Exhibit 10.1

 

PROTO LABS, INC.

EXECUTIVE EMPLOYMENT AGREEMENT

 

This Executive Employment Agreement (the “Agreement”) is entered into as of
February 6, 2014 (the “Effective Date”) by and between Proto Labs, Inc., a
Minnesota corporation (the “Company”), and Victoria M. Holt (“Executive”).

 

Recitals

 

A.            The Company desires to employ Executive, and Executive desires to
be employed by the Company, in accordance with the terms and conditions stated
in this Agreement.

 

B.            During employment with the Company Executive will have access to
confidential, proprietary and trade secret information of the Company. It is
desirable and in the best interests of the Company to protect confidential,
proprietary and trade secret information of the Company, to prevent unfair
competition by former executives of the Company following separation of their
employment with the Company and to secure cooperation from former executives
with respect to matters related to their employment with the Company.

 

C.            Executive understands that Executive’s employment and receipt of
the compensation and benefits provided for in this Agreement depends on, among
other things, Executive’s willingness to agree to and abide by the
non-disclosure, non-competition, non-solicitation, assignment of inventions and
other covenants contained in the Proto Labs, Inc. Employee Non-Disclosure and
Inventions Assignment Agreement (the “Non-Disclosure Agreement”) and the Proto
Labs, Inc. Non-Competition Agreement (the “Non-Competition Agreement”) attached
together as Exhibit A to this Agreement. Executive and the Company acknowledge
that Executive was provided a copy of this Agreement, the Non-Disclosure
Agreement and the Non-Competition Agreement before Executive accepted employment
with the Company.

 

D.             For the reasons set forth above, the Company and Executive desire
to enter into this Agreement.

 

Now, Therefore, in consideration of the foregoing and the mutual covenants set
forth herein, the Company and Executive, intending to be legally bound, hereby
agree as follows:

 

Agreements

 

1.             Term. Executive’s employment shall commence on February 6, 2014
(the “Start Date”) and shall continue at will until terminated by either party
in accordance with the provisions of Section 6 (the “Term”).

  

 
 

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2.             Employment and Duties.

 

A.     Position and Responsibilities. During the Term Executive shall serve as
the Company’s President, Chief Executive Officer and shall perform such duties
of an executive nature as the Company’s Board of Directors (the “Board”) may
assign from time to time. Executive will follow and comply with applicable
policies and procedures adopted by the Company from time to time, including
without limitation policies relating to business ethics, conflict of interest,
non-discrimination, confidentiality and protection of trade secrets, and insider
trading. Executive shall devote Executive’s full working time and efforts to the
Company’s business, to the exclusion of all other employment or active
participation in other material business interests, unless otherwise consented
to in writing by the disinterested members of the Board. Except as set forth on
Schedule 1, Executive may not serve as a director on any other board of
directors without the unanimous written consent of the Board. Executive hereby
represents and confirms that Executive is under no contractual or legal
commitments that Executive believes would prevent Executive from fulfilling
Executive’s duties and responsibilities as set forth in this Agreement.

 

B.     Board Appointment.    On the Start Date the Board shall appoint Executive
as a director of the Company and the Board shall nominate Executive for
re-election to the Board at each meeting of shareholders at which directors will
be elected during the Term. Executive acknowledges and agrees that Executive is
not entitled to any additional compensation in respect of Executive’s
appointment as a director of the Company.  If during the Term Executive ceases
to be a director of the Company for any reason, Executive’s employment with the
Company will continue (unless terminated in accordance with Section 6) and all
terms of this Agreement (other than those relating to Executive’s position as a
director of the Company) will continue in full force and effect and Executive
will have no claims in respect of such cessation of office. Executive agrees to
abide by all statutory, fiduciary or common law duties arising under applicable
law that apply to Executive as a director of the Company.  Executive further
agrees that Executive will not resign as a director of the Company without the
prior written consent of the Board and if Executive so resigns or if Executive
is disqualified from acting as a director of the Company, then the Company may
at its discretion terminate Executive’s employment under this Agreement for
Cause (as defined in Section 6.D.).

 

3.             At Will Employment. Executive’s employment with Company is at
will and Executive’s employment may be unilaterally terminated by either party
at any time for any reason, subject to the terms of Sections 6 and 7. The date
upon which Executive’s termination of employment with the Company is effective
is the “Termination Date.” For purposes of Section 7 only, with respect to the
timing of any severance payments or benefits thereunder, the Termination Date
means the date on which a “separation from service” has occurred for purposes of
Section 409A of the Internal Revenue Code of 1986, as amended, and the
regulations and guidance thereunder (the “Code”). Unless otherwise requested by
the Board in writing, upon Executive’s termination of employment with the
Company for any reason Executive will automatically resign as of the Termination
Date from all non-employee titles, positions and appointments Executive then
holds with the Company, whether as an officer, director or trustee (without any
claim for compensation related thereto), and Executive hereby agrees to take all
actions necessary to effectuate such resignations.

  

 
 

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4.           Compensation, Benefits and Expenses. While employed by the Company
during the Term, Executive will be provided with the following compensation and
benefits:

 

A.     Base Salary. The Company will pay to Executive for services provided
hereunder an initial base salary at the annualized rate of $500,000.00, which
base salary will be paid in accordance with the Company’s normal payroll
policies and procedures (“Base Salary”).  Consistent with the charter of the
Compensation Committee of the Board (the “Compensation Committee”) and the
Company’s Corporate Governance Guidelines, the independent directors will
evaluate Executive’s performance on an annual basis and then the Compensation
Committee will review this evaluation and determine any adjustments to
Executive’s Base Salary, subject to ratification by the Board. Notwithstanding
the foregoing, in no event shall Executive’s Base Salary for any year during the
Term be reduced below an annualized rate of $400,000.00 without Executive’s
consent.

 

B.     Annual Cash Incentive Bonus. Executive will be eligible for an annual
target cash incentive bonus equal to one-hundred percent (100%) of Executive’s
then-current Base Salary (the “Annual Bonus”), based on achievement of
objectives as determined by the Company, payable no later than March 15 of the
calendar year following the calendar year for which the bonus was earned. For
calendar year 2014, the objectives to earn the Annual Bonus will be consistent
with the objectives applicable for other senior executives eligible to earn cash
incentive bonuses for 2014.

 

C.     Employee Benefits. Executive will be entitled to participate in all
employee benefit plans and programs generally available to executive employees
of the Company, as determined by the Company and to the extent that Executive
meets the eligibility requirements for each individual plan or program.
Executive’s participation in any plan or program will be subject to the
provisions, rules, and regulations of, or applicable to, the plan or program.
The Company provides no assurance as to the adoption or continuation of any
particular employee benefit plan or program.

 

D.      Expenses. The Company will reimburse Executive for all reasonable and
necessary out-of-pocket business, travel, and entertainment expenses incurred by
Executive in the performance of Executive’s duties and responsibilities to the
Company during the Term. Such reimbursement shall be subject to the Company’s
normal policies and procedures for expense verification, documentation, and
reimbursement.

 

E.      Initial Equity. Executive will receive a restricted stock grant of a
certain number of shares of the Company’s common stock (the “Restricted Stock
Award”) with an aggregate value of $1,000,000.00 as of the effective date of the
Restricted Stock Award (the “Grant Date”), which shall be the earliest day
permitted pursuant to the terms of the Company’s Equity Award Approval Policy
following commencement of the Term. The Restricted Stock Award will be subject
to the terms and conditions of that certain Restricted Stock Award Agreement
between the Company and Executive dated effective as of the Grant Date (the
“Restricted Stock Agreement”), including such terms and conditions as are
incorporated from the Company’s 2012 Long-Term Incentive Plan (the “2012 LTIP”).
The restricted stock included in the Restricted Stock Award will vest ratably in
four (4) annual installments, subject to Executive’s continued employment with
the Company and accelerated vesting under certain circumstances as specified
herein and in the Restricted Stock Agreement.

  

 
 

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F.     Annual Equity. Beginning in February 2015 and continuing thereafter on an
annual basis during the Term, Executive shall receive an annual equity grant
based on terms and conditions that are comparable to those applicable to grants
made to other senior executives of the Company, including achievement of
personal or Company objectives established by the Board, and on such other terms
applicable to other executives as are established by the Board in its reasonable
discretion. For each year during the Term, the value of Executive’s annual
equity grant is expected to be $800,000.00 (as measured on the date of grant and
based on the Board’s assessment of the Company’s performance against Executive’s
and the Company’s performance objectives). In accordance with the policies and
practices of the Company, some or all of any annual equity grant may be in the
form of restricted stock, stock options, stock units or other equity that is an
economic equivalent to an option or a restricted stock award. Such equivalency
will be determined by the Board in its reasonable discretion.

 

5.            Non-Disclosure and Non-Competition. At the same time as Executive
signs this Agreement, Executive will sign both the Non-Disclosure Agreement and
the Non-Competition Agreement in the form attached together as Exhibit A, in
consideration of Executive’s employment hereunder and the payments and benefits
provided to Executive pursuant to this Agreement and other good and valuable
consideration.

 

6.             Termination.

 

A.     Voluntary Termination. Except as provided in Sections 6.B., C., D. and
E., each party hereto may terminate Executive’s employment by giving to the
other party no less than thirty (30) days prior written notice of the party’s
intent to terminate. If Executive voluntarily terminates Executive’s employment
without Good Reason, then the Company shall have no further liability to
Executive for any payment, compensation or benefit whatsoever, other than
payment of Executive’s accrued but unpaid salary and benefits through the date
of Executive’s termination and honoring Executive’s rights under any restricted
stock, stock options, stock units or other equity agreement between Executive
and the Company (collectively, “Equity Awards”). If the Company voluntarily
terminates Executive’s employment without Cause (as set forth in Section 6.D.)
or Executive terminates Executive’s employment for Good Reason (as set forth in
Section 6.E.), and subject to Executive’s compliance with the conditions
identified in the first paragraph of Section 7, then Executive shall be entitled
to severance payments and benefits as described in and pursuant to the terms and
conditions of Section 7 of this Agreement.

 

B.     By Death. Executive’s employment shall be terminated automatically upon
the death of Executive. The Company’s total liability in such event shall be
limited to payment of Executive’s accrued but unpaid salary and benefits
(including Annual Bonus) through the date of Executive’s death, honoring
Executive’s rights under any Equity Awards, and paying to Executive’s estate a
pro rata portion of Executive’s Annual Bonus equal to one times Executive’s
target annual cash incentive bonus for the calendar year in which the death
occurs, less deductions and withholding required by law, payable in a lump sum
at the same time as other eligible employees under the Company’s annual cash
incentive bonus plan for such calendar year are paid their bonuses under such
Company’s annual cash incentive bonus plan for such calendar year, but in any
event no later than March 15 of the calendar year immediately following the
calendar year in which Executive’s death occurs. Such pro rata bonus payment
shall be determined by multiplying Executive’s target annual cash incentive
bonus for the calendar year in which the death occurs by a fraction, the
numerator of which is the number of days Executive was employed by the Company
during such calendar year and the denominator is 365.

  

 
 

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  C.          By Disability. The Company may terminate Executive’s employment
upon the inability of Executive to perform on a full-time basis the duties and
responsibilities of Executive’s employment with the Company, after any
reasonable accommodation that may be required under applicable law is made by
the Company, by reason of Executive’s illness or other physical or mental
impairment or condition, if such inability continues for an uninterrupted period
of ninety (90) days (a “Disability”). A period of inability shall be
“uninterrupted” unless and until Executive returns to full-time work for a
continuous period of at least thirty (30) days. The Company shall have no
liability for severance pay or benefits following the date of Executive’s
termination of employment due to Disability, other than payment of Executive’s
accrued but unpaid salary and benefits (including Annual Bonus) through the date
of Executive’s death, honoring Executive’s rights under any Equity Awards,
honoring any rights Executive has to disability insurance benefits under
applicable law or the Company’s short or long term disability insurance policies
as in effect as of the Termination Date, and paying to Executive a pro rata
portion of Executive’s Annual Bonus equal to one times Executive’s target annual
cash incentive bonus for the calendar year in which the Termination Date due to
Disability occurs, less deductions and withholding required by law, payable in a
lump sum at the same time as other eligible employees under the Company’s annual
cash incentive bonus plan for such calendar year are paid their bonuses under
such Company’s annual cash incentive bonus plan for such calendar year, but in
any event no later than March 15 of the calendar year immediately following the
calendar year in which the Termination Date due to Disability occurs. Such pro
rata bonus payment shall be determined by multiplying Executive’s target annual
cash incentive bonus for the calendar year in which the Termination Date due to
Disability occurs by a fraction, the numerator of which is the number of days
Executive was employed by the Company during such calendar year and the
denominator is 365.

 

D.         For Cause. The employment relationship between Executive and the
Company created hereunder shall automatically and immediately terminate upon
receipt by Executive of notice of termination for Cause after the occurrence of
any one of the following events:

 

(i)        Executive’s intentional and knowing failure or refusal to perform
satisfactorily the material duties reasonably required of Executive by the Board
(other than by reason of Disability);

 

(ii)     Executive’s material and knowing violation of any law, rule,
regulation, court order or regulatory directive (other than traffic violations,
misdemeanors or other minor offenses);

 

(iii)     Executive’s material breach of the Non-Disclosure Agreement, the
Non-Competition Agreement, or any Company code of conduct and Executive’s
failure to cure such material breach (if curable) within ten (10) days of
receipt of notice of such material breach;

  

 
 

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(iv)      Executive engaging in any act or practice that involves personal
dishonesty on the part of Executive or demonstrates a willful and continuing
disregard for the best interests of the Company or its affiliates; or

 

(v)       While performing corporate duties and responsibilities, Executive
engaging in conduct that would be reasonably expected to harm or bring disrepute
to the Company or any of its affiliates.

 

E.           Good Reason. Executive’s voluntary resignation of Executive’s
employment under this Agreement will be considered to be with “Good Reason” if,
following the occurrence of one or more of the events listed below, Executive
(1) provides written notice to the Board of the event(s) constituting Good
Reason within sixty (60) days after the first occurrence of such event(s), (2)
the Company fails to reasonably cure such event(s) within thirty (30) days after
receiving such notice, and (3) Executive’s termination of Executive’s employment
is effective not later than thirty (30) days after the end of the period in
which the Board may cure the event(s). The following events will give rise to
Good Reason, unless Executive has consented thereto in writing:

 

(i)       a material reduction in Executive’s Base Salary, target incentive
bonus or annual equity grants, other than a reduction that is part of and
proportionally consistent with a broad-based reduction in base compensation,
target incentive bonus or annual equity grants applicable to the Company’s
senior executives (provided, however, that any reduction in Executive’s Base
Salary below $400,000.00 for any year during the Term without Executive’s
consent will constitute a material reduction for purposes of this Good Reason
definition);

 

(ii)      a material diminution in Executive’s authority, duties or
responsibilities;

 

(iii)     a change in the location of the Company facility or office where
Executive is based to a location more than fifty (50) miles from the Company
facility or office where Executive is based as of the Start Date; or

 

(iv)      a material breach by the Company of any terms or conditions of this
Agreement or any other agreement between Executive and the Company, which breach
has not been cured by the Company within fifteen (15) days after written notice
thereof to the Company from Executive.

 

7.           Severance. If the Company voluntarily terminates Executive’s
employment without Cause (and other than as a result of Executive’s death or
Disability (as defined in Section 6.C.)) or Executive resigns for Good Reason
(either such event, a “Qualifying Termination”), and provided that Executive
signs and does not rescind a general waiver and release of claims in favor of
the Company and its affiliates in a form to be prescribed by the Company (the
“Release”) (with such Release carving out typical post-termination matters from
such Release, including but not limited to any severance obligations and vested
rights of Executive and/or obligations of the Company to indemnify Executive for
claims arising out of or related to service as an officer or director of the
Company), and provided further that Executive is in compliance with Executive’s
continuing obligations to the Company (including but not limited to those in the
Non-Disclosure Agreement and the Non-Competition Agreement), then Executive will
receive the severance payments and benefits identified in this Section 7. If
Executive becomes eligible to receive any severance payments or benefits under
this Section 7 then Executive will not be eligible to receive any severance
payments or benefits under any other agreement between Executive and the Company
or under any severance plan or program adopted by the Company. Notwithstanding
any provisions in this Agreement to the contrary, if any severance plan or
program adopted by the Company (“Other Severance Plan”) permits Executive to
receive greater severance benefits than contemplated under this Agreement, then
Executive may, in Executive’s sole discretion, elect to receive the severance
benefits permitted under the Other Severance Plan in lieu of all severance
benefits payable to Executive under this Agreement; provided, however, any such
election by Executive shall be made at least twelve (12) months prior to the
Termination Date and may not otherwise violate any applicable restrictions under
Section 409A of the Code.

  

 
 

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A.            Payments Upon Termination of Employment Prior to a Change in
Control or After the Expiration of the Transition Period.

 

(i)     Qualifying Termination (Other than During the Transition Period). If the
Termination Date occurs during the Term and is prior to any Change in Control or
after the Transition Period (as defined in Section 7.B.(i)), and if such
termination is a Qualifying Termination, then, in addition to such base salary,
bonus and benefits that have been earned but not paid to Executive as of the
Termination Date, and subject to Executive satisfying the conditions identified
in the first paragraph of this Section 7, the Company shall provide to Executive
the following severance payments and benefits:

 

(a)     Base Salary Cash Severance. The Company shall pay to Executive an amount
equal to one times Executive’s annualized Base Salary as of the Termination Date
(or, if Executive’s resignation is for Good Reason because the Company
materially reduced Executive’s Base Salary, one times Executive’s annualized
Base Salary as of immediately before such material reduction), less deductions
and withholding required by law, payable in substantially equal installments in
accordance with the Company’s regular payroll practices over the 12-month period
immediately following the Termination Date; provided, however that any
installments that otherwise would be payable within the 60-day period
immediately following the Termination Date shall be delayed and payable with the
installment that is payable on the Company’s first payroll date following the
60th day after the Termination Date. Notwithstanding anything above to the
contrary, in no event will the amount paid under the first sentence of this
Section 7.A.(i)(a) exceed the lesser of two times (I) the limit of compensation
set forth in section 401(a)(17) of the Code as in effect for the year in which
the Termination Date occurs, or (II) Executive’s annualized compensation based
upon the annual rate of pay for services to the Company for the calendar year
prior to the calendar year in which the Termination Date occurs (adjusted for
any increase during that year that was expected to continue indefinitely if
Executive had not separated from service). If Executive’s severance pay as
calculated under the first sentence of this Section 7.A.(i)(a) is limited by
application of clause (I) or (II) of the second sentence of this Section
7.A.(i)(a), then the Company shall make an additional separate lump sum payment
to Executive equal to the difference between (x) the amount payable to Executive
under the first sentence of this Section 7.A.(i)(a) but for the application of
clause (I) or (II) of the second sentence of this Section 7.A.(i)(a), and (y)
the amount payable to Executive under the second sentence of this Section
7.A.(i)(a) as a result of the application of clause (I) or (II) of the second
sentence of this Section 7.A.(i)(a). Such lump sum payment shall be a separate
payment from the installment payments provided under this Section 7.A.(i)(a) and
shall be paid to Executive on the Company’s first payroll date following the
60th day after the Termination Date but in no event later than 75 days after the
Termination Date.

  

 
 

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(b)     Cash Bonus Payment. The Company shall pay to Executive an amount equal
to one times Executive’s target annual cash incentive bonus for the calendar
year in which the Termination Date occurs, less deductions and withholding
required by law, payable in a lump sum at the same time as other eligible
employees under the Company’s annual cash incentive bonus plan for such calendar
year are paid their bonuses under such Company’s annual cash incentive bonus
plan for such calendar year, but in any event no later than March 15 of the
calendar year immediately following the calendar year in which the Termination
Date occurs.

 

(c)     Benefits Continuation. If Executive was enrolled in a group health plan
(e.g., medical, dental, or vision plan) sponsored by the Company immediately
prior to the Termination Date, and if Executive (or Executive’s eligible
dependents) timely elects to continue such coverage under the Consolidated
Omnibus Budget Reconciliation Act of 1985 (together with any state law of
similar effect, “COBRA”), then the Company will pay to the insurance carrier(s)
its share of the premiums due for Executive and Executive’s eligible spouse and
dependents for the first twelve (12) months of such coverage under COBRA (or
until such earlier time as Executive and/or Executive’s eligible dependents are
no longer eligible for COBRA coverage).

 

(d)     Pro Rata Accelerated Vesting of Equity. Notwithstanding any language in
the Restricted Award Agreement or any other equity award agreement or underlying
plan to the contrary, if Executive has any unvested awards of restricted shares,
options or other equity-based awards granted by the Company as of the
Termination Date, then a pro rata portion of any such unvested awards scheduled
to vest on the next anniversary of the grant date for such awards will vest
immediately as of the Termination Date. Such pro rata vesting will be determined
by multiplying the total number of shares or share equivalents subject to the
awards that would have vested as of the next anniversary of the grant date for
such awards assuming Executive would have remained employed through such
anniversary by a fraction, the numerator of which is the number of days
Executive was employed by the Company during the then-current vesting year
through and including the Termination Date and the denominator is 365.

 

(ii)     Other Termination (Other Than During the Transition Period). If the
Termination Date occurs for any reason after expiration of the Term (subject to
Section 7.C.), or if the Termination Date occurs during the Term and is prior to
any Change in Control or after the Transition Period for any of the following
reasons: (a) Executive’s abandonment of or resignation from employment for any
reason other than Good Reason; (b) termination of Executive’s employment by the
Company for Cause; or (c) due to Executive’s death or Disability, then the
Company shall pay to Executive, or Executive’s beneficiary or estate, as the
case may be, such base salary, bonus and benefits (including Annual Bonus) that
have been earned but not paid to Executive as of the Termination Date, payable
pursuant to the Company’s normal payroll practices and procedures and to the
extent and in the manner provided in any applicable plans or programs, pay any
additional amount that may be payable under Section 6.B. Section 6.C. (as
applicable) and honor Executive’s rights under any Equity Awards, and Executive
shall not be entitled to any additional compensation or benefits.

  

 
 

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B.            Payments Upon Termination During the Transition Period.

 

(i)     Qualifying Termination During the Transition Period. If a Change in
Control occurs during the Term and Executive’s Termination Date occurs on the
date of the Change in Control or prior to the 18-month anniversary of the Change
in Control (such 18-month period, the “Transition Period”), and if such
termination is a Qualifying Termination, then, in addition to such base salary,
bonus and benefits that have been earned but not paid to Executive as of the
Termination Date, and subject to Executive satisfying the conditions identified
in the first paragraph of this Section 7, the Company shall provide to Executive
the following severance payments and benefits:

 

(a)     Base Salary Cash Severance. The Company shall pay to Executive an amount
equal to two times Executive’s annualized Base Salary as of the Termination Date
(or, if Executive’s resignation is for Good Reason because the Company
materially reduced Executive’s Base Salary, two times Executive’s annualized
Base Salary as of immediately before such material reduction), less deductions
and withholding required by law, payable in substantially equal installments in
accordance with the Company’s regular payroll practices over the 24-month period
immediately following the Termination Date; provided, however that any
installments that otherwise would be payable within the 60-day period
immediately following the Termination Date shall be delayed and payable with the
installment that is payable on the Company’s first payroll date following the
60th day after the Termination Date. Notwithstanding anything above to the
contrary, in no event will the amount paid under the first sentence of this
Section 7.B.(i)(a) exceed the lesser of two times (I) the limit of compensation
set forth in section 401(a)(17) of the Code as in effect for the year in which
the Termination Date occurs, or (II) Executive’s annualized compensation based
upon the annual rate of pay for services to the Company for the calendar year
prior to the calendar year in which the Termination Date occurs (adjusted for
any increase during that year that was expected to continue indefinitely if
Executive had not separated from service). If Executive’s severance pay as
calculated under the first sentence of this Section 7.B.(i)(a) is limited by
application of clause (I) or (II) of the second sentence of this Section
7.B.(i)(a), then the Company shall make an additional lump sum payment to
Executive equal to the difference between (x) the amount payable to Executive
under the first sentence of this Section 7.B.(i)(a) but for the application of
clause (I) or (II) of the second sentence of this Section 7.B.(i)(a), and (y)
the amount payable to Executive under the second sentence of this Section
7.B.(i)(a) as a result of the application of clause (I) or (II) of the second
sentence of this Section 7.B.(i)(a). Such lump sum payment shall be a separate
payment from the installment payments provided under this Section 7.B.(i)(a) and
shall be paid to Executive on the Company’s first payroll date following the
60th day after the Termination Date but in no event later than 75 days after the
Termination Date.

 

(b)     Cash Bonus Payment. The Company shall pay to Executive an amount equal
to two times Executive’s target annual cash incentive bonus for the calendar
year in which the Termination Date occurs, less deductions and withholding
required by law, payable in a lump sum at the same time as other eligible
employees under the Company’s annual cash incentive bonus plan for such calendar
year are paid their bonuses under such Company’s annual cash incentive bonus
plan for such calendar year, but in any event no later than March 15 of the
calendar year immediately following the calendar year in which the Termination
Date occurs.

  

 
 

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(c)     Benefits Continuation. If Executive was enrolled in a group health plan
(e.g., medical, dental, or vision plan) sponsored by the Company immediately
prior to the Termination Date, and if Executive (or Executive’s eligible
dependents) timely elects to continue such coverage under COBRA, then the
Company will pay to the insurance carrier(s) its share of the premiums due for
Executive and Executive’s eligible dependents for the first eighteen (18) months
of such coverage under COBRA (or until such earlier time as Executive and/or
Executive’s eligible dependents are no longer eligible for COBRA coverage).

 

(d)     Full Accelerated Vesting of Equity. Notwithstanding any language in the
Restricted Award Agreement or any other equity award agreement to the contrary,
if Executive has any unvested awards of restricted shares, options or other
equity-based awards with respect to the Company as of the Termination Date, then
any such unvested awards will vest immediately as of the Termination Date.

 

(ii)     Other Termination During the Transition Period. If the Termination Date
occurs during the Transition Period for any of the following reasons: (a)
Executive’s abandonment of or resignation from employment for any reason other
than Good Reason; (b) termination of Executive’s employment by the Company for
Cause; or (c) due to Executive’s death or Disability, then the Company shall pay
to Executive, or Executive’s beneficiary or estate, as the case may be, such
base salary, bonus and benefits (including Annual Bonus) that have been earned
but not paid to Executive as of the Termination Date, payable pursuant to the
Company’s normal payroll practices and procedures and to the extent and in the
manner provided in any applicable plans or programs, pay any additional amount
that may be payable under Section 6.B. or Section 6.C. (as applicable) and honor
Executive’s rights under any Equity Awards, and Executive shall not be entitled
to any additional compensation or benefits.

 

C.           Additional Payments Upon or Following a Change in Control. If the
Termination Date occurs during the Term and within ninety (90) days prior to a
Change in Control, and if such termination is a Qualifying Termination and
Executive reasonably demonstrates within thirty (30) days after the Change in
Control that such Qualifying Termination arose in connection with or in
anticipation of the Change in Control, then the Company shall provide to
Executive the following severance payments and benefits (in addition to the
severance payments and benefits Executive is eligible to receive under Section
7.A.), each of which shall be considered a separate payment:

 

(i)     The Company shall pay to Executive an amount equal to one times
Executive’s annualized Base Salary as of the Termination Date (or, if
Executive’s resignation was for Good Reason because the Company materially
reduced Executive’s Base Salary, one times Executive’s annualized Base Salary as
of immediately before such material reduction), less deductions and withholding
required by law, payable in a lump sum on the Company’s first payroll date
following the 60th day after the Termination Date but in no event later than 75
days after the Termination Date. Such lump sum payment shall be a separate
payment from any payments under Section 7.A.(i)(a).

  

 
 

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(ii)      The Company shall pay to Executive an amount equal to one times
Executive’s target annual cash incentive bonus for the calendar year in which
the Termination Date occurred, less deductions and withholding required by law,
payable as follows: (a) if the Change in Control and the Termination Date occur
in the same calendar year, then in a lump sum at the same time as other eligible
employees under the Company’s annual cash incentive bonus plan for such calendar
year are paid their bonuses under such Company’s annual cash incentive bonus
plan for such calendar year, but in any event no later than March 15 of the
calendar year immediately following the calendar year in which the Termination
Date occurred, or (b) if the Change in Control occurs in the calendar year
following the year in which the Termination Date occurred, then in a lump sum
not later than 60 days after the Change in Control.

 

(iii)      If Executive was enrolled in a group health plan (e.g., medical,
dental, or vision plan) sponsored by the Company immediately prior to the
Termination Date, and if Executive (or Executive’s eligible dependents) timely
elects to continue such coverage under COBRA, then the Company will pay to the
insurance carrier(s) its share of the premiums due for Executive and Executive’s
eligible dependents for six (6) months of such coverage under COBRA after the
initial 12-month COBRA coverage period under Section 7.A.(i)(c) ends (or until
such earlier time as Executive and/or Executive’s eligible dependents are no
longer eligible for COBRA coverage).

 

(iv)      The Company shall pay to Executive an amount equal to the intrinsic
value of any unvested restricted shares, options or other equity-based awards
held by Executive as of the Termination Date that were forfeited as of the
Termination Date, with such intrinsic value to be determined based on the per
share price paid by the buyer for the Company’s common stock in connection with
the Change in Control, or, if no per share price is paid by a buyer in
connection with such Change in Control, the per share value of the Company’s
common stock at the time of such Change in Control as determined in good faith
by the Board as it exists prior to the consummation of the Change in Control, in
each case, less any exercise price or other amount that would have been owed to
the Company by Executive in order to realize the value of such awards. Any
amount payable under this Section 7.C.(iv) will be subject to deductions and
withholding required by law and payable in a lump sum within the 30-day period
immediately following the Change in Control.

 

D.     Change in Control. For purposes of this Agreement, “Change in Control”
has the meaning ascribed to such term in the 2012 LTIP (as such document may be
amended from time to time).

 

E.      Section 409A; Conditional Six-Month Delay. Any payments under this
Section 7 are intended to be exempt from or satisfy the requirements for
deferred compensation under Code Section 409A, including current and future
guidance and regulations interpreting Code Section 409A, and should be
interpreted and administered accordingly. However, if the Company (or, if
applicable, the successor entity thereto) determines that any payments under
this Section 7 (or any portion of such payments) constitute “deferred
compensation” under Code Section 409A and Executive is a “specified employee” of
the Company or any successor entity thereto, as such term is defined in Code
Section 409A(a)(2)(B)(i) (a “Specified Employee”), then, solely to the extent
necessary to avoid the incurrence of the adverse personal tax consequences under
Code Section 409A, the timing of any such payments shall be delayed as follows:
on the earliest to occur of (i) the date that is six months and one day after
the Termination Date, (ii) the date of the Specified Executive’s death, or (iii)
such earlier date, as reasonably determined in good faith by the Company (or any
successor entity thereto), as would not result in any of the payments under this
Section 7 being subject to adverse personal tax consequences under Code Section
409A (such earliest date, the “Delayed Initial Payment Date”), the Company (or
the successor entity thereto, as applicable) shall (A) pay to Executive a lump
sum amount equal to the sum of the payments under this Section 7 that Executive
would otherwise have received through the Delayed Initial Payment Date if the
commencement of the payment of the payments under this Section 7 had not been
delayed pursuant to this Section 5.E. and (B) commence paying the balance of the
payments under this Section 7 in accordance with the applicable payment
schedules set forth in Section 7 above. For the avoidance of doubt, it is
intended that (1) each installment of the payments under this Section 7 is a
separate “payment” for purposes of Code Section 409A, (2) all payments under
this Section 7 satisfy, to the greatest extent possible, the exemptions from the
application of Code Section 409A provided under of Treasury Regulation
1.409A-1(b)(4)-(6), and 1.409A-1(b)(9)(iii), and (3) the payments under this
Section 7 consisting of COBRA premiums also satisfy, to the greatest extent
possible, the exemptions from the application of Code Section 409A provided
under Treasury Regulation 1.409A-1(b)(9)(v).

  

 
 

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8.            Remedies. Each of the parties to this Agreement will be entitled
to enforce its rights under this Agreement specifically, to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights existing in its favor. The parties hereto agree and acknowledge
that money damages may not be an adequate remedy for any breach of the
provisions of this Agreement and that any party may in its sole discretion apply
to any court of law or equity of competent jurisdiction in accordance with
Section 12 for injunctive relief in order to enforce or prevent any violations
of the provisions of this Agreement.

 

9.           Attorney Fees. If any action at law or in equity, including any
action for declaratory or injunctive relief, is brought which arises out of this
Agreement, or which seeks to enforce or interpret this Agreement or to seek
damages for its breach, the prevailing party shall be entitled to recover
reasonable attorney fees from the non-prevailing party, which fees may be set by
the court or arbitrator in the trial of such action, or may be enforced in a
separate action brought for that purpose, and which fees shall be in addition to
any other relief which may be awarded; provided however, the foregoing shall not
be applicable unless it is determined that the non-prevailing party breached
this Agreement.

 

10.          Assignment. This Agreement shall not be assignable, in whole or in
part, by either party without the written consent of the other party, except
that the Company may, without the consent of Executive, assign or delegate all
or any portion of its rights and obligations under this Agreement to any
corporation or other business entity (i) with which the Company may merge or
consolidate, or (ii) to which the Company may sell or transfer all or
substantially all of its assets or capital stock. Notwithstanding the Company’s
right to assign this Agreement contemplated herein, Executive’s restrictive
covenants set forth in the Non-Competition Agreement shall not expand in scope
as a result of such assignment in connection with a Change in Control without
Executive’s prior written consent if Executive is not employed by the Company as
of the date of and immediately following such assignment in connection with a
Change in Control (for example, Executive shall not be prohibited from competing
against products or services of the acquiring or surviving entity in the event
of a Change in Control if the Company did not sell such services or product
lines prior to such Change in Control if Executive is not employed by the
Company as of the date of and immediately following the Change in Control).  Any
such current or future successor to which any right or obligation has been
assigned or delegated shall be deemed to be the “Company” for purposes of such
rights or obligations of this Agreement. The rights and, obligations under this
Agreement shall inure to the benefit of and shall be binding upon the heirs,
legatees, administrators and personal representatives of Executive and upon the
successors, affiliates, representatives and assigns of the Company.

  

 
 

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11.          Severability and Reformation. The parties hereto intend all
provisions of this Agreement to be enforced to the fullest extent permitted by
law, and are intended to be limited to the extent necessary so that they will
not render this Agreement illegal, invalid, or unenforceable under present or
future law. If any provision of this Agreement or any application thereof shall
be held to be invalid, illegal or unenforceable, the validity, legality and
enforceability of such provision shall be fully severable, and this Agreement
shall be construed and enforced as if such illegal, invalid, or unenforceable
provision were never a part hereof and the remaining provisions shall remain in
full force and effect and shall not be affected by the illegal, invalid, or
unenforceable provision or by its severance.

 

12.          Notices. All notices and other communications required or permitted
to be given hereunder shall be in writing and shall be deemed to have been duly
given if delivered personally, mailed by certified mail (return receipt
requested) or sent by overnight delivery service, cable, telegram, facsimile
transmission or telex to the parties at the following addresses or at such other
addresses as shall be specified by the parties by like notice:

 

If to the Company:

 

Proto Labs, Inc.

5540 Pioneer Creek Drive

Maple Plain, MN 55359

Attention: President and CEO

 

If to Executive:

 

Vicki Holt

12970 Woodlark Lane

St. Louis, MO  63131

 

With a copy to:

 

Blitz, Bardgett & Deutsch, LC

c/o Robert Brandt

120 South Central, Suite 1650

St. Louis, MO 63105

 

Notice so given shall, in the case of notice so given by mail, be deemed to be
given and received on the fourth calendar day after posting, in the case of
notice so given by overnight delivery service, on the date of actual delivery
and, in the case of notice so given by cable, telegram, facsimile transmission,
telex or personal delivery, on the date of actual transmission or, as the case
may be, personal delivery.

  

 
 

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13.     Further Actions. Whether or not specifically required under the terms of
this Agreement, each party hereto shall execute and deliver such documents and
take such further actions as shall be necessary in order for such party to
perform all of the party’s obligations specified herein or reasonably implied
from the terms hereof.

 

14.     Taxes. The Company may withhold from any amounts payable under this
Agreement such federal, state and local income and employment taxes as the
Company determines are required or authorized to be withheld pursuant to any
applicable law or regulation. Except for any tax amounts withheld by the Company
from any compensation that Executive may receive in connection with Executive’s
employment with the Company and any employer taxes required to be paid by the
Company under applicable laws or regulations, Executive is solely responsible
for payment of any and all taxes owed in connection with any compensation,
benefits, reimbursement amounts or other payments Executive receives from the
Company under this Agreement or otherwise in connection with Executive’s
employment with the Company. The Company does not guarantee any particular tax
consequence or result with respect to any payment made by the Company. In no
event should this Section 14 or any other provision of this Agreement be
construed to require the Company to provide any gross-up for the tax
consequences of any provisions of, or payments under, this Agreement, and the
Company has no responsibility for tax or legal consequences to Executive
resulting from the terms or operation of this Agreement; provided, however, to
the extent that any post-termination COBRA premiums paid by the Company under
Section 7 of this Agreement shall be taxable at the Termination Date or during
the period for which such COBRA premiums are provided, then the Company shall
pay to Executive an additional amount for each such month that the COBRA
premiums are taxable.  The monthly amount will equal 15% of the applicable COBRA
premium for that month and such amount will be paid to Executive within two and
one half months after the month to which they relate, provided that the
aggregate amount payable to Executive under this provision will not exceed the
dollar limit in effect under Code section 402(g)(1)(B) for the year of the
Termination Date, as provided in Treasury Regulations section
1.409A-1(b)(9)(v)(D).

 

15.    Indemnification. At all times while Executive is employed by the Company,
and at all times following the Termination Date with respect to matters relating
to Executive’s employment with the Company, the Company shall continue to
provide to Executive indemnification, director’s and officer’s liability
insurance and other protection from personal liability with respect to
Executive’s employment with the Company in accordance with applicable law, the
Company’s by-laws and governance documents, and applicable insurance policies as
may be in place from time to time.

 

16.     Governing Law and Venue. This Agreement is to be governed by and
construed in accordance with the laws of the State of Minnesota without giving
effect to any choice or conflict of law provision or rule that would cause the
application of laws of any jurisdiction other than the state of Minnesota. The
parties agree that any dispute concerning this Agreement is to be brought in the
District Court in Hennepin County, Minnesota and consent to jurisdiction and
venue therein.

  

 
 

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17.     Entire Agreement. This Agreement, the Non-Disclosure Agreement, the
Non-Competition Agreement, the Restricted Stock Agreement and the 2012 LTIP
contain the entire understanding and agreement between the parties, except as
otherwise specified herein, and supersede any other agreement between Executive
and the Company, whether oral or in writing, with respect to the same subject
matter.

 

18.      No Waiver. No term or condition of this Agreement shall be deemed to
have been waived, except by a statement in writing signed by the party against
whom enforcement of the waiver is sought. Any written waiver shall not be deemed
a continuing waiver unless specifically stated, shall operate only as to the
specific term or condition waived, and shall not constitute a waiver of such
term or condition for the future or as to any act other than that specifically
waived.

 

19.     Counterparts. This Agreement may be executed in counterparts, with the
same effect as if both parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and shall
constitute one and the same instrument.

 

[signature page follows]

 

 
 

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In Witness Whereof, the parties have executed this Agreement as of the Effective
Date first above written.

 

THE COMPANY:

 

Proto Labs, Inc.

 

By /s/ John R. Judd                             

Chief Financial Officer                   

 

 

EXECUTIVE: 

 

 

/s/ Victoria M. Holt                             

Victoria M. Holt