<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-12
Luminant Worldwide Corporation
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
Michael H. Jordan Luminant Worldwide Corporation
Chairman of the Board of Directors 13737 Noel Road, Suite 1400
Dallas, Texas 75240
[Logo]
October 30, 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
9:00 a.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 30, 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 40% of the common stock of
Luminant issued and outstanding on a floating basis; 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 30, 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 9:00 a.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 30, 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
ITEM 1: AMENDMENT TO THE 1999 LONG-TERM INCENTIVE PLAN.......................................................2
STOCK OWNERSHIP....................................................................................................
EXECUTIVE COMPENSATION AND RELATED MATTERS.........................................................................
OTHER INFORMATION..................................................................................................
APPENDIX A: AMENDMENT NO. 1 TO LUMINANT WORLDWIDE CORPORATION 1999 LONG-TERM INCENTIVE PLAN.......................
</TABLE>
<PAGE>
INFORMATION ABOUT THE SPECIAL MEETING AND VOTING
THE SPECIAL MEETING
The Special Meeting will be held on Monday, November 20, 2000 at 9:00
a.m. Eastern Standard Time at 285 Madison Avenue, New York, New York. On or
about October 30, 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
<PAGE>
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.
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 INCENTIVE PLAN Approval of the proposed amendment to the 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>
2
<PAGE>
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 an increase under the plan to 40% of the shares
outstanding for this purpose. Other changes to the plan are expected to be
approved before we file our definitive proxy, including stock for bonuses and
the possibility of using loans to pay for stock. Attached as Exhibit A to this
proxy is the form of plan substantially in the form we expect the Board to
approve before we file the definitive proxy.
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 40% 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 10,500,000 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 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
3
<PAGE>
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
4
<PAGE>
Nonqualified Stock Options. An optionee will not be taxed when he receives
an 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. 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
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.
5
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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.
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.
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; and
- all directors and executive officers as a group.
6
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<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
BENEFICIALLY PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER(1) OWNED (2) COMMON STOCK (%) (2)(3)
------ -----------------------
<S> <C> <C>
Young & Rubicam 7,385,393(4) 18.5%
James R. Corey GRAT dated July 9, 1999 1,492,283(5) 5.5%
Randolph L. Austin 2,366(6) *
Joseph W. Autem 205,270(7) *
Thomas G. Bevivino 25,216(8) *
James R. Corey 1,989,711(9)(17) 7.3%
Michael J. Dolan 6,666(10) *
Michael H. Jordan 113,361(11) *
Guillermo G. Marmol 1,409,132(12) 5.2%
Donald S. Perkins 21,942(13) *
Derek R. Reisfield 348,385(14) *
Richard M. Scruggs 815,247(15) *
George P. Stamas 666(16) *
Montrose Investments Ltd. (17) %
Strong River Investments Inc. (17) %
Michael R. Alsup 1,416,421(18) 5.2%
William M. Markel 539,857(19) *
David Quackenbush 37,840(20) *
Michael Smith 46,664(21) *
Scott Williamson 127,676(22) *
All directors and executive officers
as a group (15 persons) 15,058,136 55.4%
</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 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.
7
<PAGE>
(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. 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 666 shares 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) Mr. Autem served as our Chief Financial Officer from January 1999 until July
1999. Includes 191,381 shares of common stock held by Autem Technology Partners,
L.P., of which Autem LLC, of which Mr. Autem is the managing partner, is general
partner. Includes 13,889 shares as to which Mr. Autem has the right to acquire
beneficial ownership within 60 days after October 15, 2000.
(8) Includes 23,416 shares 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.
(9) 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
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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 as to which Mr. Corey
has the right to acquire beneficial ownership within 60 days after October
15, 2000.
(10) Includes 666 shares as to which Mr. Dolan has the right to acquire
beneficial ownership within 60 days after October 15, 2000. Does not include
shares beneficially owned by Young & Rubicam, Inc., of which Mr. Dolan is Vice
Chairman, Chief Financial Officer and a director.
(11) Includes 1,000 shares as to which Mr. Jordan has the right to acquire
beneficial ownership within 60 days after October 15, 2000. Does not include
shares beneficially owned by Young & Rubicam, Inc., of which Mr. Jordan is a
director.
(12) Includes 898,836 shares as to which Mr. Marmol has the right to acquire
beneficial ownership within 60 days after October 15, 2000.
(13) Includes 2,166 shares 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.
(14) Mr. Reisfield served as a Vice Chairman and Executive Vice President from
October 1999 until March 31, 2000. Includes 239,023 shares as to which Mr.
Reisfield has the right to acquire beneficial ownership within 60 days after
October 15, 2000. Also includes 500 shares owned by I-Hatch LLC, of which Mr.
Reisfield is a managing principal and has one-third ownership. Also includes
54,681 shares owned by R4 Venture Partners I. Mr. Reisfield is a general partner
and has 31.25% ownership of R4 Venture Partners I, and therefore may be deemed
to be a beneficial owner of the shares held by R4 Venture Partners I.
(15) Includes 25,538 shares as to which Mr. Scruggs has the right to acquire
beneficial ownership within 60 days after October 15, 2000. 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. Also includes 639,109 shares held jointly by Mr. Scruggs and his wife.
(16) Includes 666 shares as to which Mr. Stamas has the right to acquire
beneficial ownership within 60 days after October 15, 2000.
(17) In September 2000, we entered into a convertible debenture purchase
agreement with Montrose Investments Ltd., Strong River Investments Inc. and Mr.
Corey, under which we sold to Montrose, Strong River and Mr. Corey warrants to
purchase shares of common stock as well as debentures which are convertible into
shares of common stock. The term of the convertible
9
<PAGE>
debentures is three years, and they are convertible into common stock at a
conversion price of 110% of the average closing price of the common stock for
the 20 trading days after September 26, 2000. The term of the warrants is
five years, and they are exercisable at an exercise price of 120% of the
average closing price of the common stock for 20 trading days after September
26, 2000. The number of shares of common stock into which the convertible
debentures and warrants are convertible and exercisable, and the exercise
price of each, cannot be determined until after October 24, 2000, since the
number of shares underlying the convertible debentures and warrants is based
on the average closing price of the common stock between September 26, 2000
and October 24, 2000. As a result, no assumptions regarding the number of
shares issuable upon conversion of the convertible debentures and warrants
have been included in the table above.
(18) Includes 2,222 shares as to which Mr. Alsup has the right to acquire
beneficial ownership within 60 days after October 15, 2000.
(19) Includes 2,166 shares as to which Mr. Markel has the right to acquire
beneficial ownership within 60 days after October 15, 2000.
(20) Includes 10,404 shares as to which Mr. Quackenbush has the right to acquire
beneficial ownership within 60 days after October 15, 2000.
(21) Includes 11,833 shares as to which Mr. Smith has the right to acquire
beneficial ownership within 60 days after October 15, 2000.
(22) Includes 20,829 shares as to which Mr. Williamson has the right to acquire
beneficial ownership within 60 days after October 15, 2000.
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
10
<PAGE>
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.
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
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<PAGE>
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
12
<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 $100,000. We will use the term
"named executive officers" to refer to these people elsewhere in this proxy
statement.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION (1) LONG-TERM COMPENSATION
---------------------------------------- ------------------------------------------------------
AWARDS PAYOUTS
------------------------ ----------------------------
OTHER SECURITIES
ANNUAL RESTRICTED UNDERLYING LONG-TERM ALL OTHER
NAME & PRINCIPAL COMPEN- STOCK OPTIONS / SARS INCENTIVE PLAN COMPEN-
POSITION YEAR SALARY BONUS SATION AWARD(S) (#) PAYOUTS ($) ATION
<S> <C> <C> <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) 372(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 - 69,444(7)
Derek R. Reisfield(8) 1999 307,850 - (2) - 239,023 - -
</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
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<PAGE>
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.
(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.
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<PAGE>
(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,
15
<PAGE>
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 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
16
<PAGE>
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 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:
17
<PAGE>
<TABLE>
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS/SARS MARKET
OPTIONS/ GRANTED TO EXERCISE OR PRICE ON GRANT DATE
SARS EMPLOYEES IN BASE PRICE DATE OF EXPIRATION PRESENT
NAME GRANTED (#) FISCAL YEAR (1) ($/SHARE) GRANT DATE VALUE
$ (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.
(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.
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<PAGE>
(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
UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS/SARS AT IN-THE-MONEY
ACQUIRED VALUE DECEMBER 31, 1999 OPTIONS/SARS AT DECEMBER
ON EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE 31, 1999
NAME (#) ($) (#) (1) EXERCISABLE/UNEXERCISABLE
($)(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.
LIMITATION OF LIABILITY; INDEMNIFICATION OF OFFICERS AND DIRECTORS
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<PAGE>
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.
OTHER INFORMATION
STOCK PERFORMANCE
20
<PAGE>
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.
<TABLE>
<CAPTION>
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
</TABLE>
ASSUMES $100 INVESTED ON SEPT. 18, 1999
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DEC. 31, 1999
(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
21
<PAGE>
us for the 2001 Special Meeting to vote for or against any stockholder
proposal 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 30, 2000
22
<PAGE>
APPENDIX A
A-1
<PAGE>
EXHIBIT A
FORM OF
LUMINANT WORLDWIDE CORPORATION
1999 LONG-TERM INCENTIVE PLAN
AMENDED AS OF _________, 2000
<TABLE>
<S> <C>
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
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1999 Long-Term Incentive Plan
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<PAGE>
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.
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 Subject to the terms of the Plan, the Administrator will,
OPTIONS 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
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Luminant Worldwide Corporation
1999 Long-Term Incentive Plan
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<PAGE>
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.
DIRECTOR Each director who is not an employee of the Company will
FORMULA receive a formula stock option ("FORMULA OPTION") as of
OPTIONS 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 Unless the Administrator specifies otherwise, each Formula
SCHEDULE 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
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Luminant Worldwide Corporation
1999 Long-Term Incentive Plan
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<PAGE>
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 FAIR MARKET VALUE of a share of Common Stock for purposes
VALUE 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;
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
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Luminant Worldwide Corporation
1999 Long-Term Incentive Plan
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<PAGE>
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.
CHANGE OF Upon a Change of Control (as defined below), all Options will
CONTROL 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");
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Luminant Worldwide Corporation
1999 Long-Term Incentive Plan
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<PAGE>
(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.
SUBSTANTIAL Upon a Change of Control that is also a SUBSTANTIAL
CORPORATE CORPORATE CHANGE, the Options will become exercisable
CHANGE (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
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Luminant Worldwide Corporation
1999 Long-Term Incentive Plan
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<PAGE>
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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Luminant Worldwide Corporation
1999 Long-Term Incentive Plan
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<PAGE>
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 An Option granted to an employee as an ISO will be an ISO
ON ISOS 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 To exercise any exercisable portion of an Option, the
EXERCISE 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
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<PAGE>
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.
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 No one may exercise an Option more than ten years after
EXPIRATION 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
TERMINATION of 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
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1999 Long-Term Incentive Plan
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<PAGE>
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
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
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Luminant Worldwide Corporation
1999 Long-Term Incentive Plan
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<PAGE>
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 Option Agreements (which could be certificates) will
AGREEMENT 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.
PUT AND CALL The Administrator may provide in Option Agreements
RIGHTS 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 Except as adjusted below under CORPORATE CHANGES,
TO PLAN
the aggregate number of shares of Common
Stock that may be issued under Options may
not exceed 40% 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
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Luminant Worldwide Corporation
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<PAGE>
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 10,500,000, 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 During the optionee's lifetime and except as
MAY EXERCISE provided 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.
ADJUSTMENTS Subject to any required action by the Company (which
UPON CHANGES it agrees to promptly take) or its stockholders,
IN CAPITAL and subject to the provisions of applicable corporate
STOCK law, if, after the Date of Grant of an Option,
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Luminant Worldwide Corporation
1999 Long-Term Incentive Plan
Page 12 of 18
<PAGE>
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 Employees of Eligible Affiliates will be entitled to
COMPANY participate in the Plan, except as otherwise designated by
EMPLOYEES the Board of Directors or the Administrator.
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1999 Long-Term Incentive Plan
Page 13 of 18
<PAGE>
"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 The Company will not issue any shares of Common Stock under
COMPLIANCE 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 Act
INVESTMENT covers the shares of Common Stock an optionee receives
AND OTHER upon exercising his Option, the Administrator may require,
RESTRICTIONS 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,
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Luminant Worldwide Corporation
1999 Long-Term Incentive Plan
Page 14 of 18
<PAGE>
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
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 The optionee must satisfy all applicable Federal, state,
WITHHOLDING 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
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Luminant Worldwide Corporation
1999 Long-Term Incentive Plan
Page 15 of 18
<PAGE>
exercise and to hold shares received from Options until
the later of two years after exercise or one year after
the Date of Grant.
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Luminant Worldwide Corporation
1999 Long-Term Incentive Plan
Page 16 of 18
<PAGE>
TRANSFERS, Unless the Administrator otherwise approves in advance in
ASSIGNMENTS, writing for estate planning or other purposes, an Option may
AND PLEDGES 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.
AMENDMENT OR The Board may amend, suspend, or terminate the Plan at any
TERMINATION time, without the consent of the optionees or their
OF PLAN AND beneficiaries; PROVIDED, HOWEVER, that such actions are
OPTIONS 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 No optionee and no beneficiary or other person claiming
STOCK under or through such optionee will have any right, title,
OWNERSHIP 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 Whether exercising an Option causes the optionee to accrue
OTHER PLANS 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
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Luminant Worldwide Corporation
1999 Long-Term Incentive Plan
Page 17 of 18
<PAGE>
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 employment
CONTRACT 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 Unless the Board extends the Plan's term, the Administrator
PLAN 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 must be submitted to Company stockholders for their
THE PLAN 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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Luminant Worldwide Corporation
1999 Long-Term Incentive Plan
Page 18 of 18
</TABLE>
<PAGE>
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]
[X] Please mark your votes
as in this example.
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.
Luminant's Board of Directors recommends a vote "FOR" Proposal 1.
FOR
1. Approval of Proposed Amendment to [ ]
1999 Long-Term Incentive Plan
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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