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
[ ] Definitive Additional Materials by Rule 14a-6(e)(2)
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
3D SYSTEMS CORPORATION
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(Name of Registrant as Specified in Its Charter)
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(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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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(4) Proposed maximum aggregate value of transaction:
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[ ] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing party:
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(4) Date filed:
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3D SYSTEMS CORPORATION
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
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TIME............................ 9:00 a.m. Pacific Time on Tuesday,
May 14, 2002
PLACE........................... Hyatt Valencia Hotel
24500 Town Center Drive
Santa Clarita, CA 91355
ITEMS OF BUSINESS............... (1) To elect three Class III members of the
Board of Directors for three-year terms.
(2) 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 March 15, 2002, you were 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.
April 12, 2002 Karen M. Shotting
VICE PRESIDENT, GENERAL COUNSEL AND
SECRETARY
3D SYSTEMS CORPORATION
26081 AVENUE HALL
VALENCIA, CALIFORNIA 91355
PROXY STATEMENT
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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 2002
Annual Meeting of Stockholders and at any adjournments or postponements.
You are invited to attend our Annual Meeting of Stockholders on Tuesday, May 14,
2002, beginning at 9:00 a.m. Pacific Time. The meeting will be held at the Hyatt
Valencia Hotel, 24500 Town Center Drive, Santa Clarita, California 91355.
STOCKHOLDERS ENTITLED TO VOTE. Holders of 3D Systems Common Stock at the close
of business on March 15, 2002 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 March
15, 2002, there were 13,134,410 shares of Common Stock outstanding.
PROXIES. Your vote is important. If your shares are registered in your name, you
are a stockholder 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 stockholders can vote by written Proxy card. All street name
stockholders also can vote by Proxy via the Internet, pursuant to the
instructions set forth on their 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 IN ORDER TO BE ABLE TO
VOTE AT THE MEETING. If you are a stockholder of record, 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. All shares entitled to vote
and represented by properly executed Proxies received prior to the Annual
Meeting, and not revoked, will be voted at the Annual Meeting in accordance with
the instructions indicated on those Proxies. If no instructions are indicated on
a properly executed Proxy, the shares represented by that Proxy will be voted as
recommended by the Board of Directors.
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 three 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.
OTHER MATTERS. At the date this Proxy Statement went to press, we do not know of
any other matter to be raised at the Annual Meeting.
Page 2
ITEM 1: ELECTION OF DIRECTORS
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Item 1 is the election of three 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 2002 Annual Meeting are
Charles W. Hull, Brian K. Service and Kevin S. Moore. The Board of Directors has
nominated Charles W. Hull, Brian K. Service and Kevin S. Moore to serve as Class
III directors for terms expiring in 2005. The Class I directors are serving
terms that expire in 2003, and the Class II directors are serving terms that
expire in 2004.
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 proposes the election of the following nominees as Class
III directors:
Charles W. Hull
Brian K. Service
Kevin S. Moore
If elected, Messrs. Hull, Service and Moore are expected to serve until the 2005
Annual Meeting of Stockholders. The three 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 on the following pages.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION OF THE
NOMINEES LISTED ABOVE.
Page 3
CLASS III DIRECTOR NOMINEES: TERMS EXPIRING IN 2002
CHARLES W. HULL Mr. Hull has served as Chief Technology Officer
of the Company since April 1997 and, effective
May 3, 2000, as Executive Vice President and
member of the Office of the Chief Executive
Officer. Mr. Hull also has served as Vice
Chairman of the Board of Directors, 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 Inc") which is an
indirect wholly-owned subsidiary of the Company
through which substantially all of its business
and operations are conducted. From February to
June 1999, Mr. Hull acted as a consultant to the
Company. From January 1980 to March 1986, Mr.
Hull was Vice President of UVP, Inc., a systems
manufacturing company, where he developed the
Company's stereolithography technology.
DIRECTOR SINCE: 1993 AGE: 62
MEMBER: NOMINATING COMMITTEE
BRIAN K. SERVICE Mr. Service has served as President and Chief
Executive Officer of the Company since September
1999 and, since October 1999, has also served as
President and Chief Executive Officer of 3D Inc.
Mr. Service was elected to 3D Systems' Board of
Directors in January 2001. Mr. Service is a
Managing Director of Regent Pacific Management
Corporation ("Regent Pacific"), and he provides
services to the Company pursuant to an agreement
between the Company and Regent Pacific. Prior to
Regent Pacific, Mr. Service served as Chief
Executive Officer of Salmond Smith Biolab, Ltd.
Prior to Salmond, he was Chief Executive Officer
of Milk Products, Inc. Mr. Service holds a
Bachelor's degree in Chemical Engineering from
Canterbury University of New Zealand and has
completed the Stanford Executive Program from
Stanford University Business School. Mr. Service
is a director of Visual Data Corporation, in
which capacity he also serves as a member of the
audit and compensation committees.
DIRECTOR SINCE: 2001 AGE: 54
KEVIN S. MOORE Mr. Moore has been a director of the Company
since October 1999. Since 1991, he has been with
The Clark Estates, Inc., a private investment
firm, where he currently is President and a
director. Mr. Moore also is a director of
Ducommun, Incorporated, as well as Aspect
Resources LLC, The Clark Foundation, and the
National Baseball Hall of Fame & Museum, Inc.
DIRECTOR SINCE: 1999 AGE: 47
MEMBER: AUDIT, COMPENSATION AND OVERSIGHT
COMMITTEES
CLASS I DIRECTORS: TERMS EXPIRING IN 2003
RICHARD C. SPALDING Mr. Spalding has been a General Partner of ABS
Ventures, a venture capital group, since January
2000. Prior to January 2000, he served as Vice
President and Chief Financial Officer of Portal
Software, an Internet billing company, between
February 1997 and March 1999. From March 1996 to
February 1997, he served as Vice President
Finance and Corporate Development for Fusion
Medical Technologies. From November 1991 to
February 1996, he served as Managing Director of
Alex Brown & Sons, heading up the Investment
Banking for the West Coast. From June 1977 to
November 1991, Mr. Spalding practiced law with
Brobeck, Phleger and Harrison, serving as
outside counsel for numerous public and private
companies.
DIRECTOR SINCE: 2001 AGE: 51
MEMBER: AUDIT AND OVERSIGHT COMMITTEES
Page 4
JIM D. KEVER Mr. Kever is Principal in a venture capital
partnership called Voyent Partners, LLC. Prior
to that, Mr. Kever was associated with WebMD
Corporation, Transaction Services Division
(formerly "Envoy Corporation") as the President
and Co-Chief Executive Officer since August
1995. Prior to August 1995, he served as Envoy
Corporation's Executive Vice President,
Secretary and General Counsel. 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
also is on the Board of Synthesis Technology, a
healthcare software company, Tyson Foods, Inc.,
an integrated processor of poultry-based food
products, and Quintiles Transnational Corp., a
consulting and health information management
services company.
DIRECTOR SINCE: 1996 AGE: 49
MEMBER: AUDIT AND OVERSIGHT COMMITTEES
G. WALTER LOEWENBAUM II Mr. Loewenbaum has been a director of the
Company since March 1999, serving as Vice
Chairman of the Board until September 1999 when
he was elected Chairman of the Board. Mr.
Loewenbaum is Managing Director of LeCorgne
Loewenbaum LLC. Prior to that, he served as
Chairman and Chief Executive Officer of
Loewenbaum & Company (formerly Southcoast
Capital Corp.), an investment banking and
investment management firm that he founded. Mr.
Loewenbaum is also on the Board of Luminex
Corporation, a value-added manufacturer of
laboratory testing equipment, and Sonic
Innovations, a manufacturer of hearing aids.
DIRECTOR SINCE: 1999 AGE: 57
MEMBER: NOMINATING COMMITTEE
CLASS II DIRECTORS: TERMS EXPIRING IN 2004
GARY J. SBONA Mr. Sbona is Chairman and Chief Executive
Officer of Regent Pacific Management
Corporation, an international turnaround
management firm, which he founded in 1974. Mr.
Sbona currently serves as Chairman and Chief
Executive Officer of Verity, Inc., a publicly
traded software company, specializing in
knowledge retrieval technology, with worldwide
operations. Additionally, he serves as Chairman
and Chief Executive Officer of Auspex Systems,
Inc., a public company that is a leading
provider of Network Attached Storage Solutions.
He is also Chairman and Chief Executive Officer
of Accelerated Networks, Inc., a public company
providing broadband telecommunications, as well
as Director of Calico Commerce Corporation, a
publicly traded software company, and Chairman
and Chief Executive Officer of Clarent
Corporation, a publicly traded broadband
telecommunications company. Mr. Sbona is also a
frequent speaker on the subject of management of
turnarounds and has been a faculty member of the
Banking Law Institute and the Bank Lending
Institute since 1992. He is also a member of the
Institute of Directors.
DIRECTOR SINCE: 1999 AGE: 58
MEMBER: COMPENSATION COMMITTEE
MIRIAM V. GOLD Mrs. Gold has since 1992 been Assistant General
Counsel of Ciba Specialty Chemicals Corporation,
and its predecessors, Novartis Inc. and
Ciba-Geigy Corporation. Her legal practice
involves a broad range of matters, including
counseling on compliance, antitrust and general
business issues. In addition, she was Vice
President of Legal & Regulatory Affairs for the
Additives Division of Ciba from 1995 to 2001.
She is also an adjunct professor at Pace
University School of Law, where she teaches a
course in In-House Practice, focusing on the
unique role of in-house counsel in ensuring that
companies are positioned to operate legally and
responsibly. Mrs. Gold received her J.D. from
New York University School of Law, and her B.A.
in American History from Barnard College.
DIRECTOR SINCE: 1994 AGE: 52
MEMBER: COMPENSATION COMMITTEE
Page 5
FURTHER INFORMATION CONCERNING THE BOARD OF DIRECTORS
MEETINGS AND COMMITTEES. The Board of Directors held sixteen meetings during
fiscal 2001. The Board of Directors has an Audit Committee, Compensation
Committee, Nominating Committee and Oversight Committee.
The Audit Committee currently consists of Richard C. Spalding, Kevin S. Moore
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 the 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. The role and responsibilities of the
Audit Committee are more fully set forth in a written Charter adopted by the
Board. The Audit Committee held four meetings during fiscal 2001.
The Compensation Committee currently consists of Gary J. Sbona, Miriam V. Gold
and Kevin S. Moore. 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. The Compensation Committee held four
meetings during fiscal 2001.
The Nominating Committee currently consists of G. Walter Loewenbaum II and
Charles W. Hull. The Nominating Committee is responsible for considering and
recommending qualified candidates for election to the Board of Directors. The
Nominating Committee held one meeting during fiscal 2001.
The Oversight Committee currently consists of Jim D. Kever, Kevin S. Moore and
Richard C. Spalding. The Oversight Committee is responsible for reviewing, from
time to time, and serving as final authority for all matters related to the
Company's dealings, negotiations, contracts, agreements or other relations
between the members of the Board of Directors and the Company, including the
Company's relationship with Regent Pacific Management Corporation. The Oversight
Committee held two meetings during fiscal 2001.
All but one director attended 75% or more of all the meetings of the Board of
Directors and those committees on which he or she served in fiscal 2001. Mr.
Spalding attended ten of the sixteen Board of Directors meetings and all of the
committee meetings on which he served in 2001.
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, 10,000 shares of Common
Stock.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. The Company has no
interlocking relationships involving any of its Compensation Committee members
that would be required by the Securities and Exchange Commission (the "SEC") to
be reported in this Proxy Statement, and no officer or full-time employee of the
Company serves on its Compensation Committee. Mr. Sbona, a member of the
Compensation Committee, provides services to the Company as a part-time
employee.
Page 6
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.
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------- ---------------------------
NUMBER OF
FISCAL YEAR SECURITIES ALL
NAME ENDED UNDERLYING OTHER
PRINCIPAL POSITION(1) DECEMBER 31 SALARY(3) BONUS OPTIONS COMPENSATION
------------------------- ----------- ---------- --------- ---------- --------------
Brian K. Service......... 2001 (3) -- -- --
President & Chief 2000 (3) -- -- --
Executive Officer 1999 (3) -- -- --
Charles W. Hull.......... 2001 $ 275,000 -- 10,000 $ 26,679 (4)
Executive Vice President 2000 $ 275,000 $ 66,000 -- $ 3,518 (5)
& Chief Technology Officer 1999 $ 275,000 $ 43,000 -- $ 65,012 (6)
E. James Selzer(2) ...... 2001 $ 200,000 -- 10,000 $ 1,662 (5)
Sr. VP, Global Finance & 2000 $ 108,870 40,000 75,000 $ 1,578 (5)
Administration and 1999 -- -- -- --
Chief Financial Officer
Martin E. McGough........ 2001 $ 240,000 -- 10,000 $ 33,762 (7)
Sr. Vice President of 2000 $ 215,585 $ 58,208 40,000 $ 15,265 (8)
Development & Quality 1999 $ 171,019 $ 43,000 60,000 $ 1,874 (5)
Grant R. Flaharty........ 2001 $ 263,077 -- 10,000 $ 9,941 (9)
Executive Vice 2000 $ 213,462 $ 70,442 40,000 $ 36,357 (10)
President of Global 1999 $ 139,896 $ 43,000 95,000 $ 1,641 (5)
Business Operations
(1) For a description of the employment contracts between certain officers and
the Company, see "Employment Contracts," below.
(2) Mr. Selzer's employment with the Company commenced in April 2000.
(3) Mr. Service was appointed President and Chief Executive Officer of the
Company on September 16, 1999. Mr. Service is compensated for his services
by Regent Pacific. The Company has an agreement (the "Regent Agreement")
with Regent Pacific, pursuant to which Regent Pacific provides the
management services of a team of up to three full-time executives,
including the chief executive, at an aggregate fee of $45,000 per week. Mr.
Service provides services pursuant to the Regent Agreement. Although the
Named Executive Officers of the Company do not include the Regent
executives, it is likely that such persons would qualify as the most highly
compensated officers of the Company if a pro rata portion of the fee paid
to Regent Pacific were attributed to them as compensation. Gary J. Sbona,
Chairman and Chief Executive Officer of Regent Pacific, also provides
services to the Company on a part-time basis pursuant to an employment
agreement with the Company and is also currently a member of the Company's
Board of Directors. In 1999, as an inducement to Mr. Sbona to provide
services as an employee of the Company, the Board of Directors granted to
him an option to purchase 350,000 shares of the Company's Common Stock at
an exercise price of $6.00 per share. In addition, in 2000 and 2001, the
Board of Directors granted to him options to purchase an additional 700,000
shares of the Company's Common Stock at exercise prices of $17.3875 and
$12.4280 per share. Mr. Service and Mr. Sbona are principals of Regent
Pacific. See "Certain Transactions With Directors and Executive Officers
and 5% Stockholders," below for further information regarding the Regent
Agreement.
Page 7
(4) Consists of the value of insurance premiums for employer paid group term
life insurance and employer matching contributions in 2001 made pursuant to
the Company's Section 401(k) plan and loan forgiveness (see "Certain
Transactions With Directors and Executive Officers and 5% Stockholders")
($23,671).
(5) Consists of the value of insurance premiums for employer paid group term
life insurance and employer matching contributions in 1999, 2000 and 2001
made pursuant to the Company's Section 401(k) plan.
(6) Consists of pay out of vacation pay ($42,308), non-employee Board of
Director fees (see "Employment Contracts") ($18,231), the value of
insurance premiums for employer paid group term life insurance, and
discretionary profit-sharing and employer matching contributions ($4,473).
(7) Consists of the value of insurance premiums for employer paid group term
life insurance and employer matching contributions in 2001 made pursuant to
the Company's Section 401(k) plan and loan forgiveness and below market
interest (see "Certain Transactions With Directors and Executive Officers
and 5% Stockholders") ($31,818).
(8) Consists of the value of insurance premiums for employer paid group term
life insurance, moving-related expenses totaling $11,510, and employer
matching contributions made pursuant to the Company's Section 401(k) plan.
(9) Consists of the value of insurance premiums for employer paid group term
life insurance and employer matching contributions in 2001 made pursuant to
the Company's Section 401(k) plan and below market interest (see "Certain
Transactions With Directors and Executive Officers and 5% Stockholders")
($8,187).
(10) Consists of the value of insurance premiums for employer paid group term
life insurance, moving-related expenses totaling $30,658, and employer
matching contributions made pursuant to the Company's Section 401(k) plan.
Page 8
OPTION GRANTS IN FISCAL 2001
The following table sets forth certain information regarding the grant of stock
options made during fiscal 2001 to the Named Executive Officers.
PERCENT
OF TOTAL
OPTIONS
GRANTED POTENTIAL
NUMBER OF TO REALIZABLE VALUE
SECURITIES EMPLOYEES AT ASSUMED
UNDERLYING IN EXERCISE RATE OF STOCK PRICE
OPTIONS FISCAL OR BASE EXPIRATION APPRECIATION FOR
NAME GRANTED YEAR(2) PRICE(3) DATE OPTION TERM(4)
--------------------- -------------- --------- ---------- --------- ---------- ---------
5% 10%
---------- ---------
Brian K. Service..... -- -- -- -- --
Charles W. Hull...... 10,000 (1) 0.8% $12.5938 2/28/11 $79,202 $200,713
E. James Selzer...... 10,000 (1) 0.8% $12.5938 2/28/11 $79,202 $200,713
Martin E. McGough.... 10,000 (1) 0.8% $12.5938 2/28/11 $79,202 $200,713
Grant R. Flaharty.... 10,000 (1) 0.8% $12.5938 2/28/11 $79,202 $200,713
(1) These option grants vest in four equal annual installments of 25% each
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 1,280,893 shares were granted to employees
during fiscal 2001.
(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 SEC and do not
represent a forecast of the future appreciation of the Common Stock.
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 2001,
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 National Market on
December 31, 2001 ($14.25 per share).
NUMBER OF SECURITIES
SHARES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
ACQUIRED OPTIONS AT IN-THE-MONEY OPTIONS AT
ON VALUE DECEMBER 31, 2001 DECEMBER 31, 2001
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------- --------- ----------- ------------- ----------- -------------
Brian K. Service........ -- -- -- -- -- --
Charles W. Hull......... -- -- 110,000 10,000 $300,000 $16,562
E. James Selzer......... -- -- 38,750 46,250 $152,578 $159,296
Martin E. McGough....... -- -- 101,250 73,750 $696,875 $438,436
Grant R. Flaharty....... -- -- 92,000 83,000 $702,500 $514,686
Page 9
EMPLOYMENT CONTRACTS
The Company has entered into employment contracts with the following Named
Executive Officers.
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
both the Company and 3D Inc 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 $235,000, $250,000, $262,500 and
$275,000, respectively. In addition to standard benefits, Mr. Hull is eligible
to participate in the Executive Incentive Compensation Plan. 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 Inc entered into a
four-year consulting agreement. Mr. Hull's duties pursuant to the agreement
included consulting with the Board of Directors and officers of the Company
concerning those aspects of the business with which Mr. Hull previously had been
concerned. As compensation for Mr. Hull's consulting services, the Company paid
Mr. Hull at an annual rate of $275,000 for the period March 1999 through May
1999. In June 1999, Mr. Hull rejoined the Company as Chief Technology Officer at
a base salary of $275,000. Effective May 3, 2000, Mr. Hull was promoted to
Executive Vice President and member of the Office of the Chief Executive
Officer; he continues his duties as Chief Technology Officer. All of the stock
options granted to Mr. Hull and unexercised as of the date of the consulting
agreement continued in force during the consulting term and are continued under
his new employment arrangement.
Effective January 7, 1997, the Company entered into an employment agreement with
Martin E. McGough, pursuant to which Mr. McGough was appointed to serve as Vice
President, Worldwide Operations. The agreement provides for an annual base
salary of $171,000 and eligibility to participate in the Executive Incentive
Compensation Plan. Effective May 3, 2000, Mr. McGough was promoted to Senior
Vice President, Operations and Development and his base salary was increased to
$240,000. On January 21, 2002, Mr. McGough was promoted to Sr. Vice President of
Development & Quality. Mr. McGough is eligible to participate in the Executive
Incentive Compensation Plan. Mr. McGough is an "at will" employee; however, if
the Company terminates Mr. McGough's employment without just cause, the Company
shall pay to Mr. McGough an amount equal to one-year's base salary. See also
"Certain Transactions With Directors and Executive Officers and 5%
Stockholders."
Effective September 17, 1999, the Company entered into an employment agreement
with Grant R. Flaharty, pursuant to which Mr. Flaharty was appointed to serve as
Vice President, General Manager Europe. The agreement provides for an annual
base salary of $165,000 and eligibility to participate in the Executive
Incentive Compensation Plan. Effective May 3, 2000, Mr. Flaharty was promoted to
Senior Vice President, Worldwide Sales and Marketing and his base salary was
increased to $240,000. Effective January 2001, Mr. Flaharty's duties included
worldwide field service as well. On March 19, 2001, Mr. Flaharty's salary was
increased to $270,000. On December 15, 2001, Mr. Flaharty was promoted to
Executive Vice President of Global Business Operations, and on February 2, 2002,
his salary was increased to $290,000. Mr. Flaharty is eligible to participate in
the Executive Incentive Compensation Plan. Mr. Flaharty is an "at will"
employee. See also "Certain Transactions With Directors and Executive Officers
and 5% Stockholders."
Effective April 1, 2000, the Company entered into an employment agreement with
E. James Selzer, pursuant to which Mr. Selzer served as Chief Financial Officer
and Vice President, Finance with a base salary of $200,000. On December 15,
2001, Mr. Selzer was promoted to Senior Vice President, Global Finance &
Administration and Chief Financial Officer, and his salary was increased to
$240,000. Mr. Selzer is eligible to participate in the Executive Incentive
Compensation Plan. Mr. Selzer is an "at will" employee.
Effective September 9, 1999, the Company entered into an agreement with Regent
Pacific for the provision of executive management services. See "Certain
Transactions With Directors and Executive Officers and 5% Stockholders."
Page 10
STOCK INCENTIVE PLANS
In addition to the 1989 Employee and Director Plan, the 1996 Stock Incentive
Plan, the 1996 Non-Employee Directors' Stock Option Plan and the 1998 Employee
Stock Purchase Plan (each as discussed in this Proxy Statement), the Company has
in effect the 2001 Stock Option Plan (the "2001 Plan"). The purpose of the 2001
Plan is to advance the interests of the Company and its stockholders by
strengthening the Company's and its subsidiaries' ability to obtain and retain
the services of the types of non-officer employees who will contribute to the
Company's long term success and to provide incentives which are linked directly
to increases in stock value which will inure to the benefit of all stockholders
of the Company. At the date of this Proxy Statement, options to purchase 193,300
shares of Common Stock underlying the 2001 Plan have been granted. Subject to
adjustment for stock splits, stock dividends and other similar events, the total
number of shares of Common Stock reserved for issuance under the 2001 Plan is
500,000 shares.
The 2001 Plan currently is administered by the Compensation Committee and the
Chief Executive Officer of the Company. The 2001 Plan provides that options may
be granted only to non-officer employees who are designated as eligible persons
by the Chief Executive Officer. The Chief Executive Officer will determine the
persons to be selected as optionees, the terms of vesting of options and the
number of shares of Common Stock to be subject to each option. The type of
awards to be granted under this plan are limited to stock options, which will be
non-statutory options.
Page 11
REPORT OF COMPENSATION COMMITTEE
The Compensation Committee is charged with the responsibility of administering
all aspects of the Company's executive compensation programs. The committee,
which currently is comprised of two independent, non-employee Directors and one
employee Director, also grants all stock options and otherwise administers the
Company's 1989 Employee and Director Plan (the "1989 Plan"), the 1996 Stock
Incentive Plan (the "1996 Plan"), the 1996 Non-Employee Directors' Stock Option
Plan (the "Director Plan"), the 2001 Stock Option Plan (the "2001 Plan") and the
1998 Employee Stock Purchase Plan. No further options will be granted under the
1989 Plan as it expired on May 9, 1999. Following review and approval by the
committee, determinations pertaining to executive compensation are submitted to
the full Board for approval. 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.
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.
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.
Under the 2001 Plan, the committee and the Chief Executive Officer are
authorized to grant non-qualified stock options (options that are not intended
to satisfy Section 422 of the Internal Revenue Code of 1986, as amended) to
purchase shares of Common Stock of the Company. 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. Officers of the Company, including members of the Board of Directors
who are officers, are not eligible for stock option grants under the 2001 Plan.
ANNUAL INCENTIVES. The committee believes that executive compensation
should be determined with specific reference to the Company's overall
performance and goals, as well as the performance and goals 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. No cash bonuses were
paid to executives for the year 2001.
The committee has approved the 3D Systems Corporation Executive Incentive
Compensation Plan (the "2002 Incentive Plan"). Under the 2002 Incentive Plan,
executive officers, other than officers whose compensation is paid by Regent
Pacific (See "Certain Transactions With Directors and Executive Officers and 5%
Stockholders") 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
executive's overall contribution to the Company and the particular division over
which he or she is assigned supervisory responsibility. The Chief Executive
Officer establishes the non-financial objectives each other executive must
attain based upon the overall performance goals of the Company.
Under the 2002 Incentive Plan, the committee has established the maximum
bonus, as a percentage of base salary, attainable by each participating
executive 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.
Page 12
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.
Each participant is eligible for a range of awards based upon attaining or
exceeding the earnings and revenue objectives and attainment of non-financial
objectives. The 2002 Incentive Plan permits the committee to adjust targets or
performance results to reflect unusual items that it determines to be
extraordinary or non-recurring.
EXECUTIVE LONG-TERM STOCK INCENTIVE PLAN. The committee also adopted under
the 1996 Plan a stock-based, long-term incentive plan for executive officers.
Under this plan, the Company made loans of $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 whole or in part, if certain
profitability targets are met. The purpose of this plan was to align more
closely officer interests with stockholder interests by promoting long-term
holdings in the Company's Common Stock, thus increasing stockholder value. See
"Certain Transactions With Directors and Executive Officers and 5%
Stockholders."
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. On September 9,
1999 the Company and Regent Pacific executed an agreement (the "Regent
Agreement") pursuant to which Regent Pacific agreed to provide a team of
executives, including Brian K. Service, to the Company for a term of 12 months.
On September 16, 1999 the Board of Directors appointed Mr. Service President and
Chief Executive Officer. Pursuant to the Regent Agreement, the Company pays
Regent Pacific $45,000 per week for the services of Mr. Service and certain
other executives; it had a one-year term and, on August 8, 2000 and October 30,
2001 was extended for additional one-year terms. Mr. Service is compensated for
his services by Regent Pacific. The Company makes no payments, other than
reimbursement for expenses, directly to Mr. Service. The Oversight Committee, a
committee consisting solely of independent directors, determines the
compensation paid to Regent Pacific. Mr. Sbona is not a member of the Oversight
Committee.
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 2001 will be
fully deductible. With respect to compensation to be paid to executives in 2002
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
Gary J. Sbona
Miriam V. Gold
Kevin S. Moore
Page 13
REPORT OF AUDIT COMMITTEE
The Audit Committee of the Board of Directors, the majority of which consists of
independent directors (as that term is defined in Rule 4200(a)(14) of the
National Association of Securities Dealers' Marketplace Rules), has furnished
the following report:
The Audit Committee assists the Board in overseeing and monitoring the integrity
of the Company's financial reporting process, its compliance with legal and
regulatory requirements and the quality of its internal and external audit
processes. The role and responsibilities of the Audit Committee are set forth in
a written Charter adopted by the Board, which is attached as Appendix "C" to
this Proxy Statement. The Audit Committee reviews and reassesses the Charter
annually and recommends any changes to the Board for approval.
The Audit Committee is responsible for overseeing the Company's overall
financial reporting process. In fulfilling its responsibilities for the
financial statements for fiscal year 2001, the Audit Committee:
- Reviewed and discussed the audited financial statements for the year
ended December 31, 2001 with management and Deloitte & Touche, LLP
("D&T"), the Company's independent auditors;
- Discussed with D&T the matters required to be discussed by Statement
on Auditing Standards No. 61 relating to the conduct of the audit; and
- Received written disclosures and the letter from D&T regarding its
independence as required by Independence Standards Board Standard No.
1. The Audit Committee discussed with D&T their independence.
The Audit Committee also considered the status of pending litigation and other
areas of oversight relating to the financial reporting and audit process that
the Committee determined appropriate.
In connection with its audits of the Company's financial statements as of
December 31, 2001 and 2000, there were no disagreements between the Company and
D&T on any matter of accounting principles or practices, financial statement
disclosure, or audit scope and procedure, which disagreement, if not resolved to
the satisfaction of D&T, would have caused them to make reference to the subject
matter of the disagreement in connection with their reports.
During each of the two fiscal years ended December 31, 2001 and 2000 there have
been no reportable events as defined in Regulation S-K Item 304(a)(1)(v).
AUDIT FEES
The aggregate fees billed by D&T for professional services rendered for the
audit of the Company's annual financial statements for the fiscal year ended
December 31, 2001, were $241,150.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
No fees were billed by D&T for professional services rendered for
information technology services relating to financial information systems design
and implementation for the fiscal year ended December 31, 2001.
ALL OTHER FEES
The aggregate fees billed by D&T for services rendered to the Company other
than the services described above under "Audit Fees" and "Financial Information
Systems Design and Implementation Fees," for the fiscal year ended December 31,
2001, were $258,431.
The Audit Committee has considered whether the provision of non-audit
services is compatible with maintaining the principal accountant's independence.
Page 14
Based on the Audit Committee's review of the audited financial statements and
discussions with management and D&T, the Audit Committee recommended to the
Board that the audited financial statements be included in the Corporation's
Annual Report on Form 10-K for the year ended December 31, 2001 for filing with
the SEC.
Audit Committee
Richard C. Spalding
Kevin S. Moore
Jim D. Kever
Page 15
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, 1996 to December 31, 2001, compared with the cumulative returns of the
NASDAQ Stock Market (U.S. Companies) Index and the Index for S & P Technology
Sector. The Comparison assumes $100 was invested on December 31, 1996 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 5 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 12/31/96 in stock or index-including reinvestment of dividends.
Fiscal year ended December 31.
Page 16
CERTAIN TRANSACTIONS WITH DIRECTORS AND EXECUTIVE OFFICERS AND 5% STOCKHOLDERS
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 2001, or which is presently proposed.
See "Employment Contracts" for a summary of employment agreements with certain
of the Company's executive officers.
Effective May 3, 2000, Martin E. McGough was promoted to Senior Vice President,
Operations and Development and transferred from Grand Junction, Colorado to
Valencia, California. In connection with his relocation, Mr. McGough was given a
relocation package to cover the costs of the move. The relocation package
includes full reimbursement for the cost of moving his family and his personal
effects, as well as a moving facilitation loan in the amount of $100,000. The
loan is interest-free (the benefit of the below-market interest rate is included
in Mr. McGough's compensation) and is repaid through bi-weekly payroll
deductions over a 5-year period.
Effective May 3, 2000, Grant R. Flaharty was promoted to Senior Vice President,
Worldwide Sales and Marketing and was transferred from Grand Junction, Colorado
to Valencia, California. In connection with his relocation, Mr. Flaharty was
given a relocation package to cover the costs of the move. The relocation
package includes full reimbursement for the cost of moving his family and his
personal effects, as well as a moving facilitation loan in the amount of
$100,000. The loan is interest-free (the benefit of the below-market interest
rate is included in Mr. Flaharty's compensation) and is repaid through bi-weekly
payroll deductions over a 5-year period.
On September 9, 1999, the Company and Regent Pacific Management Corporation
("Regent Pacific") executed an agreement (the "Regent Agreement") pursuant to
which Regent Pacific agreed to provide certain key management employees'
services to the Company at a fee of $45,000 per week, including the services of
Mr. Service, as President and Chief Executive Officer, and up to two other
Regent Pacific personnel as part of the Company's management team. The Regent
Agreement also provides that Gary J. Sbona, Chairman and Chief Executive Officer
of Regent Pacific, join the Company's Board of Directors. The Agreement had a
one-year term and, on August 8, 2000 was extended for an additional one-year
term, and provides for the availability of up to two additional executives to
provide management services on an as needed basis, beginning as of February 12,
2000. The Agreement was again extended on October 30, 2001 for an additional
one-year term under the same terms as the previous extension. The Agreement also
requires that the Company provide Director & Officer insurance for Messrs. Sbona
and Service.
Simultaneously with the execution of the Regent Agreement, the Company entered
into an employment agreement with Gary J. Sbona. As an inducement to Mr. Sbona
to provide services as a part-time employee of the Company, the Board of
Directors granted to him an option to purchase 350,000 shares of the Company's
Common Stock at an exercise price of $6.00 per share. The shares subject to such
option were earned on a monthly basis during the 12-month period ending on
September 9, 2000 and vest over a three (3) year period, subject to the Regent
Pacific management team continuing their services to the Company; provided,
however, that the earned portion of the option would vest entirely upon certain
change of control transactions or upon termination of the Regent Agreement
without cause. On August 8, 2000 the Oversight Committee of the Board extended
Mr. Sbona's Employment Agreement for an additional year and authorized the grant
of an additional 350,000 shares to Mr. Sbona at an exercise price of $17.3875
per share. The shares subject to this option are earned and vest on the same
basis as the shares granted in 1999. On October 30, 2001, the Oversight
Committee of the Board extended Mr. Sbona's Employment Agreement for an
additional year and authorized the grant of an additional 350,000 shares to Mr.
Sbona at an exercise price of $12.4280.
On May 1, 1999, the Company entered into an employment agreement with G. Walter
Loewenbaum II, Chairman of the Board of Directors, whereby Mr. Loewenbaum agreed
to provide part-time services to the Company in the area of strategic direction
in exchange for $10,000 per month and an option to purchase 150,000 shares of
the Company's Common Stock at a price of $6.6125 per share. The options vested
on January 1, 2000. The original term of the agreement was for six (6) months.
On December 20, 1999, the Board voted, with Mr. Loewenbaum abstaining, to change
Mr. Loewenbaum's status to "at-will" employee and to extend the agreement until
terminated by the Board or Mr. Loewenbaum. On August 8, 2000 the Oversight
Committee of the Board voted to increase Mr. Loewenbaum's monthly compensation
to $15,000. On February 12, 2002, the Oversight Committee awarded Mr. Loewenbaum
an
Page 17
option to purchase an additional 75,000 shares of the Company's Common Stock at
a price of $11.75 per share. These options vest in equal annual installments
over a three-year period.
During 2001, the Company used Mr. Loewenbaum's fractional share interest in a
corporate airplane for trips to and from the Company's locations in Valencia,
Grand Junction and Austin. In addition, the airplane was used by Mr. Loewenbaum
for trips to the Company's Board meetings. The total amount paid to Mr.
Loewenbaum during 2001 for this use was $71,503.
In June 2000, the Company entered into a distribution agreement for ThermoJet
printers with 3 D Solid Solutions LP ("3DSS"), a partnership in which Mr.
Loewenbaum is a partner. As of December 31, 2001, Solid Imaging Technologies,
LLC, of which Mr. Loewenbaum is the sole member, was the general partner of
3DSS. In addition, Mr. Loewenbaum also had both direct and indirect limited
partnership interest in 3DSS. As of December 31, 2001, 3DSS owed $117,819 to the
Company for the purchase of five printers plus materials and maintenance.
In January 1998, the Company adopted under the 1996 Plan the Executive Long-Term
Stock Incentive Plan pursuant to which the Company offered loans to its
executive officers of up to $60,000 to purchase shares of the Common Stock
underlying the 1996 Plan. Charles Hull and Martin McGough each executed a
promissory note for the principal amount of $60,000 that 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 becomes 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 a fiscal
year ending before January 1, 2004, 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 1/3 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 2/3 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. For the fiscal year
ended December 31, 2000 the Company earned $0.63 per fully-diluted share;
therefore, $20,000 of the principal amount of Mr. McGough's and Mr. Hull's loans
have been forgiven together with $3,671 of interest.
Pursuant to a July 1990 Distribution Agreement with Vantico, Inc., successor to
Ciba Specialty Chemicals, Inc., and subject to conditions set forth in the
agreement, the Company has been Vantico's exclusive distributor (except in
Japan) of all photopolymers manufactured by Vantico for use in
stereolithography. The Company purchased from Vantico resins valued at
approximately $11.6 million during fiscal 2001. Pursuant to a Settlement
Agreement and Mutual General Releases dated March 19, 2002, the Distribution
Agreement with Vantico will terminate on April 22, 2002. In connection with the
Settlement Agreement, Vantico has agreed to pay the Company $22,000,000 either
in cash or by transferring to the Company 1,550,000 shares of the Company's
stock. Should Vantico decide to make the payment sooner than April 22, 2002, the
Distribution Agreement will terminate within five (5) days of Vantico's notice
to the Company of the intent to accelerate the payment. A related Research and
Development Agreement will terminate at the same time.
In 1990, 3D Inc 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 of stereolithography systems and licensing of the
patents 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
$575,726 from UVP under that contract.
Page 18
In December 2001, we sold $10.0 million aggregate principal amount of 7%
convertible subordinated debentures. Messrs. Wally Loewenbaum and Jim Kever
purchased an aggregate of $1,000,000 (of which $300,000 is held by Mr.
Loewenbaum's IRA, $275,000 is held by the Elizabeth Scott Loewenbaum 1993 Trust,
$275,000 is held by Anna Willis Loewenbaum 1993 Trust, $60,000 is held by
Lillian Shaw Loewenbaum Trust, and $90,000 is held by the Loewenbaum 1992 Trust)
and $350,000 (includes $100,000 held in trust for the benefit of Mr. Kever's
minor children with respect to which Mr. Kever disclaims beneficial ownership)
of the debentures, respectively. The debentures are immediately convertible at
the option of the holder at a conversion price of $12.00 per share. Mr.
Lowenbaum is the Chairman of our Board of Directors and Mr. Kever serves as a
member on our Board of Directors.
The Board 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.
Page 19
PRINCIPAL STOCKHOLDERS
The following table sets forth as of February 28, 2002, 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 (13,131,660 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.
Number of Shares
of
Common Stock
Beneficially
Name and Address Owned (1) Percent (1)
-------------------------------------------------------- ------------------ -----------
DIRECTORS:
G. Walter Loewenbaum II................................. 1,099,393 (2) 8.37
Brian K. Service........................................ 1,300 *
Kevin S. Moore.......................................... 938,874 (3) 7.15
Charles W. Hull......................................... 573,630 (4) 4.37
Jim D. Kever............................................ 71,667 (5) *
Miriam V. Gold.......................................... 36,966 (6) *
Gary J. Sbona........................................... 233,333 (7) 1.78
Richard C. Spalding..................................... 507 *
NON-DIRECTOR NAMED EXECUTIVE OFFICERS:
Grant R. Flaharty....................................... 102,367 (8) *
E. James Selzer......................................... 63,179 (9) *
Martin E. McGough....................................... 121,089 (10) *
5% HOLDERS:
Vantico International, S.A.............................. 1,725,366 (11) 13.14
281 Fields Lane, Brewster, NY 10509
The Clark Estates, Inc.................................. 933,272 (3) 7.11
30 Wall Street, New York, NY 10005
St. Denis J. Villere & Company.......................... 1,073,014 (12) 8.17
210 Baronne Street, Suite 808, New Orleans, LA 70112
Daruma Asset Management, Inc............................ 1,193,600 (13) 9.09
60 East 42nd Street, Suite 1111, New York, NY 10165
Directors and officers as a group (12 persons).......... 3,258,775 (14) 24.82
* Less than one percent.
(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 28, 2002.
(2) Includes (a) 45,000 shares held in the name of Lillian Shaw Loewenbaum, Mr.
Loewenbaum's wife, (b) 54,498 shares held in the name of the Loewenbaum
1992 Trust for which Mr. and Mrs. Loewenbaum serve as trustees, (c) 150,000
shares held in the name of the Guaranty & Trust Co ttee fbo G. Walter
Loewenbaum, Mr.
Page 20
Loewenbaum's pension plan, (d) 72,065 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, (e) 16,594 shares
held in the name of the Anna Loewenbaum 1992 Trust for which Mr. and Mrs.
Loewenbaum serve as trustees, (f) 16,594 shares held in the name of the
Elizabeth Loewenbaum 1992 Trust for which Mr. and Mrs. Loewenbaum serve as
trustees, (g) 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 30, 2001, (h) 83,333 shares issuable on conversion of convertible
debentures, and (i) 29,614 shares owned by Mr. Loewenbaum's children with
respect to which Mr. Loewenbaum disclaims beneficial ownership.
(3) The stock owned by Mr. Moore includes 933,272 shares owned by The Clark
Estates with respect to which Mr. Moore disclaims beneficial ownership.
(4) Includes (a) 409,344 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) 77,500 shares of Common Stock
reserved for issuance upon exercise of stock options which are or will
become exercisable on or prior to April 30, 2002.
(5) Includes (a) 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 30, 2002, and (b) 29,167 shares issuable on conversion of
convertible debentures (8,333 of which relate to debentures owned by a
trust for the benefit of Mr. Kever's minor children, with respect to which
Mr. Kever disclaims beneficial ownership). 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.
(6) Includes 36,966 shares of Common Stock reserved for issuance upon exercise
of stock options, which are or will become exercisable on or prior to April
30, 2002.
(7) Includes 233,333 shares of Common Stock reserved for issuance upon exercise
of stock options that are or will become exercisable on or prior to April
30, 2002.
(8) Includes 94,500 shares of Common Stock reserved for issuance upon exercise
of stock options, which are or will become exercisable on or prior to April
30, 2002.
(9) Includes 60,000 shares of Common Stock reserved for issuance upon exercise
of stock options, which are or will become exercisable on or prior to April
30, 2002.
(10) Includes 107,500 shares of Common Stock reserved for issuance upon exercise
of stock options, which are or will become exercisable on or prior to April
30, 2002.
(11) Represents shares of Common Stock held by Vantico International S.A., which
is a subsidiary of Vantico Group S.A. and of the ultimate parent
corporation, Vantico Holding S.A. Each of Vantico International S.A.,
Vantico Group S.A. and Vantico Holding S.A. share the power to vote or
direct the vote of these shares and share the power to dispose or direct
the disposition of these shares. All information regarding the beneficial
ownership of these securities by each of Vantico International S.A.,
Vantico Group S.A. and Vantico Holding S.A. is taken exclusively from a
Form 13G filed by these entities on December 26, 2000.
(12) St. Denis J. Villere & Company ("Villere") is a Louisiana Partnership in
commendam, an investment advisor registered under the Investment Advisors
Act of 1940. As of December 31, 2001, Villere was deemed to have or share
voting or dispositive power over, and therefore to own beneficially
1,073,014 shares. Of that amount, Villere has sole voting and dispositive
power over 106,133 shares and shared voting and dispositive power over
966,881 shares. All information regarding the beneficial ownership of
Company securities by Villere is taken exclusively from a Form 13G filed by
Villere on February 1, 2001.
(13) Daruma Asset Management, Inc. is a an investment advisor registered under
the Investment Advisors Act of 1940. These securities are beneficially
owned by one or more investment advisory clients whose accounts are managed
by Daruma Asset Management, Inc. ("Daruma"). Investment advisory clients of
Daruma have the right to receive dividends from, as well as the proceeds
from, the sale of these securities. The investment advisory contracts
relating to such accounts grant to Daruma sole investment
Page 21
and/or voting power over the securities owned by such accounts. Therefore,
Daruma may be deemed to be the beneficial owner of these securities for
purposes of Rule 13d-3 ("Rule 13d-3") under the Securities Act of 1934 (the
"1934 Act"). Mariko O. Gordon (the "Principal Shareholder") owns in excess
of 50% of the outstanding voting stock and is the president of Daruma. The
Principal Shareholder may be deemed to be the beneficial owner of
securities held by persons and entities advised by Daruma for purposes of
Rule 13d-3. Daruma and the Principal Shareholder each disclaim beneficial
ownership in any of these securities. Daruma and the Principal Shareholder
are of the view that they are not acting as a "group" for purposes of
Section 13(d) under the 1934 Act and that they are not otherwise required
to attribute to each other the "beneficial ownership" of securities held by
any of them or by any persons or entities advised by Daruma. All
information regarding the beneficial ownership of Company securities by
Daruma is taken exclusively from a Form 13G filed by Daruma on January 29,
2002.
(14) Includes 811,602 shares of Common Stock reserved for issuance upon exercise
of stock options that are or will become exercisable on or prior to April
30, 2002 and 104,167 shares issuable upon conversion of the convertible
debentures.
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 SEC.
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 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,
2001, all of 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 2003 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 13, 2002.
INDEPENDENT PUBLIC ACCOUNTANTS
Deloitte and Touche, LLP, independent public accountants, were selected by the
Board of Directors to serve as independent public accountants of the Company for
fiscal 2001 and have been selected by the Board of Directors to serve as
independent public accountants for fiscal 2002.
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.
Page 22
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, 2001, 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
Karen M. Shotting
GENERAL COUNSEL AND CORPORATE SECRETARY
26081 Avenue Hall
Valencia, California 91355
April 12, 2002
Page 23
3D SYSTEMS CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
The undersigned, a stockholder of 3D SYSTEMS CORPORATION, a Delaware
corporation (the "Company"), hereby appoints Brian K. Service and E. James
Selzer, 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 14, 2002, 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.
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 Brian K. Service Kevin S. Moore
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, AND AS SAID PROXY SHALL DEEM
ADVISABLE ON SUCH OTHER BUSINESS AS MAY COME BEFORE THE MEETING, UNLESS
OTHERWISE DIRECTED.
The undersigned acknowledges receipt of a copy of the Notice of Annual
Meeting and accompanying Proxy Statement dated April 12, 2002 relating to the
Meeting.
___________________________________ No. Shares _____________
___________________________________ Date: __________________, 2002
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