Document:

EXHIBIT 10.1

 

CHANGE
IN CONTROL SEVERANCE AGREEMENT

 

This Change in Control
Severance Agreement (this “Agreement”), effective as of                     ,
2006, is between Marten Transport, Ltd., a Delaware corporation, located at 129
Marten Street, Mondovi, Wisconsin 54755 (the “Company”) and                               ,
an individual residing at                                                                                          (the ”Executive”).

 

A.                                   The
Executive is currently employed as the Company’s                                                 .

 

B.                                     The
Board considers the establishment and maintenance of a sound and vital
management to be essential to protecting and enhancing the best interests of
the Company and its stockholders, and in this connection recognizes that the
possibility of a Change in Control may raise uncertainty and questions
among management which may result in the departure or distraction of
management personnel to the detriment of the Company and its stockholders.

 

C.                                     The
Board has determined that appropriate steps should be taken to minimize the
risk that Company executive management will depart prior to a Change in
Control, thereby leaving the Company without adequate executive management
personnel during such a critical period, and to reinforce and encourage the
continued attention and dedication of members of the Company’s executive
management to their assigned duties without distraction in circumstances
arising from the possibility of a Change in Control.

 

D.                                    The
Board recognizes that continuance of the Executive’s position with the Company
involves a substantial commitment to the Company in terms of the Executive’s
personal life and professional career and the possibility of foregoing present
and future career opportunities, for which the Company receives substantial
benefits.

 

E.                                      To
induce the Executive to remain in the employ of the Company, this Agreement,
which has been approved by the Board, sets forth the benefits that the Company
agrees will be provided to the Executive in the event the Executive’s
employment with the Company is terminated in connection with a Change in
Control under the circumstances described below.

 

F.                                      Certain
capitalized terms that are used in this Agreement are defined in Exhibit A,
which is an integral part of this Agreement.

 

Accordingly, the Company
and Executive each intending to be legally bound, agree as follows:

 

1.                                       Term of Agreement. This Agreement is effective immediately
and will continue in effect until terminated as provided herein. This Agreement
will automatically terminate upon termination of the Executive’s employment
with the Company, except for a termination contemplated by Section 2, in
which case this Agreement will remain in effect until the date on which the
Company’s obligations to the Executive arising under or in connection with this
Agreement have been satisfied in full. The Company terminates this Agreement
upon fifteen

 

 

(15) months prior written
notice to the Executive. Notwithstanding anything in the foregoing to the
contrary, if a Change in Control has occurred during the term of this
Agreement, this Agreement will continue in effect beyond the termination date
then in effect for a period of [24 months; 12 months] following the month
during which the Change in Control occurs or, if later, until the date on which
the Company’s obligations to the Executive arising under or in connection with
this Agreement have been satisfied in full.

 

2.                                       Benefits upon a Change in Control
Termination. The
Executive will become entitled to the benefits described in this Section 2
if and only if (i) the Company terminates the Executive’s employment for
any reason other than the Executive’s death or Cause, or the Executive
terminates the Executive’s employment with the Company for Good Reason, and (ii) the
termination occurs either within the period beginning on the date of a Change
in Control and ending on the last day of the 24th month that begins after the month during which
the Change in Control occurs or prior to a Change in Control if the Executive’s
termination was either a condition of the Change in Control or was at the
request or insistence of a Person related to the Change in Control.

 

(a)                                  Cash Payment. Not more than 10 days following the
Date of Termination, or, if later, not more than 10 days following the date of
the Change in Control, the Company will make a lump-sum cash payment to the
Executive in an amount equal to the sum of (i) [two times; one times] the
Executive’s Base Pay, plus (ii) [two times; one times] the Executive’s
highest bonus in the three calendar years preceding the year in which the
Change in Control occurs.

 

(b)                                 Welfare Benefits. During the continuation period (as
defined below), the Company will (i) maintain group health and dental
plan(s) and (ii) provide, or arrange to provide, to the extent such
policies or coverages can be obtained on commercial reasonable terms, the same
or equivalent accidental death and dismemberment, short and long-term
disability, life insurance coverages, and all other insurance policies and
health and welfare benefits (other than benefits pursuant to any cafeteria plan
maintained by the Company pursuant to Section 125 of the Code), which by
their terms cover the Executive (and the Executive’s family members and
dependents who were eligible to be covered at any time during the 90-day period
immediately prior to the date of the Change in Control for the period after the
Change in Control in which such family members and dependents would otherwise
continue to be covered under the terms of the plan in effect immediately prior
to the Change in Control) under the same terms and at the same cost to the
Executive and the Executive’s family members and dependents as similarly
situated individuals who continue to be employed by the Company (without regard
to any reduction in such benefits that constitutes Good Reason).

 

For purposes of this section, the “continuation period”
is the period beginning on the Executive’s Date of Termination and ending on
(x) the last day of the [24th month; 12th month] that
begins after the Executive’s Date of Termination or, if earlier, (y) in the
case of the group health and dental plans referred to in clause (i) above,
the date after the Executive’s Date of Termination on which the Executive first
becomes eligible to participate as an employee in a plan of another employer
providing group health and dental benefits to the Executive and the Executive’s
eligible family members and

 

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dependents which plan
does not contain any exclusion or limitation with respect to any pre-existing
condition of the Executive or any eligible family member or dependent who would
otherwise be covered under the Company’s plan but for this clause (y) or (z) in
the case of the other welfare benefits referred to in clause (ii) above,
the date after the Executive’s Date of Termination on which the Executive first
becomes eligible to participate as an employee in a plan of another employer
providing substantially similar welfare benefits to the Executive and the
Executive’s eligible family members and dependents.

 

To the extent the Executive incurs a tax liability
(including federal, state and local taxes and any interest and penalties with
respect thereto) in connection with a benefit provided pursuant to this Section 2(b) which
the Executive would not have incurred had the Executive been an active employee
of the Company participating in the Company’s group health and dental plan, the
Company will make a payment to the Executive in an amount equal to such tax
liability plus an additional amount sufficient to permit the Executive to
retain a net amount after all taxes (including penalties and interest) equal to
the initial tax liability in connection with the benefit. For purposes of
applying the foregoing, the Executive’s tax rate will be deemed to be the
highest statutory marginal state and federal tax rate (on a combined basis)
then in effect. The payment pursuant to this Section 2(b) will be
made within 10 days after the Executive’s remittal of a written request for
payment accompanied by a statement indicating the basis for and amount of the
liability.

 

If, on or after the date
of a Change in Control, an Affiliate is sold, merged, transferred or in any
other manner or for any other reason ceases to be an Affiliate or all or any
portion of the business or assets of an Affiliate are sold, transferred or
otherwise disposed of and the acquiror is not the Parent Corporation or an
Affiliate (a “Disposition”), and the Executive remains or becomes employed
by the acquiror or an “affiliate” of the acquiror (as defined in this Agreement
but substituting “acquiror” for “Parent Corporation”) in connection with the
Disposition, the Executive will be deemed to have terminated employment on the
effective date of the Disposition for purposes of this Section 2 and will
be entitled to the benefits described in this Section 2 unless (x) the
acquiror and its affiliates jointly and severally expressly assume and agree,
in a manner that is enforceable by the Executive, to perform the
obligations of this Agreement to the same extent that the Company would be
required to perform if the Disposition had not occurred and (y) the
Successor guarantees, in a manner that is enforceable by the Executive, payment
and performance by the acquiror.

 

3.                                       Gross-Up Payments.

 

(a)                                  Anything in this Agreement to the
contrary notwithstanding, in the event it will be determined that any payments
or distributions 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, but determined without regard to any payments required
under this Section 3) (collectively, the “Payments”) would be
subject to the excise tax imposed by Section 4999 of the Code or 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, are
hereinafter collectively referred to as the “Excise

 

3

 

Tax”), then the Executive will be entitled to receive an
additional payment (a “Gross-Up Payment”) in an amount such that, after
payment by the Executive of all taxes (and any interest or penalties imposed
with respect to such taxes), including any income taxes and Excise Tax imposed
upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments.

 

(b)                                 Subject to the provisions of Section 3(d),
all determinations required to be made under this Section 3, including
whether and when a Gross-Up Payment is required and the amount such Gross-Up
Payment and the assumptions to be used in arriving at such determination, must
be made by the Company’s external auditors (the “Accounting Firm”),
which must provide detailed supporting calculations both to the Company and the
Executive within 15 business days of the receipt of notice from the Executive
that there has been a Payment, or such earlier time as is requested by the
Company. In the event that the Accounting Firm is serving as accountant or
auditor for the individual, entity or group effecting the Change of Control,
the Executive must appoint another nationally recognized accounting firm to
make the determinations required hereunder (which accounting firm will then be
referred to as the “Accounting Firm” hereunder). All fees and expenses of the
Accounting Firm will be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 3, will be paid by the Company to the
Executive within five days of the receipt of the Accounting Firm’s
determination. Any determination by the Accounting Firm will be binding upon
the Company and the Executive.

 

(c)                                  As a result of 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 by the Company will not have been made (“Underpayment”),
consistent with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to Section 3(d) and
the Executive thereafter is required to make a payment of any additional Excise
Tax, the Accounting Firm will determine the amount of the Underpayment that has
occurred and any such Underpayment will be promptly paid by the Company to or
for the benefit of the Executive.

 

(d)                                 The Executive must notify the Company in
writing of any claim by the Internal Revenue Service or any other taxing
authority that, if successful, would require the payment by the Company of any
Gross-Up Payment. Such notification must be given as soon as practicable but no
later than 10 business days after the Executive knows of such claim and must
apprise the Company of the nature of such claim and the date on which such
claim is requested to be paid. The Executive must 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 must:

 

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

 

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(ii)                                  take such action in connection with
contesting such claim as the Company will reasonably request in writing from
time to time, including 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 will bear and pay
directly all costs and expenses (including additional interest and penalties)
incurred in connection with such contest and will 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 Section 3(d), the Company will 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 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 will determine; provided further, however, that if the Company directs
the Executive to pay such claim and sue for a refund, the Company will advance
the amount of such payment to the Executive on an interest-free basis and will
indemnify 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 provided further 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 will be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and the Executive will 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.

 

(e)                                  If, after the receipt by the Executive of
an amount advanced by the Company pursuant to Section 3(d), the Executive
becomes entitled to receive any refund with respect to such claim, the
Executive must (subject to the Company’s complying with the requirements of Section 3(d))
promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If, after
the receipt by the Executive of an amount advanced by the Company pursuant to Section 3(d),
a determination is made that the Executive will not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in writing
of its intent to contest such denial of refund prior to the expiration of
thirty days after such determination, then such advance will be forgiven and
will not be required to be repaid

 

5

 

and the amount of such advance will offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid.

 

4.                                       Indemnification. Following a Change in Control, the
Company will indemnify and advance expenses to the Executive for damages, costs
and expenses (including, without limitation, judgments, fines, penalties,
settlements and reasonable fees and expenses of the Executive’s counsel)
incurred in connection with all matters, events and transactions relating to
the Executive’s service to or status with the Company or any other corporation,
employee benefit plan or other Person for which the Executive served at the
request of the Company to the extent that the Company would have been required
to do so under applicable law, corporate articles, bylaws or agreements or
instruments of any nature with or covering the Executive, as in effect
immediately prior to the Change in Control and to any further extent as may be
determined or agreed upon following the Change in Control.

 

5.                                       Miscellaneous.

 

(a)                                  Successors. The Parent Corporation must seek to have any
Successor, by agreement in form and substance satisfactory to the
Executive, assent to the fulfillment by the Company of the Company’s
obligations under this Agreement. Failure of the Parent Corporation to obtain such
assent at least three business days prior to the time a Person becomes a
Successor (or where the Parent Corporation does not have at least three
business days’ advance notice that a Person may become a Successor, within
one business day after having notice that such Person may become or has
become a Successor) will constitute Good Reason for termination by the
Executive of the Executive’s employment. The date on which any such succession
becomes effective will be deemed the Date of Termination, and Notice of
Termination will be deemed to have been given on that date. A Successor has no
rights, authority or power with respect to this Agreement prior to a Change in
Control.

 

(b)                                 Binding Agreement. This Agreement inures to the benefit
of, and is enforceable by, the Executive, the Executive’s personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive dies while any amount would still be
payable to the Executive under this Agreement if the Executive had continued to
live, all such amounts, unless otherwise provided in this Agreement, will be
paid in accordance with the terms of this Agreement to the Executive’s devisee,
legatee or other designee or, if there be no such designee, to the Executive’s
estate.

 

(c)                                  No Mitigation. The Executive will not be required to
mitigate the amount of any benefits the Company becomes obligated to provide to
the Executive in connection with this Agreement by seeking other employment or
otherwise. The benefits to be provided to the Executive in connection with this
Agreement may not be reduced, offset or subject to recovery by the Company
by any benefits the Executive may receive from other employment or
otherwise.

 

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(d)                                 No Setoff. The Company has no right to setoff benefits owed to
the Executive under this Agreement against amounts owed or claimed to be owed
by the Executive to the Company under this Agreement or otherwise.

 

(e)                                  Taxes. All benefits to be provided to the Executive in
connection with this Agreement will be subject to required withholding of
federal, state and local income, excise and employment-related taxes. The
Company’s good faith determination with respect to its obligation to withhold
such taxes relieves it of any obligation that such amounts should have been
paid to the Executive.

 

(f)                                    Notices. For the purposes of this Agreement, notices and all
other communications provided for in, or required under, this Agreement must be
in writing and will be deemed to have been duly given when personally delivered
or when mailed by United States registered or certified mail, return receipt
requested, postage prepaid and addressed to each party’s respective address set
forth on the first page of this Agreement (provided that all notices to
the Company must be directed to the attention of the President), or to such
other address as either party may have furnished to the other in writing
in accordance with these provisions, except that notice of change of address
will be effective only upon receipt.

 

(g)                                 Disputes. If the Executive so elects, any dispute, controversy
or claim arising under or in connection with this Agreement will be settled
exclusively by binding arbitration administered by the American Arbitration
Association in Minneapolis, Minnesota in accordance with the Commercial
Arbitration Rules of the American Arbitration Association then in effect;
provided that the Executive may seek specific performance of the Executive’s
right to receive benefits until the Date of Termination during the pendency of
any dispute or controversy arising under or in connection with this Agreement.
Judgment may be entered on the arbitrator’s award in any court having
jurisdiction. If any dispute, controversy or claim for damages arising under or
in connection with this Agreement is settled by arbitration, the Company will
pay, or if elected by the Executive, reimburse, all fees, costs and expenses
incurred by the Executive related to such arbitration unless the arbitrators
decide that the Executive’s claim was frivolous or advanced by the Executive in
bad faith. If the Executive does not elect arbitration, the Executive may pursue
all available legal remedies. The Company will pay, or if elected by the
Executive, reimburse the Executive for, all fees, costs and expenses incurred
by the Executive in connection with any actual, threatened or contemplated
litigation relating to this Agreement to which the Executive is or reasonably
expects to become a party, whether or not initiated by the Executive, if the
Executive is successful in recovering any benefit under this Agreement as a
result of such action. The Company will not assert in any dispute or
controversy with the Executive arising under or in connection with this Agreement
the Executive’s failure to exhaust administrative remedies.

 

(h)                                 Effect of Plan Benefits on Other
Severance Plans.
In the event the Executive receives any payment under the terms of this
Agreement, the Executive will not be eligible to receive benefits under any
other severance pay plan sponsored or maintained by the Company.

 

7

 

(i)                                     Related Agreements and Other Arrangements. This Agreement, including Exhibit A
attached hereto and incorporated as an integral part of this Agreement,
constitutes the entire agreement of the parties with respect to the subject
matter hereof, and no agreements or representations, oral or otherwise, express
or implied, with respect to the subject matter to this Agreement have been made
by any party which are not expressly set forth in this Agreement. To the extent
that any provision of any Other Arrangement limits, qualifies or is
inconsistent with any provision of this Agreement, then for purposes of this
Agreement, while such Other Arrangement remains in force, the provision of this
Agreement will control and such provision of such Other Arrangement will be
deemed to have been superseded, and to be of no force or effect, as if such
Other Arrangement had been formally amended to the extent necessary to
accomplish such purpose. Nothing in this Agreement prevents or limits the
Executive’s continuing or future participation in any Other Arrangement for
which the Executive may qualify, and nothing in this Agreement limits or
otherwise affects the rights the Executive may have under any Other
Arrangement. Amounts that are vested benefits or which the Executive is
otherwise entitled to receive under any Other Arrangement at or subsequent to
the Date of Termination will be payable in accordance with such Other
Arrangement.

 

(j)                                     No Employment or Service Contract. Nothing in this Agreement is intended
to provide the Executive with any right to continue in the employ of the
Company for any period of specific duration or interfere with or otherwise
restrict in any way the Executive’s rights or the rights of the Company.

 

(k)                                  Payment; Assignment. Benefits payable under this Agreement
will be paid only from the general assets of the Company. No person has any
right to or interest in any specific assets of the Company by reason of this
Agreement. To the extent benefits under this Agreement are not paid when due to
any individual, he or she is a general unsecured creditor of the Company with
respect to any amounts due. Benefits payable pursuant to this Agreement and the
right to receive future benefits may not be anticipated, alienated, sold,
transferred, assigned, pledged, encumbered or subject to any charge.

 

(l)                                     Late Payments. Benefits not paid under this Agreement
when due will accrue interest at the rate of 10% per year or the maximum rate
permitted under applicable law.

 

(m)                               Survival. The respective obligations of, and benefits afforded
to, the Company and the Executive which by their express terms or clear intent
survive termination of the Executive’s employment with the Company or
termination of this Agreement, as the case may be, will survive
termination of the Executive’s employment with the Company or termination of
this Agreement, as the case may be, and will remain in full force and
effect according to their terms.

 

(n)                                 Amendments; Waivers. No provision of this Agreement may be
modified, waived or discharged unless such modification, waiver or discharge is
agreed to in a writing signed by the Executive and a duly authorized officer of
the Parent Corporation. No waiver by any party to this Agreement at any time of
any breach by another party to this

 

8

 

Agreement of, or of compliance with any condition or
provision of this Agreement to be performed by such party will be deemed a
waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time.

 

(o)                                 Governing Law. This Agreement and the legal relations
among the parties as to all matters, including, without limitation, matters of
validity, interpretation, construction, performance and remedies, will be
governed by and construed exclusively in accordance with the internal laws of
the State of Wisconsin (without regard to the conflict of laws principles of any
jurisdiction).

 

(p)                                 Further Assurances. The parties to this Agreement agree to
perform, or cause to be performed, such further acts and deeds and to execute
and deliver or cause to be executed and delivered, such additional or
supplemental documents or instruments as may be reasonably required by the
other party to carry into effect the intent and purpose of this Agreement.

 

(q)                                 Interpretation. The invalidity or unenforceability of
all or any part of any provision of this Agreement will not affect the
validity or enforceability of the remainder of such provision or of any other
provision of this Agreement, which will remain in full force and effect.

 

(r)                                    Counterparts. This Agreement may be executed in
several counterparts, each of which will be deemed to be an original, but all
of which together will constitute one and the same instrument.

 

IN WITNESS WHEREOF, the
Company and the Executive have executed this Agreement as of the date first
above written.

 

	
  MARTEN TRANSPORT, LTD.

  	
   

  	
  EXECUTIVE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Randolph L. Marten

  	
   

  	
  [Name of Executive]

  
	
   

  	
  President and Chief Executive Officer

  	
   

  	
   

  
						

 

9

 

Exhibit A

 

DEFINITIONS

 

For purposes of
the Agreement, the following terms will have the meaning set forth below in
this Exhibit A unless the context clearly requires otherwise. Terms
defined elsewhere in the Agreement will have the same meaning throughout the
Agreement.

 

1.                                       “Affiliate” means (i) any
corporation at least a majority of whose outstanding securities ordinarily having
the right to vote at elections of directors is owned directly or indirectly by
the Parent Corporation or (ii) any other form of business entity in
which the Parent Corporation, by virtue of a direct or indirect ownership
interest, has the right to elect a majority of the members of such entity’s
governing body.

 

2.                                       “Base Pay” means the Executive’s
annual base salary from the Company at the rate in effect immediately prior to
a Change in Control or at the time Notice of Termination is given, whichever is
greater. Base Pay includes only regular cash salary and is determined before
any reduction for deferrals pursuant to any nonqualified deferred compensation
plan or arrangement, qualified cash or deferred arrangement or cafeteria plan.

 

3.                                       “Benefit Plan” means any

 

(a)                                  employee benefit plan as defined in Section 3(3) of
ERISA;

 

(b)                                 cafeteria plan described in Code Section 125;

 

(c)                                  plan, policy or practice providing for
paid vacation, other paid time off or short-or long-term profit sharing, bonus
or incentive payments or perquisites; or

 

(d)                                 stock option, stock purchase, restricted
stock, phantom stock, stock appreciation right or other equity-based
compensation plan with respect to the securities of any Affiliate that is
sponsored, maintained or contributed to by the Company for the benefit of
employees (and/or their families and dependents) generally or the Executive in
particular (and/or the Executive’s family and dependents).

 

4.                                       “Board” means the board of
directors of the Parent Corporation duly qualified and acting at the time in
question. On and after the date of a Change in Control, any duty of the Board
in connection with this Agreement is nondelegable and any attempt by the Board
to delegate any such duty is ineffective.

 

5.                                       “Cause” means:

 

(a)                                  the Executive’s gross misconduct that is
materially and demonstrably injurious to the Company;

 

(b)                                 the Executive’s willful and continued
failure to perform substantially the Executive’s duties with the Company
(other than any such failure (1) resulting from the Executive’s incapacity
due to bodily injury or physical or mental illness or (2) relating to
changes in the Executive’s duties after a Change in Control that constitute
Good Reason)

 

 

after a demand for substantial performance is
delivered to the Executive by the chair of the Board which specifically
identifies the manner in which the Executive has not substantially performed
the Executive’s duties and provides for a reasonable period of time within
which the Executive may take corrective actions; or

 

(c)                                  the Executive’s conviction (including a
plea of nolo contendere) of willfully engaging in illegal conduct constituting
a felony or gross misdemeanor under federal or state law which is materially
and demonstrably injurious to the Company or which impairs the Executive’s
ability to perform substantially the Executive’s duties for the Company.

 

An act or failure
to act will be considered “gross or willful” for this purpose only if done, or
omitted to be done, by the Executive in bad faith and without reasonable belief
that it was in, or not opposed to, the best interests of the Company. Any act,
or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board (or a committee thereof) or based upon the advice of
counsel for the Company will be conclusively presumed to be done, or omitted to
be done, by the Executive in good faith and in the best interests of the
Company. It is also expressly understood that the Executive’s attention to
matters not directly related to the business of the Company will not provide a
basis for termination for Cause so long as the Board did not expressly
disapprove in writing of the Executive’s engagement in such activities either
before or within a reasonable period of time after the Board knew or could
reasonably have known that the Executive engaged in those activities.
Notwithstanding the foregoing, the Executive may not be terminated for
Cause unless and until there has been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than a majority of
the entire membership of the Board at a meeting of the Board called and held
for the purpose (after reasonable notice to the Executive and an opportunity
for the Executive, together with the Executive’s counsel, to be heard before
the Board), finding that in the good faith opinion of the Board the Executive
was guilty of the conduct set forth above in clauses (a), (b) or (c) of
this definition and specifying the particulars thereof in detail.

 

6.                                       “Change in Control” means the
occurrence of any of the following on or after                     ,
2006:

 

(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

 

2

 

(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.

 

7.                                       “Code” means the Internal Revenue
Code of 1986, as amended. Any reference to a specific provision of the Code
includes a reference to such provision as it may be amended from time to
time and to any successor provision.

 

8.                                       “Company” means the Parent
Corporation, any Successor and any Affiliate.

 

9.                                       “Date of Termination” following a
Change in Control (or prior to a Change in Control if the Executive’s
termination was either a condition of the Change in Control or was at the
request or insistence of any Person related to the Change in Control) means:

 

(a)                                  if the Executive’s employment is to be
terminated by the Executive, the date specified in the Notice of Termination
which in no event may be a date more than 15 days after the date on which
Notice of Termination is given unless the Company agrees in writing to a later
date;

 

(b)                                 if the Executive’s employment is to be
terminated by the Company for Cause, the date specified in the Notice of
Termination;

 

(c)                                  if the Executive’s employment is
terminated by reason of the Executive’s death, the date of the Executive’s
death; or

 

(d)                                 if the Executive’s employment is to be
terminated by the Company for any reason other than Cause or the Executive’s
death, the date specified in the Notice of Termination, which in no event may be
a date earlier than 15 days after the date on which a Notice of Termination is
given, unless the Executive expressly agrees in writing to an earlier date.

 

In the case of
termination by the Company of the Executive’s employment for Cause, if the
Executive has not previously expressly agreed in writing to the termination,
then within the 30-day period after the Executive’s receipt of the Notice of
Termination, the Executive may notify the Company that a dispute exists
concerning the termination, in which event the Date of Termination will be the
date set either by mutual written agreement of the parties or by the judge or
arbitrators in a proceeding as provided in Section 5(g) of the
Agreement. During the pendency of any such dispute, the Executive will continue
to make the Executive available to provide services to the Company and the
Company will continue to pay the Executive the Executive’s full compensation
and benefits in effect immediately prior to the date on which the Notice of
Termination is given (without regard to any changes to such compensation or
benefits that constitute Good Reason) and until the dispute is resolved in
accordance with Section 5(g) of the Agreement. The Executive will be
entitled to retain the full amount of any such compensation and benefits
without regard to the resolution of the dispute unless the judge or

 

3

 

arbitrators decide(s)
that the Executive’s claim of a dispute was frivolous or advanced by the
Executive in bad faith.

 

10.                                 “ERISA” means the Employee
Retirement Income Security Act of 1974, as amended. Any reference to a specific
provision of ERISA includes a reference to such provision as it may be
amended from time to time and to any successor provision.

 

11.                                 “Exchange Act” means the
Securities Exchange Act of 1934, as amended. Any reference to a specific
provision of the Exchange Act or to any rule or regulation thereunder
includes a reference to such provision as it may be amended from time to
time and to any successor provision.

 

12.                                 “Good Reason” means:

 

(a)                                  a change in the Executive’s title(s),
status, position(s), authority, duties or responsibilities as an executive of
the Company as in effect immediately prior to the Change in Control which, in
the Executive’s reasonable judgment, is material and adverse (other than, if
applicable, any such change directly attributable to the fact that the Parent
Corporation is no longer publicly owned); provided, however, that Good Reason
does not include such a change that is remedied by the Company promptly after
receipt of notice of such change is given by the Executive;

 

(b)                                 a reduction by the Company in the
Executive’s Base Pay, or an adverse change in the form or timing of the
payment thereof, as in effect immediately prior to the Change in Control or as
thereafter increased;

 

(c)                                  the failure by the Company to cover the
Executive under Benefit Plans that, in the aggregate, provide substantially
similar benefits to the Executive and/or the Executive’s family and dependents
at a substantially similar total cost to the Executive (e.g., premiums,
deductibles, co-pays, out of pocket maximums, required contributions and the
like) relative to the benefits and total costs under the Benefit Plans in which
the Executive (and/or the Executive’s family or dependents) were participating
at any time during the 90-day period immediately preceding the Change in
Control;

 

(d)                                 the Company’s requiring the Executive to
be based more than 30 miles from where the Executive’s office is located
immediately prior to the Change in Control, except for required travel on the
Company’s business, and then only to the extent substantially consistent with
the business travel obligations which the Executive undertook on behalf of the
Company during the 90-day period immediately preceding the Change in Control
(without regard to travel related to or in anticipation of the Change in
Control);

 

(e)                                  the failure by the Company to obtain from
any Successor the assent to this Agreement contemplated by Section 5(a) of
the Agreement;

 

(f)                                    any purported termination by the Company
of the Executive’s employment that is not properly effected pursuant to a
Notice of Termination and 

 

4

 

pursuant to any other requirements of this Agreement,
and, for purposes of this Agreement, no such purported termination will be
effective; or

 

(g)                                 any refusal by the Company to continue to
allow the Executive to attend to matters or engage in activities not directly
related to the business of the Company which, at any time prior to the Change
in Control, the Executive was not expressly prohibited in writing by the Board
from attending to or engaging in.

 

The Executive’s
continued employment does not constitute consent to, or waiver of any rights
arising in connection with, any circumstances constituting Good Reason. The
Executive’s termination of employment for Good Reason as defined above will
constitute Good Reason for all purposes of the Agreement notwithstanding that
the Executive may also thereby be deemed to have retired under any
applicable benefit plan, policy or practice of the Company.

 

13.                                 “Notice of Termination” means a
written notice given on or after the date of a Change in Control (unless the
Executive’s termination before the date of the Change in Control was either a
condition of the Change in Control or was at the request or insistence of any
Person related to the Change in Control in which case the written notice may be
given before the date of the Change in Control) which indicates the specific
termination provision in the Agreement pursuant to which the notice is given.
Any purported termination by the Company or by the Executive on or after the date
of a Change in Control (or before the date of a Change in Control if the
Executive’s termination was either a condition of the Change in Control or was
at the request or insistence of any Person related to the Change in Control)
must be communicated by written Notice of Termination to be effective;
provided, that the Executive’s failure to provide Notice of Termination will
not limit any of the Executive’s rights under the Agreement except to the
extent the Company demonstrates that it suffered material actual damages by
reason of such failure.

 

14.                                 “Other Arrangement” is any Benefit
Plan or other plan, policy or practice of the Company or any other agreement
between the Executive and the Company, other than this Agreement.

 

15.                                 “Parent Corporation” means Marten
Transport, Ltd. and any Successor.

 

16.                                 “Person” means any individual,
corporation partnership, group, association or other person,” as such term is
used in Section 13(d) or Section 14(d) of the Exchange Act,
other than the Parent Corporation, any Affiliate or any benefit plan(s)
sponsored by the Parent Corporation or an Affiliate.

 

17.                                 “Successor” means any Person that
succeeds to, or has the practical ability to control (either immediately or
solely with the passage of time), the Parent Corporation’s business directly,
by merger, consolidation or other form of business combination, or
indirectly, by purchase of the Parent Corporation’s outstanding securities
ordinarily having the right to vote at the election of directors or all or
substantially all of its assets or otherwise.

 

5EXHIBIT 10.2

 

MARTEN TRANSPORT, LTD.

 

EXECUTIVE OFFICER

 

PERFORMANCE INCENTIVE BONUS PLAN

 

I.                                         GENERAL

 

A.                                   Plan Purpose. In an effort to maintain a position of
leadership in the highly competitive business segments in which Marten
Transport, Ltd. (the “Company”) competes, it is necessary to promote the
financial interests of the Company and its Subsidiaries, including its growth,
by attracting and retaining highly qualified executive officers possessing
outstanding ability, motivating such executives by means of performance related
incentives, and providing incentive compensation opportunities which are
competitive with those of similar corporations. The Marten Transport, Ltd.
Executive Officer Performance Incentive Bonus Plan (the
“Plan”) is designed to assist the Company in attaining these objectives.

 

B.                                     Cash Bonus Plan. The Plan is a cash bonus plan and is not
intended to be (and shall not be construed and administered as) a deferred
compensation plan or an employee benefit plan within the meaning of ERISA. Bonus
Awards under this Plan are intended to be discretionary and shall not
constitute a part of an employee’s regular rate of pay for any purpose.

 

C.                                     Term. The provisions of the Plan shall continue indefinitely
subject to termination by the Company; however, the Committee shall, in its
sole and absolute discretion, determine each year whether Bonus Awards will be
granted for such year.

 

D.                                    Definitions. Unless the context requires otherwise, the
following terms when used with initial capitalization have the following
meanings:

 

Award Year — The
calendar year for which Bonus Awards, if any, are calculated under the Plan.

 

Award Year Net Income – The Company’s net income, determined in accordance with generally
accepted accounting principles, prior to accounting for the aggregate Bonus
Award and related tax effect for the Award Year.

 

Base Salary – The
annual base compensation paid to a Participant for an Award Year and base pay
not paid during the Award Year as a result of an earnings reduction election
under a Code section 125 cafeteria plan or any deferred compensation plan
or other arrangement.

 

Board — The Board of
Directors of the Company.

 

 

Bonus Award – The
cash bonus payable to a Participant as determined under Section III.A.,
subject to the terms of the Plan.

 

Code — The Internal
Revenue Code of 1986, as from time to time amended including any related
regulations.

 

Committee – The
Compensation Committee of the Board.

 

Company – Marten
Transport, Ltd.

 

Designated Subsidiary — A
subsidiary of the Company that has been designated by the Committee from time
to time, in its sole and absolute discretion, as eligible to participate in the
Plan.

 

Eligible Employee – Each
Executive Officer of the Company or a Designated Subsidiary who has completed
at least one year of continuous service as of December 31 of an Award Year
and is employed by the Company or a Designated Subsidiary as of December 31
of an Award Year.

 

Employer — The
Company and any Designated Subsidiary.

 

ERISA — The Employee
Retirement Income Security Act of 1974, as from time to time amended, including
any related regulations.

 

Executive Officer –
Each executive officer of the Company who has been elected an executive
officer, within the meaning of the rules of the Securities and Exchange
Commission, by the Board.

 

Participant — Each
Eligible Employee who is designated as a Participant for an Award Year by the
Committee.

 

Plan — The Marten
Transport, Ltd. Executive Officer Performance Incentive Bonus Plan, as
evidenced by this written instrument as may be amended from time to time.

 

Prior Year Net Income
– The Company’s net income, as reported in its audited financial statements,
for the Prior Year.

 

Subsidiary — Any
entity, corporate or otherwise, in which the Company, directly or indirectly,
owns or controls a greater than 50% interest.

 

II.                                     PARTICIPATION

 

A.                                   Participants. Participants will be determined annually by
the Committee from among the Company’s Eligible Employees. Designation as a
Participant will apply only for the Award Year for which the designation is
made and may include a partial year.

 

2

 

B.                                     Termination of Employment. In order to be entitled to
receive a payment for Bonus Award for an Award Year, a Participant must be
actively and continuously employed for at least one year through December 31
of the Award Year for which the Bonus Award is paid; however, the Committee
may, in its sole and absolute discretion, pay a Bonus Award to a Participant
who has terminated employment prior to December 31 of the relevant Award
Year.

 

III.                                 COMPUTATION
AND PAYMENT OF BONUS AWARDS

 

A.                                   Formula Bonus.

 

1.                                       Participants. Subject to Section III.A.2., each
Participant will be eligible to earn a Bonus Award if the Award Year Net Income
is 110% or more of the Prior Year Net Income. The Bonus Award for each
Participant will be an amount equal to (a) the percentage increase in the
Award Year Net Income over the Prior Year Net Income, multiplied by (b) his
or her Base Salary; provided, however, that Award Year Net Income (after
accounting for the aggregate Bonus Award) cannot be less than 110% the Prior
Year Net Income, in which case the aggregate Bonus Award will be reduced so
that the Award Year Net Income (after accounting for the aggregate Bonus Award)
is not less than 110% of the Prior Year Net Income; and each Participant’s
Bonus Award would then be reduced on a pro rata basis to reflect such
limitation.

 

2.                                       Minimum Performance Threshold. No Bonus Award will be earned
under Section III.A.1. unless:  (a) the
Award Year Net Income (after accounting for the aggregate Bonus Award) is at
least 110% of the Prior Year Net Income; and (b) the Company’s return on
equity for the Award Year (after accounting for the aggregate Bonus Award) is
at least 15%.

 

B.                                     Committee’s Discretion. The Committee may, in its sole and
absolute discretion, adjust Award Year Net Income and Prior Year Net Income at
any time during or after an Award Year for the purpose of determining Bonus
Awards for an Award Year to account for extraordinary items affecting net
income.

 

C.                                     Cash Payment. Payment of a Bonus Award will be made in cash
as soon as practicable following the end of the Award Year, without interest,
but in any event by the March 15 following the end of the Award Year.

 

D.                                    Withholding Taxes. Notwithstanding any of the foregoing
provisions, the Employer shall withhold from any payment to be made hereunder
such amounts as it reasonably determines it may be required to withhold
under any applicable federal, state or other law, and transmit such withheld
amounts to the appropriate authorities.

 

E.                                      Payment in Event of Incapacity. If any individual entitled
to receive any payment under the Plan is, in the judgment of the Committee,
physically, mentally or legally incapable of receiving or acknowledging receipt
of the payment, and no legal representative has been appointed for the
individual, the Committee may

 

3

 

(but is not
required to) cause the payment to be made to any one or more of the following
as may be chosen by the Committee; the institution maintaining the
individual; a custodian for the individual under the Uniform Transfers to
Minors Act of any state; or the individual’s spouse, child, parent, or other
relative by blood or marriage. The Committee is not required to see to the
proper application of any such payment, and the payment completely discharges
all claims under the Plan against the Company, and the Plan to the extent of
the payment.

 

F.                                      Payment in the Event of Death. Distribution to a deceased
Participant will be made to the Participant’s heirs determined pursuant to the
applicable laws of inheritance or descent.

 

IV.                                 PLAN
ADMINISTRATION

 

A.                                   Plan Administration. The Committee or its delegate has the
authority and responsibility to manage and control the general administration
of the Plan. This Plan is not intended to modify or limit the powers, duties or
responsibilities of the Committee as set forth under the Charter for the
Committee as adopted by the Board from time to time. Determinations, decisions
and actions of the Committee, in connection with the construction,
interpretation, administration, or application of the Plan will be final,
conclusive, and binding upon any Participant and any person claiming under or
through the Participant. No employee of an Employer, any member of the Board,
any delegate of the Board, or any member of the Committee will be liable for
any determination, decision, or action made in good faith with respect to the
Plan or any Bonus Award made under the Plan.

 

B.                                     Compensation Committee. The Compensation Committee has the
sole authority and responsibility to establish the amount of any Bonus Award
payable to any Participant.

 

V.                                     AMENDMENT
OR TERMINATION

 

The Plan may at any
time be amended, modified, or terminated, as the Committee in its sole and
absolute discretion determines. Such amendment, modification, or termination of
the Plan will not require the consent, ratification, or approval of any party,
including any Participant.

 

VI.                                 MISCELLANEOUS

 

A.                                   Non-Assignability. A Participant’s rights and interests in
and to payment of any Bonus Award under the Plan may not be assigned,
transferred, encumbered or pledged other than by will or the laws of descent
and distribution; and are not subject to attachment, garnishment, execution or
other creditor’s processes.

 

B.                                     No Contract of Employment. Neither the Plan, nor any Bonus
Award, constitutes a contract of employment, and participation in the Plan will
not give any employee the right to be retained in the service of the Company or
any Subsidiary or continue in any position or at any level of compensation.

 

4

 

C.                                     Controlling Law. This Plan and all determinations made and
actions taken pursuant hereto to the extent not preempted by federal laws, will
be governed and construed by the internal laws of the State of Wisconsin,
except its laws with respect to choice of law.

 

D.                                    Unfunded, Unsecured Obligation. A Participant’s only
interest under the Plan shall be the right to receive either a cash payment for
a Bonus Award pursuant to the terms of the Bonus Award and the Plan. No portion
of the amount payable to a Participant under this Plan shall be held by the
Company or any Subsidiary in trust or escrow or any other form of asset
segregation. To the extent that a Participant acquires a right to receive a
cash payment under the Plan, such right shall be no greater than the right of
any unsecured, general creditor of the Company, and no trust in favor of any
Participant will be implied.

 

5

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