<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
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<S> <C>
For the fiscal year Commission file number:
ended:
DECEMBER 31, 1994 0-15010
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MARTEN TRANSPORT, LTD.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 39-1140809
(State of Incorporation) (I.R.S. Employer Identification
No.)
129 MARTEN STREET 54755
MONDOVI, WISCONSIN (Zip Code)
(Address of Principal Executive
Offices)
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Registrant's telephone number, including area code:
(715) 926-4216
------------------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, PAR VALUE $.01 PER SHARE
------------------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934, during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /
As of March 1, 1995, 2,929,950 shares of Common Stock of the Registrant were
outstanding, and the aggregate market value of the Common Stock of the
Registrant (based upon the last reported sale price of the Common Stock at that
date by the Nasdaq National Market), excluding shares owned beneficially by
officers and directors was approximately $21,810,975.
Part II of this Annual Report on Form 10-K incorporates by reference
information (to the extent specific pages are referred to herein) from the
Registrant's Annual Report to Shareholders for the year ended December 31, 1994
(the "1994 Annual Report"). Part III of this Annual Report on Form 10-K
incorporates by reference information (to the extent specific sections are
referred to herein) from the Registrant's Proxy Statement for its annual meeting
to be held May 2, 1995 (the "1995 Proxy Statement").
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PART I
ITEM 1. BUSINESS
(a) GENERAL DEVELOPMENT OF BUSINESS.
Marten Transport, Ltd. ("the Company") is a long-haul truckload carrier
providing protective service transportation, which is temperature controlled or
insulated carriage of temperature sensitive materials and general commodities
and carriage of time sensitive freight, pursuant to operating authority, both
contract and common, granted by the Interstate Commerce Commission ("ICC"). The
Company believes that the common carrier truckload market continues to expand as
shippers increasingly utilize common carriage to gain cost efficiencies and more
effectively use resources. Shippers are also consolidating their distribution
facilities which has led to consolidation in the number of carriers used.
As of December 31, 1994, the Company operated a fleet consisting of 965
tractors and 1,253 trailers (all of which are protective service trailers). Of
the total fleet, 909 tractors were Company-owned and 56 tractors and 3 trailers
were leased from independent contractors who also provide the services of a
driver satisfactory to the Company. As of December 31, 1994, the Company had
1,206 employees, including 976 drivers, none of whom is represented by a
collective bargaining unit.
The Company was organized under Wisconsin law in 1970 as a successor to a
sole proprietorship operated by Roger R. Marten since 1946. In 1988, the
Company reincorporated under Delaware law. The Company's executive offices are
located at 129 Marten Street, Mondovi, Wisconsin 54755, and its telephone number
is (715) 926-4216.
(b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS.
Since its inception, the Company's revenue, operating profits and assets
have been attributable primarily to one business segment--long-haul truckload
carriage of temperature and time sensitive materials and general commodities.
(c) NARRATIVE DESCRIPTION OF BUSINESS.
The Company specializes in protective service transportation of foods,
chemicals and other products that require temperature controlled or insulated
carriage. The Company also provides carriage of dry freight for customers
requiring the special services the Company offers. In 1994, the Company derived
approximately 78% of its revenue from hauling products requiring protective
service and 22% of its revenue from hauling dry freight. Most of the Company's
dry freight loads require special services the Company offers or permit the
Company to position its equipment for hauling protective service loads. The
specialized transportation services offered by the Company include:
- dependable, late model tractors which allow timely deliveries
- late model temperature controlled trailers
- scheduled pickups and deliveries
- assistance in loading and unloading
- the availability of extra trailers that can be placed for the
convenience of customers
- sufficient equipment to respond promptly to customers' varying
requirements
- an on-line computer system which allows customers to obtain
information regarding the status of deliveries
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MARKETING AND CUSTOMERS
Senior management and marketing personnel seek customers whose products
require protective or other specialized services and who ship multiple
truckloads per week. To minimize empty miles, the Company places special
emphasis on soliciting customers whose shipping requirements allow the Company
to balance the number of load originations and terminations in any given area.
A key element of the Company's emphasis on service is its strong commitment
to accommodating the individualized requirements of its customers. The Company
has developed an electronic data interface ("EDI") system, through which the
Company can provide its customers with current information regarding the
location and status of shipments in transit. This system also allows customers
to place orders for their transportation needs and allows the Company to bill
customers directly. In 1993, the Company implemented a satellite tracking
system that enhances monitoring of truck and shipment locations.
The Company maintains marketing offices in its Wisconsin headquarters, as
well as other selected locations throughout the United States. Marketing
personnel travel in their assigned regions to solicit new customers and maintain
contact with existing customers. Once a customer relationship is established,
the primary Company contact is one of the Company's customer service managers.
Working from the Company's terminal in Mondovi, Wisconsin, the customer service
managers regularly contact existing customers to solicit additional business on
a load-by-load basis, particularly when equipment will be available nearby
following a completed haul. Each customer service manager is assigned to
particular customers and is responsible for monitoring overall transportation
and service requirements as well as freight movements for each assigned
customer. These efforts to coordinate shipper needs with equipment availability
have been instrumental in maintaining a low average empty mile factor of 6.7% in
1994.
The Company's Vice President of Sales is responsible for the development of
new business, particularly in the area of protective service transportation. To
further this goal, the Company maintains an incentive program for the sales
force. The program rewards salespeople for meeting or exceeding defined
objectives within their respective regions.
The Company sets its own freight rates instead of using those published by
tariff publishing bureaus. This allows the Company to offer rates that are more
responsive to market conditions and the level of service required by a
particular customer. The Company's rate structure is designed to compensate the
Company for the cost of protective service revenue equipment as well as hauling
loads into areas that generate empty miles.
The Company derived approximately 12 percent of its revenue from a single
customer in 1994, 14 percent in 1993 and 13 percent in 1992.
OPERATIONS
The Company's operations are designed for efficient use of equipment while
maintaining the emphasis placed on providing individualized service to
customers. The Company's computer system provides real-time, on-line
information to track shipments and increase equipment utilization as well as to
assist management in long-range planning and trend analysis.
The Company maintains its dispatch operations in its Mondovi, Wisconsin,
headquarters. The customer service managers are assigned to particular
customers and regions and work closely with the Company's fleet managers,
marketing personnel and drivers. Loads are assigned to drivers by load
planners. Loads are then dispatched by fleet managers who are assigned a group
of drivers regardless of load destination. Once a load has been dispatched, a
fleet manager is responsible for
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its proper and efficient delivery and tracks the status and location of that
load through daily contact with drivers. Customer service managers coordinate
with the Company's marketing personnel to match customer needs with Company
capacity and location of revenue equipment. Each driver is monitored daily on
his/her location, load temperature and any problems by the appropriate fleet
manager. This information, along with information concerning available loads,
is constantly updated on the Company's computer system. Computer-generated
information is used to meet delivery schedules, respond to customer inquiries
and match available equipment with loads.
The Company's primary traffic lanes are between the Midwest and the West
Coast, Pacific Northwest, Southwest, Southeast, East Coast and within
California. The average length of a trip (one-way) was 1,132 miles during 1994,
1,143 miles during 1993 and 1,162 miles during 1992. The Company's loads
generally move from origin directly to destination, thus eliminating any need
for freight terminals. Due to the significant number of loads originating in
the Los Angeles area and the size of the Company's western operations, the
Company operates a maintenance facility in Ontario, California. The Company
also maintains smaller maintenance facilities in Jonesboro, Georgia, and Aurora,
Oregon.
In order to reduce fuel costs, the Company has agreements with various fuel
distributors which enable drivers to purchase fuel at a discount while in
transit. The Company also purchases fuel in bulk at its Mondovi and Ontario
facilities.
DRIVERS
As of December 31, 1994, the Company employed 976 drivers and had contracts
with independent contractors for the services of 56 tractors that provide both a
tractor and a qualified driver for the Company's exclusive use. The Company
recruits drivers from throughout the United States. The ratio of drivers to
tractors as of December 31, 1994, was 1 to 1. None of the Company's drivers is
represented by a collective bargaining unit. The Company's turnover of drivers
was approximately 59% in 1994, which the Company believes is better than the
industry average.
Drivers, including independent contractors, are selected in accordance with
specific Company guidelines relating to safety records, driving experience and
personal evaluations. Once selected, a driver is trained in all phases of
Company policies and operations as well as safety techniques and fuel-efficient
operation of the equipment. In addition, all new drivers must pass a road test
prior to assignment to a vehicle. Recognizing the importance of driver contact
while on the road for extended periods, the Company maintains a toll-free number
and a staff of fleet managers to provide timely communication and driver
support. To enhance this communication and support, the Company implemented a
satellite tracking system in 1993.
To retain qualified drivers and promote safe operations, the Company
purchases premium quality tractors and equips them with optional comfort and
safety features, including air ride suspension, air conditioning, high-quality
interiors, power steering, engine brakes and double sleeper cabs. The Company
maintains stringent screening, training and testing procedures for its drivers
to reduce the potential for accidents and the corresponding cost of insurance
and claims.
Company-employed drivers receive a fixed rate per mile which is increased
based on the driver's length of service. Drivers are also eligible for bonuses
based upon safe, efficient driving. The Company believes that its compensation
program provides an important incentive to attract and retain qualified drivers.
The Company compensates independent contractors on the basis of a fixed
rate per mile or a percentage of revenue from loads hauled. Independent
contractors pay their own fuel, insurance, maintenance and repairs and other
expenses.
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REVENUE EQUIPMENT
The Company's policy is to purchase tractors and trailers manufactured to
Company specifications. The Company's tractors are generally manufactured by
Kenworth, a subsidiary of PACCAR, Inc., and Freightliner. Most of the Company's
tractors are equipped with 365-horsepower Detroit Diesel engines, which are
designed to enable the equipment to maintain constant speed with optimum fuel
economy under conditions often encountered by the Company's equipment, such as
mountainous terrain and maximum weight loads. Most of the Company's single van
trailers are manufactured by Utility or Great Dane and are equipped with Thermo-
King cooling and heating equipment. The current cost of a temperature-
controlled, protective service trailer is approximately $38,000.
Standardization of equipment enables the Company to simplify driver training,
control the cost of spare parts inventory, enhance its preventive maintenance
program and increase fuel economy.
The following table shows the type and age of equipment owned by the
Company as of December 31, 1994:
Model year Tractors Single van trailers
---------- -------- -------------------
1995 120 94
1994 185 245
1993 293 280
1992 131 109
1991 179 145
1990 1 4
1989 -- 241
1988 -- 132
___ _____
Total 909 1,250
=== =====
The 1,250 single van refrigerated trailers are 48 feet long by 102 inches
wide with a minimum of 102 inches of inside height.
The Company's policy is to replace its tractors and trailers based on
factors such as age, the market for used equipment and improvements in
technology and fuel efficiency. The Company believes that this policy has
resulted in one of the most modern fleets among carriers of comparable size.
During 1994, 87 tractors and 78 trailers were added, net of equipment trades.
In 1995, the Company plans to purchase 304 additional tractors (for which 208
tractors will be traded) and 300 additional trailers (for which 158 trailers
will be traded).
The Company has a comprehensive maintenance program for its Company-owned
tractors and trailers to minimize equipment downtime and enhance resale value.
Inspections, repairs and maintenance are performed regularly at the Company's
facilities in Mondovi, Wisconsin; Ontario, California; Jonesboro, Georgia; and
Aurora, Oregon; and at independent contract maintenance facilities in the
Company's service territory. The Company's tractors and trailers are washed
regularly to enhance appearance and prolong equipment life.
EMPLOYEES
As of December 31, 1994, the Company employed 1,206 people, of whom 976
were drivers, 83 were mechanics and maintenance personnel and 147 were support
personnel, including management and administration. None of the Company's
employees is represented by a collective bargaining unit, and the Company
considers relations with its employees to be good.
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COMPETITION
The trucking industry is highly competitive. The Company competes
primarily with other protective service truckload carriers and with private
carriage fleets. For freight that does not require protective service trailers,
the Company also competes with dry freight truckload carriers and to a lesser
extent with railroads. The Company competes primarily on the basis of its
quality of service and its ability to provide protective service and other
specialized services. Several other truckload carriers offering protective
service have substantially greater financial resources than the Company, own
more equipment and carry a larger volume of freight than the Company.
REGULATION
The Company is a motor common and contract carrier regulated by the ICC and
various state agencies. These regulatory authorities have broad powers,
generally governing activities such as authority to engage in motor carrier
operations, rates and charges, and certain mergers, consolidations and
acquisitions. The Motor Carrier Act of 1980 (the "MCA") substantially increased
competition among motor carriers and limited the level of regulation in the
industry. The MCA enables applicants to obtain ICC operating authority more
easily and allows interstate motor carriers such as the Company to change their
rates without ICC approval. The law also allows for the removal of many route
and commodity restrictions on the transportation of freight.
The Trucking Industry Regulatory Reform Act of 1994 (the "TIRRA") has
further increased industry competition and limited industry regulation. The
TIRRA repeals tariff filing for individually determined rates; simplifies the
granting of ICC operating authority; and pre-empts price, route, and service
regulation by the states.
Motor carrier operations are subject to safety requirements prescribed by
the United States Department of Transportation governing interstate operations.
Such matters as weight and dimensions of equipment are also subject to federal
and state regulations.
The Company also has operating authority in the Canadian Provinces of
Alberta, British Columbia, Manitoba, Ontario, Quebec and Saskatchewan.
ITEM 2. PROPERTIES
The Company's executive offices and principal terminal are located on
approximately seven acres in Mondovi, Wisconsin, which currently consists of
approximately 28,000 square feet of office space and approximately 21,000 square
feet of equipment repair and maintenance space. It was originally constructed
in 1965 and was expanded in 1971, 1980, 1987 and 1993.
The Company also maintains a maintenance facility in Ontario, California.
This facility is currently leased from R & R Properties, a sole-proprietorship
owned by Randolph L. Marten, for a period of 5 years terminating December 31,
1999. The current lease provides for rent of $126,000 per year from 1995
through 1999. This rent is based on the debt service of R & R Properties to
finance this facility. The Company is required to bear the cost of insurance,
maintenance and repairs, taxes, special assessments and utilities. In 1993, the
Company remodeled this facility. The current total square footage of this
facility is approximately 15,000, including approximately 2,700 square feet of
office space and 8,000 square feet of equipment repair and maintenance space.
The parking lot measures 150,000 square feet.
The Company purchased a maintenance facility in Jonesboro, Georgia, in
1993. The facility measures approximately 12,500 square feet and consists of
office space, a two and one-half bay service and repair space and parking for up
to forty tractors and trailers.
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The Company also leases a maintenance facility in Aurora, Oregon. The
lease provides for rent of $51,600 per year. The facility, which is
approximately 6,800 square feet, consists of office space, a three-bay service
and repair space and parking for up to twenty tractors and trailers. The lease
expires in January 1996.
ITEM 3. LEGAL PROCEEDINGS
The Company is a party to routine litigation incidental to its business,
primarily involving claims for personal injury and property damage incurred in
the transport of freight. The Company self-insures for property damage. The
Company partially self-insures for losses related to workers' compensation
claims, employees' group health benefits and cargo claims. The Company also
maintains excess general liability and automobile liability insurance policies,
each with a per incident policy limit of $2,000,000 and a cumulative coverage
limit of $21,000,000. The Company believes that its current liability limit is
reasonable under the circumstances. It is possible, however, that the Company
could incur liability in excess of its policy limits in the future, in which
case its financial condition could be adversely affected.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this Report.
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
The Company's executive officers and their ages along with the offices held
as of March 1, 1995, are as follows:
Name Age Position
Randolph L. Marten 42 Chairman of the Board,
President, Chief Operating
Officer and Director
Darrell D. Rubel 49 Executive Vice President,
Chief Financial Officer,
Treasurer, Assistant Secretary
and Director
Timothy P. Nash 43 Vice President of Sales
Franklin J. Foster 39 Vice President of Finance
Robert G. Smith 51 Vice President of Operations
Voin S. Long 47 Vice President of Information Systems
Randolph L. Marten has been a full time employee of the Company since
1974. Mr. Marten has been a Director of the Company since October 1980, its
President and Chief Operating Officer since June 1986 and its Chairman of the
Board since August 1993. Mr. Marten was Vice President of the Company from
October 1980 to June 1986.
Darrell D. Rubel has been a Director of the Company since February 1983,
its Chief Financial Officer since January 1986, its Treasurer since June 1986
and its Executive Vice President since May 1993. Mr. Rubel was also Secretary
of the Company from June 1986 until August 1987
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and Vice President from January 1986 until May 1993, and has been Assistant
Secretary since August 1987.
Timothy P. Nash has been Vice President of Sales since November 1990 and
was Regional Sales Manager from July 1987 to November 1990. Mr. Nash was a
regional sales manager for Overland Express, Inc., a long-haul truckload
carrier, from August 1986 to July 1987.
Franklin J. Foster has been Vice President of Finance since December 1991
and was Director of Finance from January 1991 to December 1991. Mr. Foster was
a vice president in commercial banking for First Bank National Association from
October 1985 to January 1991.
Robert G. Smith has been Vice President of Operations since June 1993 and
was Director of Operations from September 1989 to June 1993. Mr. Smith was
director of operations for Transport Corporation of America, an irregular-route
truckload carrier, from January 1985 to September 1989.
Voin S. Long has been Vice President of Information Systems since July 1994
and was Director of Information Systems from February 1986 to July 1994. Mr.
Long was president of AVL, Inc., a transportation software company from July
1978 to February 1986.
Executive Officers of the Company are elected by the Board of Directors for
one-year terms, commencing with their election at the first meeting of the Board
of Directors immediately following the annual meeting of shareholders and
continuing until the next such meeting of the Board of Directors.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information under the caption "Common Stock Data" on page 21 of the
Company's 1994 Annual Report is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
The financial information under the caption "Five-Year Financial Summary"
on page 9 of the Company's 1994 Annual Report is incorporated herein by
reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations" on pages 10 and 11 of the
Company's 1994 Annual Report is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company's Financial Statements and the report of its independent public
accountants on pages 12 - 20 of the Company's 1994 Annual Report are
incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
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<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
A. DIRECTORS OF THE REGISTRANT.
The information under the captions "Election of Directors--Information
About Nominees" and "Election of Directors--Other Information About Nominees" in
the Company's 1995 Proxy Statement is incorporated herein by reference.
B. EXECUTIVE OFFICERS OF THE REGISTRANT.
Information concerning Executive Officers of the Company is included in
this Report under Item 4A, "Executive Officers of the Registrant."
C. COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
The information contained under the caption "Section 16 Compliance" in the
Company's 1995 Proxy Statement is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information under the captions "Election of Directors--Director
Compensation" and "Compensation and Other Benefits" in the Company's 1995 Proxy
Statement is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information under the caption "Principal Stockholders and Beneficial
Ownership of Management" in the Company's 1995 Proxy Statement is incorporated
herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information under the caption "Certain Transactions" in the Company's
1995 Proxy Statement is incorporated herein by reference.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. Financial Statements:
The following Financial Statements are incorporated herein by reference
from the pages indicated in the Company's 1994 Annual Report:
Report of Independent Public Accountants - page 20
Balance Sheets as of December 31, 1994 and 1993 - page 12
Statements of Operations for the years ended December 31, 1994, 1993
and 1992 - page 13
Statements of Changes in Shareholder's Investment for the years ended
December 31, 1994, 1993 and 1992 - page 14
Statements of Cash Flows for the years ended December 31, 1994, 1993
and 1992 -page 15
Notes to Financial Statements - pages 16 - 20
2. Financial Statement Schedules:
None.
3. Exhibits:
The exhibits to this Report are listed in the Exhibit Index on pages 11 -
15 of this Annual Report on Form 10-K. A copy of any of the exhibits
listed or referred to above will be furnished at a reasonable cost to any
person who was a shareholder of the Company as of March 24, 1995, upon
receipt from any such person of a written request for any such exhibit.
Such request should be sent to Darrell D. Rubel, Executive Vice President
and Chief Financial Officer, Marten Transport, Ltd., 129 Marten Street,
Mondovi, Wisconsin 54755.
The following is a list of each management contract or compensatory plan or
arrangement required to be filed as an Exhibit to this Annual Report on
Form 10-K pursuant to Item 14(c):
(1) Marten Transport, Ltd. Incentive Stock Option Plan, as amended.
(2) Marten Transport, Ltd. Non-Statutory Stock Option Plan, as amended.
(3) Employment Agreement, dated May 1, 1993, between the Company and
Darrell D. Rubel.
(4) Marten Transport, Ltd. 1995 Stock Incentive Plan.
(b) Reports on Form 8-K: None during the fourth quarter of the fiscal year
ended December 31, 1994.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Dated: March 22, 1995 MARTEN TRANSPORT, LTD.
By /s/ Randolph L. Marten
--------------------------------
Randolph L. Marten
Chairman of the Board,
President and Chief
Operating Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below on March 22, 1995 by the following persons on
behalf of the Registrant and in the capacities indicated.
Signature Title
--------- -----
/s/ Randolph L. Marten
------------------------------- Chairman of the Board,
Randolph L. Marten President, Chief Operating
Officer (Principal Executive
Officer) and Director
/s/ Darrell D. Rubel
------------------------------- Executive Vice President, Chief
Darrell D. Rubel Financial Officer, Treasurer, Assistant
Secretary (Principal Financial
and Accounting Officer) and
Director
/s/ Arnold P. Schultz
------------------------------- Director
Arnold P. Schultz
/s/ Larry B. Hagness
------------------------------- Director
Larry B. Hagness
/s/ Thomas J. Winkel
------------------------------- Director
Thomas J. Winkel
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MARTEN TRANSPORT, LTD.
EXHIBIT INDEX TO ANNUAL REPORT
ON FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994
Item No. Item Method of Filing
-------- ---- ----------------
3.1 Certificate of Incorporation
of the Company . . . . . . . . . . Incorporated by reference to
Exhibit 4.1 to the Company's
Registration Statement on Form
S-8 (File No. 33-75648).
3.2 Bylaws of the Company. . . . . . . Incorporated by reference to
Exhibit 4.2 to the Company's
Registration Statement on Form
S-8 (File No. 33-75648).
4.1 Specimen form of the
Company's Common Stock
Certificate. . . . . . . . . . . . Incorporated by reference to
Exhibit 4.1 to the Company's
Registration Statement on Form
S-1 (File No. 33-8108).
4.2 Certificate of Incorporation of
the Company. . . . . . . . . . . . See Exhibit 3.1
4.3 Bylaws of the Company. . . . . . . See Exhibit 3.2
9.1 Voting Trust Agreement
dated February 14, 1983,
as amended . . . . . . . . . . . . Incorporated by reference to
Exhibit 9.1 to the Company's
Registration Statement on Form
S-1 (File No. 33-8108).
9.2 Agreement regarding Voting Trust
Agreement, dated May 4, 1993 . . . Incorporated by reference to
Exhibit 19.2 to the Company's
Quarterly Report on Form 10-Q for
the quarter ended June 30, 1993
(File No. 0-15010).
10.1 Marten Transport, Ltd.
Incentive Stock Option
Plan, as amended . . . . . . . . . Incorporated by reference to
Exhibit 10.1 to the Company's
Annual Report on Form 10-K for
the fiscal year ended December
31, 1986 (File No. 0-15010).
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10.2 Marten Transport, Ltd.
Non-Statutory Stock
Option Plan, as amended. . . . . . Incorporated by reference to
Exhibit 10.2 to the Company's
Annual Report on Form 10-K for
the fiscal year ended December
31, 1987 (File No. 0-15010).
10.3 Real Estate Lease dated
November 29, 1994 between
the Company, as Lessee,
and R & R Properties and
Randolph L. Marten, as Lessor. . . Filed herewith.
10.4 Stock Restriction Agreement
among Roger R. Marten,
Randolph L. Marten and
Darrell D. Rubel . . . . . . . . . Incorporated by reference to
Exhibit 10.5 to the Company's
Registration Statement on Form
S-1 (File No. 33-8108).
10.5 Agreement on Credit Terms
dated as of January 5, 1990
between the Company and
First Bank National
Association. . . . . . . . . . . . Incorporated by reference to
Exhibit 10.10 to the Company's
Annual Report on Form 10-K for
the fiscal year ended December
31, 1989 (File No. 0-15010).
10.6 Amendment to Agreement
on Credit Terms dated as of
July 31, 1990 between the
Company and First Bank
National Association . . . . . . . Incorporated by reference to
Exhibit 10.10 to the Company's
Annual Report on Form 10-K for
the fiscal year ended December
31, 1990 (File No. 0-15010).
10.7 Incentive Stock Option
Agreement dated November 1,
1990 between the Company
and Timothy P. Nash. . . . . . . . Incorporated by reference to
Exhibit 10.11 to the Company's
Annual Report on Form 10-K for
the fiscal year ended December
31, 1990 (File No. 0-15010).
10.8 Lease Agreement and Supplement
No. 1 to Lease Agreement
dated April 1, 1990 between
the Company and Barclays Leasing,
Inc. . . . . . . . . . . . . . Incorporated by reference to
Exhibit 10.12 to the Company's
Annual Report on Form 10-K for the
for the fiscal year ended December
31, 1990 (File No. 0-15010).
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10.9 Lease Agreement dated
September 12, 1990
between the Company and
Truck Country of WI, Inc.. . . . . Incorporated by reference to
Exhibit 10.13 to the Company's
Annual Report on Form 10-K for
the fiscal year ended December
31, 1991 (File No. 0-15010).
10.10 Security Agreement dated
January 12, 1990, as
amended, between the
Company and First Bank
National Association . . . . . . . Incorporated by reference to
Exhibit 10.15 to the Company's
Annual Report on Form 10-K for
the fiscal year ended December
31, 1992 (File No. 0-15010).
10.11 Second Amendment to
Agreement on Credit
Terms dated May 31, 1991
between the Company and
First Bank National
Association. . . . . . . . . . . . Incorporated by reference to
Exhibit 10.16 to the Company's
Annual Report on Form 10-K for
the fiscal year ended December
31, 1992 (File No. 0-15010).
10.12 Amendment No. 3 to Agreement on
Credit Terms dated May 17, 1993
between the Company and First Bank
National Association . . . . . . . Incorporated by reference to
Exhibit 19.3 to the Company's
Quarterly Report on Form 10-Q for
the quarter ended June 30, 1993
(File No. 0-15010).
10.13 Employment Agreement dated
May 1, 1993 between the
Company and Darrell D.
Rubel. . . . . . . . . . . . . . . Incorporated by reference to
Exhibit 19.1 to the Company's
Quarterly Report on Form 10-Q for
the quarter ended June 30, 1993
(File No. 0-15010).
10.14 Stock Purchase Agreement
dated November 15, 1993
between the Company and
Timothy P. Nash. . . . . . . . . . Incorporated by reference to
Exhibit 10.18 to the Company's
Annual Report on Form 10-K for
the fiscal year ended
December 31, 1993 (File No. 0-
15010).
- 13 -
<PAGE>
10.15 Stock Purchase Agreement
dated November 16, 1993
between the Company and
Arnold P. Schultz. . . . . . . . . Incorporated by reference to
Exhibit 10.19 to the Company's
Annual Report on Form 10-K for
the fiscal year ended
December 31, 1993 (File No. 0-
15010).
10.16 Stock Redemption Agreement dated
June 21, 1994 between the Company
and Darrell D. Rubel, as Personal
Representative of the Estate of
Roger R. Marten. . . . . . . . . . Filed herewith.
10.17 Stock Purchase Agreement dated
December 16, 1994 between the
Company and Timothy P. Nash. . . . Filed herewith.
10.18 Marten Transport, Ltd. 1995 Stock
Incentive Plan . . . . . . . . . . Filed herewith.
13.1 1994 Annual Report to
Shareholders - pages 9-21. . . . . Filed herewith.
23.1 Consent of Arthur
Anderson & LLP . . . . . . . . . . Filed herewith.
27.1 Financial Data Schedule. . . . . . Filed herewith.
- 14 -
<PAGE>
EXHIBIT 10.3
REAL ESTATE LEASE
This Lease made and entered into this 29th day of November, 1994, by and
among R & R Properties, a Wisconsin partnership, and Randolph L. Marten
(hereinafter jointly and severally referred to as "LESSOR") and Marten
Transport, Ltd., a Delaware corporation (hereinafter referred to as "LESSEE").
1. PREMISES. The Lessor, for and in consideration of the covenants
herein contained, does hereby lease to Lessee Lessor's land and building located
in the City of Ontario, San Bernardino County, California, for the purposes of
general offices and freight terminals, which property is legally described as
set forth on the attached Exhibit 1.
2. TERM. This Lease shall be for a period of five years (60 months)
commencing on January 1, 1995, and terminating on December 31, 1999. Lessee
shall have the option, exercisable by written notice to Lessor given at least
ninety (90) days prior to the end of the initial term of this Lease, to renew
this Lease for an additional term of five years (60 months), commencing
immediately after the end of the initial term of this Lease and terminating on
December 31, 2004, upon the same terms and conditions set forth in this Lease.
3. RENT. Base rent for the leased premises shall consist of monthly
payments of $10,514.78. All monthly payments shall be made in advance on the
first day of each and every month during the term of this Lease. It is mutually
understood by the parties that this rental represents an absolute net rental to
be received by the Lessor. In addition, the Lessee shall pay, as additional
rent for the leased premises, property taxes, special assessments, insurance,
utilities, nonstructural repairs and maintenance applicable to the leased
premises as hereinafter set forth.
4. LESSEE COVENANTS. Lessee covenants and agrees, during the term of
this Lease and for such further time as Lessee shall hold the leased premises or
any part thereof, that Lessee shall:
A. Pay the rent and any other monies due on the days and in the
manner herein provided.
B. Not allow the interest of the Lessor in the leased premises to
become subject to any liens, charges or encumbrances whatsoever and to indemnify
and to keep indemnified the Lessor against all such liens, charges and
encumbrances placed thereon by acts of the Lessee.
C. Not use the leased premises in any manner contrary to, and to
comply with, any and all governmental regulations, rules, laws or ordinances now
or hereinafter in force.
D. Surrender, yield and to give up the leased premises in a clean
and reasonable condition, ordinary wear and tear and damage by fire or other
casualty reimbursed by insurance to Lessor
<PAGE>
excepted, upon the termination of the Lease, either by lapse of time or
otherwise.
E. Obtain, manage and keep in force for the benefit of the Lessee
and Lessor general public liability insurance against claims for personal
injury, death or property damage occurring on or about the leased premises or
areas adjacent thereto in such amounts as reasonably established from time to
time by Lessor consistent with levels of insurance maintained in prior periods.
Such insurance shall be carried at Lessee's own expense naming Lessor as an
additional insured and Lessee shall furnish to Lessor proof of such coverage and
provide for non-cancellation without at least thirty (30) days prior written
notice to Lessor and Lessee.
F. Obtain, maintain and keep in force for the benefit and in the
name of the Lessor fire extended coverage, vandalism, malicious mischief and
other casualty insurance to the extent of the fair market value of Lessor's
buildings and improvements situated on the leased premises, and as to the
Lessee, as desired by Lessee on its inventory, equipment, machinery and
leasehold improvements and other items owned by Lessee. All such insurance
shall be at Lessee's expense and Lessee shall furnish to Lessor proof of such
coverage and provide for non-cancellation without at least thirty (30) days
prior written notice to Lessor and Lessee.
G. Maintain, repair or replace, and keep at its own expense, in
good condition, all of the leased premises occupied by Lessee, excluding,
however, repairs of structural damage not caused by acts or omissions of Lessee,
agents or invitees and excluding damages and losses covered by insurance
required under paragraph F above and paid to Lessor.
H. Be responsible for furnishing and paying for all utilities and
services desired by Lessee including electrical, water, phone, etc.
I. Pay all property taxes and assessments when due on the leased
premises including any and all property taxes and assessments upon the property
of the Lessee used in the operation of the business of the Lessee conducted on
the leased premises or in connection with the Lessees' business conducted on the
leased premises.
5. LESSOR COVENANTS. Lessor covenants and agrees, during the term of
this Lease, and for such further time as Lessee shall hold the leased premises
or any part thereof and is not in default under this Lease, that upon Lessee's
paying the rent and observing and performing all of the terms, covenants and
conditions on Lessee's part to be observed and performed, Lessee may peacefully
and quietly have, hold, occupy and enjoy the leased premises, however, the
Lessor or its or his agents may examine the leased premises at any reasonable
time upon reasonable notice.
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<PAGE>
6. ALTERATIONS AND TRADE FIXTURES. Lessee may make normal
alterations without consent of Lessor and at the expense of Lessee. Major
alterations of the leased premises may not be made by Lessee without prior
written consent of Lessor. Upon the termination of this Lease, or the vacating
of the leased premises, any items that become part of the real estate shall be
left on the leased premises by the Lessee without expense or charge to Lessor
and become the property of Lessor.
Trade fixtures and equipment owned by or installed at the cost of
Lessee shall remain personal property and shall not be deemed to become part of
the leased premises. Lessee shall have the right to remove such trade fixtures
and equipment subject to the obligation of Lessee to repair any damage to the
leased premises caused by such removal by Lessee. Failure to remove trade
fixtures at the expiration of this Lease shall constitute automatic extension of
this Lease or, at the option of Lessor, said fixtures may be removed by Lessor
without liability for such removal and a lien shall vest in favor of Lessor on
such fixtures for the cost of such removal and any storage of such fixtures.
7. LESSOR'S RIGHTS OF RE-ENTRY. If Lessee shall fail to pay any rent
or monies required promptly on the day when the same shall become due and
payable hereunder (subject, however, to a grace period of five (5) days, said
grace period not to be construed as an automatic right to extend said payment
five (5) days beyond the date in which rent payments are due and consistent
failure to pay on the date in which said rent payments are due shall constitute
automatic breach of this Lease), Lessor may terminate this Lease by giving
thirty (30) days written notice to Lessee of such election; or if Lessee shall
fail to promptly keep and perform any other affirmative covenant of this Lease
strictly in accordance with the terms of this Lease, and shall continue in
default for a period of thirty (30) days after written notice to Lessee thereof
by Lessor, then, and in that event, and as often as any such event shall occur,
and also if Lessee shall abandon, desert, vacate or remove from the leased
premises, or shall file a petition of bankruptcy or be adjudged bankrupt after
the filing of an involuntary petition of bankruptcy, or make an assignment for
the benefit of creditors or receive the benefit of any insolvency or bankruptcy
act, or enter into an agreement or arrangement of cooperation with its
creditors, then, and in that event as well, Lessor may, at its election,
terminate this Lease at any time hereafter, upon giving to Lessee thirty (30)
days notice in writing of this election, and at the expiration of such thirty
(30) day period, all of Lessee's rights and interests in said Lease shall cease;
anything to the contrary of this Lease notwithstanding.
Lessee further covenants and agrees to pay and discharge all reasonable
costs and charges, including attorney's fees and expenses, with interest at the
maximum lawful rate of interest authorized by law of the State of Wisconsin,
that shall be made and incurred by said Lessor in enforcing the covenants and
agreements of this Lease or otherwise reasonably incurred or made in
3
<PAGE>
connection with this Lease by Lessor. All of the remedies of the Lessor are
cumulative and the selection of any one remedy shall not be deemed a waiver of
any other. Lessee expressly waives any and all rights of redemption granted by
or under any present or future law in the event of Lessee being evicted or
dispossessed or in the event of Lessor obtaining possession of the leased
premises by reason of the default or failure to perform by Lessee of any of the
covenants, conditions and agreements of this Lease or otherwise.
8. WAIVER OF LIABILITY, HOLD HARMLESS AND INDEMNITY AGREEMENT.
Lessor shall not be responsible for damage or loss to the leased premises or
property or business of Lessee, and Lessee shall not have a cause of action nor
a right of action to collect for the same, except for any such damage or loss as
is caused by the willful, deliberate, reckless or negligent conduct of Lessor.
Lessee does hereby waive any and all right of recovery against Lessor, Lessor's
employees and agents for loss occurring to the leased premises, Lessee's
property or business, except for any such damage or loss as is caused by the
willful, deliberate, reckless or negligent conduct of Lessor. Lessee covenants
and agrees that it will indemnify and save Lessor free and harmless from any and
all claims for injury and damages to persons or property arising from Lessee's
use, misuse or occupancy of the leased premises or arising from any breach by
Lessee of any covenant or obligation made and to be performed by it under the
terms hereof.
Each party further agrees that it forfeits any rights of action that it
may later acquire against the other party to this agreement for loss or damage
to said property or to any property in which either party may have an interest
where the loss is caused by fire or other insurable hazard and arises out of or
is connected with the ownership or leasing of any premises subject to this Lease
or leased in the future. Each party shall advise its insurance carrier of this
waiver.
9. DESTRUCTION AND CONDEMNATION.
A. In the event the leased premises are rendered untenable by
fire or other casualty in such a way that the premises are rendered
substantially unsuitable to Lessee for the carrying on of its business and,
further, if said Lessor is unable to substantially restore the premises within
90 days following any such casualty, then either party shall have the option of
terminating this Lease by written notice to the other. If the premises are only
partially rendered untenable, then Lessor shall undertake to promptly repair the
same and the rent for the period of repairs shall be abated pro rata, based upon
the portion of the premises which are serviceable and occupied. In the event
the repairs are undertaken, they shall be completed within a reasonable time.
B. In the event of condemnation, each party may seek, at their
own expense, such awards and rights they deem appropriate subject to the
following:
4
<PAGE>
1. Partial condemnation: In the event there is sufficient
land and improvements after such condemnation to continue the business of
Lessee, the proceeds of any such award shall be first applied to restore/modify
the property to the extent necessary to continue the conduct of the business.
The rent under this Lease shall be appropriately adjusted to reflect the
reduction of leasehold interest lost by Lessee. In the event Lessor and Lessee
cannot agree on such reduction, it shall be determined by binding arbitration;
said arbitrator to be appointed by any Judge of a court of competent
jurisdiction for the County of San Bernardino, California, upon application by
either party.
2. Total condemnation: In the event of total loss by
condemnation, this Lease shall terminate.
10. LESSOR'S RIGHTS TO MAKE CERTAIN PAYMENTS. In the event that the
Lessee fails to promptly pay when due any costs such as taxes or insurance, or
other charges on said premises, and to keep the property in reasonably repair
and pay all of the costs and expenses thereof promptly when due, and keep free
from any and all liens or accounts thereof, then the Lessor may, at its option,
pay such costs, after giving Lessee thirty days notice of demand for payment in
writing. After the giving of said notice, and in default of the Lessee's paying
as required, the Lessor may make any such payments and charge to Lessee for such
sums so paid in advance, together with interest thereon at the prime rate charge
by First National Bank of Minneapolis, Minnesota.
11. OPTION TO PURCHASE. Provided this Lease has not been cancelled or
terminated or expired by its terms, Lessee shall have the option to purchase the
leased premises, exercisable by written notice to Lessor during the following
periods:
A. At any time within six (6) months after Lessee has received
demand for payment from First Bank National Association or its successors or
assigns under that certain Limited Guaranty dated November 21, 1994 executed and
delivered by Lessee in favor of First Bank National Association to guarantee
payment of a promissory note of Lessor payable to First Bank National
Association in the original principal amount of $1,000,000 (the "Guaranty"); or
B. At any time during the last six (6) months of the initial term
of this Lease or during the last six (6) months of the optional 5-year renewal
term of this Lease.
The purchase price for the leased premises payable pursuant to exercise of
such option shall be equal to the fair market value of the leased premises as
determined by an independent appraisal conducted by an appraiser reasonably
acceptable to Lessor and Lessee, provided that, notwithstanding the foregoing,
the purchase price shall in no event be less than $500,000 nor more than
$1,500,000. If the appraisal is less than $500,000, then the purchase price
shall be $500,000, and if the appraisal is greater
5
<PAGE>
than $1,500,000, then the purchase price shall be $1,500,000. If Lessor and
Lessee are unable to agree upon an appraiser within thirty (30) days after
Lessee's notice of exercise of the option, then either party, upon ten (10)
days' prior written notice to the other party, may apply to the Circuit Court of
Buffalo County, Wisconsin, for such court to select and appoint the appraiser.
Each party shall bear one half of the cost of appointing the appraiser and of
the appraiser's fee.
Lessee shall pay to Lessor the purchase price in cash or good federal
funds on the date of closing of the purchase, which shall take place at a
mutually agreeable time and place within sixty (60) days after Lessee's notice
of exercise of the option. Notwithstanding the foregoing, Lessee shall receive
a credit against the purchase price for any amount paid by Lessee pursuant to
the Guaranty. Lessor agrees to indemnify and reimburse Lessee for any amount
that Lessee is required to pay pursuant to the Guaranty for which Lessee does
not receive a credit against the purchase price upon exercise of the option,
whether or not the option is exercised. Taxes, special assessments and other
expenses of the leased premises shall be pro rated as of the date of closing.
Any purchase by the Lessee pursuant to this Section 11 shall be subject to
the following:
a. Lessor shall provide Lessee with a commitment for an ALTA Form B
Extended Coverage Owners Policy written by a title insurer
acceptable to Lessee agreeing to issue the owners policy to Lessee
upon payment of premium ("Title Commitment"). The commitment shall
be accompanied by copies of all title exceptions. The Lessee shall
have a period of thirty (30) days after receipt of the Title
Commitment to determine if title is marketable. If title is not
marketable, Lessee will notify Lessor of its objections to title and
Lessor shall have a period of ninety (90) days thereafter to render
title marketable.
b. Lessee shall accept and Lessor shall deliver marketable title,
subject however to any encumbrances or exceptions to title which the
Lessee has placed against the leased premises during the lease term,
including taxes and assessments then and thereafter due against the
parcel. Lessee reserves the right to cure any other defect in
Lessor's title and credit the reasonable cost of the same against
the purchase price for the leased premises.
c. Conveyance shall be by Lessor's warranty deed, bill of sale and
other conveyance documents reasonably required by Lessee accompanied
by the ALTA Owner's Policy issued in the name of Lessee, as insured,
in the amount of the purchase price ("Title Policy").
6
<PAGE>
d. Lessor shall pay Lessor's attorneys' fees, the cost of preparing the
warranty deed and other conveyance documents, the cost of the Title
Commitment, one-half of any reasonable and customary closing fee or
charges imposed by the closing agent, if any, any transfer fees,
registry stamps or deed taxes or the like imposed on the conveyance
and necessary to record the warranty deed, bill of sale and other
conveyance documents and any and all special assessments levied or
pending against the leased premises. Lessee shall pay Lessee's
attorneys' fees, all recording fees for the warranty deed, bill of
sale and other conveyance documents, the cost of the Title Policy
including any title premium and one-half of any reasonable and
customary closing fee or charge imposed by the closing agent, if
any. Real estate taxes shall be prorated as of the date of closing.
e. Closing of the purchase of the leased premises shall, at Lessee's
option, be through a deed and money escrow agreement with a
nationally recognized title insurance company in substantially the
form then currently in use by such title insurance company with
provisions to make the same consistent with the foregoing
requirements.
f. Notice of election to purchase shall not terminate Lessee's
obligation to continue to make rental payments and rents shall
continue to be paid to the date of acquisition of title, any law to
the contrary notwithstanding.
12. NOTICE. Any notice, demand, request or other instrument which may
be or is required to be given under this Lease shall be delivered in person or
sent by certified mail and shall be addressed to the parties at the addresses as
noted under their signatures to this Lease or to such other address as may be,
from time to time, designated to the parties by written notice.
13. SUBLET OR ASSIGN. Lessee under this Lease shall have no right to
sublet or assign, expressed or implied, without written consent of Lessor, which
shall not be unreasonably withheld.
7
<PAGE>
This agreement shall inure to the benefit of and be binding upon the
parties hereto, their personal representatives, successors and assigns.
IN WITNESS WHEREOF, the parties have hereunto caused this Lease to be duly
executed the day and year first above noted.
MARTEN TRANSPORT, LTD. R & R PROPERTIES
LESSEE: LESSOR:
By: \s\ Darrell D. Rubel By \s\ Randolph L. Marten
------------------------------- ------------------------------
Address: 129 Marten Address: Route 3
Mondovi, WI 54755 Mondovi, WI 54755
8
<PAGE>
EXHIBIT 1
LEASE
R & R PROPERTIES - MARTEN TRANSPORT, LTD.
Description of real estate:
Parcel 1 of Parcel Map No. 7917, in the City of Ontario, County of San
Bernardino, State of California, as per plat thereof recorded in Book 81
of Parcel Maps, Pages 56 and 57, records of said County.
Subject to all covenants, conditions, restrictions, reservations, rights, right
of way and easements of record.
9
<PAGE>
EXHIBIT 10.16
STOCK REDEMPTION AGREEMENT
This AGREEMENT effective as of June 21, 1994 is between Marten Transport,
Inc., a Delaware corporation (the "COMPANY"), and Darrell D. Rubel, as
Personal Representative of the Estate of Roger R. Marten (the "SHAREHOLDER").
WHEREAS, the Shareholder desires to sell to the Company, and the Company
desires to purchase from the Shareholder, an aggregate of Five Hundred Thousand
(500,000) shares of the common stock of the Company (the "SHARES"), subject to
all of the terms and conditions of this Agreement hereinafter set forth;
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. REDEMPTION OF THE SHARES.
1.1 AGREEMENT FOR PURCHASE AND SALE OF SHARES. Subject to the
satisfaction of the conditions to closing of the transaction contemplated hereby
as hereinafter set forth, the Shareholder hereby agrees to sell to the Company,
and the Company hereby agrees to purchase from the Shareholder, the Shares for a
purchase price of $16.00 per share, or an aggregate purchase price of Eight
Million Dollars ($8,000,000) (the "REDEMPTION PRICE").
1.2 CLOSING. Unless this Agreement shall have been terminated, and
subject to the satisfaction of the conditions to closing of the transaction
contemplated hereby hereinafter set forth, a closing (the "CLOSING") will be
held on June 21, 1994 at 11:00 a.m. at the offices of Oppenheimer Wolff &
Donnelly, Plaza VII, Suite 3400, 45 South Seventh Street, Minneapolis,
Minnesota, or at such other place or at such other time as the parties hereto
may mutually agree, at which time and place the documents and instruments
necessary or appropriate to effect the transaction contemplated hereby will be
exchanged by the parties. Specifically, and not in limitation of the foregoing,
at the Closing, the Shareholder will deliver a certificate or certificates in
proper form and duly endorsed for transfer representing the Shares, and the
Company will pay to the Shareholder the Redemption Price by certified check,
federal wire transfer or interbank transfers.
1.3 PAYMENT OF COSTS OF FAIRNESS OPINION. The Shareholder hereby
agrees to pay all of the fees and expenses payable by the Company pursuant to
the engagement by the Company of Alex. Brown & Sons Incorporated ("ALEX.
BROWN") to render an opinion to the Board of Directors of the Company as to
the fairness to the Company of the transaction contemplated hereby. The Company
is hereby authorized to deduct from the Redemption Price any such amount payable
to Alex. Brown, and the Shareholder hereby agrees to pay directly to Alex. Brown
or reimburse the Company for any such fees and expenses that may become payable
that are not so deducted from the payment of the Redemption Price.
<PAGE>
2. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER. The Shareholder
hereby represents and warrants to the Company as follows:
2.1 TITLE TO SHARES. The Shareholder is the record and beneficial
owner of the Shares, free and clear of all liens, encumbrances and claims of
every kind, and the delivery of the Shares by the Shareholder to the Company
under this Agreement will transfer to the Company valid title to the Shares,
free and clear of all liens, charges, encumbrances and claims of every kind.
There are no actions, suits or proceedings against the Shareholder affecting the
title to any of the Shares or the right of the Shareholder to execute, deliver
and perform its obligations under this Agreement.
2.2 AUTHORITY. The Shareholder has the full legal right, power and
authority to execute, deliver and perform its obligations under this Agreement
and to consummate the transaction contemplated hereby. This Agreement has been
duly and validly executed and delivered by, and constitutes the valid and
binding agreement of, the Shareholder, enforceable against the Shareholder in
accordance with its terms.
2.3 NO CONFLICT. The execution and delivery of this Agreement by the
Shareholder and the consummation of the transaction contemplated hereby will not
(a) conflict with, or result in any breach of any material terms, conditions or
provisions of, or constitute a default under, or result in the imposition of any
lien or encumbrance upon any assets or property of the Shareholder pursuant to,
any applicable law, administrative regulation or judgment, or any contract to
which the Shareholder is a party or by which its properties, assets or rights
may be bound or affected, (b) violate any provision of any law, rule or
regulation of any administrative agency or governmental body applicable to the
Shareholder, or any decree of any court, arbitrator or governmental body
applicable to the Shareholder, or (c) require any filing with, or license,
permit, consent or other approval of, any third party or governmental body.
2.4 INVESTMENT REPRESENTATIONS.
(a) The Shareholder acknowledges that the Shareholder has received
such material information as has been requested, and has had an
opportunity to ask questions of and receive answers from management of the
Company to the extent deemed necessary by the Shareholder, in order to
enable the Shareholder to become fully familiar with the financial
condition, business and affairs of the Company. The Shareholder,
therefore, confirms the Company's understanding that the Shareholder is
fully aware of and advised concerning the present financial condition of
the Company, the administration of its business affairs and its prospects
for future business.
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<PAGE>
(b) The Shareholder, either alone or with the assistance of its
professional advisors, has such knowledge and experience in financial and
business matters that it is capable of reading and interpreting financial
statements and evaluating the merits and risks of the transaction
contemplated hereby.
(c) The Shareholder has obtained, to the extent it deems
necessary, its own personal professional advice with respect to the
transaction contemplated hereby in light of its financial condition and
investment needs.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Shareholder as follows:
3.1 AUTHORITY. The Company has the full legal right, power and
authority to execute, deliver and perform its obligations under this Agreement
and to consummate the transaction contemplated hereby. This Agreement has been
duly and validly executed and delivered by, and constitutes the valid and
binding agreement of, the Company, enforceable against the Company in accordance
with its terms.
3.2 NO CONFLICT. The execution and delivery of this Agreement by the
Company and the consummation of the transaction contemplated hereby will not (a)
conflict with, or result in any breach of any material terms, conditions or
provisions of, or constitute a default under, or result in the imposition of any
lien or encumbrance upon any assets or property of the Company pursuant to, any
applicable law, administrative regulation or judgment, or any contract to which
the Company is a party or by which its properties, assets or rights may be bound
or affected, (b) violate any provision of any law, rule or regulation of any
administrative agency or governmental body applicable to the Company, or any
decree of any court, arbitrator or governmental body applicable to the Company,
or (c) require any filing with, or license, permit, consent or other approval
of, any third party or governmental body.
4. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations,
warranties, covenants and agreements of the Shareholder and the Company shall
survive the execution and delivery of this Agreement and the consummation of the
transaction contemplated hereby regardless of any investigation that may have
been made at any time by or on behalf of the party to which such
representations, warranties, covenants and agreements are made.
5. CONDITIONS TO CLOSING. Notwithstanding any other provision of this
Agreement to the contrary, the obligation of the Company to effect the
transaction contemplated hereby shall be subject to the satisfaction at or prior
to the Closing of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations
and warranties of the Shareholder contained in
3
<PAGE>
this Agreement shall be in all material respects true, complete and
accurate as of the date when made and at and as of the time of the Closing
as though such representations and warranties were made at and as of such
time, except for changes specifically permitted or contemplated by this
Agreement.
(b) REQUIRED APPROVALS AND CONSENTS. All approvals and consents
of or from any third party or any governmental authority required to
consummate the transaction contemplated hereby shall have been delivered,
made or obtained, and the Company shall have received copies thereof.
(c) NO ADVERSE CHANGES. No adverse changes shall have occurred
after the date hereof in the business or financial condition of the
Company or in the trading price of the common stock of the Company.
(d) NO PROCEEDING OR LITIGATION. No suit, action,
investigation, inquiry or other proceeding by any third party or any
governmental body shall have been instituted or threatened which questions
the validity or legality of the transaction contemplated hereby or which,
if successfully asserted, would individually or in the aggregate,
otherwise have a material adverse effect on the business or financial
condition of the Company.
(e) OPINION OF COUNSEL TO THE SHAREHOLDER. The Company shall
have received an opinion of legal counsel to the Shareholder, in form and
substance satisfactory to the Company, to the following effect:
(i) The Shareholder is the record and beneficial owner of the
Shares, free and clear of all liens, encumbrances and claims of
every kind, and the delivery of the Shares by the Shareholder to the
Company under this Agreement will transfer to the Company valid
title to the Shares, free and clear of all liens, charges,
encumbrances and claims of every kind. There are no actions, suits
or proceedings against the Shareholder effecting the title to any of
the Shares or the right of the Shareholder to execute, deliver and
perform its obligations under this Agreement.
(ii) The Shareholder has the full legal right, power and
authority to execute, deliver and perform its obligations under this
Agreement and to consummate the transaction contemplated hereby.
This Agreement has been duly and validly executed and delivered by,
and constitutes the valid and binding agreement of, the Shareholder,
enforceable against the Shareholder in accordance with its terms.
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(iii) The execution and delivery of this Agreement by the
Shareholder and the consummation of the transaction contemplated
hereby will not (a) conflict with or result in any breach of any
material terms, conditions or provisions of, or constitute a default
under, or result in the imposition of any lien or encumbrance upon
any assets or property of the Shareholder pursuant to, any
applicable law, administrative regulation or judgment or any
contract to which the Shareholder is now a party or by which its
properties, assets or rights may be bound or affected, (b) violate
any provision of any law, rule or regulation of any administrative
agency or governmental body applicable to the Shareholder, or any
decree of any court, arbitrator or governmental body applicable to
the Shareholder, or (c) require any filing with, or license, permit,
consent or other approval of, any third party or governmental body.
(f) OPINION OF ALEX. BROWN. The Company shall have received a
favorable opinion of Alex. Brown, in form and substance satisfactory to
the Company, to the effect that the transaction contemplated hereby is
fair to the Company from a financial point of view.
(g) FINANCING. The Company shall have obtained, on terms
satisfactory to the Company in its sole discretion, such financing as may
be necessary for the Company to consummate the transaction contemplated
hereby.
(h) ACCEPTANCE BY COUNSEL. The form and substance of all legal
matters contemplated hereby and of all instruments and documents delivered
hereunder shall be in form and substance reasonably satisfactory to
counsel to the Company.
6. MISCELLANEOUS.
6.1 TERMINATION. This Agreement may be terminated and the transaction
contemplated hereby may be abandoned at any time, but not later than the
Closing, upon the following terms:
(i) by mutual written consent of the Company and the Shareholder; or
(ii) by the Company on or after June 23, 1994 if any of the
conditions provided for in Section 5 of this Agreement shall not have been
satisfied or waived in writing by the Company prior to such date; or
(iii) by the Shareholder on or after June 23, 1994 if the
transaction contemplated hereby shall not have been consummated on or
before such date.
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6.2 PUBLIC ANNOUNCEMENTS. The Shareholder acknowledges and
understands that the Company will make a public announcement of the transaction
contemplated hereby as may be necessary or appropriate in accordance with
applicable law. The Shareholder agrees that it will not make any public
statement or issue any release relating to the transaction contemplated hereby
without the prior written consent of the Company.
6.3 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Wisconsin.
6.4 ENTIRE AGREEMENT; SUCCESSORS AND ASSIGNMENT. This Agreement
collectively sets forth the entire agreement and understanding of the parties
with respect to the transaction contemplated hereby and supersedes all prior
agreements, arrangements, and understandings relating to the subject matter
hereof or thereof. All of the terms, representations and warranties of this
Agreement shall be binding upon, inure to the benefit of, and be enforceable by,
the parties hereto and their respective successors, heirs at law, legatees,
distributees, executors, administrators and other legal representatives.
6.5 FURTHER ASSURANCES. Each party to this Agreement will, on or at
any time after the date hereof, execute such further documents or instruments
and take such further actions as may reasonably be requested by any other party
to this Agreement to effect the purposes of this Agreement.
6.6 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together shall constitute but one instrument.
IN WITNESS WHEREOF, the parties duly executed this Agreement as of the day
and year first written above.
COMPANY:
MARTEN TRANSPORT, LTD.
By: \s\ Randolph L. Marten
-------------------------------------
Its: CHAIRMAN
------------------------------------
SHAREHOLDER:
\s\ Darrell D. Rubel
--------------------------------------------
Darrell D. Rubel, as Personal Representative
of the Estate of Roger R. Marten
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EXHIBIT 10.17
STOCK PURCHASE AGREEMENT
THIS AGREEMENT is entered into and effective as of December 16, 1994 by
and between Marten Transport, Ltd., a Delaware corporation (the "Company"), and
Timothy P. Nash (the "Employee").
WHEREAS, the Employee has exercised stock options to purchase an aggregate
of three thousand (3,000) shares of the Common Stock of the Company (the
"Shares") pursuant to the terms of that certain Incentive Stock Option Agreement
between the Company and the Employee dated as of November 1, 1990;
WHEREAS, the Employee desires to sell the Shares to the Company, and the
Company desires to purchase the Shares from the Employee in order for the
Employee to realize the benefits of the incentive provided under the Incentive
Stock Option Agreement for his efforts in the advancement of the interests of
the Company in furtherance of the purposes and intent of the Incentive Stock
Option Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto do hereby agree
as follows:
1. PURCHASE AND SALE OF SHARES. The Employee does hereby sell,
assign and transfer to the Company all right, title and interest in and to three
thousand (3,000) shares of Common Stock of the Company to be issued pursuant to
the terms of the Incentive Stock Option Agreement between the Employee and the
Company dated November 1, 1990, and the Company hereby agrees to pay to the
Employee the sum of $18.50 per share for the Shares, subject to applicable
withholding requirements of federal, state, social security and other tax laws.
2. BINDING EFFECT. This Agreement shall be binding upon the heirs,
executors, administrators and successors of the parties hereto.
3. GOVERNING LAW. This Agreement and all rights and obligations
hereunder shall be construed in accordance with and governed by the laws of the
State of Wisconsin.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the day and year first above written.
MARTEN TRANSPORT, LTD., A
Delaware Corporation
By: \s\ Darrell D. Rubel
-------------------------------
Its: EVP/CFO
----------------------------
EMPLOYEE
\s\ Timothy P. Nash
----------------------------------
Timothy P. Nash
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EXHIBIT 10.18
MARTEN TRANSPORT, LTD.
1995 STOCK INCENTIVE PLAN
1. PURPOSE OF PLAN.
The purpose of the Marten Transport, Ltd. 1995 Stock Incentive Plan (the
"Plan") is to advance the interests of Marten Transport, Ltd. (the "Company")
and its stockholders by enabling the Company to attract and retain persons of
ability to perform services for the Company by providing an incentive to such
individuals through equity participation in the Company and by rewarding such
individuals who contribute to the achievement by the Company of its 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.
2.3 "CHANGE IN CONTROL" means an event described in Section 13.1 of the
Plan.
2.4 "CODE" means the Internal Revenue Code of 1986, as amended.
2.5 "COMMITTEE" means the Compensation Committee of the Board, which is
charged with administering the Plan, as provided in Section 3 of the Plan.
2.6 "COMMON STOCK" means the common stock of the Company, par value
$.Ol 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.
2.7 "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 any 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.
2.8 "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 consultants and independent contractors of the
Company or any Subsidiary.
2.9 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
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2.10 "FAIR MARKET VALUE" means, with respect to the Common Stock, as of
any date (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
per share of the Common Stock as reported on the NASDAQ National Market System.
2.11 "INCENTIVE AWARD" means an Option, Stock Appreciation Right,
Restricted Stock Award, Performance Unit or Stock Bonus granted to an Eligible
Recipient pursuant to the Plan.
2.12 "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.
2.13 "NON-EMPLOYEE DIRECTOR" means any member of the Board of Directors
of the Company who is not an employee of the Company or any Subsidiary.
2.14 "NON-STATUTORY STOCK 0PTION" 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.
2.15 "0PTION" means an Incentive Stock Option or a Non-Statutory Stock
Option.
2.16 "PARTICIPANT" means an Eligible Recipient who receives one or more
Incentive Awards under the Plan.
2.17 "PERFORMANCE UNIT" means a right granted to an Eligible Recipient
pursuant to Section 9 of the Plan to receive a payment from the Company, in the
form of stock, cash or a combination of both, upon the achievement of
established performance goals.
2.18 "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.
2.19 "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.
2.20 "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.
2.21 "SECURITIES ACT" means the Securities Act of 1933, as amended.
2.22 "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 stock, cash or a combination of both, equal to the
difference between the Fair Market Value of one or more shares of Common Stock
and the exercise price of any such share under the terms of such Stock
Appreciation Right.
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2.23 "STOCK BONUS" means an award of Common Stock granted to an Eligible
Recipient pursuant to Section 10 of the Plan.
2.24 "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.
2.25 "TAX DATE" means the date any withholding tax obligation arises
under the Code for a Participant with respect to an Incentive Award.
3. PLAN ADMINISTRATION.
3.1 THE COMMITTEE. The Plan will be administered by the Compensation
Committee of the Board, all of whom will be "disinterested persons" within the
meaning of Rule 16b-3 under the Exchange Act. As used in this Plan, the term
"Committee" will refer to the Compensation Committee of the Board. To the
extent consistent with corporate law, 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. 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 whether Incentive Awards will be
granted in tandem with other Incentive Awards) 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. In addition, the Committee
will have the authority under the Plan to pay the economic value of any
Incentive Award in the form of cash, Common Stock or any combination of
both.
(b) 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
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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 and
that any Participant adversely affected by such amended or modified terms
has consented to such amendment or modification. No amendment or
modification to an Incentive Award, however, whether pursuant to this
Section 3.2 or any other provisions of the Plan, will be deemed to be a
regrant of such Incentive Award for purposes of this Plan.
(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, (H) any purchase, acquisition,
sale or disposition of a significant amount of assets or a significant
business, (iii) any change in accounting principles or practices, or (iv)
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 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 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 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.
4. SHARES AVAILABLE FOR ISSUANCE.
4.1 MAXIMUM NUMBER OF SHARES. 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 500,000 shares. 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. Any shares of Common Stock that are
subject to an Incentive Award that lapses, expires, is forfeited or for any
reason is terminated unexercised or unvested and any shares of Common Stock that
are subject to an Incentive Award that 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. Any shares of Common Stock that constitute the
forfeited portion of a Restricted Stock Award, however, will not become
available for further 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
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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
available for issuance under the Plan and, in order to prevent dilution or
enlargement of the rights of Participants, the number, kind and, where
applicable, exercise price of securities subject to outstanding Incentive
Awards.
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 the 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 or in tandem with other Incentive
Awards, as may be determined by the Committee. 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. The Committee may designate whether an Option is to be considered an
Incentive Stock Option or 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 (a) such price will not be less than
100% of the Fair Market Value of one share of Common Stock on the date of grant
with respect to an Incentive Stock Option (110% of the Fair Market Value 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),
and (b) such price win not be less than 85% of the Fair Market Value of one
share of Common Stock on the date of grant with respect to a Non-Statutory Stock
Option.
6.3 EXERCISABILITY AND DURATION. An Option will become exercisable at
such times and in such installments as may be determined by the Committee at the
time of grant; provided, however, that no Option may be exercisable prior to six
months from its date of grant and no Incentive Stock Option may be exercisable
after 10 years from its date of grant (five years from its date of grant 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. 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 may
allow such payments to be made, in whole or in part and upon such terms and
conditions as may be established by the Committee, by tender of a Broker
Exercise Notice, Previously Acquired Shares, a promissory note or by a
combination of such methods.
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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 (Attention: Chief Financial Officer) 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.
6.6 AGGREGATE LIMITATION OF STOCK SUBJECT TO INCENTIVE STOCK OPTIONS. To
the extent that the aggregate Fair Market Value (determined as of the date an
Incentive Stock Option is granted) of the shares of Common Stock with respect to
which incentive stock options (within the meaning of Section 422 of the Code)
are exercisable for the first time by a Participant during any calendar year
(under the Plan and any other incentive stock option plans of the Company or any
subsidiary or parent corporation of the Company (within the meaning of the
Code)) exceeds $100,000 (or such other amount as may be prescribed by the Code
from time to time), such excess Options win be treated as Non-Statutory Stock
Options. The determination will be made by taking incentive stock options into
account in the order in which they were granted. If such excess only applies to
a portion of an incentive stock option, the Committee will designate which
shares will be treated as shares to be acquired upon exercise of an incentive
stock option.
6.7 AUTOMATIC GRANTS TO NON-EMPLOYEE DIRECTORS.
(a) GRANT OF OPTIONS. Following the effective date of the Plan,
each Non-Employee Director who is subsequently appointed or elected for the
first time to serve on the Board will be granted automatically, as of the
effective date of such appointment or election, a Non-Statutory Stock
Option to purchase 10,000 shares of Common Stock (subject to adjustment as
provided in Section 4.3 of the Plan).
(b) OPTION EXERCISE PRICE. The per share price to be paid by
the Non-Employee Director at the time such an Option is exercised will be
100% of the Fair Market Value of one share of Common Stock on the date the
Option is granted. The total purchase price of the shares to be purchased
upon exercise will be paid entirely in cash (including check, bank draft or
money order).
(c) VESTING AND DURATION OF OPTIONS. Each such Option will
become exercisable, on a cumulative basis, with respect to the number of
whole shares of Common Stock representing one-third of the shares covered
by such Option on each of the first two anniversaries of its date of grant
and as to the remaining shares on the third anniversary of the date of
grant; provided that no such Option shall become exercisable as to any
further shares from and after the date on which the holder thereof ceases
to be a member of the Board. The term of each such Option shall be 10
years from the date of grant. Each such Option shall remain exercisable
for the full term thereof irrespective of whether the holder remains a
member of the Board, except that in the event of the death of the holder,
such Option may be exercised by the Holder's heirs or personal
representatives at any time before the earlier of the expiration of the
term of the Option or one year following the date of death. Such Options
will not be subject to the termination provisions of Section 11 of the
Plan.
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(d) MANNER OF 0PTION EXERCISE. An Option may be exercised by a Non-
Employee Director 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 giving written notice of exercise to the Company at its
principal executive office (such notice to specify the particular Option
that is being exercised and the number of shares with respect to which the
Option is being exercised) accompanied by payment, in cash or check payable
to the Company, of the total purchase price of the shares to be purchased
under the Option.
(e) NON-DISCRETIONARY GRANTS. Options granted to Non-Employee
Directors pursuant to this Section 6.7 are intended to qualify as "formula
awards" within the meaning of Rule 16b-3 under the Exchange Act. As a
result, other than as provided in Section 16 of the Plan, the Committee
will not have the authority to amend the eligibility requirements for, or
modify the terms or accelerate the vesting of, such Options (including,
without limitation, the authority to modify the rights of Non-Employee
Directors in connection with termination of service as a director or a
change in control of the Company) if such amendments, modifications or
acceleration of vesting would disqualify such Options from treatment as
"formula awards."
(f) RESCISSION OF PRIOR AUTOMATIC GRANT PROVISION. Following the
effective date of the Plan, the provisions of this Section 6.7 supercede
and replace the provisions of Section 19 of the Marten Transport, Ltd. 1986
Non-Statutory Stock Option Plan, as amended, with respect to all future
grants of Options to each Non-Employee Director who has been subsequently
appointed or elected for the first time to serve on the Board. The
provisions of Section 19 of the Marten Transport, Ltd. 1986 Non-Statutory
Stock Option Plan, as amended, shall remain in effect only with respect to
options that have previously been granted pursuant to such provisions and
for so long as such options remain outstanding.
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 shall be
subject to such terms and conditions, consistent with the other provisions of
the Plan, as will be determined by the Committee.
7.2 EXERCISE PRICE. The exercise price of a Stock Appreciation Right will
be determined by the Committee at the date of grant but will not be less than
85% 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 at the time of grant; provided, however, that no Stock Appreciation
Right may be exercisable prior to six months or 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.
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. The
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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, that the Participant remain in
the continuous employ or service of the Company or a Subsidiary for a certain
period or that the Participant or the Company (or any Subsidiary or division
thereof) satisfy certain performance goals or criteria; provided, however, that
no Restricted Stock Award may vest prior to six months from its date of grant.
8.2 RIGHTS AS A SHAREHOLDER; TRANSFERABILITY. Except as provided in
Sections 8.1, 8.3 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. Unless the Committee determines
otherwise (either in the agreement evidencing the Restricted Stock Award at the
time of grant or at any time after the grant of the Restricted Stock Award), any
dividends or distributions (including regular quarterly cash dividends) paid
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. In the event the Committee
determines not to pay such dividends or distributions currently, the Committee
will determine whether any interest will be paid on such dividends or
distributions. In addition, the Committee may require such dividends and
distributions to be reinvested (and in such case the Participants consent to
such reinvestment) in shares of Common Stock that 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.
9. PERFORMANCE UNITS.
An Eligible Recipient may be granted one or more Performance Units under
the Plan, and such Performance Units will be subject to such terms and
conditions, consistent with the other provisions of the Plan, as may be
determined by the Committee. The Committee may impose such restrictions or
conditions, not inconsistent with the provisions of the Plan, to the vesting of
such Performance Units as it deems appropriate, including, without limitation,
that the Participant remain in the continuous employ or service of the Company
or any Subsidiary for a certain period or that the Participant or the Company
(or any Subsidiary or division thereof) satisfy certain performance goals or
criteria. The Committee will have the discretion either to determine the form
in which payment of the economic value of vested Performance Units will be made
to the Participant (i.e., cash, Common Stock or any combination thereof) or to
consent to or disapprove the election by the Participant of the form of such
payment.
8
<PAGE>
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; provided, however, that the Committee may impose such
restrictions on the assignment or transfer of a Stock Bonus as it deems
appropriate.
11. EFFECT OF TERMINATION OF EMPLOYMENT OR OTHER SERVICE.
11.1 TERMINATION 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 any such Option or Stock
Appreciation Right);
(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 Units 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 or Stock Bonuses.
11.2 TERMINATION FOR REASONS OTHER THAN DEATH, DISABILITY OR RETIREMENT.
(a) 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 Units 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 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," 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).
9
<PAGE>
(b) For purposes of this Section 11.2, "cause" (as determined by
the Committee) will be as defined in any employment or other agreement or
policy applicable to the Participant or, if no such agreement or policy
exists, will mean (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
employment, service, confidentiality or non-compete agreement entered into
with the Company or any Subsidiary.
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
discretion (which may be exercised at any time on or after the date of grant,
including following such termination) cause Options and Stock Appreciation
Rights (or any part thereof) then held by such Participant to become or continue
to become exercisable and/or remain exercisable following such termination of
employment or service and Restricted Stock Awards, Performance Units and Stock
Bonuses then held by such Participant to vest and/or continue to vest or become
free of transfer restrictions, as the case may be, following such termination of
employment or service, in each case in the manner determined by the Committee;
provided, however, that (a) no Option or Stock Appreciation may become
exercisable, and no Restricted Stock Award may vest and become non-forfeitable,
prior to six months from its date of grant, and (b) no Option or Stock
Appreciation Right may remain exercisable beyond its expiration date.
11.4 BREACH OF CONFIDENTIALITY OR NON-COMPETE AGREEMENTS.
Notwithstanding anything in this Plan to the contrary, in the event that a
Participant materially breaches the terms of any confidentiality or non-compete
agreement entered into with the Company or any Subsidiary, whether such breach
occurs before or after termination of such Participant's employment or other
service with the Company or any Subsidiary, the Committee may immediately
terminate all rights of the Participant under the Plan and any agreements
evidencing an Incentive Award then held by the Participant without notice of any
kind.
11.5 DATE OF TERMINATION OF EMPLOYMENT OR OTHER SERVICE. Unless the
Committee otherwise determines, 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 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 legally required amounts necessary to
satisfy any and all federal, 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 or a disqualifying disposition of stock received
upon exercise of an Incentive Stock Option, or (b) 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.
10
<PAGE>
12.2 SPECIAL RULES. The Committee may, 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 Previously Acquired Shares, a
Broker Exercise Notice or a promissory note (on terms acceptable to the
Committee in its sole discretion), or by a combination of such methods.
13. CHANGE IN CONTROL.
13.1 CHANGE IN CONTROL. For purposes of this Section 13.1, a "Change in
Control' of the Company will mean the following:
(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;
(b) the approval by the stockholders of the Company of any plan
or proposal for the liquidation or dissolution of the Company;
(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;
(d) any person (other than any person that is presently the
beneficial owner of 20% or more of the outstanding Common Stock) 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; or
(e) a change in control of the Company of a nature that would be
required to be reported pursuant to Section 13 or 15(d) of the Exchange
Act, whether or not the Company is then subject to such reporting
requirements.
13.2 ACCELERATION OF VESTING. Without limiting the authority of the
Committee under Section 3.2 of the Plan, if a Change in Control of the Company
occurs, then, (a) all outstanding Options and Stock Appreciation Rights that
have been held by a Participant for at least six months will become immediately
exercisable in full and will remain exercisable for the remainder of their
terms, regardless of whether the Participant to whom such Options or Stock
Appreciation Rights have been granted remains in the employ or service of the
Company or any Subsidiary; (b) all outstanding Restricted Stock Awards that have
been held by the Participant for at least six months will become immediately
fully vested and non-forfeitable; and (c) all outstanding Performance Units 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 or Stock Bonuses.
11
<PAGE>
13.3 CASH PAYMENT FOR 0PTIONS. If a Change in Control of the Company
occurs, then the Committee, if approved by the Committee either in an agreement
evidencing an Incentive Award at the time of grant or at any time after the
grant of an Incentive Award, may determine that 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.
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 28OG(b)(2) of the Code),
together with any other payments which 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 28OG(b)(2) of the Code), then the payments to
such Participant pursuant to Section 13.2 or 13.3 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, however, that if such
Participant is subject to a separate agreement with the Company or a Subsidiary
that specifically provides that payments attributable to one or more forms of
employee stock incentives or to payments made in lieu of employee stock
incentives will not reduce any other payments under such agreement, even if it
would constitute an excess parachute payment, or provides that the Participant
will have the discretion to determine which payments will be reduced in order to
avoid an excess parachute payment, then the limitations of this Section 13.4
will, to that extent, not apply.
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 and Stock Bonuses), 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.
14.3 RESTRICTIONS ON TRANSFER. Except pursuant to testamentary will or
the laws of descent and distribution or as otherwise expressly permitted by the
Plan, no right or interest of any Participant in an Incentive Award prior to the
exercise or vesting 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. A Participant will, however, be entitled to designate a beneficiary
to receive an Incentive Award upon such
12
<PAGE>
Participant's death, and in the event of a 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, the
Participant's legal representatives, heirs and legatees.
14.4 NON-EXCLUSIVITY OF THE PLAN. Except as expressly set forth herein,
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. 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 state securities laws 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 regulatory body
which the Committee 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. PLAN AMENDMENT, MODIFICATION AND TERMINATION
The Board may suspend or terminate the Plan or any portion thereof at any
time, and 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, however, that (a) the
Board will not have the authority to amend the eligibility requirements for
Options granted pursuant to Section 6.7 of the Plan, or to modify the number of
shares, exercise price, exercisability, duration, manner of payment or other
terms with respect to such Options, more than once every six months, other than
to comply with changes in the Code, the Employee Retirement Income Security Act
or the rules promulgated thereunder; and (b) no amendments to the Plan will be
effective without approval of the stockholders of the Company if stockholder
approval of the amendment is then required pursuant to Rule 16b-3 under the
Exchange Act, Section 422 of the Code or the rules of the NASD or any stock
exchange. 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 win 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.
17. EFFECTIVE DATE AND DURATION OF THE PLAN
The Plan is effective as of March 9, 1995, the date it was adopted by the
Board. The Plan will terminate at midnight on March 8, 2005, and may be
terminated prior to such time by Board action, and no Incentive Award will be
granted after such termination. Incentive Awards
13
<PAGE>
outstanding upon termination of the Plan may continue to be exercised, or become
free of restrictions, in accordance with their terms.
18. MISCELLANEOUS
18.1 GOVERNING LAW. 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.
18.2 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.
14
<PAGE>
15
<PAGE>
EXHIBIT 13.1
FIVE-YEAR FINANCIAL SUMMARY
<TABLE>
<CAPTION>
1994 ANNUAL REPORT
Five-Year Financial Summary
Years ended December 31,
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 1994 1993 1992 1991 1990
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FOR THE YEAR
Operating revenue $122,730 $112,180 $98,194 $87,763 $81,349
Operating income 13,015 11,359 7,678 5,846 5,384
Income before extraordinary item and cumulative
effect of change in accounting principle 6,375 5,462 3,434 2,108 1,792
Net income 6,375 6,345(1) 3,434 1,965(2) 1,792
PER SHARE DATA
Income before extraordinary item and cumulative
effect of change in accounting principle $ 2.00 $ 1.58 $ 1.00 $ .62 $ .52
Net income 2.00 1.84(1) 1.00 .57(2) .52
BALANCE SHEET DATA
Total assets $105,648 $96,776 $81,434 $69,973 $63,355
Long-term obligations 24,917 21,117 20,523 17,734 14,616
Shareholders' investment 33,104 34,729 28,384 24,835 22,870
<FN>
(1) Includes extraordinary item, proceeds of $883,000 ($.26 per share) from
life insurance policy on Roger Marten, founder of Marten Transport.
(2) Includes charge of $143,000 for the cumulative effect of change in
accounting principle related to revenue recognition.
</TABLE>
9
<PAGE>
MARTEN
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
[LOGO] RESULTS OF OPERATIONS Operating revenue for 1994 increased 9 percent
over 1993, compared with increases of 14 percent in 1993 and 12 percent in 1992.
The primary reason for these annual increases is additional business from new
and existing customers. The transportation of this additional freight resulted
from continued customer demand and a moderate increase in the company's fleet
each of the last three years. Average freight rates increased slightly in 1994
as the company continued to focus on its time- and temperature-sensitive
services. Average freight rates were flat in 1993 and increased slightly in
1992. Equipment utilization, measured by miles per tractor, remained constant in
1994 and 1993 after a slight increase in 1992. Management anticipates that
customer demand will remain strong in fiscal 1995, causing operating revenue to
exceed 1994 levels.
Operating expenses for 1994 represented 89.4 percent of operating revenue,
compared with 89.9 percent in 1993 and 92.2 percent in 1992. This ratio has
improved during the last three years due to continued revenue growth and
Marten's focus on expense control.
Gains on the disposition of revenue equipment increased in 1994 due to strong
market demand for used equipment and planned replacements of the company's
fleet. In response to these gains, Marten reviewed and changed the estimated
salvage value of certain revenue equipment, effective January 1, 1994. The
change resulted in a decrease to depreciation expense of $554,000 in 1994.
Operating expenses increased in all categories due to the transportation of more
freight and additions to the company's fleet. Purchased transportation expense
also increased in 1994 and 1993 due to a higher number of independent
contractor-owned vehicles. Replacement of the company's fleet with new, more
fuel-efficient revenue equipment and fuel tax refunds positively impacted fuel
and fuel tax expense in 1994 and 1993. During this period, the average price of
diesel fuel remained relatively stable.
Insurance and claims expense was 5.0 percent of revenue in 1994, 4.7 percent in
1993 and 5.5 percent in 1992. Management's continued emphasis on driver safety
and training has held insurance and claims expense relatively stable.
Communications and utilities expense increased in 1994 due to additional
satellite transmission costs associated with the implementation of satellite
tracking systems late in 1993. Management anticipates that 1995 operating
expenses, as a percentage of operating revenue, will remain at current levels.
Interest expense as a percent of revenue declined slightly to 2.1 percent in
1994 versus 2.2 percent in 1993 and 2.4 percent in 1992. Additional long-term
debt was incurred during the last two years to finance revenue equipment
purchases and to repurchase 500,000 shares of the company's common stock in
1994. The increased interest expense associated with the additional debt was
partially offset by lower interest rates in 1993 and the first half of 1994.
Interest expense in 1995 is expected to increase from the current level, as
long-term debt will be added to finance new revenue equipment.
The company's effective tax rate was 40 percent in 1994 and 1993, compared with
39 percent in 1992. Management expects that the effective tax rate will remain
at 40 percent during 1995.
10
<PAGE>
In 1994, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 119 (SFAS No. 119), "Disclosure about Derivative
Financial Instruments and Fair Value of Financial Instruments." The company has
not entered into any derivative financial instruments as defined by SFAS No.
119; accordingly, this standard has no impact on Marten's financial statements.
Inflation can be expected to affect most of the company's operating expenses.
The impact of inflation, however, was minimal during the three years ended
December 31, 1994.
CAPITAL RESOURCES AND LIQUIDITY Marten continued to update and expand its fleet
with new, more efficient revenue equipment during 1994, requiring significant
capital expenditures. Additionally, the company repurchased 500,000 shares of
its common stock from the estate of its former chairman and chief executive
officer, Roger R. Marten, for $16 per share. The company has retired these
shares, reducing shareholders' investment by $8 million. These expenditures were
funded using cash flow from operations and long-term debt collateralized by
equipment. Long-term debt at December 31, 1994, rose $3.6 million from December
31, 1993, compared with an increase of $4.5 million in 1993. Marten has
commitments to purchase approximately $25 million of revenue equipment in 1995,
net of trade-in allowances. Management expects to fund these acquisitions with
additional long-term debt and cash flow from operations.
Cash generated from operations has been adequate to fund Marten's working
capital requirements despite a working capital deficit. Marten has operated
effectively with a working capital deficit due to a combination of operating
profits, short turnover in accounts receivable and cash management practices.
The deficit is primarily attributed to current maturities of long-term debt
related to acquisitions of revenue equipment. The working capital deficit at
December 31, 1994, rose to $7.0 million from $3.7 million at December 31, 1993.
This increase is the result of a planned reduction in cash balances, increased
insurance reserves and additional payables associated with revenue equipment
purchases. Marten has not used short-term borrowings to meet working capital
requirements and does not anticipate using short-term borrowings in 1995.
Management believes that the company's liquidity is adequate to meet expected
near-term operating needs.
SEASONALITY The trucking industry in general has experienced seasonal
fluctuations in revenue and expenses. Marten's operations are consistent with
this pattern. The company experiences revenue declines after the winter holiday
season as customers reduce shipments. Operating expenses temporarily increase in
the winter due primarily to reduced fuel efficiency and additional maintenance
costs.
11
<PAGE>
MARTEN
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
(IN THOUSANDS, EXCEPT SHARE INFORMATION) 1994 1993
--------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 3,129 $ 5,339
Receivables:
Trade, less allowances of $600 and $540 13,281 12,444
Other 3,216 2,769
Prepaid expenses (Note 1) 4,917 4,626
Deferred income taxes (Note 5) 2,260 1,910
--------------------------------------------------------------------------------------------------------------
Total current assets 26,803 27,088
--------------------------------------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT (Notes 1, 2, 3 and 4):
Revenue equipment 110,724 99,129
Building and land 3,249 2,999
Office equipment and other 3,539 3,144
Less accumulated depreciation and amortization (38,807) (35,709)
--------------------------------------------------------------------------------------------------------------
Net property and equipment 78,705 69,563
--------------------------------------------------------------------------------------------------------------
OTHER ASSETS 140 125
--------------------------------------------------------------------------------------------------------------
$105,648 $ 96,776
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' INVESTMENT
CURRENT LIABILITIES:
Accounts payable $ 3,106 $ 2,626
Insurance and claims accruals 9,639 8,863
Accrued liabilities 6,103 4,147
Current maturities of long-term debt and capital leases (Notes 2 and 3) 14,963 15,153
--------------------------------------------------------------------------------------------------------------
Total current liabilities 33,811 30,789
LONG-TERM DEBT AND CAPITAL LEASES, less current maturities (Notes 2 and 3) 24,917 21,117
DEFERRED INCOME TAXES (Note 5) 13,816 10,141
--------------------------------------------------------------------------------------------------------------
Total liabilities 72,544 62,047
--------------------------------------------------------------------------------------------------------------
COMMITMENTS (Notes 1, 3 and 9)
SHAREHOLDERS' INVESTMENT (Notes 1, 4 and 6):
Common stock, $.01 par value per share, 10,000,000 shares authorized,
2,929,950 and 3,429,950 shares issued and outstanding 29 34
Additional paid-in capital 9,281 10,865
--------------------------------------------------------------------------------------------------------------
Retained earnings 23,794 23,830
--------------------------------------------------------------------------------------------------------------
Total shareholders' investment 33,104 34,729
--------------------------------------------------------------------------------------------------------------
$105,648 $ 96,776
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these balance sheets.
12
<PAGE>
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the years ended December 31,
(IN THOUSANDS, EXCEPT SHARE INFORMATION) 1994 1993 1992
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING REVENUE $122,730 $112,180 $98,194
--------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES:
Salaries, wages and benefits 44,900 40,873 36,030
Purchased transportation 5,431 3,963 2,761
Fuel and fuel taxes 22,462 20,765 19,227
Supplies and maintenance 11,826 10,889 9,180
Depreciation and amortization 12,660 12,530 11,430
Operating taxes and licenses 2,781 2,517 2,177
Insurance and claims 6,081 5,246 5,438
Communications and utilities 1,550 1,137 1,012
Gain on disposition of revenue equipment (2,220) (1,208) --
Other 4,244 4,109 3,261
--------------------------------------------------------------------------------------------------------------
109,715 100,821 90,516
--------------------------------------------------------------------------------------------------------------
OPERATING INCOME 13,015 11,359 7,678
--------------------------------------------------------------------------------------------------------------
OTHER EXPENSES (INCOME):
Interest expense 2,516 2,447 2,330
Interest income and other (126) (186) (261)
--------------------------------------------------------------------------------------------------------------
2,390 2,261 2,069
--------------------------------------------------------------------------------------------------------------
INCOME BEFORE ITEMS BELOW 10,625 9,098 5,609
PROVISION FOR INCOME TAXES (Note 5) 4,250 3,636 2,175
--------------------------------------------------------------------------------------------------------------
INCOME BEFORE EXTRAORDINARY ITEM 6,375 5,462 3,434
EXTRAORDINARY ITEM--PROCEEDS OF LIFE INSURANCE POLICY (Note 8) -- 883 --
--------------------------------------------------------------------------------------------------------------
NET INCOME $6,375 $6,345 $3,434
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE DATA:
Income before extraordinary item $2.00 $1.58 $1.00
Extraordinary item -- .26 --
--------------------------------------------------------------------------------------------------------------
Net income $2.00 $1.84 $1.00
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statements.
13
<PAGE>
MARTEN
STATEMENTS OF CHANGES IN
SHAREHOLDERS' INVESTMENT
<TABLE>
<CAPTION>
Common Stock Additional Retained
(IN THOUSANDS, EXCEPT SHARE INFORMATION) Shares Amount Paid-In Capital Earnings Total
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1992 3,415,610 $34 $10,750 $14,051 $24,835
Net income for 1992 -- -- -- 3,434 3,434
Issuance of common stock 14,340 -- 115 -- 115
--------------------------------------------------------------------------------------------------------------
Balance at December 31, 1992 3,429,950 $34 $10,865 $17,485 $28,384
Net income for 1993 -- -- -- 6,345 6,345
--------------------------------------------------------------------------------------------------------------
Balance at December 31, 1993 3,429,950 $34 $10,865 $23,830 $34,729
Net income for 1994 -- -- -- 6,375 6,375
Repurchase of common stock (500,000) (5) (1,584) (6,411) (8,000)
--------------------------------------------------------------------------------------------------------------
Balance at December 31, 1994 2,929,950 $29 $9,281 $23,794 $33,104
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statements.
14
<PAGE>
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the years ended December 31,
(IN THOUSANDS) 1994 1993 1992
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Operations:
Income before extraordinary item $6,375 $5,462 $3,434
Adjustments to reconcile income before extraordinary item
to net cash flows from operating activities:
Depreciation and amortization 12,660 12,530 11,430
Gain on disposition of revenue equipment (2,220) (1,208) --
Deferred tax provision 3,325 2,321 829
Changes in other current operating items:
Receivables (1,284) (3,838) (3,031)
Prepaid expenses (291) (1,714) 475
Accounts payable 480 728 (28)
Other current liabilities 2,732 1,319 3,000
--------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities before
extraordinary item 21,777 15,600 16,109
Extraordinary item -- 883 --
--------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 21,777 16,483 16,109
--------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Revenue equipment additions (27,168) (27,648) (24,949)
Revenue equipment retirements 8,435 7,893 4,975
Building and land, office equipment and other additions, net (849) (1,901) (626)
Net change in other assets (15) 93 (15)
--------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (19,597) (21,563) (20,615)
--------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock -- -- 115
Common stock repurchased (8,000) -- --
Long-term borrowings 21,139 19,236 17,610
Repayment of long-term borrowings (17,529) (14,692) (13,909)
--------------------------------------------------------------------------------------------------------------
Net cash provided by (used for) financing activities (4,390) 4,544 3,816
--------------------------------------------------------------------------------------------------------------
DECREASE IN CASH AND CASH EQUIVALENTS (2,210) (536) (690)
CASH AND CASH EQUIVALENTS:
Beginning of year 5,339 5,875 6,565
--------------------------------------------------------------------------------------------------------------
End of year $3,129 $5,339 $5,875
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
CASH PAID FOR:
Interest $2,552 $2,423 $2,301
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Income taxes $820 $2,257 $223
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statements.
15
<PAGE>
MARTEN
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS: Marten Transport, Ltd. (the company) is a long-haul
truckload carrier providing protective service transportation of
temperature-sensitive materials and general commodities pursuant to operating
authority, both contract and common, granted by the Interstate Commerce
Commission. The company derived approximately 12 percent of its revenue from a
single customer in 1994, 14 percent in 1993 and 13 percent in 1992.
CASH EQUIVALENTS: The company invests available funds in short-term cash
equivalents, principally mutual funds containing U.S. government-backed
securities which have an original maturity of three months or less. These
investments are stated at cost, which approximates market value.
PREPAID EXPENSES: As of December 31, prepaid expenses consisted of the
following:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1994 1993
-----------------------------------------------------------------------------
<S> <C> <C>
License fees $1,612 $1,521
Tires in service 1,418 1,302
Parts and tires inventory 1,135 654
Insurance 301 255
Other 451 894
-----------------------------------------------------------------------------
$4,917 $4,626
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
</TABLE>
PROPERTY AND EQUIPMENT: Additions and improvements to property and equipment
are capitalized at cost, while maintenance and repair expenditures are charged
to operations as incurred. Gains and losses on revenue equipment dispositions
are included in operations. Certain facilities are leased from an entity owned
by its chairman of the board (see Notes 3 and 4).
Depreciation is computed based on the cost of the asset, reduced by its
estimated salvage value, using the straight-line method for financial reporting
purposes and accelerated methods for income tax reporting purposes. Following is
a summary of estimated useful lives:
<TABLE>
<CAPTION>
YEARS
-----------------------------------------------------------------------------
<S> <C>
Revenue equipment:
Tractors 5
Trailers 7
Satellite tracking 4
Building 20
Office equipment and other 3-15
-----------------------------------------------------------------------------
</TABLE>
The company changed the estimated salvage value of certain revenue equipment
effective January 1, 1994, to reflect the continued market demand for used
equipment. The change resulted in a decrease in depreciation expense of $554,000
and an increase in net income of $333,000, or $.10 per share, in 1994.
TIRES IN SERVICE: The cost of original equipment and replacement tires placed in
service is capitalized. Amortization is computed based on cost, less estimated
salvage value, using the straight-line method over a period of 24 months. The
current portion of tires in service is included in prepaid expenses in the
accompanying balance sheets. The cost of tires to be amortized beyond one year,
along with the estimated salvage value of tires in service, are included in
revenue equipment in the accompanying balance sheets. The cost of recapping
tires is charged to expense as incurred.
INSURANCE AND CLAIMS: The company self-insures for property damage and
self-insures, in part, for losses related to workers' compensation claims, auto
liability, cargo, general liability and employees' group health benefits.
Insurance coverage is maintained for per-incident and cumulative liability
losses in amounts the company considers sufficient based on historical
experience. The company provides currently for estimated self-insured and
partially self-insured losses. Under arrangements with its insurance carriers
and regulatory authorities, the company has arranged for approximately $8.8
million in letters of credit to guarantee settlement of claims.
16
<PAGE>
REVENUE RECOGNITION: The company recognizes revenue and related expenses on the
date shipment of freight is completed.
EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE: Earnings per share have been
computed based on the weighted average number of shares outstanding during each
period as adjusted for the effect of the issuance of stock options to certain
employees and directors. Weighted average common and common equivalent shares
outstanding were 3,192,140 in 1994, 3,451,932 in 1993 and 3,434,538 in 1992.
DERIVATIVE FINANCIAL INSTRUMENTS: The company has not entered into any
derivative financial instruments as defined by Statement of Financial Accounting
Standards No. 119, as of and for the years ended December 31, 1994 and 1993.
RECLASSIFICATIONS: Certain amounts in the 1993 and 1992 financial statements
have been reclassified to conform to the 1994 presentation. These
reclassifications had no effect on previously reported net income or
shareholders' investment.
2. LONG-TERM DEBT AND CAPITAL LEASES
Long-term debt and capital leases consist of notes payable and capitalized
leases (see Note 3) collateralized by specific revenue equipment. The notes and
leases are payable in monthly principal and interest installments. Interest
rates range from 6 percent to 9.2 percent.
The debt agreements contain various restrictive covenants which, among other
matters, require the company to maintain certain financial ratios. The company
was in compliance with all debt covenants at December 31, 1994.
Maturities of long-term debt at December 31, 1994, are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS) AMOUNT
-----------------------------------------------------------------------------
<S> <C>
1995 $14,963
1996 12,828
1997 8,339
1998 3,708
1999 42
-----------------------------------------------------------------------------
$39,880
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
</TABLE>
3. LEASES
The company acquired certain revenue equipment in 1990 under the terms of
capital leases which were included within long-term debt and capital leases (see
Note 2). The leases provided for 48 equal monthly payments. Payments made under
these leases amounted to $1,382,000 in 1994 and $2,488,000 in 1993. The payments
made in 1994 satisfied remaining capital lease obligations. The cost and
related accumulated amortization of revenue equipment under capital leases
included in the accompanying balance sheet at December 31, 1993, were $4,360,000
and $2,242,000, respectively.
The company leases facilities and office equipment under operating leases with
terms ranging from one to five years (see Note 4). Under most of these
arrangements, the company pays maintenance and other expenses related to the
leased property.
Minimum future obligations under operating leases in effect at December 31,
1994, are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS) AMOUNT
-----------------------------------------------------------------------------
<S> <C>
1995 $281
1996 134
1997 128
1998 126
1999 126
-----------------------------------------------------------------------------
$795
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
</TABLE>
Lease-related expenses were as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1994 1993 1992
-----------------------------------------------------------------------------
<S> <C> <C> <C>
Capital lease amortization $ 81 $867 $925
Capital lease interest expense 20 288 374
Operating lease rentals 436 493 482
-----------------------------------------------------------------------------
</TABLE>
17
<PAGE>
MARTEN
4. RELATED PARTY TRANSACTIONS
During the three years ended December 31, 1994, the company engaged in the
following related party transactions:
(a) The company repurchased 500,000 shares of its common stock from the estate
of its former chairman and chief executive officer, Roger R. Marten, on June 21,
1994, for $16 per share.
(b) The company leases equipment, office and terminal facilities under a
non-cancelable operating lease with an entity owned by its chairman of the board
and previously with a partnership in which its current and former chairmen of
the board were partners. Total rental expense charged to operations relating to
this lease was $175,000 during 1994, $175,000 during 1993 and $185,000 during
1992. Future minimum rental payments under the lease are $126,000 per year from
1995 through 1999.
(c) During 1993, the company made payments of $629,000 to a construction company
owned by a director of Marten Transport for additions to the Mondovi, Wisconsin,
headquarters and a maintenance facility in Ontario, California.
(d) During the three years ended December 31, 1994, the company has maintained
checking, savings and investment accounts at banks controlled by its former
chairman of the board and a non-shareholder/officer of the company.
5. INCOME TAXES
The company utilizes the liability method of accounting for income taxes whereby
deferred taxes are determined based on the estimated future tax effects of
differences between the financial statement and tax bases of assets and
liabilities given the provisions of enacted tax laws.
The components of the provision for income taxes consisted of the following:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1994 1993 1992
-----------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $ 765 $1,150 $1,116
State 160 165 230
-----------------------------------------------------------------------------
925 1,315 1,346
-----------------------------------------------------------------------------
Deferred:
Federal 2,708 1,909 700
State 617 412 129
-----------------------------------------------------------------------------
3,325 2.321 829
-----------------------------------------------------------------------------
Total provision $4,250 $3,636 $2,175
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
</TABLE>
The statutory federal income tax rate is reconciled to the effective income tax
rate as follows:
<TABLE>
<CAPTION>
1994 1993 1992
-----------------------------------------------------------------------------
<S> <C> <C> <C>
Statutory federal income tax rate 34% 34% 34%
Increase in taxes arising from:
State income taxes, net of
federal income tax benefit 4 4 4
Permanent differences 2 2 1
-----------------------------------------------------------------------------
Effective tax rate 40% 40% 39%
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
</TABLE>
As of December 31, the net deferred tax liability consisted of the following:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1994 1993
-----------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Reserves and accrued liabilities for
financial reporting in excess of tax $ 4,463 $ 4,004
State income tax deduction for
financial reporting in excess of tax 644 348
Alternative minimum tax credit 104 83
-----------------------------------------------------------------------------
5,211 4,435
-----------------------------------------------------------------------------
Deferred tax liabilities:
Tax depreciation in excess of
depreciation for financial reporting 14,459 10,489
Prepaid tires, licenses and use tax
expensed for income tax purposes and
capitalized for financial reporting 2,134 1,930
Other 174 247
-----------------------------------------------------------------------------
16,767 12,666
-----------------------------------------------------------------------------
Net deferred tax liability $11,556 $ 8,231
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
</TABLE>
18
<PAGE>
6. SHAREHOLDERS' INVESTMENT
The company maintains an Incentive Stock Option Plan and a Non-Statutory Stock
Option Plan providing for the grant of options to purchase up to an aggregate of
250,000 shares of common stock to officers, directors and key employees. Grants
can be made until August 7, 1996, as determined by the board of directors, at a
price of not less than 100 percent of the fair market value on the date of
grant, except that in the case of any shareholder owning 10 percent or more of
the common stock of the company, the exercise price of an incentive stock
option is to be not less than 110 percent of the fair market value. The term of
the options under the Incentive Stock Option Plan may not exceed 10 years after
date of grant, except that in the case of options to any shareholder owning more
than 10 percent of the common stock of the company, the term may not exceed
five years. Options under the Non-Statutory Stock Option Plan may be granted for
terms of up to 10 years and one month.
As of December 31, activity under the Incentive Stock Option Plan was as
follows:
<TABLE>
<CAPTION>
1994 1993 1992
-----------------------------------------------------------------------------
<S> <C> <C> <C>
Outstanding, beginning of year 47,500 41,500 41,500
Granted:
$13.25/share -- 15,000 --
$17.50/share 15,000 -- --
Exercised:
$3.75/share -- (9,000) --
$3.75/share (3,000) -- --
-----------------------------------------------------------------------------
Outstanding, end of year 59,500 47,500 41,500
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Exercisable, end of year:
$3.75-$17.50/share 23,500 17,500 20,500
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
</TABLE>
The company also has granted options under the Non-Statutory Stock Option Plan
to purchase 33,500 shares of common stock. During 1993, options were exercised
for 10,000 shares at $5.00 per share. At December 31, 1994, options for 23,500
shares were outstanding, including 13,500 shares exercisable at $7.00 to $18.50
per share.
The company repurchased 500,000 shares of its common stock on June 21, 1994, for
$16 per share (see Note 4). The shares have been retired, reducing shareholders'
investment by $8 million. The company repurchased, at fair market value, the
3,000 shares of stock issued in 1994 and the 19,000 shares issued in 1993 upon
exercise of the options noted above. In 1992, the company issued 14,340 shares
of common stock as compensation to certain employees.
7. RETIREMENT SAVINGS PLAN
Effective January 1, 1993, the company adopted a defined contribution retirement
savings plan, in accordance with Section 401(k) of the Internal Revenue Code,
covering all employees who meet a minimum service requirement. Each participant
can make contributions of up to 15 percent of compensation. The company's
contribution of 25 percent of each participant's contribution to the plan for up
to 4 percent of compensation vests at the rate of 20 percent per year from the
second through sixth years of service. In addition, the company may make
elective contributions which are determined by resolution of the board of
directors. No elective contributions were made in 1994 or 1993. Total expense
recorded in connection with the plan was $167,000 in 1994 and $166,000 in 1993.
8. EXTRAORDINARY ITEM
On August 9, 1993, the company's former chairman and chief executive officer,
Roger R. Marten, passed away. The company was the beneficiary of a $1 million
life insurance policy on Mr. Marten. These proceeds, net of previously recorded
cash surrender value of $117,000, were recorded in 1993 as an extraordinary
credit with no income tax effect.
9. Commitments
The company has commitments to purchase approximately $25 million of additional
revenue equipment, net of trade-in allowances, in 1995.
19
<PAGE>
MARTEN
10. QUARTERLY FINANCIAL DATA (UNAUDITED)
The following is a summary of the quarterly results of operations for 1994
and 1993:
<TABLE>
<CAPTION>
1994 QUARTERS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) FIRST SECOND THIRD FOURTH TOTAL
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating revenue $29,220 $30,483 $31,443 $31,584 $122,730
Operating income 2,566 3,434 3,644 3,371 13,015
Net income 1,200 1,742 1,788 1,645 6,375
Net income per share .35 .51 .60 .56 2.00
-------------------------------------------------------------------------------------------------------------------
<CAPTION>
1993 Quarters (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) First Second Third Fourth Total
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating revenue $25,844 $28,260 $29,079 $28,997 $112,180
Operating income 2,146 3,182 3,499 2,532 11,359
Income before extraordinary item 934 1,562 1,761 1,205 5,462
Extraordinary item -- -- 883 -- 883
Net income 934 1,562 2,644 1,205 6,345
Net income per share before extraordinary item .27 .45 .51 .35 1.58
Net income per share .27 .45 .77 .35 1.84
-------------------------------------------------------------------------------------------------------------------
</TABLE>
The company changed the estimated salvage value of certain revenue equipment
effective January 1, 1994 (see Note 1). The change resulted in a decrease in
depreciation expense of $405,000 through the third quarter of 1994. The effect
of this change in estimate was recorded in the third quarter of 1994, which
increased net income by $243,000, or $.08 per share, of which $.05 per share
related to the first and second quarters of 1994. The net income per share for
the 1994 quarters exceeds the net income per share for the year due to changes
in the weighted average number of shares outstanding during the year.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Marten Transport, Ltd.:
We have audited the accompanying balance sheets of Marten Transport, Ltd. (a
Delaware corporation) as of December 31, 1994 and 1993, and the related
statements of operations, changes in shareholders' investment and cash flows
for each of the three years in the period ended December 31, 1994. These
financial statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Marten Transport, Ltd. as of
December 31, 1994 and 1993, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1994, in conformity
with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Minneapolis, Minnesota
March 3, 1995
20
<PAGE>
CORPORATE INFORMATION
EXECUTIVE OFFICERS AND DIRECTORS
Randolph L. Marten
Chairman of the Board, President, Chief Operating Officer and Director
Darrell D. Rubel
Executive Vice President, Chief Financial Officer, Treasurer, Assistant
Secretary and Director
Timothy P. Nash
Vice President of Sales
Franklin J. Foster
Vice President of Finance
Robert G. Smith
Vice President of Operations
Voin S. Long
Vice President of Information Systems
Arnold P. Schultz
Director
Retired Superintendent of Schools, Goodhue, Minnesota
Larry B. Hagness
Director
President, Durand Builders Service, Inc., Durand, Wisconsin
Thomas J. Winkel
Director
Management Consultant, Eagan, Minnesota
Mark A. Kimball
Secretary
Partner, Oppenheimer Wolff & Donnelly, Minneapolis, Minnesota
CORPORATE HEADQUARTERS
129 Marten Street
Mondovi, Wisconsin 54755
Telephone: (715) 926-4216
Fax: (715) 926-4530
SHAREHOLDER INFORMATION
A copy of the company's 1994 Annual Report on Form 10-K as filed with the
Securities and Exchange Commission is available by writing to:
Darrell D. Rubel, executive vice president and chief financial officer, at
Marten's corporate headquarters.
ANNUAL MEETING
Shareholders, employees and friends are invited to attend Marten Transport's
annual meeting on Tuesday, May 2, 1995, at 4:00 p.m., at the Holiday Inn Eau
Claire, 2703 Craig Road, Eau Claire, Wisconsin.
STOCK LISTING
Nasdaq National Market symbol:
MRTN
LEGAL COUNSEL
Oppenheimer Wolff & Donnelly
45 South Seventh Street
Suite 3400
Minneapolis, Minnesota 55402
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP
45 South Seventh Street
Minneapolis, Minnesota 55402
TRANSFER AGENT AND REGISTRAR
Mellon Securities Trust Company
c/o Mellon Securities Transfer Services
85 Challenger Road
Overpeck Centre
Ridgefield Park, New Jersey 07660
Communications concerning change of address or stock certificates should be
directed to the transfer agent.
PUBLIC/FINANCIAL RELATIONS COUNSEL
Padilla Speer Beardsley Inc.
224 Franklin Avenue West
Minneapolis, Minnesota 55404
COMMON STOCK DATA
The company's quarterly stock price data, as reported by the Nasdaq National
Market, were as follows:
<TABLE>
<CAPTION>
1994 1993
Quarter HIGH LOW High Low
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
First 18 3/4 16 3/4 13 3/4 10 3/4
--------------------------------------------------------------------------------
Second 19 17 14 1/2 12 3/4
--------------------------------------------------------------------------------
Third 19 1/2 17 1/2 14 1/2 13
--------------------------------------------------------------------------------
Fourth 20 18 18 3/4 14
--------------------------------------------------------------------------------
</TABLE>
The foregoing prices do not include adjustments for retail mark-ups, mark-downs
or commissions. On December 31, 1994, there were 332 shareholders of record, as
well as approximately 310 beneficial shareholders. The company has not paid any
cash dividends on its common stock since it became publicly held in September
1986, and management does not anticipate cash dividend payments in the
foreseeable future.
<PAGE>
EXHIBIT 23.1
CONSENT OF ARTHUR ANDERSEN LLP
As independent public accountants, we hereby consent to the incorporation by
reference of our report dated March 3, 1995 included or incorporated by
reference in this Form 10-K into Marten Transport, Ltd.'s previously filed Form
S-8 dated February 23, 1994.
Arthur Andersen LLP
Minneapolis, Minnesota
March 29, 1995
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Statements of Operations and the Balance Sheets and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 3,129
<SECURITIES> 0
<RECEIVABLES> 13,281
<ALLOWANCES> 600
<INVENTORY> 0
<CURRENT-ASSETS> 26,803
<PP&E> 117,512
<DEPRECIATION> 38,807
<TOTAL-ASSETS> 105,648
<CURRENT-LIABILITIES> 33,811
<BONDS> 24,817
<COMMON> 29
0
0
<OTHER-SE> 33,075
<TOTAL-LIABILITY-AND-EQUITY> 105,648
<SALES> 0
<TOTAL-REVENUES> 122,730
<CGS> 0
<TOTAL-COSTS> 109,715
<OTHER-EXPENSES> (126)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,516
<INCOME-PRETAX> 10,625
<INCOME-TAX> 4,250
<INCOME-CONTINUING> 6,375
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,375
<EPS-PRIMARY> 2.00
<EPS-DILUTED> 0
</TABLE>
