Exhibit 10.1

  

PROTO LABS, INC.

AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT

 

This Amended and Restated Executive Employment Agreement (the “Agreement”) is
entered into as of August 1, 2019 (the “Effective Date”) by and between Proto
Labs, Inc., a Minnesota corporation (the “Company”), and Victoria M. Holt
(“Executive”).

 

Recitals

 

A.     Executive and the Company are parties to an Executive Employment
Agreement dated February 6, 2014 (the “Prior Agreement”).

 

B.     Executive and the Company desire to supersede and replace the Prior
Agreement in its entirety, as of the Effective Date.

 

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

 

D.     During employment with the Company Executive has had and will continue to
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.

 

E.     Executive understands that Executive’s continued employment and receipt
of the compensation and benefits provided for in this Agreement depends on,
among other things, Executive’s willingness to agree to continue to 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”)
previously executed by Executive and effective February 6, 2014, attached
together as Exhibit A to this Agreement. Executive and the Company acknowledge
that Executive was provided a copy of the Non-Disclosure Agreement and the
Non-Competition Agreement before Executive accepted employment with the Company,
and further acknowledges that Executive was provided a copy of Executive’s
signed Non-Disclosure Agreement and Executive’s signed Non-Competition Agreement
before Executive executed this Agreement.

 

F.     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:

 

 

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Agreements

 

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

 

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.    The Company acknowledges that Executive has been a
director of the Company and agrees the Board shall continue to 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 after the Effective Date a base salary at the annualized rate of
$530,450.00, 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.

 

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.

 

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.     Award Agreements. Executive and the Company are parties to Stock Option
Agreements, Restricted Stock Unit Agreements and Performance Stock Unit
Agreements (collectively, the “Award Agreements”), which provide Executive with
options to purchase, or an opportunity to have vest, shares of the Company’s
common stock (“Shares”) pursuant to Award Agreements and the Company’s 2012
Long-Term Incentive Plan (the “Plan”).

 

F.      Annual Equity. Executive shall continue to 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.

 

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5.    Non-Disclosure and Non-Competition. Executive acknowledges entering into
the Non-Disclosure Agreement and the Non-Competition Agreement and hereby
reaffirms Executive’s commitments and obligations under the Non-Disclosure
Agreement and the Non-Competition Agreement. Nothing in this Agreement is
intended to modify, amend, cancel or supersede the Non-Disclosure Agreement or
the Non-Competition Agreement in any manner.

 

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
Termination Date and honoring Executive’s rights under any Award Agreements or
under any other 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.) and other than as a result of death or Disability (as set
forth in Section 6.C.), or if Executive terminates Executive’s employment for
Good Reason (as set forth in Section 6.E.) (either such event being a
“Qualifying Termination”), 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 twenty (120) 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 any Termination Date due to
Disability, other than payment of Executive’s accrued but unpaid salary and
benefits (including Annual Bonus) through the date of Executive’s Disability,
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;

 

(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

 

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(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) the Termination Date is not later than thirty (30) days
after the end of the period in which the Board may cure the event(s). For the
avoidance of doubt, Executive will not be entitled to any compensation or
benefits pursuant to this Agreement if Executive voluntarily resigns from
Executive’s employment without Good Reason. The following events will give rise
to Good Reason, unless Executive has consented thereto in writing:

 

(i)      a material reduction in Executive’s total compensation, which is
comprised of Base Salary, target incentive bonus and 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 Effective 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 there is a Qualifying Termination, provided that
Executive’s termination of employment constitutes an involuntary “separation
from service” under Section 409A of the Code (“Section 409A”), 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.

 

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A.     Payments Upon Qualifying Termination 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 (as defined below) or after the Transition Period (as defined below),
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 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)      Vesting of Equity Awards. Notwithstanding any language in the Award
Agreements or any other Equity Award or in the Plan to the contrary, if
Executive has an unvested option to purchase Shares or any unvested Stock Units
(as defined in the Plan) under the Award Agreements or any other Equity Award
under the Plan addressing Executive’s option to purchase or right or have vest
Shares, then a pro rata portion of any such time-based award scheduled to vest
on the next anniversary of the grant date for such award will vest as of the
Termination Date and a pro rata portion of any such performance-based award will
vest as provided below. In the case of time-based awards, the number of
additional Shares that Executive will have the option to purchase or will have
vest as a result of such pro rata vesting will be determined by multiplying the
total number of additional Shares Executive would have had the option to
purchase, or have had vest, as of the next anniversary of the grant date for
such award 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. For
performance-based awards, the number of additional Shares that Executive will
have vest as a result of such pro rata vesting will be determined by multiplying
the total number of additional Shares that would otherwise have been determined
to have been earned had Executive remained employed through the end of the
applicable performance period by a fraction, the numerator of which is the
number of days Executive was employed by the Company during the performance
period and the denominator is the number of days in the performance period
(e.g., 1,095 days in the case of a three-year performance period).

 

(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. 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.

 

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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.

 

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(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.

 

(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
Award Agreements or any other Equity Award to the contrary, if Executive has any
unvested awards of restricted stock units, 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. In the case of
performance-based awards, the number of Shares subject to such accelerated
vesting shall be based on a determination by the Board of the degree to which
any performance-based vesting conditions will be deemed satisfied.

 

(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:

 

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(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).

 

(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 stock units, 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. In the
case of forfeited performance-based awards, the intrinsic value shall be based
on the number of Shares subject to an award based on a determination by the
Board of the degree to which any performance-based vesting or payment conditions
will be deemed satisfied. 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.

 

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

 

E.     Section 409A; Conditional Six-Month Delay. Any payments under this
Section 7 (the “Payments”) are intended to be exempt from or satisfy the
requirements for deferred compensation under Section 409A, including current and
future guidance and regulations interpreting Section 409A, and should be
interpreted and administered accordingly. However, if the Company (or, if
applicable, the successor entity thereto) determines that the Payments (or any
portion of the Payments) constitute “deferred compensation” under Section 409A
and Executive is a “specified employee” of the Company or any successor entity
thereto, as such term is defined in 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 Section 409A, the timing of the 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 Employee’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 being subject to adverse personal tax consequences
under 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 that Executive
would otherwise have received through the Delayed Initial Payment Date if the
commencement of the payment of the Payments had not been delayed pursuant to
this Section 7.E. and (B) commence paying the balance of the Payments 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 is a separate “payment” for purposes of Section 409A, (2) all Payments
satisfy, to the greatest extent possible, the exemptions from the application of
Section 409A provided under of Treasury Regulation 1.409A-1(b)(4)-(6), and
1.409A-1(b)(9)(iii), and (3) the Payments consisting of COBRA premiums also
satisfy, to the greatest extent possible, the exemptions from the application of
Section 409A provided under Treasury Regulation 1.409A-1(b)(9)(v).

 

F.      280G Limitations. In the event that the severance pay and other benefits
provided for in this Agreement or otherwise payable to Executive (i) constitute
“parachute payments” within the meaning of Section 280G of the Code and (ii)
would be subject to the excise tax imposed by Code Section 4999, then such
benefits shall be either be: (A) delivered in full, or (B) delivered as to such
lesser extent which would result in no portion of such severance pay and other
benefits being subject to excise tax under Code Section 4999, whichever of the
foregoing amounts, taking into account the applicable federal, state and local
income and employment taxes and the excise tax imposed by Code Section 4999,
results in the receipt by Executive, on an after-tax basis, of the greatest
amount of benefits, notwithstanding that all or some portion of such benefits
may be subject to excise tax under Code Section 4999. Any determination required
under this Section 7.F. will be made in writing by an accounting firm selected
by the Company or such other person or entity to which the parties mutually
agree (the “Accountants”), whose determination will be conclusive and binding
upon Executive and the Company for all purposes. For purposes of making the
calculations required by this Section 7.F., the Accountants may make reasonable
assumptions and approximations concerning applicable taxes and may rely on
reasonable, good faith interpretations concerning the application of Code
Sections 280G and 4999. The Company and Executive shall furnish to the
Accountants such information and documents as the Accountants may reasonably
request in order to make a determination under this Section 7.F. The Company
shall bear all costs the Accountants may reasonably incur in connection with any
calculations contemplated by this Section 7.F. Any reduction in payments and/or
benefits required by this Section 7.F. shall occur in the following order: (i)
cash payments shall be reduced first and in reverse chronological order such
that the cash payment owed on the latest date following the occurrence of the
event triggering such excise tax will be the first cash payment to be reduced;
(ii) accelerated vesting of restricted stock units, options or other
equity-based awards, if any, shall be cancelled/reduced next and in the reverse
order of the date of grant for such restricted stock units, options or other
equity-based awards (i.e., the vesting of the most recently granted stock awards
will be reduced first), with full-value awards reversed before any restricted
stock units, options or other equity-based awards are reduced; and (iii)
deferred compensation amounts subject to Section 409A shall be reduced last.

 

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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 the termination of Executive’s employment, 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.

 

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: Board Chair

 

If to Executive:

 

Vicki Holt

Address on file with the Company

 

With a copy to:

 

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.

 

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.

 

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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.

 

17.   Entire Agreement. This Agreement, the Non-Disclosure Agreement, the
Non-Competition Agreement, the Award Agreements or any other Equity Award, and
the Plan 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 (including the Prior Agreement); provided, however, that nothing
herein shall supersede or replace any of the Company’s equity-based compensation
plans and any award agreements with the Executive entered into thereunder.

 

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.

 

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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 A. Way     Chief Financial Officer  

 

 

EXECUTIVE:

 

 

/s/Victoria M. Holt     Victoria M. Holt    

 

 

 

 

 

 

Amended and Restated Executive Employment Agreement

 

 

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SCHEDULE 1

OUTSIDE BOARDS

 

 

1.

Watlow Electric Manufacturing Company

 

2.

Waste Management, Inc.