<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>
[ ] Preliminary Proxy Statement
[X] 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
75,000,000 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 24, 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 24, 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 75,000,000 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 24,
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 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.
<PAGE> 4
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
DIRECTOR BENEFICIALLY OWNED PERCENT
NAME AND AGE POSITIONS WITH THE COMPANY SINCE AT FEBRUARY 26, 1999 OF CLASS
- ------------ ----------------------------- -------- -------------------- --------
<S> <C> <C> <C> <C>
Marc H. Bell, 31............. President & Chief Executive 1989 1,713,093(1) 39.9%
Officer
Robert B. Bell, 59........... Executive Vice-President & 1994 120,051(2) 2.8%
Chief Financial Officer
T. Shiraishi, 54............. Director 1994 612,500(3) 14.8%
Martin Fox, 63............... Director 1995 16,000(4) *
Dr. Richard Videbeck, 74..... Director 1995 16,000(5) *
Lord Anthony St. John, 41.... Director 1997 10,000(6) *
Sid Paterson, 58............. Director 1998 20,000(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.
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, Chief Executive Officer and a
director of Initio, Inc., a publicly owned electronic commerce and catalogue
specialty retailer of consumer products for more than five years. Mr. Fox
graduated New York University, School of Commerce Accounts and Finance in 1958
and Columbia Law School in 1961 where he was a member of the Board of Editors of
the Columbia Law Review. Thereafter Mr. Fox practiced law for ten years and
joined Initio, Inc. in 1972 shortly after which he became Co-Chief Executive
Officer.
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
1
<PAGE> 5
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 options which vest within 60 days, 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 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) Lord St. John has the right to acquire the number of shares shown 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.
2
<PAGE> 6
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.
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
3
<PAGE> 7
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 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.
4
<PAGE> 8
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 SECURITIES
ANNUAL UNDERLYING
NAME AND POSITION YEAR SALARY BONUS COMPENSATION OPTIONS
----------------- ---- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Marc H. Bell....................... 1998 $250,000 $ -- $ -- 211,500
President and 1997 200,000 -- -- --
Chief Executive Officer 1996 165,000 -- -- --
Robert B. Bell..................... 1998 151,042 -- -- 30,000
Executive Vice President and 1997 125,000 -- -- 90,000
Chief Financial Officer 1996 100,504 -- -- --
Marc Jaffe......................... 1998 133,250 -- -- 50,000
Senior Vice President, Operations 1997 89,000 -- -- 25,000
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
ANNUAL RATES OF STOCK
% OF TOTAL PRICE APPRECIATION
NUMBER OF OPTIONS GRANTED FOR OPTION TERM(3)
SECURITIES UNDERLYING TO EMPLOYEES IN EXERCISE EXPIRATION ---------------------
NAME OPTIONS GRANTED(1) 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>
5
<PAGE> 9
- ---------------
(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.
(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 VALUE OF UNEXERCISED
UNDERLYING 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.
6
<PAGE> 10
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.
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 initial 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.
Under the 1999 Stock Option Plan, if approved by the shareholders, 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 initial 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. No options have been granted under the 1999 Stock Option Plan.
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 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
7
<PAGE> 11
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 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)............................................... 16,000 *
Dr. Richard Videbeck(7)..................................... 16,000 *
Lord Anthony St. John(8).................................... 10,000 *
Sid Paterson(9)............................................. 20,000 *
Janus Capital Corporation(10)............................... 513,872 12.3
All executive officers and directors as a group (9
persons)(11).............................................. 2,138,912 47.4
</TABLE>
- ---------------
* 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 options which vest within 60 days, 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.
8
<PAGE> 12
(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) Lord St. John has the right to acquire the number of shares shown pursuant
to currently exercisable stock options and options which vest within 60
days. 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.
(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 which
are subject to shared voting and investment power. According to the
Schedule 13G, the shares 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 March 2, 1999
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. The Company's current policy is
to grant every full time employee an option to purchase shares of Common Stock.
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 no
longer than 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 upon exercise must be paid for 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 110% of the fair market value on the date
of grant. If stock of the Company is used to exercise an option, such stock must
have either (i) been owned by the optionee for more than six months prior to the
date of exercise or (ii) have not been acquired, directly or
9
<PAGE> 13
indirectly, from the Company. The market value of the Company's shares at
February 26, 1999 was $25.125. Options are non-transferable except by will or by
the laws of descent and distribution, or as expressly authorized by 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. The 1999 Plan
provides for each non-employee Board member to be granted an option to purchase
shares of common stock on the earlier of (1) the first day of Globix's fiscal
year or (2) the first day of his or initial term as director. The option will
become exercisable in full 12 months from the date of grant and will have an
exercise price equal to the fair market value per share of the common stock on
the date of grant. Each option will have a maximum term of 10 years, subject to
earlier termination following the optionee's cessation of Board service.
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.
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 such time as 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
10
<PAGE> 14
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.
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 and the Company will not realize any tax consequences.
If an option holder transfers previously owned stock that was acquired
other than by exercising incentive stock options 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 to the Company 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
75,000,000. On February 26, 1999, there were 4,153,396 shares of common stock
outstanding. The Company has reserved 563,200 shares of common stock for the
exercise of warrants which were issued in connection with the Company's debt
financing in April 1998. The Company has also reserved 101,485 shares of common
stock for the exercise of the warrant sold to Rickel & Associates, Inc. in
connection with its initial public offering in January 1996.
In addition, in connection with its 1995 and 1998 Stock Option Plans, the
Company has reserved 299,116 shares and 1,019,666 shares, respectively of common
stock for issuance. The Company has also reserved 1,500,000 shares of common
stock to be issued under the 1999 Plan and 1,100,000 shares pursuant to the
amendment to Marc Bell's employment agreement. The increase in authorized shares
is not necessary to provide shares for the 1999 Stock Option Plan or the
amendment to Marc Bell's employment agreement.
Authorized but unreserved shares at February 26, 1999 are 13,863,137. If
the proposal to change the Company's authorized common stock is approved by the
shareholders, the Company will have 68,863,137 shares authorized but unreserved.
Although the Company has no current plans to issue any shares to be
authorized under this proposal, the increase in capital stock will provide the
Company's Board of Directors with the ability to use the Company's stock to
respond to developments in the Company's business, including possible financing
and acquisition transactions and general corporate purposes. While the increase
in authorized Common Stock will not change
11
<PAGE> 15
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 could use the additional shares of common stock to
discourage an attempt to change control of the Company, however, the Board has
no present intention of issuing any shares of common stock for such purposes and
this proposal is not being recommended in response to any specific effort to
obtain control of the Company of which the Company is aware.
The Board of Directors is recommending such increase.
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
term of the option will be 10 years and its exercise price 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.
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
12
<PAGE> 16
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.
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
13
<PAGE> 17
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.
"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
<PAGE> 18
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.
(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.
2
<PAGE> 19
(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, 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.
3
<PAGE> 20
(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.
(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
4
<PAGE> 21
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
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
(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.
5
<PAGE> 22
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 seventy-five
million (75,000,000) 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.
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
<PAGE> 23
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> 24
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 75,000,000
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 / /
-2-
<PAGE> 25
6. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment or
adjournments thereof.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS AND WILL BE VOTED FOR THE
ELECTION OF THE PROPOSED DIRECTORS AND FOR THE ABOVE PROPOSALS UNLESS OTHERWISE
INDICATED.
SIGNATURE(S) should be exactly as
name or names appear on this [Sign,
Date and Return proxy. If stock is
held jointly, the Proxy Card
Promptly each holder should sign. If
Using the Enclosed signing is by
attorney, executor, Envelope.]
administrator, trustee or guardian,
please give full title.
Dated , 1999
------------------
--------------------------------
Signature
--------------------------------
Print Name
--------------------------------
Signature
-------------------------------
Print Name
