Exhibit 10.1

 

3D Systems Corporation

 

Senior Management Change of Control Severance Policy

 

 

 

The purpose of this Senior Management Change of Control Severance Policy (the
“Policy”) of 3D Systems Corporation, a Delaware corporation (the “Company”), is
to set forth the terms and conditions regarding the payment of severance
benefits to certain “Eligible Employees” for a “Qualifying Termination” that
occurs in connection with “Change of Control” of the Company (as those terms are
defined herein).  For purposes of this Policy, the Company includes any
successor to the Company as the result of a Change of Control.

 

This Policy covers severance benefits payable only in case of a Qualifying
Termination. If an Eligible Employee is party to an employment, change of
control, severance or other similar agreement with the Company that provides for
severance benefits (an “Other Agreement”) or is eligible for certain statutory
or other mandatory severance benefits in the jurisdiction where the Eligible
Employee is employed (“Statutory Severance”), then (i) any severance benefits
under any such Other Agreements or as Statutory Severance that is triggered by a
termination of employment that is not a Qualifying Termination shall continue to
apply in accordance with the applicable terms, and (ii) if severance benefits
are payable under both this Policy and any Other Agreement or as Statutory
Severance, in order to avoid duplication of severance benefits, the Eligible
Employee shall be eligible to receive severance benefits under whichever
arrangement provides the greatest severance benefits, but not both, as
determined by the Compensation Committee of the Board of Directors (the “Board”)
of the Company.

 

1.Eligibility

 

The following officers of the Company (each, an “Eligible Employee”) shall be
covered by this Policy:

 

a.Chief Executive Officer;

b.President;

c.Executive Vice Presidents; and

d.Senior Vice Presidents.

 

2.Severance Benefits

 

If an Eligible Employee has a Qualifying Termination, the Eligible Employee
shall be eligible to receive the severance payments and equity vesting as
described in this Section 2, subject to the condition in Section 3 regarding a
release of claims. Exhibit A hereto provides the definition of “Qualifying
Termination,” included related definitions for “Cause,” “Change of Control” and
“Constructive Discharge.” However, if “Cause” or “Constructive Discharge” (or
similar terms) are defined in an Other Agreement for an Eligible Employee, the
definition in such Other Agreement shall control for purposes of this Policy.

 

 

 

a.Cash Severance Payments.

 

i.For the CEO. The Chief Executive Officer shall be entitled to a lump sum cash
payment equal to 200% of the sum of (i) his or her base salary plus (ii) his or
her annual target performance bonus.

 

ii.For Other Eligible Employees. Each other Eligible Employee shall be entitled
to a lump sum cash payment equal to 150% of the sum of (i) his or her base
salary plus (ii) his or her annual target performance bonus.

 

iii.Pro Rata Bonus. Additionally, each Eligible Employee shall be entitled to a
lump sum cash payment equal to his or her annual target performance bonus, pro
rated based on the portion of the year worked through the date of the Qualifying
Termination.

 

iv.Applicable Base Salary and Target Bonus. The amount of base salary and annual
target performance bonus for clauses (i), (ii) and (iii) shall be determined
immediately prior to the Qualifying Termination and without regard to any action
that would have otherwise triggered the right to claim Constructive Discharge.

 

v.Timing of Payment. Payment of amounts under this Section 2.a shall be made in
a single cash payment, less applicable tax withholdings, as soon as practicable
after the release required under Section 3 has become effective, but in no event
later than 60 days after the Qualifying Termination.

 

b.Benefits Continuation. An Eligible Employee shall be eligible to receive an
additional cash severance payment, in lieu of any benefits continuation, in an
amount equal to (i) the difference between the monthly COBRA rate and the active
employee premium rate for the applicable group health coverage (i.e., medical,
dental and vision) as elected by the Eligible Employee (for the Eligible
Employee and his or her eligible dependents) at the time of the Qualifying
Termination, multiplied by (ii) a number of months equal to 24 for the Chief
Executive Officer and 18 for each other Eligible Employee. Payment of the amount
under this Section 2.b shall be made in a single cash payment, less applicable
tax withholdings, as soon as practicable after the release required under
Section 3 has become effective, but in no event later than 60 days after the
Qualifying Termination.

 

c.Treatment of Equity Awards. The adoption of this Policy will have no effect on
outstanding equity awards granted by the Company to Eligible Employees before
the date this Policy first becomes effective. For any such equity awards granted
after the date this Policy first becomes effective and while the Policy remains
in effect:

 

i.Equity Plan Controls. Nothing in this Policy shall be considered an amendment
to the applicable equity compensation plan of the Company under which the equity
awards are made (the “Equity Plan”). In that regard, Equity Plan provisions
regarding treatment of equity awards if such awards are not assumed, converted
or replaced in a Change of Control transaction, or other treatment of equity
awards under the terms of the transaction (such as a cash-out of awards) shall
continue to apply, and this Policy shall not restrict the discretion of the
Board otherwise provided under the terms of the Equity Plan.

 

ii.Double-Trigger Vesting. Unless the terms of an equity award provide for more
favorable treatment to the Eligible Employee, for an equity award that is
assumed, converted or replaced in connection with a Change of Control, the
following vesting provisions shall apply notwithstanding any provision in the
applicable award agreement to the contrary:

 

 

 

1.Time-Based Equity Awards – Time-based equity awards shall vest in full upon a
Qualifying Termination. The post-employment exercise period for any vested stock
option shall be as determined under the terms of the applicable award agreement.

 

2.Performance-Based Equity Awards – Outstanding performance-based equity awards
shall be converted in their entirety to timed-based equity awards upon the
occurrence of a Change of Control based on the assumption that the performance
goals are achieved at target; provided, however, that if the transaction price
in a Change of Control transaction is below a share price vesting condition, the
performance-based equity awards subject to such share price vesting condition
shall be forfeited as of the Change of Control. The vesting of performance-based
equity awards that are converted to time-based equity awards shall occur upon
the same vesting schedule upon which the former performance metrics would have
been measured and shall vest in full upon a Qualifying Termination.

 

3.Release. As a condition to the receipt of severance payments under this
Policy, the Compensation Committee may require that the Eligible Employee
execute and deliver to the Company a release of claims against the Company in a
form reasonably satisfactory to the Company. The form of release shall be
provided to the Eligible Employee on or before the date of the Qualifying
Termination, and the Eligible Employee shall thereafter have 21 days (or such
longer period as required by applicable law) to execute the release, which shall
become effective upon execution, or later upon any expiration of any required
revocation period. In all events, the release must become effective by no later
than 60 days after the Qualifying Termination in order for the Eligible Employee
to be eligible to receive the severance benefits provided under Section 2.

 

4.Authority. The provisions of this Policy have been established by the
Compensation Committee of the Board. The Compensation Committee maintains the
right to modify or terminate this Policy at any time, with or without prior
notification.

 

5.Return of Payment. Notwithstanding anything to the contrary in this Policy, if
an Eligible Employee receives any severance payments under this Policy and the
Company subsequently determines that the Eligible Employee had engaged in
conduct which constituted Cause for termination of employment, such Eligible
Employee shall reimburse the Company for all payments and the value of all
benefits received by the Eligible Employee which would not have been made if the
Eligible Employee had been terminated for Cause.

 

6.Section 409A. It is intended that the payments and benefits set forth in
Section 2 are, to the greatest extent possible, exempt from the application of
Section 409A of the Internal Revenue Code (“Section 409A”), and the Policy shall
be construed and interpreted accordingly. However, if the Company determines
that all or a portion of the payments and benefits provided under the Policy to
an Eligible Employee constitute “deferred compensation” under Section 409A, (i)
the Eligible Employee’s Qualifying Termination shall occur upon the Eligible
Employee’s “separation from service” with the Company within the meaning of
Section 409A, and (ii) if the Eligible Employee is a “specified employee” within
the meaning of Section 409A, then, solely to the extent necessary to avoid the
incurrence of the adverse personal tax consequences under Section 409A, any
payment under the Policy shall be delayed until the first payroll date following
the earlier of (i) the Eligible Employee’s death or (ii) six months and one days
after the Eligible Employee’s “separation from service” (within the meaning of
Section 409A). For purposes of Section 409A, each payment provided under the
Policy shall be treated as a separate payment. The Company makes no
representations that the payments and benefits provided under the Policy comply
with Section 409A and in no event shall the Company be liable for all or any
portion of any taxes, penalties, interest or other expenses that may be incurred
by an Eligible Employee on account of noncompliance with Section 409A.

 

 

 

7.Section 280G. Notwithstanding any other provision of this Policy or any other
plan, arrangement or agreement to the contrary, if any of the payments or
benefits provided or to be provided by the Company or its affiliates to an
Eligible Employee or for the Eligible Employee’s benefit pursuant to the terms
of this Policy or otherwise (“Covered Payments”) constitute “parachute payments”
within the meaning of Section 280G of the Internal Revenue Code and would, but
for this Section 7, be subject to the excise tax imposed under Section 4999 of
the Internal Revenue Code (or any successor provision thereto) or any similar
tax imposed by state or local law or any interest or penalties with respect to
such taxes (collectively, the “Excise Tax”), then the Covered Payments shall be
payable either (i) in full or (ii) reduced to the minimum extent necessary to
ensure that no portion of the Covered Payments is subject to the Excise Tax,
whichever of the foregoing (i) or (ii) results in the Eligible Employee’s
receipt on an after-tax basis of the greatest amount of benefits after taking
into account the applicable federal, state, local and foreign income, employment
and excise taxes (including the Excise Tax). Any determination required under
this Section 7 shall be made by the Company in its sole discretion.

 

 

 

Effective February 22, 2018

 

 

 

 

 

 

 

 

 

 

Exhibit A

 

Definitions

 

1.“Cause” shall mean:

 

a.The willful failure by an Eligible Employee to perform the Eligible Employee’s
duties and obligations in any material respect, as determined by the Board in
its reasonable judgment, other than any such failure resulting from the
disability of the Eligible Employee;

b.An Eligible Employee’s commission of a crime or offense involving the property
of the Company, or any crime or offense constituting a felony or involving fraud
or moral turpitude;

c.An Eligible Employee’s violation of any law, which violation is materially
injurious or could reasonably be expected to be materially injurious to the
operations, prospects or reputation of the Company;

d.An Eligible Employee’s material violation of his or her employment agreement
or any generally recognized policy of the Company or the Eligible Employee’s
refusal to follow the Board’s reasonable and lawful instructions;

e.An Eligible Employee’s commission, by act or omission, of any material act of
dishonesty in performing employment duties; or

f.An Eligible Employee’s use of alcohol or illegal drugs that interferes with
performing employment duties, as determined by the Board.

 

2.A “Change of Control” shall mean any one of the following events:

 

a.the date of acquisition by any person or group other than the Company or any
subsidiary of the Company (and other than any employee benefit plans (or related
trust) of the Company or any of its subsidiaries) of beneficial ownership of
securities possessing more than thirty percent (30%) of the total combined
voting power of the Company’s then outstanding voting securities which generally
entitle the holder thereof to vote for the election of directors (“Voting
Power”), provided, however, that no Change of Control shall be deemed to have
occurred solely by reason of any such acquisition by a corporation with respect
to which, after such acquisition, more than sixty percent (60%) of the then
outstanding shares of common stock of such corporation and the Voting Power of
such corporation are then beneficially owned, directly or indirectly, by the
persons who were the beneficial owners of the stock and Voting Power of the
Company immediately before such acquisition, in substantially the same
proportions as their ownership immediately before such acquisition; or

b.the date the individuals who constitute the Board as of immediately following
the effective date of this Policy (the “Incumbent Board”) cease for any reason
other than their deaths to constitute at least a majority of the Board; provided
that any individual who becomes a director after the effective date of this
Policy whose election or nomination for election by the Company’s stockholders
was approved by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such individual were a member
of the Incumbent Board; or

c.the Company effects (a) a merger or consolidation of the Company with one or
more corporations or entities, as a result of which the holders of the
outstanding Voting Power of the Company immediately prior to such merger,
reorganization or consolidation hold less than 50% of the Voting Power of the
surviving or resulting corporation or entity immediately after such merger or
consolidation; (b) a liquidation or dissolution of the Company; or (c) a sale or
other disposition of all or substantially all of the assets of the Company other
than to an entity of which the Company owns at least 50% of the Voting Power.

 

 

 

For purposes of the foregoing definition, the terms “beneficially owned” and
“beneficial ownership” and “person” shall have the meanings ascribed to them in
Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “1934
Act”), and “group” means two or more persons acting together in such a way to be
deemed a person for purposes of Section 13(d) of the 1934 Act. Further,
notwithstanding anything herein to the contrary, the definition of Change of
Control set forth herein shall not be broader than the definition of “change in
control event” as set forth under Section 409A, and the guidance promulgated
thereunder, and if a transaction or event does not otherwise fall within such
definition of change in control event, it shall not be deemed a Change of
Control for purposes of this Policy.

 

3.“Constructive Discharge” shall mean an Eligible Employee’s termination of
employment with the Company as the result of:

 

a.a greater than 10% reduction in base salary;

b.any failure to pay the base salary (other than the inadvertent failure to pay
a de minimis amount of the base salary, which payment is immediately made by the
Company upon notice from the Eligible Employee);

c.a material diminution in or other substantial adverse alteration in the nature
or scope of the Eligible Employee’s responsibilities, authority, or duties with
the Company from those in effect on the Effective Date; or

d.a relocation of the Eligible Employee’s principal place of business, without
the Eligible Employee’s consent, to a location that is more than 75 miles from
the Eligible Employee’s principal place of business immediately before such
relocation.

 

In the event of the occurrence of any such triggering event, the Eligible
Employee shall have the right to terminate the Eligible Employee’s employment
with the Company for Constructive Discharge, upon delivery of written notice to
the Company no later than the close of business on the sixtieth (60th) day
following the effective date of the applicable triggering event; provided,
however, that such termination shall not be effective until the expiration of
thirty (30) days after receipt by the Company of such written notice if the
Company has not cured such Constructive Discharge triggering event within the
30-day period. If Company so effects a cure, the Constructive Discharge notice
shall be deemed rescinded and of no force or effect. Notwithstanding the
foregoing, such notice and lapse of time shall not be required with respect to
any event or circumstance which is the same or substantially the same as an
event or circumstance with respect to which notice and an opportunity to cure
has been given within the previous six (6) months, and in such case the Eligible
Employee may terminate employment with the Company for Constructive Discharge
within sixty (60) days following the occurrence of such event.

 

 

 

4.“Qualifying Termination” shall mean the termination of an Eligible Employee’s
employment with the Company either by action of the Company without Cause or by
action of the Eligible Employee for Constructive Discharge, in either case if
such termination of employment occurs during the period beginning on the date of
the Change of Control and ending on the second anniversary of the date of the
Change of Control. In addition, if (A) a termination of employment by action of
the Company without Cause or by action of the Eligible Employee for Constructive
Discharge occurs within one hundred eighty (180) days before the date on which
the Change of Control occurs, and (B) it is reasonably demonstrated by the
Eligible Employee that such termination of employment or events constituting
Constructive Discharge was (x) at the request of a third party who had taken
steps reasonably calculated to effect a Change of Control or (y) otherwise arose
in connection with or in anticipation of a Change of Control, then such
termination of employment shall be deemed a Qualifying Termination upon the
occurrence of the Change of Control within such 180-day period. In that case,
the Eligible Employee shall receive any severance payments or benefits to which
the Eligible Employee may otherwise be entitled without regard to this Policy
before the Change of Control (e.g., under an Other Agreement or as Statutory
Severance), and upon the Change of Control (i) such prior severance payments and
benefits shall cease, and (ii) the Eligible Employee shall receive the severance
payments provided under Section 2 this Policy (paid upon, or within 10 days
after, the Change of Control), reduced by the amount of any severance payments
or benefits received before the Change of Control in order to prevent
duplication of benefits.