SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
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the Securities Exchange Act of 1934 (Amendment No. )
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Globix Corporation
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139 CENTRE STREET
NEW YORK, NEW YORK 10013
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 26, 2001
To: The Shareholders of Globix Corporation
NOTICE IS HEREBY GIVEN that the 2001 Annual Meeting of Shareholders of
GLOBIX CORPORATION (the "Company"), a Delaware corporation, will be held at the
offices of the Company at 139 Centre Street, New York, New York 10013 on
Thursday, April 26, 2001, at 9:00 a.m., local time, for the following purposes:
1. To elect nine 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 2001
Stock Option Plan;
3. To consider and act upon a proposal to ratify the Company's 2001
Restricted Stock Plan;
4. To consider and act upon a proposal to ratify the appointment of
Arthur Andersen LLP as the Company's independent auditors for the
fiscal year ending September 30, 2001; and
5. 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 15, 2001
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 2001 Annual Meeting of
Shareholders or any adjournments thereof.
By order of the Board of Directors.
/s/ Marc H. Bell
Marc H. Bell
Chairman of the Board
New York, New York
March 21, 2001
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 return envelope.
GLOBIX CORPORATION
139 CENTRE STREET, NEW YORK, NEW YORK 10013
-----------------
PROXY STATEMENT
FOR
2001 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 26, 2001
-----------------
March 21, 2001
The enclosed proxy is solicited by the Board of Directors of Globix
Corporation, a Delaware corporation (the "Company"), in connection with the 2001
Annual Meeting of Shareholders to be held at the offices of the Company at 139
Centre Street, New York, New York 10013 on Thursday, April 26, 2001 at 9:00
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, the persons named in the proxy will vote the proxy:
o FOR the election as directors of the nine nominees listed below to
serve until the next annual meeting of shareholders and until their
successors have been duly elected and qualified;
o FOR the approval of the Company's 2001 Stock Option Plan;
o FOR the ratification of the Company's 2001 Restricted Stock Plan;
o FOR the ratification of the appointment of Arthur Andersen LLP as
the Company's independent auditors for the fiscal year ending
September 30, 2001; and
o In accordance with the judgment of the proxy holders as to any other
matter that may be properly brought before the meeting or any
adjournments thereof.
The record date with respect to this solicitation is the close of business
on March 15, 2001 and only shareholders of record at that time will be entitled
to vote at the meeting.
The principal executive office of the Company is 139 Centre Street, New
York, New York 10013, and its telephone number is (212) 334-8500. The shares
represented by all validly executed proxies received in time to be taken to the
Annual Meeting, and not previously revoked, will be voted at the Annual Meeting.
A 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 26, 2001.
RECORD DATE AND QUORUM
The close of business on March 15, 2001 has been fixed as the record date
for the determination of stockholders entitled to notice of and to vote at the
Annual Meeting and at any adjournment or postponement thereof. The number of
outstanding common shares, par value $.01 per share, entitled to vote at the
Annual Meeting is 41,826,629. Each common share is entitled to one vote. The
number of outstanding preferred shares, par value $.01 per share, entitled to
vote at the Annual Meeting is 81,501. Each preferred share is entitled to 100
votes, an amount equal to the number of common shares issuable
1
upon conversion of a preferred share. Holders of record of preferred shares may
vote on all matters that the holders of common stock are entitled to vote upon,
except that with respect to the election of Directors of the Company, the shares
of preferred stock shall automatically be voted in the same proportion as the
votes of the common stock. All common share numbers and share prices reflect the
two-for-one stock split which was paid on December 30, 1999 and the two-for-one
stock split which was paid on January 31, 2000. The presence in person or by
proxy at the Annual Meeting of the holders of one-third of the votes entitled to
be cast at the Annual Meeting shall constitute a quorum. There is no cumulative
voting.
REQUIRED VOTE
Assuming the presence of a quorum at the Annual Meeting:
o the affirmative vote of a plurality of the votes cast at the meeting
is required for the election as directors of the nine nominees
listed below;
o the affirmative vote of a majority of the votes cast at the meeting
is required:
o to approve the Company's 2001 Stock Option Plan;
o to ratify the Company's 2001 Restricted Stock Plan; and
o to ratify the appointment of Arthur Andersen LLP as the
Company's independent auditors for the fiscal year ending
September 30, 2001.
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 to determine a quorum, 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.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The nine persons named below, all of whom 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. Mr. Tsuyoshi Shiraishi, a director since July 1994, is
not seeking reelection to the Board of Directors.
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.
2
DIRECTOR
NAME AND AGE POSITION WITH THE COMPANY SINCE
------------ ------------------------- -----
Marc H. Bell, 33 Chairman, Chief Executive 1989
Officer,
President & Director
Lord St. John, 43 Vice President & Director 1997
Robert B. Bell, 61 Director 1994
Martin Fox, 65 Director 1995
Jack D. Furst, 41 Director 1999
Michael J. Levitt, 42 Director 1999
Sid Paterson, 60 Director 1998
Harshad Shah, 59 Director 2000
Dr. Richard Videbeck, 77 Director 1995
Marc H. Bell, has been the President and Chief Executive Officer since he
founded Globix in 1989. He has appeared on numerous television broadcasts and
has been quoted in national publications regarding Internet-related topics. He
has a Bachelor of Science 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.
Anthony St. John, Lord St. John of Bletso, Vice President, Business
Development has been a director of Globix since October 1997. In September 1999,
Lord St. John became Globix's Vice President, Business Development. 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. Lord St. John is also a director of Globix's U.K.
subsidiary and serves as its Director of Business Development. He received his
Bachelor of Arts and Bachelor of Science degrees from Capetown University and
Bachelor of Laws from the University of South Africa and a Masters of Law from
the London School of Economics.
Robert B. Bell, has been a Director of Globix since 1994. Prior to that he
served for more than five years as Executive Vice President of Globix. Until
recently, Mr. Bell served as Director of International Affairs. He also served
as Chief Financial Officer from 1994 through September 1999. 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 taxation, investments and
international real estate joint ventures. 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. He has a Bachelor of Science
degree from New York University and a J.D. degree from the University of
California at Berkeley. Mr. Bell is the father of Marc H. Bell.
Martin Fox, has been a director of Globix since October 1995. Mr. Fox has
been, for more than five years, the President, Chief Executive Officer, and a
director of Initio, Inc., a publicly owned company, which has been an electronic
commerce and catalogue specialty retailer of consumer products.
3
Jack D. Furst, has been a director of Globix since December 1999. Mr.
Furst has been a partner of Hicks, Muse, Tate & Furst Incorporated since 1989.
Mr. Furst serves as a director of American Tower Corporation, Cooperative
Computing, Inc., Hedstrom Holdings, Inc., Home Interiors & Gifts, Inc.,
International Wire Group, Inc., LLS Corp., Triton Energy Limited and Viasystems,
Inc. Mr. Furst received his B.S. degree from the College of Business
Administration at Arizona State University and his M.B.A. from the Graduate
School of Business at the University of Texas.
Michael J. Levitt, has been a director of Globix since December 1999. Mr.
Levitt has been a partner of Hicks, Muse, Tate & Furst Incorporated since 1996.
From 1993 through 1995, Mr. Levitt was a Managing Director and Deputy Head of
Investment Banking with Smith Barney Inc. Mr. Levitt serves as a director of
AMFM Inc., Awards.com, El Sitio, Inc., G.H. Mumm/Perrier/Jouet, Grupo MVS, S.A.
de C.V., Ibero-American Media Partners II Ltd., International Home Foods, Inc.,
Regal Cinemas, Inc., RCN Corporation and STC Broadcasting, Inc. Mr. Levitt
attended the University of Michigan, from which he received his B.B.A. and J.D.
Sid Paterson, has been a director of Globix since February 1998. He has
been President and Chief Executive Officer of Sid Paterson Advertising Inc. for
more than five years.
Harshad Shah, has been a director of Globix since April 2000. Mr. Shah has
been involved in real estate investment and development since 1982. Mr. Shah has
been President of Leyland Equities Corp. since December 1995. From 1982 to 1985,
Mr. Shah was President of Crescent Equities, Inc. From 1970 to 1982 he was a
Vice President of Manufactures Hanover Trust Company (now Chase Manhattan Bank).
Mr. Shah attended the Elphinstone College in Bombay, India where he received a
B.A. in Economics and the Indian Institute of Management where he received a
Masters Degree in Business Administration.
Dr. Richard Videbeck, has been a director of Globix since October 1995.
Since 1983, Dr. Videbeck has been an independent consultant in consumer risk
analysis, particularly for retailers and banks. From 1974 until 1986, he was a
Professor of Sociology at the University of Illinois at Chicago. From 1974 until
1977, Dr. Videbeck was the Dean of the Doctor of Arts Program of the Graduate
College of the University of Illinois at Chicago.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS.
The Board of Directors of the Company met 10 times during the fiscal year,
which ended on September 30, 2000. None of the directors standing for
re-election have attended fewer than 75% of the total number of meetings of the
Board of Directors and committees on which he serves, except Messrs. Furst and
Levitt.
The Company's Audit Committee consists of Messrs. Fox, Furst and Levitt
and Dr. Videbeck and has the obligations specified in the Audit Committee
Charter (attached hereto as Appendix A).
4
Report of the Audit Committee
The following shall not be deemed to be "soliciting material" or to be
"filed" with the Commission nor shall such information be incorporated by
reference into any future filing of the Company under the Securities Act of 1933
or the Securities and Exchange Act of 1934.
The Audit Committee oversees the financial reporting process on behalf of
the Board of Directors. Management has the primary responsibility for the
financial statements and the reporting process including the systems of internal
controls. With respect to the audit of the fiscal year ended September 30, 2000,
the Audit Committee met three times. The initial meeting occurred prior to the
year-end when the Audit Committee met with representatives of management and of
the Company's independent auditors, Arthur Anderson LLP, to receive, review and
accept the plan for the year-end audit. Subsequently, the Audit Committee met
twice more to review the fiscal year financial results and the Company's audited
consolidated financial statements.
In the course of these meetings, the Audit Committee discussed with the
Company's independent auditors those matters required to be discussed by
Statement on Accounting Standards No. 61, as amended, "Communication with Audit
Committees," by the Auditing Standards Board of the American Institute of
Certified Public Accountants. The Audit Committee received and reviewed the
written disclosures and the letter from the independent auditors required by
Independence Standard No. 1, as amended, "Independence Discussions with Audit
Committee," by the Independence Standards Board and have considered the
compatibility of nonaudit services with the auditor's independence.
In fulfilling its oversight responsibilities, the Committee reviewed the
audited financial statements in the Annual Report with management including a
discussion of the quality, not just the acceptability, of the accounting
principles, the reasonableness of significant judgments, and the clarity of
disclosures in the financial statements. Based on the reviews and discussions
referred to above, the Audit Committee recommends to the Board of Directors that
the consolidated financial statements referred to above be included in the
Company's Annual Report on Form 10-K for the year ended September 30, 2000.
Audit Committee
Martin Fox
Jack Furst
Michael Levitt
Richard Videbeck
Fiscal 2000 Audit Firm Fee Summary
During the fiscal year ended September 30, 2000, audit fees were $210,000 and
all other fees to Arthur Anderson LLP were $305,000, including fees for audit
related services of $244,000 and nonaudit services of $61,000. Audit related
services include fees for benefit plan and certain subsidiary audits, SEC
registration statements, business acquisitions and accounting consultations.
Compensation Committee Interlock and Insider Participation
The Compensation Committee of the Globix Board consists of Messrs. Fox,
Levitt, Paterson and Shah. There is no insider participation on the Compensation
Committee.
5
Report of the Compensation Committee on Executive Compensation
The following shall not be deemed to be "soliciting material" or to be
"filed" with the Commission nor shall such information be incorporated by
reference into any future filing of the Company under the Securities Act of 1933
or the Exchange Act of 1934.
The duties of the Compensation Committee include approval of salary and
other compensation arrangements for the Company's executive officers. No member
of the Compensation Committee is a current or former officer or employee of the
Company.
The Company has established a compensation philosophy around the principle
of having compensation reflect and reinforce the Company's strategic and
operational goals and enhance long-term shareholder value. The Company's
philosophy is to:
o Set compensation levels to attract, retain, reward and motivate
executive officers and employees;
o Align compensation with business objectives and performance;
o Position compensation to reflect the individual's performance as
well as the level of responsibility, skill and strategic value of
the employee; and
o Recognize the evolving organizational structure of the Company and
directly motivate executives to accomplish results within their
spheres of influence as well as foster a Company-wide team spirit.
The Company attempts to target its compensation programs to provide
compensation opportunities that are perceived by its officers and employees to
justify continued service to the Company.
Executive Officer Compensation
Compensation decisions for the fiscal year ended September 30, 2000 were
based on the following considerations:
o Existing contractual compensation considerations with three senior
executive officers;
o Compensation opportunities perceived to be necessary to retain
executive officers;
o The importance of the executives to the Company's current and future
success;
o The significance of the executive's compensation cost relative to
its impact on the Company's financial success over the next few
years; and
o The maintenance, where practical, of internal compensation
relationships that provide rationale and flexibility in
organizational staffing.
Chief Executive Officer Compensation
Marc H. Bell's compensation is stipulated by the terms of his employment
agreement. For fiscal year 2000, Mr. Bell received a base salary of $367,500 and
an annual bonus of $831,125. Mr. Bell's bonus is determined by multiplying by
10,000 the increase in the market price of the Company's common stock on June 30
of the then current fiscal year over the highest market price of the Company's
common
6
stock on any preceding July 1 during the term of the employment agreement. The
Committee believes that this bonus structure incentivizes long-term Company
growth and stock performance.
Compensation Committee
Martin Fox
Michael Levitt
Sid Paterson
Harshad Shah
The Company does not have a nominating committee or any other committees.
OTHER EXECUTIVE OFFICERS
Alfred G. Binford, Senior Vice President and President-Network Services
Group, joined Globix in October 2000. Prior to joining Globix, Mr. Binford was
Senior Vice President of Broadcast Services of its Real Broadcast Network
Division of RealNetworks Inc. from April 2000 to September 2000 Mr. Binford also
served as Senior Vice President and Chief Marketing Officer of Intermedia
Communications, the parent of Digex Corporation from March 1999 to April 2000.
Prior to that he was President and Chief Executive Officer of Verizon Long
Distance where he was employed since September 1994.
Peter L. Herzig, Senior Vice President and Chief Operating
Officer-Application Services Group, joined Globix in October 2000. Prior to
joining Globix, Mr. Herzig was Executive Vice President and Chief Financial
Officer at iWon.com, from March 2000 to October 2000, where his responsibilities
included managing iWon's relationship with Globix. Previously, Mr. Herzig was a
Senior Managing Director and Head of Global Capital Markets Services for Bear,
Stearns & Co., from 1998 to March 2000, where he provided strategic
capital-structure advisory services to a broad spectrum of domestic and
international clients, including many new media technology companies
experiencing growth with the expansion of the Internet. Prior to that he was
employed by Goldman Sachs since 1989.
Marc Jaffe, Senior Vice President, Chief Operating Officer -Field
Operations, joined Globix in January 1995. 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, where he
received a Bachelor of Arts degree.
Anthony L. Previte, Senior Vice President, Chief Technology Officer,
joined Globix in October 1998. From July 1991 to 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.
Brian L. Reach, Senior Vice President, Chief Financial Officer, joined
Globix in September 1999. From May 1997 to August 1999, Mr. Reach was the Chief
Financial Officer of IPC Communications, a provider of integrated
telecommunications equipment and services to the financial industry. During his
tenure at IPC, Mr. Reach successfully guided IPC through its leveraged
recapitalization and financially restructured IPC enabling it to invest in
strategic acquisitions and next generation technologies. Prior to IPC, Mr. Reach
was the Chief Financial Officer of Celadon Group, Inc. and Cantel Industries,
Inc. Mr. Reach is a certified public accountant and received his Bachelor of
Science degree in accounting from the University of Scranton.
7
OTHER KEY EMPLOYEES
Paul L. Bonington, Vice President, Marketing, joined Globix in May 1999.
From August 1994 to February 1999, Mr. Bonington was an executive with
Mecklermedia Corporation, a producer of Internet publications, trade shows and
web sites. In 1998, he was named Mecklermedia's Senior Vice President of
Strategic Planning and Marketing. From 1994 to 1997, Mr. Bonington headed
Mecklermedia's print division as publisher of Internet World magazine, and later
as Senior Vice President/Group Publisher following the launch of Web Week, Web
Developer and Internet Shopper magazines. Mr. Bonington has a Bachelor of
Science degree in business economics from the State University of New York,
Oneonta.
Shawn P. Brosnan, Vice President and Corporate Controller, joined Globix
in November 1999. Prior to joining Globix, Mr. Brosnan spent over 15 years with
Ernst & Young. During his tenure at Ernst & Young, he was a business advisor
with extensive experience in the areas of accounting, finance, financial
reporting, mergers and acquisitions and process improvement. Mr. Brosnan is a
certified public accountant and received his Bachelor of Science degree in
accounting from Providence College.
Alan Patrick, Vice President, Corporate Development, joined Globix in May
2000. Prior to joining Globix, Mr. Patrick was head of Strategy & Business
Development for Hosting & ASP at British Telecom Plc since November 1996. Prior
to that he was a consultant with McKinsey & Co since 1994. Mr. Patrick holds a
BS and MS in Engineering from the University of the Witwatersrand in South
Africa.
Christopher D. Peckham, Vice President, Information Technology, 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. Mr. Peckham has Doctoral, Master and
Bachelor of Science degrees in electrical engineering from the New Jersey
Institute of Technology.
Sheldon Reiter, Vice President, Real Estate, joined Globix in May 2000.
Prior to joining Globix, Mr. Reiter was a practicing corporate and real estate
attorney for 32 years, specializing in construction, development and financing
of real property. He was a partner in Kalnick, Klee & Green and its predecessor
firm. In addition, Mr. Reiter was a real estate developer of shopping centers,
office buildings and hotels. Mr. Reiter was admitted to the New York Bar in
1967. He received his Bachelor's degree from New York University and a Juris
Doctor degree from Brooklyn Law School.
Richard Rose, Vice President, Business Development, joined Globix in May
2000. Prior to joining Globix, Mr. Rose was with British Telecom Plc from
September 1995, working as a General Manager in its Outsourcing and Customized
Solutions Division, where he led the successful negotiation and implementation
to run the largest telecommunications outsourced contract in Europe. In May
1997, he joined the International M&A Development Group where he was responsible
for managing a number of European fixed line and Internet and Multimedia
transactions. He has a Masters Degree in Mathematics from London University.
COMPENSATION OF DIRECTORS AND OFFICERS
The following Summary Compensation Table sets forth the compensation for
the years ended September 30, 2000, 1999 and 1998 for Globix's Chief Executive
Officer and its three most highly compensated executive officers (other than the
Chief Executive Officer) and a former executive officer whose cash compensation
exceeded $100,000 in the year ended September 30, 2000 (collectively referred to
as the named executive officers):
8
Summary Compensation Table
Long-Term
Compensation
Annual Compensation Awards
------------------- ------
Other Securities
Annual Underlying
Name and Position Year Salary ($) Bonus ($) Compensation($) Options (#)
----------------- ---- ---------- --------- ------------ -------------
Marc H. Bell ................. 2000 367,500 831,125 -- --
President and Chief 1999 350,000 331,875 -- 4,788,244
Executive Officer 1998 250,000 -- -- 846,000
Robert B. Bell ............... 2000 275,000 -- -- 50,000
Former Executive 1999 240,625 -- -- --
Vice President 1998 151,042 -- -- 120,000
Marc Jaffe ................... 2000 250,000 -- -- --
Senior Vice President, Chief 1999 215,685 -- -- 480,000
Operating Officer 1998 133,250 -- -- 200,000
Anthony L. Previte ........... 2000 200,000 -- -- --
Senior Vice President, Chief 1999 141,585 -- -- 400,000
Technology Officer
Brian L. Reach ............... 2000 250,000 50,000 -- --
Senior Vice President, Chief 1999 20,000 -- -- 400,000
Financial Officer
Effective July 2000, Mr. Robert B. Bell became Director of International Affairs
and ceased to be an executive officer of Globix.
Mr. Previte joined Globix in October 1998 and Mr. Reach joined Globix in
September 1999.
9
Option Grants in Last Fiscal Year
The following table summarizes options granted during the year ended
September 30, 2000 to the named executive officers:
Individual Grants
-----------------
% of
Total Potential Realizable
Options Value at Assumed
Number of Granted Annual Rates of Stock
Securities to Price Appreciation
Underlying Employees for Option Term ($)
Options in Fiscal Exercise Expiration -------------------
Name Granted Year Price ($) Date 5% 10%
---- ------- ---- --------- ---- -- ---
Marc H. Bell ............ -- -- -- -- -- --
Robert B. Bell .......... 40,000 2.1 8.86 11/1/09 577,280 919,222
10,000 0.5 29.19 4/4/10 475,474 757,113
Marc Jaffe .............. -- -- -- -- -- --
Brian L. Reach .......... -- -- -- -- -- --
Anthony L. Previte ...... -- -- -- -- -- --
The options on the preceding table have been granted pursuant to Globix's
2000 and 1999 Stock Option Plans and vest on the first anniversary of the date
of the grant. During the year ended September 30, 2000, Globix granted employees
options to purchase 1,863,550 shares of common stock under the 1998, 1999 and
2000 Stock Option Plans.
The amounts shown as potential realizable value 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 Globix's estimate or projection of Globix's
future common stock prices. These amounts represent certain assumed rates of
appreciation in the value of Globix'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. The amounts reflected in the
table may not necessarily be achieved.
Option Exercises and Fiscal Year-End Option Values
The following named executive officers exercised options during the fiscal
year ended September 30, 2000:
Mr. Robert B. Bell exercised options to purchase 480,000 shares, at prices
ranging from $18.88 to $26.53 per share, which resulted in realized value of
$10,446,182.
Mr. Marc Jaffe exercised options to purchase 180,000 shares, at prices
ranging from $9.99 to $55.81 per share, which resulted in realized value of
$3,366,771.
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, 2000, and the values for exercisable and unexercisable
options. 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, 2000 of $23.38 per share, less the
exercise price.
10
Fiscal Year-End Option Values
Number of Value of Unexercised
Securities Underlying In-the-Money Options at
Unexercised Options at September 30, 2000
September 30, 2000 ($)
------------------ ---
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
Marc H. Bell .......... 5,467,444 166,800 87,705,242 3,600,712
Robert B. Bell ........ -- 50,000 -- 522,450
Marc Jaffe ............ 116,000 504,000 1,534,812 2,655,000
Anthony L. Previte .... 80,000 320,000 987,399 655,597
Brian L. Reach ........ 80,000 320,000 914,960 3,659,840
COMPENSATION OF DIRECTORS
Each director of Globix, who beneficially owns less than five percent of
the Company's stock, is granted upon election or re-election at the annual
meeting of stockholders, options to purchase 10,000 shares of common stock.
These options are exercisable in full beginning 12 months after the date of
grant, have a ten-year term, and are exercisable at fair market value on the
date of the grant. Effective April 4, 2000, Globix implemented a cash
compensation program pursuant to which its directors who are not also officers
of or employed by Globix or any of its majority-owned subsidiaries, will receive
fees of $2,000 for personal attendance or $500 for telephonic attendance at
board meeting and $1,250 for personal attendance or $250 for telephonic
attendance at committee meetings. In addition, at the discretion of the Board of
Directors, directors may be reimbursed for reasonable travel expenses in
attending Board and committee meetings.
Mr. Fox, Mr. Shiraishi, Dr. Videbeck and Mr. Paterson each received option
grants for 40,000 shares of common stock at a price of $11.69 per share on
October 1, 1999. On December 3, 1999, Messrs. Furst and Levitt each received
options to purchase a total of 40,000 shares of common stock at a price of
$10.53 per share, the fair market value on that date. On April 4, 2000, each
Director other than Mr. Marc H. Bell, received option grants for 10,000 shares
of common stock at a price of $29.1875 per share.
EMPLOYMENT CONTRACTS AND TERMINATION OF
EMPLOYMENT AND CHANGE-OF-CONTROL ARRANGEMENTS
Marc H. Bell. Effective June 1, 1998, Globix entered into a seven year
employment agreement with Mr. Marc H. Bell. Under this agreement his base salary
for fiscal year 2000 was $367,500, which increases annually at the rate of five
percent. In addition, Mr. Bell receives an annual bonus equal to ten thousand
times the increase, if any, of the market price per share of Globix's common
stock on each June 30 over the highest per share market price of Globix's common
stock on any preceding July 1 during the term of the agreement. During the years
ended September 30, 2000 and 1999 Mr. Bell received bonuses of approximately
$831,125 and $331,875, respectively, under this provision of the employment
agreement. The employment agreement also provides that he may require Globix to
lend him up to a total of $155,000. Any loan taken thereunder will mature five
years after the date made and bear interest at the rate of eight percent per
annum. However, the interest accruing during the first two years is not payable
until the end of such two-year period. At September 30, 2000 and 1999, Mr. Bell
had no outstanding borrowings under such loan arrangement.
11
Pursuant to the terms of the employment agreement, as amended, Mr. Bell is
also entitled to stock option grants to purchase shares of common stock. The
term of such option is ten years from the date of grant. During the years ended
September 30, 2000, 1999 and 1998 Mr. Bell was granted options to purchase
shares of common stock totaling 0, 4,096,580 and 691,664, respectively, under
this agreement.
Robert B. Bell. Globix and Robert B. Bell are parties to an employment
agreement, dated as of July 21, 1999 which expires on March 31, 2002. The
employment agreement provided for a base salary of $275,000 per year, increasing
annually at the rate of 5.0% per year starting October 1, 2000.
Pursuant to the terms of the employment agreement, Globix has established
a deferred compensation plan in the form of an irrevocable trust which Globix
funds to the extent of $250,000 for each fiscal quarter commencing with the
quarter ended March 31, 1999, until the total amount held in the trust reaches
$3.0 million. Under an amendment to the employment agreement, dated as of March
21, 2001, Mr. Bell will be entitled to receive payments of $20,000 per month
from the trust commencing on April 1, 2001, subject to annual increases for cost
of living adjustments. Upon Mr. Bell's death, the payments from the trust shall
be reduced by fifty percent and this reduced amount shall be paid to Mr. Bell's
designee for a period of two years.
Under the amendment to Mr. Bell's employment agreement, commencing April
1, 2001, Mr. Bell's shall become a part-time employee and consultant until June
4, 2004 unless earlier terminated by mutual agreement. Mr. Bell's salary during
this period shall be $3,000 per month.
Alfred G. Binford. Mr. Binford accepted employment with Globix pursuant to
the terms of an employment offer letter dated August 31, 2000. The terms of the
employment offer letter provide for a signing bonus of $60,000, a base salary of
$225,000 per year and an annual performance bonus of up to $113,000, based upon
mutually agreed criteria, payable after each fiscal year-end. In addition, Mr.
Binford is entitled to receive stock options. In October 2000, Mr. Binford
received stock options to purchase 100,000 shares of common stock at an exercise
price of $23.31 per share, which vest ratably over five years. Globix has
assured Mr. Binford a pre-tax in-the-money value of at least $2,000,000 for his
exercisable stock options on or before the second anniversary of the grant date,
provided that Mr. Binford's employment with Globix has not been terminated prior
to such date by Globix for cause or by Mr. Binford for any reason. In the event
of a shortfall, Globix, at its option, may pay the difference in cash or its
common stock.
12
PERFORMANCE GRAPH
The stock price performance graph below is required by the SEC and shall
not be deemed to be incorporated by reference by any general statement
incorporating by reference this Proxy Statement into any filing under the
Securities Act or the Exchange Act, except to the extent the Company
specifically incorporates this information by reference and shall not otherwise
be deemed soliciting material or filed under such acts.
The following graph shows a comparison of cumulative total stockholder
return, calculated on a dividend reinvested basis, for the Company, the NASDAQ
Composite Stock Market Index (U.S.) and the Media General Internet Software and
Services Index from the date of the Company's initial public offering on January
30, 1996 through September 30, 2000. Management cautions that the stock price
performance shown in the graph below should not be considered indicative of
potential future stock performance.
[PERFORMANCE GRAPH]
[The following was depicted as line chart in the printed material.]
Cumulative Total Return
1/30/96 9/30/96 9/30/97 9/30/98 9/30/99 9/30/00
------- ------- ------- ------- ------- -------
Globix Corporation $100.00 $110.16 $76.57 $78.13 $584.38 $1165.65
Nasdaq Stock Market
Index (U.S.) $100.00 $55.38 $42.76 $59.79 $214.82 $215.87
Media General
Internet Software and
Services Index $100.00 $114.76 $155.98 $162.10 $262.24 $358.73
13
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of the Company's common stock as of March 15, 2001:
o each person or entity who is known by the Company to own
beneficially 5% or more of the outstanding shares of common stock;
o each executive officer in office as of March 15, 2001;
o each director; and
o all executive officers and directors of the Company as a group.
The applicable percentage of ownership is based on 41,826,629 shares outstanding
on March 15, 2001, as adjusted for applicable dilution. Unless otherwise
indicated, the address for those listed below is c/o Globix Corporation, 139
Centre St., New York, NY 10013.
Executive Officers, Directors Number of Shares Percent
and 5% Stockholders: Beneficially Owned of Class
-------------------- ------------------ --------
Marc H. Bell............................................... 7,682,835 16.7
Robert B. Bell............................................. 75,000 *
Marc Jaffe................................................. 432,404 1.0
Anthony L. Previte......................................... 268,000 *
Brian L. Reach............................................. 290,000 *
Alfred Binford............................................. 50,000 *
Peter Herzig............................................... 0 --
Lord St. John.............................................. 119,000 *
c/o Globix Ltd.,
80-110 New Oxford St.
London WC1A 1HB
Martin Fox................................................. 125,000 *
10 Henry Street
Teterboro, NJ 07608
Jack D. Furst.............................................. 75,000 *
200 Crescent Court
Dallas, Texas 75201
Michael J. Levitt.......................................... 75,000 *
200 Crescent Court
Dallas, Texas 75201
Sid Paterson............................................... 160,000 *
99 Madison Avenue
New York, NY 10016
Harshad Shah............................................... 15,300 *
145 East 48th Street
New York, New York 10017
14
Executive Officers, Directors Number of Shares Percent
and 5% Stockholders: Beneficially Owned of Class
-------------------- ------------------ --------
Tsuyoshi Shiraishi......................................... 925,000 2.2
Harpoon Holdings, Ltd.
491 River Valley Road
#14-03A Valley Point Office Tower
Singapore 248373
Dr. Richard Videbeck....................................... 109,200 *
3249 East Angler's Stream
Avon Park, FL 33825
Thomas O. Hicks............................................ 8,000,000 16.1
200 Crescent Court
Dallas, Texas 75201
HM4 Globix Qualified Fund, LLC............................. 7,264,400 14.8
200 Crescent Court
Dallas, Texas 75201
HMTF Equity Fund IV (1999), L.P............................ 7,264,400 14.8
200 Crescent Court
Dallas, Texas 75201
HM4/GP (1999) Partners, L.P................................ 7,315,900 14.9
200 Crescent Court
Dallas, Texas 75201
Hicks, Muse GP (1999) Partners IV, L.P..................... 7,613,200 15.4
200 Crescent Court
Dallas, Texas 75201
Hicks, Muse (1999) Fund IV, LLC............................ 7,613,200 15.4
200 Crescent Court
Dallas, Texas 75201
Firsthand Capital Management, Inc......................... 5,163,000 12.3
Kevin Michael Landis
125 South Market
San Jose, California 95113
Janus Capital Corporation.................................. 4,558,890 10.9
Janus Venture Fund
Thomas H. Bailey
100 Fillmore Street
Denver, CO 80206-4923
All executive officers and directors as a Group
(15 persons) .............................................. 10,401,739 22.2
* Less than 1%
Under the rules of the Securities and Exchange Commission, a person is
deemed to be the beneficial owner of a security if that person has or shares the
power to vote or direct the voting of such security or the power to dispose or
direct the disposition of the security. A person is also deemed to be a
beneficial owner of any securities if that person has the right to acquire
beneficial ownership within 60 days.
The amount shown for Marc H. Bell includes 3,419,455 shares owned
directly, including 2,048,290 shares subject to limitations on transfer and the
Company's right to repurchase at par value, expiring with
15
respect to 25% of such shares on each of December 27, 2001, 2002, 2003 and 2004
("Restricted Shares"), and 4,263,380 stock options to purchase shares
exercisable within 60 days and is based on a Schedule 13G filed on February 15,
2001.
The amount shown for Robert B. Bell includes 25,000 Restricted Shares and
50,000 stock options to purchase shares exercisable within 60 days.
The amount shown for Mr. Jaffe includes 240,000 Restricted Shares, 116,000
stock options to purchase shares exercisable within 60 days and 666 shares owned
by Mr. Jaffe's minor child for which Mr. Jaffe disclaims beneficial ownership.
The amount shown for Mr. Previte includes 180,000 Restricted Shares and
88,000 stock options to purchase shares exercisable within 60 days.
The amount shown for Mr. Reach includes 200,000 Restricted Shares and
80,000 stock options to purchase shares exercisable within 60 days.
The amount shown for Mr. Binford includes 50,000 Restricted Shares.
The amount shown for Lord St. John includes 25,000 Restricted Shares,
82,000 stock options to purchase shares exercisable within 60 days and 12,000
shares held in trust for the benefit of Lord St. John's wife and children, for
which Lord St. John disclaims beneficial ownership.
The amount shown for Mr. Fox includes 25,000 Restricted Shares and 50,000
stock options to purchase shares exercisable within 60 days.
The amount shown for Mr. Furst includes 25,000 Restricted Shares and
50,000 stock options to purchase shares exercisable within 60 days.
The amount shown for Mr. Levitt includes 25,000 Restricted Shares and
50,000 stock options to purchase shares exercisable within 60 days.
The amount shown for Mr. Paterson includes 25,000 Restricted Shares and
100,000 stock options to purchase shares exercisable within 60 days.
The amount shown for Mr. Shiraishi includes 25,000 Restricted Shares,
50,000 stock options to purchase shares exercisable within 60 days and 850,000
shares held through a controlled entity, Harpoon Holdings, Ltd.
The amount shown for Dr. Videbeck includes 25,000 Restricted Shares and
50,000 stock options to purchase shares exercisable within 60 days.
The amount shown for Mr. Shah includes 5,000 Restricted Shares and 10,000
stock options to purchase shares exercisable within 60 days.
The amounts shown for Thomas O. Hicks, HM4 Globix Qualified Fund, LLC,
HMTF Equity Fund IV (1999), L.P., HM4/GP (1999) Partners, L.P., Hicks, Muse GP
(1999) Partners IV, L.P., and Hicks, Muse (1999) Fund IV, LLC are based upon
Forms 4 filed by those persons on July 10, 2000. The amounts shown assume
conversion to common stock of all Series A 7.5% Convertible Preferred Stock
beneficially owned by such entities as of such date. The shares shown are
subject to shared voting and investment power.
16
Messrs. Furst and Levitt, each a director of Globix, were appointed to the
Board of Directors on December 9, 1999 on behalf of the holders of the Series A
7.5% Convertible Preferred Stock.
The amount shown for Firsthand Capital Management, Inc. and Kevin Michael
Landis is based on a Schedule 13G jointly filed by such persons on February 13,
2001.
The amount shown for Janus Capital Corporation, Janus Venture Fund and
Thomas H. Bailey is as of December 31, 2000 and reported based upon Amendment
No. 2 to a Schedule G jointly filed by such persons on February 15, 2001.
The amount shown for all executive officers and directors as a group,
include 5,039,380 stock options to purchase shares exercisable within 60 days.
PROPOSAL NO. 2
APPROVAL OF 2001 STOCK OPTION PLAN
There is being submitted to the shareholders for approval at the 2001
Annual Meeting, the Globix Corporation 2001 Stock Option Plan (the "2001 Plan")
an incentive and non-qualified stock option plan which authorizes the issuance
of up to 2,000,000 shares of the Company's voting common shares. The number of
shares to be authorized for issuance under the proposed 2001 Plan is less than
5% of the total outstanding common shares as of the date hereof. The 2001 Plan
was approved by the Board of Directors at a meeting held on January 23, 2001,
subject to shareholder approval. If the 2001 Plan is approved, the 2,000,000
common shares being authorized will be used to grant options to employees,
officers, directors and consultants of the Company.
The Board of Directors believes that the Company and its shareholders have
benefited from the grant of stock options in the past and that similar benefits
will result from the adoption of the 2001 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 2001 Plan will be exercisable at such time or times and in such
installments, if any, as the Company's Compensation 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 indirectly, from
the Company. The per share fair market value of the Company's shares at March
15, 2001 was $3.00. Options are non-transferable except by will or by the laws
of descent and distribution, or as expressly authorized by the Compensation
Committee or the Board of Directors. Notwithstanding the preceding sentence, any
Director (who does not beneficially own more than 5% of the Company's stock) may
transfer Stock Options, provided that (i) any such transfer shall be limited to
such director's spouse, siblings, or direct lineal ancestors or descendants or
to limited
17
partnerships, trusts, closely held corporations for the benefit of such family
members (the "Permitted Transferees"), (ii) that the Company shall have been
provided written notice of any such transfer, and (iii) any such Permitted
Transferee shall agree to be bound by the terms of the grant of the Option. Each
option to be granted under the 2001 Plan will be evidenced by an agreement
subject to the terms and conditions set forth above.
Options granted under the 2001 Plan terminate on the date the optionee's
relationship with the Company is terminated, unless extended for up to three
months from the date of termination of the optionee's employment with the
Company at the Compensation Committee's discretion, 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 2001
Plan, which does not include the right to increase the number of shares which is
available for the grant of options, except to adjust for stock splits and
similar types of changes to the Company's capital structure.
During the term of the 2001 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 2001 Plan will be administered by the Compensation Committee appointed
by the Board of Directors. The Compensation Committee is comprised of Messrs.
Fox, Levitt, Paterson and Shah. The Board of Directors is recommending the
adoption of the 2001 Plan. The description of the proposed 2001 Plan set forth
above is qualified in its entirety by reference to the text of the 2001 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 2001 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
18
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.
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 2001 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.
19
PROPOSAL NO. 3
RATIFICATION OF 2001 RESTRICTED STOCK PLAN
There is being submitted to the shareholders for ratification at the 2001
Annual Meeting, the Globix Corporation 2001 Restricted Stock Plan (the
"Restricted Stock Plan"). The Board of Directors firmly believes that the
Company's long-term interests are best advanced by aligning the interests of its
key leaders and employees with the interests of its shareholders. Therefore, to
attract and retain directors, executive officers and key employees of
exceptional ability, and in recognition of the significant and extraordinary
contributions to the long-term performance and growth of the Company made by
these individuals, on December 27, 2000, the Board of Directors adopted, subject
to shareholder ratification, the Restricted Stock Plan. The Restricted Stock
Plan is intended to supplement the Company's other stock incentive plans. The
Board of Directors believes that the adoption and implementation of the
Restricted Stock Plan is in the best interests of the Company and its
shareholders and it is advisable to make additional shares available for
restricted stock awards.
A maximum of 3,063,490 shares of Common Stock, derived from authorized but
unissued shares, would be available for award under the Restricted Stock Plan.
In December 2000 the Board awarded Restricted Shares in this number subject to
the Company's right to repurchase in the event of termination of employment or
Directorship for $.01 per share which right expires to the extent of 25% per
year commencing on the first anniversary of the date of award. Information with
respect to specific restricted stock awards can be found under "Principal
Stockholders."
The following is a summary of the principal features of the Restricted
Stock Plan. The summary is qualified in its entirety by reference to the terms
of the Restricted Stock Plan, the complete text of which is attached as Exhibit
B to this Proxy Statement.
Under the Restricted Stock Plan, directors, executive officers, and other
key employees of the Company would be eligible to receive restricted stock
awards. Other individuals eligible to participate in the Restricted Stock Plan
may join the Company in the future. Directors, executive officers and key
employees of the Company may be deemed to have an interest in the Restricted
Stock Plan because they may receive restricted stock awards under the Restricted
Stock Plan.
The Restricted Stock Plan would be administered by the Compensation
Committee of the Board of Directors (the "Compensation Committee"), the Board or
such other committee as the Board of Directors may designate.
The Compensation Committee would make determinations, subject to the terms
of the Restricted Stock Plan, as to the persons to receive restricted stock
awards, the amount of restricted stock to be granted to each person, the terms
of each grant and all other determinations necessary or advisable for
administration of the Restricted Stock Plan. The Compensation Committee may
amend the terms of restricted stock awards granted under the Restricted Stock
Plan from time to time in a manner consistent with the Restricted Stock Plan;
provided, that no amendment may be effective relating to a particular restricted
stock award without the consent of the relevant participant, except to the
extent the amendment operates solely to the benefit of the participant. The
Compensation Committee would have full authority and discretion to interpret the
Restricted Stock Plan.
The Board of Directors may terminate the Restricted Stock Plan at any time
and may from time to time amend the Restricted Stock Plan as it deems proper and
in the best interests of the Company, provided that no such amendment may impair
any outstanding restricted stock award without the consent
20
of the participant, except according to the terms of the restricted stock award.
Unless earlier terminated by the Board of Directors, the Restricted Stock Plan
would terminate on December 31, 2010.
The Compensation Committee may provide that upon the occurrence of a
"change in control" of the Company (as defined in the Restricted Stock Plan),
any or all restricted stock awards would become fully vested immediately,
nonforfeitable or otherwise no longer subject to any restriction.
The Restricted Stock Plan would allow the Compensation Committee to award
restricted stock, subject to such terms and conditions that the Compensation
Committee from time to time determined. The Compensation Committee would set
forth the terms of individual awards of restricted stock in restricted stock
agreements. Restricted stock granted by the Compensation Committee would vest in
accordance with restricted stock agreements. Unless the Compensation Committee
provides otherwise in a restricted stock agreement, upon the latter to occur of
the termination of employment or directorship of a participant during the
restricted period set by the Compensation Committee for any reason other than
death or disability, the participant's restricted stock would be subject to
repurchase by the Company at a purchase price of $.01 per share. If the
participant's directorship or employment terminates during the restricted period
by reason of death or disability the restrictions on the participant's shares
would terminate automatically and the restricted stock would vest as of the date
of termination.
A recipient of restricted stock would not be allowed to sell, exchange,
transfer, pledge, assign or otherwise dispose of the stock other than to the
Company or by will or the laws of descent and distribution. In addition, the
Compensation Committee could impose other restrictions on shares of restricted
stock. Holders of restricted stock would enjoy all other rights of a shareholder
with respect to restricted stock, including the right to vote restricted shares
at shareholders' meetings and the right to receive all dividends paid with
respect to shares of common stock. Any securities received by a holder of
restricted stock pursuant to a stock dividend, stock split, recapitalization,
merger, consolidation, combination or exchange of shares would be subject to the
same terms, conditions and restrictions that are applicable to the restricted
stock for which the shares are received.
FEDERAL INCOME TAX CONSEQUENCES
Generally, a participant would not recognize income upon the award of
restricted stock. However, a participant would be required to recognize
compensation income on the value of restricted stock at the time the restricted
stock vests (when the restrictions lapse). At the time the participant
recognizes compensation income, the Company would be entitled to a corresponding
deduction for federal income tax purposes. If restricted stock is forfeited by a
participant, the participant would not recognize income and the Company would
not receive a deduction. Before the lapse of restrictions, dividends paid on
restricted stock would be reported as compensation income to the participant and
the Company would receive a corresponding deduction.
A participant could, within 30 days after the date of an award of
restricted stock, elect to report compensation income for the tax year in which
the award of restricted stock occurs. If the participant makes such an election,
the amount of compensation income would be the value of the restricted stock at
the time of the award. Any later appreciation in the value of the restricted
stock would be treated as capital gain and realized only upon the sale of the
restricted stock. Dividends received after such an election would be taxable as
dividends and not treated as additional compensation income. If, however,
restricted stock is forfeited after the participant makes such an election, the
participant would not be allowed any deduction for the amount earlier taken into
income. Upon the sale of restricted stock, a participant would realize capital
gain (or loss) in the amount of the difference between the sale price and the
value of the stock previously reported by the participant as compensation
income.
21
PROPOSAL NO. 4
RATIFICATION OF APPOINTMENT OF AUDITORS
The Company's financial statements for the past several fiscal years were
audited by Arthur Andersen LLP, independent public accountants. On January 23,
2001, the Board of Directors reappointed Arthur Andersen LLP as independent
auditors to audit the financial statements of the Company for the fiscal year
ending September 30, 2001.
Representatives of Arthur Andersen LLP are expected to be present at the
Annual Meeting of Shareholders, will have an opportunity to make a statement if
they so desire and will be available to respond to appropriate questions.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See "Employment Contracts" section of this proxy statement for a
description of certain loans Globix had made to Marc H. Bell.
A company owned by a family member of Harshad Shah, a director of Globix
since April 4, 2000, holds a promissory note from Globix in the amount of $2.6
million, carrying an interest rate of 7% that arose from Globix's acquisition of
139 Centre Street. Interest payments totaled approximately $45,000 and $181,000
in Fiscal 1999 and 2000, respectively.
See "Liquidity and Capital Resources" section of the Management Discussion
and Analysis section of Globix's September 30, 2000 Annual Report on Form 10-K
for a description of certain fees paid to Hicks, Muse, Tate & Furst
Incorporated.
The Company retains 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, 2000 were approximately $0.1
million and for the year ended September 30, 1999 were approximately $1.5
million. A substantial portion of these amounts constitute the pass-through of
amounts payable by the Company to the publications for printing the
advertisements. All transactions between the Company and Sid Paterson
Advertising Inc. are on terms that are no less favorable to the Company than
those available in comparable transactions in arm's length dealings with
unrelated third parties.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors and executive
officers, and persons who own more than 10% of our common stock ("10%
Stockholders"), to file with the SEC initial reports of ownership on Form 3 and
reports of changes in ownership of our common stock and other equity securities
on a Form 4 or Form 5. Such executive officers and 10% Stockholders are required
by SEC regulations to furnish us with copies of all Section 16(a) forms they
file. One such regulation requires disclosure by the Registrant of filings
which, under the SEC's rules, are not deemed to be timely. During its review
with respect to fiscal 2000, Globix determined that certain directors (Messrs.
Fox, Paterson, Dr. Videbeck, Lord St. John and former director Mr. Shiraishi),
each with respect to one report regarding one transaction did not file all such
reports on a timely basis.
22
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 2002
Annual Meeting of Shareholders must be received by the Company for inclusion in
proxy material relating to such meeting not later than October 5, 2001.
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-K
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, 139 Centre Street, New York, New York 10013.
By Order of the Board of Directors,
/s/ Marc H. Bell
Marc H. Bell
Chairman of the Board
Appendix A
GLOBIX CORPORATION
Audit Committee of the Board of Directors
CHARTER
--------------------------
I. PURPOSE
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities by reviewing: the
financial reports and other financial information provided by the Corporation to
any governmental body or the public; the Corporation's systems of internal
controls regarding finance, accounting, legal compliance and ethics that
management and the Board have established; and the Corporation's auditing,
accounting and financial reporting process generally. Consistent with this
function, the Audit Committee should encourage continuous improvement of and
foster adherence to, the Corporation's policies, procedures and practices at all
levels. The Audit Committee's primary duties and responsibilities are to:
1. Serve as an independent and objective party to monitor the Corporation's
financial reporting process and internal control system.
2. Review and appraise the audit efforts of the Corporation's independent
accountants.
3. Provide an open avenue of communication among the independent accountants,
financial and senior management and the Board of Directors.
The Audit Committee will primarily fulfill these responsibilities by
carrying out the activities enumerated in Section IV of this Charter.
II. COMPOSITION
The Audit Committee shall be comprised of three or more directors as
determined by the Board, each of whom shall be independent directors, and free
from any relationship that, in the opinion of the Board, would interfere with
the exercise of his or her independent judgment as a member of the Committee. A
director is precluded from Committee membership if, among other things, he or
she has:
o been employed by the Corporation or its affiliates in the current or
past three years;
o accepted any compensation from the Corporation or its affiliates in
excess of $60,000 during the previous fiscal year (except for board
service, retirement plan benefits, or non-discretionary
compensation);
o an immediate family member who is, or has been in the past three
years, employed by the Corporation or its affiliates as an executive
officer; o been a partner, controlling shareholder or an executive
officer of any for-profit business to which the Corporation made, or
from which it received, payments (other than those which arise
solely from investments in the corporation's securities) that exceed
five percent of the organization's consolidated gross revenues for
that year, or $200,000, whichever is more, in any of the past three
years; or
o been employed as an executive of another entity where any of the
Corporation's executives serve on that entity's compensation
committee.
All members of the Committee shall have a working familiarity with basic finance
and accounting practices, and at least one member of the Committee shall have
accounting or related financial management expertise.
The members of the Committee shall be elected by the Board at the annual
meeting of the Board to serve until the next annual meeting of the Board or
until their successors shall be duly elected and qualified. Unless a
1
Chair is elected by the full Board, the members of the Committee may designate a
Chair by majority vote of the full Committee membership.
III. MEETINGS
1. The Committee shall meet at least four times annually, or more frequently
as circumstances dictate. As part of its job to foster open communication,
the Committee should meet at least annually with management and the
independent accountants in separate executive sessions to discuss any
matters that the Committee or each of these groups believe should be
discussed privately. In addition, the Committee or at least its Chair
should meet with the independent accountants and management quarterly to
review the Corporation's financials consistent with Section IV.3 below.
2. A majority of the entire Committee membership shall constitute a quorum
for the transaction of business and the vote of a majority of the
Committee members present at the taking of the vote, if a quorum is then
present, shall be the act of the Committee. Committee members may neither
be present nor vote by proxy.
3. Any action by the Committee may be taken without a meeting if all
Committee members consent in writing to the adoption of a resolution
authorizing the action. The resolution and consent shall be filed with the
Committee minutes.
4. Any one or more Committee members may participate in a Committee meeting
by means of a conference telephone or similar communications equipment
allowing all persons participating to hear each other at the same time.
Participation by such means shall constitute presence in person at a
meeting.
IV. RESPONSIBILITIES
To fulfill its responsibilities and duties the Audit Committee shall:
Documents/Reports Review
1. Review and assess the adequacy of this Charter periodically, at least
annually, and update it as conditions dictate. Ensure that eligibility to
serve on this Committee remains consistent with any rulemaking promulgated
by the Securities and Exchange Commission or Nasdaq, as appropriate.
2. Review the Corporation's annual audited financial statements and any
reports or other financial information submitted to any governmental body,
or the public, including any audit or review opinion, certification or
report rendered by the independent accountants.
3. Review with financial management and the independent accountants the 10-Q
prior to its filing or prior to the release of earnings. The Chair of the
Committee may represent the entire Committee for purposes of this review.
Independent Accountants
4. Recommend to the Board of Directors the appointment of the independent
accountants, considering independence and effectiveness.
5. Review the performance of the independent accountants and approve any
proposed reappointment or discharge of the independent accountants when
circumstances warrant.
6. Review types of services rendered to the Corporation by the independent
accountants and approve the fees and other compensation to be paid to the
independent accountants.
7. On an annual basis, the Committee should review and discuss with the
independent accountants the scope of the annual audit and quarterly
reviews and all significant relationships the independent accountants have
2
with the Corporation to ensure their independence. The Committee is
responsible for assuring the accountants' independence. 8. Periodically
consult with the independent accountants out of the presence of management
about internal controls and the adequacy and accuracy of the Corporation's
financial statements and disclosures.
Financial Reporting Process
9. In consultation with the independent accountants, review the integrity of
the Corporation's financial reporting process, both internal and external.
10. Consider the independent accountant's judgments about the quality and
appropriateness of the Corporation's accounting principles as applied to
its financial reporting.
11. Consider and approve, if appropriate, major changes to the Corporation's
accounting principles and practice as suggested by the independent
accountants or management.
Process Improvement
12. Establish regular and separate systems of reporting to the Audit Committee
by each of management and the independent accountants regarding any
significant judgments made in management's preparation of the financial
statements and the view of each as to the appropriateness of such
judgments.
13. Following completion of the annual audit, review separately with each of
management and the independent accountants any significant difficulties
encountered during the course of the audit, including any restrictions on
the scope of work or access to required information.
14. Review any significant disagreement among management and the independent
accountants in connection with the preparation of the financial
statements.
15. Review with the independent accountants and management the extent to which
changes or improvements in financial or accounting practices, as approved
by the Audit Committee, have been implemented.
Ethical and Legal Compliance
16. Establish, review and update periodically a Code of Ethical Conduct and
ensure that management has established a system to disseminate and enforce
this Ethical Code.
17. Review managements' monitoring of the Corporation's compliance with the
Ethical Code, and ensure that management has the proper review system in
place to ensure that the Corporation's financial statements, reports and
other financial information disseminated to governmental organizations,
and the public satisfy legal requirements.
18. Review, with the Corporation's counsel, legal compliance matters including
corporate securities trading policies.
19. Review with the Corporation's counsel, any legal matter that could have a
significant impact on the Corporation's financial statements.
Other
20. Perform any other activities consistent with this Charter, the
Corporation's By-laws and governing law, as the Committee or Board deems
necessary or appropriate.
3
EXHIBIT A
GLOBIX CORPORATION
2001 STOCK OPTION PLAN
1.Purpose of Plan. This 2001 Stock Option Plan (the "Plan") is designed to
assist Globix Corporation (the "Company") in attracting and retaining the
services of employees, directors 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 closing price 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 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.
"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.
1
The stock to be issued upon exercise of Stock Options granted under the
Plan shall consist of authorized but unissued or 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 2,000,000
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 Compensation 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, directors and 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) Unless otherwise determined by the Committee, Stock Options granted
hereunder to directors shall be in lieu of grants under any predecessor stock
option plan of the Company.
7. Terms and Exercise of Stock Option.
2
(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.
Notwithstanding the foregoing, any Director (who does not beneficially own more
than 5% of the Company's stock) may transfer Stock Options, provided that (i)
any such transfer shall be limited to such director's spouse, siblings, or
direct lineal ancestors or descendants or to limited partnerships, trusts,
closely held corporations for the benefit of such family members (the "Permitted
Transferees"), (ii) that the Company shall have been provided written notice of
any such transfer, and (iii) any such Permitted Transferee shall agree to be
bound by 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
3
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, except that the optionee shall
have the right to exercise his or her Stock Option (to the extent that the
optionee was entitled to exercise it as of the date of termination), within 15
days of the date of termination, but in no event later than the termination date
of his or her Stock Option; provided, however, if the optionee is terminated for
cause, the Stock Option shall terminate on the date of termination of
employment. The Option Committee or the Board, may determine, in their sole
discretion, whether the date of termination will be based on the last day the
optionee performed services for the Company rather than the date of termination.
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.
(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 or the Board, 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, 2010. 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, 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
4
(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
(each of the foregoing a "Change of Control Event"), the Company may (i)
accelerate the vesting schedule in such manner as the Company may decide in its
sole discretion, and/or (ii) 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 Change of Control Event 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. Alternatively, outstanding Stock
Options under the Plan may be assumed or converted to similar options in any
surviving or acquiring entity, but, if the surviving or acquiring entity shall
refuse to assume, or convert, said Stock Options, they shall be terminated if
not exercised according to the requirements set forth above.
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 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
5
approval by the affirmative vote of the holders of the majority of Common Stock
of the Company on or before December 31, 2001.
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.
6
EXHIBIT B
GLOBIX CORPORATION
2001 RESTRICTED STOCK PLAN
SECTION 1
Establishment of Plan; Purpose of Plan
1.1 Establishment of Plan. The Company hereby establishes the 2001
Restricted Stock Plan (the "Plan") for its directors, corporate and subsidiary
executive officers and key employees. The Plan permits the award of Restricted
Stock.
1.2 Purpose of Plan. The purpose of the Plan is to provide directors,
executive officers and key employees of the Company and its Subsidiaries with an
increased incentive to make significant contributions to the long-term
performance and growth of the Company and its Subsidiaries, to join the
interests of directors, executive officers and key employees with the interests
of the Company's shareholders through the opportunity for increased stock
ownership and to attract and retain directors, executive officers and key
employees. The Plan is further intended to provide flexibility to the Company in
structuring long-term incentive compensation to best promote the foregoing
objectives.
SECTION 2
Definitions
The following words have the following meanings unless a different meaning
is plainly required by the context:
2.1 "Act" means the Securities Exchange Act of 1934, as amended.
2.2 "Board" means the Board of Directors of the Company.
2.3 Unless otherwise defined in the grant or agreement applicable to a
Restricted Stock Award, "Change in Control" shall have the meaning given to it
in the Indenture dated as of February 8, 2000 between the Company and HSBC Bank
USA governing the Company's 12.50% Senior Notes due 2010.
2.4 "Code" means the Internal Revenue Code of 1986, as amended.
2.5 "Committee" means the Compensation Committee of the Board, the Board
or such other committee, as the Board shall designate to administer the Plan.
2.6 "Common Stock" means the Common Stock of the Company, $0.01 par value.
2.7 "Company" means Globix Corporation, a Delaware corporation, and its
successors and assigns.
2.8 "Participant" means a director, executive officer or key employee of
the Company or its Subsidiaries who has been granted a Restricted Stock Award
under the Plan.
1
2.9 "Person" has the same meaning as set forth in Sections 13(d) and
14(d)(2) of the Act.
2.10 "Restricted Period" means the period of time during which Restricted
Stock awarded under the Plan is subject to restrictions. The Restricted Period
may differ among Participants and may have different expiration dates with
respect to shares of Common Stock covered by the same Restricted Stock Award.
2.11 "Restricted Stock" means Common Stock awarded to a Participant
pursuant to Section 5 of the Plan.
2.12 "Restricted Stock Award" means the award of Restricted Stock to a
Participant pursuant to the Plan.
2.13 "Subsidiary" means any company or other entity of which 50% or more
of the outstanding voting stock or voting ownership interest is directly or
indirectly owned or controlled by the Company or by one or more Subsidiaries of
the Company.
SECTION 3
Administration
3.1 Power and Authority. The Committee shall administer the Plan. Except
as limited in this Plan, the Committee shall have full power and authority to
interpret the provisions of the Plan and Restricted Stock granted under the
Plan, to supervise the administration of the Plan and the Restricted Stock
granted under the Plan and to make all other determinations considered necessary
or advisable under the Plan. All determinations, interpretations and selections
made by the Committee regarding the Plan shall be final and conclusive. The
Committee shall hold its meetings at such times and places as it deems
advisable. Action may be taken by a written instrument signed by all of the
members of the Committee, and any action so taken shall be fully as effective as
if it had been taken at a meeting duly called and held. The Committee may
delegate record keeping, calculation, payment and other ministerial
administrative functions to individuals designated by the Committee, who may be
employees of the Company or its Subsidiaries.
3.2 Awards to Participants. In accordance with and subject to the
provisions of the Plan, the Committee shall have the authority to determine all
provisions of Restricted Stock Awards as the Committee may deem necessary or
desirable and as are consistent with the terms of the Plan, including, without
limitation, the authority to: (a) determine whether and when Restricted Stock
Awards will be granted, the persons to be granted Restricted Stock Awards, the
amount of Restricted Stock Awards to be granted to each person and the terms of
the Restricted Stock Awards to be granted; (b) determine and amend vesting
schedules, if any; (c) permit delivery or withholding of stock in payment of the
exercise price or to satisfy tax withholding obligations; and (d) waive any
restrictions or conditions applicable to any Restricted Stock Award. Restricted
Stock Awards shall be granted or awarded by the Committee, and Restricted Stock
Awards may be amended by the Committee consistent with the Plan, provided that
no such amendment may become effective without the consent of the Participant,
except to the extent that the amendment operates solely to the benefit of the
Participant.
3.3 Indemnification of Committee Members. Neither any member nor former
member of the Committee nor any individual to whom authority is or has been
delegated shall be personally responsible
2
or liable for any act or omission in connection with the performance of powers
or duties or the exercise of discretion or judgment in the administration and
implementation of the Plan. Each person who is or shall have been a member of
the Committee shall be indemnified and held harmless by the Company from and
against any cost, liability or expense imposed or incurred in connection with
such person's or the Committee's taking or failing to take any action under the
Plan. Each such person shall be justified in relying on information furnished in
connection with the Plan's administration by any appropriate person or persons.
SECTION 4
Shares Subject to the Plan
4.1 Number of Shares. Subject to adjustment as provided in Section 4.2 of
the Plan, a maximum of 3,063,490 shares of Common Stock shall be available for
Restricted Stock Awards under the Plan. Such shares may be authorized but
unissued shares or treasury shares.
4.2 Adjustments. If the number of shares of Common Stock outstanding
changes by reason of a stock dividend, stock split, recapitalization, merger,
consolidation, combination, exchange of shares or any other change in the
corporate structure or shares of the Company, the aggregate number and class of
shares available under the Plan, together with award limits and other
appropriate terms of the Plan, shall be appropriately adjusted. No fractional
shares shall be issued pursuant to the Plan, and any fractional shares resulting
from adjustments shall be eliminated from the respective Restricted Stock Award,
with an appropriate cash adjustment for the value of any Restricted Stock Awards
eliminated. If a Restricted Stock Award is canceled, surrendered, modified,
expires or is terminated during the term of the Plan but before the exercise or
vesting of the Restricted Stock Award in full, the shares subject to but not
purchased or retained by the Participant under such Restricted Stock Award shall
be available for other Restricted Stock Awards. If shares subject to and
otherwise deliverable upon the exercise of a Restricted Stock Award are
surrendered to the Company in connection with the exercise or vesting of a
Restricted Stock Award, the surrendered shares subject to the Restricted Stock
Award shall be available for other Restricted Stock Awards.
SECTION 5
Restricted Stock
5.1 Grant. A Participant may be granted Restricted Stock under the Plan.
Restricted Stock shall be subject to such terms and conditions, consistent with
the other provisions of the Plan, as shall be determined by the Committee in its
sole discretion. Restricted Stock shall be awarded on the condition that the
Participant remains in the employ of the Company or one of its Subsidiaries
during the Restricted Period. Such condition shall have no effect on the right
of the Company or any Subsidiary to terminate the Participant's employment at
any time. No payment is required from a Participant for an award of Restricted
Stock.
5.2 Restricted Stock Agreements. Each award of Restricted Stock shall be
evidenced by a Restricted Stock agreement containing such terms and conditions,
consistent with the provisions of the Plan, as the Committee from time to time
determines.
5.3 Termination of Employment or Directorship.
3
(a) General. If at any time a Participant is not an employee of the
Company or one of it subsidiaries and is not a director of the Company or one of
its subsidiaries, then any shares of Restricted Stock still subject to
restrictions on the date of such termination shall at the Company's option be
subject to repurchase by the Company at a purchase price of $.01 per share, upon
written notice by the Company to the Participant within thirty days of the date
of such termination.
(b) Death or Disability. If the events specified in section 5.3(a) shall
occur by reason of total and permanent disability (within the meaning of section
105(d)(4) or any successor section, of the Code) or death, the restrictions
applicable to the shares of Restricted Stock including the Company's repurchase
rights shall automatically terminate as of the date of such disability or death.
5.4 Restrictions on Transferability. Shares of Restricted Stock shall not
be sold, exchanged, transferred, pledged or otherwise disposed of by a
Participant during the Restricted Period other than to the Company pursuant to
subsection 5.3(a) or by will or the laws of descent and distribution.
5.5 Rights as a Shareholder. During the Restricted Period, a Participant
shall have all rights of a shareholder with respect to his Restricted Stock,
including (a) the right to vote any shares at shareholders' meetings; (b) the
right to receive, without restriction, all cash dividends paid with respect to
such Restricted Stock; and (c) the right to participate with respect to such
Restricted Stock in any stock dividend, stock split, recapitalization or other
adjustment in the Common Stock of the Company or any merger, consolidation or
other reorganization involving an increase or decrease or adjustment in the
Common Stock of the Company. Any new, additional or different shares or other
security received by the Participant pursuant to any such stock dividend, stock
split, recapitalization or reorganization shall be subject to the same terms,
conditions and restrictions as those relating to the Restricted Stock for which
such shares were received.
5.6 Legending of Restricted Stock. Any certificates evidencing shares of
Restricted Stock awarded pursuant to the Plan shall bear the following legend:
"THE SALE OR OTHER TRANSFER OF THESE SHARES IS SUBJECT TO AN AGREEMENT,
DATED AS OF ____ BETWEEN THE OWNER HEREOF AND THE CORPORATION WHICH (X)
RESTRICTS THE OWNER'S RIGHT TO SELL OR OTHERWISE TRANSFER THE SHARES
REPRESENTED BY THIS CERTIFICATE AND (Y) IMPOSES CERTAIN PURCHASE AND SALE
RIGHTS AND OBLIGATIONS REGARDING THESE SHARES ON SUCH PARTIES."
In addition the Company may affix an appropriate legend with respect
to federal securities laws.
5.7 Resale. The Participant shall agree not to resell or redistribute such
Restricted Stock after the Restricted Period except upon such conditions as the
Company reasonably may specify to ensure compliance with federal and state
securities laws.
4
SECTION 6
Change in Control
Without in any way limiting the Committee's discretion, the Committee may
include in any Restricted Stock Award provisions for acceleration of any vesting
or other similar requirements or for the elimination of any restrictions upon
Restricted Stock Awards upon a Change in Control of the Company.
SECTION 7
General Provisions
7.1 No Rights to Awards. No Participant or other person shall have any
claim to be granted any Restricted Stock Award, and there is no obligation of
uniformity of treatment of employees, Participants or holders or beneficiaries
of Restricted Stock Awards. The terms and conditions of the Restricted Stock
Awards of the same type and the determination of the Committee to grant a waiver
or modification of any Restricted Stock Award and the terms and conditions
thereof need not be the same with respect to each Participant.
7.2 Withholding. The Company or a Subsidiary shall be entitled to (a)
withhold and deduct from future wages of a Participant (or from other amounts
that may be due and owing to a Participant from the Company or a Subsidiary), or
make other arrangements for the collection of, all amounts deemed necessary to
satisfy any and all federal, state and local withholding and employment-related
tax requirements attributable to a Restricted Stock Award, including, without
limitation, the grant, exercise or vesting of, or payment of dividends with
respect to, a Restricted Stock Award; or (b) require a Participant promptly to
remit the amount of such withholding to the Company before taking any action
with respect to a Restricted Stock Award. Unless the Committee determines
otherwise, withholding may be satisfied by withholding Common Stock to be
received upon exercise or by delivery to the Company of previously owned Common
Stock.
7.3 Compliance with Laws; Listing and Registration of Shares. All
Restricted Stock granted under the Plan shall be subject to applicable laws,
rules and regulations, and to the requirement that if at any time the Committee
determines, in its sole discretion, that the listing, registration or
qualification of the shares covered thereby upon any securities exchange or
under any state or federal law, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition of, or in connection
with, the granting of such Restricted Stock Award or the issue or purchase of
shares thereunder, such Restricted Stock Award may not be exercised in whole or
in part, or the restrictions on such Restricted Stock Award shall not lapse,
unless and until such listing, registration, qualification, consent or approval
shall have been effected or obtained free of any conditions not acceptable to
the Committee.
7.4 No Limit on Other Compensation Arrangements. Nothing contained in the
Plan shall prevent the Company or any Subsidiary from adopting or continuing in
effect other or additional compensation arrangements, including the grant of
options and other stock-based awards, and such arrangements may be either
generally applicable or applicable only in specific cases.
7.5 No Right to Employment. The grant of a Restricted Stock Award shall
not be construed as giving a Participant the right to be retained in the employ
or directorship of the Company or any Subsidiary. The Company or any Subsidiary
may at any time dismiss a Participant from employment,
5
free from any liability or any claim under the Plan, unless otherwise expressly
provided in the Plan or in any written agreement with a Participant.
7.6 Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
SECTION 8
Effective Date and Duration of the Plan
This Plan shall take effect December 27, 2000, which is the day of
approval by the Board of Directors, provided, that any Restricted Stock Awards
granted prior to shareholder approval shall be subject to approval of the Plan
by the Company's shareholders at a regular or special meeting. Unless earlier
terminated by the Board of Directors, no Restricted Stock Award shall be granted
under this Plan after December 31, 2010.
SECTION 9
Termination and Amendment
The Board may terminate the Plan at any time, or may from time to time
amend the Plan, provided that no such amendment may impair any outstanding
Restricted Stock Award without the consent of the Participant, except according
to the terms of the Restricted Stock Award. No termination, amendment or
modification of the Plan shall become effective with respect to any Restricted
Stock Award previously granted under the Plan without the prior written consent
of the Participant holding such Restricted Stock Award unless such amendment or
modification operates solely to the benefit of the Participant.
6
[LOGO] GLOBIX(TM) The Global Internet Exchange
Globix Corporation
139 Centre Street
New York, New York 10013-4408
Phone: 212 334-8500
www.Globix.com
GLOBIX CORPORATION
PROXY
Annual Meeting of Shareholders - Thursday, April 26, 2001.
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 15, 2001 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 10013 at
9:00 a.m., local time, on Thursday, April 26, 2001, 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.)
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, Jack D.
Furst, Michael J. Levitt, Sid Paterson, Lord St. John, Harshad Shah and Dr.
Richard Videbeck.
2. Proposal to approve the Company's 2001 Stock Option Plan.
For |_| Against |_| Abstain |_|
3. Proposal to ratify the Company's 2001 Restricted Stock Plan.
For |_| Against |_| Abstain |_|
4. Proposal to ratify the appointment of Arthur Andersen LLP as the Company's
independent auditors for the fiscal year ending September 30, 2001.
For |_| Against |_| Abstain |_|
5. 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 , 2001
Signature
Print Name
Signature
Print Name