UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the Commission
[X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
GLOBIX CORPORATION
(Name of Registrant as Specified in its Charter)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
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to Exchange Act Rule 0-11:
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(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
GLOBIX CORPORATION
139 CENTRE STREET
NEW YORK, NEW YORK 10013
May 23, 2005
Dear Stockholder:
You are cordially invited to attend the 2005 Annual Meeting of Stockholders
of Globix Corporation, to be held at 1:00 p.m., local time, on Monday, June 13,
at the Globix Corporation headquarters at 139 Centre Street, New York, New York
10013.
The formal item on the agenda is the election of nine directors and the
ratification of the appointment of Amper, Politziner & Mattia PC as Globix
Corporation's independent accountants for the Fiscal Year ending September 30,
2005. The Proxy Statement provides information about each nominee and the
appointment of accountants. We do not expect any other items of business to be
raised.
We urge you to vote your shares promptly. As always, your vote is
important, and we appreciate your interest in Globix Corporation.
Sincerely yours,
STEVEN G. SINGER
CHAIRMAN OF THE BOARD OF DIRECTORS
GLOBIX CORPORATION
139 CENTRE STREET
NEW YORK, NEW YORK 10013
NOTICE OF ANNUAL MEETING
May 23, 2005
Notice is hereby given that the 2005 Annual Meeting of the Stockholders of
Globix Corporation, a Delaware corporation, will be held at our offices at 139
Centre Street, New York, New York 10013 on Monday, June 13, 2005 at 1:00 p.m.,
local time, for purposes of:
1) electing nine directors;
2) ratifying the appointment of Amper, Politziner & Mattia PC as Globix's
independent accountants for the fiscal year ending September 30, 2005; and
3) acting upon such other matters as may properly come before the meeting
or any adjournments, postponements or continuations of the meeting.
All Globix stockholders of record at the close of business on May 19, 2005
are entitled to vote at the meeting.
All stockholders are invited to attend the meeting. To ensure your
representation at the meeting, however, we urge you to vote your shares by mail
at the earliest convenience, whether or not you expect to attend the meeting. In
the event that you attend the meeting, you may vote in person even if you have
returned a proxy. Your vote is important.
H. Jameson Holcombe
CORPORATE SECRETARY
PROXY STATEMENT
TABLE OF CONTENTS
QUESTIONS AND ANSWERS..........................................................1
PROPOSAL ONE - ELECTION OF DIRECTORS...........................................6
INFORMATION AS TO NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS..............6
Our Board Of Directors................................................9
Committees of the Board of Directors.................................10
Directors' Compensation..............................................12
Other Executive Officers.............................................12
REPORT OF THE AUDIT COMMITTEE.................................................14
Information Regarding Independent Auditors...........................14
Advance Approval Policy..............................................15
Changes in Independent Auditors......................................15
REPORT OF THE COMPENSATION COMMITTEE..........................................18
Chief Executive Officer Compensation.................................19
Compensation Committee Interlocks and Insider Participation..........19
EXECUTIVE COMPENSATION........................................................20
Summary Compensation Table...........................................20
Aggregated Option/SAR Exercises In Last Fiscal And Fiscal
Year-End Option Values...............................................21
Employment Agreements................................................22
STOCKHOLDER PERFORMANCE GRAPH.................................................23
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT................24
Section 16(a) Beneficial Ownership Reporting Compliance..............27
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................................27
PROPOSAL TWO - RATIFICATION OF THE APPOINTMENT OF AMPER, POLITZINER
& MATTIA PC...................................................................29
Appendix A: Audit Committee Charter
Appendix B: Compensation Committee Charter
Appendix C: Nominating and Corporate Governance Committee Charter
This proxy statement is being furnished to you in connection with the
solicitation of proxies by the Board of Directors to be used at the 2005 Annual
Meeting of Stockholders of Globix Corporation ("Globix"). Copies of this proxy
statement are being mailed to stockholders of record beginning on or about May
23, 2005. A copy of the Globix Annual Report on Form 10-K for the year ended
September 30, 2004 accompanies this proxy statement.
The Annual Meeting will be held on Monday, June 13, 2005 at our principal
executive offices located at 139 Centre Street, New York, New York 10013 at 1:00
p.m. for the purposes set forth in the accompanying Notice of Annual Meeting of
Stockholders.
QUESTIONS AND ANSWERS
----------------------------------------------------------------
Q: WHAT AM I VOTING ON?
A: You are being asked by Globix to vote on the election of nine directors,
five of whom, Peter K. Stevenson, Peter L. Herzig, Steven Lampe, Steven G.
Singer and Raymond L. Steele, served on our Board last year and four of
whom, Wayne Barr, Jr., Jose A. Cecin, Jr., Stephen E. Courter and John
Forsgren, were appointed to the Board on March 7, 2005 pursuant to the
terms of the merger agreement between Globix and NEON Communications, Inc.
("NEON"). For more information on each nominee, turn to "Information as to
Nominees for Election to the Board of Directors" beginning on page 6.
You are also being asked to approve the appointment of Amper, Politziner &
Mattia PC as Globix's independent accountants for the fiscal year ending
September 30, 2005. For more information on this appointment, please turn
to "Ratification of the Appointment of Amper, Politziner & Mattia PC"
beginning on page 29.
Q: WHO IS ENTITLED TO VOTE?
A: Each of the recordholders of outstanding shares of Globix common stock and
each holder of Globix preferred stock at the close of business on May 19,
2005 is entitled to one vote for each share they own. As of the record
date, 48,449,009 shares of common stock were deemed issued and outstanding,
although of these shares of common stock only 48,284,409 shares have been
distributed. Each share of common stock is entitled to one vote on each
matter which holders of shares of common stock are entitled to vote. The
Globix preferred stock will be entitled to one vote per share and will vote
with the holders of common stock as a single class with respect to any
question or matter on which holders of common stock have a right to vote.
As of the record date, there were 2,971,753 shares of Globix preferred
stock outstanding.
The shares of Globix common stock outstanding before its bankruptcy in 2002
were cancelled on the effective date of our plan of reorganization (April
25, 2002) and do not have the right to vote. Holders of these shares may
receive their pro rata share of the 164,600 shares being withheld following
the resolution of the shareholder derivative suit described in "Item 3 -
Legal Proceedings" in our Annual Report on Form 10-K, depending on the
resolution of this suit.
Q: HOW DO I VOTE?
A: You can vote in any one of the following ways:
o YOU CAN VOTE BY MAIL by signing and dating your proxy card, and
mailing it in the enclosed prepaid envelope. If you mark your voting
instructions on the proxy card, your shares will be voted as you
instruct. If you return a signed card but do not provide voting
instructions, your shares will be voted FOR the named nominees for
election as directors and IN FAVOR OF the ratification of the
appointment of Amper, Politzner & Mattia PC as Globix's independent
accountants for the fiscal year ending September 30, 2005.
o YOU CAN VOTE IN PERSON AT THE ANNUAL MEETING by delivering your
completed proxy card in person at the Annual Meeting or by completing
a ballot available upon request at the meeting. However, if you hold
your shares in a bank or brokerage account rather than in your own
name, you must obtain a legal proxy from your stockbroker in order to
vote at the meeting.
Regardless of how you choose to vote, your vote is important and we
encourage you to vote promptly.
Q: WILL ANY OTHER MATTERS BE VOTED ON?
A: We do not expect any other matters to be considered at the Annual Meeting.
However, if a matter not listed on the proxy card is legally and properly
brought before the Annual Meeting by a stockholder, the proxies will vote
on the matter in accordance with their judgment of what is in the best
interest of Globix.
Q: HOW MANY VOTES ARE NEEDED TO HOLD THE MEETING?
A: 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.
Q: HOW MANY VOTES ARE NEEDED TO ELECT THE NOMINEES FOR DIRECTOR?
A: Directors are elected by a plurality of the votes, which means the nine
nominees who receive the largest number of votes will be elected. There is
no cumulative voting.
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Q: HOW MANY VOTES ARE NEEDED TO APPROVE THE RATIFICATION OF AMPER, POLITZINER
& MATTIA PC AS GLOBIX'S INDEPENDENT ACCOUNTANTS FOR THE FISCAL YEAR ENDING
SEPTEMBER 30, 2005?
A: The affirmative vote of a majority of those votes cast at the meeting is
required to approve the ratification of Amper, Politziner & Mattia PC as
Globix's independent accountants for the fiscal year ending September 30,
2005.
Q: WHO WILL COUNT THE VOTES?
A: Representatives of Mellon Investor Services LLC, our Transfer Agent, will
count the votes. A representative from Mellon Investor Services LLC will
act as inspector of elections.
Q: HOW ARE VOTES COUNTED?
A: In determining whether we have a quorum, we count all properly submitted
proxies and ballots, including abstentions, broker non-votes and withheld
votes, as present and entitled to vote. However, abstentions and broker
non-votes, as well as votes withheld, are not considered votes cast and
will not be counted for or against a matter or nominee.
Q: WHAT SHARES ARE COVERED BY MY PROXY CARD?
A: You should have been provided a proxy card for each account in which you
own shares of Globix common or preferred stock either:
o directly in your name as the stockholder of record; or
o indirectly through a broker, bank or other holder of record.
Q: WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE PROXY CARD?
A: It means that you have multiple accounts in which you own shares of Globix
common or preferred stock. Please vote all proxy cards you receive to
ensure that all your shares are voted. However, for your convenience we
recommend that you contact your broker, bank or our transfer agent to
consolidate as many accounts as possible under a single name and address.
Our transfer agent is Mellon Investor Services LLC. All communications
concerning shares you hold in your name, including address changes, name
changes, requests to transfer shares and similar issues, can be handled by
making a toll-free call to Mellon Investor Services LLC at 1-800-370-1163
or contacting them on the internet at www.melloninvestor.com.
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Q: HOW CAN I CHANGE MY VOTE?
A: You can revoke your proxy and change your vote at any time before the polls
close at the Annual Meeting. You can do this by:
o signing another proxy with a later date; or
o voting again at the meeting.
Q: WHEN ARE STOCKHOLDER PROPOSALS FOR THE 2006 ANNUAL MEETING OF STOCKHOLDERS
DUE?
A: You may submit proposals for consideration at the 2006 annual meeting,
including director nominations, in accordance with the following:
o All stockholders who wish to include a proposal in our Proxy Statement
for the Annual Meeting in 2006 must provide notice to our Corporate
Secretary by certified mail - return receipt requested to Corporate
Secretary, Globix Corporation, 139 Centre Street, New York, New York
10013 a reasonable amount of time before the Company prints and mails
its Proxy Statement for the 2006 Annual Meeting. The notice must
satisfy the requirements for stockholder proposals under the federal
securities laws.
o All stockholders who wish to present a matter at the 2006 Annual
Meeting, but not include such matter in the Proxy Statement, must
provide notice to the Corporate Secretary in accordance with the
bylaws of Globix.
o All stockholders who wish to make a director nomination at our 2006
Annual Meeting must provide notice to our Corporate Secretary by
certified mail - return receipt requested to Corporate Secretary,
Globix Corporation, 139 Centre Street, New York, New York 10013 no
later than March 16, 2006 and no earlier than February 14, 2006.
However, if the 2006 Annual Meeting does not occur between May 15,
2006 and July 13, 2006, the notice must be received not later than the
close of business on the tenth day following the day on which notice
of the Annual Meeting is made or the date that the Annual Meeting is
publicly announced, whichever occurs first. The notice must set forth
the stockholder's name and address as they appear on Globix's books
and the class and number of shares of Globix common or preferred stock
which are beneficially owned by such stockholder. Additionally, the
notice must set forth, as to each person whom the stockholder proposes
to nominate for election as a director, all information relating to
such person that is required to be disclosed pursuant to Regulation
14A under the Securities Exchange Act of 1934 (including such person's
written consent to being named as a nominee and to serving as a
director if elected).
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o You may contact the Globix Corporate Secretary at Globix's corporate
headquarters for a copy of the relevant Bylaw provisions regarding the
requirements for making stockholder proposals and nominating director
candidates.
Q: WHO PAYS THE COST OF SOLICITING THE PROXIES REQUESTED?
A: We will pay the expenses of soliciting proxies for the 2005 Annual Meeting,
including the costs of preparing, printing and mailing this Proxy
Statement, and payments to brokerage firms, banks and others for forwarding
solicitation materials to indirect owners of shares of Globix common or
preferred stock. In addition to use of the mail, proxies may be solicited
personally or by telephone by present and former officers, directors and
other employees of Globix without additional compensation, as well as by
employees of Mellon Investor Services LLC, our vote tabulator.
Q: WHERE CAN I GET A COPY OF THE GLOBIX ANNUAL REPORT?
A: If you were a stockholder of record on May 19, 2005, you should have
received a copy of our Annual Report on Form 10-K for the fiscal year ended
September 30, 2004 either with this Proxy Statement or prior to its
receipt. If you have not received the Annual Report on Form 10-K, please
write to the Corporate Secretary at the address below or call Globix at
(212) 334-8500 and a copy will be sent to you. Requests for copies of the
Annual Report on Form 10-K should be sent to: Corporate Secretary, Globix
Corporation, 139 Centre Street, New York, New York 10013. The Annual Report
on Form 10-K is also available on our Internet Web Site at
http://www.globix.com/about/ir.php.
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PROPOSAL ONE - ELECTION OF DIRECTORS
------------------------------------------------------------
The number of directors on our Board of Directors is nine. All directors of
Globix serve for a term of one year. All of the nominees are currently serving
as directors. The Board has no reason to believe that any nominee will be unable
to serve as a director. If, however, a nominee should be unable to serve at the
time of the Annual Meeting, the shares of Globix common and preferred stock
properly represented by valid proxies will be voted for the election of a
substitute nominee recommended by the Board.
INFORMATION AS TO NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
The name and age of each nominee for election as director and his present
position with Globix are included below:
Name Age Position
---- --- --------
Peter K. Stevenson 44 President, Chief Executive Officer and Director
Wayne Barr, Jr. 41 Director
Jose A. Cecin, Jr. 41 Director
Stephen E. Courter 50 Director
John Forsgren 58 Director
Peter L. Herzig 42 Vice Chairman of the Board of Directors
Steven Lampe 46 Director
Steven G. Singer 44 Chairman of the Board of Directors
Raymond L. Steele 70 Director
PETER K. STEVENSON joined Globix as president and chief executive officer
in April 2002 and also serves as a member of our Board of Directors. Mr.
Stevenson has over 22 years of experience in the communications industry. Prior
to joining Globix, Mr. Stevenson was a senior consultant to Communication
Technology Advisors LLC, from January 2002 through April 2002, a restructuring
boutique focusing on distressed telecommunications companies through the
provision of strategic planning advice, restructuring assistance and overall
business advice. Communication Technology Advisors LLC currently provides Globix
with various business advisory services. Mr. Stevenson is a founder of Net One
Group, Inc., a northern Virginia based telecom investment and management company
focused on developing and operating next generation broadband services networks.
From January 2001 to January 2002, Mr. Stevenson served as a strategic advisor
to the board of directors of Net Uno, one of the largest cable television, CLEC
and ISP carriers in Venezuela. From January 1998 to December 2000, Mr. Stevenson
was a corporate officer of Net Uno and president and chief operating officer of
Net Uno's Data and Telephone Group. From February 1996 to June 1998, Mr.
Stevenson was partner in, and vice president for, Wave International, an
international telecommunications investment and management firm focused on
developing companies in international markets. Mr. Stevenson graduated with a
Bachelor of Science degree from Saint Francis University in Loretto,
Pennsylvania.
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WAYNE BARR, JR. became a director of Globix upon the effectiveness of the
merger with NEON. Mr. Barr is a founding member and Senior Managing Director of
Capital & Technology Advisors LLC and Communication Technology Advisors LLC,
financial and operational restructuring firms with offices in Albany, New York
and Reston, Virginia. Mr. Barr is also a founding member of TechOne Capital
Group LLC, a private investment firm based in Albany, New York. Prior to
starting these firms, Mr. Barr was the Associate General Counsel of CAI Wireless
Systems, Inc., a wireless spectrum company located in Albany, New York, which
was sold to MCI WorldCom in 1999. Mr. Barr began his career as an attorney in
private practice in New York City and in Albany. He received his J.D. degree
from Albany Law School of Union University and is a member of the New York State
Bar. Mr. Barr has served as a member of the board of directors of NEON since
December 2002 and is a member of the board of directors of Evident Technologies,
Inc. and a member of the Board of Trustees of the New York Racing Association,
Inc.
JOSE A. CECIN, JR. became a director of Globix upon the effectiveness of
the merger with NEON. Mr. Cecin is a Managing Director of BB&T Capital Markets,
a leading middle-market investment bank, and directs the firm's
telecommunications practice. He is also active in the firm's defense and
aerospace practice. Mr. Cecin has over twenty years of management experience and
has had a strong focus on telecommunications, financing and corporate
development over the last fifteen years. Prior to joining BB&T Capital Markets,
Mr. Cecin was one of two founders of Cambrian Communications, a
telecommunications service provider, where he served as chief operating officer
and a director. On September 20, 2002, Cambrian Communications LLC filed a
petition for relief under Chapter 11 of the U.S. Bankruptcy Code in the U.S.
Bankruptcy Court for the Eastern District of Virginia. Prior to founding
Cambrian in 1999, Mr. Cecin was on the founding team of Wave International, a
telecommunications management company focused on infrastructure opportunities in
developing markets. Prior to Wave International, Mr. Cecin served as Managing
Director of Corporate Development at Bell Atlantic Corporation (now Verizon).
Mr. Cecin has served on the board of directors and board of advisors of several
private companies. Mr. Cecin earned a BS degree in Electrical Engineering from
the United States Military Academy at West Point and an MBA from Stanford
University.
STEPHEN E. COURTER became a director of Globix upon the effectiveness of
the merger with NEON. Mr. Courter, who was NEON's chairman of the board of
directors, president and chief executive officer until the merger with Globix,
joined NEON in December 2000. Mr. Courter held the positions of chairman of the
board of directors, president and chief executive officer with NEON when the
company filed for bankruptcy in June, 2002. Prior to joining NEON, Mr. Courter
was managing director and chief executive officer of Energis N.V., a
facilities-based network service provider in Holland from June 1998 to December
2000. From December, 1995 to June, 1998, Mr. Courter was vice president of
finance and assistant general manager of GlobalOne, a joint venture between
Sprint, Deutsche Telecom and France Telecom. Prior to joining GlobalOne, from
August, 1987 to November, 1995, he served in various positions of increasing
responsibility at Sprint International. Earlier in his career, Mr. Courter
worked for IBM Corporation and KPMG Peat Marwick LLP.
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JOHN H. FORSGREN became a director of Globix upon the effectiveness of the
merger with NEON. Mr. Forsgren has served as one of NEON's directors since May
1998 and as NEON's interim chief executive officer from August 2000 to December
2000. Mr. Forsgren served as vice chairman, executive vice president and chief
financial officer of Northeast Utilities and various subsidiaries from 1996 to
January 1, 2005. From December 1994 to January 1996, he served as a managing
director of Chase Manhattan Bank. Prior to that, Mr. Forsgren served as Senior
Vice President of the Walt Disney Company. He received his Bachelor of Arts
degree in Economics from Georgetown University and a Masters in Business
Administration degree from Columbia University.
PETER L. HERZIG has served as vice chairman of our Board of Directors since
May 2002. From August 2001 through April 2002, Mr. Herzig served as our chief
executive officer. Mr. Herzig joined Globix in October 2000, served as chief
operating officer from March 2001 through August 2001 and served as senior vice
president and chief operating officer-Application Services Group from October
2000 through March 2001. Prior to joining Globix, Mr. Herzig served as 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. Prior to joining iWon.com, Mr. Herzig was a senior managing
director and head of global capital markets services for Bear, Stearns & Co.
Inc. from February 1998 through 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 Bear Stearns,
Mr. Herzig worked at Goldman Sachs & Co. from July 1989 through February 1998.
Mr. Herzig has a Bachelor of Arts degree from Dartmouth College and a Masters in
Business Administration degree from Columbia University.
STEVEN LAMPE has been a director of Globix since April 2002. Mr. Lampe is a
managing member of Lampe, Conway & Co. LLC, an investment management company
which he co-founded in June 1999. Prior to his work at Lampe, Conway, Mr. Lampe
managed Lone Star Securities Fund, a distressed investment fund, from June 1997
through June 1999. Prior to his employment with Lone Star, Mr. Lampe worked at
Smith Management, a private investment company, from February 1988 through June
1997. Mr. Lampe has a Bachelor of Arts degree from Middlebury College and a
Masters in Business Administration degree from Harvard University.
STEVEN G. SINGER has been a director of Globix since April 2002. Effective
December 15, 2002, Mr. Singer became chairman of our Board of Directors. Mr.
Singer is the chairman and chief executive officer of American Banknote
Corporation, a publicly-traded corporation and 200 year-old global security
printer of documents of inherent value, including currency, passports, credit
cards, stock and bond certificates, and related products and services. On
January 19, 2005 American Banknote Corporation filed a petition for relief under
Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the
District of Delaware. Mr. Singer also serves as the non-executive chairman of
the board of Motient Corporation, a publicly traded corporation, and as the
Chapter 7 Trustee of American Pad & Paper Company. From 1993 through November
2000, Mr. Singer was the executive vice president and chief operating officer of
Romulus Holdings, Inc., a family-owned investment vehicle, and, from 1994
through the present, has served as the chairman of Pure 1 Systems, a
manufacturer and distributor of water treatment products. Mr. Singer has a
Bachelor of Arts degree, summa cum laude, from the University of Pennsylvania
and a Juris Doctor degree from the Harvard Law School.
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RAYMOND L. STEELE has been a director of Globix since June 2003. Mr.
Steele, a Chartered Financial Analyst, is a retired Investment Banker. In
addition to our company, Mr. Steele is a member of the board of directors of
American Banknote Corporation, Motient Corporation, Dan River Incorporated,
Dynabazaar Incorporated and Horizon Offshore Incorporation. From August 1997
until October 2000, Mr. Steele served as a board member of Video Services
Corporation. Prior to his retirement, Mr. Steele held various senior positions
such as executive vice president of Pacholder Associates, Inc. (from August 1990
until September 1993), executive advisor at the Nickert Group (from 1989 through
1990), and vice president, trust officer and chief investment officer of the
Provident Bank (from 1984 through 1988). He also served as Chairman of the Board
and CEO of Webcraft Technologies. Mr. Steele also previously served as a
director of Emerson Radio Corporation, Orion Motion Pictures Incorporation,
Video Services Corporation, Modernfold Incorporated, ICH Incorporated, GFTA,
Pharmhouse Incorporated and Dual Star Incorporated.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE FOR THE DIRECTOR NOMINEES LISTED ABOVE.
OUR BOARD OF DIRECTORS
The number of our Board of Directors is nine. Our directors are elected at
each annual stockholders' meeting, and serve until the next annual stockholders'
meeting and the election and qualification of their respective successors.
Messrs. Barr, Cecin, Courter and Forsgren were appointed to our Board of
Directors in accordance with the terms of the NEON Communications, Inc. merger
agreement. The Board of Directors met 12 times in fiscal year 2004.
Stockholders may communicate with any of our directors by writing to them
c/o Globix Corporation, 139 Centre Street, New York, New York 10013.
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COMMITTEES OF THE BOARD OF DIRECTORS
Our bylaws provide that our Board of Directors may create, by the
affirmative vote of at least a majority of the directors then in office, an
executive committee and any other committees which our Board of Directors deems
necessary or desirable to create. Our Board of Directors has the following
committees:
NAME OF COMMITTEE FUNCTIONS OF THE COMMITTEE NUMBER OF
AND MEMBERS MEETINGS IN
FISCAL 2004
AUDIT: This committee is comprised entirely of non-employee 5
directors and its responsibilities include:
Raymond L. Steele, o appointing, determining funding for, overseeing
Chairman and replacing our independent auditors;
o monitoring the independence and performance of
Peter L. Herzig our independent auditors;
o preapproving all audit and permitted non-audit
John H. Forsgren services performed by the independent auditors;
o reviewing our annual and quarterly financial
statements;
o monitoring our accounting and financial
reporting process and systems of internal
control;
o overseeing and providing direction on our
conduct of its business and compliance with its
ethical and legal responsibilities;
o overseeing our internal audit function; and
o facilitating open communication among the
Board, senior management, internal audit and
the independent auditors.
AUDIT COMMITTEE FINANCIAL EXPERT
The Audit Committee is composed of three directors, all of whom have been
determined by the Board of Directors to be "independent" as defined by the
listing standards of the American Stock Exchange, Section 10A(m)(3) of the
Securities Exchange Act of 1934 and the rules and regulations of the Securities
and Exchange Commission, except Mr. Herzig who would not be deemed independent
under the listing standards of the American Stock Exchange because he served as
our Chief Executive Officer from August 2001 through April 2002. The Board of
Directors has determined that Mr. Herzig's membership on the Audit Committee is
required by the best interests of the Company and its shareholders. Mr. Herzig
will be deemed independent under the listing standards of the American Stock
Exchange as of May 2005. All three members of the Audit Committee have been
determined by the Board of Directors to be "financial experts" as defined by the
Securities and Exchange Commission. The Audit committee operates under a written
charter adopted by the Board of Directors. This charter was amended and restated
on December 16, 2004. A copy of the charter is included as Appendix A to this
Proxy Statement.
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NAME OF COMMITTEE FUNCTIONS OF THE COMMITTEE NUMBER OF
AND MEMBERS MEETINGS IN
FISCAL 2004
COMPENSATION: This committee is comprised entirely of non-employee 2
Jose A. Cecin, Jr. directors and its responsibilities include:
o overseeing the compensation and benefits of
Peter Herzig employees; and
o establishing executive compensation.
Steven Lampe
The Compensation Committee is composed of three directors, all of whom have
been determined by the Board of Directors to be "independent" under the
standards of the American Stock Exchange. A Compensation Committee charter was
adopted by the Board of Directors on December 16, 2004. A copy of the charter is
included as Appendix B to this Proxy Statement.
NAME OF COMMITTEE FUNCTIONS OF THE COMMITTEE NUMBER OF
AND MEMBERS MEETINGS IN
FISCAL 2004
NOMINATING AND CORPORATE This committee is comprised entirely of non-employee 1
GOVERNANCE: directors and its responsibilities include:
Peter Herzig o establishing criteria for Board and committee
membership and recommend to the Board proposed nominees
John H. Forsgren for election to the Board and for membership on
committees of the Board;
Steven Lampe o making recommendations regarding proposals and
nominees for directors submitted by shareholders of
Globix; and
o making recommendations to the Board regarding
corporate governance matters and practices.
-11-
The Nominating and Corporate Governance Committee is composed of three
directors, all of whom have been determined by the Board of Directors to be
"independent" under the standards of the American Stock Exchange. A Nominating
and Corporate Governance Committee charter was adopted by the Board of Directors
on December 16, 2004. A copy of the charter is included as Appendix C to this
Proxy Statement.
The Nominating and Corporate Governance Committee has responsibility for
nominating directors of Globix. Peter Herzig, Steven Lampe and Raymond L. Steele
were named to this committee. The Nominating and Corporate Governance Committee
will give consideration to director candidates recommended by security holders
in accordance with the procedures described in the Questions and Answers section
of this Proxy Statement. The Nominating and Corporate Governance Committee does
not have a specific process for identifying and evaluating nominees for
director, but when considering nominations for membership on our Board of
Directors, the Nominating and Corporate Governance Committee seeks to identify
persons who have the highest capabilities, judgment and ethical standards and
who have an understanding of our business.
All of our directors attended over 75 percent of all meetings of the Board
of Directors and Committees on which they served during fiscal year 2004.
Directors are generally expected to attend our annual meeting of stockholders.
Two directors attended last year's annual meeting of stockholders.
DIRECTORS' COMPENSATION
Under our compensation program for directors, our directors are entitled to
receive:
o $2,000 per month for directors and $4,000 per month for the Chairman;
o an additional $250 per month for service on the Compensation Committee
of our Board of Directors (or $500 per month for the Chairman of the
Compensation Committee);
o an additional $500 per month for service on the Audit Committee of our
Board of Directors (or $1,000 per month for the Chairman of the Audit
Committee); and
o an additional $1,000 for each Board of Directors or committee meeting
in excess of four per year.
OTHER EXECUTIVE OFFICERS
NAME AGE POSITION
Philip J. Cheek 39 Managing and Finance Director of Globix U.K. Ltd.
Robert M. Dennerlein 45 Vice President and Chief Financial Officer
H. Jameson Holcombe 42 Senior Vice President, Operations, Chief
Technology Officer and Secretary
James C. Schroeder 57 Vice President and General Counsel
PHILIP J. CHEEK joined Globix's United Kingdom subsidiary, Globix Ltd., in
July 2000 as European finance director. Mr. Cheek was subsequently appointed to
the additional position of managing director of Globix Ltd. on July 12, 2001. He
currently serves on the Globix Ltd. United Kingdom board of directors. Prior to
his joining Globix Ltd., Mr. Cheek served in various financial positions with
Fritz Companies, an international freight company (now part of UPS) from April
1996 through July 2000. Mr. Cheek graduated as a qualified ACCA in 1992 with a
professional training practice at Maxwells Chartered Accountants.
-12-
ROBERT M. DENNERLEIN joined Globix in January 2003 as vice president and
corporate controller and became our chief financial officer on May 12, 2003.
Prior to joining Globix, from August 2001 until January 2003, Mr. Dennerlein
served as vice president and controller for OpNext, a global optical components
joint venture created by a spinoff from Hitachi and a venture capital investment
by Clarity Partners. From July 1999 until August 2001, Mr. Dennerlein served as
the director of accounting and external reporting for Agere Systems (formerly
the Microelectronics division of Lucent Technologies). From June 1992 until July
1999, Mr. Dennerlein held various management positions at International
Specialty Products, a global specialty chemicals manufacturer. He served as
senior director, ISP Financial Services from July 1997 until July 1999 and prior
to that controller, ISP International Operations from May 1995 until July 1997.
Mr. Dennerlein is a Certified Public Accountant and received a Masters in
International Business degree from Seton Hall University. He also holds a
Bachelor of Science in Accounting from Seton Hall University.
H. JAMESON HOLCOMBE joined Globix in July 2002 as senior vice president of
operations, a position he continues to hold. In April, 2003 he became our
corporate secretary and on August 11, 2003 he became our chief technology
officer. Prior to joining Globix, Mr. Holcombe served as chief information
officer of Cambrian Communications from February 2000 through July 2002. On
September 20, 2002, Cambrian Communications LLC filed a petition for relief
under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for
the Eastern District of Virginia. From August 1997 to January 2000, Mr. Holcombe
served as a senior principal consultant at C-Change, Inc. in San Rafael CA,
leading project teams to deliver e-commerce initiatives for entertainment,
telecommunications and financial services clients. Mr. Holcombe received a
Masters degree in Computer Science from George Washington University in
Washington, D.C. and a Masters in Business Administration degree from Chaminade
University in Honolulu. Mr. Holcombe received his undergraduate degree from the
United States Military Academy at West Point.
JAMES C. SCHROEDER joined Globix in February 2000 as Deputy General
Counsel. In December 2003 he was promoted to General Counsel and is responsible
for overseeing all of Globix's legal activities including real estate and sales
contracts. Prior to joining Globix, Mr. Schroeder was in private practice.
Earlier in his career Mr. Schroeder served as in-house counsel for Philips
Electronics NA and McKesson, Inc. Mr. Schroeder holds a BA from the University
of Southern California. He received his JD from Pepperdine University and his
LLM from New York University.
-13-
REPORT OF THE AUDIT COMMITTEE
----------------------------------------------------------------
The following shall not be deemed to be "soliciting material" or to be
"filed" with the Securities and Exchange Commission nor shall such information
be incorporated by reference into any future filing of Globix under the
Securities Act of 1933 or the Securities Exchange Act of 1934.
Management is responsible for our internal controls, financial reporting
process and compliance with laws, and regulations and ethical business
standards. The independent auditors are responsible for performing an
independent audit of our consolidated financial statements in accordance with
generally accepted auditing standards and for issuing a report thereon. The
Audit Committee monitors and oversees these processes.
The Audit Committee has reviewed and discussed the audited financial
statements of Globix for the fiscal year ended September 30, 2004 with
management, with the internal auditor and with Amper, Politziner & Mattia, P.C.
("Amper"), our independent auditors for the year ended September 30, 2004. In
addition, the Committee has held discussions with Amper covering the matters
required by Statement of Auditing Standards No. 61 (Communication with Audit
Committees), as amended. The Audit Committee has also received the written
disclosures and the letter from Amper required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees), and has held
discussions with Amper regarding that firm's independence.
Based on the Audit Committee's reviews and discussions with management and
the independent auditors as discussed above, the Audit Committee recommended
that the Board of Directors include the audited financial statements of Globix
in our Annual Report on Form 10-K for the fiscal year ended September 30, 2004
for filing with the Securities and Exchange Commission.
This report is furnished by the members of the Audit Committee.
Raymond L. Steele, Chairman
Peter L. Herzig
John H. Forsgren
INFORMATION REGARDING INDEPENDENT AUDITORS
The following is a description of fees paid to Globix's independent
auditor, Amper, Politziner & Mattia, P.C. ("Amper") or scheduled to be paid
under an engagement agreement for services in fiscal years 2003 and 2004. The
final amounts actually paid for the fiscal year 2004 audit may differ by an
immaterial amount based on the final hourly billing by Amper.
-14-
FISCAL YEAR FISCAL YEAR
2003 2004
----------- -----------
Audit Fees $ 212,165 $ 222,337
Audit Related Fees $ 0 $ 162,440 (1)
Tax Fees $ 0 $ 10,630
All Other Fees $ 26,775 (2) $ 26,079 (3)
Total Fees $ 238,940 $ 421,487
=========== ===========
----------
(1) Audit-related fees consisted of audit-related services in connection with
the registration statements on Form S-4 initially filed with the SEC on
October 12, 2004 and Form S-1 filed with the SEC on March 23, 2004.
(2) All other fees consisted of audit-related services in connection with the
401(k) profit-sharing plan we maintain for our employees. The Audit
Committee has considered whether the provision of these services is
compatible with maintaining Amper's independence.
(3) All other fees consisted of audit-related services in connection with the
SAS-70 certification.
ADVANCE APPROVAL POLICY
In accordance with the procedures set forth in its charter, the Audit
Committee approves in advance all auditing services and permitted non-audit
services (including the fees and terms of those services) to be performed for
Globix by its independent auditors. Such approval may be accomplished by
approving the terms of the engagement prior to the engagement of the independent
auditors with respect to such services or by establishing detailed
advance-approval policies and procedures to govern such engagement. All of the
fees and services described above were subject to advance approval.
The Audit Committee has approved the engagement of Amper to serve as our
independent auditors for the fiscal year ending September 30, 2005.
Representatives of Amper will attend the Annual Meeting, will have the
opportunity to make a statement if they desire to do so, and will be available
to respond to appropriate questions.
CHANGES IN INDEPENDENT AUDITORS
On July 31, 2002, we engaged PricewaterhouseCoopers LLP ("PWC") as our
independent auditors and dismissed Arthur Andersen LLP, which had previously
served as our independent auditors. The Board of Directors and Audit Committee
participated in and approved the decision to change independent auditors. The
audit reports of Arthur Andersen on the consolidated financial statements of
Globix and its subsidiaries as of and for the fiscal years ended September 30,
2000 and 2001 did not contain an adverse opinion or disclaimer of opinion, nor
were they modified as to uncertainty, audit scope or accounting principles. The
-15-
audit report for the year ended September 30, 2001 contained a going concern
modification. During the fiscal years ended September 30, 2000 and 2001, there
were no disagreements on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of Arthur Andersen, would
have caused it to make reference to the subject matter of the disagreement in
connection with its report.
PWC served as our independent auditors from July 31, 2002 through September
12, 2003. At a meeting held on September 12, 2003, our Audit Committee
recommended and approved a change in our independent auditors. Accordingly, we
dismissed PWC as our independent auditors on September 12, 2003.
PWC's reports on our financial statements for the seven-month period ended
April 30, 2002 and as of and for the five-month period ended September 30, 2002
contained no adverse opinion or disclaimer of opinion and were not qualified or
modified as to uncertainty, audit scope or accounting principle.
From the date of PWC's engagement on July 31, 2002 through September 12,
2003, there have been no disagreements with PWC on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure, which disagreements, if not resolved to the satisfaction of PWC,
would have caused PWC to make reference thereto in its report on the financial
statements for such periods.
From the date of PWC's engagement on July 31, 2002 through September 12,
2003, there have been no "reportable events" as that term is defined in Item
304(a)(1)(v) of Regulation S-K, except that on August 13, 2003 PWC provided us
with a management letter reporting to us the following:
Since our emergence from bankruptcy in April 2002, we have had to face many
challenging and complex accounting and financial reporting issues, including
fresh start accounting, restructuring and the restatement of amounts in our
financial statements for the quarter ended March 31, 2002. In addition, we have
experienced significant turnover in our financial reporting staff, as well as
limited management resources. We fell behind in our periodic reporting to the
Securities and Exchange Commission for the year ended September 30, 2002, and
experienced difficulty in catching up with our filing obligations for the year
ended September 30, 2002 while fulfilling our responsibilities for the year
ended September 30, 2003. PWC reported that the combined effect of these
challenges had stressed the capabilities of our accounting staff and created
material weaknesses within our accounting and reporting controls. The management
letter indicated that the shortage of qualified accounting personnel had
required PWC to perform significantly more work in connection with the audit of
our financial statements for the seven-month period ended April 30, 2002 and the
five-month period ended September 30, 2002. The management letter recommended
hiring at least two additional senior financial staff members, one of whom would
be required to be the controller.
-16-
We agreed with these findings and recommendations and as such, the
management letter noted that we had hired a controller who began work on July
15, 2003. In addition, in order to resolve the problems described above, we
hired a new Senior Accountant in May 2003, a new Manager of External Reporting
in October 2003 and a new Senior Accountant in November 2003. In addition, we
have committed to returning to a normal recurring closing timetable that
includes formal management reviews and a monthly financial reporting package.
Finally, by completing our fiscal 2002 reporting, we have significantly reduced
the burden on our internal accounting staff.
At its meeting on September 12, 2003, our Audit Committee recommended and
approved the engagement of Amper as our independent auditors. Accordingly, we
engaged Amper as our independent auditors, effective September 12, 2003. During
the two most recent fiscal years and through September 12, 2003, we have not
consulted with Amper regarding any matter that would require reporting under
Item 304(a)(2) of Regulation S-K.
-17-
REPORT OF THE COMPENSATION COMMITTEE
-----------------------------------------------------------
To our Stockholders:
The following shall not be deemed to be "soliciting material" or to be
"filed" with the Securities and Exchange Commission nor shall such information
be incorporated by reference into any future filing of Globix under the
Securities Act of 1933 or the Securities Exchange Act of 1934.
The duties of the Compensation Committee include approval of salary and
other compensation arrangements for our executive officers. No member of the
Compensation Committee is a current or former officer or employee of Globix.
Globix has established a compensation philosophy around the principle of
having compensation reflect and reinforce our strategic and operational goals
and enhance long-term stockholder value. Our 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 and with
the interests of the stockholders;
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 Globix and directly
motivate executives to accomplish results within their spheres of
influence as well as foster a company-wide team spirit.
Globix attempts to target its compensation programs to provide compensation
opportunities that are perceived by its officers and employees to justify
continued service to Globix.
Compensation decisions for the fiscal year ended September 30, 2004 were
based on the following considerations:
o Existing contractual compensation arrangements with the senior
executive officers;
o Compensation opportunities perceived to be necessary to retain
executive officers;
o The importance of the executives to our current and future success;
o The significance of the executive's compensation cost relative to its
impact on our 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.
-18-
Stock options granted to executive officers during fiscal 2004 will vest in
part based on the substantial achievement by Globix (as determined by the
Compensation Committee) of certain components (revenues, cash and earnings
before interest, taxes, depreciation and amortization) of the Globix operating
plan in fiscal 2004, 2005 and 2006.
CHIEF EXECUTIVE OFFICER COMPENSATION
Effective April 15, 2002, we entered into an employment agreement with
Peter K. Stevenson for his services as our President and Chief Executive
Officer. The original term of the agreement extended until July 31, 2003. As of
August 1, 2003, the agreement was amended to extend the term until July 31,
2004, subject to extension for successive six month periods with the mutual
consent of Globix and Mr. Stevenson, and to make certain other changes in Mr.
Stevenson's compensation and severance arrangements. Under the amended
agreement, Mr. Stevenson's base salary is $308,000 per year. Mr. Stevenson is
also eligible for an annual bonus in an amount up to 50 percent of his base
salary, payable at the discretion of the Compensation Committee, if he achieves
the targets (objective and subjective) to be established by the Compensation
Committee. In addition, under the terms of Mr. Stevenson's employment agreement
we agreed to grant to Mr. Stevenson options to acquire 548,667 shares of our
common stock, or 3% of the outstanding shares of our common stock on a fully
diluted basis. One hundred percent of these options have vested. Fifty percent
have vested based on the passage of time. The remaining 50 percent have vested
based on the determination by the Compensation Committee that Globix had
substantially achieved the performance targets specified in Mr. Stevenson's
original employment agreement. The Committee believes that these bonus and
option grants have provided and will provide appropriate incentives for Mr.
Stevenson to work for long-term growth and stock performance.
This report is furnished by the members of the Compensation Committee.
Steven G. Singer, Committee Chair
John H. Forsgren
Steven Lampe
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Singer, the Chairman of Globix's Board of Directors and a member of the
compensation committee of the board of directors until March 14, 2005, was paid
a success fee by Globix in the amount of $169,000 in connection with the sale by
Globix of the property located at 415 Greenwich Street, New York, New York in
January 2004.
-19-
EXECUTIVE COMPENSATION
--------------------------------------------------------
SUMMARY COMPENSATION TABLE
The following summary compensation table sets forth the total compensation
for the fiscal years ended September 30, 2004, September 30, 2003 and September
30, 2002 for Globix's Chief Executive Officer, Globix's four other most highly
compensated executive officers during the fiscal year ended September 30, 2004
who held office as of September 30, 2004.
ANNUAL COMPENSATION
-------------------
SECURITIES
UNDERLYING
SALARY BONUS OTHER ANNUAL OPTIONS/ ALL OTHER
NAME AND PRINCIPAL POSITION YEAR ($) ($)(2) COMPENSATION($) SARS (#) COMPENSATION
--------------------------- ---- ------- ------- --------------- ---------- ------------
Peter K. Stevenson(1) 2004 308,000 284,250 --- --- ---
PRESIDENT AND CHIEF 2003 284,684 150,000 79,105(4) 548,667(3) ---
EXECUTIVE OFFICER 2002 127,333 75,000 50,000(5) --- 1,459(6)
Robert M. Dennerlein(7) 2004 176,250 69,050 --- --- ---
CHIEF FINANCIAL OFFICER 2003 108,077 42,916 --- 100,000 ---
H. Jameson Holcombe(8) 2004 185,000 65,807 --- --- ---
SENIOR VICE PRESIDENT 2003 170,000 53,125 79,623(9) 106,582 ---
OF OPERATIONS, CORPORATE 2002 34,375 --- 27,621(10) --- ---
SECRETARY AND CHIEF
TECHNOLOGY OFFICER
John D. McCarthy(11) 2004 190,000 70,807 --- --- ---
SENIOR VICE PRESIDENT, 2003 190,000 62,938 --- 146,316 ---
CORPORATE DEVELOPMENT 2002 190,000 27,000 --- 100,000(12) ---
Philip J. Cheek(13) 2004 197,134 25,287 3,584(14) --- 19,893(15)
MANAGING AND FINANCE 2003 178,333 41,625 3,213(16) 30,000 17,833(15)
DIRECTOR, GLOBIX U.K. LTD. 2002 119,662 18,097 2,955(17) --- 11,966(15)
(1) Mr. Stevenson became our President and Chief Executive Officer on April 15,
2002.
(2) Amounts shown include a special one-time bonus paid in April 2004
occasioned by the successful completion of the sale of the property at 415
Greenwich Street in New York, New York in the amount of $168,750 for Mr.
Stevenson, $13,000 for Messrs. Dennerlein and Holcombe and $18,000 for Mr.
McCarthy.
(3) Pursuant to Mr. Stevenson's employment agreement dated as of April 15,
2002, we agreed to grant to Mr. Stevenson options to acquire 548,667 shares
of our common stock, which options were granted to Mr. Stevenson on March
14, 2003 pursuant to our 2003 Stock Option Plan.
(4) Represents the amount that we reimbursed Mr. Stevenson for his housing and
travel costs in the fiscal year ended September 30, 2003, including amounts
reimbursed for taxes associated with these payments, as his permanent
residence is located outside of the New York area.
-20-
(5) Represents the amount that we reimbursed Mr. Stevenson for his housing and
travel costs in the fiscal year ended September 30, 2002, as his permanent
residence is located outside of the New York area.
(6) Represents the amount of premiums for life insurance benefits for Mr.
Stevenson paid by Globix in the five month period ended September 30, 2002.
(7) Mr. Dennerlein became our Chief Financial Officer on May 12, 2003. He
joined Globix in January 2003.
(8) Mr. Holcombe joined Globix in July 2002 as Senior Vice President of
Operations. He became our Corporate Secretary in April 2003 and our Chief
Technology Officer on August 11, 2003.
(9) Represents the amount that we reimbursed Mr. Holcombe for his housing and
travel costs in the fiscal year ended September 30, 2003, including amounts
reimbursed for taxes associated with these payments, as his permanent
residence is located outside of the New York area.
(10) Represents the amount that we reimbursed Mr. Holcombe for his housing and
travel costs in the fiscal year ended September 30, 2002, as his permanent
residence is located outside of the New York area.
(11) Mr. McCarthy served as our Senior Vice President, Corporate Development
from September 2002 until his resignation effective as of April 28, 2005.
He joined Globix on March 5, 2001.
(12) These options were granted prior to the effective date of our plan of
reorganization and were cancelled on the effective date of the plan of
reorganization.
(13) Mr. Cheek joined our U.K. subsidiary, Globix Ltd., in July 2000. He was
appointed Managing and Finance Director of Globix Ltd. on July 12, 2001.
(14) Represents the amount that we reimbursed Mr. Cheek for his travel costs in
the fiscal year ended September 30, 2004, as his permanent residence is
located outside of the London area.
(15) Represents the amount contributed by Globix Ltd. to its profit sharing
plan.
(16) Represents the amount that we reimbursed Mr. Cheek for his travel costs in
the fiscal year ended September 30, 2003, as his permanent residence is
located outside of the London area.
(17) Represents the amount that we reimbursed Mr. Cheek for his travel costs in
the fiscal year ended September 30, 2002, as his permanent residence is
located outside of the London area.
AGGREGATED OPTION/SAR EXERCISES AND FISCAL YEAR-END OPTION/SAR VALUE TABLE
The following table presents information concerning exercise of options by
the officers included in the Summary Compensation Table during the fiscal year
ended September 30, 2004.
VALUE NUMBER OF SECURITIES VALUE OF UNEXERCISED
NUMBER OF REALIZED UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/SARS
SHARES (MARKET PRICE OPTIONS AT FISCAL YEAR END AT FISCAL YEAR END(1)
ACQUIRED AT EXERCISE EXERCISE -------------------------- -------------------------
ON LESS EXERCISE PRICE
NAME EXERCISE PRICE) ($/SHARE) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
Peter K. Stevenson --- --- 3.04 548,667 --- $ 115,220 $ ---
Robert M. Dennerlein --- --- 3.04 50,000 50,000 10,500 10,500
H. Jameson Holcombe --- --- 3.04 53,291 53,291 11,191 11,191
John D. McCarthy --- --- 3.04 73,158 73,158 15,363 15,363
Philip J. Cheek --- --- 3.04 15,000 15,000 3,150 3,150
(1) Based on a sales price of $3.25 per share of our common stock on the OTC
Bulletin Board on September 30, 2004.
-21-
EMPLOYMENT AGREEMENTS
PETER K. STEVENSON. Effective April 15, 2002, we entered into an employment
agreement with Peter K. Stevenson for his services as our President and Chief
Executive Officer. The original term of the agreement extended until July 31,
2003. As of August 1, 2003, the agreement was amended to extend the term until
July 31, 2004, subject to extension for successive six month periods with the
mutual consent of Globix and Mr. Stevenson, and to make certain other changes in
Mr. Stevenson's compensation and severance arrangements. Under the amended
agreement, Mr. Stevenson's base salary is $308,000 per year. Mr. Stevenson is
also eligible for an annual bonus in an amount up to 50 percent of his base
salary, payable at the discretion of the Compensation Committee, if he achieves
the targets (objective and subjective) established by the Compensation
Committee. In addition, under the terms of Mr. Stevenson's employment agreement
we agreed to grant to Mr. Stevenson options to acquire 548,667 shares of our
common stock, or 3 percent of the outstanding shares of our common stock on a
fully diluted basis. One hundred percent of these options have vested. Fifty
percent have vested based on the passage of time. The remaining 50 percent have
vested based on the achievement of performance targets as described in the the
Compensation Committee report on page 18. Under his employment agreement, Mr.
Stevenson is also entitled to reimbursement for certain travel expenses between
his home in Virginia and our offices in New York City, and for the expense of
maintaining an office in Virginia.
Mr. Stevenson's employment agreement provides that in the event that we
terminate his employment with Globix for any reason other than cause, or if Mr.
Stevenson terminates his employment with our Company for good reason, then Mr.
Stevenson is entitled to twelve months' salary.
H. JAMESON HOLCOMBE. On July 15, 2002, we entered into an agreement with H.
Jameson Holcombe outlining the terms of Mr. Holcombe's employment as our Vice
President, Operations. Mr. Holcombe's base salary is $165,000 per year, which
will be increased no less frequently than once per year in accordance with our
policies. Mr. Holcombe is also eligible to receive a bonus of 30 percent of his
base salary, which is contingent upon our Company meeting certain performance
targets mutually agreed upon by Globix and Mr. Holcombe. Further, we are
required to reimburse Mr. Holcombe for his travel each week to New York and his
reasonable living expenses while in New York. Our agreement with Mr. Holcombe
also provides that he is eligible to receive stock options under our 2003 Stock
Option Plan. We are entitled to terminate Mr. Holcombe's employment at any time.
JOHN D. MCCARTHY. In connection with Mr. McCarthy's resignation, we entered
into an agreement, to be effective as of April 28, 2005, to continue Mr.
McCarthy's salary through August 31, 2005.
-22-
STOCKHOLDER PERFORMANCE GRAPH
--------------------------------------------------------
The graph depicted below shows the total shareholder returns for our common
stock as compared against the NASDAQ market index and the Media General Internet
Software and Service Index. To our knowledge, our common stock did not trade
from April 25, 2002, the effective date of our plan of reorganization, until
October 31, 2002.
COMPARE 11-MONTH CUMALATIVE TOTAL RETURN
AMONG GLOBIX CORPORATION,
NASDAQ MARKET INDEX AND COREDATA GROUP INDEX
[THE FOLLOWING DATA WAS REPRESENTED AS A LINE CHART IN THE PRINTED MATERIAL]
------------------------ FISCAL YEAR ENDING ---------------------
COMPANY/INDEX/MARKET 10/31/2002 12/31/2002 3/31/2003 6/30/2003 9/30/2003 12/31/2003
GLOBIX CORP 100.00 80.00 100.00 120.00 106.40 160.00
INTERNET 100.00 106.37 126.01 171.94 196.67 223.76
NASDAQ MARKET INDEX 100.00 100.45 100.98 122.29 135.10 151.33
------------------------ FISCAL YEAR ENDING ---------------------
COMPANY/INDEX/MARKET 3/31/2004 6/30/2004 9/30/2004
GLOBIX CORP 131.60 116.00 130.00
INTERNET 239.35 278.25 252.60
NASDAQ MARKET INDEX 151.02 155.46 144.28
Assumes $100 invested on Oct. 31, 2002.
Assumes dividend reinvested.
Fiscal year ending Sept. 30, 2004
-23-
SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
-------------------------------------------------------
The following table and the accompanying notes set forth certain
information, as of May 19, 2005 (except as set forth below), concerning the
beneficial ownership of our common stock by: (1) each person who is known by us
to beneficially own more than five percent of our common stock, (2) each
director of Globix, (3) each officer named in the Summary Compensation Table and
(4) all directors and executive officers as a group. The beneficial ownership of
our preferred stock, where applicable, is set forth in the accompanying notes to
this table.
NAME AND ADDRESS
OF BENEFICIAL OWNER NUMBER PERCENTAGE(1)
------------------- ------ -------------
MacKay Shields LLC(2) 14,787,661 29.64%
c/o MacKay Shields Financial Corp.
9 West 57th Street
New York, NY 10019
LC Capital Master Fund Ltd.(3) (4) 5,373,141 10.98
Lampe Conway & Co. LLC
730 Fifth Avenue, Ste. 1002
New York, NY 10019
Loeb Partners Corp. (5) 3,299,330 6.79
61 Broadway
New York, NY 10006
Mode 1 Communications, Inc.(6) 2,723,674 5.62
c/o Northeast Utilities Service Co.
107 Selden Street
Berlin, CT 06037
Citadel Investment Group LLC(7) 2,549,600 5.26
131 Dearborn St., 36th Floor
Chicago, IL 60604
Peter K. Stevenson(8) 565,667 1.17
Wayne Barr, Jr. (9) 341,657 *
Jose A. Cecin, Jr.(10) 3,068 *
Stephen E. Courter(11) 573,660 1.17
John Forsgren(12) 2,061 *
Peter L. Herzig * *
Steven Lampe(3) (4) 5,373,141 10.98
-24-
Steven G. Singer(13) 915,622 1.89
Raymond L. Steele * *
Philip J. Cheek(14) 20,000 *
Robert M. Dennerlein(15) 66,666 *
H. Jameson Holcombe(16) 71,054 *
John D. McCarthy(17) 97,546 *
All directors and officers of Globix 8,030,142 15.82%
as a group (13 persons)(18)
(*) Less than 1%
(1) Except as noted below, the information regarding beneficial ownership of
our common stock has been presented in accordance with the rules of the
Securities and Exchange Commission. Under these rules, a person may be
deemed to beneficially own any shares as to which such person, directly or
indirectly, has or shares voting power or investment power and also any
shares of our common stock as to which such person has the right to acquire
voting or investment power within 60 days through the exercise of any stock
option or other right. The percentage of beneficial ownership as to any
person as of a particular date is calculated by dividing (a) (i) the number
of shares beneficially owned by such person plus (ii) the number of shares
as to which such person has the right to acquire voting or investment power
within 60 days by (b) the total number of shares outstanding as of such
date, plus any shares that such person has the right to acquire from Globix
within 60 days. As used in this proxy statement, "voting power" is the
power to vote or direct the voting of shares and "investment power" is the
power to dispose or direct the disposition of shares. Except as noted, each
stockholder listed has sole voting and investment power with respect to the
shares shown as being beneficially owned by such stockholder.
(2) According to information provided to us by MacKay Shields LLC, the
pecuniary interests in these shares are held by a number of clients for
whom MacKay Shields LLC is the discretionary investment advisor or
subadvisor. MacKay Shields LLC has voting and investment control over these
shares and, accordingly, is deemed to beneficially own these shares.
Included in these shares are 1,434,939 shares of common stock that may be
acquired upon conversion of the preferred stock.
(3) Mr. Lampe is affiliated with LC Capital Master Fund Ltd., which owns these
shares. Mr. Lampe has voting and investment control over these shares and,
consequently, is deemed to beneficially own these shares.
(4) LC Capital Master Fund Ltd. directly beneficially owns 5,363,639 shares of
Globix common stock (including 462,462 shares that may be acquired upon
conversation of the preferred stock). LC Capital indirectly beneficially
owns 9,502 shares of Globix common stock pursuant to currently exercisable
stock options granted to Mr. Lampe, who is an affiliate of LC Capital.
(5) Loeb Partners Corp. directly beneficially owns 3,289,828 shares of Globix
common stock (including 117,317 shares that may be acquired upon conversion
of the preferred stock). Loeb Partners indirectly beneficially owns 9,502
shares of Globix common stock pursuant to currently exercisable stock
options granted to Mr. Grubin, a former director of NEON, who is an
affiliate of Loeb Partners.
(6) Mode 1 Communications, Inc. directly beneficially owns 2,723,674 shares of
Globix common stock, including 9,502 shares of Globix common stock pursuant
to currently exercisable stock options. These options were originally
granted to Mr. Forsgren, who is an affiliate of Mode 1, and subsequently
transferred to Northeast Utilities, the parent of Mode 1.
-25-
(7) According to information provided to us, Citadel Limited Partnership is the
portfolio manager for each of Citadel Equity Fund Ltd. and Citadel Credit
Trading Ltd. Citadel Investment Group, L.L.C. acts as the general partner
of Citadel Limited Partnership.
(8) Pursuant to the terms of Mr. Stevenson's employment agreement described in
"Executive Compensation - Employment Agreements", on March 14, 2003, Globix
granted to Mr. Stevenson options to acquire 548,667 shares of Globix common
stock pursuant to the Globix 2003 Stock Option Plan, all of which stock
options are currently vested.
(9) Mr. Barr directly beneficially owns 9,502 shares of Globix common stock
pursuant to currently exercisable stock options and 125,000 shares of
Globix common stock pursuant to a currently exercisable warrant.
Additionally, Mr. Barr indirectly beneficially owns a warrant currently
exercisable for 207,155 shares of Globix common stock which is directly
beneficially owned by Rita Barr, Mr. Barr's spouse.
(10) Mr. Cecin beneficially owns these shares pursuant to currently exercisable
stock options.
(11) Mr. Courter beneficially owns these shares pursuant to stock options that
are fully vested and exercisable as a result of the merger.
(12) Mr. Forsgren served as vice chairman, executive vice president and chief
financial officer of Northeast Utilities, the parent of Mode 1, and various
subsidiaries from 1996 until his resignation, effective January 1, 2005.
Mr. Forsgren directly owns 2,061 shares of Globix common stock.
(13) Mr. Singer is co-trustee of two trusts for the benefit of his brother's
children and as trustee has voting and investment control over the 915,622
shares of common stock held in the trusts (including 118,197 shares that
may be acquired on conversion of the preferred stock). Mr. Singer's
sister-in-law, Karen Singer, serves as sole trustee for another trust for
the benefit of Mr. Singer's brother's children, which trust holds 4,092,594
shares of common stock (including 699,098 shares that may be acquired on
conversion of the preferred stock). Mr. Singer and his sister-in-law
disclaim membership in a group, as such term is defined in Section 13(d)(3)
of the Securities Exchange Act of 1934, and disclaim any other interest in
the Globix common stock held in the trusts.
(14) Mr. Cheek beneficially owns these shares pursuant to currently exercisable
stock options.
(15) Mr. Dennerlein beneficially owns these shares pursuant to currently
exercisable stock options.
(16) Mr. Holcombe beneficially owns these shares pursuant to currently
exercisable stock options.
(17) Mr. McCarthy beneficially owns these shares pursuant to currently
exercisable stock options.
(18) Includes options and warrants to purchase an aggregate of 1,721,820 shares
and also includes preferred shares exchangeable for 580,659 shares.
Unless otherwise indicated, the address for the individuals listed above is
c/o Globix Corporation, 139 Centre St., New York, NY 10013.
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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The federal securities laws require Globix directors and executive
officers, and persons who own more than ten percent of the outstanding shares of
common stock, to file with the Securities and Exchange Commission initial
reports of ownership and reports of changes in ownership of any equity
securities of Globix on Forms 3, 4, and 5. To our knowledge, based on review of
copies of such reports furnished to Globix and representations by these
individuals that no other reports were required, all required reports have been
filed on a timely basis on behalf of all persons subject to these requirements
during fiscal 2004.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
------------------------------------------------------
In September 2002, Globix paid Peter L. Herzig a lump sum of $250,000 in
connection with his resignation as Chief Executive Officer of Globix.
In January 2004, Globix paid Steven Singer, the Chairman of Globix's Board
of Directors and until March 14, 2005 a member of the compensation committee of
the Board of Directors, a success fee in the amount of $169,000 in connection
with sale by Globix of the property located at 415 Greenwich Street, New York,
New York. Mr. Stevenson, Globix's president and chief executive officer, was
also paid a success fee in the amount of $169,000 by Globix in connection with
the sale of the property. Globix paid similar success fees in lesser amounts to
certain other executive officers in connection with the sale of the property.
Communication Technology Advisors LLC ("CTA") provided consulting and
business development services to Globix and NEON prior to the merger and had
done so since Globix and NEON each emerged from bankruptcy in 2002. The fee paid
by Globix was $65,000 per month, while the fee paid by NEON was $35,000 per
month. CTA agreed to present merger and acquisition advice and opportunities to
NEON for a success fee which CTA agreed to waive in relation to the merger with
Globix. Additionally, under a letter agreement between Globix and CTA, CTA is
entitled to a success fee if Globix consummates a sale, merger or a similar
transaction with CTA's assistance. CTA also agreed to waive this fee in relation
to the merger with NEON. NEON issued to certain current and former affiliates of
CTA and certain of such affiliates' designees warrants exercisable for 300,000
shares of NEON common stock at $6.06 per share through October 23, 2008 and
warrants exercisable for 350,000 shares of NEON common stock at $5.30 per share
through December 3, 2007, as payment for its consulting and business development
services. CTA purchased these warrants for $25,000. The warrants were converted
into warrants exercisable for Globix common stock upon consummation of the
merger. One of CTA's employees is Wayne Barr, Jr. who serves on Globix's Board
of Directors. He, along with certain affiliates of CTA, hold warrants
exercisable for 500,000 shares of Globix common stock at $3.00 per share through
March 13, 2013, which were purchased for $25,000. On May 15, 2005, CTA and
Globix entered into a new consulting agreement under which CTA will receive a
fee of $120,000 per month. This agreement replaces the prior agreements with
Globix and NEON.
-27-
For the years ended December 31, 2003 and 2004, CTA received $780,000 in
fees from Globix. For the years ended December 31, 2003 and 2004, CTA received
$925,000 and $435,000, respectively in fees from NEON.
Effective February 13, 2003, NEON entered into an employment agreement with
Stephen E. Courter for his services as NEON's President, Chief Executive Officer
and Chairman of the board of directors. The original term of the employment
agreement was extended until December 31, 2003 and provided for the agreement to
be automatically extended for successive twelve-month periods, subject to early
termination. Under the agreement, Mr. Courter's base salary was $275,000 per
year and he was eligible for an annual bonus at 50 percent of his base salary,
payable in accordance with NEON's compensation program established and
administered by NEON's board of directors. In addition, under the terms of Mr.
Courter's employment agreement, NEON granted to Mr. Courter options to acquire
450,000 shares of NEON common stock, which were converted into options to
purchase 573,660 shares of Globix common stock in the merger. These options
became fully vested and immediately exercisable in the merger.
In addition, Mr. Courter's employment agreement provided that in the event
that NEON terminated his employment with NEON for any reason (other than for
cause, as defined in the employment agreement), then Mr. Courter is entitled to
twelve months' salary and incentive compensation at the then current
compensation rate and twelve months' benefit continuation at the then current
level. Pursuant to this agreement, Mr. Courter will receive salary and bonus
compensation through May, 2006. Mr. Courter has also agreed to serve as a
consultant to NEON for a period of six months in exchange for $50,000.
-28-
PROPOSAL TWO - RATIFICATION OF THE APPOINTMENT OF
AMPER, POLITZINER & MATTIA PC
----------------------------------------------------------
The Audit Committee has appointed Amper, Politziner & Mattia, P.C. as our
independent auditors for the year ended September 30, 2004. In the event that
ratification of this appointment of Amper, Politziner & Mattia, P.C. is not
approved by the affirmative vote of a majority of votes cast on the matter, then
the appointment of Amper, Politziner & Mattia, P.C. will be reconsidered by the
Audit Committee. Representatives of Amper, Politziner & Mattia, P.C. are
expected to attend the 2005 Annual Meeting, will have the opportunity to make a
statement if they so desire and will be available to respond to appropriate
questions.
Your ratification of the appointment of Amper, Politziner & Mattia, P.C.
for the fiscal year ending September 30, 2005 does not preclude the Audit
Committee from terminating its engagement of Amper, Politziner & Mattia, P.C.
and retaining new independent registered public accountants, if it determines
that such an action would be in the best interest of Globix.
Information about Amper, Politziner & Mattia, P.C. is set forth in the
Report of the Audit Committee beginning on page 14.
BY ORDER OF THE BOARD OF DIRECTORS
H. Jameson Holcombe
Corporate Secretary
Dated: May 23, 2005
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APPENDIX A
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GLOBIX CORPORATION
AUDIT COMMITTEE CHARTER
I. PURPOSE
The Audit Committee (the "Committee") is appointed by the Board of
Directors (the "Board") of Globix Corporation (the "Company") to assist the
Board in monitoring (1) the integrity of the financial statements of the
Company, (2) the independent auditor's qualifications and independence, (3) the
performance of the Company's internal audit function and independent auditors,
(4) the effectiveness of the Company's internal control structure, and (5) the
compliance by the Company with legal and regulatory requirements.
The Committee shall prepare the report required by the rules of the
Securities and Exchange Commission (the "Commission") to be included in the
Company's annual proxy statement.
II. GUIDING PRINCIPLES
The guiding principles to be considered by the Committee in carrying out
its responsibilities in reviewing a particular matter shall include
consideration of (1) whether the financial statements fairly present the results
of operations of the Company in accordance with generally accepted accounting
principles; (2) whether the treatment of the matter is consistent with the
Company's practices in prior accounting periods; (3) whether the presentation of
the matter is reasonably comprehensive under the circumstances; (4) whether the
disclosure regarding the matter contains any material misstatement or fails to
disclose a matter which reasonably would be considered material to the Company's
security holders; and (5) whether the presentation varies in a material way from
principles of convention or conservatism.
III. LIMITATION OF COMMITTEE'S ROLE
While the Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Committee to plan or conduct audits or to
determine that the Company's financial statements and disclosures are complete
and accurate and are in accordance with generally accepted accounting principles
and applicable rules and regulations. These are the responsibilities of
management and the independent auditor.
IV. COMMITTEE MEMBERSHIP
The Committee shall consist of no fewer than three members, each of whom
has been determined by the Board to be independent, as defined by Section 121A
of The American Stock Exchange Company Guide and Section 301 of the
Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"). Each Committee member
must also satisfy the independence, experience and other requirements applicable
to Committee members set forth in Section 10A(m)(3) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), the listing standards of The
American Stock Exchange ("AMEX") and the rules and regulations of the
Commission. Each member of the Committee shall be able to read and understand
fundamental financial statements, including the Company's balance sheet, income
statement and cash flow statement or will become able to do so within a
reasonable period of time after his or her appointment to the Committee. At
least one member of the Committee must be an "audit committee financial expert"
under Item 401(h) of Regulation S-K and "financially sophisticated" as defined
in Section 121B(2) of the AMEX Company Guide. A member of the Committee is
"financially sophisticated" if he or she has past employment experience in
finance or accounting, requisite professional certification in accounting, or
any other comparable experience or background that results in the individual's
financial sophistication, including, but not limited to being or having been a
chief executive officer, chief financial officer or other senior officer with
financial oversight responsibilities, or an active participant in one or more
public company audit committees. A director who qualifies as an "audit committee
financial expert" under Item 401(h) of the Regulation S-K is presumed to qualify
as "financially sophisticated." Committee members may enhance their familiarity
with finance and accounting by participating in educational programs conducted
by the Company or an outside provider.
A-1
The members of the Committee shall be appointed by the Board on the
recommendation of the Nominating and Corporate Governance Committee. Committee
members may be replaced by the Board.
V. MEETINGS
The Committee shall meet as often as it determines necessary, but not
less frequently than quarterly. The Committee shall meet at least annually with
management, the internal auditors and the independent auditor in separate
executive sessions. The Committee may request any officer or employee of the
Company or the Company's outside counsel or independent auditor to attend a
meeting of the Committee or to meet with any members of, or consultants to, the
Committee.
VI. COMMITTEE AUTHORITY AND RESPONSIBILITIES
The Committee shall have the sole authority to appoint, determine funding
for, oversee and replace the outside auditors as set forth in Section 10A(m)(2)
of the Exchange Act. The Committee shall be directly responsible for the
compensation and oversight of the work of the independent auditor (including
resolution of disagreements between management and the independent auditor
regarding financial reporting) for the purpose of preparing or issuing an audit
report or related work. The independent auditor shall report directly to the
Committee.
The Committee shall preapprove all auditing services and permitted
non-audit services (including the fees and terms thereof) to be performed for
the Company by its independent auditor, subject to the de minimus exceptions for
non-audit services described in Section 10A(i)(1)(B) of the Exchange Act which
are approved by the Committee prior to the completion of the audit. The
Committee may form and delegate authority to subcommittees consisting of one or
more members when appropriate, including the authority to grant preapprovals of
audit and permitted non-audit services, provided that decisions of such
subcommittee to grant preapprovals shall be presented to the full Committee at
its next scheduled meeting.
In discharging its duties, the Committee is empowered to investigate any
matter within the scope of its responsibilities.
The Committee shall have the authority, without seeking Board approval,
to obtain such data, engage such professionals and advisors, and use such other
internal and external resources as it determines necessary to fulfill its
responsibilities and duties. This shall include, without limitation, the
authority to consult with the Company's management and corporate staff, incur
administrative expenses, obtain external reports and other materials and to
engage outside advisors, including independent counsel, as it determines
necessary to carry out its duties. The Committee shall have sole authority to
approve fees and other terms of engagement for any professional advisors
retained by the Committee. The Company must provide for appropriate funding, as
determined by the Committee, for the payment of compensation to any independent
auditor, compensation to any advisors employed by the Committee pursuant to this
paragraph, and ordinary administrative expenses of the Committee that are
necessary or appropriate in carrying out its duties.
The Committee shall make regular reports to the Board.
The Committee, to the extent it deems necessary or appropriate, shall:
FINANCIAL STATEMENT AND DISCLOSURE MATTERS
1. Review and discuss with management and the independent auditor the annual
audited financial statements, including disclosures made in the
"Management's Discussion and Analysis of Financial Condition and Results
of Operations" portion of the Form 10-K, and recommend to the Board
whether the audited financial statements should be included in the
Company's Form 10-K.
A-2
2. Review and discuss with management and the independent auditor the
Company's quarterly financial statements prior to the filing of its Form
10-Q, including disclosures made in the "Management's Discussion and
Analysis of Financial Condition and Results of Operations" portion of the
Form 10-Q and the results of the independent auditor's review of the
quarterly financial statements.
3. Discuss with management and the independent auditor significant financial
reporting issues and judgments made in connection with the preparation of
the Company's financial statements, including any significant changes in
the Company's selection or application of accounting principles, any
major issues as to the adequacy of the Company's internal controls and
any special steps adopted in light of material control deficiencies.
4. Review and discuss quarterly reports from the independent auditors on:
(a) All critical accounting policies and practices to be used.
(b) All alternative treatments of financial information within
generally accepted accounting principles that have been discussed
with management, ramifications of the use of such alternative
disclosures and treatments, and the treatment preferred by the
independent auditor.
(c) Other material written communications between the independent
auditor and management, such as any management letter or schedule
of unadjusted differences.
5. Discuss with management the Company's earnings press releases, including
the use of "pro forma," "adjusted" or other non-GAAP information, as well
as financial information and earnings guidance provided to analysts and
rating agencies. Such discussion may be done generally (consisting of
discussing the types of information to be disclosed and the types of
presentations to be made).
6. Discuss with management and the independent auditor the effect of
regulatory and accounting initiatives as well as off-balance sheet
structures on the Company's financial statements.
7. Discuss with management the Company's major financial risk exposures and
the steps management has taken to monitor and control such exposures,
including the Company's risk assessment and risk management policies.
8. Discuss with the independent auditor the matters required to be discussed
by Statement on Auditing Standards No. 61 relating to the conduct of the
audit, including any difficulties encountered in the course of the audit
work, any restrictions on the scope of activities or access to requested
information, and any significant disagreements with management.
9. Ensure that a public announcement of the Company's receipt of an audit
opinion that contains a going concern qualification is made promptly.
OVERSIGHT OF THE COMPANY'S RELATIONSHIP WITH THE INDEPENDENT AUDITOR
10. Review and evaluate the lead partner of the independent auditor team.
11. Obtain and review a report from the independent auditor at least annually
regarding (a) the independent auditor's internal quality-control
procedures, (b) any material issues raised by the most recent internal
quality-control review, peer or Public Company Accounting Oversight Board
review, of the firm, or by any inquiry or investigation by governmental
or professional authorities within the preceding five years respecting
one or more independent audits carried out by the firm, (c) any steps
taken to deal with any such issues, and (d) all relationships between the
independent auditor and the Company. Evaluate the qualifications,
performance and independence of the independent auditor, including
considering whether the auditor's quality controls are adequate and the
provision of permitted non-audit services is compatible with maintaining
the auditor's independence, taking into account the opinions of
management and internal auditors.
A-3
12. Ensure the rotation of the lead (or coordinating) audit partner having
primary responsibility for the audit and the audit partner responsible
for reviewing the audit as required by law, and consider whether, in
order to assure continuing auditor independence, it is appropriate to
adopt a policy of rotating the independent auditing firm on a regular
basis.
13. Recommend to the Board policies for the Company's hiring of employees or
former employees of the independent auditor who participated in any
capacity in the audit of the Company.
14. Meet with the independent auditor prior to the audit to discuss the
planning and staffing of the audit.
15. Discuss with the national office of the independent auditor issues on
which they were consulted by the Company's audit team and matters of
audit quality and consistency.
OVERSIGHT OF THE COMPANY'S INTERNAL AUDIT FUNCTION
16. Review the appointment and replacement of the senior internal auditing
executive.
17. Review the significant reports to management prepared by the internal
auditing department and management's responses.
18. Discuss with the independent auditor and management the internal audit
department responsibilities, budget and staffing and any recommended
changes in the planned scope of the internal audit.
EFFECTIVENESS OF INTERNAL CONTROLS
19. Review management's plan for establishing and maintaining internal
controls, the framework used to evaluate its control structure and
management's subsequent assessment of the effectiveness of the internal
controls.
20. Review disclosures made to the Audit Committee by the Company's CEO and
CFO during their certification process for the Form 10-K and Form 10-Q
about any significant deficiencies in the design or operation of internal
controls or material weaknesses therein and any fraud involving
management or other employees who have a significant role in the
Company's internal controls.
COMPLIANCE OVERSIGHT RESPONSIBILITIES
21. Obtain from the independent auditor assurance that Section 10A(b) of the
Exchange Act has not been implicated.
22. Obtain reports from management, the Company's senior internal auditing
executive and the independent auditor that the Company and its
subsidiary/foreign affiliated entities are in conformity with applicable
legal requirements and the Company's Code of Business Conduct and Ethics.
Advise the Board with respect to the Company's policies and procedures
regarding compliance with applicable laws and regulations and with the
Company's Code of Business Conduct and Ethics.
23. Review reports and disclosures of insider and affiliated party
transactions and approve all related party transactions.
A-4
24. Establish procedures for the receipt, retention and treatment of
complaints received by the Company regarding accounting, internal
accounting controls or auditing matters, and the confidential, anonymous
submission by employees of concerns regarding questionable accounting or
auditing matters.
25. Discuss with management and the independent auditor any correspondence
with regulators or governmental agencies and any published reports which
raise material issues regarding the Company's financial statements or
accounting policies.
26. Discuss with the Company's General Counsel legal matters that may have a
material impact on the financial statements or the Company's compliance
policies.
VII. ANNUAL PERFORMANCE EVALUATION
The Committee shall perform an evaluation, at least annually, of the
performance of the Committee, including by reviewing the compliance of the
Committee with this Charter. In addition, the Committee shall review and assess,
at least annually, the adequacy of this Charter and recommend to the Board any
improvements to this Charter that the Committee considers necessary or valuable.
The Committee shall conduct such evaluations and review in such manner as it
deems appropriate.
Amended and Restated as of: December 16, 2004
A-5
APPENDIX B
----------
GLOBIX CORPORATION
COMPENSATION COMMITTEE CHARTER
I. PURPOSE
The Compensation Committee (the "Committee") is appointed by the Board of
Directors (the "Board") of Globix Corporation (the "Company") to assist the
Board of Directors in fulfilling its oversight responsibilities relating to
senior executive and director compensation. The Committee shall provide
oversight on the development and implementation of the compensation policies,
strategies, plans and programs for the Company's key employees and outside
directors and disclosure relating to those matters; review and approve the
compensation of the executive officers of the Company and its subsidiaries; and
provide oversight concerning selection of officers, management succession
planning, performance of individual executives and related matters. In
performing this function, the Committee's goal is for the Company's compensation
programs to be consistent with the Company's strategic business objectives and
shareholder interests. The Committee shall have the duties and responsibilities
as described in Section IV of this Charter.
II. COMPOSITION
The Committee will consist of not less than two directors as determined
by the Board, each of whom the Board has determined to be independent, as
defined by Section 121A of the American Stock Exchange Company Guide. Each
Committee member will also qualify as both a "non-employee director" within the
meaning of Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and an "outside director" within the meaning of
Section 162(m) of the Internal Revenue Code of 1986, as amended ("Section
162(m)") or, in each case, any successor provision. Each Committee member must
also satisfy any other the requirements applicable to compensation committee
members set forth in the listing standards of any stock exchange upon which the
Company's securities are then traded.
The members of the Committee shall be appointed by the Board annually,
and shall serve until their successors shall be duly appointed and qualified.
Unless the Board appoints a Chair, the members of the Committee may designate a
Chair by a majority vote of the full Committee membership. In fulfilling its
responsibilities, the Committee shall be entitled to delegate its
responsibilities to a subcommittee of the Committee.
III. MEETINGS
The Committee shall meet at least annually or as often as necessary to
carry out its responsibilities and to act upon any other matters within its
jurisdiction. The Committee may request any officer or employee of the Company
to attend a meeting of the Committee or to meet with any members of, or
consultants or advisors to, the Committee. At its sole discretion the Committee
may meet separately with members of management or with outside advisors to
discuss any matters that the Committee believes is appropriate. The Committee
may also exclude from its meetings any persons it deems appropriate in order to
carry out its responsibilities.
B-1
IV. RESPONSIBILITIES AND DUTIES
The following functions shall be the common recurring activities of the
Committee in carrying out its responsibilities outlined in Section I of the
Charter. These functions should serve as a guide with the understanding that the
Committee may carry out additional functions and adopt additional policies and
procedures as may be appropriate in light of changing business, legislative,
regulatory, legal or other conditions. The Committee shall also carry out any
other responsibilities and duties delegated to it by the Board from time to time
related to the purposes of the Committee outlined in Section I of this Charter.
To fulfill its responsibilities and duties the Committee shall, to the
extent it deems necessary or appropriate:
SETTING COMPENSATION FOR EXECUTIVE OFFICERS AND DIRECTORS
1. Review at least annually and approve the Company's compensation strategy,
corporate goals and objectives relevant to management compensation and
total compensation policy with a goal of establishing and maintaining
compensation programs that support business objectives, create
shareholder value in both the long and short term, retain key executive
talent, link compensation with business performance and comply with
applicable regulatory requirements. The Committee may also consider such
other factors as it deems appropriate, including, without limitation,
competitive practices.
2. Provide oversight and guidance on the development and implementation of
compensation and benefit plans for the Company, including, without
limitation, adopting and amending such equity and other compensation
plans as the Committee may deem necessary or appropriate and taking such
steps as the Committee deems necessary or appropriate in order to qualify
compensation payable under such plans as "performance-based compensation"
under Section 162(m) or any successor provision.
3. Review at least annually and approve the measures of performance, both
qualitative and quantitative, with respect to the Company's Chief
Executive Officer. The Committee shall evaluate at least annually the
Chief Executive Officer's performance in light of these measures and,
based upon these evaluations, shall approve the Chief Executive Officer's
compensation package. The meeting at which this evaluation and approval
occurs shall be held in executive session.
4. Review at least annually and approve the measures of performance, both
qualitative and quantitative, with respect to the Company's other
executive officers. The Committee shall evaluate at least annually each
such officer's performance in light of these measures and, based upon
these evaluations, shall approve the compensation package for such
executive officers. The Committee shall also provide oversight of
management's decisions concerning the performance and compensation of
other Company officers and key employees.
5. Review and approve compensation for non-employee members of the Board.
6. Consider policies and procedures pertaining to expense accounts of senior
executives.
7. Review and recommend to the full Board director's and officer's
indemnification and insurance matters.
8. Approve separation packages and severance benefits for executive officers
to the extent these packages are outside the ordinary plan limits.
9. Perform any other activities consistent with this Charter, Company Bylaws
and governing law as the Committee or the Board deems necessary or
appropriate.
MONITORING STOCK OPTION AND OTHER INCENTIVE COMPENSATION PLANS
10. Review and make recommendations to the Board with respect to the
Company's stock option plans and any other incentive-compensation plans.
B-2
11. Make and approve stock option grants, incentive stock grants and other
discretionary awards under the Company's stock option and other incentive
plans to directors and "officers" of the Company, as that term is used in
Rule 16b-3 promulgated under the Exchange Act, or any successor
provision.
12. Make recommendations to the Board regarding reservation of shares for
issuance under Company employee or director benefit plans.
13. Review and monitor employee pension, profit sharing and benefit plans.
REPORTS
14. Prepare for inclusion in the Company's proxy statement a Compensation
Committee Report on Executive Compensation complying with the
requirements of Section 402(k) of Regulation S-K promulgated under the
Exchange Act, or any successor provision.
15. Report regularly to the Board.
V. ANNUAL PERFORMANCE EVALUATION
The Committee shall perform a review and evaluation, at least annually,
of the performance of the Committee and its members, including by reviewing the
compliance of the Committee with this Charter. In addition, the Committee shall
review and reassess, at least annually, the adequacy of this Charter and
recommend to the Board any improvements to this Charter that the Committee
considers necessary or valuable. The Committee shall conduct such evaluations
and reviews in such manner as it deems appropriate.
* * *
In discharging its duties, the Committee is empowered to investigate any
matter within the scope of its responsibilities.
The Committee shall have the authority to obtain such data, engage such
professionals and advisors and use such other internal and external resources as
it deems necessary to fulfill its responsibilities and duties. This shall
include, without limitation, the authority to consult with the Company's
management and corporate staff, obtain external consultant reports, published
salary surveys, and other materials and to engage independent compensation
consultants, accountants, attorneys and other professionals. The Committee shall
have sole authority to approve fees and other terms of engagement for any
professional advisors retained by the Committee. The Company must provide for
appropriate funding, as determined by the Committee, for the payment of
compensation to any advisors employed by the Committee pursuant to this
paragraph, and ordinary administrative expenses of the Committee that are
necessary or appropriate in carrying out its duties.
Adopted as of: December 16, 2004
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APPENDIX C
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GLOBIX CORPORATION
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE CHARTER
I. PURPOSE
The Nominating and Corporate Governance Committee (the "Committee") is
appointed by the Board of Directors (the "Board") of Globix Corporation (the
"Company") to assist the Board in fulfilling its responsibilities with respect
to Board and committee membership, shareholder proposals and corporate
governance matters and practices.
The Committee's primary duties and responsibilities are to:
o Establish criteria for Board and committee membership and
recommend to the Board proposed nominees for election to the Board
and for membership on committees of the Board;
o Make recommendations regarding proposals and nominees for director
submitted by shareholders of the Company; and
o Make recommendations to the Board regarding corporate governance
matters and practices.
The Committee shall fulfill these responsibilities by carrying out the
activities set forth in Section IV of this Charter.
II. COMPOSITION
The Committee shall be comprised of three or more directors as determined
by the Board, each of whom the Board has determined to be independent, as
defined by Section 121A of the American Stock Exchange Company Guide. Each
Committee member must also satisfy any independence, experience and other
requirements applicable to corporate governance committee members set forth in
the listing standards of any stock exchange upon which the Company's securities
are then traded and the rules and regulations of the Securities and Exchange
Commission.
The members of the Committee shall be appointed by the Board annually and
shall serve until their successors shall be duly appointed and qualified. Unless
the Board appoints a Chair, the members of the Committee may designate a Chair
by a majority vote of the full Committee membership. In fulfilling its
responsibilities, the Committee shall be entitled to delegate its
responsibilities to a subcommittee of the Committee.
III. MEETINGS
The Committee shall meet at least once a year or more frequently as
circumstances dictate. The Committee may request any officer or employee of the
Company to attend a meeting of the Committee or to meet with any members of, or
consultants or advisors to, the Committee. At its sole discretion the Committee
may meet separately with members of management or with outside advisors to
discuss any matters that the Committee believes is appropriate. The Committee
may also exclude from its meetings any persons it deems appropriate in order to
carry out its responsibilities.
IV. RESPONSIBILITIES AND DUTIES
The following functions shall be the common recurring activities of the
Committee in carrying out its responsibilities outlined in Section I of the
Charter. These functions should serve as a guide with the understanding that the
Committee may carry out additional functions and adopt additional policies and
procedures as may be appropriate in light of changing business, legislative,
regulatory, legal or other conditions. The Committee shall also carry out any
other responsibilities and duties delegated to it by the Board from time to time
related to the purposes of the Committee outlined in Section I of this Charter.
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To fulfill its responsibilities and duties the Committee shall, to the
extent it deems necessary or appropriate:
BOARD SELECTION, COMPOSITION AND EVALUATION
1. Establish criteria for Board membership, including, without limitation,
career specialization, relevant technical skills, strength of character,
diversity and the extent to which the candidate would fill a present need
on the Board. The Committee may review and revise such criteria from time
to time as necessary to reflect the needs of the Board.
2. Oversee the search process for candidates for Board membership, review
and approve recommendations for proposed nominees for election to the
Board. In that connection, the Committee shall have sole authority to
retain and to terminate any search firm to be used to assist it in
identifying candidates to serve as directors of the corporation,
including sole authority to approve the fees payable to such search firm
and any other terms of retention.
3. Consider questions of independence and possible conflicts of interest of
candidates and members of the Board and executive officers pursuant to
the listing standards of any stock exchange upon which the Company's
securities are then traded.
4. Review and approve recommendations to the Board regarding proposals and
nominees for director submitted by shareholders of the Company.
5. Consider whether an orientation program for new directors should be
implemented and, if it is determined there is a need for such program,
the Committee shall develop and oversee such program.
6. Determine whether and what form of continuing education is appropriate
for incumbent directors.
7. Consider and recommend changes in the size and composition of the Board.
8. Review and evaluate, at least annually, the performance of the Board of
the whole and oversee the evaluation of management.
COMMITTEE SELECTION AND COMPOSITION
9. Review and assess the committee structure of the Board and make
recommendations to the Board regarding committee structure, functions and
purpose.
10. Recommend members of the Board to serve on the committees of the Board,
giving consideration to the criteria for service on each committee as set
forth in the charter for such committee, as well as to any other factors
the Committee deems relevant, and where appropriate, make recommendations
regarding the removal of any member of any committee.
CORPORATE GOVERNANCE
11. Develop and recommend to the Board for its approval an annual
self-evaluation process for the Board and its committees. The Committee
shall oversee the annual self-evaluations.
12. Make recommendations to the Board regarding appropriate policies and
procedures to promote the effective functioning of the Board and
corporate governance matters and practices.
13. Perform any other activities consistent with this Charter, the Company's
By-laws and governing law as the Committee or the Board deems necessary
or appropriate.
14. Report regularly to the Board.
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V. ANNUAL PERFORMANCE EVALUATION
The Committee shall perform a review and evaluation, at least annually,
of the performance of the Committee and its members, including by reviewing the
compliance of the Committee with this Charter. In addition, the Committee shall
review and reassess, at least annually, the adequacy of this Charter and
recommend to the Board any improvements to this Charter that the Committee
considers necessary or valuable. The Committee shall conduct such evaluations
and reviews in such manner as it deems appropriate.
* * *
In discharging its duties the Committee is empowered to investigate any
matter within the scope of its responsibilities.
The Committee shall have the authority, without seeking Board approval,
to obtain such data, engage such professionals and advisors and use such other
internal and external resources as it reasonably determines necessary to fulfill
its responsibilities and duties. This shall include, without limitation, the
authority to consult with the Company's management and corporate staff, incur
administrative expenses, obtain external reports and other materials and to
engage outside advisors, including search firms and outside counsel, as it
determines necessary to carry out its duties. The Committee shall have sole
authority to approve fees and other terms of engagement for any professional
advisors retained by the Committee. The Company must provide for appropriate
funding, as determined by the Committee, for the payment of compensation to any
advisors employed by the Committee pursuant to this paragraph, and ordinary
administrative expenses of the Committee that are necessary or appropriate in
carrying out its duties.
Adopted as of: December 16, 2004
C-3
APPENDIX D
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[LOGO]
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 - Monday, June 13, 2005
The undersigned shareholder of Globix Corporation (the "Company") hereby
appoints H. Jameson Holcombe and Steven G. Singer, or either of them, the
attorney and proxy of the undersigned, with full power of substitution, to vote,
as indicated herein, all the common and preferred shares of the Company standing
in the name of the undersigned at the close of business on May 19, 2005 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 1:00 p.m., local time,
on Monday, June 13, 2005, 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 in respect to all matters which may properly come before the
meeting in accordance with and as more fully described in the Notice of Meeting
and Proxy Statement for the meeting, receipt of which is acknowledged.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS AND WILL BE VOTED FOR THE
ELECTION OF THE PROPOSED DIRECTORS AND FOR THE ABOVE PROPOSAL UNLESS OTHERWISE
INDICATED.
If the undersigned hold(s) any shares in a fiduciary, custodial or joint
capacity or capacities, this proxy is signed by the undersigned in every such
capacity as well as individually.
(Please fill in the reverse side and return promptly in the enclosed envelope.)
D-1
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: Peter K. Stevenson, Wayne Barr, Jr., Jose A. Cecin,
Jr., Stephen E. Courter, John Forsgren, Peter L. Herzig, Steven Lampe, Steven G.
Singer and Raymond Steele.
2. Proposal to approve the appointment of Amper, Politziner & Mattia PC as
Globix's independent accountants for the fiscal year ending September 30, 2005.
For |_| Against |_| Abstain |_|
3. 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.
SIGNATURE(S) should be exactly as name or names appear on this Proxy Card.
Joint owners should each sign. If acting as attorney, executor, trustee or other
representative capacity, sign name and title. If signing for a corporation,
please sign in full corporate name by a duly authorized officer.
Signature________________ Date _____ Signature________________ Date _____
D-2