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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
<TABLE>
<S> <C>
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-12
LUMINANT WORLDWIDE 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)
</TABLE>
Payment of Filing Fee (Check the appropriate box):
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<S> <C> <C>
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
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 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was 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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<TABLE>
<S> <C>
Michael H. Jordan Luminant Worldwide Corporation
Chairman of the Board of Directors 13737 Noel Road, Suite 1400
Dallas, Texas 75240
</TABLE>
[LOGO]
October 31, 2000
Dear Stockholder:
On behalf of the Board of Directors and employees of Luminant Worldwide
Corporation, I cordially invite you to attend a Special Meeting of Luminant
Worldwide Corporation's stockholders to be held on Monday, November 20, 2000 at
1:00 p.m. Eastern Time at 285 Madison Avenue, New York, New York.
Enclosed with this letter is a Notice of the Special Meeting, a Proxy
Statement, a proxy card and a return envelope. Both the Notice of Special
Meeting and the Proxy Statement provide details of the business that we will
conduct at the Special Meeting and other information about Luminant Worldwide
Corporation.
Whether or not you plan to attend the Special Meeting, please sign, date and
promptly return the proxy card in the enclosed prepaid return envelope. Your
shares will be voted at the Special Meeting in accordance with your proxy
instructions. Of course, if you attend the Special Meeting you may vote in
person. If you plan to attend the meeting, please mark the appropriate box on
the enclosed proxy card.
Sincerely,
/s/ Michael H. Jordan
Michael H. Jordan
CHAIRMAN OF THE BOARD OF DIRECTORS
<PAGE>
LUMINANT WORLDWIDE CORPORATION
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
Date: Monday, November 20, 2000
Place: 285 Madison Ave.
New York, New York
October 31, 2000
Dear Stockholders:
At the Special Meeting, we will ask you to:
- Consider and vote upon a proposal to amend Luminant's 1999 Long-Term
Incentive Plan to increase the number of shares issuable under that plan
to an amount equal to 45% of the common stock of Luminant issued and
outstanding at any given time; and
- Transact any other business that is properly presented at the Special
Meeting.
You will be able to vote your shares at the Special Meeting if you were a
stockholder of record at the close of business on October 20, 2000.
By Order of the Board of Directors:
Thomas G. Bevivino
SECRETARY
YOUR VOTE IS IMPORTANT
Please indicate your vote on the enclosed proxy card and return it in the
enclosed envelope as soon as possible, even if you plan to attend the meeting.
If you attend the meeting, you will be able to revoke your proxy and vote in
person. If you have any questions about voting your shares, please contact:
Thomas G. Bevivino, 13737 Noel Rd., Suite 1400, Dallas, Texas 75240,
telephone number (972) 581-6256
<PAGE>
LUMINANT WORLDWIDE CORPORATION
13737 NOEL ROAD, SUITE #1400
DALLAS, TEXAS 75240
October 31, 2000
PROXY STATEMENT FOR SPECIAL MEETING
This Proxy Statement provides information that you should read before you
vote on the proposals that will be presented to you at the special meeting (the
"Special Meeting") of the stockholders of Luminant Worldwide Corporation to be
held on Monday, November 20, 2000 at 1:00 p.m. Eastern Time at 285 Madison
Avenue, New York, New York. Unless the context requires otherwise, all
references in this Proxy Statement to the "Company," "Luminant," "us," "we" and
"our" refer to Luminant Worldwide Corporation and its subsidiaries. Except as
otherwise indicated, all share and per-share data has been adjusted to reflect a
16,653-for-one stock split we completed on September 14, 1999.
This Proxy Statement provides detailed information about the Special
Meeting, the proposals you will be asked to vote on at the Special Meeting, and
other relevant information.
On or about October 31, 2000, we began mailing information to people who,
according to our records, owned shares of our common stock at the close of
business on October 20, 2000.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
INFORMATION ABOUT THE SPECIAL MEETING AND VOTING............ 1
PROPOSALS TO BE PRESENTED AT THE SPECIAL MEETING............ 2
STOCK OWNERSHIP............................................. 5
EXECUTIVE COMPENSATION AND RELATED MATTERS.................. 8
OTHER INFORMATION........................................... 16
APPENDIX A: FORM OF 1999 LONG TERM INCENTIVE PLAN........... A-1
</TABLE>
<PAGE>
INFORMATION ABOUT THE SPECIAL MEETING AND VOTING
THE SPECIAL MEETING
The Special Meeting will be held on Monday, November 20, 2000 at 1:00 p.m.
Eastern Standard Time at 285 Madison Avenue, New York, New York. On or about
October 31, 2000 we began mailing this Proxy Statement to people who, according
to our records, owned shares of our common stock at the close of business on
October 20, 2000.
THIS PROXY SOLICITATION
We are sending you this Proxy Statement because our Board of Directors is
seeking a proxy to vote your shares at the Special Meeting. This Proxy Statement
is intended to assist you in deciding how to vote your shares.
Luminant is paying the cost of requesting these proxies, estimated at
approximately $7,000 in the aggregate. Our directors, officers and employees may
request proxies in person or by telephone, mail, telecopy or letter. Such
persons will receive no additional compensation for such services, but we will
reimburse them for their reasonable out-of-pocket expenses. We will also provide
copies of proxy materials to fiduciaries, custodians, nominees and brokerage
houses for forwarding to beneficial owners of our common stock, and we will
reimburse them as well for their reasonable out-of-pocket expenses.
RECORD DATE AND QUORUM
The record date for the Special Meeting was October 20, 2000. If you held
shares of our common stock as of the record date, you may attend and vote at the
Special Meeting. On the record date, 27,168,480 shares of our common stock were
issued and outstanding. Each share of our common stock is entitled to one vote
at the Special Meeting, except that 875,248 shares of our common stock held by
Young & Rubicam, Inc. are designated "non-voting common stock" and are not
entitled to vote at the Special Meeting.
A "quorum" must be present at the Special Meeting to transact business. A
quorum will be present if a majority of the outstanding shares of the Company's
common stock entitled to vote generally in the election of directors are
represented at the Special Meeting either in person by the holders of the shares
or by proxy. If a quorum is not present, a vote cannot occur.
If you indicate on a proxy or ballot that you abstain from voting or that
your shares are not to be voted on a particular proposal, your shares will not
be counted as having been voted on that proposal, but those shares will be
counted as in attendance at the Special Meeting for purposes of determining a
quorum. Broker non-votes (i.e., proxies from brokers or nominees indicating that
such persons have not received instructions from the beneficial owners or other
persons entitled to vote shares as to a matter with respect to which brokers or
nominees do not have discretionary power to vote) will also be counted as shares
that are represented at the Special Meeting for quorum purposes. If you hold
your shares with a broker and you do not tell your broker how to vote, your
broker does not have the authority to vote on the proposal scheduled to be
presented at the Special Meeting.
VOTING YOUR SHARES
You have one vote for each share of Luminant common stock (excluding
non-voting common stock) that you owned of record at the close of business on
October 20, 2000. The number of shares you own (and may vote at the Special
Meeting) is listed on the enclosed proxy card. You may not cumulate your votes
in voting for directors.
You may vote your shares at the Special Meeting either in person or by
proxy. To vote in person, you must attend the Special Meeting and obtain and
submit a ballot. Ballots for voting in person will be available at the Special
Meeting. To vote by proxy, you must complete and return the enclosed proxy card.
By completing and returning the proxy card, you will be directing the persons
designated on the proxy card to vote your shares at the Special Meeting in
accordance with the instructions you give on the proxy card.
<PAGE>
If you decide to vote by proxy, your proxy card will be valid only if you
sign, date and return it before the Special Meeting. If you complete the proxy
card except for the voting instructions, then your shares will be voted FOR the
proposed amendment to the 1999 Long-Term Incentive Plan.
REVOKING YOUR PROXY
If you decide to change your vote, you may revoke your proxy at any time
before it is voted. You may revoke your proxy in any one of three ways:
- You may notify the Secretary of Luminant in writing that you wish to
revoke your proxy.
- You may submit a proxy dated later than your original proxy.
- You may attend the Special Meeting and vote. Merely attending the Special
Meeting will not by itself revoke a proxy; you must obtain a ballot and
vote your shares to revoke the proxy.
VOTE REQUIRED FOR APPROVAL
<TABLE>
<S> <C>
PROPOSAL 1: AMENDMENT OF THE 1999 LONG-TERM Approval of the proposed amendment to the
INCENTIVE PLAN 1999 Long-Term Incentive Plan requires the
affirmative vote of a majority of the votes
cast at the Special Meeting. If you abstain
from voting, it has the same effect as if
you voted against this proposal.
</TABLE>
PROPOSALS TO BE PRESENTED AT THE SPECIAL MEETING
We will present the following proposal at the Special Meeting. We do not
expect anyone to present any other proposals. If anyone validly presents any
other proposal, we will use your proxy to vote on those proposals as we believe
appropriate.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE
FOLLOWING PROPOSAL.
ITEM 1: AMENDMENT TO 1999 LONG-TERM INCENTIVE PLAN
We have adopted and our stockholders have previously approved a long-term
incentive plan to promote our long-term growth and profitability, improve
stockholder value, and attract, retain, and reward highly motivated and
qualified employees and directors. We are submitting the plan to you now to
increase the number of shares available because of the importance we place on
equity-based compensation in recruitment. (Our recently adopted broad based
option plan covering 5% of the shares has not proven sufficient.) Our Board of
Directors has approved a proposal to amend the long term incentive plan to
increase the number of shares issuable under the plan. Attached as Appendix A to
this proxy is the plan as approved under the authority of the Board.
Under the long-term incentive plan, as revised, we can grant options and can
grant stock as bonuses or in lieu of deferred compensation, for 45% of the
shares of common stock issued and outstanding. We can grant options to employees
in the form of incentive stock options for up to 12,200,000 shares, but may
choose not to do so. Any options we grant that are not incentive stock options
will be nonqualified stock options. The compensation committee of our Board
administers the long-term incentive plan unless the Board specifies another
committee of the Board or chooses to act itself as administrator.
All of our employees, directors, and certain service providers are eligible
to receive options under the long-term incentive plan. For tax reasons, the
long-term incentive plan limits the number of shares covered by options that an
individual can receive in a calendar year to 50% of the original pool, or
approximately 3.6 million shares (although we have no expectation of granting
that amount). The administrator determines the prices, exercise schedules,
expiration dates, method of payment (including through promissory
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notes, under the revised plan), and other material conditions under which
optionees may exercise their options. Except with respect to replacement
options, which we grant to replace options at companies we acquire, the exercise
price of these options may not be less than the fair market value of the common
stock on the date of grant.
The long-term incentive plan also provides for formula option grants for
9,000 shares to each person serving or who has agreed to serve as a non-employee
director and for 6,000 shares annually thereafter at each annual meeting of our
stockholders at which the director is re-elected or remains a director. A
director who receives formula options can generally exercise them beginning six
months after receipt, as to one-sixth of the shares and as to an additional
one-sixth every following six months.
All options will become exercisable if we have a change of control, except
as option agreements provide otherwise or as necessary to allow pooling of
interest accounting. In general, we will have a change of control if:
- anyone acquires or holds more than 50% of our voting securities, excluding
holdings by our benefit plans and some other related parties;
- we complete a merger or consolidation, unless, in general, our pre-merger
shareholders own at least 50% of the voting securities of the merged
companies;
- our Board changes in specified ways in connection with proxy contents or
as a result of adding new directors who are not approved by existing
directors; or
- if we complete a liquidation or dissolution or sell or otherwise dispose
of all or substantially all of our assets.
In addition, unless we provide otherwise, or as necessary to allow pooling
of interest accounting, the long-term incentive plan and all options will
terminate in defined circumstances if:
- we are not the surviving company in a merger, consolidation, or
reorganization;
- we complete a liquidation or dissolution or sell substantially all our
assets; or
- our board approves and we complete a transaction that results in a person
or entity's owning all of our stock, unless the person or entity is
related to us in specified ways.
However, before the long-term incentive plan would terminate for one of those
reasons, we would either agree that our successor would assume the options
and/or the long-term incentive plan, allow optionees to exercise the options if
these options were in-the-money, or cancel the options by paying the amount, if
any, by which the value determined with respect to that transaction exceeds the
exercise price of the options.
The long-term incentive plan limits the time during which an optionee can
exercise an option to no more than 10 years. In addition, an optionee who leaves
employment will generally have no more than 90 days to exercise the previously
exercisable portions of an option, reduced to no days after employment in
terminations for cause, and additional rules apply to death and disability. The
compensation committee may, however, override the plan's rules, other than the
10 year limit. We cannot grant additional options under the long-term incentive
plan after the tenth anniversary of its adoption.
TAX CONSEQUENCES
NONQUALIFIED STOCK OPTIONS. An optionee will not be taxed when he receives
a non-qualified stock option ("NQSO"). When he exercises an NQSO, he will
generally owe taxes on ordinary income on the difference between the value of
the shares he receives and the price he pays, with the "spread" treated like
additional salary for an employee. He may then owe taxes again if and when he
sells the shares. That tax would be on the difference between the price he
received for the share and his "basis," which is the sum of the price he
originally paid plus the value of the shares on which he originally paid income
taxes.
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Depending upon how long he held the shares before selling, he may be eligible
for favorable tax rates for certain kinds of capital gains. In addition,
Luminant will receive an income tax deduction for any amounts of "ordinary
income" to him.
INCENTIVE STOCK OPTIONS. An optionee will not be taxed when he receives an
incentive stock option ("ISO") and will not be taxed when he exercises the ISO,
unless he is subject to the alternative minimum tax ("AMT"). If he holds the
shares purchased upon exercise of the ISO ("ISO Shares") for more than one year
after the date he exercised the option and for more than two years after the
option grant date, he generally will realize long-term capital gain or loss
(rather than ordinary income or loss) when he sells or otherwise disposes of the
ISO Shares. This gain or loss will equal the difference between the amount
realized upon such disposition and the amount paid for the ISO Shares. If the
optionee sells the ISO Shares in a "disqualifying disposition" (that is, within
one year from the date he exercises the ISO or within two years from the date of
the ISO grant), he generally will recognize ordinary compensation income equal
to the lesser of (1) the fair market value of the shares on the date of exercise
minus the price he paid or (2) the amount he realized on the sale. For a gift or
another disqualifying disposition where a loss, if sustained, would not usually
be recognized, he will recognize ordinary income equal to the fair market value
of the shares on the date of exercise minus the price he paid. Any amount
realized on a disqualifying disposition that exceeds the amount treated as
ordinary compensation income (or any loss realized) will be a long-term or a
short-term capital gain (or loss), depending, under current law, on whether he
held the shares for at least 12 months. Luminant can generally take a tax
deduction on a disqualifying disposition corresponding to the ordinary
compensation income he recognizes but cannot deduct the amount of the capital
gains.
ALTERNATIVE MINIMUM TAX. The difference between the exercise price and the
fair market value of the ISO Shares on the date of exercise is an adjustment to
income for purposes of the AMT. The AMT (imposed to the extent it exceeds the
taxpayer's regular tax) is a certain percentage of an individual taxpayer's
alternative minimum taxable income that is lower than the regular tax rates but
covers more income. Taxpayers determine their alternative minimum taxable income
by adjusting regular taxable income for certain items, increasing that income by
certain tax preference items, and reducing this amount by the applicable
exemption amount. If a disqualifying disposition of the ISO Shares occurs in the
same calendar year as exercise of the ISO, there is no AMT adjustment with
respect to those ISO Shares. Also, upon a sale of ISO Shares that is not a
disqualifying disposition, alternative minimum taxable income is reduced when he
sells by the excess of the fair market value of the ISO Shares at exercise over
the amount paid for the ISO Shares.
STOCK GRANTS. When a participant receives a stock grant under the plan, the
participant will have ordinary income and the Company will generally be eligible
to take a corresponding tax deduction.
POTENTIAL LIMITATION ON COMPANY DEDUCTIONS. Code Section 162(m) denies a
deduction to any publicly held corporation for compensation it pays to certain
employees in a taxable year to the extent that compensation exceeds $1 million
for a covered employee. The tax rules disregard certain kinds of compensation,
including qualified "performance-based compensation," for purposes of the
deduction limitation. Compensation attributable to share options will qualify as
performance-based compensation, provided that: (1) the plan contains a
per-employee limitation on the number of shares for which options may be granted
during a specified period; (2) the stockholders approve that per-employee
limitation; (3) the option is granted by a compensation committee with voting
members comprised solely of "outside directors"; and (4) either the exercise
price of the option is at least equal to the fair market value of the shares on
the date of grant, or the option is granted (or exercisable) only upon the
achievement (as certified by the compensation committee) of an objective
performance goal established by the compensation committee while the outcome is
substantially uncertain. Luminant intends and expects the option grants to be
exempt from Section 162(m) as performance-based.
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This is a summary of the general principles of current federal income tax
law that apply to the purchase of shares under the amended plan. While we
believe that the description accurately summarizes existing provisions of the
Internal Revenue Code of 1986, as amended, and its legislative history and
regulations, and the applicable administrative and judicial interpretations,
these statements are only summaries, and the rules in question are quite
detailed and complicated. Moreover, legislative, administrative, regulatory or
judicial changes or interpretations may occur that would modify such statements.
Individual financial situations may vary, and state and local tax consequences
may be significant. Therefore, no one should act based on this description
without consulting his own tax advisors concerning the tax consequences of
purchasing shares under the Plan and the disposing of those shares. In addition,
different rules may apply if the optionee is subject to foreign tax laws or pays
the exercise price using shares he already owns.
NEW PLAN BENEFITS
We have no definitive plans nor have we entered into any agreements to issue
shares of our common stock that would be covered by this proposed amendment to
our long term incentive plan.
STOCK OWNERSHIP
The table below shows the number and percentage of outstanding shares of our
common stock which, to our knowledge, are beneficially owned as of October 15,
2000 by:
- all persons known by us to own beneficially more than 5% of Luminant's
common stock;
- each director, and each named executive officer who is currently an
executive officer; and
- all directors and executive officers as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF BENEFICIALLY PERCENT OF COMMON
NAME AND ADDRESS OF BENEFICIAL OWNER(1) OWNED(2) STOCK(%)(2)(3)
--------------------------------------- ---------------- ------------------
<S> <C> <C>
Young & Rubicam......................................... 7,385,393(4) 25.5%
James R. Corey GRAT dated July 9, 1999.................. 1,492,283(5) 5.5%
Randolph L. Austin...................................... 6,366(6) *
Thomas G. Bevivino...................................... 25,216(7) *
James R. Corey.......................................... 2,797,330(8) 9.99%
Michael J. Dolan........................................ 10,666(9) *
Michael H. Jordan....................................... 102,681(10) *
Guillermo G. Marmol..................................... 1,409,132(11) 5.0%
Donald S. Perkins....................................... 25,942(12) *
Richard M. Scruggs...................................... 830,096(13) 3.1%
George P. Stamas........................................ 12,999(14) *
Michael R. Alsup........................................ 1,417,402(15) 5.2%
All directors and executive officers as a group (12
persons).............................................. 15,050,785 48.8%
</TABLE>
------------------------
An asterisk (*) indicates ownership of less than one percent (1%) of the
outstanding common stock.
(1) Unless otherwise indicated, the address for our executive officers,
directors and 5% or greater stockholders is c/o Luminant Worldwide
Corporation, 13737 Noel Road, Suite 1400, Dallas, Texas 75240-7367.
(2) We have determined beneficial ownership in accordance with the rules of the
Securities and Exchange Commission. In determining the number of shares
beneficially owned by a person and the percentage ownership of that person,
we include shares of common stock subject to options or warrants held by
that person that are currently exercisable or exercisable within 60 days
after October 15, 2000. We do
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not consider these shares outstanding in computing the percentage ownership
of any other person, however. To our knowledge, the persons named in the
table below have sole voting and investment power with respect to all shares
of common stock shown as beneficially owned by them, subject to community
property laws where applicable and except as otherwise indicated below.
(3) The percentage of beneficial ownership for each stockholder is based on
27,168,480 shares of common stock outstanding as of October 15, 2000.
(4) Such information as to beneficial ownership is derived from a Report on
Schedule 13G filed by Young & Rubicam, Inc. on February 14, 2000. Includes
875,248 shares of non-voting common stock and 1,800,000 shares of common
stock subject to a currently exercisable option. Also includes 558,032
shares issued in March 2000 as contingent consideration under the terms of
the acquisition agreement by which we acquired from Young & Rubicam, Inc.
certain assets of Brand Dialogue-New York, a division of Young &
Rubicam, Inc. The number of shares issued as contingent consideration was
based on the financial performance of Brand Dialogue-New York from July 1,
1999 through December 31, 1999. These shares have been delivered to an
escrow agent pending agreement between us and Young & Rubicam, Inc.
regarding the amount of contingent consideration payable under the terms of
the acquisition agreement. The actual number of shares issued to Young &
Rubicam, Inc. as contingent consideration in respect of the performance of
Brand Dialogue-New York during the aforementioned period may increase or
decrease depending on the agreement reached. Young & Rubicam, Inc. maintains
its principal business address at 285 Madison Avenue, New York, New York
10017.
(5) Such information as to beneficial ownership is derived from a Report on
Schedule 13D/A filed on October 11, 2000. The James R. Corey GRAT dated
July 9, 1999 (the "GRAT") may be entitled to additional contingent
consideration under the terms of the acquisition agreement by which we
acquired Potomac Partners Management Consultants LLC in September 1999. The
number of shares of common stock that could be issued as payment of
additional contingent consideration are not now determinable and no
assumptions regarding those issuances have been included in the table above.
(6) Includes 4,666 shares underlying options as to which Mr. Austin has the
right to acquire beneficial ownership within 60 days after October 15, 2000.
Also includes 500 shares owned by I-Hatch LLC. Mr. Austin is a managing
principal and has one-third ownership of I-Hatch LLC, and therefore may be
deemed to be a beneficial owner of the shares held by I-Hatch LLC.
(7) Includes 23,416 shares underlying options as to which Mr. Bevivino has the
right to acquire beneficial ownership within 60 days after October 15, 2000.
Also includes 800 shares owned by Vincente V. Bevivino, Mr. Bevivino's son.
Mr. Bevivino may be deemed a beneficial owner of the shares owned by his
son.
(8) Such information as to beneficial ownership is derived from a Report on
Schedule 13D/A filed on October 11, 2000. Includes 1,492,283 shares of
common stock held by the Corey GRAT, which Mr. Corey may be deemed to
beneficially own by virtue of his position as trustee of the GRAT.
Mr. Corey may be entitled to additional contingent consideration under the
terms of the acquisition agreement by which we acquired Potomac Partners
Management Consultants LLC, of which Mr. Corey was a member, in
September 1999. The number of shares of common stock that could be issued as
payment of additional contingent consideration are not now determinable and
no assumptions regarding those issuances have been included in the table
above. Includes 2,000 shares underlying options as to which Mr. Corey has
the right to acquire beneficial ownership within 60 days after October 15,
2000.
On September 21, 2000, Mr. Corey acquired from the Company debentures
immediately convertible into 800,000 shares of Company common stock and
warrants immediately exercisable for 183,150 shares of Company common stock.
Among other terms applicable to these securities, Mr. Corey
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cannot exercise or convert these debentures or warrants to the extent
Mr. Corey and his affiliates would, as a result of the exercise or
conversion, own more than 9.999% of the then-outstanding shares of our
common stock. Mr. Corey may waive this restriction, but only upon not less
than 61 days prior notice to us. As a result, the number of shares of common
stock shown in the table above as beneficially owned by Mr. Corey only
includes the number of shares of common stock underlying these convertible
debentures and warrants that would not cause his beneficial ownership of our
common stock to exceed 9.999% of the total number of shares of our common
stock outstanding on October 15, 2000. As such, the number of shares of our
common stock shown in the table above as beneficially owned excludes 177,531
shares underlying convertible debentures and warrants that Mr. Corey has the
right to acquire subject to the 9.999% restriction.
(9) Includes 4,666 shares underlying options as to which Mr. Dolan has the right
to acquire beneficial ownership within 60 days after October 15, 2000. Does
not include any shares beneficially owned by Young & Rubicam, Inc., of which
Mr. Dolan is Vice Chairman, Chief Financial Officer and a director.
(10) Includes 45,000 shares underlying options as to which Mr. Jordan has the
right to acquire beneficial ownership within 60 days after October 15, 2000.
Does not include any shares beneficially owned by Young & Rubicam, Inc., of
which Mr. Jordan is a director.
(11) Includes 898,836 shares underlying options as to which Mr. Marmol has the
right to acquire beneficial ownership within 60 days after October 15, 2000.
We anticipate entering into a severance agreement with Mr. Marmol that will
provide that all of Mr. Marmol's 1,422,094 options to purchase shares of our
common stock will vest immediately. As a result, this severance agreement
would result in an additional 523,258 shares underlying options being
beneficially owned by Mr. Marmol.
(12) Includes 6,166 shares underlying options as to which Mr. Perkins has the
right to acquire beneficial ownership within 60 days after October 15, 2000.
Mr. Perkins may be entitled to additional contingent consideration under the
terms of the acquisition agreement by which we acquired Potomac Partners
Management Consultants LLC, of which Mr. Perkins was a member, in
September 1999. The number of shares of common stock that could be issued as
payment of additional contingent consideration are not now determinable and
no assumptions regarding those issuances have been included in the table
above.
(13) Includes 26,887 shares underlying options as to which Mr. Scruggs has the
right to acquire beneficial ownership within 60 days after October 15, 2000.
Includes 639,109 shares held jointly with Cynthia K. Scruggs and 1,100
shares held by the daughters of Mr. Scruggs. Also includes 150,000 shares
held by RSCS Holdings LTD. Mr. Scruggs is the sole member of RS Resources
LLC, which is a general partner of RSCS Holdings LTD, and therefore
Mr. Scruggs may be deemed a beneficial owner of the shares held by RSCS
Holdings LTD.
(14) Includes 12,999 shares as to which Mr. Stamas has the right to acquire
beneficial ownership within 60 days after October 15, 2000.
(15) Based on information set forth in a Report on Schedule 13G filed on
October 20, 2000. Includes 122,910 shares held by the 1996 Alsup Issue
Trusts, which Mr. Alsup has the option to acquire. Includes 981 shares
underlying options as to which Mr. Alsup has the right to acquire beneficial
ownership within 60 days after October 15, 2000.
7
<PAGE>
EXECUTIVE COMPENSATION AND RELATED MATTERS
The following is a report of the Compensation Committee describing the
compensation policies and rationales it used to determine the compensation paid
to our executive officers for the year ended December 31, 1999. In
September 2000, Luminant's Chief Executive Officer, Guillermo G. Marmol,
resigned his position with Luminant and the Board of Directors appointed James
R. Corey to serve as Chief Executive Officer.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of Luminant's Board of Directors consists solely
of five non-employee directors, of whom one is a non-voting member. The
Compensation Committee is responsible for determining all compensation paid or
awarded to Luminant's key executive officers for periods after Luminant became a
public company. However, substantially all of the compensation Luminant paid to
executive officers for 1999 was established under employment agreements Luminant
negotiated and executed before becoming a public company. Therefore, the
following sections on Philosophy, Base Salary, Cash Bonus and Stock Options
describe the framework, which have guided or will guide the Compensation
Committee regarding decisions not covered by employment agreements.
PHILOSOPHY. The Compensation Committee's goal is to recruit and retain an
executive team of superior talent. To do so, the Committee attempts to offer
competitive and fair compensation that rewards executives for exceptional
performance and holds them accountable for Luminant's performance. Particular
objective factors that the Committee believes are important in assessing
performance include growth in the number of customers for Luminant's services,
growth in revenue, earnings before interest expense, taxes, depreciation, and
amortization, and earnings per share. More subjective factors the Committee
believes are important in evaluating performance include success in integrating
newly acquired companies and hiring and retention of key employees.
In establishing appropriate levels for base salary, the Compensation
Committee will consider the market for senior executives of public companies in
businesses comparable to Luminant's, based on their own business experience. The
Committee will also consider the particular officer's overall contributions to
Luminant over the past year and since its inception. Annual performance bonuses
are based on the Compensation Committee's evaluation of the executive's
performance in achieving several specified annual goals. Option grants are
designed to reward an executive officer for his overall contribution to Luminant
and to serve as an incentive to achieve Luminant's goal of increasing
shareholder value.
Executive officers' compensation consists primarily of three components:
(i) base salary, (ii) cash bonus, and (iii) stock options.
BASE SALARY. The Committee will establish base salaries after considering a
variety of factors that determine an executive's value to Luminant, including
the individual's knowledge, experience, and accomplishments and the level of
responsibility assumed. The Committee also will set base salaries at levels it
considers necessary to retain key employees.
CASH BONUS. The Committee determined Mr. Marmol's cash bonus for the fiscal
year ended December 31, 1999. Cash bonuses are based on the Committee's overall
qualitative evaluation of the performance and accomplishments of each executive
officer for the year.
STOCK OPTIONS. The Committee believes achievement of Luminant's goals may be
fostered by a stock option program that is tailored to employees who
significantly enhance Luminant's value. Accordingly, during the fiscal year
ended December 31, 1999, the Committee or the Board granted employees options to
purchase 5,462,602 shares of Common Stock. Named executive officers received
options with respect to 1,545,072 shares of Common Stock.
8
<PAGE>
CHIEF EXECUTIVE OFFICER'S COMPENSATION. Mr. Guillermo Marmol is one of
Luminant's largest stockholders. His financial well-being is therefore directly
tied to Luminant's performance as reflected in the price per share of Common
Stock. For his services as Luminant's Chief Executive Officer, Mr. Marmol
received an amount of compensation for 1999 determined in accordance with his
pre-public employment agreement. The Committee awarded Mr. Marmol a bonus of
$125,000 for the fiscal year ended December 31, 1999. In doing so, it considered
the successful completion of Luminant's initial public offering, the integration
of the acquired businesses, and the continuing progress in developing new
opportunities for Luminant and in recruiting and market development.
COMPENSATION DEDUCTION LIMIT. The Securities and Exchange Commission
requires that this report comment on Luminant's policy with respect to a special
rule under the tax laws, section 162(m) of the Internal Revenue Code. That
section limits, with exceptions described below, the compensation that a
corporation can deduct for payments to a chief executive officer and the four
other most highly compensated executive officers to $1 million per officer per
year. A company can deduct compensation (including from exercising options) in
excess of $1 million if it pays the compensation under a plan that its
shareholders approve and that is performance-related. Option exercises are
typically deductible under such a plan if granted with exercise prices at or
above the market price when granted or if grandfathered because granted before
the public offering. The Committee's policy with respect to the compensation
deduction limit is to make every reasonable effort to ensure that compensation
likely to be received by a senior executive is deductible under section 162(m),
while at the same time giving Company executives incentives to stay with and
enhance Luminant's value. The Committee believes, however, that compensation
exceeding the $1 million deduction limit should not be ruled out where such
compensation is justified based on the executive's value to Luminant and its
shareholders. The Committee believes that no executive compensation expenses
paid in 1999 will be non-deductible under section 162(m).
This Report should not be considered incorporated by reference in any
document previously or subsequently filed with the Securities and Exchange
Commission that incorporates by reference all or any portion of this proxy
statement, unless the report is specifically incorporated by reference.
Randolph L. Austin
Michael J. Dolan
Michael H. Jordan
Donald S. Perkins
George P. Stamas
9
<PAGE>
EXECUTIVE COMPENSATION
We were founded in August 1998, did not conduct any operations in 1998 and,
accordingly, did not pay any compensation to our executive officers for the year
ended December 31, 1998. The following table summarizes the compensation paid to
or earned by our Chief Executive Officer, all other executive officers who were
serving as executive officers as of December 31, 1999 and whose salary and bonus
for services rendered in all capacities to Luminant for the fiscal year ended
December 31, 1999 exceeded $100,000, and two additional individuals who served
as executive officers during the fiscal year ended December 31, 1999 and whose
salary and bonus for services rendered in all capacities to Luminant for the
fiscal year ended December 31, 1999 exceeded $100,000. We will use the term
"named executive officers" to refer to these people elsewhere in this proxy
statement.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION (1) LONG-TERM COMPENSATION
------------------------------------------- ---------------------------
AWARDS
---------------------------
OTHER SECURITIES
ANNUAL RESTRICTED UNDERLYING
NAME & PRINCIPAL COMPEN- STOCK OPTIONS / SARS
POSITION YEAR SALARY BONUS SATION AWARD(S) (#)
---------------- -------- -------- -------- -------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C>
James R. Corey
CHIEF EXECUTIVE OFFICER,
PRESIDENT & CHIEF OPERATING
OFFICER....................... 1999 76,313(3) 34,375 (2) -- --
Richard M. Scruggs
VICE CHAIRMAN & EXECUTIVE VICE
PRESIDENT..................... 1999 61,016(4) 26,000 (2) -- 50,934(4)
Thomas G. Bevivino
CHIEF FINANCIAL OFFICER &
SECRETARY..................... 1999 57,788(5) 101,063 80,000(5) -- 60,000
Guillermo G. Marmol(6)
FORMER CHIEF EXECUTIVE
OFFICER....................... 1999 $112,692 $125,000 (2) -- 1,195,115
Joseph W. Autem(7)............ 1999 140,280 -- (2) -- 13,889
Derek R. Reisfield(8)......... 1999 307,850 -- (2) -- 239,023
<CAPTION>
LONG-TERM COMPENSATION
--------------------------
PAYOUTS
--------------------------
LONG-TERM ALL OTHER
NAME & PRINCIPAL INCENTIVE PLAN COMPEN-
POSITION PAYOUTS ($) SATION
---------------- -------------- ---------
<S> <C> <C>
James R. Corey
CHIEF EXECUTIVE OFFICER,
PRESIDENT & CHIEF OPERATING
OFFICER....................... -- --
Richard M. Scruggs
VICE CHAIRMAN & EXECUTIVE VICE
PRESIDENT..................... 372(4)
Thomas G. Bevivino
CHIEF FINANCIAL OFFICER &
SECRETARY..................... -- --
Guillermo G. Marmol(6)
FORMER CHIEF EXECUTIVE
OFFICER....................... -- --
Joseph W. Autem(7)............ -- 69,444(7)
Derek R. Reisfield(8)......... -- --
</TABLE>
------------------------------
(1) Amounts shown reflect compensation earned in the period presented, although
payments earned in prior periods may have been paid in the period presented
and compensation earned in the period presented may have been paid in a
subsequent period.
(2) The amount does not equal or exceed the lesser of $50,000 or 10% of
compensation.
(3) Prior to September 1999, Mr. Corey was a Managing Director and owner of
Potomac Partners Management Consulting LLC. Upon our acquisition of Potomac
Partners Management Consulting in September 1999, Mr. Corey was appointed
our President and Chief Operating Officer at an effective annual salary of
$275,000. Mr. Corey was also appointed our Chief Executive Officer in
September 2000.
(4) Prior to September 1999, Mr. Scruggs was President, Chief Executive Officer,
Chairman of the Board and an owner of Align Solutions Corp. Upon our
acquisition of Align Solutions Corp. in September 1999, Mr. Scruggs was
appointed Vice Chairman and Executive Vice President at an effective annual
salary of $250,000. The number of securities under the heading "Securities
Underlying Options/SARS" represents the number of Luminant shares underlying
options issued to Mr. Scruggs to replace options he held in Align Solutions
Corp. at the time of acquisition by Luminant. The amount set forth in the
column titled "All Other Compensation" represents premiums paid by Luminant
for life insurance policies held by Mr. Scruggs.
(5) Mr. Bevivino performed financial advisory and consulting services for us
from March 1999 until June 1999, when he was appointed our Vice President of
Finance. Mr. Bevivino served as our Vice President of Finance from
June 1999 until December 1999, when he was appointed our Chief Financial
Officer and Secretary. The amounts set forth for Mr. Bevivino in the columns
titled "Salary" and "Bonus" reflect all amounts paid to Mr. Bevivino for his
services to Luminant as a Vice President of Finance, Chief Financial Officer
and Secretary during 1999. The amount set forth for Mr. Bevivino in the
column titled "Other Annual Compensation" reflects amounts paid to
Mr. Bevivino as a result of financial advisory and consulting services
provided to Luminant by ARC Group LLC, a firm in which Mr. Bevivino holds a
50% ownership interest.
(6) Mr. Marmol served as Chief Executive Officer from August 1998 until
September 2000.
10
<PAGE>
(7) Mr. Autem served as our Chief Financial Officer from January 1999 until
July 1999 and has entered into an agreement to continue providing consulting
services to us. The amount set forth for Mr. Autem under the column "All
Other Annual Compensation" includes consulting fees paid to Mr. Autem
following his resignation as Chief Financial Officer in accordance with the
terms of a severance agreement we entered into with Mr. Autem in connection
with his resignation.
(8) Mr. Reisfield served as a Vice Chairman and Executive Vice President from
October 1999 until March 31, 2000.
EMPLOYMENT AGREEMENTS
Mr. Marmol served as our Chief Executive Officer and director until his
resignation from both capacities in September 2000. Mr. Marmol was party to an
employment agreement with us during his tenure as our Chief Executive Officer.
Consistent with his employment agreement, Mr. Marmol will receive an amount
equal to his salary through December 31, 2000 and bonuses of equal amounts for
2000 and 2001. His outstanding options (exercisable at the initial public
offering price) became fully exercisable and will remain exercisable until
October 2003. Mr. Marmol is subject to covenants intended to bar his competition
through December 2001 and solicitation of clients or employees through
December 2002.
As of September 16, 1999, we entered into an employment agreement with James
R. Corey, our Chief Executive Officer, President and Chief Operating Officer,
for the period through September 16, 2002. Mr. Corey receives an annual salary
of $275,000 plus a bonus of up to the same amount. Mr. Corey receives the same
benefits as our other employees and will be eligible to receive options under
Luminant's long-term incentive plan. Upon a change of control of Luminant, all
of Mr. Corey's options will become immediately exercisable. We may terminate
Mr. Corey's agreement for cause or upon death or disability. Cause includes a
material breach of Mr. Corey's obligations or Mr. Corey's gross negligence,
conviction for, or plea of no contest to, a charge of commission of a felony, a
breach by Mr. Corey of his non-compete or confidentiality agreement, or if
Mr. Corey interfered with our relationship with any client, supplier or other
person. Mr. Corey may terminate his employment with us with or without good
reason. Good reason means if we materially violate the employment agreement or
if we relocate his primary office by more than 35 miles from Herndon, Virginia.
If Mr. Corey resigns or we terminate his employment with or without cause or
because of death or disability, we will pay Mr. Corey any unpaid portion of his
salary pro-rated through the date of actual termination, reimburse business
expenses, pay accrued vacation and pay health insurance premiums for that
period. In addition, if we terminate Mr. Corey's employment without cause or he
resigns for good reason, Mr. Corey will receive a severance payment equal to his
base salary for a period of 18 months following the termination, the pro rata
share of the bonus for the year of his termination, continuation of his benefits
and acceleration of the next sixth of his options. Mr. Corey will be subject to
covenants intended to bar his competition and solicitation of clients or
employees during his employment and for one year after his employment ends for
any reason.
As of September 16, 1999, we entered into an employment agreement with
Richard M. Scruggs, our Vice Chairman and Executive Vice President, for the
period through September 16, 2002. Mr. Scruggs receives an annual salary of
$250,000 plus a bonus of up to the same amount. Mr. Scruggs receives the same
benefits as our other employees and will be eligible to receive options under
Luminant's long-term incentive plan. Upon a change of control of Luminant, all
of Mr. Scruggs's options will become immediately exercisable. We may terminate
Mr. Scruggs's agreement for cause or upon death or disability. Cause includes a
material breach of Mr. Scruggs's obligations or Mr. Scruggs's gross negligence,
conviction for, or plea of no contest to, a charge of commission of a felony, a
breach by Mr. Scruggs of his non-compete or confidentiality agreement, or if
Mr. Scruggs interfered with our relationship with any client, supplier or other
person. Mr. Scruggs may terminate his employment with us with or without good
reason. Good reason means if we materially violate the employment agreement or
if we relocate his primary office by more than 35 miles from Harris County,
Texas. If Mr. Scruggs resigns or we terminate his employment with or without
cause or because of death or disability, we will pay Mr. Scruggs any unpaid
portion of his salary pro-rated through the date of actual termination,
reimburse business expenses, pay accrued vacation and pay health insurance
premiums for that period. In addition, if we terminate Mr. Scruggs's employment
without cause or he resigns for good reason, Mr. Scruggs will receive a
severance payment equal to his base
11
<PAGE>
salary for a period of 18 months following the termination, the pro rata share
of the bonus for the year of his termination, continuation of his benefits and
acceleration of the next sixth of his options. Mr. Scruggs is subject to
covenants intended to bar his competition and solicitation of clients or
employees during his employment and for one year after his employment ends for
any reason.
As of June 28, 1999, we entered into an employment agreement with Thomas G.
Bevivino, our Chief Financial Officer and Secretary, for the period through
June 28, 2002. Mr. Bevivino receives an annual salary of $150,000 plus a bonus
of up to the same amount. Under the agreement, in connection with our initial
public offering we granted Mr. Bevivino options to acquire 60,000 shares of
common stock under our long-term incentive plan, exercisable at the initial
public offering price of $18.00 per share. The options will become exercisable
in sixths every sixth months after the date we granted them and will remain
exercisable for up to 10 years after the date of the grant. We may terminate
Mr. Bevivino's agreement with or without cause or upon death or disability.
Cause includes a material breach of Mr. Bevivino's obligations or
Mr. Bevivino's gross negligence, conviction for, or plea of no contest to, a
charge of commission of a felony, a breach by Mr. Bevivino of his non-compete or
confidentiality agreement, or if Mr. Bevivino interfered with our relationship
with any client, supplier or other person. Mr. Bevivino may terminate his
employment with us with or without good reason. Good reason means if we
materially violate the employment agreement. If Mr. Bevivino resigns or we
terminate his employment with or without cause or because of death or
disability, we will pay Mr. Bevivino any unpaid portion of his salary pro-rated
through the date of actual termination, reimburse business expenses, pay accrued
vacation and pay health insurance premiums for that period. In addition, if we
terminate Mr. Bevivino's employment without cause or he resigns for good reason,
Mr. Bevivino will receive a severance payment equal to his base salary for a
period of 18 months following the termination and the pro rata share of the
bonus for the year of his termination, continuation of his benefits and
acceleration of the next sixth of his options. Mr. Bevivino is subject to
covenants intended to bar his competition and solicitation of clients or
employees during his employment and for one year after his employment ends for
any reason.
Mr. Reisfield was also party to an employment agreement with us during his
tenure as one of our executive officers. The employment agreement terminated
when he left his employment with us.
SEVERANCE AGREEMENT
Joseph Autem resigned as our Chief Financial Officer effective as of
July 23, 1999. In connection with Mr. Autem's resignation, we entered into a
severance agreement with him effective July 23, 1999. Under the severance
agreement. Mr. Autem is serving as a financial consultant to Luminant for a
period of six years. He is being compensated at the rate of $13,888.89 per month
and will receive an acquisition fee if we acquire any company Mr. Autem refers
to us as an acquisition candidate after July 23, 1999. Upon the closing of our
initial public offering, we granted Mr. Autem immediately exercisable and fully
vested options to purchase 13,889 shares of our common stock at an exercise
price of $0.01 per share. Mr. Autem exercised these options in December 1999. We
paid $56,249.75 as reimbursement of Mr. Autem's fees and expenses incurred in
furtherance of our business, and an additional $25,000 in deferred consulting
fees.
DIRECTOR COMPENSATION
Directors who are also our employees do not receive additional compensation
for serving as directors. Upon joining the Board of Directors, non-employee
directors receive an option to purchase 9,000 shares of common stock under our
long-term incentive plan at an exercise price equal to the market value per
share of common stock on the date of grant. In addition, under our long-term
incentive plan, each non-employee director receives an annual option to purchase
6,000 shares at each annual meeting of our stockholders at which the director is
re-elected or remains a director. Each of these options will have an exercise
price equal to the market value per share of common stock on the date of grant.
A director who receives formula options can generally exercise them beginning
six months after receipt, as to one-sixth of the shares and as to an additional
one-sixth every following six months. Directors are also reimbursed for
out-of-pocket
12
<PAGE>
expenses incurred in attending meetings of the Board of Directors or committees
of the Board of Directors, in their capacity as directors.
Directors may also receive additional, discretionary option grants. In
September 1999, Mr. Jordan was also granted options to purchase 120,000 shares
of common stock in consideration for services rendered and exercisable at a
price equal to the initial public offering price per share. In September 1999,
Mr. Stamas was also granted options to purchase 25,000 shares of common stock in
consideration for services rendered and exercisable at a price equal to the
initial public offering price per share. One-sixth of these additional options
granted to Messrs. Jordan and Stamas become exercisable every six months over
36 months from the date of grant. Mr. Dolan, who is Vice Chairman, Chief
Financial Officer and a director of Young & Rubicam, has agreed to serve on our
Board of Directors at the request of Young & Rubicam. Mr. Dolan has assigned to
Young & Rubicam the net proceeds received by him in connection with any exercise
of options we grant to him for serving on our Board of Directors and sale by him
of the underlying shares.
OPTION GRANTS
The following table provides information on options granted to the named
executive officers during 1999:
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO MARKET
OPTIONS/ EMPLOYEES IN EXERCISE OR PRICE ON GRANT DATE
SARS FISCAL YEAR BASE PRICE DATE OF EXPIRATION PRESENT VALUE
NAME GRANTED (#) (1) ($/SHARE) GRANT DATE $ (2)
---- ----------- ------------ ----------- -------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
James R. Corey.............. -- -- -- -- -- --
Richard M. Scruggs.......... 17,910(3) .33% $ .25 $18.00 6/30/07 $ 319,136
22,540(4) .41% $ 1.52 $18.00 4/30/08 $ 382,622
10,484(5) .19% $ 2.86 $18.00 2/28/09 $ 169,989
Thomas G. Bevivino(6)....... 60,000 1.10% $18.00 $18.00 9/15/09 $ 683,645
Guillermo G. Marmol(7)...... 1,195,115 21.97% $18.00 $18.00 9/15/09 $13,617,234
Joseph W. Autem(8).......... 13,889 .25% $ .01 $18.00 9/15/09 $ 249,901
Derek R. Reisfield(9)....... 239,023 4.4% $18.00 $18.00 9/15/09 $ 2,723,447
</TABLE>
------------------------
(1) The percentages in the table above are based on options to purchase
5,462,602 shares of common stock granted under our stock option plan in the
year ended December 31, 1999 to our employees.
(2) In the table above, the value of options granted is based on a Black-Scholes
pricing model with a volatility of 70%, a risk-free rate of return of 6.43%,
a dividend yield of 0%, and exercise of options five years from date of
grant. The actual value, if any, that an executive officer may realize will
depend on the excess of the market price over the exercise price on the date
the option is exercised so there is no assurance that the value realized by
an executive officer will be at or near the value estimated by the
Black-Scholes model, which is based on assumptions as to the variables of
stock price to volatility, future dividend yield and interest rate. For an
estimate of the impact of all stock option grants on Luminant's financial
results using the Black-Scholes valuation method, see Note 10 in the Notes
to Consolidated Financial Statements in the Luminant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1999.
(3) 40% of the options granted to Mr. Scruggs vested on July 1, 1999, and the
remaining began vesting at the rate of one-thirty sixth per month each month
thereafter. The options will remain exercisable for up to 10 years after the
date of the grant.
13
<PAGE>
(4) 40% of the options granted to Mr. Scruggs vested on January 1, 2000, and the
remaining began vesting at the rate of one-thirty sixth per month each month
thereafter. The options will remain exercisable for up to 10 years after the
date of the grant.
(5) 40% of the options granted to Mr. Scruggs vest on February 28, 2001, with
the remaining 60% vesting at the rate of one-thirty sixth per month each
month thereafter. The options will remain exercisable for up to 10 years
after the date of the grant.
(6) Of the options granted to Mr. Bevivino on September 15, 1999 one-sixth
become exercisable every six months after the date of grant and remain
exercisable for up to 10 years after the date of grant.
(7) Of the options for 1,195,115 shares granted to Mr. Marmol on September 15,
1999, 25% were exercisable immediately. The remainder became fully
exercisable in October 2000. These exercisable options remain exercisable
for up to thirty-six months after the end of his employment.
(8) Mr. Autem was granted options for 13,889 shares on September 15, 1999. These
options were immediately exercisable and fully vested. Mr. Autem exercised
these options in December 1999.
(9) Mr. Reisfield was granted options for 239,023 shares on September 15, 1999.
The options were immediately exercisable and will remain exercisable for up
to 10 years after the date of grant, or until we terminate all options under
the long-term incentive plan if earlier than 10 years after the date of
grant.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR, AND FISCAL YEAR-END STOCK
OPTION VALUES
The following table sets forth for each of the named executive officers
certain information concerning options exercised during the fiscal year ended
December 31, 1999 and the number of shares subject to both exercisable and
unexercisable stock options as of that date. The table also shows values for
"in-the-money" options as of December 31, 1999. These values represent the
positive spread between the respective exercise prices of outstanding options
and the fair market value of Luminant common stock as of December 31, 1999.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/SARS AT OPTIONS/SARS AT
ACQUIRED VALUE DECEMBER 31, 1999 DECEMBER 31, 1999
ON EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
NAME (#) ($) (#) (1) ($)(2)
---- ----------- -------- ------------------------------- -------------------------
<S> <C> <C> <C> <C>
James R. Corey.......... -- -- -- --
Richard M. Scruggs...... -- -- 19,695/31,239 $878,277/$1,370,398
Thomas G. Bevivino...... -- -- 0/60,000 $0/$1,650,000
Guillermo G. Marmol..... -- -- 298,779/896,336 $8,216,423/$24,649,240
Joseph W. Autem......... 13,889 $534,588(3) -- --
Derek R. Reisfield...... -- -- 239,023/0 $6,573,133/$0
</TABLE>
------------------------
(1) Includes both "in-the-money" and "out-of-the-money" options. "In-the-money"
options are options with exercise prices below the market price of
Luminant's common stock on December 31, 1999.
(2) Includes only "in-the-money" options as of December 31, 1999. Based on the
closing price of Luminant's common stock on December 31, 1999 ($45.50) minus
the exercise price.
(3) Based on the fair market value of Luminant's common stock as represented by
the closing price on the exercise date, minus the exercise price and
multiplied by the number of shares acquired. The closing price of Luminant's
common stock on December 9, 1999, the exercise date, was $38.50 per share.
14
<PAGE>
LIMITATION OF LIABILITY; INDEMNIFICATION OF OFFICERS AND DIRECTORS
As the Delaware General Corporation Law permits, we have included in our
certificate of incorporation a provision to eliminate the personal liability of
our directors for or with respect to any acts or omissions in the performance
the director's duties as a director. In addition, our charter and bylaws provide
that we must indemnify our officers and directors to the full extent permitted
by the Delaware General Corporation Law subject to specific exceptions,
including circumstances in which indemnification would be discretionary under
applicable law. We are also required to advance expenses to our officers and
directors as incurred in connection with proceedings against them for which they
may be indemnified. At present, we are not aware of any pending or threatened
litigation or proceeding involving any of our directors, officers, employees or
agents in which we would be required or permitted to indemnify them. We believe
that these charter provisions and indemnification agreements are necessary to
attract and retain qualified persons as directors and officers.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the year ended December 31, 1999, the Compensation Committee of the
Board of Directors consisted of Messrs. Austin, Dolan, Jordan, Perkins and
Stamas. None of these members of the Compensation Committee has ever been an
officer or employee of Luminant. No interlocking relationship exists or has
existed between any of these members of the Compensation Committee or any other
member of our Board of Directors and any members of the board of directors or
compensation committee of any other company.
Michael H. Jordan, our Chairman and a director and member of the
Compensation Committee, acquired a membership interest in Commonwealth
Principals II, LLC, a Virginia-based merchant banking firm, in December 1998 for
a purchase price of $400,000. Commonwealth founded, and provided the initial
capitalization for, Luminant. In connection with our organization in
August 1998, we issued 1,665,273 shares of common stock to Commonwealth in
exchange for consulting, financial advisory and capital raising services
provided by members of Commonwealth, and Commonwealth's commitment to advance
necessary funds, in connection with our initial public offering and the related
acquisitions of the eight companies. In September 1999 Commonwealth distributed
all of its shares of Luminant common stock to its members and Mr. Jordan
received 109,361 shares.
Luminant retained the law firm of Wilmer, Cutler & Pickering, Washington,
D.C., in connection with its initial public offering and acquisition of the
eight companies and has continued to retain Wilmer, Cutler & Pickering as its
outside legal counsel. George P. Stamas, a director of Luminant and a non-voting
member of the Compensation Committee, was a partner with Wilmer, Cutler &
Pickering until January 2000. Since January 2000, Mr. Stamas has served as a
Vice Chair of Deutsche Banc Alex. Brown, an investment bank which served as lead
underwriter in Luminant's initial public offering.
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OTHER INFORMATION
STOCK PERFORMANCE
The following graph compares total stockholder return on our common stock
with the cumulative total return of the Nasdaq Market Index and the cumulative
return of the peer group described in footnote (1) below for the period from
September 16, 1999, the date that Luminant's common stock began trading on the
Nasdaq National Market following our initial public offering, through
December 31, 1999, the end of our most recent fiscal year. The graph plots the
growth in value of an initial $100 investment over the indicated time period,
assuming the reinvestment of dividends.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG LUMINANT WORLDWIDE
CORPORATION, NASDAQ MARKET INDEX AND PEER GROUP INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
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LUMINANT WORLDWIDE CORPORATION PEER GROUP INDEX NASDAQ MARKET INDEX
<S> <C> <C> <C>
9/16/99 100 100 100
9/30/99 116.59 104.11 100
10/31/99 148.34 148.09 107.74
11/30/99 121.33 162.22 120.49
12/31/99 172.51 224.26 147.32
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(1) The peer group is composed of the following companies that we compete with
on a worldwide basis in the internet professional services industry:
Appnet, Inc., Braun Consulting, Inc., iXL Enterprises, Inc.,
Proxicom, Inc., Razorfish, Inc., Sapient Corp., Scient Corp., U.S.
Interactive, Inc., Viant Corp., and MarchFirst, Inc.
PROPOSALS FOR THE 2001 ANNUAL MEETING
If you want to include a proposal in the proxy statement for Luminant's 2001
Annual Meeting, please send the proposal to us at 13737 Noel Road, Suite 1400,
Dallas, Texas 75240, Attention: Thomas G. Bevivino, Secretary. Proposals must be
received on or before December 19, 2000 to be included in next year's proxy
statement. Please note that proposals must comply with all of the requirements
of Rule 14a-8 under the Securities Exchange Act of 1934, as well as the
requirements of our certificate of incorporation and bylaws. Under Rule 14a-4 as
promulgated under the Securities Exchange Act of 1934, we will be able to use
proxies given to us for the 2001 Special Meeting to vote for or against any
stockholder proposal
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submitted other than pursuant to Rule 14a-8 at our discretion unless the
proposal is submitted to us on or before 90 days before next year's annual
meeting.
OTHER MATTERS
Although our management is not aware of any other matters that may come
before the Special Meeting, if any such matters should be presented, the persons
named in the accompanying proxy card intend to vote such proxy in accordance
with their best judgment.
By Order of the Board of Directors
/s/ Michael H. Jordan
Michael H. Jordan
Chairman of the Board
October 31, 2000
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APPENDIX A
FORM OF
LUMINANT WORLDWIDE CORPORATION
1999 LONG-TERM INCENTIVE PLAN
AMENDED AS OF , 2000
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PURPOSE Luminant Worldwide Corporation, a Delaware corporation
(the "COMPANY"), wishes to recruit, reward, and retain
employees and outside directors. To further these
objectives, the Company hereby sets forth the Luminant
Worldwide Corporation 1999 Long-Term Incentive Plan
(the "PLAN"), effective as of September 15, 1999 (the
"EFFECTIVE DATE"), to provide options ("OPTIONS") to
employees and outside directors of the Company and its
Related Companies to purchase shares of the Company's
common stock (the "COMMON STOCK").
PARTICIPANTS All employees of the Company and of any Eligible
Affiliates are eligible for Options under this Plan.
Eligible individuals become "OPTIONEES" when the
Administrator grants them an option under this Plan.
The Administrator may also grant options to directors,
consultants and certain other service providers. The
term OPTIONEE also includes, where appropriate, a
person authorized to exercise an Option in place of
the original recipient. A director serving on behalf
of an investor may, in advance of a grant, request
that the Company grant the option directly to the
investor, provided that the resulting grant may not
qualify for exemption from registration under
Rule 701 or for registration on Form S-8.
EMPLOYEE means any person employed as a common law
employee of the Company or a Related Company. Other
service providers must be natural persons to
participate.
ADMINISTRATOR The ADMINISTRATOR is the Board of Directors of the
Company (the "BOARD"), unless the Board specifies a
committee of the Board (which could be a committee of
one). The Administrator will be the Compensation
Committee of the Board, unless the Board either
specifies another committee or acts under the Plan as
though it were the Compensation Committee.
The Administrator is responsible for the general
operation and administration of the Plan and for
carrying out its provisions and has full discretion in
interpreting and administering the provisions of the
Plan.
Subject to the express provisions of the Plan, the
Administrator may exercise such powers and authority
of the Board as the Administrator may find necessary
or appropriate to carry out its functions. The
Administrator may delegate its functions (other than
those described in the GRANTING OF OPTIONS section) to
officers or other employees of the Company.
The Administrator's powers will include, but not be
limited to, the power to amend, waive, or extend any
provision or limitation of any Option. The
Administrator may act through meetings of a majority
of its members or by unanimous consent.
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The Administrator may also make a direct grant of
Common Stock (with any or no restrictions) as a bonus
or to grant such stock or other awards in lieu of
Company obligations to pay cash under other plans or
compensatory arrangements, including the Company's
Senior Bonus Plan or any deferred compensation plans.
GRANTING OF OPTIONS Subject to the terms of the Plan, the Administrator
will, in its sole discretion, determine
the persons who receive Options,
the terms of such Options,
the schedule for exercisability (including any
requirements that the optionee or the Company
satisfy performance criteria),
the time and conditions for expiration of the
Options, and
the form of payment due upon exercise.
The Administrator's determinations under the Plan need
not be uniform and need not consider whether possible
recipients are similarly situated.
Options granted to employees may be "incentive stock
options" ("ISOS") within the meaning of Section 422 of
the Internal Revenue Code of 1986 (the "CODE"), or the
corresponding provision of any subsequently enacted
tax statute, or nonqualified stock options ("NQSOS"),
and the Administrator will specify which form of
option it is granting. (If the Administrator fails to
specify the form, it will be an ISO to the extent the
tax laws permit.) Any options granted to outside
directors, including Formula Options, or other persons
who are not employees, must be nonqualified stock
options.
SUBSTITUTIONS The Administrator may also grant Options in
substitution for options or other equity interests
held by individuals who become employees of the
Company or of a Related Company as a result of the
Company's or Related Company's acquiring or merging
with the individual's employer or acquiring its
assets. In addition, the Administrator may provide for
the Plan's assumption of options granted outside the
Plan to persons who would have been eligible under the
terms of the Plan to receive a grant, including both
persons who provided services to any acquired company
or business and persons who provided services to the
Company or any Related Company. If necessary to
conform the Options to the interests for which they
are substitutes, the Administrator may grant
substitute Options under terms and conditions
(including Exercise Price) that vary from those the
Plan otherwise requires.
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DIRECTOR FORMULA Each director who is not an employee of the Company
OPTIONS will receive a formula stock option ("FORMULA OPTION")
as of effective date of the registration of the
Company's initial public offering (the "IPO EFFECTIVE
DATE") with respect to 9,000 shares of Common Stock,
as will each non- employee director later appointed or
elected to the Board (with the grant made as of the
date of his first election or appointment). Each such
non-employee director serving on the Board at each
annual meeting of the Company's stockholders
(beginning with the meeting at least six months after
the Effective Date and excluding directors who leave
the Board on the day of the annual meeting) will
receive a Formula Option as of that meeting with
respect to 6,000 shares of Common Stock. The Exercise
Price for Formula Options will be the Fair Market
Value on the Date of Grant. The Board or the
Administrator may also make discretionary Option
grants to outside directors.
EXERCISE SCHEDULE Unless the Administrator specifies otherwise, each
Formula Option will become exercisable as to one-sixth
every six months over the three years following the
Date of Grant, irrespective of whether the director
remains on the Board at such date. A Formula Option
will become exercisable in its entirety upon the
director's death, disability, or attainment of age 70.
DATE OF GRANT The DATE OF GRANT will be the date as of which this
Plan (for Formula Options) or the Administrator grants
an Option to a participant, as specified in the Plan
or in the Administrator's minutes or other written
evidence of action.
EXERCISE PRICE The EXERCISE PRICE is the value of the consideration
that an optionee must provide in exchange for one
share of Common Stock. The Administrator will
determine the Exercise Price under each Option and may
set the Exercise Price without regard to the Exercise
Price of any other Options granted at the same or any
other time. The Company may use the consideration it
receives from the optionee for general corporate
purposes.
The Exercise Price per share for NQSOs may not be less
than 100% of the Fair Market Value of a share on the
Date of Grant for grants made after the IPO Effective
Date. For ISOs, the Exercise Price per share must be
at least 100% of the Fair Market Value (on the Date of
Grant) of a share of Common Stock covered by the
Option; PROVIDED, HOWEVER, that if the Administrator
decides to grant an ISO to someone covered by Code
Sections 422(b)(6) and 424(d) (as a
more-than-10%-stock-owner), the Exercise Price must be
at least 110% of the Fair Market Value.
FAIR MARKET VALUE Fair Market Value of a share of Common Stock for
purposes of the Plan will be determined as follows:
if the Company has no publicly-traded stock, the
Administrator will determine the Fair Market Value for
purposes of the Plan using any measure of value it
determines in good faith to be appropriate;
if the Common Stock trades on a national
securities exchange, the closing sale price on
that date;
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if the Common Stock does not trade on any such
exchange, the closing sale price as reported by
the National Association of Securities
Dealers, Inc. Automated Quotation System
("NASDAQ") for such date;
if no such closing sale price information is
available, the average of the closing bid and
asked prices that Nasdaq reports for such date; or
if there are no such closing bid and asked prices,
the average of the closing bid and asked prices as
reported by any other commercial service for such
date.
For any date that is not a trading day, the Fair
Market Value of a share of Common Stock for such date
will be determined by using the closing sale price or
the average of the closing bid and asked prices, as
appropriate, for the immediately preceding trading
day. The Administrator can substitute a particular
time of day or other measure of "closing sale price"
or "bid and asked prices" if appropriate because of
changes in exchange or market procedures.
The Fair Market Value will be treated as equal to the
price established in an IPO for any Options granted as
of the IPO if they are granted on or before the date
on which the IPO's underwriters price the IPO or
granted on the following day before trading opens in
the Common Stock.
The Administrator has sole discretion to determine the
Fair Market Value for purposes of this Plan, and all
Options are conditioned on the optionees' agreement
that the Administrator's determination is conclusive
and binding even though others might make a different
and also reasonable determination.
EXERCISABILITY The Administrator will determine the times and
conditions for exercise of each Option.
Options will become exercisable at such times and in
such manner as the Administrator determines and the
Option Agreement indicates; PROVIDED, HOWEVER, that
the Administrator may, on such terms and conditions as
it determines appropriate, accelerate the time at
which the optionee may exercise any portion of an
Option.
If the Administrator does not specify otherwise,
Options will become exercisable as to one sixth of the
covered shares six months following the Date of Grant
and one sixth after each following six months, so long
as the optionee remains employed or continues his
relationship as a service provider, and will expire as
of the tenth anniversary of the Date of Grant (unless
they expire earlier under the Plan or the Option
Agreement). The Administrator has the sole discretion
to determine that a change in service-providing
relationship eliminates any further service credit on
the exercise schedule.
No portion of an Option that is unexercisable at an
optionee's termination of service-providing
relationship (for any reason) will thereafter become
exercisable (and the optionee will immediately forfeit
any unexercisable portions at his termination of
service-providing relationship), unless the Option
Agreement provides otherwise, either initially or by
amendment.
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CHANGE OF CONTROL Upon a Change of Control (as defined below), all
Options will BECOME fully exercisable, unless the
optionee's Option Agreement provides otherwise. A
CHANGE OF CONTROL for this purpose means the
occurrence of any one or more of the following events
after the Company's IPO:
(i) sale of all or substantially all of the assets of
the Company to one or more individuals, entities, or
groups (other than an "Excluded Owner" as defined
below);
(ii) complete or substantially complete
dissolution or liquidation of the Company;
(iii) a person, entity, or group (other than an
Excluded Owner) acquires or attains ownership of
more than 50% of the undiluted total voting power
of the Company's then-outstanding securities
eligible to vote to elect members of the Board
("COMPANY VOTING SECURITIES");
(iv) completion of a merger or consolidation of
the Company with or into any other entity (other
than an Excluded Owner) UNLESS the holders of the
Company Voting Securities outstanding immediately
before such completion, together with any trustee
or other fiduciary holding securities under a
Company benefit plan, retain control because they
hold securities that represent immediately after
such merger or consolidation at least 50% of the
combined voting power of the then outstanding
voting securities of either the Company or the
other surviving entity or its ultimate parent;
(v) the individuals who constitute the Board
immediately before a proxy contest cease to
constitute at least a majority of the Board
(excluding any Board seat that is vacant or
otherwise unoccupied) immediately following the
proxy contest; or
(vi) during any two year period, the individuals
who constitute the Board at the beginning of the
period (the "INCUMBENT DIRECTORS") cease for any
reason to constitute at least a majority of the
Board (excluding any Board seat that is vacant or
otherwise unoccupied), provided that any
individuals that a majority of Incumbent Directors
approve for service on the Board are treated as
Incumbent Directors.
An "EXCLUDED OWNER" consists of the Company, any
Related Company, any Company benefit plan, or any
underwriter temporarily holding securities for an
offering of such securities.
Even if other tests are met, a Change of Control has
not occurred under any circumstance in which the
Company files for bankruptcy protection or is
reorganized following a bankruptcy filing. In
addition, the acceleration will not occur if it would
prevent use of "pooling of interest" accounting for a
reorganization, merger, or consolidation of the
Company that the Board approves.
The Administrator may allow conditional exercises in
advance of the completion of a Change of Control that
are then rescinded if no Change of Control occurs.
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SUBSTANTIAL Upon a Change of Control that is also a SUBSTANTIAL
CORPORATE CHANGE CORPORATE CHANGE, the Options will become exercisable
(unless the Change of Control section provides
otherwise) and the Plan and any unexercised Options
will TERMINATE (after the occurrence of one of the
alternatives set forth in the next full paragraph)
unless either (i) such termination would prevent use
of "pooling of interest" accounting for a
reorganization, merger, or consolidation of the
Company that the Board approves, (ii) an agreement
with an optionee provides otherwise or
(iii) provision is made in writing in connection with
such transaction for the assumption or continuation of
outstanding Options, or the substitution for such
options or grants of any options or grants covering
the stock or securities of a successor employer
entity, or a parent or subsidiary of such successor,
with appropriate adjustments as to the number and kind
of shares of stock and prices, in which event the
Options will continue in the manner and under the
terms so provided.
If an Option would otherwise terminate under the
preceding sentence and the Administrator considers
that the Fair Market Value of the Common Stock as a
result of the Substantial Corporate Change exceeds or
is likely to exceed the Exercise Price, the
Administrator will either provide that
optionees will have the right, at such time before the
completion of the transaction causing such termination
as the Board or the Administrator reasonably
designates, to exercise any unexercised portions
of the Option, including those portions that the
Change of Control will make exercisable or
cause the Company, or agree to allow the
successor, to cancel each Option after payment to
the optionee of an amount in cash, cash
equivalents, or successor equity interests
substantially equal to the Fair Market Value under
the transaction minus the Exercise Price for the
shares covered by the Option (and, where the Board
or Administrator determines it is appropriate, any
required tax withholdings).
The Administrator may allow conditional exercises in
advance of the completion of a Substantial Corporate
Change that are then rescinded if no Substantial
Corporate Change occurs.
The Board or other Administrator may take any actions
described in the SUBSTANTIAL CORPORATE CHANGE section,
without any requirement to seek optionee consent.
A "SUBSTANTIAL CORPORATE CHANGE" means any of the
following events:
a sale as described in clause (i) under Change of
Control,
a dissolution or liquidation as described in
clause (ii),
an ownership change as described in clause (iii),
but with the percentage ownership increased to
100%
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merger, consolidation, or reorganization of the
Company with or into one or more corporations or
other entities in which the Company is not the
surviving entity, other than a transaction
intended primarily to change the Company's state
of incorporation or that satisfies clause (iv)
under Change of Control, or any other transaction
(including a merger or reorganization in which the
Company survives) approved by the Board that
results in any person or entity (other than an
Excluded Owner) owning 100% of Company Voting
Securities.
LIMITATION ON ISOS An Option granted to an employee as an ISO will be an
ISO only to the extent that the aggregate Fair Market
Value (determined at the Date of Grant) of the stock
with respect to which ISOs are exercisable for the
first time by the optionee during any calendar year
(under the Plan and all other plans of the Company and
its subsidiary corporations, within the meaning of
Code Section 422(d)), does not exceed $100,000. This
limitation applies to Options in the order in which
such Options were granted. If, by design or operation,
the Option exceeds this limit, the excess will be
treated as an NQSO.
METHOD OF EXERCISE To exercise any exercisable portion of an Option, the
optionee must:
Deliver notice of exercise to the Secretary of the
Company (or to whomever the Administrator designates),
in a form complying with any rules the
Administrator may issue, signed or otherwise
authenticated by the optionee, and specifying the
number of shares of Common Stock underlying the
portion of the Option the optionee is exercising;
Pay the full Exercise Price by cash or a cashier's
or certified check for the shares of Common Stock
with respect to which the Option is being
exercised, unless the Administrator consents to
another form of payment (which could include loans
from the Company or the use of Common Stock); and
Deliver to the Administrator such representations
and documents as the Administrator, in its sole
discretion, may consider necessary or advisable.
After an IPO, payment in full of the Exercise Price
need not accompany the written notice of exercise if
the exercise complies with a previously-approved
cashless exercise method, including, for example, that
the notice directs that the stock certificates (or
other indicia of ownership) for the shares issued upon
the exercise be delivered to a licensed broker
acceptable to the Company as the agent for the
individual exercising the option and at the time the
stock certificates (or other indicia) are delivered to
the broker, the broker will tender to the Company cash
or cash equivalents acceptable to the Company and
equal to the Exercise Price and any required
withholding taxes.
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If the Administrator agrees to allow an optionee to
pay through tendering shares of Common Stock to the
Company, the individual can only tender stock he has
held for at least six months at the time of surrender.
Shares of stock offered as payment will be valued, for
purposes of determining the extent to which the
optionee has paid the Exercise Price, at their Fair
Market Value on the date of exercise. The
Administrator may also, in its discretion, accept
attestation of ownership of Common Stock and issue a
net number of shares upon Option exercise, or, after
an IPO, by having a broker tender to the Company cash
equal to the exercise price and any withholding taxes.
The Administrator may also, at the Date of Grant or
such later time as it determines, permit payment of
any Exercise Price with a full or partially recourse
promissory note containing such terms and conditions
as the Administrator considers appropriate. The terms
or conditions of the note need not require payment of
interest, or may defer all interest payments until the
maturity date of the note. The Administrator may
forgive the note in its sole discretion, including
upon satisfaction of such terms and conditions (which
may include continued employment with the Company) as
the Administrator considers appropriate.
OPTION EXPIRATION No one may exercise an Option more than ten years
after its Date of Grant (or five years for ISOs
granted to 10% owners covered by Code Sections
422(b)(6) and 424(d)). An Optionee will immediately
forfeit and can never exercise any portion of any
Option that is unexercisable at his termination of
service-providing relationship (for any reason),
unless the Option Agreement provides otherwise, either
initially or by amendment. Unless the Option Agreement
provides otherwise, either initially or by amendment,
no one may exercise otherwise exercisable portions of
an Option after the first to occur of:
EMPLOYMENT The 90th day after the date of termination of
TERMINATION employment (other than for death or Disability), where
termination of employment means the time when the
employer-employee or other service-providing
relationship between the employee and the Company (and
all related Companies) ends for any reason. The
Administrator may provide that Options terminate
immediately upon termination of employment for "cause"
under an employee's employment or consultant's
services agreement or under another definition
specified in the Option Agreement. Unless the Option
Agreement or the Administrator provides otherwise,
termination of employment does not include instances
in which the Company immediately rehires a common law
employee as an independent contractor. The
Administrator, in its sole discretion, will determine
all questions of whether particular terminations or
leaves of absence are terminations of employment and
may decide to suspend the exercise schedule during a
leave rather than to terminate the option. Unless the
Option Agreement or the Administrator provides
otherwise, terminations of employment include
situations in which the optionee's employer ceases to
be related to the Company closely enough to be a
Related Company for new grants.
GROSS MISCONDUCT For the Company's termination of the optionee's
employment as a result of the optionee's Gross
Misconduct, the time of such termination. For purposes
of this Plan, "GROSS MISCONDUCT" means the optionee
has
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committed fraud, misappropriation, embezzlement, or
willful misconduct that has resulted or is likely to
result in material harm to the Company or a
Related Company;
committed or been indicted for or convicted of, or
pled guilty or no contest to, any misdemeanor
(other than for minor infractions or traffic
violations) involving fraud, breach of trust,
misappropriation, or other similar activity, or
otherwise relating to the Company, or any felony;
or
committed an act of gross negligence or otherwise
acted with willful disregard for the Company's or
a Related Company's best interests in a manner
that has resulted or is likely to result in
material harm to the Company or a Related Company.
If the optionee has a written employment or other
agreement in effect at the time of his termination
that specifies "cause" for termination, "Gross
Misconduct" for purposes of his termination will refer
to "cause" under the employment or other agreement,
rather than to the foregoing definition.
DISABILITY For disability, the earlier of (i) the first
anniversary of the optionee's termination of
employment for disability and (ii) 60 days after the
optionee no longer has a disability, where
"DISABILITY" means the inability to engage in any
substantial gainful activity because of any medically
determinable physical or mental impairment that can be
expected to result in death or that has lasted or can
be expected to last for a continuous period of not
less than 12 months, or, if the Company then maintains
long-term disability insurance, the date as of which
the individual is eligible for benefits under that
insurance; or
DEATH The date 12 months after the optionee's death.
If exercise is permitted after termination of
service-providing relationship, the Option will
nevertheless expire as of the date that the former
service provider violates any covenant not to compete
or other post-employment covenant in effect between
the Company or a Related Company and the former
employee or other service provider. In addition, an
optionee who exercises an Option more than 90 days
after termination of employment with the Company
and/or Eligible Affiliates will only receive ISO
treatment to the extent the law permits, and becoming
or remaining an employee of another related company
(that is not an Eligible Affiliate) or an independent
contractor will not prevent loss of ISO status because
of the formal termination of employment.
Nothing in this Plan extends the term of an Option
beyond the tenth anniversary of its Date of Grant, nor
does anything in this OPTION EXPIRATION section make
an Option exercisable that has not otherwise become
exercisable, unless the Administrator specifies
otherwise.
OPTION AGREEMENT Option Agreements (which could be certificates) will
set forth the terms of each Option and will include
such terms and conditions, consistent with the Plan,
as the Administrator may determine are necessary or
advisable. To the extent the agreement is inconsistent
with the Plan, the Plan will govern. The Option
Agreements may contain special rules.
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PUT AND CALL RIGHTS The Administrator may provide in Option Agreements or
other agreements that the Company has the right (or
obligation) to purchase outstanding Options, or the
shares received from exercising an Option, under
certain circumstances, including termination of
service-providing relationship for any reason or death
and may provide for rights of first refusal. The
Administrator may distinguish between unexercisable
and exercisable Options.
STOCK SUBJECT TO PLAN Except as adjusted below under CORPORATE CHANGES,
the aggregate number of shares of Common Stock that
may be issued under Options may not exceed 45% of the
shares of Common Stock issues and outstanding,
the maximum number of shares that may be granted
under Options for a single individual in a
calendar year may not exceed 50% of the preceding
number, provided that the individual maximum
applies only to Options first made under this Plan
and not to Options made in substitution of a prior
employer's options or other incentives, except as
Code Section 162(m) otherwise requires, and
the aggregate number of shares of Common Stock
that may be issued under ISOs may not exceed
12,200,000, plus the number necessary to provide
ISOs in substitution for pre-IPO ISOs.
The Common Stock will come from either authorized but
unissued shares or from previously issued shares that
the Company reacquires, including shares it purchases
on the open market or holds as treasury shares. If any
Option expires, is canceled, or terminates for any
other reason, the shares of Common Stock available
under that Option will again be available for the
granting of new Options (but will be counted against
that calendar year's limit for a given individual).
No adjustment will be made for a dividend or other
right (except a stock dividend) for which the record
date precedes the date of exercise.
The optionee will have no rights of a stockholder with
respect to the shares of stock subject to an Option
except to the extent that the Company has issued
certificates for, or otherwise confirmed ownership of,
such shares upon the exercise of the Option.
The Company will not issue fractional shares pursuant
to the exercise of an Option, unless the Administrator
determines otherwise, but the Administrator may, in
its discretion, direct the Company to make a cash
payment in lieu of fractional shares.
PERSON WHO MAY During the optionee's lifetime and except as provided
EXERCISE under TRANSFERS, ASSIGNMENTS, AND PLEDGES, only the
optionee or his duly appointed guardian or personal
representative may exercise the Options. After his
death, his personal representative or any other person
authorized under a will or under the laws of descent
and distribution may exercise any then exercisable
portion of an Option. If someone other than the
original recipient seeks to exercise any portion of an
Option, the Administrator may request such proof as it
may consider necessary or appropriate of the person's
right to exercise the Option.
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ADJUSTMENTS UPON Subject to any required action by the Company (which
CHANGES IN CAPITAL it agrees to promptly take) or its stockholders, and
STOCK subject to the provisions of applicable corporate law,
if, after the Date of Grant of an Option,
the outstanding shares of Common Stock increase or
decrease or change into or are exchanged for a
different number or kind of security because of
any recapitalization, reclassification, stock
split, reverse stock split, combination of shares,
exchange of shares, stock dividend, or other
distribution payable in capital stock, or
some other increase or decrease in such Common
Stock occurs without the Company's receiving
consideration (excluding, unless the Administrator
determines otherwise, stock repurchases),
the Administrator must make a proportionate and
appropriate adjustment in the number of shares of
Common Stock underlying each Option, so that the
proportionate interest of the optionee immediately
following such event will, to the extent
practicable, be the same as immediately before
such event. (This adjustment does not apply to
Common Stock that the optionee has already
purchased.) Unless the Administrator determines
another method would be appropriate, any such
adjustment to an Option will not change the total
price with respect to shares of Common Stock
underlying the unexercised portion of the Option
but will include a corresponding proportionate
adjustment in the Option's Exercise Price. The
Board or other Administrator may take any actions
described in the ADJUSTMENTS UPON CHANGES IN
CAPITAL STOCK section without any requirement to
seek optionee consent.
The Administrator will make a commensurate change to
the maximum number and kind of shares provided in the
STOCK SUBJECT TO PLAN section.
All references to numbers of shares of Common Stock in
the Plan and in any Option grants made on or before
the IPO Effective Date assume the IPO is or will be
completed and thus relate to post-IPO numbers of
shares.
Any issue by the Company of any class of preferred
stock, or securities convertible into shares of common
or preferred stock of any class, will not affect, and
no adjustment by reason thereof will be made with
respect to, the number of shares of Common Stock
subject to any Option or the Exercise Price except as
this ADJUSTMENTS section specifically provides. The
grant of an Option under the Plan will not affect in
any way the right or power of the Company to make
adjustments, reclassifications, reorganizations or
changes of its capital or business structure, or to
merge or to consolidate, or to dissolve, liquidate,
sell, or transfer all or any part of its business or
assets.
RELATED COMPANY Employees of Eligible Affiliates will be entitled to
EMPLOYEES participate in the Plan, except as otherwise
designated by the Board of Directors or the
Administrator.
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"ELIGIBLE AFFILIATE" means each of the Related
Companies, except as the Administrator otherwise
specifies. For ISO grants, "RELATED COMPANY" means any
corporation in an unbroken chain of corporations
including the Company if, at the time an Option is
granted to a Participant under the Plan, each
corporation (other than the last corporation in the
unbroken chain) owns stock possessing 50% or more of
the total combined voting power of all classes of
stock in another corporation in such chain. Related
Company also includes a single-member limited
liability company included within the chain described
in the preceding sentence. The Board or the
Administrator may use a different definition of
Related Company for NQSOs and may include other forms
of entity at the same level of equity relationship (or
such other level as the Board or the Administrator
specifies).
LEGAL COMPLIANCE The Company will not issue any shares of Common Stock
under an Option until all applicable requirements
imposed by Federal and state securities and other
laws, rules, and regulations, and by any applicable
regulatory agencies or stock exchanges, have been
fully met. To that end, the Company may require the
optionee to take any reasonable action to comply with
such requirements before issuing such shares.
including compliance with any Company black-out
periods or trading restrictions. No provision in the
Plan or action taken under it authorizes any action
that Federal or state laws otherwise prohibit.
The Plan is intended to conform to the extent
necessary with all provisions of the Securities Act of
1933 ("SECURITIES ACT") and the Securities Exchange
Act of 1934 and all regulations and rules the
Securities and Exchange Commission issues under those
laws. Notwithstanding anything in the Plan to the
contrary, the Administrator must administer the Plan,
and Options may be granted and exercised, only in a
way that conforms to such laws, rules, and
regulations. To the extent permitted by applicable
law, the Plan and any Options will be treated as
amended to the extent necessary to conform to such
laws, rules, and regulations.
PURCHASE FOR Unless a registration statement under the Securities
INVESTMENT AND OTHER Act covers the shares of Common Stock an optionee
RESTRICTIONS receives upon exercising his Option, the Administrator
may require, at the time of such exercise, that the
optionee agree in writing to acquire such shares for
investment and not for public resale or distribution,
unless and until the shares subject to the Option are
registered under the Securities Act. Unless the shares
are registered under the Securities Act, the optionee
must acknowledge:
that the shares purchased on exercise of the Option
are not so registered,
that the optionee may not sell or otherwise
transfer the shares unless
such sale or transfer complies with all
applicable laws, rules, and regulations, including
all applicable Federal and state securities
laws, rules, and regulations, and either
the shares have been registered under the
Securities Act in connection with the sale or
transfer thereof, or
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counsel satisfactory to the Company has issued
an opinion satisfactory to the Company that
the sale or other transfer of such shares is
exempt from registration under the Securities
Act.
Additionally, the Common Stock, when issued upon the
exercise of an Option, will be subject to any other
transfer restrictions, rights of first refusal, and
rights of repurchase set forth in or incorporated by
reference into other applicable documents, including
the Option Agreements, or the Company's articles or
certificate of incorporation, by-laws, or generally
applicable stockholders' agreements.
The Administrator may, in its sole discretion, take
whatever additional actions it deems appropriate to
comply with such restrictions and applicable laws,
including placing legends on certificates and issuing
stop-transfer orders to transfer agents and
registrars.
TAX WITHHOLDING The optionee must satisfy all applicable Federal,
state, and local income and employment tax withholding
requirements before the Company will deliver stock
certificates or otherwise recognize ownership upon the
exercise of an Option. The Company may decide to
satisfy the withholding obligations through additional
withholding on salary or wages. If the Company does
not or cannot withhold from other compensation, the
optionee must pay the Company, with a cashier's check
or certified check, the full amounts, if any, required
for withholding. Payment of withholding obligations is
due before the Company will issue any shares on
exercise or, if the Administrator so requires, at the
same time as is payment of the Exercise Price. If the
Administrator so determines, the optionee may instead
satisfy the withholding obligations by directing the
Company to retain shares from the Option exercise, by
tendering previously owned shares, or by attesting to
his ownership of shares (with the distribution of net
shares), or, after an IPO, by having a broker tender
to the Company cash equal to the withholding taxes.
Without any requirement to seek an optionee's consent,
the Company may require the optionee to use one or
more specified brokerage firms to exercise and to hold
shares received from Options until the later of two
years after exercise or one year after the Date of
Grant.
TRANSFERS, Unless the Administrator otherwise approves in advance
ASSIGNMENTS, AND in writing for estate planning or other purposes, an
PLEDGES Option may not be assigned, pledged, or otherwise
transferred in any way, whether by operation of law or
otherwise or through any legal or equitable
proceedings (including bankruptcy), by the optionee to
any person, except by will or by operation of
applicable laws of descent and distribution. If
necessary to comply with Rule 16b-3, the optionee may
not transfer or pledge shares of Common Stock acquired
upon exercise of an Option until at least six months
have elapsed from (but excluding) the Date of Grant,
unless the Administrator approves otherwise in advance
in writing. The Administrator may, in its discretion,
expressly provide that an optionee may transfer his
Option, without receiving consideration, to
(i) members of his immediate family (children,
grandchildren, or spouse), (ii) trusts for the
benefit of such family members, or (iii) partnerships
whose only partners are such family members.
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AMENDMENT OR The Board may amend, suspend, or terminate the Plan at
TERMINATION OF PLAN any time, without the consent of the optionees or
AND OPTIONS their beneficiaries; PROVIDED, HOWEVER, that such
actions are consistent with this section. Except as
required by law or by the Substantial Corporate
Changes section, the Administrator may not, without
the optionee's or beneficiary's consent, modify the
terms and conditions of an Option so as to materially
adversely affect the optionee. No amendment,
suspension, or termination of the Plan will, without
the optionee's or beneficiary's consent, terminate or
materially adversely affect any right or obligations
under any outstanding Options, except as provided in
the Substantial Corporate Changes Section.
PRIVILEGES OF STOCK No optionee and no beneficiary or other person
OWNERSHIP claiming under or through such optionee will have any
right, title, or interest in or to any shares of
Common Stock allocated or reserved under the Plan or
subject to any Option except as to such shares of
Common Stock, if any, already issued to such optionee.
EFFECT ON OTHER PLANS Whether exercising an Option causes the optionee to
accrue or receive additional benefits under any
pension or other plan is governed solely by the terms
of such other plan.
LIMITATIONS ON Notwithstanding any other provisions of the Plan, no
LIABILITY individual acting as a director, officer, other
employee, or agent of the Company will be liable to
any optionee, former optionee, spouse, beneficiary, or
any other person for any claim, loss, liability, or
expense incurred in connection with the Plan, nor will
such individual be personally liable because of any
contract or other instrument he executes in such other
capacity. The Company will indemnify and hold harmless
each director, officer, other employee, or agent of
the Company to whom any duty or power relating to the
administration or interpretation of the Plan has been
or will be delegated, against any cost or expense
(including attorneys' fees) or liability (including
any sum paid in settlement of a claim with the Board's
approval) arising out of any act or omission to act
concerning this Plan unless arising out of such
person's own fraud or bad faith.
NO EMPLOYMENT Nothing contained in this Plan constitutes an
CONTRACT employment contract between the Company and the
optionees. The Plan does not give any optionee any
right to be retained in the Company's employ, nor does
it enlarge or diminish the Company's right to end the
optionee's employment or other relationship with the
Company.
APPLICABLE LAW The laws of the State of Delaware (other than its
choice of law provisions) govern this Plan and its
interpretation.
DURATION OF PLAN Unless the Board extends the Plan's term, the
Administrator may not grant after September 14, 2009.
The Plan will then terminate but will continue to
govern unexercised and unexpired Options.
APPROVAL OF THE PLAN The Plan must be submitted to Company stockholders for
their approval within 12 months before or after the
Board adopts the Plan to qualify any Options
designated as ISOs for treatment as such. If the
stockholders do not so approve the Plan, the Plan and
any outstanding ISOs will be treated as void and of no
effect.
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Please Detach and Mail in the Envelope Provided
PROXY FOR THE SPECIAL MEETING OF STOCKHOLDERS OF
LUMINANT WORLDWIDE CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS AND MAY BE REVOKED PRIOR TO ITS EXERCISE.
The undersigned stockholder(s) of Luminant Worldwide Corporation (the
"Company") hereby appoint(s) Messrs. James R. Corey and Thomas G. Bevivino,
and each of them singly, as proxies, each with full power of substitution,
for and in the name of the undersigned at the Special Meeting of stockholders
of the Company to be held on Monday, November 20, 2000, and at any and all
adjournments thereof, to vote all common shares of said Company held of
record by the undersigned on October 20, 2000, as if the undersigned were
present and voting the shares.
(SEE REVERSE SIDE)
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Please Detach and Mail in the Envelope Provided
<S> <C>
/X/ PLEASE MARK YOUR VOTES
AS IN THIS EXAMPLE.
LUMINANT'S BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 1.
FOR AGAINST ABSTAIN
1. Approval of Proposed Amendment to / / / / / /
1999 Long-Term Incentive Plan
If this card is properly executed, shares will be voted in the
manner directed herein by the undersigned. If no direction is
made, shares will be voted FOR Proposal 1, and in accordance with
the discretion of the proxies' on such other business that may
properly come before the meeting, to the extent permitted by law.
Please sign exactly as name appears to the
left. Joint owners should each sign. When
signing as attorney, executor, administrator,
trustee or guardian, please give full title
as such.
Signatures(s) Date _________, 2000
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