on deductible compensation
pursuant to Section 162(m) of the Code. 
The Committee may exercise its duties, power and authority under the
Plan in its sole and absolute discretion without the consent of any Participant
or other party, unless the Plan specifically provides otherwise.  Each determination, interpretation or other
action made or taken by the Committee pursuant to the provisions of the Plan
will be conclusive and binding for all purposes and on all persons, and no
member of the Committee will be liable for any action or determination made in
good faith with respect to the Plan or any Incentive Award granted under the
Plan.


 


3.2  Authority
of the Committee.


 


(a)  In accordance with and subject to
the provisions of the Plan, the Committee will have the authority to determine
all provisions of Incentive Awards as the Committee may deem necessary or
desirable and as consistent with the terms of the Plan, including, without
limitation, the following:  (i) the
Eligible Recipients to be selected as Participants; (ii) the nature and
extent of the Incentive Awards to be made to each Participant (including the
number of shares of Common Stock to be subject to each Incentive Award, any
exercise price, the manner in which Incentive Awards will vest or become
exercisable and the form of written agreement, if any, evidencing such
Incentive Award; (iii) the time or times when Incentive Awards will be
granted; (iv) the duration of each Incentive Award; and (v) the
restrictions and other conditions to which the payment or vesting of Incentive
Awards may be subject; provided, however, that notwithstanding any other
provision of the Plan, any Incentive Award other than an Option or Stock
Appreciation Right will not vest or become payable over a period of less than
three (3) years from the date of grant, if vesting or payment is based
solely upon the passage of time, and will have a performance measurement period
of not less than one (1) year, if vesting or payment is based upon
satisfaction of Performance Criteria or other objectives.  In addition, the Committee will have the
authority under the Plan in its sole discretion to pay the economic value of any
Incentive Award in the form of cash, Common Stock or any combination of both;
provided, however, that the Committee will have the authority to pay the
economic value of any Incentive Award in cash only if, and


 


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to the extent, the exercise of such right does not cause an Incentive
Award to become subject to Section 409A of the Code.


 


(b)  Subject to Section 3.2(d),
below, the Committee will have the authority under the Plan to amend or modify
the terms of any outstanding Incentive Award in any manner, including, without
limitation, the authority to modify the number of shares or other terms and
conditions of an Incentive Award, extend the term of an Incentive Award,
accelerate the exercisability or vesting or otherwise terminate any
restrictions relating to an Incentive Award, accept the surrender of any
outstanding Incentive Award or, to the extent not previously exercised or
vested, authorize the grant of new Incentive Awards in substitution for surrendered
Incentive Awards; provided, however, that the amended or modified terms are
permitted by the Plan as then in effect, that such amendment does not cause an
Incentive Award to become subject to Section 409A of the Code, and that
any Participant adversely affected by such amended or modified terms has
consented to such amendment or modification.


 


(c)  In the event of (i) any
reorganization, merger, consolidation, recapitalization, liquidation,
reclassification, stock dividend, stock split, combination of shares, rights
offering, extraordinary dividend or divestiture (including a spin-off) or any
other change in corporate structure or shares; (ii) any purchase,
acquisition, sale, disposition or write-down of a significant amount of assets
or a significant business; (iii) any change in accounting principles or
practices, tax laws or other such laws or provisions affecting reported
results; (iv) any uninsured catastrophic losses or extraordinary
non-recurring items as described in Accounting Principles Board Opinion
No. 30 or in management’s discussion and analysis of financial performance
appearing in the Company’s annual report to stockholders for the applicable
year; or (v) any other similar change, in each case with respect to the
Company or any other entity whose performance is relevant to the grant or
vesting of an Incentive Award, the Committee (or, if the Company is not the
surviving corporation in any such transaction, the board of directors of the
surviving corporation) may, without the consent of any affected Participant,
amend or modify the vesting criteria (including Performance Criteria) of any
outstanding Incentive Award that is based in whole or in part on the financial
performance of the Company (or any Subsidiary or division or other subunit thereof)
or such other entity so as equitably to reflect such event, with the desired
result that the criteria for evaluating such financial performance of the
Company or such other entity will be substantially the same (in the sole
discretion of the Committee or the board of directors of the surviving
corporation) following such event as prior to such event; provided, however,
that the amended or modified terms are permitted by the Plan as then in effect.


 


(d)  Notwithstanding any other provision
of this Plan other than Section 4.3, the Committee may not, without prior
approval of the Company’s stockholders, seek to effect any re-pricing of any
previously granted, “underwater” Option by: 
(i) amending or modifying the terms of the Option to lower the
exercise price; (ii) canceling the underwater Option and granting either
(A) replacement Options or Stock Appreciation Rights having a lower
exercise price; (B) Restricted Stock Awards; or (C) Performance Unit
Awards or Stock Bonuses in exchange; or (iii) repurchasing the underwater
Options and granting new Incentive Awards under this Plan.  For purposes of this Section 3.2(d), an
Option will be


 


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deemed to be “underwater” at any time when the Fair Market Value of the
Common Stock is less than the exercise price of the Option.


 


(e)  Notwithstanding anything in this
Plan to the contrary, the Committee will not take any action or exercise any
discretion to cause an Incentive Award to become subject to the requirements of
Section 409A of the Code.


 


4.             Shares
Available for Issuance.


 


4.1  Maximum
Number of Shares Available; Certain Restrictions on Awards.  Subject to adjustment as provided in
Section 4.3 of the Plan, the maximum number of shares of Common Stock that
will be available for issuance under the Plan will be 1,900,000.  Notwithstanding any other provision of the
Plan to the contrary, (i) no Participant in the Plan may be granted
Options and Stock Appreciation Rights relating to more than 250,000 shares of
Common Stock in the aggregate during any calendar year, (ii) no
Participant in the Plan may be granted Incentive Awards (other than Options and
Stock Appreciation Rights) relating to more than 125,000 shares of Common Stock
pursuant to each type of Incentive Award (other than Options and Stock
Appreciation Rights) during any Calendar year, (iii) no more than an
aggregate of 500,000 shares of Common Stock may be issued pursuant to Incentive
Awards under the Plan, other than Options and Stock Appreciation Rights,  and (iv) no more than 1,900,000 shares
of Common Stock may be issued pursuant to the exercise of Incentive Stock
Options granted under the Plan, with the foregoing share limits subject, in
each case, to adjustment as provided in Section 4.3.  The shares available for issuance under the
Plan may, at the election of the Committee, be either treasury shares or shares
authorized but unissued, and, if treasury shares are used, all references in
the Plan to the issuance of shares will, for corporate law purposes, be deemed
to mean the transfer of shares from treasury.


 


4.2  Accounting
for Incentive Awards.  Shares of
Common Stock that are issued under the Plan or that are subject to outstanding
Incentive Awards will be applied to reduce the maximum number of shares of
Common Stock remaining available for issuance under the Plan; provided,
however, that shares subject to an Incentive Award that lapses, expires, is
forfeited (including issued shares forfeited under a Restricted Stock Award) or
for any reason is terminated unexercised or unvested or is settled or paid in
cash or any form other than shares of Common Stock will automatically again
become available for issuance under the Plan.


 


4.3  Adjustments
to Shares and Incentive Awards.  In
the event of any reorganization, merger, consolidation, recapitalization,
liquidation, reclassification, stock dividend, stock split, combination of
shares, rights offering, divestiture or extraordinary dividend (including a
spin-off) or any other change in the corporate structure or shares of the
Company, the Committee (or, if the Company is not the surviving corporation in
any such transaction, the board of directors of the surviving corporation) will
make appropriate adjustment (which determination will be conclusive) as to the number
and kind of securities or other property (including cash) available for
issuance or payment under the Plan and, in order to prevent dilution or
enlargement of the rights of Participants, (a) the number and kind of
securities or other property (including cash) subject to outstanding Incentive
Awards, and (b) the exercise price of outstanding Options and Stock
Appreciation Rights.


 


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5.             Participation.


 


Participants
in the Plan will be those Eligible Recipients who, in the judgment of the
Committee, have contributed, are contributing or are expected to contribute to
the achievement of economic objectives of the Company or its Subsidiaries.  Eligible Recipients may be granted from time
to time one or more Incentive Awards, singly or in combination with other
Incentive Awards, as may be determined by the Committee in its sole
discretion.  Incentive Awards will be
deemed to be granted as of the date specified in the grant resolution of the
Committee, which date will be the date of any related agreement with the
Participant.


 


6.             Options.


 


6.1  Grant.  An Eligible Recipient may be granted one or
more Options under the Plan, and such Options will be subject to such terms and
conditions, consistent with the other provisions of the Plan, as may be
determined by the Committee in its sole discretion.  The Committee may designate whether an Option
is to be considered an Incentive Stock Option or a Non-Statutory Stock Option.  To the extent that any Incentive Stock Option
granted under the Plan ceases for any reason to qualify as an “incentive stock
option” for purposes of Section 422 of the Code, such Incentive Stock
Option will continue to be outstanding for purposes of the Plan but will
thereafter be deemed to be a Non-Statutory Stock Option.


 


6.2  Exercise
Price.  The per share price to be
paid by a Participant upon exercise of an Option will be determined by the
Committee in its discretion at the time of the Option grant, provided that such
price will not be less than 100% of the Fair Market Value of one share of
Common Stock on the date of grant (110% of the Fair Market Value of one share
of Common Stock on the date of grant of an Incentive Stock Option if, at the
time the Incentive Stock Option is granted, the Participant owns, directly or
indirectly, more than 10% of the total combined voting power of all classes of
stock of the Company or any parent or subsidiary corporation of the Company).


 


6.3  Exercisability
and Duration.  An Option will become
exercisable at such times and in such installments and upon such terms and
conditions as may be determined by the Committee in its sole discretion at the
time of grant (including without limitation (i) the achievement of one or
more Performance Criteria; and/or that (ii) the Participant remain in the
continuous employ or service of the Company or a Subsidiary for a certain
period; provided, however, that no Option may be exercisable after 10 years
from its date of grant (five years from its date of grant in the case of an Incentive
Option if, at the time the Incentive Stock Option is granted, the Participant
owns, directly or indirectly, more than 10% of the total combined voting power
of all classes of stock of the Company or any parent or subsidiary corporation
of the Company).


 


6.4  Payment
of Exercise Price.


 


(a)  The total purchase price of the
shares to be purchased upon exercise of an Option will be paid entirely in cash
(including check, bank draft or money order); provided, however, that the
Committee, in its sole discretion and upon terms and conditions established by
the Committee, may allow such payments to be made, in whole or in part, by
(i) tender of a Broker Exercise Notice; (ii) by tender, or
attestation as to ownership, of Previously


 


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Acquired Shares that have been held for the period of time necessary to
avoid a charge to the Company’s earnings for financial reporting purposes and
that are otherwise acceptable to the Committee; (iii) to the extent
permissible under applicable law, by delivery of a promissory note (on terms
acceptable to the Committee in its sole discretion); (iv) by a “net
exercise of the Option (as further described in paragraph (b), below);  or 
(v) by a combination of such methods.


 


(b)  In the case of a “net exercise” of
an Option, the Company will not require a payment of the exercise price of the
Option from the Participant but will reduce the number of shares of Common
Stock issued upon the exercise by the largest number of whole shares that has a
Fair Market Value that does not exceed the aggregate exercise price for the
shares exercised under this method. Shares of Common Stock will no longer be
outstanding under an Option (and will therefore not thereafter be exercisable)
following the exercise of such Option to the extent of (i) shares used to
pay the exercise price of an Option under the “net exercise,” (ii) shares
actually delivered to the Participant as a result of such exercise and
(iii) any shares withheld for purposes of tax withholding pursuant to
Section 12.1.


 


(c)  Previously Acquired Shares tendered
or covered by an attestation as payment of an Option exercise price will be
valued at their Fair Market Value on the exercise date.


 


6.5  Manner of Exercise.  An Option may be exercised by a Participant
in whole or in part from time to time, subject to the conditions contained in
the Plan and in the agreement evidencing such Option, by delivery in person, by
facsimile or electronic transmission or through the mail of written notice of
exercise to the Company at its principal executive office in Mondovi, Wisconsin
and by paying in full the total exercise price for the shares of Common Stock
to be purchased in accordance with Section 6.4 of the Plan.


 


7.             Stock
Appreciation Rights.


 


7.1  Grant.  An Eligible Recipient may be granted one or
more Stock Appreciation Rights under the Plan, and such Stock Appreciation
Rights will be subject to such terms and conditions, consistent with the other
provisions of the Plan, as may be determined by the Committee in its sole
discretion.  The payment of the economic
value of Stock Appreciation Rights will be made to a Participant in Common
Stock.


 


7.2  Exercise
Price.  The exercise price of a Stock
Appreciation Right will be determined by the Committee, in its discretion, at
the date of grant but may not be less than 100% of the Fair Market Value of one
share of Common Stock on the date of grant.


 


7.3  Exercisability
and Duration.  A Stock Appreciation
Right will become exercisable at such time and in such installments as may be
determined by the Committee in its sole discretion at the time of grant;
provided, however, that no Stock Appreciation Right may be exercisable after 10
years from its date of grant.  A Stock
Appreciation Right will be exercised by giving notice in the same manner as for
Options, as set forth in Section 6.5 of the Plan.


 


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7.4  Grants
in Tandem with Options.  Stock
Appreciation Rights may be granted alone or in addition to other Incentive
Awards, or in tandem with an Option.  A
Stock Appreciation Right may be issued in tandem with an Option only if neither
the Option nor the Stock Appreciation Right is subject to the requirements of
Section 409A of the Code.  A Stock
Appreciation Right granted in tandem with an Option shall cover the same number
of shares of Common Stock as covered by the Option (or such lesser number as
the Committee may determine), shall be exercisable at such time or times and
only to the extent that the related Option is exercisable, have the same term
as the Option and shall have an exercise price equal to the exercise price for
the Option, which shall in no event be less than the Fair Market Value of one
share of Common Stock on the date of grant. 
Upon the exercise of a Stock Appreciation Right granted in tandem with
an Option, the Option shall be canceled automatically to the extent of the
number of shares covered by such exercise; conversely, upon exercise of an
Option having a related Stock Appreciation Right, the Stock Appreciation Right
shall be canceled automatically to the extent of the number of shares covered
by the Option exercise.


 


8.             Restricted
Stock Awards.


 


8.1  Grant.  An Eligible Recipient may be granted one or
more Restricted Stock Awards under the Plan, and such Restricted Stock Awards
will be subject to such terms and conditions, consistent with the other
provisions of the Plan, as may be determined by the Committee in its sole
discretion.  The Committee may impose
such restrictions or conditions, not inconsistent with the provisions of the
Plan, to the vesting of such Restricted Stock Awards as it deems appropriate,
including, without limitation, (i) the achievement of one or more of
Performance Criteria; and/or that (ii) the Participant remain in the
continuous employ or service of the Company or a Subsidiary for a certain
period, provided such restrictions cause the Restricted Stock Award and
underlying Common Stock to not be includible in income under Section 83 of
the Code by reason of the property being nontransferable and subject to a
substantial risk of forfeiture within the meaning of Section 409A of the
Code.


 


8.2  Rights
as a Stockholder; Transferability. 
Except as provided in Sections 8.1, 8.3, 8.4 and 14.3 of the Plan, a
Participant will have all voting, dividend, liquidation and other rights with
respect to shares of Common Stock issued to the Participant as a Restricted
Stock Award under this Section 8 upon the Participant becoming the holder
of record of such shares as if such Participant were a holder of record of
shares of unrestricted Common Stock.


 


8.3  Dividends
and Distributions.  Any dividends or
distributions paid other than in the form of cash with respect to shares of
Common Stock subject to the unvested portion of a Restricted Stock Award will
be subject to the same restrictions as the shares to which such dividends or
distributions relate.


 


8.4  Enforcement
of Restrictions.  To enforce the
restrictions referred to in this Section 8, the Committee may place a
legend on the stock certificates referring to such restrictions and may require
the Participant, until the restrictions have lapsed, to keep the stock
certificates, together with duly endorsed stock powers, in the custody of the
Company or its transfer agent, or to maintain evidence of stock ownership,
together with duly endorsed stock powers, in a certificateless book-entry stock
account with the Company’s transfer agent.


 


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9.             Performance
Unit Awards.


 


An
Eligible Recipient may be granted one or more Performance Unit Awards
under the Plan, and such Performance Unit Awards will be subject to such
terms and conditions, consistent with the other provisions of the Plan, as may
be determined by the Committee in its sole discretion.  The Committee may impose such restrictions or
conditions, not inconsistent with the provisions of the Plan, to
the payment, issuance, retention and/or vesting of such
Performance Unit Awards as it deems appropriate, including, without
limitation, (i) the achievement of one or more of Performance Criteria;
and/or that (ii) the Participant remain in the continuous employ or
service of the Company or a Subsidiary for a certain period; provided, however,
that in all cases payment of a Performance Unit Award will be made to the
Participant within two and one-half months following the end of the
Participant’s tax year during which receipt of the Performance Unit Award
is no longer subject to a “substantial risk of forfeiture” within the meaning
of Section 409A of the Code.


 


10.           Stock
Bonuses.


 


An
Eligible Recipient may be granted one or more Stock Bonuses under the Plan, and
such Stock Bonuses will be subject to such terms and conditions, consistent
with the other provisions of the Plan, as may be determined by the
Committee.  The Participant will have all
voting, dividend, liquidation and other rights with respect to the shares of
Common Stock issued to a Participant as a Stock Bonus under this
Section 10 upon the Participant becoming the holder of record of such
shares.  The Committee may impose such
restrictions or conditions, not inconsistent with the other provisions of the
Plan, to the payment, issuance, retention and/or vesting of such Stock Bonuses
and/or on the assignment or transfer of shares of Common Stock issued pursuant
to the Stock Bonus as it deems appropriate, including, without limitation
(i) the achievement of one or more of Performance Criteria; and/or that
(ii) the Participant remain in the continuous employ or service of the
Company or a Subsidiary for a certain period; provided, however, that in all
cases payment of a Stock Bonus will be made to the Participant within two and
one-half months following the end of the Participant’s tax year during which
receipt of the Stock Bonus is no longer subject to a “substantial risk of
forfeiture” within the meaning of Section 409A of the Code.


 


11.           Effect
of Termination of Employment.  The
following provisions shall apply upon termination of a Participant’s employment
or other service with the Company and all Subsidiaries, except to the extent
that the Committee provides otherwise in an agreement evidencing an Incentive
Award at the time of grant or determines otherwise pursuant to
Section 11.3.


 


11.1  Termination
of Employment Due to Death, Disability or Retirement.  In the event a Participant’s employment or
other service with the Company and all Subsidiaries is terminated by reason of
death, Disability or Retirement:


 


(a)  All outstanding Options and Stock
Appreciation Rights then held by the Participant will remain exercisable to the
extent exercisable as of such termination for a period of one year after such
termination (but in no event after the expiration date of such Option or Stock
Appreciation Right);


 


10





















 


(b)  All outstanding Restricted Stock
Awards then held by the Participant that have not vested will be terminated and
forfeited; and


 


(c)  All outstanding Performance Unit
Awards and Stock Bonuses then held by the Participant that have not vested will
be terminated and forfeited.


 


11.2  Termination
of Employment for Reasons Other than Death, Disability or Retirement. In
the event a Participant’s employment or other service is terminated with the
Company and all Subsidiaries for any reason other than death, Disability or
Retirement, or a Participant is in the employ or service of a Subsidiary and
the Subsidiary ceases to be a Subsidiary of the Company (unless the Participant
continues in the employ or service of the Company or another Subsidiary), all
rights of the Participant under the Plan and any agreements evidencing an
Incentive Award will immediately terminate without notice of any kind, and no
Options or Stock Appreciation Rights then held by the Participant will
thereafter be exercisable, all Restricted Stock Awards then held by the
Participant that have not vested will be terminated and forfeited, and all
Performance Unit Awards and Stock Bonuses then held by the Participant will
vest and/or continue to vest in the manner determined by the Committee and set
forth in the agreement evidencing such Performance Unit Awards or Stock
Bonuses; provided, however, that if such termination is due to any reason other
than termination by the Company or any Subsidiary for Cause as defined in
Section 2.3, all outstanding Options and Stock Appreciation Rights then
held by such Participant will remain exercisable to the extent exercisable as
of such termination for a period of three months after such termination (but in
no event after the expiration date of any such Option or Stock Appreciation
Right).


 


11.3  Modification
of Rights Upon Termination. 
Notwithstanding the other provisions of this Section 11, upon a
Participant’s termination of employment or other service with the Company and
all Subsidiaries, the Committee may, in its sole discretion (which may be
exercised at any time on or after the date of grant, including following such
termination), except as provided in clause (ii), below, cause Options or Stock
Appreciation Rights (or any part thereof) then held by such Participant to
become or continue to terminate, become exercisable, and/or remain exercisable
following such termination of employment, and Restricted Stock Awards,
Performance Unit Awards and Stock Bonuses then held by such Participant to terminate,
vest, and/or continue to vest or become free of restrictions and conditions to
issuance, as the case may be, following such termination of employment, in each
case in the manner determined by the Committee; provided, however, that
(i) no Incentive Award may remain exercisable or continue to vest for more
than two years beyond the date such Incentive Award would have terminated if
not for the provisions of this Section 11.3 but in no event beyond its
expiration date; (ii) any such action adversely affecting any outstanding
Incentive Award will not be effective without the consent of the affected
Participant (subject to the right of the Committee to take whatever action it
deems appropriate under Sections 3.2(c), 4.3 and 13 of the Plan); and (iii) any
such action does not cause any outstanding Incentive Award to become subject to
the requirements of Section 409A of the Code.


 


11.4  Determination
of Termination of Employment or Other Service.


 


(a) 
The change
in a Participant’s status from that of an employee of the Company or any
Subsidiary to that of a non-employee consultant or advisor of the Company or
any


 


11





















 


Subsidiary will, for purposes of the Plan, be deemed to result in a
termination of such Participant’s employment with the Company and its
Subsidiaries, unless the Committee otherwise determines in its sole discretion.


 


(b)  The change in a Participant’s
status from that of a non-employee consultant or  advisor of the Company or any Subsidiary to
that of an employee of the Company or any Subsidiary will not, for purposes of
the Plan, be deemed to result in a termination of such Participant’s service as
a non-employee consultant or advisor with the Company and its Subsidiaries, and
such Participant will thereafter be deemed to be an employee of the Company or
its Subsidiaries until such Participant’s employment is terminated, in which
event such Participant will be governed by the provisions of this Plan relating
to termination of employment (subject to paragraph (a), above).


 


(c)  Unless the Committee otherwise
determines in its sole discretion, a Participant’s employment or other service
will, for purposes of the Plan, be deemed to have terminated on the date
recorded on the personnel or other records of the Company or the Subsidiary for
which the Participant provides employment or other service, as determined by
the Committee in its sole discretion based upon such records.


 


12.           Payment
of Withholding Taxes.


 


12.1  General
Rules.  The Company is entitled to
(a) withhold and deduct from future wages of the Participant (or from
other amounts that may be due and owing to the Participant from the Company or
a Subsidiary), or make other arrangements for the collection of, all amounts
the Company reasonably determines are legally required and necessary to satisfy
any and all federal, foreign, state and local withholding and
employment-related tax requirements attributable to an Incentive Award,
including, without limitation, the grant, exercise or vesting of, or payment of
dividends with respect to, an Incentive Award; (b) withhold cash paid or
payable or shares of Common Stock from the shares issued or otherwise issuable
to Participant in connection with an Incentive Award, provided such action does
not cause the Incentive Award to become subject to the requirements of
Section 409A of the Code; or (c) require the Participant promptly to
remit the amount of such withholding to the Company before taking any action,
including issuing any shares of Common Stock, with respect to an Incentive
Award.


 


12.2  Special
Rules.  The Committee may, in its
sole discretion and upon terms and conditions established by the Committee,
permit or require a Participant to satisfy, in whole or in part, any
withholding or employment-related tax obligation described in Section 12.1
of the Plan by electing to tender, or by attestation as to ownership of,
Previously Acquired Shares that have been held for the period of time necessary
to avoid a charge to the Company’s earnings for financial reporting purposes
and that are otherwise acceptable to the Committee, by delivery of a Broker
Exercise Notice or a combination of such methods, provided such action does not
cause the Incentive Award to become subject to the requirements of Section 409A
of the Code.  For purposes of satisfying
a Participant’s withholding or employment-related tax obligation, Previously
Acquired Shares tendered or covered by an attestation will be valued at their
Fair Market Value.


 


12





















 


13.           Change
in Control.


 


13.1  A
“Change in Control” shall be deemed to have occurred if the event set forth in
any one of the following paragraphs shall have occurred:


 


(a)  the sale, lease, exchange or other
transfer, directly or indirectly, of substantially all of the assets of the
Company (in one transaction or in a series of related transactions) to a person
or entity that is not controlled by the Company; or


 


(b)  the approval of stockholders of the
Company of any plan or proposal for the liquidation or dissolution of the
Company; or


 


(c)  a merger or consolidation to which
the Company is a party if the stockholders of the Company immediately prior to
the effective date of such merger or consolidation have “beneficial ownership”
(as defined in Rule 13d-3 under the Exchange Act), immediately following
the effective date of such merger or consolidation, of securities of the
surviving corporation representing less than 50% of the combined voting power
of the surviving corporation’s then outstanding securities ordinarily having
the right to vote at elections of directors; or


 


(d)  any person, other than (i) the
Company, (ii) any trustee or other fiduciary holding securities under any
employee benefit plan of the Company, (iii) Randolph L. Marten or any of
his affiliates, or (iv) Christine K. Marten or any of her affiliates,
becomes after the effective date of the Plan the “beneficial owner” (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% or
more of the combined voting power of the Company’s outstanding securities
ordinarily having the right to vote at elections of directors.


 


13.2  Acceleration
of Vesting.  Without limiting the
authority of the Committee under Sections 3.2 and 4.3 of the Plan, if a Change
in Control of the Company occurs, then, if approved by the Committee in its
sole discretion either in an agreement evidencing an Incentive Award at the
time of grant or at any time after the grant of an Incentive Award:
(a) all outstanding Options and Stock Appreciation Rights will become
immediately exercisable in full and will remain exercisable in accordance with
their terms; (b) all outstanding Restricted Stock Awards will become
immediately fully vested and non-forfeitable; and (c) all outstanding Performance
Unit Awards and Stock Bonuses then held by the Participant will vest and/or
continue to vest in the manner determined by the Committee and set forth in the
agreement evidencing such Performance Units Awards or Stock Bonuses.


 


13.3  Cash
Payment.  If a Change in Control of
the Company occurs, then the Committee, if approved by the Committee in its
sole discretion either in an agreement evidencing an Incentive Award at the
time of grant or at any time after the grant of an Incentive Award, and without
the consent of any Participant affected thereby, may determine that:
(i) some or all Participants holding outstanding Options will receive,
with respect to some or all of the shares of Common Stock subject to such
Options, as of the effective date of any such Change in Control of the Company,
cash in an amount equal to the excess of the Fair Market Value of such shares
immediately prior to the effective date of such Change in Control of the
Company over the exercise price per share of such Options (or,


 


13





















 


in the event that there is no
excess, that such Options will be terminated); and (ii) some or all
Participants holding Performance Unit Awards will receive, with respect to some
or all of the shares of Common Stock subject to such Performance Unit Awards,
as of the effective date of any such Change in Control of the Company, cash in
an amount equal the Fair Market Value of such shares immediately prior to the
effective date of such Change in Control. 
Notwithstanding the foregoing provisions of this Section 13.3, the
Committee may not make a cash payment if such payment would cause the Option or
Performance Unit Award to become subject to the requirements of
Section 409A of the Code.


 


13.4  Limitation
on Change in Control Payments. 
Notwithstanding anything in Section 13.2 or 13.3 of the Plan to the
contrary, if, with respect to a Participant, the acceleration of the vesting of
an Incentive Award as provided in Section 13.2 or the payment of cash in
exchange for all or part of an Incentive Award as provided in Section 13.3
(which acceleration or payment could be deemed a “payment” within the meaning
of Section 280G(b)(2) of the Code), together with any other
“payments” that such Participant has the right to receive from the Company or
any corporation that is a member of an “affiliated group” (as defined in
Section 1504(a) of the Code without regard to
Section 1504(b) of the Code) of which the Company is a member, would
constitute a “parachute payment” (as defined in Section 280G(b)(2) of
the Code), then the “payments” to such Participant pursuant to
Section 13.2 or 13.3 of the Plan will be reduced to the largest amount as
will result in no portion of such “payments” being subject to the excise tax
imposed by Section 4999 of the Code; provided, that such reduction shall
be made only if the aggregate amount of the payments after such reduction
exceeds the difference between (A) the amount of such payments absent such
reduction minus (B) the aggregate amount of the excise tax imposed under
Section 4999 of the Code attributable to any such excess parachute
payments.  Notwithstanding the foregoing
sentence, if a Participant is subject to a separate agreement with the Company
or a Subsidiary that expressly addresses the potential application of Sections
280G or 4999 of the Code (including, without limitation, that “payments” under
such agreement or otherwise will be reduced, that the Participant will have the
discretion to determine which “payments” will be reduced, that such “payments”
will not be reduced or that such “payments” will be “grossed up” for tax
purposes), then this Section 13.4 will not apply, and any “payments” to a
Participant pursuant to Section 13.2 or 13.3 of the Plan will be treated
as “payments” arising under such separate agreement.


 


14.           Rights
of Eligible Recipients and Participants; Transferability.


 


14.1  Employment
or Service.  Nothing in the Plan will
interfere with or limit in any way the right of the Company or any Subsidiary
to terminate the employment or service of any Eligible Recipient or Participant
at any time, nor confer upon any Eligible Recipient or Participant any right to
continue in the employ or service of the Company or any Subsidiary.


 


14.2  Rights
as a Stockholder.  As a holder of
Incentive Awards (other than Restricted Stock Awards), a Participant will have
no rights as a stockholder unless and until such Incentive Awards are exercised
for, or paid in the form of, shares of Common Stock and the Participant becomes
the holder of record of such shares. 
Except as otherwise provided in the Plan, no adjustment will be made for
dividends or distributions with respect to such Incentive Awards as to which
there is a record date preceding the date the Participant becomes the holder of
record of such shares, except as the Committee may determine in its discretion,
provided such adjustment for dividends or


 


14





















 


distributions does not cause
the Incentive Award to become subject to the requirements of Section 409A
of the Code.


 


14.3  Restrictions
on Transfer.


 


(a)  Except pursuant to testamentary
will or the laws of descent and distribution or as otherwise expressly
permitted by subsections (b) and (c) below, no right or interest of
any Participant in an Incentive Award prior to the exercise (in the case of
Options) or vesting or issuance (in the case of Restricted Stock Awards,
Performance Unit Awards or Stock Bonuses) of such Incentive Award will be
assignable or transferable, or subjected to any lien, during the lifetime of
the Participant, either voluntarily or involuntarily, directly or indirectly,
by operation of law or otherwise.


 


(b)  A Participant will be entitled to
designate a beneficiary to receive an Incentive Award upon such Participant’s
death, and in the event of such Participant’s death, payment of any amounts due
under the Plan will be made to, and exercise of any Options (to the extent
permitted pursuant to Section 11 of the Plan) may be made by, such
beneficiary.  If a deceased Participant has
failed to designate a beneficiary, or if a beneficiary designated by the
Participant fails to survive the Participant, payment of any amounts due under
the Plan will be made to, and exercise of any Options (to the extent permitted
pursuant to Section 11 of the Plan) may be made by, the Participant’s
legal representatives, heirs and legatees. 
If a deceased Participant has designated a beneficiary and such
beneficiary survives the Participant but dies before complete payment of all
amounts due under the Plan or exercise of all exercisable Options, then such
payments will be made to, and the exercise of such Options may be made by, the
legal representatives, heirs and legatees of the beneficiary.


 


(c)  Upon a Participant’s request, the
Committee may, in its sole discretion, permit a transfer of all or a portion of
a Non-Statutory Stock Option, other than for value, to such Participant’s
child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former
spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law, any person sharing such
Participant’s household (other than a tenant or employee), a trust in which any
of the foregoing have more than fifty percent of the beneficial interests, a
foundation in which any of the foregoing (or the Participant) control the
management of assets, and any other entity in which these persons (or the
Participant) own more than fifty percent of the voting interests.  Any permitted transferee will remain subject
to all the terms and conditions applicable to the Participant prior to the
transfer.  A permitted transfer may be
conditioned upon such requirements as the Committee may, in its sole
discretion, determine, including, but not limited to execution and/or delivery
of appropriate acknowledgements, opinion of counsel, or other documents by the
transferee.


 


14.4  Non-Exclusivity
of the Plan.  Nothing contained in
the Plan is intended to modify or rescind any previously approved compensation
plans or programs of the Company or create any limitations on the power or
authority of the Board to adopt such additional or other compensation
arrangements as the Board may deem necessary or desirable.


 


15





















 


15.           Securities
Law and Other Restrictions.


 


Notwithstanding
any other provision of the Plan or any agreements entered into pursuant to the
Plan, the Company will not be required to issue any shares of Common Stock
under this Plan, and a Participant may not sell, assign, transfer or otherwise
dispose of shares of Common Stock issued pursuant to Incentive Awards granted
under the Plan, unless (a) there is in effect with respect to such shares
a registration statement under the Securities Act and any applicable securities
laws of a state or foreign jurisdiction or an exemption from such registration
under the Securities Act and applicable state securities laws, and
(b) there has been obtained any other consent, approval or permit from any
other U.S. which the Committee, in its sole discretion, deems necessary or
advisable.  The Company may condition
such issuance, sale or transfer upon the receipt of any representations or
agreements from the parties involved, and the placement of any legends on
certificates representing shares of Common Stock, as may be deemed necessary or
advisable by the Company in order to comply with such securities law or other
restrictions.


 


16.           Performance-Based
Compensation Provisions.


 


The Committee, when it is comprised solely of
two or more outside directors meeting the requirements of Section 162(m)
of the Code (“Section 162(m)”), in its sole discretion, may designate
whether any Incentive Awards are intended to be “performance-based
compensation” within the meaning of Section 162(m).  Any Incentive Awards so designated will, to
the extent required by Section 162(m), be conditioned upon the achievement
of one or more Performance Criteria, and such Performance Criteria will be
established by the Committee within the time period prescribed by, and will
otherwise comply with the requirements of, Section 162(m) giving due
regard to the disparate treatment under Section 162(m) of Options and
Stock Appreciation Rights (where compensation is determined based solely on an
increase in the value of the underlying stock after the date of grant or
award), as compared to other forms of compensation, including Restricted Stock
Awards, Performance Unit Awards and Stock Bonuses.  The Committee shall also certify in writing
that such Performance Criteria have been met prior to payment of compensation
to the extent required by Section 162(m).


 


17.           Exclusion
from Section 409A of the Code.


 


It is
intended that the Plan and all Incentive Awards hereunder be issued and
administered in a manner that will cause such Incentive Awards to not be
treated as deferred compensation subject to the requirements of
Section 409A of the Code.  The
Committee is authorized to adopt rules or regulations deemed necessary or
appropriate, and to take such other actions determined to be reasonably
necessary, to qualify for any exception or exclusion from the requirements of
Section 409A of the Code (including any transition or grandfather
rules relating thereto).


 


18.           Plan
Amendment, Modification and Termination.


 


The
Board may suspend or terminate the Plan or any portion thereof at any
time.  The Board may amend the Plan from
time to time in such respects as the Board may deem advisable in order that
Incentive Awards under the Plan will conform to any change in applicable laws
or regulations or in any other respect the Board may deem to be in the best
interests of the Company; provided,


 


16





















 


however, that no such
amendments to the Plan will be effective without approval of the Company’s
stockholders if: (i) stockholder approval of the amendment is then
required pursuant to Section 422 of the Code or the rules of the
Nasdaq National Market or the rules of any other national exchange that
lists the Company; or (ii) such amendment seeks to modify Section 3.2(d) hereof.  No termination, suspension or amendment of
the Plan may adversely affect any outstanding Incentive Award without the
consent of the affected Participant; provided, however, that this sentence will
not impair the right of the Committee to take whatever action it deems
appropriate under Sections 3.2(c), 4.3 and 13 of the Plan.


 


19.           Effective
Date and Duration of the Plan.


 


The Plan is effective as of the Effective Date.  The Plan will terminate at midnight on the
tenth (10th) anniversary of such Effective Date, and may be
terminated prior to such time by Board action. 
No Incentive Award will be granted after termination of the Plan.  Incentive Awards outstanding upon termination
of the Plan may continue to be exercised, earned or become free of
restrictions, according to their terms.


 


20.           Miscellaneous.


 


20.1  Governing
Law.  Except to the extent expressly
provided herein or in connection with other matters of corporate governance and
authority (all of which shall be governed by the laws of the Company’s
jurisdiction of incorporation), the validity, construction, interpretation,
administration and effect of the Plan and any rules, regulations and actions
relating to the Plan will be governed by and construed exclusively in
accordance with the laws of the State of Wisconsin, notwithstanding the
conflicts of laws principles of any jurisdictions.


 


20.2  Successors
and Assigns.  The Plan will be
binding upon and inure to the benefit of the successors and permitted assigns
of the Company and the Participants.


 


17