<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14a INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for the Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
</TABLE>
Globix Corp
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which 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> 2
GLOBIX CORPORATION
295 LAFAYETTE STREET
NEW YORK, NEW YORK 10012
NOTICE OF 1999 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD April 23, 1999
TO: THE SHAREHOLDERS OF GLOBIX CORPORATION
NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of Shareholders of GLOBIX
CORPORATION (the "Company"), a Delaware corporation, will be held at the offices
of the corporation at 139 Centre Street, New York, New York 10012 on Friday,
April 23, 1999, at 11:00 a.m., local time, for the following purposes:
1. To elect seven directors to serve, subject to the provisions of the
By-laws, until the next Annual Meeting of Shareholders and until their
respective successors have been duly elected and qualified;
2. To consider and act upon a proposal to approve the Company's 1999 Stock
Option Plan;
3. To consider and act upon a proposal to amend the Certificate of
Incorporation to change the Company's authorized common stock to
50,000,000 shares having a par value of $.01 per share;
4. To consider and act upon a proposal to approve an amendment to Marc
Bell's employment agreement;
5. To consider and act upon a proposal to approve the selection of Arthur
Andersen LLP as the Company's independent auditors for the fiscal year
ending September 30, 1999;
6. To transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on March 5, 1999 as the
record date for the meeting. Only holders of shares of record at that time will
be entitled to notice of and to vote at the 1999 Annual Meeting of Shareholders
or any adjournment or adjournments thereof.
By order of the Board of Directors.
Marc H. Bell
Chairman of the Board
New York, New York
March 23, 1999
- --------------------------------------------------------------------------------
IMPORTANT
IF YOU CANNOT PERSONALLY ATTEND THE MEETING, IT IS REQUESTED THAT YOU
INDICATE YOUR VOTE ON THE ISSUES INCLUDED ON THE ENCLOSED PROXY AND DATE,
SIGN AND MAIL IT IN THE ENCLOSED SELF-ADDRESSED ENVELOPE THAT REQUIRES NO
POSTAGE IF MAILED IN THE UNITED STATES.
- --------------------------------------------------------------------------------
<PAGE> 3
GLOBIX CORPORATION
295 LAFAYETTE STREET, NEW YORK, NEW YORK 10012
- --------------------------------------------------------------------------------
PROXY STATEMENT
FOR
1999 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 23, 1999
- --------------------------------------------------------------------------------
March 23, 1999
The enclosed proxy is solicited by the Board of Directors of Globix
Corporation, a Delaware corporation (the "Company") in connection with the 1999
Annual Meeting of Shareholders to be held at the offices of the corporation at
139 Centre Street, New York, New York 10012 on Friday, April 23, 1999, at 11:00
a.m., local time, and any adjournments thereof, for the purposes set forth in
the accompanying Notice of Meeting. Unless instructed to the contrary on the
proxy, it is the intention of the persons named in the proxy to vote the proxies
in favor of (i) the election as directors of the seven nominees listed below to
serve until the next annual meeting of shareholders; (ii) approval of the
Company's 1999 Stock Option Plan; (iii) approval of the proposal to amend the
Certificate of Incorporation to change the authorized common stock of the Common
Stock of the Company to 50,000,000 shares having a par value of $.01 per share;
(iv) approval of the proposal to amend Marc Bell's employment agreement; and (v)
approval of the selection of Arthur Andersen LLP as the Company's independent
auditors for the fiscal year ending September 30, 1999. The record date with
respect to this solicitation is the close of business on March 5, 1999, and only
shareholders of record at that time will be entitled to vote at the meeting.
The principal executive office of the Company is 295 Lafayette Street, New
York, New York 10012, and its telephone number is (212) 334-8500. The shares
represented by all validly executed proxies received in time to be taken to the
meeting, and not previously revoked, will be voted at the meeting. The proxy may
be revoked by the shareholder at any time prior to its being voted. This proxy
statement and the accompanying proxy were mailed to you on or about March 23,
1999.
OUTSTANDING SHARES
The number of outstanding shares entitled to vote at the meeting is 4,153,396
common shares, par value $.01 per share each of which is entitled to one vote.
The presence in person or by proxy at the Annual Meeting of the holders of
one-third of such shares shall constitute a quorum. There is no cumulative
voting.
Assuming the presence of a quorum at the Annual Meeting, the affirmative vote
of a majority of the common shares present at the meeting and entitled to vote
on each matter is required for the election as directors of the seven nominees
listed below and the amendment to Marc Bell's employment agreement. The
affirmative vote of the holders of a majority of the total outstanding common
shares is necessary to approve the Company's 1999 Stock Option Plan and the
amendment to the Certificate of Incorporation. Votes shall be counted by one or
more employees of the Company's Transfer Agent who shall serve as the inspectors
of election. The inspectors of election will canvas the shareholders
<PAGE> 4
present in person at the meeting, count their votes and count the votes
represented by proxies presented. Abstentions and broker non-votes are counted
for purposes of determining the number of shares represented at the meeting, but
are deemed not to have voted on the proposal. Broker non-votes occur when a
broker nominee (which has voted on one or more matters at the meeting) does not
vote on one or more other matters at the meeting because it has not received
instructions to so vote from the beneficial owner and does not have
discretionary authority to so vote.
ELECTION OF DIRECTORS
The seven persons named below, who are currently members of the Board of
Directors, have been nominated for re-election to serve until the next Annual
Meeting of Shareholders and until their respective successors have been elected
and qualified.
Unless stated to be voted otherwise, each proxy will be voted for the election
of the nominees named below. All of the nominees have consented to serve as
directors if elected. If at the time of the Annual Meeting any nominee is unable
or declines to serve, the proxies may be voted for any other person who shall be
nominated by the present Board of Directors to fill the vacancy.
<TABLE>
<CAPTION>
Number of Shares
Positions with Beneficially Owned Percent
NAME AND AGE the Company Director Since at February 26, 1999 of Class
- ------------ -------------- -------------- -------------------- --------
<S> <C> <C> <C> <C>
Marc H. Bell, 31 President & Chief 1989 1,713,093 (1) 39.9%
Executive Officer
Robert B. Bell, 59 Executive Vice- 1994 120,051 (2) 2.8%
President & Chief
Financial Officer
T. Shiraishi, 54 Director 1994 612,500 (3) 14.8%
Martin Fox, 63 Director 1995 26,000 (4) *
Dr. Richard Director 1995 26,000 (5) *
Videbeck, 74
Lord Anthony Director 1997 20,000 (6) *
St. John, 41
Sid Paterson, 58 Director 1998 30,000 (7) *
</TABLE>
Mr. Marc Bell has been President and Chief Executive Officer since he founded
the Company in 1989. Since re-focusing the Company on Internet-related services,
Mr. Bell has appeared on numerous television broadcasts and has been frequently
quoted in numerous national publications regarding Internet-related topics. Mr.
Bell has a B.S. degree in accounting from Babson College and an M.S. Degree in
Real Estate Finance from New York University. Mr. Bell is the son of Robert B.
Bell. Mr. Bell is a member of the Board of Directors of Cybernet Data Systems,
Inc., the "publisher" of the web site Edgar-on-Line.com.
-2-
<PAGE> 5
Mr. Robert Bell has served as Executive Vice President and Chief Financial
Officer of the Company since 1994. Mr. Bell is also the Managing Director of the
Company's UK subsidiary, Globix Limited. Prior to joining the Company, Mr. Bell
spent three years at Coopers & Lybrand. Thereafter, he was a practicing attorney
in New York City at the firm of Bell, Kalnick, Beckman, Klee and Green, which
Mr. Bell founded in the early 1970s, and specialized in the law of international
real estate joint ventures and investment. He is the author of Joint Ventures in
Real Estate published by John Wiley & Sons. Prior to 1994, Mr. Bell was for many
years an Adjunct Professor at New York University. Mr. Bell is the father of
Marc H. Bell. Mr. Bell has a B.S. degree from New York University and a J.D.
degree from the University of California at Berkeley.
Mr. Martin Fox has been the President and a director of Initio, Inc., a publicly
owned e-commerce and catalogue specialty retailer of consumer products for more
than five years.
Dr. Richard Videbeck has been an independent consultant in consumer risk
analysis, particularly for retailers and banks. From 1974 until 1986, Dr.
Videbeck was a Professor of Sociology at the University of Illinois at Chicago.
From 1974 to 1977, Dr. Videbeck was the Dean of the Doctor of Arts Program of
the Graduate College of the University of Illinois at Chicago.
Anthony St. John, Lord St. John of Bletso has been a director of the Company
since October 1997. Since 1978, Lord St. John has served as a sitting member of
the House of Lords of the Parliament of the United Kingdom and an Extra
Lord-in-Waiting to Her Majesty the Queen. He is also a member of The House of
Lords' European Union Sub-Committee on Economic and Financial Affairs, Trade and
External Relations. Since 1993, he has served as a consultant to Merrill Lynch
and is a Registered Representative of the London Stock Exchange. He is also a
director of Globix Limited and its Director of Business Development. He received
his BA and BSC from Capetown University and LLB from the University of South
Africa and an LLM (Masters of Law) from the London School of Economics. He
qualified as an attorney/solicitor in Capetown, South Africa.
Mr. Tsuyoshi Shiraishi has been a director of the Company since July 1994. Mr.
Shiraishi has been the Chairman of Century World PTE Ltd., an investment
consulting firm, and the Managing Director of Harpoon Holdings Ltd., a British
Virgin Islands holding company, since 1992. From 1990 to 1994, Mr. Shiraishi was
the Director of Marketing & Investment for Kajima Overseas Asia PTE Ltd., a
subsidiary of Kajima Corporation, an international construction company. In
addition, since 1990, Mr. Shiraishi has been Vice Chairman of Century
International Hotels, which operates and manages 21 hotels in the Pacific Rim.
He is the sole shareholder of Harpoon, which is a major stockholder of the
Company. Mr. Shiraishi is a Japanese citizen and a resident of Singapore.
Mr. Sid Paterson has been President and Chief Executive Officer of Sid Paterson
Advertising for more than five years.
- ---------------
*less than 1%
(1) Includes (i) 944,693 shares owned directly by Mr. Bell (225,000
shares of which are pledged to an unrelated third party which
financed Mr. Bell's acquisition of such shares pursuant to a
security agreement, (ii) the right to acquire 155,900 shares
pursuant to currently exercisable stock options, and (iii) 612,500
shares owned by Harpoon, an entity controlled by Mr. Shiraishi,
director of the Company, which are subject to an Irrevocable Proxy
entered into between Harpoon and Marc H. Bell, dated as of October
1, 1995 (the Irrevocable Proxy), pursuant to which Harpoon has
granted Mr. Bell the sole right to vote
-3-
<PAGE> 6
such shares with respect to the election of the Company's
directors. The Irrevocable Proxy terminates in June 2004.
(2) Includes the right to acquire 120,000 shares.
(3) Mr. Shiraishi's shares are held through Harpoon. Mr. Shiraishi, a
director of the Company, is the sole shareholder of Harpoon.
Harpoon has granted the underwriters of the Company's recent
public offering an option to purchase up to 400,000 shares of
common stock solely to cover over-allotments. If the
over-allotment is exercised in full, Mr. Shiraishi will
beneficially own 2.6% of the common stock after consummation of
the offering. Mr. Shiraishi's address is Harpoon Holdings, Ltd., 2
Handy Road, #11-09 Cathay Building, Singapore 229233.
(4) Mr. Fox has the right to acquire the number of shares shown
pursuant to currently exercisable stock options. Mr. Fox's address
is 10 Henry Street, Teeterboro, NJ 07608.
(5) Dr. Videbeck has the right to acquire the number of shares shown
pursuant to currently exercisable stock options. Dr. Videbeck's
address is 3249 East Angler's Stream, Avon Park, FL 33825.
(6) Includes the right to acquire 10,000 shares pursuant to currently
exercisable stock options does not include 3,000 shares held in
trust for the benefit of Lord St. John's wife and children, to
which Lord St. John disclaims beneficial ownership. Lord St.
John's address is 97 Cadogan Gardens, London SW3 2RE, United
Kingdom.
(7) Mr. Paterson has the right to acquire 10,000 shares pursuant to
currently exercisable stock options. Mr. Paterson's address is 99
Madison Avenue, New York, NY 10016.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS.
The Board of Directors of the Company met six times during the fiscal year
which ended on September 30, 1998. Of the directors nominated, Mr. Shiraishi
attended one meeting and Mr. Paterson attended four. None of the other directors
have attended fewer than 75% of the total number of meetings of the Board of
Directors and committees on which he serves.
The Company has an Audit Committee consisting of Messrs. Robert Bell and Sid
Paterson and Dr. Videbeck. The Audit Committee reviews the financial reporting
and internal controls of the Company and meets with appropriate financial
personnel of the Company, as well as its independent auditors, in connection
with these reviews. The Audit Committee also recommends to the Board the
accounting firm that is to be presented to the shareholders for designation as
independent auditors to examine the corporate accounts of the Company for the
current fiscal year. The Audit Committee met in December 1998 and discussed
financial events occurring during the course of the fiscal year and voted to
recommend the continuation of Arthur Andersen LLP as the company's auditors.
The Company also has a Stock Option Committee, consisting of Messrs. Marc
Bell, Martin Fox and Sid Paterson. Subject to existing contractual obligations,
the Stock Option Committee is responsible for setting and administering the
policies that govern the granting of employee stock options.
-4-
<PAGE> 7
The Company does not have a nominating committee, employee compensation
committee or other committees.The Stock Option Committee met periodically during
fiscal 1998 to grant employee stock options.
The Company does not have a nominating committee, employee compensation
committee or other committees.
OTHER EXECUTIVE OFFICERS
Marc Jaffe, Senior Vice President, Operations, joined the Company in
January 1995. Mr. Jaffe has extensive experience in the use of computers and
telecommunications in the advertising and marketing industry. Mr. Jaffe recently
developed an Internet-focused marketing strategy that won the prestigious
CreaTech Award, presented by Advertising Age magazine, and has spoken at
numerous Internet conferences. Prior to joining Globix, Mr. Jaffe was a
department manager at Sid Paterson Advertising Inc. in New York City which he
joined in 1989. Mr. Jaffe graduated from Colgate University in 1989, where he
received a Bachelor of Arts Degree.
Alan Levy joined the Company as Treasurer and Chief Accounting Officer
in February 1997. From March 1994 to February 1997, Mr. Levy was the Assistant
to the Vice President of Finance of Del Laboratories, Inc., a manufacturer,
marketer and distributer of cosmetics and over-the-counter pharmaceuticals.
Prior to that, Mr. Levy was a Technical Manager with the American Institute of
Certified Public Accountants from August 1990 to March 1994. Prior to August
1990, Mr. Levy was a Manager for Ernst & Young. He is a Certified Public
Accountant and received his Bachelor's degree in Public Accounting from Long
Island University, C.W. Post Campus.
OTHER KEY EMPLOYEES
Christopher D. Peckham, Vice President, Network Engineering, rejoined
Globix in February 1999. From August 1997 to February 1999, Mr. Peckham was
Manager of Network Engineering for ICON, a national Internet service provider.
From August 1995 through August 1997, Mr. Peckham served as Senior Systems and
Networking Administrator for Globix. From May 1995 through August 1995, Mr.
Peckham held the position of Director of Technology for the Interactive Media
Division of Database America. Mr. Peckham has a B.S. and a Masters degree in
Electrical Engineering from the New Jersey Institute of Technology.
Michael J. Martini, Vice President, North American Sales, joined Globix
in January 1999. From May 1997 to October 1998, Mr. Martini was the Vice
President, Global Accounts at Bridge Information Systems (formerly Dow Jones
Markets). From January 1993 to April 1997, Mr. Martini served as the Vice
President, Global Accounts Manager at Reuters America, Inc. Mr. Martini received
his Bachelor's degree in Marketing from Miami University.
Alayne C. Gyetvai, Vice President, Professional Services, joined Globix
in January 1999. From September 1994 to August 1998, Ms. Gyetvai held
senior-level positions at Silicon Graphics, Inc., most recently as the Director
of Global Professional Services and Global Web Implementation. From January 1989
to September 1994, Ms. Gyetvai served as Site Manager, Senior Systems Engineer
and Senior Consultant for Sun Microsystems. Ms. Gyetvai earned a Bachelor's
degree in Computer Science and a Masters in Probability Mechanics from the
University of Colorado and a Bachelor's degree in Electrical Engineering
Computer Engineering from the University of New Mexico.
Anthony Previte, Vice President, Technology, joined the Company in
October 1998. Mr. Previte was the Vice President, Special Projects for Emcor
Group, Inc., a publicly traded electrical and
-5-
<PAGE> 8
mechanical engineering and construction firm. While at Emcor Group, Mr. Previte
was involved in the design and construction of over one million square feet of
secure data center facilities for companies such as Prudential Securities,
Morgan Stanley and Nomura Securities. Mr. Previte has a degree in aerospace
engineering from Polytechnic Institute of New York.
Frances Formisano, Vice President of Customer Service and Support,
joined the Company in September 1998. From December 1996 to August 1998, Ms.
Formisano was the Director of Operations at Dow Jones & Co. Inc. From 1983
through November 1996, Ms. Formisano held various positions at IBM, most
recently as an Operations Manager in the Electronic Commerce Internet Division.
Terri Pearson, Vice President, International, and Director of
Operations for Globix Limited, joined the Company in October 1998. Ms. Pearson
directs all aspects of the subsidiary's daily operations, including recruiting.
From 1995 to 1998, Ms. Pearson was the Director of Human Resources and
Operations at Demon Internet, U.K.'s largest ISP. From 1992 to 1995, Ms. Pearson
served as the General Manager of World Viewdata Travel Services, Ltd., a
division of BT Prestel.
Robert Milstein, Vice President, Marketing, joined the Company in March
1996. In December 1989, Mr. Milstein founded Milstein Computer Graphics, a
provider of marketing, advertising and design services. From May 1989 to
December 1989, Mr. Milstein served as the Production Manager of a magazine
publishing company. Mr. Milstein received his Bachelor of Science degree from
Cornell University in 1989.
Paul Asher, Vice President, Facilities and Secretary, joined the
Company in July 1994. Mr. Asher was named Vice President, Facilities in August
1998. Prior to that, Mr. Asher served as the Company's Special Projects Manager.
Prior to joining the Company, Mr. Asher had his own equipment rental company.
Mr. Asher has a Bachelor of Arts degree from the University of Rochester.
COMPENSATION OF DIRECTORS AND OFFICERS
The following table sets forth compensation paid to the Company's Chief
Executive Officer and its four most highly compensated executive officers (other
than the Chief Executive Officer) for the three fiscal years ended September 30,
1998:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
OTHER
ANNUAL SECURITIES
COMPEN- UNDERLYING
NAME AND POSITION YEAR SALARY BONUS SATION OPTIONS
<S> <C> <C> <C> <C> <C>
Marc H. Bell............................ 1998 $250,000 $ --- $ --- 211,500
President and Chief................... 1997 200,000 --- --- ---
Executive and Chief................... 1996 165,000 --- --- ---
Robert B. Bell.......................... 1998 151,042 --- --- 30,000
Executive Vice 1997 125,000 --- --- 90,000
</TABLE>
-6-
<PAGE> 9
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
OTHER
ANNUAL SECURITIES
COMPEN- UNDERLYING
NAME AND POSITION YEAR SALARY BONUS SATION OPTIONS
<S> <C> <C> <C> <C> <C>
President and 1996 100,504 --- --- ---
Chief Financial
Officer
Marc Jaffe.............................. 1998 133,250 --- --- 50,000
Senior Vice 1997 89,000 --- --- 25,000
President, Operations 1996 64,083 --- --- 5,000
William T. Jahnke....................... 1998 100,000 --- --- 10,000
Vice President 1997 82,800 --- --- 12,000
Solution Sales 1996 80,000 --- --- 6,000
Scott Safran............................ 1998 107,203 --- --- 20,000
Vice President 1997 60,547 --- --- 5,000
Training 1996 17,385 --- --- ---
</TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
Option Grants in Fiscal 1998
The following table summarizes options granted during the year ended September
30, 1998 to the Named Executive Officers:
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF STOCK
SECURITIES PRICE APPRECIATION
UNDERLYING % OF TOTAL OPTIONS FOR OPTION TERM(3)
OPTIONS GRANTED TO EMPLOYEES EXERCISE EXPIRATION ------------------
NAME GRANTED(1) IN FISCAL YEAR (2) PRICE DATE 5% 10%
- ---- ---------- ------------------ ----- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
Marc H. Bell.............. 69,500 10.2% $7.15 3/17/08 $230,623 $ 674,798
142,000 20.8% 6.50 3/17/08 563,501 1,471,024
Robert B. Bell............ 30,000 4.4 6.50 3/17/08 119,049 310,780
Marc Jaffe................. 50,000 7.3 5.00 1/08/08 152,628 398,436
William T. Jahnke....... 10,000 1.5 5.00 1/08/08 30,526 79,687
Scott Safran............... 20,000 2.9 5.00 1/08/08 61,051 159,374
</TABLE>
- ----------------------
(1) These options have been granted pursuant to Globix's 1998 Stock Option
Plan. The options to purchase 142,000 shares of common stock granted to
Marc H. Bell and the options to purchase 30,000 shares of common stock
granted to Robert B. Bell are fully vested. All other options listed on
this table vest over five years at a rate of 20.0% on each anniversary
of the date of the grant.
-7-
<PAGE> 10
(2) During the year ended September 30, 1998, Globix granted employees
options to purchase 682,375 shares of common stock under the 1995 and
1998 Stock Option Plans.
(3) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. The 5%
and 10% assumed annual rates of compounded stock price appreciation are
mandated by rules of the Securities and Exchange Commission and do not
represent the Company's estimate or projection of the Company's future
common stock prices. These amounts represent certain assumed rates of
appreciation in the value of the Company's common stock from the fair
market value on the date of grant. Actual gains, if any, on stock
option exercises are dependent on the future performance of the common
stock and overall stock market conditions. The amounts reflected in the
table may not necessarily be achieved.
OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
The following table shows the number of shares covered by both
exercisable and unexercisable stock options held by the Named Executive Officers
as of the year ended September 30, 1998, and the values for exercisable and
unexercisable options. No options were exercised during the year ended September
30, 1998 by the Named Executive Officers.
Option Exercises and Fiscal Year-End Option Values
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDER- VALUE OF UNEXERCISED
LYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT SEPTEMBER 30, 1998 AT SEPTEMBER 30, 1998(1)
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Marc H. Bell 142,000 69,500 $ --- $ ---
Robert B. Bell 120,000 --- 11,250 ---
Marc Jaffe 11,666 68,334 625 63,750
William T. Jahnke 8,000 20,000 375 13,250
Scott Safran 1,667 23,333 208 25,417
</TABLE>
- -----------------
(1) Options are in-the-money if the market value of the shares covered
thereby is greater than the option exercise price. This calculation is
based on the fair market value at September 30, 1998 of $6.25 per
share, less the exercise price.
COMPENSATION OF DIRECTORS
Under the 1995 Stock Option Plan, each non-employee director of Globix who
does not beneficially own more than 5% of Globix's outstanding common stock was
entitled to receive annually (on the earlier of the first day of Globix's fiscal
year or the first day of the term of directorship), options to purchase a total
of 3,000 shares of common stock. Such options are immediately exercisable, have
a ten-year term, subject to certain restrictions, and are exercisable at the
market price of the common stock at the date of the grant. Messrs. Fox and
Videbeck each received option grants for 3,000 shares of common stock at a price
of $7.00 per share and $8.625 per share on October 1, 1995 and October 1, 1996,
respectively. In September 1997, such options were re-priced at $6.125 per share
and remain outstanding.
-8-
<PAGE> 11
Under the 1998 Stock Option Plan, each non-employee Board member who is
considered a "Non- Employee Director" under Rule 16b-3 of the Securities
Exchange Act of 1934 will be granted an option to purchase shares of common
stock on the earlier of (i) the first day of Globix's fiscal year or (ii) the
first day of his or her term as director. The option will become exercisable in
full 12 months after the date of grant. The exercise price per share of each
such option will be the market price per share of common stock on the option
grant date. Each option will have a maximum term of ten years, subject to
earlier termination following the optionee's cessation of Board service.
Pursuant to this program, Mr. Fox, Dr. Videbeck, Lord St. John and Mr. Paterson
each received option grants for 10,000 shares of common stock at a price of
$6.25 per share on October 1, 1998. In addition, in March 1998, Mr. Fox, Dr.
Videbeck and Mr. Paterson each received options to purchase a total of 10,000
shares of common stock at a price of $6.50 per share, the market price of the
underlying shares on the date of the grant, which became exercisable in
September 1998.
In addition, at the discretion of the Board of Directors, directors may be
reimbursed for reasonable travel expenses in attending Board and committee
meetings. In October 1997, Lord St. John received options to purchase a total of
10,000 shares of common stock at a price of $7.25 per share (the fair market
value of the underlying shares on the date of grant) in lieu of receiving any
cash compensation. During the year ended September 30, 1998, Mr. Fox received
$10,195 in consulting fees from the Company.
In January 19, 1999, the Company purchased an aggregate of $20,000,000 of
liability insurance from AIG Insurance group for indemnification of all of its
directors and officers at a cost of approximately $358,800.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-OF-CONTROL
ARRANGEMENTS
The Company and Marc H. Bell are parties to an employment agreement, dated
as of April 10, 1998, which expires on June 30, 2005. The employment agreement
provides for a base salary of $350,000 per year, increasing annually at the rate
of 5% per year starting October 1, 1999. In addition, beginning on June 30,
1999, Mr. Bell is entitled to receive an annual bonus equal to 10,000 times the
increase, if any, of the per share market price of the Company's common stock on
June 30 of the current year over the highest per share market price of the
Company's common stock on each July 1 during the term of the agreement.
Pursuant to the terms of the employment agreement, Mr. Bell is entitled to
receive stock options from the Company. In March 1998, Mr. Bell received stock
options to purchase 69,500 shares of common stock at an exercise price of $7.15
per share and 142,000 shares of common stock at an exercise price of $6.50 per
share.
Currently, Mr. Bell is entitled to receive on September 30 of each fiscal
year, an option to purchase shares of common stock equal to 25% of any increase
in the total shares of Globix common stock outstanding during the prior twelve
months as a result of equity offerings or acquisitions. The exercise price of
the option would be equal to the market price of Globix's common stock on the
date of grant and would be exercisable immediately at an exercise price at least
equal to the fair market price of the Company's common stock. On March 2, 1999
Mr. Bell agreed to surrender this right pursuant to an amendment to the
employment agreement, which is conditioned upon the consummation of the
Company's most recent offering. Under the terms of the amendment, in lieu of
this right, Mr. Bell is entitled to receive a one-time option to purchase an
amount of shares of Globix common stock equal to 25% of the difference between
the number of shares outstanding immediately
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<PAGE> 12
after the closing of the offering and the number outstanding as of October 1,
1998. The exercise price of this option will be the same as the price to the
public in the Company's offering.
In September 1998, Mr. Bell borrowed $155,000 from the Company. The loan
matures five years after the date made and bears interest at the rate of 8.0%
per annum. Interest which accrues during the first two years of the loan is not
payable until the end of such two year period.
Pursuant to the terms of Mr. Bell's previous employment agreement, he
borrowed a total of $145,408 from the Company during 1997. The loan is due in
2002 and bears interest at the rate of 8.75% per annum.
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of Globix common stock as of December 31, 1998 by: (i) each person or
entity who is known by Globix to own beneficially 5% or more of the outstanding
shares of common stock, (ii) each executive officer in office as of February 26,
1999, (iii) each director, and (iv) all executive officers and directors of the
Company as a group.
<TABLE>
<CAPTION>
Shares Owned
Number Percent
------ -------
<S> <C> <C>
Named Executive Officers,
Directors and 5% Stockholders:
Marc H. Bell(1) 1,713,093 39.8
Robert B. Bell(2) 120,051 2.8
Marc Jaffe(3) 26,767 *
Alan Levy(4) 4,501 *
Tsuyoshi Shiraishi(5) 612,500 14.7
Martin Fox(6) 26,000 *
Dr. Richard Videbeck(7) 26,000 *
Lord Anthony St. John(8) 25,000 *
Sid Paterson(9) 30,000 *
Various Reporting Persons(10) 908,827 21.8
All executive officers and
directors as a group
(9 persons)(11) 1,971,412 43.3
</TABLE>
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<PAGE> 13
- ---------------------------
* Indicates beneficial ownership of less than one percent of the total
outstanding common stock.
(1) Includes (i) 944,693 shares owned directly by Mr. Bell (225,000 shares
of which are pledged to an unrelated third party which financed Mr.
Bell's acquisition of such shares pursuant to a security agreement),
(ii) the right to acquire 155,900 shares pursuant to currently
exercisable stock options, and (iii) 612,500 shares owned by Harpoon,
an entity controlled by Mr. Shiraishi, a director of the Company, which
are subject to an Irrevocable Proxy entered into between Harpoon and
Marc H. Bell, dated as of October 1, 1995 (the Irrevocable Proxy),
pursuant to which Harpoon has granted Mr. Bell the sole right to vote
such shares with respect to the election of the Company's directors.
The Irrevocable Proxy terminates in June 2004.
(2) Includes the right to acquire 120,000 shares pursuant to currently
exercisable stock options.
(3) Includes the right to acquire 26,667 shares pursuant to currently
exercisable stock options and options which vest within 60 days.
(4) Includes the right to acquire 4,500 shares pursuant to currently
exercisable stock options.
(5) Mr. Shiraishi's shares are held through Harpoon. Mr. Shiraishi, a
director of the Company, is the sole shareholder of Harpoon. Harpoon
has granted the underwriters of the Company's recent public offering an
option to purchase up to 400,000 shares of common stock solely to cover
over-allotments. If the over-allotment is exercised in full, Mr.
Shiraishi will beneficially own 2.6% of the common stock after
consummation of the offering. Mr. Shiraishi's address is Harpoon
Holdings, Ltd., 2 Handy Road, #11-09 Cathay Building, Singapore 229233.
(6) Mr. Fox has the right to acquire the number of shares shown pursuant to
currently exercisable stock options. Mr. Fox's address is 10 Henry
Street, Teeterboro, NJ 06805.
(7) Dr. Videbeck has the right to acquire the number of shares shown
pursuant to currently exercisable stock options. Dr. Videbeck's address
is 3249 East Angler's Stream, Avon Park, FL 33825.
(8) Includes the right to acquire 20,000 shares pursuant to currently
exercisable stock options. Lord St. John's address is 97 Cadogan
Gardens, London SW3 2RE, United Kingdom.
(9) Mr. Paterson has the right to acquire 10,000 shares pursuant to
currently exercisable stock options. Mr. Paterson's address is 99
Madison Avenue, New York, NY 10016.
(10) On February 10, 1999, a Schedule 13G was filed by Janus Capital
Corporation, Thomas H. Bailey and Janus Venture Fund (collectively, the
"Reporting Persons") to report their interests in the shares shown.
According to the Schedule 13G, the shares
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<PAGE> 14
were acquired by the Reporting Persons in the ordinary course of
business, and not with the purpose of changing or influencing the
control of the Company.
(11) Includes stock options to purchase 399,066 shares which are either
currently exercisable or exercisable within 60 days.
PROPOSED 1999 STOCK OPTION PLAN
There is being submitted to the shareholders for approval at the 1999 Annual
Meeting, the Globix Corporation 1999 Stock Option Plan (the "1999 Plan") an
incentive and non-qualified stock option plan which authorizes the issuance of
up to 1,500,000 shares of the Company's voting common shares. The 1999 Plan was
approved by the Board of Directors at a meeting held on subject to shareholder
approval. If the 1999 Plan is approved, the 1,500,000 common shares being
authorized will be used to grant incentive options to employees and officers and
non-qualified options to Non-Employee Directors and consultants of the Company.
The Board of Directors believes that the Company and its shareholders have
benefitted from the grant of stock options in the past and that similar benefits
will result from the adoption of the 1999 Plan. It is believed that stock
options play an important role in providing eligible employees with an incentive
and inducement to contribute fully to the further growth and development of the
Company and its subsidiaries because of the opportunity to acquire a proprietary
interest in the Company on an attractive basis.
Except as expressly provided in the Plan, all stock options granted under the
1999 Plan will be exercisable at such time or times and in such installments, if
any, as the Company's Stock Option Committee or the Board of Directors may
determine and expire no more than ten years from the date of grant. The term for
options granted to 10% or greater shareholders will be five years to qualify as
an incentive stock option. The exercise price of the stock option will be the
fair market value of the Company's common shares on the date of grant and must
be paid in cash or in stock of the Company valued at its then fair market value.
The exercise price of stock options granted to a holder of greater than 10% of
the Company's common stock will be greater than or equal to the fair market
value on the date of grant and must be 110% of the fair market value to qualify
as an incentive stock option. If stock of the company is used to exercise an
option, such stock must have either been owned by the optionee for more than six
months prior to the date of exercise or was not acquired, directly or indirectly
from the Company.The market value of the Company's shares at February 15, 1999
was $[to come]. Options are non-transferable except by will or by the laws of
descent and distribution, or as expressly authorized by the Stock Option
Committee or the Board of Directors. Each option to be granted under the 1999
Plan will be evidenced by an agreement subject to the terms and conditions set
forth above.
Options granted under the 1999 Plan terminate on the date the optionee's
relationship with the Company is terminated except if termination is by reason
of death or disability. In such event the option terminates six months after the
optionee's death or termination of employment by reason of disability.
The Board of Directors has a limited right to modify or amend the 1999 Plan,
which does not include the right to increase the number of shares which is
available for the grant of options.
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<PAGE> 15
During the term of the 1999 Plan, the eligible employees of the Company will
receive, for no consideration prior to exercise, the opportunity to profit from
any rise in the market value of the common stock. This will dilute the equity
interest of the other shareholders of the Company. The grant and exercise of the
options also may affect the Company's ability to obtain additional capital
during the term of any options.
The 1999 Plan will be administered by the Stock Option Committee appointed by
the Board of Directors. The Stock Option Committee is comprised of Marc Bell,
Martin Fox and Sid Paterson. The Board of Directors is recommending the adoption
of the 1999 Plan. The description of the proposed 1999 Plan set forth above is
qualified in its entirety by reference to the text of the 1999 Plan as set forth
in Exhibit A.
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the Federal income tax treatment of the stock
options which may be granted under the 1999 Plan based upon the current
provisions of the Internal Revenue Code.
An option holder who exercises a non-qualified stock option will recognize
taxable compensation at the date of exercise with respect to the difference
between the fair market value of the option shares at exercise and the exercise
price paid to purchase such shares. The Company is entitled to a corresponding
deduction for such compensation. At which time the option stock is sold, the
option holder will recognize either short-term or long-term capital gain income
(depending upon the length of time such stock has been held) with respect to the
excess of the option stock sale price over the exercise price paid to purchase
such shares.
An option holder who exercises an incentive stock option will not realize any
regular taxable income. At the date of exercise, the option holder may,
depending on his or her personal tax situation, be subject to Alternative
Minimum tax ("AMT") because the difference between the fair market value of the
shares at exercise and the exercise price represents an AMT preference item.
The tax consequences of a disposition of incentive stock option stock depends
upon the length of time the stock has been held by the employee. If the employee
holds the option stock for at least two years after the option is granted and
one year after the exercise of the option, any gain realized on the sale is
long-term capital gain. In order to receive long-term capital gain treatment,
the employee must remain in the employ of the Company from the time the option
is granted until three months before its exercise (twelve months in the event of
termination due to the death or disability of the employee). The Company will
not be entitled to a deduction in this instance.
If the option stock is not held for the requisite holding period described
above, a "disqualifying disposition" will occur. A disqualifying disposition
results in the employee recognizing ordinary compensation income to the extent
of the lesser of: (1) the fair market value of the option stock on the date of
exercise less the option price ("the spread"), or (2) the amount realized on
disposition of the option stock less the option price. The Company will be
entitled to a deduction at this time for such ordinary compensation income. The
option holder's basis in such shares will be the fair market value on the date
of exercise.
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<PAGE> 16
The exercise of an option through the exchange of common shares already owned
by the option holder generally will not result in any taxable gain or loss on
the unrealized appreciation of the shares so used and so long as the shares were
held by the optionee for at least six months prior to exercise of the option,
the Company will not realize any tax consequences.
If an option holder transfers previously owned non-incentive stock option
stock to exercise a non-qualified option or an incentive stock option, this may
be done in a manner that will not result in taxation up to the fair market value
of the surrendered stock. This transaction is viewed as a tax-free exchange of
stock in the same corporation up to an equal value of option stock. In this
situation, there is no taxation to the option holder or to the Company on any
appreciation in value of the previously held stock. However, if additional
shares of option stock are received by the option holder, they are treated as
taxable compensation for services includible in his or her gross income. The
Company is entitled to a corresponding tax deduction for such compensation.
If an employee transfers previously owned incentive stock option stock to
exercise an incentive stock option, this may be done in a tax-free manner unless
a disqualifying disposition of the previously owned incentive stock option
shares transferred occurs. In the case of a disqualifying disposition of such
previously owned incentive stock option shares, incentive stock option
"pyramiding rules" apply whereby the post-acquisition gain in value of such
shares is taxed to the employee as compensation. In addition, compensation is
attributed to the employee to the extent of the spread at the acquisition date
of such previous owned incentive stock option shares. The Company is entitled to
a corresponding tax deduction for such compensation.
For purposes of determining whether shares have been held for the long-term
capital gain holding period, the holding period of shares received will
generally include the holding period of shares surrendered only if the shares
received have the same basis, in whole or in part, in the employee's hands as
the shares surrendered.
Whenever under the 1999 Plan shares are to be delivered upon exercise of a
stock option, the Company shall be entitled to require as a condition of
delivery that the option holder remit an amount sufficient to satisfy all
Federal, state, and other governmental withholding tax requirements related
thereto.
PROPOSAL TO INCREASE AUTHORIZED COMMON STOCK
There is being submitted to the shareholders for approval at the 1999 Annual
Meeting a proposal to amend the Certificate of Incorporation to increase the
authorized common stock of the Company, par value $.01, from 20,000,000 to
50,000,000. The increase in capital stock will provide the Company's Board of
Directors with the ability to use the Company's stock in corporate transactions
without having to seek further shareholder approval. While the increase in
authorized Common Stock will not change substantially the rights of holders of
the Corporation's Common Stock, issuance of shares in future transactions may
have a dilutive effect.
The Board of Directors is recommending such increase.
-14-
<PAGE> 17
PROPOSAL TO APPROVE AMENDMENT
TO MARC BELL'S EMPLOYMENT AGREEMENT
There is being submitted to the shareholders for approval at the 1999 Annual
Meeting a proposal to amend Marc Bell's employment agreement.
Currently, Mr. Bell's employment agreement entitles him to receive, on
September 30 of each fiscal year, an option to purchase shares of common stock
equal to 25% of any increase in the total shares of Globix common stock
outstanding during the prior twelve months as a result of equity offerings or
acquisitions. The exercise price of the option would be equal to the market
price of Globix's common stock on the date of grant and would be exercisable
immediately. On March 2, 1999 Mr. Bell agreed to surrender this right pursuant
to an amendment to the employment agreement, which is conditioned upon the
consummation of the Company's most recent offering. Under the terms of the
amendment, in lieu of this right, Mr. Bell is entitled to receive a one-time
option to purchase an amount of shares of Globix common stock equal to 25% of
the difference between the number of shares outstanding immediately after the
closing of the offering and the number outstanding as of October 1, 1998. The
exercise price of this option will be the same as the price to the public in the
Company's offering.
SELECTION OF AUDITORS
The Company's financial statements for the past several fiscal years were
examined by Arthur Andersen LLP, independent public accountants. On March 2,
1999, the Board of Directors voted to propose and recommend the selection of
Arthur Andersen LLP as independent auditors to examine its financial statements
for the fiscal year ending September 30, 1999.
Representatives of Arthur Andersen LLP are expected to be present at the
annual meeting of shareholders with the opportunity to make a statement if they
desire to do so and will be available to respond to appropriate questions.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Marc H. Bell currently has two loans outstanding from Globix. In
September 1998, Mr. Bell borrowed $155,000 from Globix pursuant to an employment
agreement, dated April 10, 1998. This loan matures in 2003 and bears interest at
the rate of 8.0% per annum. Under Mr. Bell's previous employment agreement, Mr.
Bell borrowed $145,408 from the Company. This loan matures in 2002 and bears
interest at the rate of 8.75% per annum. Both loans are currently outstanding.
The Company utilizes Sid Paterson Advertising, Inc., an entity controlled by
Mr. Sid Paterson, a director of the Company, as its agent to place Company
advertisements in various print publications. Amounts paid to Sid Paterson
Advertising, Inc. for the year ended September 30, 1998 were approximately
$507,000, which includes amounts due to the publications for printing the
advertisements.
-15-
<PAGE> 18
In July 1998, Globix, through BLP Acquisition LLC (BLP), a New York limited
liability company over 99% owned by wholly-owned subsidiaries of Globix,
purchased the land and the nine-story building located at 139 Centre Street, New
York, New York. The total acquisition cost of approximately $17.0 million
includes the cost of purchasing the right to acquire the Centre Street property.
Of the $17.0 million, $15.3 million was paid in July 1998 and $1.65 million is
due in June 1999, secured by a standby letter of credit. The Company also
entered into an agreement with the minority partner of BLP, giving the Company
the right to purchase, and the minority partner the right to sell, at any time
prior to November 2005, the minority interest at any time for a purchase price
of $2.6 million. This obligation is secured by a standby letter of credit. A
former owner of the right to purchase the Centre Street property is entitled to
additional consideration if BLP sells the Centre Street property. Such amount
will be equal to the greater of (a) $1.0 million (subject to increase after June
1, 2018 by 10% and an additional 10% every fifth year thereafter), and (b) 10%
of the gross sales price of the property if such sales price is greater than
$17.5 million.
In connection with the Company's IPO in 1996, Marc H. Bell and Harpoon, an
entity controlled by Mr. Shiraishi, a director of the Company, have each
deposited 210,000 shares of the common stock owned by them (the Deposit Shares)
with the Company. The Company will hold such shares pursuant to a Share Deposit
Agreement, dated January 24, 1996 among Harpoon, Mr. Bell, the Company and
Rickel & Associates, Inc. The Deposit Shares will be returned to their
respective owners in January 2004.
OTHER MATTERS
The Board of Directors does not know of any matters other than those described
above to be presented to the meeting. If any other matters do come before the
meeting, the persons named in the proxy will exercise their discretion in voting
thereon.
SHAREHOLDER PROPOSALS
Proposals by any shareholders intended to be presented at the year 2000 Annual
Meeting of Shareholders must be received by the Corporation for inclusion in
proxy material relating to such meeting not later than September 5, 1999.
EXPENSES
All expenses in connection with solicitation of proxies will be borne by the
Company. Officers and regular employees of the Company may solicit proxies by
personal interview and telephone and telegraph. Brokerage houses, banks and
other custodians, nominees and fiduciaries will be reimbursed for out-of-pocket
and reasonable expenses incurred in forwarding proxies and proxy statements.
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<PAGE> 19
UNDERTAKING
The Company undertakes to provide without charge to each person solicited by
this proxy statement a copy of the Company's annual report on Form 10-KSB
including the financial statements and financial statement schedules required to
be filed with the Securities and Exchange Commission for the Company's most
recent fiscal year. The request made in writing shall be addressed to Marc H.
Bell, Globix Corporation, 295 Lafayette Street, 3rd Floor, New York, New York
10012.
By Order of the Board of Directors,
Marc H. Bell
Chairman of the Board
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<PAGE> 20
Exhibit A
GLOBIX CORPORATION
1999 STOCK OPTION PLAN
1. Purpose of Plan. This 1999 Stock Option Plan (the "Plan")
is designed to assist Globix Corporation (the "Company") in attracting and
retaining the services of employees, Non-Employee Directors (as hereinafter
defined) and such consultants as may be designated and to provide them with an
incentive and inducement to contribute fully to the further growth and
development of the business of the Company and its subsidiaries.
2. Legal Compliance. It is the intent of the Plan that all
options granted under it shall be either "Incentive Stock Options" ("ISOs"), as
such term is defined in Section 422 of the Internal Revenue Code of 1986, as
amended ("Code"), or non-qualified stock options ("NQOs"); provided, however,
ISOs shall be granted only to employees of the Company. An option shall be
identified as an ISO or an NQO in writing in the document or documents
evidencing the grant of the option. All options that are not so identified as
ISOs are intended to be NQOs. It is the further intent of the Plan that it
conform in all respects with the requirements of Rule 16b-3 of the Securities
and Exchange Commission under the Securities Exchange Act of 1934, as amended
("Rule 16b-3"). To the extent that any aspect of the Plan or its administration
shall at any time be viewed as inconsistent with the requirements of Rule 16b-3
or, in connection with ISOs, the Code, such aspect shall be deemed to be
modified, deleted or otherwise changed as necessary to ensure continued
compliance with such provisions.
3. Definitions. In addition to other definitions contained
elsewhere in the Plan, as used in the Plan the following terms have the
following meanings unless the context requires a different meaning:
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as the same may from
time to time be amended.
"Committee" means the committee referred to in Section 5 hereof.
"Common Stock" means the Common Stock of the Company, par value $.0l
per share.
"Designated Beneficiary" means the person designated by an optionee to
be entitled on his death to any remaining rights arising out of an
option, such designation to be made in accordance with such regulations
as the Committee or Board may establish.
"Fair Market Value" means the average of the high and low prices on the
over-the-counter market on the last day on which the Company's shares
of Common Stock were traded immediately preceding the date an option is
granted pursuant to the Plan, as reported by the National Association
of Security Dealers Automated Quotation System ("NASDAQ"), or NASDAQ's
successor, or if not reported on NASDAQ, the fair market value of such
Common Stock as determined by the Committee or the Board in good faith
and based on all relevant factors.
"Non-Employee Directors" means Non-Employee Director as defined in Rule
16b-3(b)(3), or any successor provision promulgated under the
Securities Exchange Act of 1934.
<PAGE> 21
"Stock Options" means any stock options granted to an optionee under
the Plan.
'Stock Option Agreement" means a stock option agreement entered into
pursuant to the Plan.
4. Stock Options: Stock Subject to Plan.
The stock to be issued upon exercise of Stock Options granted
under the Plan shall consist of authorized but unissued shares, or of treasury
shares, of Common Stock, as determined from time to time by the Board. The
maximum number of shares for which Stock Options may be granted under the Plan
is 1,500,000 shares, subject to adjustment as provided in Section 9 of the Plan.
If any Stock Option granted under the Plan should expire or terminate for any
reason whatsoever without having been exercised in full, the unpurchased shares
shall become available for new option grants.
5. Administration.
(a) The Plan shall be administered by a Stock Option Committee
or, if such Committee is not appointed, then it shall be administered by the
Board. Options may be granted by the Board or the Committee. For purposes of the
Plan, the Board or its appointed Committee shall be referred to as the
"Committee." The Committee, if any, shall be appointed by the Board and shall
consist of not less than two members. The Board shall establish the number of
members to serve on the Committee, shall fill all vacancies or create new
openings on the Committee, and may remove any member of the Committee at any
time with or without cause. The Committee shall select its own chairman and
shall adopt, alter or repeal such rules and procedures as it may deem proper and
shall hold its meetings at such times and places as it may determine. The
Committee shall keep minutes of its meetings and of actions taken by it without
a meeting. A majority of the Committee present at any meeting at which a quorum
is present, or acts approved in writing by all members of the Committee without
a meeting, shall be the acts of the Committee.
(b) Unless otherwise determined by the Board, the Committee
shall have full and final authority in its discretion, but subject to the
express provisions of the Plan, to:
(i) prescribe, amend and rescind rules and
regulations relating to the Plan;
(ii) interpret the Plan and the respective Stock
Options; and
(iii) make all other determinations necessary or
advisable for administering the Plan. All determinations and interpretations by
the Committee or the Board shall be binding and conclusive upon all parties. No
member of the Committee or the Board shall be liable for any action or
determination made in good faith in respect of the Plan or any Stock Option
granted under it.
(c) The provisions of this Section 5 shall survive any
termination of the Plan.
6. Grants of Options.
(a) Officers, employee directors, other key employees of the
Company or any subsidiary and consultants shall be eligible to be selected by
the Committee to receive stock option grants.
- 2 -
<PAGE> 22
(b) Subject to the provisions of the Plan, the Committee shall
determine and designate the persons to whom grants will be made, the number of
Stock Options to be granted and the terms and conditions of each grant.
(c) So long as shares are available under this Plan, Stock
Options may be granted to Non-Employee Directors as follows:
(i) Stock Options shall be granted each year to each
of the Non-Employee directors to purchase three thousand (3,000) shares of
Common Stock on the earlier of (x) the first day of the Company's fiscal year,
or (y) on the first day of his/her term as director, at a purchase price equal
to the fair market value on the date of grant.
(ii) Stock Options granted to Non-Employee Directors
shall be exercisable in full twelve months after the date of grant.
(iii) In the event a Non-Employee Director ceases to
serve as a member of the Board of Directors of the Company any time for any
reason, the portion of his Stock Option which is exercisable at the date of
termination and all rights thereunder shall be exercisable by him at any time
within three months thereafter, but in no event later than the termination date
of his Stock Option. If a Non-Employee Director shall die while serving as a
director of the Company, the portion of his Stock Option which is exercisable at
the date of death may be exercised by his designated beneficiary or
beneficiaries (or, a person who has been effectively designated, by his
executor, administrator or the person to whom his rights under his Stock Option
shall pass by his will or by the laws of descent and distribution) at any time
within one year after the date of his death, but not later than the termination
date of his Stock Option.
(iv) Nothing in the Plan or in any Stock Option
granted pursuant hereto shall confer on any Non-Employee Director any right to
continue as a director of the Company.
7. Terms and Exercise of Stock Option.
(a) Unless otherwise determined by the Committee each Stock
Option shall terminate no later than ten years (or such shorter term as may be
fixed by the Committee) after the date on which it shall have been granted. The
date of termination pursuant to this paragraph is referred to hereinafter as the
"termination date" of the option.
(b) Stock Options shall be exercisable at such time or times
and in such installments, if any, as the Committee or Board may determine. In
the event any option is exercisable in installments, any shares which may be
purchased during any year or other period which are not purchased during such
year or other period may be purchased at any time or from time to time during
any subsequent year or period during the term of the option unless otherwise
provided in the Stock Option Agreement.
(c) A Stock Option shall be exercised by written notice to the
Secretary or Treasurer of the Company at its then principal office. The notice
shall specify the number of shares as to which the Stock Option is being
exercised and shall be accompanied by payment in full of the purchase price for
such shares; provided, however , that an optionee at his or her discretion may,
in lieu of cash payment, to the Company, (i) deliver Common Stock already owed
by him or her, valued at fair market value on the date of delivery, as payment
for the exercise of any Stock Option provided such shares have been owned by
optionee for at least six months prior to exercise or were not acquired,
- 3 -
<PAGE> 23
directly or indirectly, from the Company, or (ii) instruct a broker to notify
the company of optionee's exercise and sell stock to cover the exercise price
and tax withholding. In the event a Stock Option is being exercised, in whole or
in part pursuant to Section 8(c) hereof by any person other than the optionee, a
notice of election shall be accompanied by proof satisfactory to the Company of
the rights of such person to exercise said Stock Option. An optionee shall not,
by virtue of the granting of a Stock Option, be entitled to any rights of a
shareholder in the Company and such optionee shall not be considered a record
holder of shares purchased by him or her until the date on which he or she shall
actually be recorded as the holder of such shares upon the stock records of the
Company. The Company shall not be required to issue any fractional shares upon
exercise of any Stock Option and shall not be required to pay to the person
exercising the Stock Option the cash equivalent of any fractional share interest
unless so determined by the Committee.
(d) In the event an optionee elects to deliver Common Stock
already owned by such optionee or to request that Common Stock be withheld in
accordance with subsection (c) above, upon exercise of a Stock Option granted
hereunder, the Company shall be entitled to require as a condition thereto that
the optionee remit an amount which the Company deems sufficient to satisfy all
Federal, state and other governmental withholding tax requirements related
thereto. The Company shall have the right, in lieu of or in addition to the
foregoing to withhold such sums from compensation otherwise due to the optionee.
8. Other Stock Option Conditions.
(a) Except as expressly permitted by the Board, no Stock
Option shall be transferred by the optionee otherwise than by will or by the
laws of descent and distribution. During the lifetime of the optionee the Stock
Option shall be exercisable only by such optionee, by his or her legal
representative or by a transferee permitted under the terms of the grant of the
Stock Option.
(b) Unless otherwise determined by the Committee, in the event
of the termination of an optionee's employment by the Company at any time for
any reason (excluding disability or death), the portion of his or her Stock
Option which is exercisable at the date of termination of employment and all
rights thereunder shall terminate on the date of termination of the optionee's
relationship with the Company. Notwithstanding the foregoing, unless otherwise
determined by the Committee, in the event an optionee is permanently and totally
disabled (within the meaning of section 105(d)(4), or any successor section, of
the Code), the portion of his or her Stock Option which is exercisable at the
date of disability and all rights thereunder shall be exercisable by the
optionee (or his or her legal representative) at any time within six (6) months
of termination of employment - but in no event later than the termination date
of his Stock Option.
(c) Unless otherwise determined by the Committee, if an
optionee shall die while in the employ of the Company, the portion of his or her
Stock Option which is exercisable at the date of death may be exercised by his
or her designated beneficiary or beneficiaries (or if none have been effectively
designated, by his or her executor, administrator or the person to whom his or
her rights under his or her Stock Option shall pass by will or by the laws of
descent and distribution) at any time within six (6) months after the date of
death, but not later than the termination date of his or her Stock Option.
(d) Nothing in the Plan or in any option granted pursuant
hereto shall confer on an employee any right to continue in the employ of the
Company or prevent or interfere in any way with the right of the Company to
terminate his employment at any time, with or without cause.
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<PAGE> 24
(e) Each Stock Option granted pursuant to the Plan shall be
evidenced by a written Stock Option Agreement duly executed by the Company and
the optionee, in such form and containing such provisions as the Committee may
from time to time authorize or approve.
9. Adjustments. The Stock Option Agreements shall contain such
provisions as the Committee shall determine to be appropriate for the adjustment
of the kind and number of shares subject to each outstanding Stock Option, or
the Stock Option prices, or both, in the event of any changes in the outstanding
Common Stock of the Company by reason of stock dividends, stock splits,
recapitalizations, reorganizations, mergers, consolidations, combinations or
exchanges of shares, or the like. In the event of any such change or changes in
the outstanding Common Stock, and as often as the same shall occur, the kind and
aggregate number of shares available under the Plan may be appropriately
adjusted by the Committee, whose determination shall be binding and conclusive.
10. Amendment and Termination.
(a) Unless the Plan shall have been otherwise terminated as
provided herein, it shall terminate on, and no option shall be granted
thereunder, after December 31, 2009. The Board may at any time prior to that
date alter, suspend or terminate the Plan as it may deem advisable, except that
it may not without further shareholder approval (i) increase the maximum number
of shares subject to the Plan (except for changes pursuant to Section 9); (ii)
permit the grant of options to anyone other than the officers, employee
directors, Non-Employee Directors and consultants; (iii) change the manner of
determining the minimum stock exercise prices (except for changes pursuant to
Section 9); or (iv) extend the period during which Stock Options may be granted
or exercised. Except as otherwise hereinafter provided, no alteration,
suspension or termination of the Plan may, without the consent of the optionee
to whom any Stock Option shall have theretofore been granted (or the person or
persons entitled to exercise such Stock Option under Section 8(c) of the Plan),
terminate such optionee's Stock Option or adversely affect such optionee's
rights thereunder.
(b) Anything herein to the contrary notwithstanding, in the
event that the Board shall at any time declare it advisable to do so in
connection with any proposed sale or conveyance of all or substantially all of
the property and assets of the Company or of any proposed consolidation or
merger of the Company (unless the Company shall be the surviving corporation in
such merger), the Company may give written notice to the holder of any Stock
Option that the portion of his or her Stock Option which is exercisable on the
date of the notice may be exercised only within thirty (30) days after the date
of such notice but not thereafter, and all rights under said Stock Option which
shall not have been so exercised shall terminate at the expiration of such
thirty (30) days, provided that the proposed sale, conveyance, consolidation or
merger to which such notice shall relate shall be consummated within six (6)
months after the date of such notice. If such proposed sale, conveyance,
consolidation or merger shall not be consummated within said time period, no
unexercised rights under any Stock Option shall be affected by such notice
except that such Stock Option may not be exercised between the date of
expiration of such thirty (30) days and the date of the expiration of such six
month period.
11. Option Exercise Price. The price per share to be paid by
the optionee at the time an ISO is exercised shall not be less than one hundred
percent (100%) of the Fair Market Value of one share of the optioned Common
Stock on the date immediately preceding the date on which the Stock Option is
granted. No ISO may be granted under the Plan to any person who, at the time of
such grant, owns (within the meaning of Section 424(d) of the Code) stock
possessing more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company unless the exercise price of such ISO is at
least equal to one hundred and ten percent (110%) of Fair Market
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<PAGE> 25
Value. The price per share to be paid by the optionee at the time an NQO is
exercised shall not be less than eighty-five percent (85%) of the Fair Market
Value on the date immediately preceding the date on which the NQO is granted, as
determined by the Committee.
12. Ceiling of ISO Grants. The aggregate Fair Market Value
(determined at the time any ISO is granted) of the Common Stock with respect to
which an optionee's ISOs, together with incentive stock options granted under
any other plan of the Company are exercisable for the first time by such
optionee during any calendar year shall not exceed $100,000. If an optionee
holds such incentive stock options that become first exercisable (including as a
result of acceleration of exercisability under the Plan) in any one year for
shares having a fair market value at the date of grant in excess of $100,000,
then the most recently granted of such ISOs, to the extent that they are
exercisable for shares having an aggregate Fair Market Value in excess of such
limit, shall be deemed to be NQOs.
13. Indemnification. Any member of the Committee or the Board
who is made, or threatened to be made, a party to any action or proceeding,
whether civil or criminal, by reason of the fact that such person is or was a
member of the Committee or the Board insofar as it relates to the Plan shall be
indemnified by the Company, and the Company may advance such person's related
expenses, to the full extent permitted by law and/or the Certificate of
Incorporation or By-laws of the Company.
14. Effective Date of the Plan; Termination of the Plan and
Stock Options. The Plan shall become effective on the date of adoption by the
Board, provided, however, that the Plan shall be subject to approval by the
affirmative vote of the holders of the majority of Common Stock of the Company
on or before December 31, 1999.
15. Expenses. Except as otherwise provided herein for the
payment of Federal, State and other governmental taxes, the Company shall pay
all fees and expenses incurred in connection with the Plan and the issuance of
the stock hereunder.
16. Government Regulations, Registrations and Listing of
Stock.
(a) The Plan, and the grant and exercise of Stock Options
thereunder, and the Company's obligation to sell and deliver stock under such
Stock Options shall be subject to all applicable Federal and State laws, rules
and regulations and to such approvals by any regulatory or governmental agency
as may, in the opinion of the Company, be necessary or appropriate.
(b) The Company may in its discretion require whether or not a
registration statement under the Securities Act of 1933 and the applicable rules
and regulations thereunder (collectively the "Act") is then in effect with
respect to shares issuable upon exercise of any stock option or the offer and
sale of such shares is exempt from the registration provisions of such Act, that
as a condition precedent to the exercise of any Stock Option the person
exercising the Stock Option give to the Company a written representation and
undertaking satisfactory in form and substance to the Company that such person
is acquiring the shares for his or her own account for investment and not with a
view to the distribution or resale thereof and otherwise establish to the
company's satisfaction that the offer or sale of the shares issuable upon
exercise of the Stock Option will not constitute or result in any breach or
violation of the Act or any similar act or statute or law or regulation in the
event that a Registration statement under the Act is not then effective with
respect to the Common Shares issued upon the exercise of such stock option; the
company may place upon any stock certificate appropriate legends referring to
the restrictions on disposition under the Act
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<PAGE> 26
(c) In the event the class of shares issuable upon the
exercise of any Stock Option is listed on any national securities exchange or
NASDAQ, the Company shall not be required to issue or achieve any certificate
for shares upon the exercise of any Stock Option, or to the listing of the
shares so issuable on such national securities exchange or NASDAQ and prior to
the registration of the same under the Securities Exchange Act of 1934 or any
similar act or statute.
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<PAGE> 27
Exhibit B
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
GLOBIX CORPORATION
UNDER SECTION 242 OF THE DELAWARE GENERAL CORPORATION LAW
GLOBIX CORPORATION, A CORPORATION ORGANIZED AND EXISTING UNDER THE LAWS OF THE
STATE OF DELAWARE (THE "CORPORATION") HEREBY CERTIFIES AS FOLLOWS:
1. The name of the Corporation is Globix Corporation.
2. The Certificate of Incorporation of the Corporation was filed with the
Secretary of State of Delaware, Division of Corporations on September
29, 1995 under the name Bell Technology Group Ltd.
3. The amendment of the Certificate of Incorporation of the Corporation
effected by this Certificate of Amendment is to increase the number of
shares authorized common stock of the corporation.
4. To accomplish the foregoing amendment, Article FOURTH of the
Certificate of Incorporation of the Corporation, is hereby amended to
read as follows:
"FOURTH: The Corporation shall have the authority to issue
fifty million (50,000,000) shares of Common Stock having a par
value of $.01 per share. The Corporation shall also have the
authority to issue five hundred thousand (500,000) shares of
Preferred Stock having a par value of $.01 per share (the
"Preferred Shares"). The Board of Directors of the Corporation
(the "Board") shall have the right to authorize, by resolution
of the Board adopted in accordance with the By-laws of the
Corporation, the issuance of the Preferred Shares and, in
connection therewith, to (a) cause such shares to be issued in
series; (b) fix the annual rate of dividends payable with
respect to the Preferred shares or series thereof; (c) fix the
amount payable upon redemption of the Preferred shares; (d) fix
the amount payable upon liquidation or dissolution of the
Company; (e) fix provisions as to voting rights, if any; and
(e) fix such other rights, powers and preferences as the Board
shall determine."
5. The foregoing amendment of the Certificate of Incorporation of the
Corporation was authorized by a vote of Board of Directors of the
Corporation, followed by a vote of the holders of a majority of all
outstanding shares of the Corporation entitled to vote on said
amendment of the Certificate of Incorporation.
<PAGE> 28
IN WITNESS WHEREOF, we have subscribed this document on the date set forth
below and do hereby affirm, under the penalties of perjury, that the statements
contained herein have been examined by us and are true and correct.
April 23, 1999
By: ________________________
Marc H. Bell President
Attest:
By: _______________________
Paul Asher, Secretary
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<PAGE> 29
Exhibit C
As of March 2, 1999
Mr. Marc H. Bell
39 Mather Road
Stamford, Connecticut 06903
Dear Mr. Bell:
This is to confirm our agreement that, effective as of March
2, 1999 (the "Effective Date"), the Employment Agreement between us dated as of
April 10, 1998 (hereinafter referred to as the "Agreement") is amended as
follows:
1. Section 3.03(c) of the Agreement is hereby deleted in its
entirety and the following substituted therefor:
Executive shall be granted an option as set forth in
Amendment No. 1 to the Company's Registration Statement on
Form S-1 filed March 4, 1999 to purchase that number of shares
of Common Stock as shall equal 25% of the difference between
the number of shares of Common Stock issued and outstanding on
the date of closing of the currently proposed public offering
and the number issued and outstanding as of October 1, 1998,
provided, however, that (i) for purposes of this calculation,
treasury shares shall not be deemed to be issued and
outstanding and (ii) any increase which is the result of stock
splits or stock dividends, shall not be taken into account.
Such stock option shall be non-qualified stock options for
purposes of the Internal Revenue Code of 1986, as amended. The
exercise price of such stock options shall be the price of the
Company's common stock to the public in the currently proposed
offering. Such stock option shall be exercisable in whole on
the date of grant and shall terminate on the tenth anniversary
of the date of grant. Such stock option shall be evidenced by
an agreement containing such other terms and conditions as the
Company and Executive shall agree. The Company shall take all
such steps as shall be necessary to effectuate the foregoing
including, without limitation, proposing this amendment for
approval by the Company's stockholders and reserving a
sufficient number of authorized but unissued shares to permit
the purchase of the shares pursuant to the stock options
granted hereunder.
<PAGE> 30
2. In all other respects, the Agreement shall continue in
full force and effect in accordance with its original terms, as amended.
If the foregoing sets forth a correct statement of our
agreement, please sign the duplicate hereof in the place indicated and return it
to us.
Very truly yours,
GLOBIX CORPORATION
By /s/
Robert B. Bell
Executive Vice President
ACCEPTED AND AGREED:
/s/
Marc H. Bell
<PAGE> 31
GLOBIX CORPORATION
PROXY
Annual Meeting of Shareholders - Friday, April 23, 1999.
The undersigned shareholder of Globix Corporation (the "Company")
hereby appoints Marc H. Bell the attorney and proxy of the undersigned, with
full power of substitution, to vote, as indicated herein, all the common shares
of the Company standing in the name of the undersigned at the close of business
on March 5, 1999 at the Annual Meeting of Shareholders of the Company to be held
at the offices of the Company at 139 Centre Street, New York, New York 10012 at
11:00 a.m., local time, on Friday, April 23, 1999, and at any and all
adjournments thereof, with all the powers the undersigned would possess if then
and there personally present and especially (but without limiting the general
authorization and power hereby given) to vote as indicated on the proposals, as
more fully described in the Proxy Statement for the meeting.
(Please fill in the reverse side and return promptly in the enclosed envelope.)
<PAGE> 32
PLEASE MARK BOXES /-/ OR /X/ IN BLUE OR BLACK INK.
1. Election of Directors.
FOR all nominees / /
WITHHOLD authority only for those nominees whose name(s) I have written below
/ /
WITHHOLD authority for ALL nominees / /
Nominees for Director are: Marc H. Bell, Robert B. Bell,
Martin Fox, Dr. Richard Videbeck, Lord Anthony St. John of
Bletso, Tsuyoshi Shiraishi and Sidney Paterson.
2. Proposal to approve the Company's 1999 Stock Option Plan.
For / / Against / / Abstain / /
3. Proposal to approve the amendment to the Company's Certificate of
Incorporation to increase the Company's authorized common stock to 50,000,000
shares, pr value $.01.
For / / Against / / Abstain / /
4. Proposal to approve the amendment to Marc H. Bell's employment agreement.
For / / Against / / Abstain / /
5. Proposal to approve the selection of Arthur Andersen LLP as the Company's
independent auditors for the fiscal year ending September 30, 1999.
For / / Against / / Abstain / /
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