<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
3D Systems Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
---------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------------
(5) Total fee paid:
---------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
---------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
---------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. _____)
Filed by the registrant
Filed by a Party other than the Registrant o Check the appropriate box:
o Preliminary Proxy Statement o Confidential, For Use of the
Definitive Proxy Statement Commission Only (as permitted by
o Definitive Additional Materials Rule 14a-6(e)(2)
o Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
3D Systems Corporation
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
o No Fee Required
o Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
o Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement no.:
(3) Filing party:
(4) Date filed:
1
<PAGE> 3
3D SYSTEMS CORPORATION
-----------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 22, 1998
-----------
TO OUR STOCKHOLDERS:
You are cordially invited to attend the 1998 Annual Meeting of Stockholders
of 3D Systems Corporation ("3D" or the "Company"), to be held at the La Quinta
Inn & Suites, 2761 Crossroads Blvd., Grand Junction, Colorado 81506, on May 22,
1998 at 10:00 a.m., Mountain Daylight time. The Annual Meeting is being held for
the following purposes:
1. To elect three Class II Directors to hold office for three years and
until their respective successors have been elected;
2. To approve the Company's 1998 Employee Stock Purchase Plan; and
3. To transact such other business as may properly come before the Annual
Meeting or any adjournments or postponements thereof.
Only stockholders of record of the Common Stock of the Company at the close
of business on April 8, 1998 are entitled to notice of and to vote at the Annual
Meeting and at any adjournments or postponements thereof.
All stockholders are cordially invited to attend the Annual Meeting in
person. However, to ensure your representation at the Annual Meeting, you are
urged to complete and return the enclosed Proxy as promptly as possible in the
enclosed postage prepaid envelope. Any stockholder attending the Annual Meeting
may vote in person, even though he or she has returned a Proxy.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ A. SIDNEY ALPERT
----------------------------------------
Vice President, General Counsel and
Secretary
26081 Avenue Hall
Valencia, CA 91355
April 24, 1998
IN ORDER TO ENSURE YOUR REPRESENTATION AT THE MEETING, PLEASE COMPLETE, DATE,
SIGN AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE AS PROMPTLY AS
POSSIBLE. IF YOU DO ATTEND THE MEETING, YOU MAY, IF YOU PREFER, REVOKE YOUR
PROXY AND VOTE YOUR SHARES IN PERSON.
<PAGE> 4
3D SYSTEMS CORPORATION
----------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 22, 1998
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of 3D Systems Corporation, a Delaware
corporation (the "Company"), for use at the 1998 Annual Meeting of Stockholders
(the "Annual Meeting") to be held at the La Quinta Inn & Suites, 2761 Crossroads
Blvd., Grand Junction, Colorado 81506, on May 22, 1998 at 10:00 a.m., Mountain
Daylight time, and at any adjournments or postponements thereof, for the
purposes set forth in this proxy statement and in the attached Notice of Annual
Meeting of Stockholders. Accompanying this Proxy Statement is the Board of
Directors' Proxy for the Annual Meeting, which you may use to vote on the
proposals described in this Proxy Statement.
All Proxies which are properly completed, signed and returned to the
Company prior to the Annual Meeting, and which have not been revoked, will,
unless otherwise directed by the stockholder, be voted in accordance with the
recommendations of the Board of Directors set forth in this Proxy Statement. A
stockholder may revoke his or her Proxy at any time before it is voted either by
filing with the Secretary of the Company, at its principal executive offices, a
written notice of revocation or a duly executed proxy bearing a later date, or
by attending the Annual Meeting and expressing a desire to vote his or her
shares in person.
The close of business on April 8, 1998 has been fixed as the record date
for the determination of stockholders entitled to notice of and to vote at the
Annual Meeting or at any adjournments or postponements of the Annual Meeting. At
the record date, 11,252,984 shares of the Company's Common Stock, par value
$.001 per share (the "Common Stock"), were outstanding. Common Stock is the only
outstanding class of securities of the Company entitled to vote at the Annual
Meeting.
A stockholder is entitled to cast one vote for each share held of record on
the record date on all matters to be considered at the Annual Meeting. The three
nominees for election as Class II directors at the Annual Meeting who receive
the highest number of affirmative votes will be elected. The approval of the
1998 Employee Stock Purchase Plan will require the affirmative vote of a
majority of the shares of Common Stock present or represented and voting at the
Annual Meeting. All other matters that may properly come before the meeting
require for approval the favorable vote of a majority of shares voting at the
meeting in person or by proxy. Abstentions and broker non-votes will be included
in the number of shares present at the Annual Meeting for the purpose of
determining the presence of a quorum. Abstentions will be counted toward the
tabulation of votes cast on proposals submitted to stockholders and will have
the same effect as negative votes, while broker non-votes will not be counted as
votes cast for or against such matters.
Unless the context otherwise clearly requires, all references in this Proxy
Statement to the "Company" include 3D Systems Corporation and its subsidiaries.
The Company's principal executive offices are located at 26081 Avenue Hall,
Valencia, California 91355. This Proxy Statement and the accompanying Proxy were
mailed to stockholders on or about April 24, 1998.
<PAGE> 5
ELECTION OF DIRECTORS
In accordance with the Bylaws of the Company, the Board of Directors is
divided into three classes. At each annual meeting of stockholders, directors
constituting one class are elected, each for a three-year term. Three Class II
directors will be elected at the Annual Meeting.
Unless otherwise instructed, the Proxy holders will vote the Proxies
received by them for the nominees named below. If any nominee is unable or
unwilling to serve as a director at the time of the Annual Meeting or any
postponement or adjournment thereof, the Proxies will be voted for such other
nominee(s) as shall be designated by the current Board of Directors to fill any
vacancy. The Company has no reason to believe that any nominee will be unable or
unwilling to serve if elected as a director.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION OF THE
NOMINEES LISTED BELOW.
The Board of Directors proposes the election of the following nominees as
Class II directors:
Arthur B. Sims
Richard D. Balanson
Miriam V. Gold
If elected, each nominee is expected to serve until the 2001 Annual Meeting
of Stockholders. The three nominees for election as Class II directors at the
Annual Meeting who receive the highest number of affirmative votes will be
elected.
2
<PAGE> 6
INFORMATION WITH RESPECT TO NOMINEES, CONTINUING DIRECTORS AND EXECUTIVE
OFFICERS
The following table sets forth certain information with respect to the
nominees, continuing directors and executive officers of the Company as of
February 27, 1998:
<TABLE>
<CAPTION>
YEAR FIRST
ELECTED OR
APPOINTED
NAME: AGE DIRECTOR PRINCIPAL OCCUPATION
----- --- ---------- --------------------
<S> <C> <C> <C>
NOMINEES:
CLASS II DIRECTORS
(terms to expire in 2001)
Arthur B. Sims 60 1993 Mr. Sims has served as Chief Executive Officer and
Chairman of the Board of the Company since August
1993 and, since September 1991, has also served as Chief
Executive Officer of 3D Systems, Inc., a California
corporation which is an indirect, wholly-owned
subsidiary of the Company through which substantially all
of its business and operations are conducted. From
September 1990 to September 1991, Mr. Sims was an
independent management consultant. From 1989 until
September 1990, he was Chief Executive Officer and
President of Quadratron Systems Incorporated, a
developer and marketer of office automation software.
From 1988 to 1989, Mr. Sims served as President and
Chief Executive Officer of CPT Corporation, an office
automation systems company. Prior thereto, he served
for four years as Corporate Vice President and President
of Computer Science Corp.'s Industry Services Group
and, for one year prior thereto, served as President and
Chief Executive Officer of United Information Systems.
Mr. Sims was previously associated with IBM and
General Electric Company. Mr. Sims currently serves as
a member of the board of directors of Structural
Dynamics Research Corporation, a company listed on the
Nasdaq Stock Market's National Market and a leading
supplier of mechanical design automation software,
product data management software and related services.
</TABLE>
3
<PAGE> 7
<TABLE>
<CAPTION>
YEAR FIRST
ELECTED OR
APPOINTED
NAME: AGE DIRECTOR PRINCIPAL OCCUPATION
----- --- ---------- --------------------
<S> <C> <C> <C>
Richard D. Balanson 48 1997 Dr. Balanson has served as President and Chief
Operating Officer of the Company since April 1997.
From November 1996 to April 1997, Dr. Balanson
served as Executive Vice-President, Development and
Manufacturing of the Company. From June 1994 to May
1996, Dr. Balanson was Executive Vice-President,
General Manager, and a member of the board of
directors of Maxtor Corporation, a major supplier of
computer disk drives, where he headed engineering,
manufacturing, materials, sales and marketing. From
March 1992 to May 1994, Dr. Balanson served as
President and Chief Operating Officer of Applied
Magnetics Corporation, a major OEM components
supplier to manufacturers of disk and tape drives. From
1975 to 1992, Dr. Balanson was associated with IBM.
Miriam V. Gold (1)(2) 48 1994 Since the Merger (as hereinafter defined) in December
1996, Ms. Gold has served as the Vice President of
Regulatory Affairs and as Assistant General Counsel of
Ciba Specialty Chemicals, Inc. Ms. Gold was associated
with Ciba-Geigy Corporation, Ardsley, New York,
("CGNY") from 1977 to December 1996. Ms. Gold
served as Vice President, Regulatory Affairs of CGNY
from May 1995 to December 1996 and as Assistant
General Counsel of CGNY from 1992 to December
1996. Prior thereto, Ms. Gold served as Division
Counsel of CGNY since 1987. From 1983 to 1987, Ms.
Gold served as Associate Division Counsel of CGNY.
</TABLE>
4
<PAGE> 8
<TABLE>
<CAPTION>
YEAR FIRST
ELECTED OR
APPOINTED
NAME: AGE DIRECTOR PRINCIPAL OCCUPATION
----- --- ---------- --------------------
<S> <C> <C> <C>
CONTINUING DIRECTORS:
CLASS I DIRECTORS
(terms to expire in 2000)
Donald S. Bates (1)(2) 69 1995 Mr. Bates currently is, and for more than the past six
years has been, an independent management consultant.
In January 1997, Mr. Bates became a member of the
board of directors of Glenayre Technologies, Inc., a
company listed on the Nasdaq Stock Market's National
Market and involved in the design, manufacture and
marketing of telecommunications equipment and related
software used in the wireless personal communication
service markets. From October 1984 until March 1986,
Mr. Bates was President and Chief Operating Officer of
Piezo Electric Products, Inc., a piezoelectric and
thermistor engineering and component manufacturing
company, and served on that company's board of
directors from October 1984 until April 1989. From
November 1983 to April 1986, Mr. Bates served as a
member of the board of directors of Communications
Industries, Inc., a provider of paging services and
manufacturer of communication related equipment. Mr.
Bates served as President of the United Telecom
Computer Group, Inc., a subsidiary of United
Telecommunications Inc. (now Sprint), from September
1981 until June 1983. Prior to his retirement after 30
years, Mr. Bates was employed at General Electric
Company in various financial and general management
capacities and, from January 1980 until September 1981,
was Senior Vice President and Group Executive of that
company's Information & Communications Systems
Group.
Jim D. Kever (1) 45 1996 Mr. Kever has been associated with Envoy Corporation
("Envoy"), a company listed on the Nasdaq Stock
Market's National Market and involved in transaction
processing, since 1981. Since 1995, Mr. Kever has
served as its President and Co-Chief Executive Officer.
Prior to that time, Mr. Kever was Executive Vice
President of Envoy. Mr. Kever currently serves on the
board of directors of Envoy Corporation and Transaction
Systems Architects, Inc., a company listed on the Nasdaq
Stock Market's National Market and involved in
transaction processing, and also is a member of the
Compensation Committee of that company.
</TABLE>
5
<PAGE> 9
<TABLE>
<CAPTION>
YEAR FIRST
ELECTED OR
APPOINTED
NAME: AGE DIRECTOR PRINCIPAL OCCUPATION
----- --- ---------- --------------------
<S> <C> <C> <C>
CLASS III DIRECTOR
(term to expire in 1999)
Charles W. Hull 58 1993 Mr. Hull has served as Chief Technology Officer and
Vice Chairman of the Board of the Directors of the
Company since April 1997. From August 1993 until
April 1997, Mr. Hull served as President and Chief
Operating Officer of the Company. From March 1986
until April 1997, Mr. Hull also served as President of 3D
Systems, Inc. From January 1980 to March 1986, Mr.
Hull was Vice-President of UVP, Inc., a systems
manufacturing company. The Company's
stereolithography technology was developed by Mr. Hull
while he was employed by UVP, Inc.
</TABLE>
- ---------------------
(1) Member of Audit Committee.
(2) Member of Compensation Committee.
For a description of an agreement among certain stockholders of the Company
with respect to the nomination and election of Directors, see "Shareholders
Agreement," below.
SHAREHOLDERS AGREEMENT
Ciba Specialty Chemicals, Inc. ("CSC") is a Swiss-based multinational
manufacturer and distributor of specialty chemicals, a 14.57% beneficial
shareholder of the Company and the Company's partner in photopolymer
development. In December 1996, Ciba-Geigy Limited ("Ciba") completed its merger
(the "Merger") with Sandoz Ltd., and in connection therewith, spun off Ciba
Specialty Chemicals Holding Inc. ("CSC Holding"), the parent company of CSC,
which was formed to hold the worldwide specialty chemicals businesses of Ciba
and its affiliates. In connection with this transaction, CSC succeeded to the
respective rights and obligations of Ciba and its affiliates under their
contracts with the Company.
Unless otherwise indicated, all references to "CSC" include Ciba Specialty
Chemicals, Inc. and its affiliates, including CSC Holding and its wholly-owned
subsidiaries in Canada, through which CSC holds its interest in the Company, and
the United States, through which CSC conducts its U.S. operations.
Pursuant to a Shareholders Agreement among the Company, CSC, and Charles W.
Hull and certain other stockholders and former stockholders of the Company
(collectively referred to as the "Founders"), CSC and the Founders, who at
February 10, 1998 together beneficially owned an aggregate of 2,504,263 shares
of Common Stock (approximately 21.94% of the outstanding shares of Common
Stock), have agreed to vote all of their respective shares to elect and maintain
on the Board of Directors of the Company two nominees designated by CSC who are
reasonably acceptable to the agent for the Founders (currently Mr. Hull), two
nominees designated by the Founders who are reasonably acceptable to CSC, and
one or more nominees selected by the four nominees. All decisions of the
Founders are made solely by Mr. Hull. The Company has agreed, subject to
applicable law, to support the election of the nominees selected by the
Founders, CSC and their respective nominees. See "Principal Stockholders."
Ms. Gold currently is the Director designated by CSC, Messrs. Hull and Sims
currently are the Directors designated by the Founders and Mr. Kever, Mr. Bates
and Dr. Balanson currently are the Directors designated by the other three
Directors.
6
<PAGE> 10
BOARD MEETINGS AND COMMITTEES
The Board of Directors has an Audit Committee and a Compensation Committee.
The Audit Committee currently consists of Donald S. Bates, Miriam V. Gold and
Jim D. Kever. The Audit Committee recommends the engagement of the Company's
independent public accountants, reviews the scope of the audit to be conducted
by such independent public accountants, and periodically meets with the
independent public accountants and the Chief Financial Officer of the Company to
review matters relating to the Company's financial statements, the Company's
accounting principles and its system of internal accounting controls, and
reports its recommendations as to the approval of the financial statements of
the Company to the Board of Directors. Three meetings of the Audit Committee
were held during the year ended December 31, 1997.
The Compensation Committee currently consists of Donald S. Bates and Miriam
V. Gold. The Compensation Committee is responsible for considering and making
recommendations to the Board of Directors regarding executive compensation and
is responsible for administering the Company's stock option and executive
incentive compensation plans. Four meetings of the Compensation Committee were
held during the year ended December 31, 1997.
The Board of Directors held eight meetings during fiscal 1997. No director
attended less than 75% of all the meetings of the Board of Directors and those
committees on which he or she served in fiscal 1997, other than Dr. Balanson,
who attended five of the eight meetings of the Board of Directors and Mr. Kever
who attended two of the three meetings of the Audit Committee.
COMPENSATION OF DIRECTORS
The Company pays its non-employee Directors an annual retainer of $15,000,
plus $1,500 for each Board meeting attended either in person or telephonically
and $1,500 for attendance at each committee meeting not held on a day that Board
meetings were held. In addition, non-employee directors each receive an annual
automatic grant of ten-year options to purchase, at the fair market value of the
Common Stock on the date of grant, 7,500 shares of Common Stock.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company has no interlocking relationships involving any of its
Compensation Committee members which would be required by the Securities and
Exchange Commission to be reported in this Proxy Statement, and no officer or
employee of the Company serves on its Compensation Committee.
REPORT OF COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors of the Company is
charged with the responsibility of administering all aspects of the Company's
executive compensation programs. The committee, which is currently comprised of
two independent, non-employee Directors, also grants all stock options and
otherwise administers the Company's 1989 Employee and Director Plan (the "1989
Plan") and is responsible for the administration of the 1996 Stock Incentive
Plan (the "1996 Plan") and the 1996 Stock Option Plan for Non-Employee Directors
(the "Director Plan"). Following review and approval by the committee, all
determinations pertaining to executive compensation, other than stock option
matters, are submitted to the full Board for approval.
Total Compensation. It is the philosophy of the committee that executive
compensation should be structured to provide an appropriate relationship between
executive compensation and performance of the Company and the share price of the
Common Stock, as well as to attract, motivate and retain executives of
outstanding abilities and experience. The principal elements of total
compensation paid to executives of the Company are as follows:
Base Salary. Base salaries are negotiated at the commencement of an
executive's employment with the Company, or upon renewal of his or her
employment agreement, and are designed to reflect the position, duties and
responsibilities of each executive officer, the cost of living in the area in
which the officer is located, and the market for base salaries of similarly
situated executives at other companies engaged in businesses similar to that of
the Company. Base salaries may be annually adjusted in the sole discretion of
the committee to reflect changes in any of the foregoing factors.
7
<PAGE> 11
Annual Incentives. The committee believes that executive compensation
should be determined with specific reference to the Company's overall
performance, as well as the performance of the division or function over which
each individual executive has primary responsibility. In this regard, the
committee considers both quantitative and qualitative factors. Quantitative
items used by the committee in analyzing the Company's performance include sales
and sales growth, results of operations and an analysis of actual levels of
operating results and sales to budgeted amounts. Qualitative factors include the
committee's assessment of such matters as the enhancement of the Company's image
and reputation, expansion into new markets and the development and success of
new products and new marketing programs.
The Board of Directors has approved the 3D Systems Corporation Executive
Incentive Compensation Plan (the "1998 Incentive Plan"). Under the 1998
Incentive Plan, executive officers are eligible to receive an annual cash
incentive award based, in part, upon the attainment of specified levels of
earnings and revenue by the Company as determined by the committee at the
beginning of the fiscal year and individual non-financial objectives which are
designed to measure each officer's overall contribution to the Company and the
particular division over which he or she is assigned supervisory responsibility.
The non-financial objectives that must be obtained by the Chief Executive
Officer, in order to be eligible for an award, are established by the committee.
The Chief Executive Officer establishes the non-financial objectives each other
executive officer must attain. Officers whose compensation is determined in part
by sales commissions paid or payable are not eligible to participate in the 1998
Incentive Plan.
Under the 1998 Incentive Plan, prior to the commencement of each fiscal
year the committee will establish the maximum bonus, as a percentage of base
salary, attainable by each participating officer on the basis of the financial
performance of the Company and the attainment of non-financial objectives by the
officer. No bonuses will be paid unless the Company achieves a threshold
earnings level established by the committee.
The committee attributes various weights to the qualitative factors
discussed above based upon their perceived relative importance to the Company at
the time compensation determinations are made. Each executive's performance is
evaluated with respect to each of these factors, and compensation levels are
determined based on each executive's overall performance.
If the Company achieves a minimum level of earnings, each participant may
be eligible for a range of awards based upon the attainment of the earnings,
revenue and non-financial objectives. The 1998 Incentive Plan permits the
committee to adjust targets or performance results to reflect unusual items
which it determines to be extraordinary or non-recurring.
Stock Incentive Plan Options and Awards. Under the 1996 Plan, the committee
is authorized to grant any type of award which might involve the issuance of
shares of Common Stock, an option, warrant, convertible security, stock
appreciation right or similar right or any other security or benefit with a
value derived from the value of the Common Stock. The number of options granted
to an individual is based upon a number of factors, including his or her
position, salary and performance, and the overall performance and stock price of
the Company.
Executive Long-Term Stock Incentive Plan. The committee also has adopted
under the 1996 Plan a stock-based, long-term incentive plan for executive
officers. Under this plan, the Company has offered loans of up to $60,000 to
executive officers of the Company for the purpose of purchasing shares of Common
Stock from the Company at the fair market value of the Common Stock at the time
of purchase. The plan calls for the loans to be forgiven, in part or whole, if
certain profitability targets are met. The purpose of this plan is to more
closely align officer interests with stockholder interests by promoting
long-term holdings in the Common Stock, thus increasing stockholder value. See
"Certain Transactions With Directors and Executive Officers."
Determination of Chief Executive Officer's Compensation. As Chief Executive
Officer, Mr. Sims is compensated pursuant to an employment agreement described
under "Employment Contracts," below, which became effective October 31, 1994. In
determining the overall compensation of Mr. Sims, the committee placed
particular emphasis on the growth experienced by the Company since the
commencement of Mr. Sims' employment with the Company in late 1991 to the
present. In addition, the committee recognized the potential for growth made
possible by the infrastructure within the Company created by the Chief Executive
Officer. The committee also recognized the importance of maintaining Mr. Sims'
salary at a rate competitive with other similarly sized publicly traded
companies. During the year ended December 31, 1997, total sales of the Company
increased from $79,632,000 to $90,257,000. In August 1997, the Company
successfully completed the acquisition of the rapid prototyping "Stereos"
product line
8
<PAGE> 12
and business from EOS GmbH of Germany, a significant European competitor. As a
result of these factors, and others, effective January 1, 1998, the committee
increased Mr. Sims' base salary from $278,250 to $297,750. Mr. Sims did not
receive a bonus for the fiscal year ended December 31, 1997, but will be
eligible to receive a significant cash incentive award if the Company achieves
or exceeds targeted levels of earnings and revenue for the year ending December
31, 1998.
The primary component of the long term compensation of Mr. Sims consists of
stock options covering a total of 393,332 shares of Common Stock that were
granted to him in 1991 (as part of an earlier employment agreement), 1992, 1994
(as part of his current employment agreement, see "Employment Contracts," below)
and 1996. The committee believes that this aspect of Mr. Sims' compensation is
tied directly to corporate performance and the share price of the Common Stock,
thereby aligning the interests of Mr. Sims and that of the Company's
stockholders.
In connection with its deliberations, the committee seeks, and is
significantly influenced by, the views of the Chief Executive Officer with
respect to appropriate compensation levels of the other officers. The committee
intends to continue its policy of linking executive compensation with maximizing
stockholder returns and corporate performance to the extent possible through the
programs described above.
Omnibus Budget Reconciliation Act Implications for Executive Compensation.
Effective January 1, 1994, under Section 162(m) of the Internal Revenue Code of
1986, as amended (the "Code"), a public company generally will not be entitled
to a deduction for non-performance-based compensation paid to certain executive
officers to the extent such compensation exceeds $1.0 million. Special rules
apply for "performance-based" compensation, including the approval of the
performance goals by the stockholders of the Company.
All compensation paid to the Company's employees in fiscal 1997 will be
fully deductible. With respect to compensation to be paid to Mr. Sims in 1998
and future years, in certain instances such compensation may exceed $1.0
million. Accordingly, the committee, the Board of Directors and the
stockholders, at the 1995 Annual Meeting of Stockholders, adopted the
performance goal element of Mr. Sims' employment agreement. See "Employment
Contracts," below.
The Company intends to seek stockholder approval at any time the Company
may become obligated to pay other of its senior executive officers covered by
Section 162(m) in excess of $1.0 million in any one year.
Compensation Committee
Donald S. Bates
Miriam V. Gold
9
<PAGE> 13
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth, as to the Chief Executive Officer and as to
each of the other four most highly compensated officers whose compensation
exceeded $100,000 during the last fiscal year (the "Named Executive Officers"),
information concerning all compensation paid for services to the Company in all
capacities for each of the three years ended December 31 indicated below.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------
FISCAL YEAR NUMBER OF
ENDED ANNUAL COMPENSATION SECURITIES
DECEMBER -------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION 31, SALARY BONUS OPTIONS COMPENSATION
- --------------------------- ----------- --------- ------- --------- ------------
<S> <C> <C> <C> <C> <C>
Arthur B. Sims............. 1997 $276,466 $ - - $ 3,056(2)
Chief Executive Officer 1996 265,000 - 110,000 6,437(3)
1995 250,000 149,325 - 6,974(3)
Charles W. Hull............ 1997 $260,817 $ - - $ 1,829(2)
Vice Chairman and Chief 1996 250,000 - 110,000 6,071(3)
Technology Officer 1995 235,000 139,872 - 6,556(3)
Richard D. Balanson (4).... 1997 $225,000 $ 37,500 50,000 $35,163(5)
President and Chief Operating
Officer
Eugen J. Geyer (6)......... 1997 $179,029(7) $ - - $ -
3D Systems Europe 1996 186,667(7) 56,897(8) 70,000 29,329(7)(9)
Mark R. Bell (10).......... 1997 $144,327 $ 25,555 35,000 $79,696(11)
Vice-President, the Americas 1996 123,953 28,005 45,000 62,139(12)
</TABLE>
- ----------------------
(1) For a description of the employment contract between each officer and the
Company, see "Employment Contracts," below.
(2) Consists of the value of insurance premium of employer paid group term life
insurance.
(3) Consists of discretionary profit sharing contributions made pursuant to the
Company's Section 401(k) plan for these persons.
(4) Dr. Balanson became an executive officer of the Company in November 1996.
(5) Includes $608 for the value of insurance premium of employer paid group
term life insurance and a moving allowance totaling $34,555.
(6) Mr. Geyer became an executive officer of the Company in January 1996. Mr.
Geyer and the Company have entered into a severance agreement which
provides for the termination of Mr. Geyer's employment with the Company,
effective April 1998. See "Employment Contracts" below.
10
<PAGE> 14
(7) Mr. Geyer's compensation is payable in German Deutchmarks. For the year
ended December 31, 1996, the average exchange rate was approximately
$1=DM1.50. For the year ended December 31, 1997, the average exchange rate
was approximately $1=DM1.65.
(8) Mr. Geyer's bonus was paid at an exchange rate of $1=DM1.45.
(9) Consists of an automobile allowance totaling DM24,320 and a temporary
living allowance totaling DM19,764.
(10) Mr. Bell became an executive officer of the Company in April 1996.
(11) Includes $185 for the value of insurance premium of employer paid group
term life insurance, a moving allowance totaling $78,350, and sales
commissions totaling $1,161.
(12) Consists of discretionary profit sharing contributions made pursuant to the
Company's Section 401(k) plan totaling $2,931, an automobile allowance
totaling $1,125, sales commissions totaling $15,698 and a moving allowance
totaling $42,385.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information regarding the grant of
stock options made during the fiscal year ended December 31, 1997 to the Named
Executive Officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT ASSUMED
NUMBER OF RATE OF STOCK PRICE
SECURITIES PERCENT OF TOTAL APPRECIATION FOR
UNDERLYING OPTIONS GRANTED OPTION TERM(1)
OPTION TO EMPLOYEES IN EXERCISE OR EXPIRATION --------------------------
NAME GRANTED(2) FISCAL YEAR(3) BASE PRICE(4) DATE 5% 10%
---- ---------- ---------------- ------------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Arthur B. Sims......... -- -- -- -- -- --
Charles W. Hull........ -- -- -- -- -- --
Richard D. Balanson.... 50,000 9.53% $8.375 4/17/07 $ 263,349 $667,379
Eugen J. Geyer......... -- -- -- -- -- --
Mark R. Bell........... 35,000 6.67% $8.00 5/22/07 $ 176,090 $446,247
</TABLE>
- ------------------------
(1) The potential realizable value is based on the assumption that the Common
Stock appreciates at the annual rate shown (compounded annually) from the
date of grant until the expiration of the option term. These amounts are
calculated pursuant to applicable requirements of the Securities and
Exchange Commission (the "Commission") and do not represent a forecast of
the future appreciation of the Common Stock.
(2) The option grants set forth on this chart vest in four equal annual
installments of 25% commencing on the first anniversary from the date of
the grant and were each granted for a term of 10 years.
(3) Options covering an aggregate of 524,633 shares were granted to eligible
persons during the fiscal year ended December 31, 1997.
(4) The exercise price and tax withholding obligations related to exercise may
be paid by delivery of already owned shares, subject to certain conditions.
11
<PAGE> 15
STOCK OPTIONS HELD AT FISCAL YEAR-END
The following table sets forth, for each of the Named Executive Officers,
certain information regarding the exercise of stock options during the fiscal
year ended December 31, 1997, the number of shares of Common Stock underlying
stock options held at fiscal year-end and the value of options held at fiscal
year-end based upon the last reported sales price of the Common Stock on the
Nasdaq Stock Market's National Market on December 31, 1997 ($6.1875 per share).
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 1997 DECEMBER 31, 1997
ACQUIRED ON VALUE ----------------------------- --------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Arthur B. Sims....... -- -- 280,904 67,361 $242,093 --
Charles W. Hull...... 10,000 $27,941 171,666 55,000 $152,541 --
Richard D. Balanson.. -- -- 62,500 237,500 -- --
Eugen J. Geyer....... -- -- 17,500 52,500 -- --
Mark R. Bell......... 1,200 $ 3,352 16,082 69,083 $ 5,643 --
</TABLE>
EMPLOYMENT CONTRACTS
The Company has entered into employment contracts with each of its Named
Executive Officers.
The Company and Arthur B. Sims, the Chief Executive Officer of the Company
and 3D Systems, Inc., its California subsidiary ("3D California") entered into
an employment agreement (the "Employment Agreement"), effective October 31,
1994. The Employment Agreement was approved by the Compensation Committee in
October 1994 and the "Special Bonus" component thereof (defined below) was
approved by the stockholders at the 1995 Annual Meeting of Stockholders. See
"Report of Compensation Committee--Omnibus Budget Reconciliation Act
Implications for Executive Compensation." Pursuant to the Employment Agreement,
Mr. Sims is entitled to a base salary of $250,000 per year, subject to increase
from time to time at the discretion of the Compensation Committee. Effective
January 1, 1996, February 1, 1997, and January 1, 1998, the Compensation
Committee increased Mr. Sims' base salary to $265,000, $278,250 and $297,750,
respectively. Mr. Sims is also eligible to receive annual bonuses and cash
incentive awards (see "Report of Compensation Committee -- Annual Incentives"
and "Report of Compensation Committee -- Determination of Chief Executive
Officer's Compensation") and, upon the occurrence of a "Triggering Event," the
"Special Bonus." A "Triggering Event" is defined as (i) the acquisition of more
than 50% (80% in the case of certain current stockholders of the Company) of the
outstanding common stock of the Company or 3D California; (ii) a merger in which
the Company or 3D California is not the surviving entity; (iii) the sale or
transfer of more than 50% of the assets or earning power of the Company; or (iv)
the election of a new majority of the Board of Directors of the Company in
connection with a contested election. The Special Bonus would be equal to the
lesser of (a) $1.0 million; (b) one cent less than three times Mr. Sims' average
annual compensation includable in his gross income for the last five years; or
(c) the greater of (i) the maximum amount permissible under Code Section 162(m)
and (ii) 7.5% of the difference between the market value of the Company on the
date the transaction giving rise to the Triggering Event is consummated and
$109,852,608 (the market value of the Company on the date of the Employment
Agreement). The Employment Agreement also permits Mr. Sims, at any time during
its term, to terminate his duties as Chief Executive Officer and elect to become
a consultant to the Company for up to a four year term for an annual consulting
fee of $100,000 plus an additional $250 per hour in any fiscal quarter during
which the performance of his consulting duties exceeds 100 hours. After October
31, 1999, Mr. Sims' engagement as an employee with the Company will continue on
an "at will" basis. If Mr. Sims' employment is terminated without cause, he will
be entitled to severance pay over a period of 24 months at his then-current
annual salary, and, if a Triggering Event occurs during the severance period,
Mr. Sims will also be entitled to the Special Bonus.
12
<PAGE> 16
The Company and Mr. Geyer entered into an employment agreement in February
1996 (the "Employment Agreement"), pursuant to which Mr. Geyer has served as
Vice President of the Company and a Severance Agreement and General Release in
March 1998 (the "Severance Agreement"), pursuant to which Mr. Geyer's employment
with the Company will terminate effective April 1998. Under the Employment
Agreement, Mr. Geyer's initial base salary was DM280,000 per year (for the year
ended December 31, 1996, the average exchange rate was approximately $1=DM1.50),
subject to increase at the discretion of the Board of Directors. In addition to
standard benefits, Mr. Geyer was entitled to incentive compensation equal to
DM82,500 based on the achievement of certain operating goals established
pursuant to the 3D Systems Corporation Executive Incentive Compensation Plan
(see "Report of the Compensation Committee -- Annual Incentives"), and up to
DM53,625 in additional incentive compensation, at the discretion of the Board of
Directors, if the Company exceeds these operating goals. Notwithstanding the
foregoing, regardless of annual objectives, Mr. Geyer received a one-time bonus
in an amount equal to DM82,500 for the year ended December 31, 1996, by virtue
of his employment with the Company through such date. Under certain
circumstances, the Employment Agreement entitled Mr. Geyer to severance pay
equal to 18 months of his then-current annual salary. Pursuant to the Severance
Agreement, the Company will pay Mr. Geyer between DM450,000 and DM494,670 (the
exchange rate listed in the Wall Street Journal on March 19, 1998 was
approximately $1=DM1.82) and Mr. Geyer has released the Company from any
obligations to Mr. Geyer pursuant to the Employment Agreement or otherwise.
The Company and Mr. Bell entered into an employment agreement in April
1996, pursuant to which Mr. Bell serves as Vice President, the Americas, of the
Company. Under the agreement, Mr. Bell's base salary is $140,000 per year,
subject to increase at the discretion of the Board of Directors. Effective
February 1, 1997 and January 1, 1998, the Board of Directors increased Mr.
Bell's base salary to approximately $145,000 and $150,000, respectively. In
addition to standard benefits, Mr. Bell is entitled to incentive compensation
based on the achievement of certain sales goals. If his employment is terminated
without cause, Mr. Bell is entitled to severance pay equal to six months of his
then current base salary.
The Company and Mr. Hull entered into an employment agreement in April
1994, pursuant to which Mr. Hull served as President and Chief Operating Officer
of each of the Company and 3D California until April 1997, at which time Mr.
Hull was appointed Vice Chairman and Chief Technology Officer of the Company.
Pursuant to the agreement, Mr. Hull's initial base salary was $200,000 per year,
subject to increase at the discretion of the Board of Directors. Effective
November 7, 1994, January 1, 1996, February 1, 1997, and January 1, 1998, the
Board of Directors increased Mr. Hull's base salary to approximately $235,000,
$250,000, $262,500 and $275,000, respectively. In addition to standard benefits,
Mr. Hull is entitled to receive incentive compensation up to a maximum of 60% of
his annual base salary based on the achievement of certain operating goals. For
the year ended December 31, 1997, Mr. Hull received no incentive compensation.
Mr. Hull's employment agreement also permits Mr. Hull, at any time during his
employment term, to terminate his duties under the agreement and elect to become
a consultant to the Company for up to a three year term for an annual consulting
fee of $80,000 plus an additional $200 per hour in any fiscal quarter during
which the performance of his consulting duties exceeds 100 hours. This agreement
expires on March 1, 1999 unless sooner terminated pursuant to its terms. After
March 1, 1999, Mr. Hull's engagement with the Company, whether as an employee or
a consultant, will continue on an "at will" basis. If Mr. Hull's employment is
terminated without cause, he is entitled to severance pay equal to 18 months of
his then-current annual salary.
The Company and Dr. Balanson entered into an employment agreement on
October 28, 1996, which was amended on April 17, 1997 to provide for Dr.
Balanson's promotion to President and Chief Operating Officer of the Company.
Pursuant to the amended agreement, Dr. Balanson's initial base salary was
$225,000 per year, subject to increase at the discretion of the Board of
Directors. Effective January 1, 1998, the Board of Directors increased Dr.
Balanson's base salary to approximately $240,750. In addition to standard
benefits, Dr. Balanson is entitled to receive incentive compensation up to a
maximum of 75% of his annual base salary based on the achievement of certain
operating goals. For the year ended December 31, 1997, Dr. Balanson received
$37,500 in incentive compensation. Dr. Balanson's agreement expires on October
28, 2000 unless sooner terminated pursuant to its terms. After October 28, 2000,
Dr. Balanson's engagement with the Company will continue on an "at will" basis.
If Dr. Balanson's employment is terminated without cause, he is entitled to
severance pay equal to 12 months of his then-current annual salary.
13
<PAGE> 17
CERTAIN TRANSACTIONS WITH
DIRECTORS AND EXECUTIVE OFFICERS
Except as disclosed in this Proxy Statement, neither the nominees for
election as Directors of the Company, the Directors or senior officers of the
Company nor any stockholder owning more than five percent of the issued shares
of the Company, or any of their respective associates or affiliates, had any
material interest, direct or indirect, in any material transaction to which the
Company was a party during the year ended December 31, 1997, or which is
presently proposed.
See "Other Information -- Employment Contracts" for a summary of employment
agreements with certain of the Company's executive officers.
In January 1998, the Company adopted under the 1996 Plan the Executive
Long-Term Stock Incentive Plan pursuant to which the Company offers to loan to
its executive officers up to $60,000 to purchase shares of the Common Stock
underlying the 1996 Plan. Each of Arthur Sims, Charles Hull, Sidney Alpert, Mark
Bell and Richard Balanson has executed a promissory note for the principal
amount of $60,000, each of which bears interest at the rate of 6% per annum. The
notes are secured by the shares of Common Stock purchased. Subject to certain
forgiveness provisions set forth below, all principal and accrued interest
outstanding under the notes become due and payable upon the earlier to occur of
(i) a sale, transfer or other disposition of the shares of Common Stock securing
the note; (ii) the termination of the executive's employment with the Company;
(iii) the fifth anniversary of the execution of the note; (iv) the sale, lease
or other disposition of all or substantially all of the Company's assets to a
single purchaser or group of related purchasers; (v) the sale, lease or other
disposition, in one transaction or a series of related transactions of the
majority of the Company's outstanding capital stock; or (vi) the merger or
consolidation of the Company into or with another corporation in which the
stockholders of the Company will own less than 50% of the voting securities of
the surviving corporation. If during the fiscal year ending December 31, 1998,
or a subsequent fiscal year through fiscal year ending December 31, 2003, the
Company reports earnings per share of: (a) at least $0.50 per share but less
than $1.00 per share, the Company will forgive 1/3rd of the original principal
amount of the note, or such smaller amount of principal then outstanding,
together with all of the interest accrued on such amount; (b) at least $1.00 per
share but less than $1.50 per share, the Company will forgive 2/3rds of the
original principal amount of the note, or such smaller amount of principal then
outstanding, together with all of the interest accrued on such amount; or (c) at
least $1.50 per share, the Company will forgive the entire original principal
amount of the note, or such smaller amount of principal then outstanding,
together with all interest accrued on such amount; provided, however, that the
provisions of clauses (a) and (b) of this sentence shall be applicable to each
executive officer only one time.
Pursuant to a July 1990 distribution agreement with CSC, and subject to
conditions set forth in the agreement, the Company is CSC's current exclusive
distributor of all photopolymers manufactured by CSC for use in
stereolithography and purchased from CSC resins valued at approximately
$8,831,000 during the year ended December 31, 1997. Subject to certain
conditions, so long as CSC provides adequate supplies, the Company is required
to fill all of its requirements for its photopolymers through purchases from
CSC. Subject to certain conditions, the agreement will remain in effect until
either party gives the other six months advance notice of termination.
In May 1988, the Company entered into a Research and Development Agreement
with CSC to develop photopolymers, photopolymerizable monomers and
photoinitiators for use with the Company's stereolithography products, which
agreement has from time to time been amended. Subject to certain conditions, the
Research and Development Agreement will remain in effect until either party
gives the other six months advance notice of its decision to terminate the
agreement. The parties have agreed that if a change in control (as defined in
such agreement) of the Company should occur, at the option of CSC, the Company
will be required to pay CSC an amount equal to CSC's deferred research and
development costs, as defined in such agreement, of up to $10 million.
In 1990, 3D California acquired the patents for stereolithography
technology from UVP, Inc. ("UVP") in exchange for $9,075,000, $500,000 of which
was paid in cash and $350,000 by certain offsets. The balance of the purchase
price ($8,225,000) is payable based upon sales levels and subject to certain
conditions. For further information with respect to this matter, see Note 6(b)
of Notes to Consolidated Financial Statements, which appears
14
<PAGE> 18
in the Company's Annual Report filed on Form 10-K which accompanies this Proxy
Statement. Pursuant to a 1987 contract between UVP and Charles W. Hull (the
President of 3D California, Chief Technology Officer, and Vice Chairman of the
Board of Directors of the Company), Mr. Hull is entitled to receive from UVP,
with respect to his prior relationship with UVP, an amount equal to 10% of all
royalties or other amounts received by UVP with respect to the patents, but only
after recoupment of certain expenses by UVP. To date, Mr. Hull has received
$197,350 from UVP under that agreement.
Management believes, based on its reasonable judgment, but without further
investigation, that the terms of each of the foregoing transactions or
arrangements between the Company on the one hand and the affiliates, officers,
Directors or stockholders of the Company which were parties to such transactions
on the other hand, were, on an overall basis, at least as favorable to the
Company as could then have been obtained from unrelated parties.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers, directors, and persons who own more than ten percent of a
registered class of the Company's equity securities to file reports of ownership
and changes in ownership with the Securities and Exchange Commission (the
"SEC"). Executive officers, directors and greater-than-ten percent stockholders
are required by SEC regulations to furnish the Company with all Section 16(a)
forms they file. Based solely on its review of the copies of the forms received
by it and written representations from certain reporting persons that they have
complied with the relevant filing requirements, the Company believes that,
during the year ended December 31, 1997, all the Company's executive officers,
directors and greater-than-ten percent stockholders complied with all Section
16(a) filing requirements, except for Mr. Spina, and Mr. McGough, both executive
officers of the Company, each of whom filed a Form 5 reporting their status as
executive officers of the Company, which status was reportable on a Form 3; and
Mr. Hull, an executive officer and 10% holder of the Company's equity
securities, who filed a Form 5 reporting the sale of 10,000 shares of Common
Stock and exercise of options to purchase 10,000 shares of Common Stock, each of
which transactions was reportable on a Form 4.
15
<PAGE> 19
PERFORMANCE GRAPH
The following graph sets forth the percentage change in cumulative total
stockholder return of the Common Stock during the five-year period from December
31, 1992 to December 31, 1997, compared with the cumulative returns of the
Nasdaq Stock Market (US Companies) Index and the Index for S & P Technology
Sector. The Comparison assumes $100 was invested on January 1, 1993 in the
Common Stock and in each of the foregoing indices. The stock price performance
on the following graph is not necessarily indicative of future stock price
performance. [GRAPHIC OMITTED]
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG 3D SYSTEMS CORPORATION, THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE S & P TECHNOLOGY SECTOR INDEX
[GRAPHIC OMITTED]
TDSC
<TABLE>
<CAPTION>
Cumulative Total Return
----------------------------------------------
12/92 12/93 12/94 12/95 12/96 12/97
<S> <C> <C> <C> <C> <C> <C> <C>
3D SYSTEMS CORPORATION TDSC 100.00 127.27 245.45 575.75 309.09 150.00
NASDAQ STOCK MARKET-US INAS 100.00 114.80 112.21 158.70 195.19 239.53
S & P TECHNOLOGY SECTOR ITES 100.00 123.01 143.37 206.51 292.98 369.42
</TABLE>
16
<PAGE> 20
PROPOSAL TO APPROVE THE 1998 EMPLOYEE STOCK PURCHASE PLAN
The proposed 3D Systems Corporation 1998 Employee Stock Purchase Plan (the
"1998 Plan") was unanimously adopted by the Board of Directors on February 27,
1998, subject to the approval of the 1998 Plan by the Company's stockholders.
The Board of Directors adopted the 1998 Plan to provide eligible employees the
opportunity to acquire limited amounts of the Common Stock on favorable terms. A
copy of the 1998 Plan is attached as Exhibit "A" to this Proxy Statement. As of
the date of this Proxy Statement, no awards had been granted under the 1998
Plan.
The following is a summary of the principal features of the 1998 Plan. This
summary is not intended to be complete and reference should be made to Exhibit
"A" of this Proxy Statement for the complete text of the 1998 Plan.
ADMINISTRATION; PARTICIPATION
The 1998 Plan will be administered by the Board of Directors or, at the
Board's discretion, a committee of the Board (the "Administrator"). Under the
1998 Plan, the Company may grant to an employee each year options to purchase
shares which have an aggregate fair market value (determined as of the date of
the original grant of the options) not in excess of $25,000. An eligible
employee may participate in the 1998 Plan by designating an amount not less than
1% or greater than 10% of the employee's regular compensation, exclusive of
bonuses and overtime, as determined by the Administrator, to be paid by payroll
deductions into an account maintained for the employee's benefit pursuant to the
1998 Plan. An eligible employee so electing will receive an option to purchase a
number of shares to be calculated at the expiration of the option term equal to
the amount in the employee's account at the end of the term divided by the
exercise price. The option term of any option will be established by the
Administrator prior to the date of grant of the option, but may not exceed one
year. An option granted under the 1998 Plan will be deemed to have been
automatically exercised on the last day of the option term unless the employee
has given the Company proper written notice of his or her withdrawal from
participation in the 1998 Plan. Employees will be required to hold shares
acquired pursuant to the 1998 Plan for a period of 90 days after such shares are
acquired.
ELIGIBILITY
All persons who have been employed by the Company for more than five
months, or who are customarily scheduled to work more than 20 hours per week and
more than 5 months during a year, are eligible to receive options granted under
the 1998 Plan. Notwithstanding the foregoing, no options will be granted to an
employee if such employee, immediately after the option is granted, would own
stock (as defined by Code Sections 423(b)(3) and 424(d)) possessing 5% or more
of the total combined voting power or value of all classes of stock of the
Company.
EXERCISE PRICE
The exercise price of each option will be the lesser of (i) 85% of the fair
market value of the shares on the date such option is granted or (ii) 85% of the
fair market value of the shares on the last day of the period during which such
option is outstanding.
COMMON STOCK SUBJECT TO THE 1998 PLAN
The 1998 Plan provides for the issuance of up to 600,000 shares of Common
Stock, subject to adjustment upon the occurrence of certain events such as stock
splits, stock dividends, recapitalizations or other changes in the outstanding
Common Stock. If any outstanding option expires or terminates unexercised, the
shares of Common Stock subject to the unexercised portion of the option shall
again be available for issuance under the 1998 Plan.
WITHDRAWAL
If an employee withdraws from the 1998 Plan, that employee will receive the
balance in his or her account as of the date of withdrawal, and the employee's
interest in the 1998 Plan and any option granted to the employee
17
<PAGE> 21
under the 1998 Plan will terminate. All shares covered by options which
terminate without having been exercised will be available for issuance upon
exercise of other options granted under the 1998 Plan.
RESTRICTIONS ON ASSIGNMENT; TERMINATION OF EMPLOYMENT
No option will be transferable except by will or the laws of descent and
distribution. An employee will be deemed to have withdrawn from the 1998 Plan,
and any option granted to the employee under the 1998 Plan will terminate, as of
the date of termination of the employee's employment with the Company unless the
reason for termination is death or permanent disability. In that event, the
employee or the employee's executor or administrator, as the case may be, may
elect to exercise any option granted to the employee under the 1998 Plan.
AMENDMENTS; TERMINATION OF THE 1998 PLAN
The 1998 Plan may be amended from time to time by the Board of Directors,
provided, however, that to the extent required for compliance with Code Section
423, or any applicable law or regulation, stockholder approval will be required
for any amendment that will (a) increase the total number of shares as to which
options may be granted under the 1998 Plan, (b) materially modify the class of
persons eligible to receive Options, (c) materially increase the benefits
accruing to participants under the 1998 Plan, (d) decrease the exercise price
below a price computed in the manner stated in Section 7 of the 1998 Plan, or
(e) otherwise require stockholder approval under any applicable law or
regulation. Unless sooner terminated by the Board of Directors, the 1998 Plan
will terminate on February 27, 2003.
FEDERAL INCOME TAX CONSEQUENCES
The 1998 Plan and the right of participants to make purchases thereunder
are intended to qualify under the provisions of Code Sections 421 and 423.
Payroll deductions under the 1998 Plan will be taxable to a participant as
compensation for the year in which such amounts would otherwise have been paid
to the participant. No income will be taxable to a participant at the time of
grant of the option or purchase of shares. A participant may become liable for
tax upon disposition of the shares acquired as summarized below.
If the shares are sold or disposed of (including by way of gift) at least
two years after the date of the beginning of the option term (the "date of
option grant") and at least one year after the date such shares are purchased
(the "date of option exercise"), in this event, the lesser of (a) the excess of
the fair market value of the shares at the time of such disposition over the
amount paid for the Common Stock or (b) the excess of the fair market value of
the shares at the time the option was granted over the option price will be
treated as ordinary income to the participant. Any further gain upon such
disposition will be treated as capital gain. Any such capital gain would be
taxed at long-term rates if the stock is held for more than 18 months and at
mid-term rates if held more than 12 but not more than 18 months. If the shares
are sold and the sales price is less than the option price, there is no ordinary
income and the participant has a capital loss for the difference.
In the event that the shares are sold or disposed of (including by way of
gift or by exchange in connection with the exercise of an incentive stock
option) before the expiration of the holding periods described above, the excess
of the fair market value of the shares on the date of option exercise over the
amount paid for the Common Stock will be treated as ordinary income to the
participant. This excess will constitute ordinary income in the year of sale or
other disposition even if no gain is realized on the sale or a gratuitous
transfer of the shares is made. The balance of any gain will be treated as
capital gain. Even if the shares are sold for less than their fair market value
on the date of option exercise, the same amount of ordinary income is attributed
to a participant and a capital loss is recognized equal to the difference
between the sales price and the value of the shares on such date of option
exercise. The Company ordinarily will be allowed a tax deduction at the time and
in the amount of ordinary income recognized by the participant, but may also be
required to withhold income tax upon such amount or report such amount to the
Internal Revenue Service.
18
<PAGE> 22
RECOMMENDATION AND REQUIRED VOTE
The Board of Directors has unanimously approved the 1998 Plan. Stockholder
approval of the 1998 Plan requires the affirmative vote of a majority of the
shares of Common Stock present or represented and entitled to vote on this
matter at the Annual Meeting. An abstention will be counted toward the
tabulation of votes cast and will have the same effect as a vote against the
proposal. A broker non-vote, however, will not be treated as a vote cast for or
against approval of the proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
APPROVAL OF THE 1998 EMPLOYEE STOCK PURCHASE PLAN.
19
<PAGE> 23
OTHER INFORMATION
PRINCIPAL STOCKHOLDERS
The following table sets forth as of February 27, 1998, unless otherwise
indicated, certain information relating to the ownership of Common Stock by (i)
each person known by the Company to be the beneficial owner of more than five
percent of the outstanding shares of Common Stock, (ii) each of the Company's
directors, (iii) each of the Named Executive Officers, and (iv) all of the
Company's executive officers and directors as a group. Except as may be
indicated in the footnotes to the table and subject to applicable community
property laws, each such person has the sole voting and investment power with
respect to the shares owned. The address of each person listed is in care of the
Company, 26081 Avenue Hall, Valencia, California 91355, unless otherwise set
forth below such person's name.
<TABLE>
<CAPTION>
Number of Shares of
Common Stock
Name and Address Beneficially Owned (1) Percent (1)
---------------- ---------------------- -----------
<S> <C> <C>
Charles W. Hull................................ 2,504,263(2)(3) 21.94%
Ciba Specialty Chemicals, Inc.................. 2,504,263(3) 21.94
885 Georgia Street, Suite 2200
Vancouver, B.C. V6C3E8
G. Walter Loewenbaum, II....................... 669,689(4) 5.96
111 Congress Street, Suite 1600
Austin, TX 78701
Southcoast Capital Corporation................. 669,689(4) 5.96
111 Congress Street, Suite 1600
Austin, TX 78701
Dimensional Fund Advisers Inc.................. 622,900(5) 5.54
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
The Clark Estates, Inc......................... 594,272(6) 5.29
30 Wall Street
New York, NY 10005
Arthur B. Sims................................. 304,267(7) 2.64
Richard D. Balanson............................ 95,120(8) *
Mark Bell...................................... 48,354(9) *
Jim D. Kever................................... 14,000(10) *
Eugen J. Geyer................................. 30,685(11) *
Miriam V. Gold................................. 8,333(12) *
Donald S. Bates................................ 6,833(13) *
Directors and Named Executive Officers
as a group (8 persons)......................... 3,011,855(14) 25.44
</TABLE>
- -----------
* Less than one percent.
20
<PAGE> 24
(1) Under Rule 13d-3, certain shares may be deemed to be beneficially owned by
more than one person (if, for example, persons share the power to vote or
the power to dispose of the shares). In addition, shares are deemed to be
beneficially owned by a person if the person has the right to acquire the
shares (for example, upon exercise of an option) within 60 days of the date
as of which the information is provided. In computing the percentage
ownership of any person, the amount of shares outstanding is deemed to
include the amount of shares beneficially owned by such person (and only
such person) by reason of these acquisition rights. As a result, the
percentage of outstanding shares of any person as shown in this table does
not necessarily reflect the person's actual ownership or voting power with
respect to the number of shares of Common Stock actually outstanding at
February 27, 1998.
(2) Includes 438,889 shares of Common Stock held in the Charles William Hull
and Charlene Antoinette Hull 1992 Revocable Living Trust for which Mr. and
Mrs. Hull serve as trustees and 171,666 shares of Common Stock reserved for
issuance upon exercise of stock options which are or will become
exercisable on or prior to April 28, 1998. Excludes 3,561 shares of Common
Stock held of record by Mr. Hull's adult daughter, with respect to which
Mr. Hull disclaims beneficial ownership.
(3) Shares of Common Stock listed as beneficially owned by CSC are owned of
record by CSC Holding, the parent of Ciba Specialty Chemicals, Inc.
Pursuant to Rule 13d-3 under the Exchange Act, CSC and Charles W. Hull
(together, the "Control Group") may be deemed to beneficially own all
shares of Common Stock held by each of them, as well as shares owned by the
other Founders, with respect to an agreement, pursuant to which the Control
Group has the right to direct the voting of such shares with respect to the
election of Directors of the Company (see "Election of Directors --
Shareholders Agreement"). The Control Group has the power to direct the
voting with respect to the election of Directors of the Company of an
aggregate of 2,504,263 shares. As of February 27, 1998, the number of
shares of Common Stock beneficially owned by the Control Group which each
member thereof had sole investment power and the sole power to vote for
matters other than the election of Directors was as follows (the
percentages set forth below have been calculated assuming all shares of
Common Stock reserved for issuance upon exercise of stock options granted
to any Directors or Named Executive Officers which are or will become
exercisable on or prior to April 28, 1998 are outstanding as of February
27, 1998):
<TABLE>
<CAPTION>
Percent of all
Outstanding
Number of Shares Shares
---------------- --------------
<S> <C> <C>
Charles W. Hull.................. 643,748 5.44%
Ciba Specialty Chemicals, Inc.... 1,725,366 14.57%
--------- ------
Total 2,369,114 20.01%
========= ======
</TABLE>
(4) Southcoast Capital Corporation, a Louisiana corporation ("Southcoast"), is
an investment banking and broker-dealer firm. Southcoast is a wholly-owned
subsidiary of Southcoast Holding Corporation, a Louisiana corporation,
which is controlled by Mr. Loewenbaum and members of his immediate family.
As of May 12, 1997, Mr. Loewenbaum and Southcoast beneficially owned
669,689 shares of the Common Stock of the Company. Of these shares, 469,689
are beneficially owned by Mr. Loewenbaum and 200,000 shares are
beneficially owned by Southcoast. A total of 293,882 of Mr. Loewenbaum's
shares are held with sole voting and dispositive power and he shares voting
and dispositive power with his wife with respect to 93,558 shares. Mr.
Loewenbaum holds sole dispositive power only with respect to 72,249 shares
and he shares dispositive power only with his mother with respect to 10,000
shares. Southcoast holds sole voting and investment power with respect to
the 200,000 shares of Common Stock held by it. All information regarding
the beneficial ownership of Company securities by Mr. Loewenbaum and
Southcoast is taken exclusively from a Form 13D filed by Mr. Loewenbaum and
Southcoast on May 22, 1997.
(5) Dimensional Fund Advisors Inc. ("Dimensional") holds sole voting power over
400,600 shares of Common Stock. Persons who are officers of Dimensional
also serve as officers of DFA Investment Dimensions Group Inc. (the
"Fund"), and the DFA Investment Trust Company (the "Trust"), each an
open-end management
21
<PAGE> 25
investment company registered under the investment Company Act of 1940. In
their capacities as officers of the Fund and Trust, these persons vote
84,700 additional shares which are owned by the Fund and 137,600 shares
which are owned by the Trust. The securities reported as beneficially owned
by Dimensional are owned by advisory clients of Dimensional, none of which
to the knowledge of Dimensional owns more than 5% of the class. Dimensional
disclaims beneficial ownership of all such securities. All information
regarding the beneficial ownership of Company securities by Dimensional,
the Fund and the Trust is taken exclusively from a Form 13G filed by
Dimensional on February 10, 1998.
(6) All information regarding the beneficial ownership of Company securities by
The Clark Estates is taken exclusively from a Form 13D filed by The Clark
Estates on June 23, 1997.
(7) Includes 283,682 shares of Common Stock reserved for issuance upon exercise
of stock options which are or will become exercisable on or prior to April
28, 1998.
(8) Includes 75,000 shares of Common Stock reserved for issuance upon exercise
of stock options which are or will become exercisable on or prior to April
28, 1998.
(9) Includes 22,332 shares of Common Stock reserved for issuance upon exercise
of stock options which are or will become exercisable on or prior to April
28, 1998.
(10) Includes 2,500 shares of Common Stock reserved for issuance upon exercise
of stock options which are or will become exercisable on or prior to April
28, 1998.
(11) Includes 30,000 shares of Common Stock reserved for issuance upon exercise
of stock options which are or will become exercisable on or prior to April
28, 1998.
(12) Includes 8,033 shares of Common Stock reserved for issuance upon exercise
of stock options which are or will become exercisable on or prior to April
28, 1998.
(13) Includes 5,833 shares of Common Stock reserved for issuance upon exercise
of stock options which are or will become exercisable on or prior to April
28, 1998.
(14) Includes 599,046 shares of Common Stock reserved for issuance upon exercise
of stock options which are or will become exercisable on or prior to April
28, 1998.
The information as to shares beneficially owned has been individually
furnished by the respective Directors, Named Executive Officers, and other
stockholders of the Company, or taken from documents filed with the Securities
and Exchange Commission.
22
<PAGE> 26
STOCKHOLDER PROPOSALS
Any stockholder who intends to present a proposal at the 1999 Annual
Meeting of Stockholders for inclusion in the Company's Proxy Statement and Proxy
form relating to such Annual Meeting must submit such proposal to the Company at
its principal executive offices by December 25, 1998.
INDEPENDENT PUBLIC ACCOUNTANTS
Coopers & Lybrand LLP, independent public accountants, were selected by the
Board of Directors to serve as independent public accountants of the Company for
the year ended December 31, 1997 and have been selected by the Board of
Directors to serve as independent auditors for the fiscal year ending December
31, 1998.
SOLICITATION OF PROXIES
It is expected that the solicitation of proxies will be primarily by mail.
The cost of solicitation by management will be borne by the Company. The Company
will reimburse brokerage firms and other persons representing beneficial owners
of shares for their reasonable disbursements in forwarding solicitation material
to such beneficial owners. Proxies may also be solicited by certain of the
Company's directors and officers, without additional compensation, personally or
by mail, telephone, telegram or otherwise for the purpose of soliciting such
proxies.
ANNUAL REPORT ON FORM 10-K
THE COMPANY'S ANNUAL REPORT ON FORM 10-K, WHICH HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION FOR THE YEAR ENDED DECEMBER 31, 1997, WILL BE
MADE AVAILABLE TO STOCKHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST TO INVESTOR
RELATIONS, 3D SYSTEMS, 26081 AVENUE HALL, VALENCIA, CALIFORNIA 91355.
ON BEHALF OF THE BOARD OF DIRECTORS
/s/ A. SIDNEY ALPERT
----------------------------------------
A. Sidney Alpert
Secretary
26081 Avenue Hall
Valencia, CA 91355
April 24, 1998
23
<PAGE> 27
EXHIBIT A
3D SYSTEMS CORPORATION
1998 EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE.
This 1998 Employee Stock Purchase Plan (the "Plan") is intended to provide
incentive to, and to encourage stock ownership by, selected employees of 3D
Systems Corporation, a Delaware corporation (the "Company"), and any
"Subsidiary" or "Parent" thereof, so that such employees may acquire a
proprietary interest in, or increase their proprietary interest in, the Company.
For purposes of the Plan, the terms "Subsidiary" and "Parent" shall mean any
present or future corporation which would be a "subsidiary corporation" or a
"parent corporation" respectively, of the Company, as those terms are defined in
Section 424 of the Internal Revenue Code of 1986, as amended, and as the same
may be amended from time to time (the "Code").
Options granted under the Plan are intended to constitute options granted
pursuant to an "employee stock purchase plan" under Code Section 423 and shall
be referred to in the Plan as "options."
2. ADMINISTRATION.
a. By the Board of Directors. The Plan shall be administered by the Board
of Directors of the Company (the "Board") unless and until the Board delegates
administration to a committee (the "Committee") as provided in Paragraph 2(b).
The Board or the Committee, as the case may be, shall be referred to in the Plan
as the "Administrator." Subject to the provisions of the Plan, the Administrator
shall have authority to construe and interpret the Plan, to promulgate, amend
and rescind rules and regulations relating to its administration, to determine
the timing and manner of the grant of the options, the number of shares covered
by and all other terms of the options, to determine the duration and purpose of
leaves of absence which may be granted to employees without constituting
termination of their employment for the purpose of the Plan, and to make any and
all other determinations which it determines to be necessary or advisable for
the administration of the Plan; provided, however, that notwithstanding anything
to the contrary contained in the Plan, all Participants, as defined in Paragraph
5(b), shall have the same rights and privileges within the meaning of Code
Section 423(b)(5). The interpretation and construction by the Administrator of
any provision of the Plan, or of any agreement or option issued and executed
under or pursuant to the Plan, shall be final and binding upon holders of
options granted under the Plan and affected by such interpretation or
construction. No member of the Board or the Committee shall be liable for any
action or determination undertaken or made in good faith with respect to the
Plan or any agreement or option issued and executed pursuant to the Plan.
b. By a Committee of the Board. The Board may, in its sole and absolute
discretion, delegate any or all of its duties and authority with respect to the
Plan to a Committee of not less than three members of the Board to be appointed
by and to serve at the pleasure of the Board. Once appointed, each member of the
Committee shall continue to serve until otherwise directed by the Board. From
time to time, the Board may increase or decrease (to not less than three
members) the size of the Committee, add additional members to, remove members
(with or without cause) from, appoint new members in substitution therefor, and
fill vacancies, however caused, in the Committee. The Committee shall keep
minutes of all of its meetings and shall provide copies of such minutes to the
Board. Subject to the limitations prescribed by applicable law, the Plan and the
Board, the Committee may establish and follow such rules and regulations for the
conduct of its business as it may determine to be advisable.
3. ELIGIBILITY.
All employees of the Company, any Subsidiary or any Parent, except
employees who have been employed by the Company for less than five months, or
who are customarily scheduled to work less than 20 hours per week or less than 5
months during a year, shall be eligible to receive options granted under the
Plan; provided, however, that
A-1
<PAGE> 28
no option shall be granted to an employee if such employee, immediately after
the option is granted, would own stock (as defined by Sections 423(b)(3) and
424(d) of the Code) possessing 5% or more of the total combined voting power or
value of all classes of stock of the Company, any Subsidiary or any Parent.
4. THE STOCK.
The stock subject to any option granted under or pursuant to the Plan shall
be shares of the Company's authorized but unissued or reacquired common stock,
par value $.001 per share (the "Shares"). Subject to adjustment as set forth in
this Paragraph 4 and Paragraph 10, the aggregate number of Shares which may be
purchased upon exercise of options granted under the Plan shall not exceed
600,000 Shares; provided, however, that if any outstanding option shall for any
reason expire or terminate unexercised, the Shares subject to the unexercised
portion of the option shall again be available for options under the Plan as
though no option had been granted with respect to such Shares. Each time any of
the events set forth in Paragraph 10(a) or Paragraph 10(b) occurs, the number of
Shares to be purchased under the Plan shall be adjusted in the same manner as
shares subject to any outstanding option would be adjusted under the provisions
of Paragraph 10(a) and Paragraph 10(b), respectively. If on any Grant Date or
Exercise Date (as defined in Paragraph 5(a) below) the total number of Shares
which would otherwise be subject to options granted pursuant to Paragraph 5(a)
exceeds the number of Shares then available under the Plan (after deduction of
all shares for which options have been exercised or are then outstanding), the
Company shall make a pro rata allocation of the Shares remaining available for
issuance upon exercise of options in as uniform a manner as practicable. If such
event occurs on a Grant Date, the Company shall give written notice to each
Participant (as defined in Paragraph 5(b) below) affected thereby and shall, if
necessary, reduce the rate of payroll deductions.
5. GRANT OF OPTIONS.
a. General Statement; "Grant Date"; "Option Period"; "Exercise Date."
Options may be granted from time to time under this Plan in accordance with this
Paragraph 5. The dates on which options shall be granted and the terms of the
options shall be established from time to time by the Administrator; provided,
however, that (i) the term of any option shall not exceed one year; and (ii) all
options granted on any Grant Date shall have the same terms and conditions
(except they may differ with respect to the number of shares subject to each
such option). For purposes of this Plan, each date on which an option is granted
shall be referred to as a "Grant Date," the period during which any option is
outstanding shall be referred to as the "Option Period," and the last day of the
Option Period for any option shall be referred to as an "Exercise Date." The
number of Shares subject to each option shall be the quotient, excluding all
fractions, of the total paid into the Plan by each Participant during the Option
Period in accordance with Paragraphs 5(b) and (f), divided by the "Option Price"
(as defined in Paragraph 7(b) below).
b. Election to Participate: Payroll Deduction and Authorization. Except as
provided in Paragraph 5(f) below, an eligible employee may participate in the
Plan only by means of payroll deductions. Each eligible employee who elects to
participate in the Plan (a "Participant") shall deliver to the Company, during
the calendar month preceding a Grant Date, a Written Payroll Deduction
Authorization Form in the form authorized by the Administrator, in which the
Participant gives notice of his or her election to participate in the Plan as of
the next Grant Date, and designates a stated amount to be deducted from his or
her compensation on each payday and paid into an account maintained under the
Plan for his or her benefit. The stated amount to be deducted from the
Participant's compensation on each payday may be no less than 1% of the amount
of "eligible compensation" (as defined in Paragraph 5(d) below) from which the
deduction is made and may not exceed either of the following: (i) 10% of the
amount of "eligible compensation" (as defined in Paragraph 5(d) below) from
which the deduction is made; or (ii) an amount which will result in
noncompliance with the $25,000 limitation stated in Paragraph 5(e) below. Once
an employee becomes a Participant in the Plan, such employee will automatically
participate in the Plan during each successive Option Period until such time as
the employee withdraws from the Plan as provided in Paragraph 8 or the
employee's employment is terminated as provided in Paragraph 9. An eligible
employee is not required to file a new Written Payroll Deduction Authorization
Form in order to remain a Participant in the Plan during any subsequent
successive Option Periods.
A-2
<PAGE> 29
c. Changes in Payroll Authorization. Except as otherwise provided in
Paragraph 8 or 9, the amount deducted from a Participant's compensation on each
payday must remain the same throughout any Option Period.
d. "Eligible Compensation" Defined. The term "Eligible Compensation" means
the Participant's regular rate of pay on the Grant Date. "Eligible Compensation"
does not include management incentives and bonuses, overtime, extended work week
premiums, or other special payments, fees or allowances.
e. $25,000 Limitation. No option may be granted under the Plan which would
permit the Participant to credit (by means of payroll deductions or otherwise)
toward the purchase of Shares under the Plan, and under any other employee stock
purchase plan pursuant to Section 423 of the Code of the Company, any Subsidiary
or any Parent, an amount which would permit the purchase of Shares with an
aggregate fair market value in excess of $25,000 (determined on the Grant Date)
for any calendar year in which such option is outstanding at any time.
f. Additional Purchases. The Administrator may, in its discretion, from
time to time permit purchases of Shares under the Plan other than by payroll
deductions.
g. Account. All payroll deductions made by a Participant shall be credited
to an account established for the benefit of the Participant.
6. FAIR MARKET VALUE.
For the purposes of the Plan, the "Fair Market Value" of the Stock on a
given date shall be the closing sale price of the Stock as reported by the
Nasdaq National Market (or any national stock exchange (an "exchange") on which
the Stock is at the time listed or admitted to trading) for a single trading
day. If no sales of the Stock were made on the Nasdaq National Market (or an
exchange) on the transaction date, Fair Market Value shall mean the closing
price of a share of the Stock as reported for the next preceding day on which
sales of the Stock were made on the Nasdaq National Market (or an exchange).
7. EXERCISE OF OPTIONS; HOLDING PERIOD.
a. General Statement. Unless a Participant withdraws from the Plan as
provided in Paragraph 8, or the Participant's employment is terminated as
provided in Paragraph 9, each Participant in the Plan automatically and without
any action on his or her part shall be deemed to have exercised his or her
option on each Exercise Date to the extent that the balance then in the
Participant's account under the Plan is sufficient to purchase at the "Option
Price" (as determined in Paragraph 7(b) below) whole Shares subject to the
Participant's option. Any balance remaining in the Participant's account after
such purchase shall be carried over to the next Option Period on behalf of the
Participant unless the Participant elects, in writing, to have the balance
refunded, in which event the balance shall be promptly refunded to the
Participant. Except as otherwise provided in Paragraph 9(b), options shall not
be exercised on any date other than an Exercise Date.
b. "Option Price" Defined. The Option Price per Share to be paid by each
Participant upon the exercise of his or her option shall be the lesser of (i)
85% of the Fair Market Value of a Share on the Exercise Date or (ii) 85% of the
Fair Market Value of a Share on the Grant Date.
c. Delivery of Stock Certificates. As promptly as practicable after the
Exercise Date, the Company shall deliver to each Participant a stock certificate
issued in his or her name, or in a name designated by the Participant, for the
number of shares with respect to which the Participant's option was exercised
and for which the Participant has paid the Option Price. Notwithstanding
anything to the contrary contained in this Paragraph 7, no option shall be
deemed exercised and no certificate shall be delivered unless and until any then
applicable requirements of all state and federal laws and regulatory agencies
shall have been fully complied with to the satisfaction of the Company and its
counsel. If the Company is unable to comply with any applicable securities law
requirements, the Company shall not be liable to any Participant except to
return to the Participant the amount of the balance in the Participant's
account.
A-3
<PAGE> 30
d. Rights of Stockholder. No Participant shall have any rights as a
stockholder with respect to any of the Shares subject to options held by the
Participant until the date a stock certificate for such Shares is issued. No
adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distributions or other rights for which
the record date is prior to the date such stock certificate is issued, except as
provided in Paragraph 10 below.
e. Holding Period. Shares issued pursuant to the Plan may not be sold or
transferred for a period of 90 days from the date of purchase. Each stock
certificate for Shares issued pursuant to the Plan shall contain the following
legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED PURSUANT TO 3D
SYSTEMS CORPORATION'S 1998 EMPLOYEE STOCK PURCHASE PLAN, PURSUANT TO WHICH
THE SHARES EVIDENCED BY THIS CERTIFICATE CANNOT BE SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED FOR A PERIOD OF 90 DAYS AFTER THE DATE
OF ISSUANCE. A COPY OF 3D SYSTEMS CORPORATION'S 1998 EMPLOYEE STOCK
PURCHASE PLAN MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF 3D SYSTEMS
CORPORATION.
8. WITHDRAWAL FROM THE PLAN.
a. General Statement. A Participant may withdraw in whole from the Plan at
any time. A Participant who wishes to withdraw from the Plan must deliver to the
Company a Notice of Withdrawal in the form authorized by the Administrator.
Promptly after the Notice of Withdrawal is delivered to the Company, the Company
shall refund to the Participant the amount of the balance in the Participant's
account under the Plan and, automatically and without any further act on the
Participant's part, the Participant's payroll deduction authorization, interest
in the Plan and option granted under the Plan shall terminate.
b. Eligibility After Withdrawal. A Participant's withdrawal from the Plan
during an Option Period shall not affect such Participant's eligibility to be
granted an option on any Grant Date following such Option Period.
9. TERMINATION OF EMPLOYMENT.
a. Termination of Employment Other Than by Permanent Disability or Death.
If a Participant fails to remain an eligible employee, or if a Participant
ceases to be employed by the Company, any Subsidiary or any Parent for any
reason other than permanent disability or death, the Participant's participation
in the Plan shall terminate. The Participant shall cease to participate in the
Plan as of the date of the termination of the Participant's employment, or as of
the date the Participant fails to constitute an eligible employee, as the case
may be. The Company shall promptly refund to the Participant the amount of the
balance in the Participant's account under the Plan as of such date, and the
Participant's interest in the Plan and any options granted under the Plan shall
automatically terminate on such date.
b. Termination by Death or Permanent Disability. If a Participant shall die
or become permanently disabled while in the employ of the Company, any
Subsidiary or any Parent, the Participant or the executor of the Participant's
will or the administrator of the Participant's estate, as the case may be, by
written notice to the Company may either (i) exercise the option as of the date
of death or permanent disability, in which event the Company shall apply the
balance in the Participant's account under the Plan to the purchase at the
Option Price of whole Shares and refund the excess, if any, or (ii) request
payment of the balance of the Participant's account under the Plan, in which
event the Company shall promptly make such payments, and the Participant's
interest in the Plan and the option granted under the Plan shall terminate upon
such payment. If the Company does not receive such notice prior to the earlier
to occur of the Exercise Date or 90 days after the Participant's death or
permanent disability, as the case may be, it shall be conclusively presumed that
alternative (ii) has been elected. In the event of the death of the Participant,
the Shares and/or the cash to which the Participant is entitled shall be
delivered to the individual, if any, whom the Participant designated in writing
to be the Participant's beneficiary under the Plan, and in the absence of a
beneficiary
A-4
<PAGE> 31
validly designated by the Participant under the Plan, the Company shall deliver
the Shares and/or cash to the executor or administrator of the estate, if any,
or if none to the heirs of the Participant. If the option is exercised, the date
of death or permanent disability, as the case may be, shall be deemed the
Exercise Date for the purpose of computing the Option Price.
c. "Permanent Disability" Defined. For purposes of the Plan, permanent
disability shall occur if a Participant shall have failed to perform his or her
services as an employee of the Company for a period of 120 days because of ill
health, physical or mental disability or for any other cause beyond the control
of the Participant.
10. ADJUSTMENTS UPON RECAPITALIZATION.
Subject to any required action by the stockholders of the Company:
a. If the outstanding Shares are increased or decreased through any stock
dividend, stock split, reverse stock split or otherwise, an appropriate
adjustment shall be made simultaneously therewith in all of the following: (i)
the maximum number of Shares to be purchased under the Plan, (ii) the Option
Price, and (iii) the number of Shares subject to any then outstanding options.
b. In case of any capital reorganization, reclassification of the Shares
(other than a recapitalization described in Paragraph 10(a) above),
consolidation or merger of the Company (collectively, a "Reorganization"), the
holders of all outstanding options under the Plan shall thereafter be entitled
upon exercise to purchase the kind and number of shares of stock or other
securities or property of the Company receivable upon such Reorganization by a
holder of the number of Shares which the option entitles such holder to purchase
from the Company prior to such Reorganization; and in any such case, appropriate
adjustment shall be made in the applications of the provisions set forth in the
Plan with respect to the Participant's rights and interest thereafter, such that
the provisions set forth in the Plan (including the specified changes and other
adjustments to the Option Price) shall thereafter be applicable in relation to
any shares or other property thereafter purchasable upon exercise of the
outstanding options.
c. If the Company is dissolved or liquidated, then the Participant's
participation in the Plan shall terminate on the effective date of the
dissolution or liquidation, and the Company shall promptly refund to the
Participant the amount of the balance in the Participant's account under the
Plan. Upon such dissolution or liquidation, the Participant's payroll deduction
authorization, interest in the Plan and option under the Plan shall terminate
automatically and without any further act on the Participant's part.
d. To the extent that the foregoing adjustments relate to stock or
securities of the Company, such adjustments shall be made by the Administrator,
and its determination shall be final, binding and conclusive.
e. The provisions of this Paragraph 10 are intended to be exclusive, and no
Participant shall have any other right upon the occurrence of any of the events
described in this Paragraph 10.
f. The grant of options under this Plan shall not affect in any way the
right or power of the Company to make adjustments, reclassifications,
reorganizations or changes in its capital or business structure, or to merge,
consolidate, dissolve or liquidate, or to sell or transfer all or any part of
its business or assets.
11. RESTRICTION UPON ASSIGNMENT.
An option granted under the Plan shall not be transferable otherwise than
by will or the laws of descent and distribution, and shall be exercisable during
the Participant's lifetime only by the Participant. The Company will not
recognize and shall be under no duty to recognize any assignment or purported
assignment of a Participant's option or of any rights under the option.
A-5
<PAGE> 32
12. USE OF FUNDS; NO INTEREST PAID.
All funds received by the Company upon the exercise of options under the
Plan shall be included in the general funds of the Company and may be used for
any corporate purpose. No interest shall be paid to any Participant or credited
to any Participant's account under the Plan.
13. AMENDMENT OF THE PLAN.
The Administrator may amend the Plan in such respects as it shall deem
advisable; provided, however, that to the extent required for compliance with
Code Section 423 or any applicable law or regulation, stockholder approval will
be required for any amendment that will (a) increase the total number of Shares
as to which options may be granted under the Plan, (b) materially modify the
class of persons eligible to receive options, (c) materially increase the
benefits accruing to Participants under the Plan, (d) decrease the Option Price
below a price computed in the manner stated in Section 7, or (e) otherwise
require stockholder approval under any applicable law or regulation.
14. TERM OF THE PLAN.
The term of the Plan shall commence on the date of its adoption by the
Board of Directors of the Company (the "Effective Date"). Unless sooner
terminated by the Board in its sole discretion, the Plan shall expire five years
from the Effective Date. Such termination or expiration shall not affect options
previously granted.
15. REPORTS.
Upon the exercise of any option and if required by the Code, the Company
shall file with the Internal Revenue Service a return containing the information
required to be reported pursuant to Section 6039 of the Code or any replacement
thereof. The Company shall deliver a copy of such return to the Participant.
After the end of each Option Period, each Participant shall receive a report of
such Participant's account setting forth the total payroll deductions
accumulated, the number of Shares purchased, and the remaining cash balance, if
any, carried forward to the next Option Period.
16. RIGHTS AS AN EMPLOYEE.
Nothing in the Plan shall be construed to give any person the right to
remain in the employ of the Company or to affect the right of the Company to
terminate the employment of any person at any time with or without cause.
17. INFORMATION TO EMPLOYEES.
At least annually, each Participant shall receive financial statements from
the Company, except for employees whose duties in connection with the Company
assure them access to equivalent information.
18. TAX WITHHOLDING.
The Company shall have the right to deduct from all payments hereunder any
federal, local or employment taxes that it deems are required by law to be
withheld with respect to such payments.
A-6
<PAGE> 33
3D SYSTEMS CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
The undersigned, a stockholder of 3D SYSTEMS CORPORATION, a Delaware
corporation (the "Company"), hereby appoints Arthur B. Sims and Frank J. Spina,
and each of them, as the proxies of the undersigned, with full power of
substitution, to attend, vote and act for the undersigned at the Annual Meeting
of Stockholders of the Company, to be held on May 22, 1998, and any
postponements or adjournments thereof, and in connection herewith, to vote and
represent all of the shares of the Company which the undersigned would be
entitled to vote, as follows:
The Board of Directors recommends a WITH vote on Proposal 1 and a FOR vote
on Proposal 2.
1. ELECTION OF CLASS II DIRECTORS, as provided in the Company's Proxy
Statement:
[ ] WITH [ ] WITHOUT Authority to vote for the nominees listed below.
(INSTRUCTIONS: TO WITHHOLD AUTHORITY FOR THE NOMINEES, LINE THROUGH OR
OTHERWISE STRIKE OUT NAMES BELOW)
Arthur B. Sims Richard D. Balanson Miriam V. Gold
2. The approval of the 1998 Employee Stock Purchase Plan:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The undersigned hereby revokes any other proxy to vote at such Meeting, and
hereby ratifies and confirms all that said proxy may lawfully do by virtue
hereof. WITH RESPECT TO SUCH OTHER BUSINESS THAT MAY PROPERLY COME BEFORE THE
MEETING AND ANY POSTPONEMENTS OR ADJOURNMENTS THEREOF, SAID PROXY IS AUTHORIZED
TO VOTE IN ACCORDANCE WITH ITS BEST JUDGMENT.
This Proxy will be voted in accordance with the instructions set forth
above. THIS PROXY WILL BE TREATED AS A GRANT OF AUTHORITY TO VOTE FOR THE
ELECTION OF THE CLASS II DIRECTORS NAMED, THE 1998 EMPLOYEE STOCK PURCHASE PLAN,
AND AS SAID PROXY SHALL DEEM ADVISABLE ON SUCH OTHER BUSINESS AS MAY COME BEFORE
THE MEETING, UNLESS OTHERWISE DIRECTED.
<PAGE> 34
The undersigned acknowledges receipt of a copy of the Notice of Annual
Meeting and accompanying Proxy Statement dated April 24, 1998 relating to the
Meeting.
Date: , 1998
------------------------
------------------------
Signature(s) of
Stockholder(s)
(See Instructions Below)
The signature(s) hereon
should correspond
exactly with the name(s)
of the stockholder(s)
appearing on the Stock
Certificate. If stock is
jointly held, all joint
owners should sign. When
signing as attorney,
executor, administrator,
trustee or guardian,
please give full title
as such. If signer is a
corporation, please sign
the full corporation
name, and give title of
signing officer.
THIS PROXY IS SOLICITED BY
THE BOARD OF DIRECTORS OF 3D SYSTEMS CORPORATION
