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 [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the
[X] Definitive Proxy Statement Commission Only (as permitted by
[ ] Definitive Additional Materials Rule 14a-6(e)(2)
[ ] 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):
[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 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:
- --------------------------------------------------------------------------------
[X] 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:
<PAGE>
3D SYSTEMS CORPORATION
-----------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
-----------------------------------------------------
TIME
10:00 a.m. Mountain Daylight Time on Thursday, May 20, 1999
PLACE
Grand Vista Hotel
2790 Crossroads Blvd.
Grand Junction, Colorado 81506
ITEMS OF BUSINESS
(1) To elect two Class III members of the Board of Directors for three
year terms.
(2) To amend the Company's 1996 Stock Incentive Plan to increase the
number of authorized shares by 800,000.
(3) To vote on a stockholder proposal to amend the Executive Incentive
Compensation Plan.
(4) To transact such other business as may properly come before the
Meeting and any adjournment or postponement.
RECORD DATE
You can vote if at the close of business on April 6, 1999 you are a
stockholder of the Company.
PROXY VOTING
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 vote promptly by signing and returning the enclosed proxy
card, or if you hold your shares in street name, by accessing the World
Wide Web site indicated on your proxy card to vote via the Internet.
/s/ A. Sidney Alpert
April 26, 1999 A. Sidney Alpert
VICE PRESIDENT, GENERAL COUNSEL AND
SECRETARY
<PAGE>
3D SYSTEMS CORPORATION
26081 AVENUE HALL
VALENCIA, CALIFORNIA 91355
PROXY STATEMENT
- --------------------------------------------------------------------------------
These proxy materials are delivered in connection with the solicitation
by the board of directors of 3D Systems Corporation, a Delaware corporation ("3D
Systems," the "Company," "we," or "us"), of Proxies to be voted at our 1999
Annual Meeting of Stockholders and at any adjournments or postponements.
You are invited to attend our annual meeting of stockholders on Thursday
May 20, 1999, beginning at 10:00 a.m. Mountain Daylight Time. The meeting will
be held at the Grand Vista Hotel, 2790 Crossroads Blvd., Grand Junction,
Colorado 81506.
SHAREHOLDERS ENTITLED TO VOTE. Holders of 3D Systems common stock at the close
of business on April 6, 1999 are entitled to receive this notice and to vote
their shares at the annual meeting. Common stock is the only outstanding class
of securities of the Company entitled to vote at the annual meeting. As of April
6, 1999, there were 11,389,310 shares of Common Stock outstanding.
PROXIES. Your vote is important. If your shares are registered in your name, you
are a share owner of record. If your shares are in the name of your broker or
bank, your shares are held in street name. We encourage you to vote by proxy so
that your shares will be represented and voted at the meeting even if you cannot
attend. All share owners can vote by written proxy card. All street name share
owners can also vote by proxy via the Internet, pursuant to the instructions set
forth on your proxy card. Your submitting the enclosed Proxy will not limit your
right to vote at the annual meeting if you later decide to attend in person. If
your shares are held in street name, you must obtain a Proxy, executed in your
favor, from the holder of record to be able to vote at the meeting. If you are a
record holder, you may revoke your Proxy at any time before the meeting 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 your shares in
person.
INTERNET VOTING BY SHARES HELD IN STREET NAME. A number of brokerage firms and
banks offer Internet voting options. The Internet voting procedures are designed
to authenticate stockholders' identities, to allow stockholders to give their
voting instructions and to confirm that stockholders' instructions have been
recorded properly. Specific instructions to be followed by owners of shares of
common stock held in street name are set forth on your proxy card. Stockholders
voting via the Internet should understand that there may be costs associated
with electronic access, such as usage charges from telephone companies and
Internet access providers, that must be borne by the stockholder.
QUORUM. The presence, in person or by Proxy, of a majority of the votes entitled
to be cast by the stockholders entitled to vote at the annual meeting is
necessary to constitute a quorum. Abstentions and broker non-votes will be
included in the number of shares present at the annual meeting for determining
the presence of a quorum.
VOTING. Each share of 3D Systems common stock is entitled to one vote on each
matter properly brought before the meeting. 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.
ELECTION OF DIRECTORS. The two nominees for Class III director receiving the
highest number of votes at the annual meeting will be elected. If any nominee is
unable or unwilling to serve as a director at the time of the annual meeting 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.
AMENDMENT OF 1996 STOCK INCENTIVE PLAN. The approval of the amendment to the
1996 Stock Incentive Plan will require the affirmative vote of a majority of the
shares of Common Stock present or represented and entitled to vote at the Annual
Meeting.
Page 2
<PAGE>
STOCKHOLDER PROPOSAL TO AMEND THE EXECUTIVE INCENTIVE COMPENSATION PLAN. The
approval of the stockholder proposal to amend the Executive Incentive
Compensation Plan will require the affirmative vote of a majority of the shares
of Common Stock present or represented and entitled to vote at the Annual
Meeting.
OTHER MATTERS. 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. At the date this proxy statement went to press,
we do not know of any other matter to be raised at the annual meeting.
ITEM 1: ELECTION OF DIRECTORS
- --------------------------------------------------------------------------------
Item 1 is the election of two members of the board of directors. The
board of directors is grouped into three classes, as nearly equal in number as
possible. Directors hold office for staggered terms of three years. One of the
three classes is elected each year to succeed the directors whose terms are
expiring.
The Class III directors whose terms expire at the 1999 Annual Meeting
are Charles W. Hull and Ian L. White-Thomson. The board of directors has
nominated Messrs. Hull and White-Thomson to serve as Class III directors for
terms expiring in 2002. The Class I directors are serving terms that expire in
2000, and the Class II directors are serving terms that expire in 2001.
Unless otherwise instructed, the proxy holders will vote the Proxies
received by them for the nominees named below. If any nominee is unwilling to
serve as a director at the time of the annual meeting, the proxies will be voted
for such other nominee(s) as shall be designated by the then 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 III directors:
Charles W. Hull
Ian L. White-Thomson
If elected, Mr. Hull and Mr. White-Thomson are expected to serve until
the 2002 Annual Meeting of stockholders. The two nominees for election as Class
III directors at the annual meeting who receive the highest number of
affirmative votes will be elected.
The principal occupation and certain other information about the
nominees, other directors whose terms of office continue after the annual
meeting, and certain executive officers are set forth below and on the following
pages.
Page 3
<PAGE>
CLASS III DIRECTOR NOMINEES: TERMS EXPIRING IN 2002
CHARLES W. HULL
Mr. Hull served as Chief Technology Officer and Vice Chairman of the Board
of the Directors of the Company from April 1997 until his retirement on
February 28, 1999. 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., a
California corporation ("3D California") which is an indirect wholly-owned
subsidiary of the Company through which substantially all of its business
and operations are conducted. 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.
DIRECTOR SINCE: 1993 AGE: 59
IAN L. WHITE-THOMSON
Since 1995, Mr. White-Thomson has served as Chief Executive Officer of Rio
Tinto Borax Limited. Mr. White-Thomson was associated with U.S. Borax Inc.
until December 1998 and served as its Chairman since 1996, President and
Chief Executive Officer since 1988, and director since 1973. He was
selected as Manufacturer of the Year in 1997 by the California
Manufacturers' Association. Mr. White-Thomson is a director of KCET
Community Television of Southern California and Oryx Energy Company, where
he is also a member of the compensation committee.
DIRECTOR SINCE: 1998 AGE: 61
CLASS I DIRECTORS: TERMS EXPIRING IN 2000
DONALD S. BATES
Mr. Bates currently is, and since 1988 has been, an independent management
consultant. In January 1997, Mr. Bates became a member of the board of
directors of Glenayre Technologies, Inc. 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.
DIRECTOR SINCE: 1995 AGE: 70
MEMBER: AUDIT, COMPENSATION AND NOMINATING COMMITTEES
JIM D. KEVER
Mr. Kever has been associated with Envoy Corporation as the President and
Co-Chief Executive Officer since August 1995, and as a director since its
incorporation in August 1981. Prior to August 1995, he served as the
Company's Executive Vice President, Secretary and General Counsel from the
date of incorporation until assuming the title of President and Co-Chief
Executive Officer. Mr. Kever also is a Director of Transaction Systems
Architects, Inc., a supplier of electronic payment software products and
network integration solutions as well as Luminex Corporation, a value-added
manufacturer of laboratory testing equipment. He is also on the board of
Synthesis Technology, a health care software company, and Nichols TXEN, a
healthcare TPA processing company.
DIRECTOR SINCE: 1996 AGE: 46
MEMBER: AUDIT, COMPENSATION AND NOMINATING COMMITTEES
Page 4
<PAGE>
G. WALTER LOEWENBAUM II
Mr. Loewenbaum has been a director of the Company since March 1999, serving
as Vice Chairman of the Board. Since 1990, he has served as Chairman and
Chief Executive Officer of Loewenbaum & Company (formerly Southcoast
Capital Corp.), an investment banking and investment management firm that
he founded. From 1979 to 1990, he held a variety of positions at Morgan
Keegan, an investment banking firm, ultimately serving as Managing Director
and Senior Vice President of its international institutional sales
division.
DIRECTOR SINCE: 1999 AGE: 54
CLASS II DIRECTORS: TERMS EXPIRING IN 2001
ARTHUR B. SIMS
Mr. Sims has served as Chief Executive Officer and Chairman of the Board of
3D Systems since August 1993 and, since September 1991, has also served as
Chief Executive Officer of 3D Systems, Inc. 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 leading supplier of mechanical design automation software,
product data management software and related services.
DIRECTOR SINCE: 1993 AGE: 61
MEMBER: NOMINATING COMMITTEE
RICHARD D. BALANSON
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 was
responsible for 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. DIRECTOR SINCE: 1997 AGE: 49
MIRIAM V. GOLD
Ms. Gold has served as the Vice President of Regulatory Affairs and as
Assistant General Counsel of Ciba Specialty Chemicals, Inc. since December
1996. 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. DIRECTOR
SINCE: 1994 AGE: 49
MEMBER: AUDIT AND COMPENSATION COMMITTEES
Page 5
<PAGE>
FURTHER INFORMATION CONCERNING THE BOARD OF DIRECTORS
MEETINGS AND COMMITTEES. The board of directors held five meetings during fiscal
1998. The board of directors has an Audit Committee, Compensation Committee and
Nominating 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 fiscal 1998.
The Compensation Committee currently consists of Donald S. Bates, Miriam
V. Gold and Jim D. Kever. 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. Five meetings of the
Compensation Committee were held during fiscal 1998.
The Nominating Committee currently consists of Donald S. Bates, Jim D.
Kever and Arthur B. Sims. The Nominating Committee is responsible for
considering and recommending qualified candidates for election to the board of
directors. Two meetings of the Nominating Committee were held during fiscal
1998.
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 1998.
DIRECTORS' COMPENSATION. 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.
Page 6
<PAGE>
ITEM 2: INCREASE OF SHARES UNDER THE 1996 STOCK INCENTIVE PLAN
- --------------------------------------------------------------------------------
The board of directors proposes that the stockholders approve an
amendment (the "Amendment") to the Company's 1996 Stock Incentive Plan (the
"1996 Plan") to increase the number of shares reserved for issuance under the
1996 Plan from 1,300,000 to 2,100,000 shares.
The 1996 Plan is an integral part of the Company's compensation program.
The 1996 Plan provides incentives in the form of grants of stock options and
other rewards. The objective of these incentives is to advance the longer term
interests of the Company and its stockholders by providing incentives tied to
the performance of the Company's stock. Options provide rewards to employees
upon the creation of incremental stockholder value and the attainment of
long-term earnings goals. The 1996 Plan also encourages officers to acquire a
larger personal financial interest in the Company through stock ownership. It is
also anticipated that the 1996 Plan will further enable the Company to attract
and retain highly qualified executives.
The board of directors believes it is in the best interests of the
Company to continue to make substantial use of stock-based incentives to
attract, retain and motivate qualified employees. Accordingly, following the
recommendation of the Compensation Committee of the board of directors (the
"Committee"), on March 5, 1999 the board resolved to amend the 1996 Plan to
increase the number of shares reserved for issuance under the 1996 Plan and is
submitting this Amendment to the stockholders for their approval at the annual
meeting. As of the Record Date, options to purchase 1,024,554 shares were
outstanding under the 1996 Plan and only 194,173 shares were available for
future grants.
Of the 800,000 additional shares available by reason of the amendment,
the Committee has, prior to the date of this proxy statement, granted options to
Mr. Arthur Sims to purchase 100,000 shares of the common stock, subject to
approval of the Amendment by the Company's stockholders at the annual meeting.
The exercise price of the options granted to Mr. Sims shall be equal to 115% of
the closing sale price of the Common Stock over a ten trading day period
following stockholder approval of the Amendment and shall vest in four equal
annual installments commencing on the first anniversary of the date of grant.
The following summary briefly describes the principal features of the
1996 Plan and is qualified in its entirety by reference to the full text of the
1996 Plan, a copy of which is incorporated herein by reference to the Company's
Registration Statement on Form S-8 filed on September 12, 1996.
GENERAL. Employees of the Company or any of its current or future
subsidiaries are eligible to be considered for the grant of awards under the
1996 Plan. The maximum number of shares of common stock that may be issued
pursuant to awards granted under the 1996 Plan is currently 1,300,000, subject
to certain adjustments to prevent dilution. Any shares of common stock subject
to an award which for any reason expires or terminates unexercised are again
available for issuance under the 1996 Plan.
The 1996 Plan is administered by the Compensation Committee. Subject to
the provisions of the 1996 Plan, the Committee has full and final authority to
select the employees to whom awards will be granted thereunder, to grant the
awards and to determine the terms and conditions of the awards and the number of
shares to be issued pursuant thereto.
AWARDS. The 1996 Plan authorizes the Committee to enter into any type of
arrangement with an eligible employee that, by its terms, involves or might
involve the issuance of (1) shares of common stock, (2) an option, warrant,
convertible security, stock appreciation right or similar right with an exercise
or conversion privilege at a price related to the common stock, or (3) any other
security or benefit with a value derived from the value of the common stock. The
maximum number of shares of common stock with respect to which options or rights
may be granted under the 1996 Plan to any employee during any fiscal year is
100,000, subject to certain adjustments to prevent dilution.
Page 7
<PAGE>
Awards under the 1996 Plan are not restricted to any specified form or
structure and may include arrangements such as sales, bonuses and other
transfers of stock, restricted stock, stock options, reload stock options, stock
purchase warrants, other rights to acquire stock or securities convertible into
or redeemable for stock, stock appreciation rights, phantom stock, dividend
equivalents, performance units or performance shares. An award may consist of
one such arrangement or two or more such arrangements in tandem or in the
alternative. An award may provide for the issuance of common stock for any
lawful consideration, including services rendered or, to the extent permitted by
applicable state law, to be rendered. (Currently, Delaware law does not permit
the issuance of common stock for services to be rendered.)
An award granted under the 1996 Plan to an employee may include a
provision conditioning or accelerating the receipt of benefits, either
automatically or in the discretion of the Committee, upon the occurrence of
specified events, such as a change of control of the Company, an acquisition of
a specified percentage of the voting power of the Company or a dissolution,
liquidation, merger, reclassification, sale of substantially all of the property
and assets of the Company or other significant corporate transaction. Any stock
option granted to an employee may be an incentive stock option or a
non-qualified stock option. See "Federal Income Tax Treatment" below.
An award under the 1996 Plan may permit the recipient to pay all or part
of the purchase price of the shares or other property issuable pursuant to the
award, and/or to pay all or part of the recipient's tax withholding obligations
with respect to such issuance, by delivering previously owned shares of capital
stock of the Company or other property, or by reducing the amount of shares or
other property otherwise issuable pursuant to the award. If an option granted
under the 1996 Plan permitted the recipient to pay for the shares issuable
pursuant thereto with previously owned shares, the option may grant the
recipient the right to "pyramid" his or her previously owned shares, I.E., to
exercise the option in successive transactions, starting with a relatively small
number of shares and, by a series of exercises using shares acquired from each
transaction to pay the purchase price of the shares acquired in the following
transaction, to exercise the option for a larger number of shares with no more
investment than the original share or shares delivered.
1996 PLAN DURATION. The 1996 PLAN became effective upon its adoption by
the Board of Directors on March 21, 1996. No awards may be granted under the
1996 PLAN after March 21, 2006. Although any award that was duly granted on or
prior to such date may thereafter be exercised or settled in accordance with its
terms, no shares of Common Stock may be issued pursuant to any award made after
March 21, 2006.
AMENDMENTS. The Committee may amend or terminate the 1996 PLAN at any
time and in any manner, PROVIDED, no recipient of any award may, without his or
her consent, be deprived thereof or of any of his or her rights thereunder or
with respect thereto as a result of such amendment or termination; and if any
rule or regulation promulgated by the Securities and Exchange Commission (the
"Commission"), the Internal Revenue Service or any national securities exchange
or quotation system upon which any of the Company's securities are listed
requires that any such amendment be approved by the Company's stockholders, then
such amendment will not be effective until it has been approved by the Company's
stockholders.
EFFECT OF SECTION 16(B) OF THE SECURITIES EXCHANGE ACT OF 1934. The
acquisition and disposition of Common Stock by officers, directors and more than
10% stockholders of the Company ("Insiders") pursuant to awards granted to them
under the 1996 PLAN may be subject to Section 16(b) of the Securities Exchange
Act of 1934. Pursuant to Section 16(b), a purchase of Common Stock by an Insider
within six months before or after a sale of Common Stock by the Insider could
result in recovery by the Company of all or a portion of any amount by which the
sale proceeds exceed the purchase price. Insiders are required to file reports
of changes in beneficial ownership under Section 16(a) of the Securities
Exchange Act of 1934 upon acquisitions and dispositions of shares. Rule 16b-3
provides an exemption from Section 16(b) liability for certain transactions
pursuant to certain employee benefit plans. The 1996 PLAN is designed to comply
with Rule 16b-3.
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES. The following is a
general discussion of the principal federal income tax consequences under the
1996 Plan. Because the United States federal income tax rules governing options
and related payments are complex and subject to change, optionees are advised to
consult their
Page 8
<PAGE>
tax advisors prior to exercise of options or dispositions of stock acquired
pursuant to option exercise. The 1996 Plan does not constitute a qualified
retirement plan under Section 401(a) of the Code (which generally covers trusts
forming part of a stock bonus, pension or profit-sharing plan funded by the
employer and/or employee contributions which are designed to provide retirement
benefits to participants under certain circumstances) and is not subject to the
Employee Retirement Income Security Act of 1974 (the pension reform law which
regulates most types of privately funded pension, profit sharing and other
employee benefit plans).
CONSEQUENCES TO EMPLOYEES: INCENTIVE STOCK OPTIONS. No income is
recognized for federal income tax purposes by an optionee at the time an
Incentive Stock Option is granted, and, except as discussed below, no income is
recognized by an optionee upon his or her exercise of an Incentive Stock Option.
If the optionee disposes of the shares received upon exercise after two years
from the date such option was granted and after one year from the date such
option is exercised, the optionee will recognize long-term capital gain or loss
when he or she disposes of his or her shares. Such gain or loss generally will
be measured by the difference between the exercise price of the option and the
amount received for the shares at the time of disposition. If the optionee
disposes of shares acquired upon exercise of an Incentive Stock Option within
two years after being granted the option or within one year after acquiring the
shares, any amount realized from such disqualifying disposition will be taxable
at ordinary income rates in the year of disposition to the extent that (i) the
lesser of (a) the fair market value of the shares on the date the Incentive
Stock Option was exercised or (b) the fair market value at the time of such
disposition exceeds (ii) the Incentive Stock Option exercise price. Any amount
realized upon disposition in excess of the fair market value of the shares on
the date of exercise will be treated as short-term or long-term capital gain,
depending upon the length of time the shares have been held. The use of stock
acquired through exercise of an Incentive Stock Option to exercise an Incentive
Stock Option will constitute a disqualifying disposition if the applicable
holding period requirements have not been satisfied. For alternative minimum tax
purposes, the excess of the fair market value of the stock as of the date of
exercise over the exercise price of the Incentive Stock Option is included in
computing that year's alternative minimum taxable income. However, if the shares
are disposed of in the same year, the maximum alternative minimum taxable income
with respect to those shares is the gain on disposition. There is no alternative
minimum taxable income from a disqualifying disposition in subsequent years.
CONSEQUENCES TO EMPLOYEES: NON-STATUTORY OPTIONS. No income is
recognized by an optionee at the time Non-Statutory Options are granted under
the 1996 Plan. In general, at the time shares are issued to an optionee pursuant
to exercise of Non-Statutory Options, the optionee will recognize income taxable
at ordinary income tax rates equal to the excess of the fair market value of the
shares on the date of exercise over the exercise price of such shares. An
optionee will recognize gain or loss on the subsequent sale of shares acquired
upon exercise of Non-Statutory Options in an amount equal to the difference
between the selling price and the tax basis of the shares, which will include
the price paid plus the amount included in the optionee's taxable income by
reason of the exercise of the Non-Statutory Options. Provided the shares are
held as a capital asset, any gain or loss resulting from a subsequent sale will
be short-term or long-term capital gain or loss depending upon the length of
time the shares have been held.
CONSEQUENCES TO COMPANY: INCENTIVE STOCK OPTIONS. The Company will not
be allowed a deduction for federal income tax purposes at the time of the grant
or exercise of an Incentive Stock Option. There are also no United States
federal income tax consequences to the Company as a result of the disposition of
shares acquired upon exercise of an Incentive Stock Option if the disposition is
not a disqualifying disposition. At the time of a disqualifying disposition by
an optionee, the Company will be entitled to a deduction for the amount received
by the optionee to the extent that such amount is taxable to the optionee at
ordinary income tax rates.
CONSEQUENCES TO COMPANY: NON-STATUTORY OPTIONS. The Company generally
will be entitled to a deduction for United States federal income tax purposes in
the same year and in the same amount as the optionee is considered to have
recognized income taxable at ordinary income tax rates in connection with the
exercise of Non-Statutory Options. In certain instances, the Company may be
denied a deduction for compensation attributable to awards granted to certain
officers of the Company to the extent such compensation exceeds $1,000,000 in a
given year.
Page 9
<PAGE>
BOARD RECOMMENDATION AND VOTE. The approval of the amendment to the 1996
Stock Incentive Plan will require the affirmative vote of a majority of the
shares of Common Stock present or represented and entitled to vote at the Annual
Meeting. The Board is of the opinion that the Amendment is in the best interests
of the Company and recommends a vote for the approval of the Amendment. All
Proxies will be voted to approve the Amendment unless a contrary vote is
indicated on the enclosed Proxy card.
ITEM 3: STOCKHOLDER PROPOSAL
- --------------------------------------------------------------------------------
Mr. Raymond Thweatt, with an address of 2680 Greenfield, Berkley,
Michigan 48072, beneficial owner of 5,000 shares of common stock, has proposed
the adoption of the following resolution and has furnished the following
statement in support of his proposal:
"I propose that any Executive Officers won't be able to receive any
annual (the "1998 Cash Incentive Plan") award unless the common 3D Systems Stock
has increase in value from the last annual meeting to the present meeting date
by a least five per-cent. Value refers to the asking price per share of 3D
System's stock at the close of the stock market on each annual meeting. I
propose that (the "1998 Cash Incentive Plan") award would be changed from
receiving annual cash incentive Award to receiving 3D Systems common stock."
REASONS: "The stockholders are not getting their fair share on their investment
at the present time. This proposal will increase the value of the stock. So more
investors would buy 3D Systems common stock."
COMPANY RESPONSE: The board of directors has developed an overall executive
compensation program that it believes encourages the executives of the Company
to make responsible business decisions which result in Company performance that
benefits the stockholders. Under the Executive Incentive Compensation Plan,
described on page 15 of this Proxy Statement, 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 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 board of directors believes that achieving certain financial objectives is
important to the Company and that the establishment of those objectives as well
as the form of compensation provided is best left within the discretion of the
Compensation Committee. The board also believes that obtaining certain
non-financial objectives, such 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, also is important to the Company and
results in increased stockholder value. With cash incentive awards based on both
financial and non-financial objectives, executives benefit when the value of the
Company increases. The board of directors believes that providing these kinds of
incentives will encourage actions by executives which benefit all stockholders.
In 1998, based on the performance of the Company, there were no awards granted
to executive officers under the Executive Incentive Compensation Plan.
The board of directors also believes that the Company's executive
compensation program is competitive with those of companies with which the
Company competes for executive talent. The Company must remain competitive. If
it does not, the board believes that the Company will be less successful
attracting and retaining the executive talent it needs to be a market leader.
While a compensation package including cash incentive awards will not always
retain an executive, the board believes that these types of compensation
packages are an appropriate tool to use in seeking to maximize stockholder
value.
BOARD RECOMMENDATION AND VOTE. The approval of the stockholder proposal
will require the affirmative vote of a majority of the shares of Common Stock
present or represented and entitled to vote at the Annual Meeting. For the
reasons expressed above, the board believes that it is NOT in the stockholders'
interest to adopt this proposal and urge you to vote against it. THE BOARD OF
DIRECTORS RECOMMENDS A VOTE AGAINST THE ADOPTION OF THIS STOCKHOLDER PROPOSAL.
PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS STOCKHOLDERS
OTHERWISE SPECIFY IN THEIR PROXIES.
Page 10
<PAGE>
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.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------- ----------------------
NUMBER OF
FISCAL YEAR SECURITIES
NAME ENDED UNDERLYING ALL OTHER
PRINCIPAL POSITION (1) DECEMBER 31, SALARY BONUS OPTIONS COMPENSATION
---------------------- ------------ ------ ----- ------- ------------
<S> <C> <C> <C> <C> <C>
Arthur B. Sims........... 1998 $ 308,227 $ -- -- $ 3,594 (2)
Chief Executive Officer 1997 276,466 -- -- 3,056 (2)
1996 265,000 -- 110,000 6,437 (3)
Charles W. Hull.......... 1998 $ 284,952 $ -- -- $ 2,094 (2)
Vice Chairman 1997 260,817 -- -- 1,829 (2)
1996 250,000 -- 110,000 6,071 (3)
Richard D. Balanson (4) . 1998 $ 249,222 $ -- -- $115,889 (5)
President and Chief 1997 225,000 37,500 50,000 35,163 (6)
Operating Officer 1996 30,288 -- 250,000 --
Frank J. Spina (7) ...... 1998 $ 181,731 $ 31,281 75,000 $176,520 (8)
Vice President and Chief 1997 13,461 30,000 -- --
Financial Officer
A. Sidney Alpert ........ 1998 $ 174,154 $ 25,000 20,000 $ 1,738 (2)
Vice President, General 1997 157,788 -- 35,000 --
Counsel and Secretary 1996 150,000 -- 53,301 --
- ----------
<FN>
(1) For a description of the employment contracts between certain officers 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.
(4) Dr. Balanson's employment with the Company commenced in November 1996.
(5) Consists of $686 for the value of insurance premium of employer paid group
term life insurance and a moving allowance totaling $115,203.
(6) Consists of $608 for value of insurance premium of employer paid group term
life insurance and a moving allowance totaling $34,555.
(7) Mr. Spina's employment with the Company commenced in November 1997.
(8) Consists of $265 for the value of insurance premium of employer paid group
term life insurance and a moving allowance totaling $176,255.
</FN>
</TABLE>
Page 11
<PAGE>
OPTION GRANTS IN FISCAL 1998
The following table sets forth certain information regarding the grant of
stock options made during fiscal 1998 to the Named Executive Officers.
<TABLE>
<CAPTION>
POTENTIAL
NUMBER OF PERCENT OF REALIZABLE VALUE
SECURITIES TOTAL OPTIONS AT ASSUMED
UNDERLYING GRANTED TO RATE OF STOCK PRICE
OPTION EMPLOYEES IN EXERCISE OR EXPIRATION APPRECIATION FOR
NAME GRANTED(1) FISCAL YEAR(2) BASE PRICE(3) DATE OPTION TERM(4)
---- ---------- ------------ ------------- ---------- -------------------
5% 10%
-- ---
<S> <C> <C> <C> <C> <C> <C>
Arthur B. Sims......... - - - - - -
Charles W. Hull........ - - - - - -
Richard D. Balanson.... - - - - - -
Frank J. Spina......... 75,000 12.83 % $ 7.00 1/16/08 $ 330,170 $ 836,722
A. Sidney Alpert....... 20,000 3.42 % $ 7.00 1/16/08 88,045 223,126
<FN>
(1) 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 granted for a term of 10 years.
(2) Options covering an aggregate of 584,333 shares were granted to eligible
persons during fiscal 1998.
(3) The exercise price and tax withholding obligations related to exercise may
be paid by delivery of already owned shares, subject to certain conditions.
(4) 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 and do not represent a forecast of the future
appreciation of the Common Stock.
</FN>
</TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth, for each of the Named Executive
Officers, certain information regarding the exercise of stock options during
fiscal 1998, 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, 1998 ($7.50 per share).
<TABLE>
<CAPTION>
Number of Securities
Shares Underlying Unexercised Value of Unexercised
Acquired on Value Options at in-the-Money Options at
Exercise Realized December 31, 1998 December 31, 1998
-------- -------- ---------------------- -----------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Arthur B. Sims.............. - - 310,765 37,500 $ 557,003 -
Charles W. Hull............. - - 171,666 55,000 $ 305,664 -
Richard D. Balanson......... - - 137,500 162,500 - -
Frank J. Spina.............. - - - 75,000 - $ 37,500
A. Sidney Alpert............ - - 39,867 72,900 $ 329 $ 10,000
</TABLE>
Page 12
<PAGE>
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, effective October 31, 1994 and amended
January 1, 1999 (as amended, the "Employment Agreement"). Pursuant to the
Employment Agreement, Mr. Sims is entitled to a base salary of $317,250 per
year, subject to increase from time to time at the discretion of the
Compensation Committee. Pursuant to the Employment Agreement, the Company
granted options to Mr. Sims to purchase 100,000 shares of common stock, subject
to approval of the amendment to the 1996 Stock Incentive Plan (the "Amendment")
by the stockholders at the annual meeting. The exercise price of the options
granted to Mr. Sims shall be equal to 115% of the closing sale price of the
common stock over a ten trading day period following approval by stockholders of
the Amendment. The Company will grant the stock options within 30 days following
approval by the stockholders of the Company of the Amendment. The stock options
will also provide for accelerated vesting upon a change of control of the
Company. 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 that would be deductible by the
Company 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 initial 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 $150,000 plus
an additional $250 per hour in any fiscal quarter during which the performance
of his consulting duties exceeds 150 hours. After December 31, 2003, 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.
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, 1998, 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. Effective February 28, 1999, Mr. Hull terminated
his duties under the agreement and Mr. Hull, the Company and 3D California
entered into a four year Consulting Agreement pursuant to which Mr. Hull's
duties shall include consulting with the Board of Directors and officers of the
Company concerning those aspects of the business with which Mr. Hull previously
has been concerned, meeting with and aiding in the retention of the existing and
future customers of the Company, and assisting the Company in research and
development of products and methods of production. Mr. Hull is not required to
devote more than 100 hours per fiscal quarter to the performance of his
consulting duties under the
Page 13
<PAGE>
Consulting Agreement. As compensation for Mr. Hull's consulting services, the
Company shall pay to Mr. Hull $275,000 for the first year, $150,000 for the
second year and $100,000 for each of the third and fourth years. All of the
stock options granted to Mr. Hull and unexercised as of the date of the
Consulting Agreement continue in force and vest in accordance with their terms.
Mr. Hull may accept employment for others but only to the extent that the
additional activities are not otherwise prohibited by the terms of the
employment agreement and the other activities do not impair his ability to
discharge fully and completely his consulting duties.
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, 1999, the Board of Directors increased Dr.
Balanson's base salary to $275,000. 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. Dr.
Balanson did not receive incentive compensation for fiscal 1998. 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.
Effective September 26, 1997, the Company entered into an agreement with
Frank J. Spina, pursuant to which Mr. Spina serves as Vice President and Chief
Financial Officer. Mr. Spina is paid an annual base salary equal to $175,000 and
is eligible to participate in the 1998 Executive Incentive Compensation Plan.
Effective January 1, 1999, the Board of Directors increased Mr. Spina's base
salary to $186,375. Mr. Spina is an "at will" employee. However, if the Company
terminates Mr. Spina's employment without just cause, the Company shall pay to
Mr. Spina an amount equal to one-year's base salary.
Effective December 27, 1995, the Company entered into an agreement with
A. Sidney Alpert, pursuant to which Mr. Alpert serves as Vice President and
General Counsel. Mr. Alpert is paid an annual base salary equal to $150,000 and
is eligible to participate in the 1998 Executive Incentive Compensation Plan.
Effective January 1, 1999, the Board of Directors increased Mr. Alpert's base
salary to $181,260. Mr. Alpert is an "at will" employee. However, if the Company
terminates Mr. Alpert's employment without just cause, the Company shall pay to
Mr. Alpert an amount equal to one-year's base salary.
Mr. Charles Wilson was employed by the Company as Vice President, Sales
and Marketing. Mr. Wilson's employment with the Company ended on February 25,
1999. The Company and Mr. Wilson entered into a Severance Agreement and General
Release (the "Separation Agreement") dated March 12, 1999 pursuant to which the
Company forgave Mr. Wilson's obligation to repay to the Company $81,086 in
relocation expenses paid in connection with the commencement of Mr. Wilson's
employment in September 1998. The Company also agreed to reimburse Mr. Wilson
for certain other expenses incurred in connection with the commencement of his
employment, which expenses, in the aggregate, will not exceed $27,600.
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
three 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"), the 1996 Stock Option Plan for Non-Employee Directors
(the "Director Plan") and the 1998 Employee Stock Purchase 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
Page 14
<PAGE>
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.
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 "1999 Incentive Plan"). Under the 1999
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 1999
Incentive Plan.
Under the 1999 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 1999 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, options, warrants, convertible securities,
stock appreciation rights or similar rights or any other securities or benefits
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 made 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 align more
Page 15
<PAGE>
closely 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."
1998 EMPLOYEE STOCK PURCHASE PLAN. The Company also provides under the
1998 Employee Stock Purchase Plan an opportunity for substantially all of its
employees to purchase Common Stock at a modest discount to the market price.
Pursuant to this plan, employees may allocate annually up to the lesser of
$25,000 or 10% of their regular compensation for the purchase of shares of
Common Stock.
DETERMINATION OF CHIEF EXECUTIVE OFFICER'S COMPENSATION. As Chief
Executive Officer, Mr. Sims is compensated pursuant to an employment agreement
described under "Employment Contracts," above, 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 fiscal 1998, total sales of the Company increased from
$90,257,000 to $98,117,000. In August 1997, the Company successfully completed
the acquisition of the rapid prototyping "Stereos" product line and business
from EOS GmbH of Germany, a significant European competitor. As a result of
these factors, and others, effective January 1, 1999, the committee increased
Mr. Sims' base salary from $297,750 to $317,250. Mr. Sims did not receive a
bonus for fiscal 1998, but will be eligible to receive a significant cash
incentive award if the Company achieves or exceeds targeted levels of earnings
and revenue for fiscal 1999.
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 have
been granted to him since 1991. 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 1998 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. However, in order to maintain flexibility in compensating executive
officers in a manner designed to promote varying corporate goals, the
Compensation Committee has not adopted a policy that all compensation must be
deductible.
Compensation Committee
Donald S. Bates
Miriam V. Gold
Jim D. Kever
Page 16
<PAGE>
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, 1993 to December 31, 1998, 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, 1994 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.
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]
* $100 INVESTED ON 1/1/94 IN STOCK OR INDEX-INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING 12/31/98.
<TABLE>
TDSC
<CAPTION>
Cumulative Total Return
-------------------------------------------------
12/93 12/94 12/95 12/96 12/97 12/98
<S> <C> <C> <C> <C> <C> <C>
3D SYSTEMS CORPORATION TDSC 100.00 193 452 243 118 143
NASDAQ STOCK MARKET-US INAS 100.00 98 138 170 208 294
S & P TECHNOLOGY SECTOR ITES 100.00 117 168 238 300 519
----------------------------------------------------------------------------------------
</TABLE>
Page 17
<PAGE>
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, nor 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 fiscal 1998, or which is presently proposed.
See "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,
Frank Spina, Martin McGough, Mark Bell (who is no longer employed by the
Company), 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. Mr.
Bell has paid in full his indebtedness to the Company. 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 ended 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 Ciba Specialty
Chemicals, Inc., as amended from time to time (together with its affiliates,
"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
$8,847,000 during fiscal 1998. 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
Page 18
<PAGE>
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 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, a
director 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 $268,421
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.
SHAREHOLDERS AGREEMENT
CSC is a Swiss-based multinational manufacturer and distributor of
specialty chemicals, a 15.15% 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.
Pursuant to a Shareholders Agreement among the Company, CSC, 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 28, 1999 together beneficially owned an aggregate of 2,364,791 shares
of common stock (approximately 20.68% 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 Messrs.
Balanson, Bates, Kever, Loewenbaum and White-Thomson currently are the directors
designated by the other three directors.
Page 19
<PAGE>
PRINCIPAL STOCKHOLDERS
- --------------------------------------------------------------------------------
The following table sets forth as of February 28, 1999, 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 (11,389,310 shares), (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)
---------------- --------------------- ----------
DIRECTORS:
<S> <C> <C>
Charles W. Hull......................................... 2,364,791 (2) (3) 20.68
G. Walter Loewenbaum, II................................ 716,094 (4) 6.29
Arthur B. Sims.......................................... 334,495 (5) 2.86
Richard D. Balanson..................................... 197,981 (6) 1.72
Jim D. Kever............................................ 20,000 (7) *
Miriam V. Gold.......................................... 14,466 (8) *
Donald S. Bates......................................... 11,833 (9) *
Ian L. White-Thomson.................................... 500 *
NON-DIRECTOR NAMED EXECUTIVE OFFICERS:
A. Sidney Alpert........................................ 74,141 (10) *
Frank J. Spina.......................................... 37,647 (11) *
5% HOLDERS:
Ciba Specialty Chemicals, Inc........................... 2,364,791 (3) 20.68
885 Georgia Street, Suite 2200, Vancouver, B.C. V6C3E8
Dimensional Fund Advisers Inc........................... 619,100 (12) 5.44
1299 Ocean Avenue, 11th Floor, Santa Monica, CA 90401
The Clark Estates, Inc.................................. 594,272 (13) 5.22
30 Wall Street, New York, NY 10005
Directors and officers as a group (11 persons).......... 3,799,903 (14) 31.28
* Less than one percent.
</TABLE>
(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
Page 20
<PAGE>
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 28, 1999.
(2) Includes (a) 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 (b) 180,416 shares of common stock
reserved for issuance upon exercise of stock options which are or will
become exercisable on or prior to April 29, 1999. 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 Ciba Specialty
Chemicals, Inc. ("CSC") are owned of record by CSC Holding, the parent of
CSC. 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 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
"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 2,364,791 shares. As of February 28, 1999, 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 29, 1999 are outstanding as of February
28, 1999):
NUMBER OF SHARES PERCENT OF ALL
OUTSTANDING
SHARES
Charles W. Hull..................... 639,425 5.53 %
Ciba Specialty Chemicals, Inc....... 1,725,366 15.15 %
--------- -------
Total 2,364,791 20.68 %
========= =======
(4) Includes (a) 40,799 shares held in the name of Lillian Shaw Loewenbaum, Mr.
Loewenbaum's wife, (b) 41,933 shares held in the name of the Loewenbaum
1992 Trust for which Mr. and Mrs. Loewenbaum serve as trustees, (c) 143,466
shares held in the name of the Guaranty & Trust Co ttee fbo G. Walter
Loewenbaum, Mr. Loewenbaum's pension plan, (d) 10,766 shares held in the
name of The Waterproof Partnership LTD for which Mr. and Mrs. Loewenbaum
serve as the general partners and as certain of the limited partners, and
(e) 138,914 shares held in the name of Loewenbaum & Co., Inc., a wholly
owned subsidiary of Loewenbaum Holdings, Co., a company in which Mr.
Loewenbaum's family owns a majority interest.
(5) Includes (a) 14,652 shares of common stock held in the Arthur B. Sims
Living Trust dated February 5, 1998 for which Mr. Sims serves as trustee,
and (b) 310,765 shares of common stock reserved for issuance upon exercise
of stock options which are or will become exercisable on or prior to April
29, 1999.
(6) Includes 150,000 shares of common stock reserved for issuance upon exercise
of stock options which are or will become exercisable on or prior to April
29, 1999.
(7) Includes 7,500 shares of common stock reserved for issuance upon exercise
of stock options which are or will become exercisable on or prior to April
29, 1999. Also includes 1,000 shares of common stock held in trust for the
benefit of Mr. Kever's minor children, with respect to which Mr. Kever
disclaims beneficial ownership.
Page 21
<PAGE>
(8) Includes 14,166 shares of common stock reserved for issuance upon exercise
of stock options which are or will become exercisable on or prior to April
29, 1999.
(9) Includes 10,833 shares of common stock reserved for issuance upon exercise
of stock options which are or will become exercisable on or prior to April
29, 1999.
(10) Includes (a) 24,699 shares of common stock held in the Alpert Living Trust
dated January 21, 1998, for which Mr. & Mrs. Alpert serve as trustees, and
(b) 49,442 shares of common stock reserved for issuance upon exercise of
stock options which are or will become exercisable on or prior to April 29,
1999.
(11) Includes 18,750 shares of common stock reserved for issuance upon exercise
of stock options which are or will become exercisable on or prior to April
29, 1999.
(12) Dimensional Fund Advisors Inc. ("Dimensional"), an investment advisor
registered under the Investment Advisors Act of 1940, furnishes investment
advice to four investment companies registered under Investment Company Act
of 1940, and serves as investment manager to certain other investment
vehicles, including commingled group trusts. (These investment companies
and investment vehicles are the "Portfolios"). In its role as investment
advisor and investment manager, Dimensional possesses both voting and
investment power over the securities that are owned by the Portfolios. All
securities reported as held by Dimensional are owned by the Portfolios, and
Dimensional disclaims beneficial ownership of such securities. All
information regarding the beneficial ownership of Company securities by
Dimensional is taken exclusively from a Form 13G filed by Dimensional on
February 11, 1999.
(13) 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.
(14) Includes 758,122 shares of Common Stock reserved for issuance upon exercise
of stock options which are or will become exercisable on or prior to April
29, 1999.
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.
Page 22
<PAGE>
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 fiscal 1998, all the Company's executive officers,
directors and greater-than-ten percent stockholders complied with all Section
16(a) filing requirements.
STOCKHOLDER PROPOSALS
Any stockholder who intends to present a proposal at the 2000 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 28, 1999.
INDEPENDENT PUBLIC ACCOUNTANTS
PricewaterhouseCoopers LLP, independent public accountants, were
selected by the Board of Directors to serve as independent public accountants of
the Company for fiscal 1998 and have been selected by the Board of Directors to
serve as independent auditors for fiscal 1999.
SOLICITATION OF PROXIES
It is expected that the solicitation of proxies will be 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, 1998, 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, California 91355
April 26, 1999
<PAGE>
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 20, 1999, 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, a FOR vote
on Proposal 2, and an AGAINST vote on Proposal 3.
1. ELECTION OF CLASS III 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)
Charles W. Hull Ian L. White-Thomson
2. The approval of the amendment to the 1996 Stock Option Plan to increase the
number of authorized shares by 800,000.
____ FOR ____ AGAINST ____ ABSTAIN
3. The approval of the stockholder proposal to amend the Executive Incentive
Compensation 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 III Directors named, the amendment to the 1996 Stock
Option Plan, and as said proxy shall deem advisable on such other business as
may come before the Meeting, unless otherwise directed. This Proxy will be
treated as a GRANT OF AUTHORITY TO VOTE AGAINST the stockholder proposal to
amend the Executive Incentive Compensation Plan.
<PAGE>
The undersigned acknowledges receipt of a copy of the Notice of Annual
Meeting and accompanying Proxy Statement dated April 26, 1999 relating to the
Meeting.
Date: ___________, 1999
----------------------------------------
----------------------------------------
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
