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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 2, 1999
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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REGISTRATION STATEMENT
ON FORM S-3
UNDER THE SECURITIES ACT OF 1933
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GLOBIX CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 7373 13-3781263
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
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139 CENTRE STREET
NEW YORK, NEW YORK 10013
(212) 334-8500
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
MARC H. BELL
PRESIDENT AND CHIEF EXECUTIVE OFFICER
GLOBIX CORPORATION
139 CENTRE STREET
NEW YORK, NEW YORK 10013
(212) 334-8500
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE OF AGENT FOR SERVICE)
PLEASE SEND COPIES OF ALL COMMUNICATIONS TO:
ARNOLD N. BRESSLER, ESQ.
MILBERG WEISS BERSHAD HYNES & LERACH LLP
ONE PENNSYLVANIA PLAZA
NEW YORK, NEW YORK 10119-0165
(212) 594-5300
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time upon the exercise of warrants after this registration statement becomes
effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, please check the following box and list the Securities
Act registration number of the earlier effective registration statement for the
same offering. [ ]
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
Pursuant to Rule 416, this Registration Statement also covers such
indeterminable number of additional shares of common stock, if any, which may
become issuable by virtue of the anti-dilution provisions of the warrants.
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PRICE(1) REGISTRATION FEE
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Common Stock, $.01 par value per share............. 664,573 $23,924,628 $6,651
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(1) Estimated solely for purposes of calculating registration fee in accordance
with Rule 457(c) of the Securities Act of 1933, as amended, based upon the
closing price of $36.00 per share of common stock on October 29, 1999.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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PROSPECTUS
GLOBIX CORPORATION
664,573 SHARES OF COMMON STOCK
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These shares may be offered and sold from time to time by certain
stockholders of Globix identified in this prospectus. See "Selling
Stockholders." The selling stockholders are holders of warrants to purchase
shares of Globix common stock and acquired such warrants either on January 24,
1996 in connection with Globix's initial public offering of common stock or on
April 30, 1998 in connection with Globix's sale of 160,000 units consisting of
13% Senior Notes and warrants.
The selling stockholders will receive all of the net proceeds from the sale
of the shares. These stockholders will pay all underwriting discounts and
selling commissions, if any, applicable to the sale of the shares. Globix will
not receive any proceeds from the sale of the shares.
YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 4 OF THIS
PROSPECTUS BEFORE PURCHASING ANY OF THE COMMON STOCK OFFERED HEREBY.
Globix's common stock is quoted on the Nasdaq National Market under the
symbol "GBIX." On October 29, 1999, the last reported sale price of the common
stock was $36.00 per share.
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Neither the SEC nor any state securities commission has determined whether this
prospectus is truthful or complete. Nor have they made, nor will they make, any
determination as to whether anyone should buy these securities. Any
representation to the contrary is a criminal offense.
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The date of this Prospectus is November 2, 1999
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TABLE OF CONTENTS
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SECTION PAGE
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Available Information....................................... ii
Globix Corporation.......................................... 1
Risk Factors................................................ 4
Use of Proceeds............................................. 13
Selling Stockholders........................................ 13
Plan of Distribution........................................ 17
Legal Matters............................................... 17
Experts..................................................... 17
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AVAILABLE INFORMATION
Globix files reports, proxy statements and other information with the
Commission. Those reports, proxy statements and other information may be
obtained:
- At the Public Reference Room of the Commission, Room 1024-Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549;
- At the public reference facilities at the Commission's regional offices
located at Seven World Trade Center, 13th Floor, New York, New York 10048
or Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661;
- By writing to the Commission, Public Reference Section, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549;
- At the offices of The Nasdaq Stock Market, Reports Section, 1735 K
Street, N.W., Washington, D.C. 20006; or
- From the Internet site maintained by the Commission at
http://www.sec.gov, which contains reports, proxy and information
statements and other information regarding issuers that file
electronically with the Commission.
Some locations may charge prescribed or modest fees for copies.
Globix has filed with the Commission a registration statement under the
Securities Act of 1933, as amended, with respect to the common stock offered
hereby. This prospectus, which is a part of the registration statement, does not
contain all the information set forth in, or annexed as exhibits to, such
registration statement, certain portions of which have been omitted pursuant to
rules and regulations of the Commission. For further information with respect to
Globix and the common stock, reference is made to such registration statement,
including the exhibits thereto, copies of which may be inspected and copied at
the aforementioned facilities of the Commission. Copies of such registration
statement, including the exhibits, may be obtained from the Public Reference
Section of the Commission at the aforementioned address upon payment of the fee
prescribed by the Commission.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents which have been filed by Globix with the Commission
pursuant to the Exchange Act or the Securities Act are incorporated by reference
in this prospectus:
- Globix's Annual Report on Form 10-KSB/A for the year ended September 30,
1998.
- Globix's Quarterly Reports on Form 10-QSB/A for the quarter ended
December 31, 1998, and on Form 10-QSB for the quarters ended March 31,
1999 and June 30, 1999.
- The description of Globix's common stock and warrants contained in its
Registration Statement on Form S-1, declared effective by the Commission
on March 22, 1999, File No. 333-70375.
In addition, all documents filed by Globix pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this prospectus
and prior to the termination of the offering of the common stock offered hereby
shall be deemed to be incorporated herein by reference and to be a part hereof
from the date of filing of such documents.
Globix hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom a copy of this prospectus is delivered,
upon the written or oral request of any such person, a copy of any and all of
the above documents (not including exhibits to any of such documents unless such
exhibits are specifically incorporated by reference into such documents). Such
requests should be addressed to the Secretary, Globix Corporation, 139 Centre
Street, New York, New York 10013.
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THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS BASED ON OUR CURRENT
EXPECTATIONS, ASSUMPTIONS, ESTIMATES AND PROJECTIONS ABOUT GLOBIX AND OUR
INDUSTRY. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN
THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS, INCLUDING ALL
THE RISKS AND UNCERTAINTIES DISCUSSED IN "RISK FACTORS" AND ELSEWHERE IN THIS
PROSPECTUS. WE DO NOT UNDERTAKE TO UPDATE PUBLICLY ANY FORWARD-LOOKING
STATEMENTS FOR ANY REASON, EVEN IF NEW INFORMATION BECOMES AVAILABLE OR OTHER
EVENTS OCCUR IN THE FUTURE. WE BELIEVE THAT OUR FORWARD-LOOKING STATEMENTS ARE
WITHIN THE MEANING OF THE SAFE HARBOR PROVIDED BY THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED. THIS SUMMARY HIGHLIGHTS SOME INFORMATION FROM THIS PROSPECTUS.
YOU SHOULD ALSO READ THE MORE DETAILED INFORMATION AND CONSOLIDATED FINANCIAL
STATEMENTS AND THE NOTES TO THOSE STATEMENTS APPEARING IN OTHER PARTS OF THIS
PROSPECTUS.
GLOBIX CORPORATION
BUSINESS
We are a leading provider of Internet access and sophisticated Internet
products and services to large and medium size businesses. Our comprehensive
range of high performance products and services enables our customers to utilize
the Internet in implementing their business strategies. Our Internet products
and services include:
- facilities for hosting customer web sites on our servers, known as web
hosting, and housing customer-owned web servers and related equipment,
known as co-location;
- Internet access using telecommunication lines dedicated to particular
customers;
- value-added services such as dissemination of audio and video content
over the Internet, known as streaming media, electronic commerce and
network security;
- management of sophisticated computer systems and networks;
- instructor-led corporate training; and
- sale and integration of Internet-related hardware and software.
Our customers primarily use our products and services to maintain a high
speed, high capacity, direct link to the Internet and to establish and support
complex web sites. We currently offer our products and services from our
facilities in New York City, London and the San Francisco Bay area, where most
of our customers have substantial operations. Our teams of sales consultants,
technical personnel and customer support professionals are located near our
customers. Because of this strong local market presence, we are able to evaluate
the needs of our customers and quickly respond with tailored solutions. We also
provide our customers the ability to outsource the maintenance of their
corporate web sites. Our products are flexible and scaleable, allowing us to
modify the size and breadth of the services we provide as needed.
CUSTOMERS
As of June 30, 1999, we had approximately 1,300 business customer accounts
for Internet products and services. Our customers are in a variety of industries
such as advertising, financial services, media, publishing and retail. Our
Internet customers include Acclaim Entertainment, American Red Cross,
Bloomingdale's, BPI Communications (Billboard and Adweek), Dow Jones, Earthweb,
General Media International (Penthouse), Microsoft, National Hockey League,
Nomura Securities, Ogilvy & Mather, RealNetworks, Standard & Poors and Tishman
Speyer Properties.
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FACILITIES AND NETWORK EXPANSION
We recently opened new state-of-the-art "SuperPOP" facilities in New York
City, London and the San Francisco Bay area, to complement our original New York
City facility. Each new SuperPOP features:
- a high performance Internet data center with multiple, redundant,
high-capacity fiber connections, uninterruptable power supplies with
back-up generators, a dry fire suppression system, raised floor and
environmental controls;
- a network operations center, which provides 24 hour a day, 7 day a week
monitoring of our network and our customers' web sites; and
- on-site customer support, sales and marketing, and administration of
Internet software and hardware, including servers and routers.
The addition of the new SuperPOP facilities has increased our total
Internet data center capacity from 2,000 square feet to 63,000 square feet,
significantly increasing the space we have available to house servers and
routers for hosting web sites and co-location.
We have points of presence, or POPs, in Chicago and Washington D.C. We are
establishing POPs in Los Angeles, Amsterdam, Frankfurt, Geneva, Milan, Paris,
Stockholm and Vienna as part of a planned program of establishing POPs in other
major business centers in the United States and Europe. We are also evaluating
new markets and may in the future establish additional POPs or SuperPOP
facilities in additional global business markets. We have established a
high-performance network in the United States to connect our SuperPOPs and POPs.
We are extending this network backbone to major business centers in Europe. Our
network will significantly increase data transmission speed and capacity,
improve reliability and reduce data transmission costs.
MARKET OPPORTUNITY
We believe we are well positioned to take advantage of the significant
market opportunity that exists to provide Internet products and services to
businesses. For example, International Data Corporation estimates that:
- U.S. corporate Internet access revenues will increase from $2.9 billion
in 1998 to $12.0 billion in 2003.
- U.S. value-added Internet service revenues, such as hosting customers'
web sites, electronic commerce and security services, will increase from
$3.0 billion in 1998 to $12.9 billion in 2003.
- European corporate Internet access revenues will increase from $2.2
billion in 1998 to $7.7 billion in 2003.
- European value-added Internet service revenues will increase from $528.0
million in 1998 to $3.7 billion in 2003.
Our target customers are large and medium-sized businesses located near our
facilities. We believe that our target market is currently underserved by our
competitors. Many of our competitors focus primarily on Internet access products
and generally do not maintain a significant local presence or offer a full range
of Internet services. Our other competitors typically lack the resources to
provide and support a full range of value-added Internet products and services.
We believe that our strong local presence, high-performance facilities and
comprehensive range of Internet products and services enable us to effectively
compete against our competitors.
GROWTH STRATEGY
Our objective is to become the leading provider of Internet access and
sophisticated Internet products and services to businesses in key global
business markets. To achieve this objective, we intend to:
- continue to invest extensively in our infrastructure by establishing
additional POPs and, where there is sufficient demand, SuperPOPs;
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- expand our product and service offerings, such as Internet video
conferencing and virtual private network, or VPN, services;
- sell additional products and services to existing customers;
- enhance the Globix brand name in our target markets; and
- make investments in, or acquire, complementary businesses.
HISTORY
We were originally incorporated in New York in 1989 as NAFT International
Ltd. In July 1994, PFM Technologies Corporation, a newly formed affiliate of
NAFT, acquired NAFT and its affiliated corporations in a tax-free exchange of
common stock. We reincorporated in Delaware in 1995 under the name Bell
Technology Group Ltd. We changed our name to Globix Corporation on June 1, 1998.
Our principal executive offices are located at 139 Centre Street, New York, New
York 10013. Our telephone number is (212) 334-8500.
The name "Globix" and the Globix logo are trademarks and service marks of
Globix. Each trademark, trade name or service mark of any other company
appearing in this offering memorandum belongs to its respective owner.
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RISK FACTORS
You should carefully consider the following factors and other information.
The risks and uncertainties described below are not the only ones facing us.
Additional risks and uncertainties may also adversely impair our business
operations. If any of the following risks actually occur, our business,
financial condition or results of operations could be materially and adversely
affected.
OUR SUBSTANTIAL LEVERAGE MAY ADVERSELY AFFECT OUR FINANCIAL AND OPERATING
FLEXIBILITY.
As a result of our large outstanding debt obligations, we have significant
ongoing debt service requirements. As of June 30, 1999, we owed approximately
$161.4 million in long-term debt and notes payable. Our high level of
indebtedness could have several adverse effects on our future operations,
including the following:
- a significant portion of our cash flow from operations will be dedicated
to servicing our debt obligations and will not be available for other
business purposes;
- the terms and conditions of our indebtedness limit our flexibility in
planning for and reacting to changes in our business;
- our ability to obtain additional financing in the future for working
capital, capital expenditures, and other purposes may be substantially
impaired; and
- our substantial leverage may make us more vulnerable to economic
downturns and competitive pressures.
Our ability to meet our debt service obligations and to reduce our total
indebtedness depends on our future operating performance. Our future operating
performance will depend on our ability to expand our business operations by
building new facilities, extending our enhanced network and expanding our
product and service offerings. In addition, our future operating performance
will depend on economic, competitive, regulatory, legislative and other factors
affecting our business that are beyond our control. If we are unable to expand
our business as planned, we may not be able to service our outstanding
indebtedness.
WE MAY NOT HAVE SUFFICIENT CASH FLOW FOR OUR BUSINESS.
Based on our current level of operations, we believe that we will have
sufficient cash flow to meet our needs at least through the year ending
September 30, 2000. After that time, we may not generate sufficient cash flow
from operations or be able to raise capital in sufficient amounts, or at all, to
enable us to service our debt and operate our business. If we are unable to do
so, our business, financial condition and results of operations will be
materially and adversely affected.
WE HAVE A HISTORY OF OPERATING LOSSES AND WE EXPECT THESE LOSSES TO CONTINUE AND
INCREASE AT LEAST FOR THE NEAR FUTURE.
We have experienced significant losses since we began operations. We expect
to continue to incur significant losses for the foreseeable future. We incurred
net losses of approximately $3.1 million for the year ended September 30, 1997
and $11.2 million for the year ended September 30, 1998. Our loss for the nine
months ended June 30, 1999 was approximately $26.3 million. As of June 30, 1999,
our accumulated deficit was approximately $42.5 million. We expect our expenses
to increase as we expand our business. We cannot assure you that our revenues
will increase as a result of our increased spending. If revenues grow more
slowly than we anticipate, or if operating expenses exceed our expectations, we
may not become profitable. Even if we become profitable, we may be unable to
sustain our profitability. In either of such cases, our business, financial
conditions and results of operations will be materially and adversely affected.
WE MAY NOT BE ABLE TO RETAIN THE KEY PERSONNEL WE NEED TO SUCCEED.
We believe our success depends upon the continued contributions of our
executive officers and key operating personnel, particularly Marc H. Bell. The
unanticipated departure of any key member of our
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management team could have a material adverse effect on our business, financial
condition and results of operations. Our future success also depends on our
ability to attract and retain key personnel for management, technical, sales and
marketing, and customer support positions. Competition for qualified personnel
is intense and we may not be able to attract or retain personnel in the future
and the failure to attract or retain qualified personnel in the future could
have a material adverse effect on our business, assets, financial condition,
results of operations and prospects.
Furthermore, our growth is placing a significant strain on our management
systems and resources. As of June 30, 1999, we had 340 full-time employees in
comparison to approximately 120 full-time employees as of June 30, 1998. If we
do not successfully manage our expansion, our business will suffer.
WE MAY HAVE DIFFICULTY ESTABLISHING AND MANAGING OUR EXPANDING OPERATIONS.
A key element of our business strategy is the expansion of our facilities
and our network, which has required, and will continue to require, a great deal
of management time and the expenditure of large amounts of money. We have
recently opened new state-of-the-art facilities in New York City, London and the
San Francisco Bay area. We have POPs in Chicago and Washington D.C. and we are
establishing POPs in Los Angeles, Amsterdam, Frankfurt, Geneva, Milan, Paris,
Stockholm and Vienna as part of a planned program of establishing POPs in other
major business centers in the United States and Europe. We are also expanding
our network to connect these new facilities. Our success will depend on our
ability to integrate, operate and further expand and upgrade our new network and
facilities. Any delay in the completion of our new network would materially and
adversely affect our business plans. In addition, if we do not continue to
institute adequate financial and managerial controls and reporting systems and
procedures to operate from multiple facilities in geographically dispersed
locations, our operations will be materially and adversely affected.
WE ONLY BEGAN OUR INTERNET DIVISION IN 1995, SO YOUR BASIS FOR EVALUATING US IS
LIMITED.
Our Internet Division has only been in operation since 1995 and many of our
Internet-related services have only been offered since 1997. Previously, our
business principally involved the sale of computer and peripheral equipment for
desktop publishing applications. Accordingly, we have a limited operating
history in the Internet business upon which you may evaluate us. You should
consider the risks and difficulties frequently encountered by early stage
companies in new and rapidly evolving markets. If we fail to adequately address
these risks, our business, financial condition and results of operations will be
materially and adversely affected.
OUR OPERATIONS DEPEND ON THE CAPABILITIES OF OUR NETWORK.
Our success depends upon the performance of our network and our ability to
expand our network as our customer base gets larger and the needs of our
customers for Internet access become more demanding. If we are unsuccessful in
providing a network with the necessary capabilities, our business, financial
condition and results of operations will be materially and adversely affected.
Our existing network relies entirely on third party data communications and
telecommunications providers. These include Internet service providers, such as
Sprint, Cable & Wireless and UUNET, and long distance and local carriers,
including the regional Bell operating companies. These carriers are subject to
price constraints, including tariff controls, that in the future may be relaxed
or lifted. This could have a material and adverse effect on the costs of
maintaining our network. Many of our agreements with network and Internet
service providers allow the supplier to terminate the agreement on relatively
short notice. Accordingly, we cannot assure you that these suppliers will
continue to service us or that we would be able to replace them on comparable
terms, or at all.
Other risks and difficulties that we may encounter in connection with our
expanding network include our ability to adapt our network infrastructure to
changing customer requirements and changing industry standards.
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ANY FAILURE BY QWEST TO DELIVER OUR DEDICATED NETWORK WILL MATERIALLY AND
ADVERSELY AFFECT OUR BUSINESS.
In October 1998, we entered into an agreement with Qwest which gives us the
exclusive right to use portions of Qwest's global fiber network as our network
for a 20-year period. Our future success is highly dependent on Qwest's
performance of its obligations under this agreement. Any failure by Qwest to
perform its obligations would, in turn, adversely affect our ability to utilize
our new facilities and our ability to effectively utilize the personnel hired to
work in these facilities. Such a failure by Qwest might also require us to seek
network capacity from third parties, on a short term or longer term basis, at a
significantly higher cost than our cost structure with Qwest. Any of these
events would have a material and adverse effect on our business, financial
condition and results of operations.
OUR SUCCESS DEPENDS ON FORMING RELATIONSHIPS WITH OTHER INTERNET SERVICE
PROVIDERS.
The Internet includes a number of Internet service providers that operate
their own networks and connect with each other at various points under
arrangements known as "peering" arrangements. It is more costly and less
efficient to operate a network without peering arrangements. Consequently, we
must establish and maintain peering relationships to maintain high network
performance levels without having to pay excessive amounts for the transmission
of data. These arrangements are not subject to regulation and the terms,
conditions and costs can be changed by the provider over time. Other Internet
service providers may not agree to maintain peering relationships with us, at
reasonable costs or at all. Currently, we have approximately 400 peering
connections in effect. If we fail to establish and maintain more peering
relationships on a cost-effective basis, the costs of operating our network will
be significantly greater and our business, financial condition and results of
operations will be materially and adversely affected.
FLUCTUATIONS IN OUR QUARTERLY OPERATING RESULTS MAY NEGATIVELY IMPACT OUR
RESULTS OF OPERATIONS.
Our revenues and operating results vary significantly from quarter to
quarter due to a number of factors, not all of which are in our control. You
should not rely on quarter-to-quarter comparisons of our results of operations
as an indication of future performance. It is possible that in some future
periods our results of operations may be below the expectations of public market
analysts and investors. In this event, the price of our common stock may fall.
Factors which could cause quarterly results to fluctuate include:
- customer demand for our products and services;
- the timing of the expansion of our operations;
- seasonality in sales, principally during the summer and year-end
holidays;
- temporary increases in server and equipment sales to new customers as new
SuperPOPs become fully operational;
- the mix of our products and services revenues from our two operating
divisions;
- the timing of significant sales of Internet-related hardware;
- changes in the growth rate of Internet usage;
- the mix of revenues from our various Internet products and services;
- changes in pricing by us or our competitors;
- the introduction of new products or services by us or our competitors;
- the mix of domestic and international sales; and
- costs related to acquisitions of technology or businesses.
Our revenues are difficult to forecast and are subject to substantial
variability. In addition, we plan to significantly increase our operating
expenses to bring our new facilities and network online and to market and
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support our products and services. Therefore, if we have an unexpected shortfall
in revenues in relation to our expenses and we are unable to timely adjust our
spending to offset such shortfall, our business, financial condition and results
of operations would be materially and adversely affected.
WE ARE JUST BEGINNING TO EXPAND INTO INTERNATIONAL MARKETS AND MAY NOT BE
SUCCESSFUL IN THESE EFFORTS.
Until recently, we have operated only in the New York City area. We began
operations in Santa Clara, California on June 17, 1999 and in London on July 15,
1999. We plan to further expand our international operations into other European
cities in the near future. Because we have limited experience operating in
markets other than the New York market, we may have difficulty adapting our
products and services to different market needs. We may also be unsuccessful in
our efforts to market and sell these products and services to customers abroad.
In addition, we may find it more difficult and expensive to hire and train
employees and to manage international operations together with our U.S.
operations.
International operations are subject to other inherent risks, including:
- differences in regulatory requirements in various countries;
- potentially adverse tax consequences;
- political and economic instability;
- technology export and import restrictions or prohibitions;
- fluctuations in currency exchange rates;
- imposition of exchange controls;
- language and cultural barriers;
- uncertainty regarding protection of intellectual property rights; and
- seasonal reductions in business activity during the summer months in
Europe and certain other parts of the world.
If we fail to successfully address these risks, our business, financial
condition and results of operations may be materially and adversely affected.
WE ARE DEPENDENT ON OUR HARDWARE AND SOFTWARE SUPPLIERS TO PROVIDE US WITH THE
PRODUCTS AND SERVICES WE NEED TO SERVE OUR CUSTOMERS.
We rely on outside vendors to supply us with computer hardware, software
and networking equipment. These products are available from only a few sources.
We primarily buy these products from Silicon Graphics, Sun Microsystems, Compaq,
Intergraph and Cisco. We also rely on Cisco for network design and computer
installation services. We cannot assure you that we will be able to obtain the
products and services that we need on a timely basis and at affordable prices.
We have in the past experienced delays in receiving shipments of equipment
purchased for resale. We may not be able to obtain computer equipment on the
scale and at the times required by us at an affordable cost. Our suppliers may
enter into exclusive arrangements with our competitors or stop selling their
products or services to us at commercially reasonable prices. If our sole or
limited source suppliers do not provide us with products or services, our
business, financial condition and results of operations may be materially and
adversely affected.
WE MAY MAKE INVESTMENTS OR ACQUISITIONS THAT ARE NOT SUCCESSFUL.
We may make investments in or acquire complementary businesses, products,
services or technologies, but we have very limited experience in these
activities. The terms and conditions of our $160 million debt
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financing limit our ability to make investments in businesses unless we acquire
the entire business. If we seek to make investments or acquisitions, we will be
subject to the following risks:
- We may not be able to identify suitable investment or acquisition
candidates.
- If the purchase price for an acquisition consists of cash, we may need to
use all or a portion of our available cash, including proceeds from this
offering.
- If we do identify suitable candidates, we may not be able to make
investments or acquisitions on commercially acceptable terms.
- Acquisitions may cause a disruption in our ongoing business, distract our
management and other resources and make it difficult to maintain our
standards, controls and procedures.
- We may not be able to successfully integrate the services, products and
personnel of any acquired business into our operations.
- We may not be able to retain key employees of the acquired companies or
maintain good relations with its customers or suppliers.
- We may be required to incur additional debt.
- We may be required to issue equity securities, which may be dilutive to
existing shareholders, to pay for acquisitions.
- We may have to incur significant accounting charges, such as for goodwill
or for acquired in-process research and development, which may adversely
affect our results of operations.
BECAUSE WE ARE DEPENDENT ON COMPUTER SYSTEMS, A SYSTEMS FAILURE WOULD CAUSE A
SIGNIFICANT DISRUPTION TO OUR BUSINESS.
Our business depends on the efficient and uninterrupted operation of our
computer and communications hardware systems and infrastructure. We currently
maintain most of our computer systems in our new facilities in New York City,
London and the San Francisco Bay area. While we have taken precautions against
systems failure, interruptions could result from natural disasters as well as
power loss, telecommunications failure and similar events. We also lease
telecommunications lines from local, regional and national carriers, whose
service may be interrupted. Our business, financial condition and results of
operations could be materially and adversely affected by any damage or failure
that interrupts or delays our operations.
IF OUR SECURITY MEASURES ARE INADEQUATE, OUR BUSINESS WILL BE ADVERSELY
AFFECTED.
We have taken measures to protect the integrity of our infrastructure and
the privacy of confidential information. Nonetheless, our infrastructure is
potentially vulnerable to physical or electronic break-ins, viruses or similar
problems. If a person circumvents our security measures, he or she could
jeopardize the security of confidential information stored on our systems,
misappropriate proprietary information or cause interruptions in our operations.
We may be required to make significant additional investments and efforts to
protect against or remedy security breaches. Security breaches that result in
access to confidential information could damage our reputation and expose us to
a risk of loss or liability.
The security services that we offer in connection with our customers'
networks cannot assure complete protection from computer viruses, break-ins and
other disruptive problems. Although we attempt to limit contractually our
liability in such instances, the occurrence of these problems may result in
claims against us or liability on our part. These claims, regardless of their
ultimate outcome, could result in costly litigation and could have a material
adverse effect on our business and reputation and on our ability to attract and
retain customers for our products and services.
8
<PAGE> 13
OUR BUSINESS IS DEPENDENT ON THE CONTINUED GROWTH IN USE AND IMPROVEMENT OF THE
INTERNET.
Our products and services are targeted toward businesses which use the
Internet. The Internet is subject to a high level of uncertainty and is
characterized by rapidly changing technology, evolving industry standards, and
frequent new product and service introductions. If Internet usage does not grow
at the rates which we presently anticipate, our business, financial condition
and results of operations will be materially and adversely affected.
Critical issues concerning the commercial use of the Internet remain
unresolved and may affect the growth of Internet use, especially in the market
that we target. Despite growing interest in the many commercial uses of the
Internet, many businesses have been deterred from purchasing Internet products
and services for a number of reasons, including:
- inadequate protection of the confidentiality of stored data and
information moving across the Internet;
- inconsistent quality of service;
- inability to integrate business applications on the Internet;
- the need to deal with multiple vendors, whose products are frequently
incompatible; and
- lack of availability of cost-effective, high-speed products and services.
OUR SUCCESS DEPENDS ON KEEPING UP WITH RAPID TECHNOLOGICAL CHANGES IN OUR
MARKETS.
The market for Internet products and services has only recently begun to
develop and is rapidly evolving. Significant technological changes could render
our existing products and services obsolete. To be successful, we must adapt to
our rapidly changing market by continually improving the responsiveness,
functionality and features of our products and services to meet our customer's
needs. If we are unable to respond to technological advances and conform to
emerging industry standards in a cost-effective and timely basis, our business,
financial condition and results of operations will be materially and adversely
affected.
WE HAVE MANY COMPETITORS AND WE MAY NOT BE ABLE TO COMPETE EFFECTIVELY AGAINST
THEM.
Competition for the Internet products and services that we provide is
intense and we expect that competition will continue to intensify. We may not
have the financial resources, technical expertise, sales and marketing or
support capabilities to successfully meet our competition. If we are unable to
compete successfully against our competitors, our business, financial condition
and results of operations will be adversely affected.
Our competitors include other Internet service providers, such as:
- national and global Internet service providers, including Concentric
Network, PSINet and UUNET; and
- Internet service providers with a presence in the business centers where
we have a presence, including AboveNet, BT Internet, Demon Internet,
DIGEX, Exodus, Frontier GlobalCenter, GTE Genuity and Verio.
Our competitors also include telecommunications companies, such as:
- AT&T, Cable & Wireless, MCI WorldCom and Sprint; and
- regional Bell operating companies which offer Internet access, such as
Bell Atlantic.
Because we offer a broad range of goods and services, we encounter
competition from numerous other businesses which provide one or more similar
goods or services, including numerous resellers of Internet-related hardware and
software companies.
9
<PAGE> 14
Many of our existing competitors, as well as a number of potential new
competitors, have:
- longer operating histories;
- greater name recognition;
- larger customer bases;
- larger networks;
- more and larger facilities; and
- significantly greater financial, technical and marketing resources.
Our competitors may respond more quickly than we can to new or emerging
technologies and changes in customer requirements. They may also devote greater
resources than we can to the development, promotion and sale of products and
services. They may develop Internet products and services that are superior to
or have greater market acceptance than ours. Our competitors may also engage in
more extensive research and development, undertake more extensive marketing
campaigns, adopt more aggressive pricing policies and make more attractive
offers to our existing and potential employees and strategic partners. In
addition, current and potential competitors have established or may establish
cooperative relationships among themselves or with third parties.
New competitors, including large computer hardware, software, media and
other technology and telecommunications companies, may enter our market and
rapidly acquire significant market share. As a result of increased competition
and vertical and horizontal integration in the industry, we could encounter
significant pricing pressures. These pricing pressures could result in
significantly lower average selling prices for our products and services. For
example, telecommunications companies may be able to provide customers with
reduced communications costs in connection with their Internet access services,
significantly increasing pricing pressures on us. We may not be able to offset
the effects of any price reductions with an increase in the number of our
customers, higher revenue from value-added services, cost reductions or
otherwise. In addition, Internet access service businesses are likely to
encounter consolidation in the near future, which could result in increased
price and other competition.
YEAR 2000 PROBLEMS MAY DISRUPT OUR BUSINESS.
The Year 2000 issue is the result of computer programs being written using
two digits rather than four to define the applicable year. In other words,
date-sensitive software may recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in system failures or miscalculations
causing disruptions of normal business activities. If our present efforts to
address the Year 2000 compliance issues are not successful, or if our suppliers
and other third parties do not successfully address such issues, our business,
financial condition and results of operations could be materially and adversely
affected.
We have performed a Year 2000 simulation on our software to test system
readiness and found it to be compliant. We have been informed by our material
hardware and software vendors that such products used by us are currently Year
2000 compliant. We have assessed the materiality of our non-information
technology systems and have received assurances of Year 2000 compliance from
providers of material non-information technology systems. In addition, we have
tested our non-information technology systems and have found them to be Year
2000 compliant.
We cannot assure you that governmental agencies, utility companies,
telecommunication companies, other Internet service providers, third party
service providers, hardware and software manufacturers and others outside our
control will be Year 2000 compliant. The failure of any of these entities to be
Year 2000 compliant could materially and adversely affect our business,
financial condition and results of operations.
CHANGES IN GOVERNMENT REGULATIONS COULD ADVERSELY AFFECT OUR BUSINESS.
There are an increasing number of laws and regulations pertaining to the
Internet. These laws or regulations relate to liability for information received
from or transmitted over the Internet, online content
10
<PAGE> 15
regulation, user privacy, taxation and quality of products and services. The
government may also seek to regulate some segments of our activities as basic
telecommunications services. Moreover, the applicability to the Internet of
existing laws governing intellectual property ownership and infringement,
copyright, trademark, trade secret, obscenity, libel, employment, personal
privacy and other issues is uncertain and developing. We cannot predict the
impact, if any, that future regulation or regulatory changes may have on our
business.
In addition, a number of state and local government officials have asserted
the right or indicated a willingness to impose taxes on Internet-related
services and commerce, including sales, use and access taxes. Certain proposed
federal legislation is being considered that would, if enacted as currently
proposed, place a moratorium on the imposition by state and local governments of
new taxes on ISPs or other businesses involved in Internet-related commerce.
However, there can be no assurance that such legislation will be enacted or, if
enacted, that such legislation will embody such features. Furthermore, there can
be no assurance that federal taxes will not be imposed upon such services. We
cannot predict whether the imposition of any such additional taxes would have a
material adverse effect on our business, financial condition or results of
operations.
WE MAY BE LIABLE FOR VIOLATING THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES
OR HAVE DIFFICULTIES ENFORCING OUR OWN INTELLECTUAL PROPERTY RIGHTS.
Intellectual property rights, such as patents, technology, software,
copyrights, trademarks and domain names, are very important to companies engaged
in Internet-related businesses. We are not aware of any claims that the
intellectual property important to the operation of our business -- whether
owned by us or licensed to us by a third party -- infringes or violates the
intellectual property rights of any other party. Nonetheless, a third party may
bring a claim of infringement against us or any of our material suppliers. In
such case, we may be forced to pay for a license to continue using such
intellectual property. There is no guarantee that we could even obtain such a
license, or that it would be available on reasonable terms. In the alternative,
we may be forced to defend ourselves against infringement claims in litigation,
which would be costly and could result in our having to pay damages to third
parties. We have taken steps contractually to limit our liability for the use of
intellectual property licensed to us by third parties; however, there can be no
guarantee that we have complete or adequate protection in the above
circumstances. If a third party brings a claim that our business infringes its
intellectual property rights, our business, financial condition and results of
operations may be materially and adversely affected.
We rely on a combination of intellectual property laws and confidentiality
agreements to protect our own intellectual property rights. There can be no
guarantee that these will adequately protect all of our rights, or that any of
our intellectual property rights will not be challenged or held invalid or
unenforceable in a dispute with third parties. Moreover, third parties may
independently develop technology, software or other intellectual property that
is comparable with or similar to our own, and we may not be able to prevent
their use of it. Such developments would hurt any competitive advantage that we
derive from the use of our intellectual property. If we are unable to enforce
our intellectual property rights against third parties, our business, financial
condition and results of operations may be materially and adversely affected.
WE MAY BE LIABLE FOR THE MATERIAL OUR CUSTOMERS DISTRIBUTE OVER THE INTERNET.
The law relating to the liability of online service providers, private
network operators and Internet service providers for content and information
carried on or disseminated through their networks is currently unsettled. We may
become subject to legal claims relating to the content in the web sites we host.
For example, lawsuits may be brought against us claiming that material
inappropriate for viewing by young children can be accessed from the web sites
we host. Claims could also involve matters such as defamation, invasion of
privacy, copyright and trademark infringement. Internet service providers have
been sued in the past, sometimes successfully, based on the material
disseminated over their networks. While new U.S. laws offer certain protections
to Internet service providers, in terms of liability for content and information
sent to third parties over their networks, it is unclear if such protection will
apply in any particular claim brought against Globix in the future. Furthermore,
such protections may not exist at all in other countries where Globix does
business. If we have to take costly measures to reduce our exposure to these
risks, or are required to defend ourselves
11
<PAGE> 16
against such claims, or pay damage awards to third parties, our business,
financial condition and results of operations may be materially and adversely
affected.
FUTURE SALES OF OUR COMMON STOCK BY OUR EXISTING STOCKHOLDERS COULD HAVE ADVERSE
EFFECTS.
The market price of our common stock could decline as a result of sales by
our existing stockholders of a large number of shares of common stock in the
market, or the perception that these sales may occur. These sales also might
make it more difficult for us to sell equity securities in the future at a time
and at a price that we deem appropriate. As of September 15, 1999, we had
outstanding options and warrants to purchase 3,353,392 shares of common stock at
prices ranging from $5.00 to $47.75. At that date, Marc H. Bell, our President
and Chief Executive Officer owned approximately 645,000 shares and had currently
exercisable options to purchase 1,352,961 shares. If the holders of these
shares, options and warrants were to exercise their rights and sell the shares
issued to them, it could have an adverse effect on the market price of our
common stock.
WE ARE SUBJECT TO ANTI-TAKEOVER PROVISIONS.
Provisions of our certificate of incorporation, our by-laws and Delaware
law could make it more difficult for a third party to acquire us, even if doing
so would be beneficial to our stockholders.
12
<PAGE> 17
USE OF PROCEEDS
All of the net proceeds from the sale of Globix shares will go to the
stockholders who offer to sell their shares. Accordingly, Globix will not
receive any proceeds from the sales of the Globix shares.
SELLING STOCKHOLDERS
The following table sets forth certain information, as of October 4, 1999,
with respect to the number of shares of common stock owned, or to be owned upon
the exercise of warrants, by the selling stockholders named below and as
adjusted to give effect to the sale of shares offered hereby. The shares are
being registered to permit public secondary trading of the shares, and the
selling stockholders may offer the shares for sale from time to time.
The shares being offered by the selling stockholders will be issued to the
selling stockholders upon the exercise of warrants to purchase shares of common
stock. The warrants were acquired from Globix in either Globix's initial public
offering pursuant to an Underwriter's Warrant to Purchase Common Stock and/or
Redeemable Warrants dated January 24, 1996, or Globix's sale of 160,000 units
consisting of 13% Senior Notes and warrants pursuant to a Purchase Agreement
dated April 24, 1998.
Globix has filed with the SEC, under the Securities Act, a registration
statement on Form S-3 (the "Registration Statement") of which this prospectus
forms a part, with respect to the resale of the shares from time to time on the
Nasdaq National Market or in privately-negotiated transactions.
The shares offered by this prospectus may be offered from time to time by
the selling stockholders named below:
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
SHARES NUMBER OF SHARES
BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO BEING OWNED AFTER
NAME OF SELLING STOCKHOLDER ADDRESS OF SELLING STOCKHOLDER THE OFFERING OFFERED THE OFFERING
--------------------------- ------------------------------ -------------- --------- ------------
<S> <C> <C> <C> <C>
American Odyssey Funds, Inc..... c/o Credit Suisse Asset 880 880 0
Management
153 E. 53 Street
New York, NY 10022
AMEX Retirement Plan
-- ABAM High Yield............ American Express Trust 1,760 1,760 0
as Custodian
733 Marquette Avenue
Minneapolis, MN 55402
AXP Variable Portfolio
-- Bond Fund.................. American Express Trust 19,043 19,043 0
as Custodian
733 Marquette Avenue
Minneapolis, MN 55402
AXP Variable Portfolio
-- Extra Income Fund.......... American Express Trust 8,272 8,272 0
as Custodian
733 Marquette Avenue
Minneapolis, MN 55402
AXP Variable Portfolio
-- Managed Fund............... American Express Trust 17,600 17,600 0
as Custodian
733 Marquette Avenue
Minneapolis, MN 55402
Bank of New York................ 925 Paterson Plank Rd. 107,184 107,184 0
Secaucus, NJ 07094
</TABLE>
13
<PAGE> 18
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
SHARES NUMBER OF SHARES
BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO BEING OWNED AFTER
NAME OF SELLING STOCKHOLDER ADDRESS OF SELLING STOCKHOLDER THE OFFERING OFFERED THE OFFERING
--------------------------- ------------------------------ -------------- --------- ------------
<S> <C> <C> <C> <C>
Bankers Trust Company........... c/o BT Services 9,680 9,680 0
Tennessee Inc.
648 Grassmere Park Drive
Nashville, TN 37211
Boston Safe Deposit and Trust
Company....................... c/o Mellon Bank N.A. 10,560 10,560 0
Three Mellon Bank Center
Pittsburgh, PA 15259
Brown Brothers Harriman & Co.... 63 Wall Street 5,632 5,632 0
New York, NY 10005
Credit Suisse Asset Management
Income Fund................... c/o Credit Suisse Asset 3,520 3,520 0
Management
153 E. 53 Street
New York, NY 10022
CPR (USA) Inc. ................. 101 Hudson Street 23,728 23,728 0
Suite 3700
Jersey City, NJ 07302
CSAM-Australia U.S. High Yield
Fund.......................... c/o Credit Suisse Asset 704 704 0
Management
153 E. 53 Street
New York, NY 10022
CSAM-GPF-CSAM
High Yield Fund............... c/o Credit Suisse Asset 1,584 1,584 0
Management
153 E. 53 Street
New York, NY 10022
CSAM Investment Trust
U.S. High Yield SRS........... c/o Credit Suisse Asset 1,760 1,760 0
Management
153 E. 53 Street
New York, NY 10022
CSAM Strategic Global
Income Fund................... c/o Credit Suisse Asset 880 880 0
Management
153 E. 53 Street
New York, NY 10022
Deutsche Bank Securities Inc.... 175 Water Street 10,560 10,560 0
New York, NY 10038
DFG Corporation................. 21 Outrigger Mall 3,256 3,256 0
Marina del Rey, CA 90292
Donaldson Lufkin & Jenrette
Securities Corp............... 277 Park Avenue 13,200 13,200 0
New York, NY 10172
Eaton, Michael.................. 1 State Street Plaza 2,445 2,445 0
New York, NY 10004
FamCo Income Partners LP........ 21 Outrigger Mall 3,256 3,256 0
Marina del Rey, CA 90292
</TABLE>
14
<PAGE> 19
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
SHARES NUMBER OF SHARES
BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO BEING OWNED AFTER
NAME OF SELLING STOCKHOLDER ADDRESS OF SELLING STOCKHOLDER THE OFFERING OFFERED THE OFFERING
--------------------------- ------------------------------ -------------- --------- ------------
<S> <C> <C> <C> <C>
FamCo Offshore Limited.......... 21 Outrigger Mall 528 528 0
Marina del Rey, CA 90292
FamCo Value Income Partners
LP............................ 21 Outrigger Mall 10,560 10,560 0
Marina del Rey, CA 90292
General Ret. System of the City
of Detroit.................... c/o Credit Suisse Asset 1,408 1,408 0
Management
153 E. 53 Street
New York, NY 10022
Goldman, Sachs & Co. ........... 1 New York Plaza 722 722 0
New York, NY 10004
Income Trust --
High Yield Portfolio.......... c/o U.S. Bank N.A. 68,728 68,728 0
601 Second Avenue South
Minneapolis, MN 55402
IDS Life Series Fund,
Inc. -- Income Portfolio...... American Express Trust 880 880 0
as Custodian
733 Marquette Avenue
Minneapolis, MN 55402
IDS Life Series Fund,
Inc. -- Managed Fund.......... American Express Trust 2,640 2,640 0
as Custodian
733 Marquette Avenue
Minneapolis, MN 55402
Investors Fiduciary Trust
Company/SSB................... 1776 Heritage Dr. 25,334 25,334 0
No. Quincy, MA 02171
Investors Bank & Trust Co....... 200 Clarendon Street 176 176 0
Boston, MA 02116
Karlin, Eve..................... 15 W. 81st Street 4,557 4,557 0
New York, NY 10024
Liberty View Fund, LLC.......... 101 Hudson Street 4,928 4,928 0
Suite 3700
Jersey City, NJ 07302
Liberty View Fund, L.P. ........ 101 Hudson Street 44,704 44,704 0
Suite 3700
Jersey City, NJ 07302
Liberty View U.S.
Enhanced High Yield........... 101 Hudson Street 3,520 3,520 0
Suite 3700
Jersey City, NJ 07302
Mediolanum Top Managers
Global HY Fund................ c/o Credit Suisse Asset 880 880 0
Management
153 E. 53 Street
New York, NY 10022
</TABLE>
15
<PAGE> 20
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
SHARES NUMBER OF SHARES
BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO BEING OWNED AFTER
NAME OF SELLING STOCKHOLDER ADDRESS OF SELLING STOCKHOLDER THE OFFERING OFFERED THE OFFERING
--------------------------- ------------------------------ -------------- --------- ------------
<S> <C> <C> <C> <C>
Nabisco Foods................... c/o Credit Suisse Asset 493 493 0
Management
153 E. 53 Street
New York, NY 10022
Norwest Bank Colorado, N.A. .... 1740 Broadway 1,440 1,440 0
Denver, CO 80274-8748
Northern Trust Company.......... 801 S. Canal Street 1,584 1,584 0
Chicago, IL 60607
Northrup Grumman Corp -- HY
Portfolio..................... c/o Credit Suisse Asset 2,464 2,464 0
Management
153 E. 53 Street
New York, NY 10022
Northwestern University......... c/o Credit Suisse Asset 704 704 0
Management
153 E. 53 Street
New York, NY 10022
Panorama Series Fund I, Inc --
Lifespan Bal.................. c/o Credit Suisse Asset 352 352 0
Management
153 E. 53 Street
New York, NY 10022
Panorama Series Fund I, Inc --
Lifespan Div Inc.............. c/o Credit Suisse Asset 176 176 0
Management
153 E. 53 Street
New York, NY 10022
Perkin Elmer Corp Emp
Pen and Savings Plan.......... c/o Credit Suisse Asset 528 528 0
Management
153 E. 53 Street
New York, NY 10022
Policemen and Firemen
Retirement Sys -- Detroit..... c/o Credit Suisse Asset 1,056 1,056 0
Management
153 E. 53 Street
New York, NY 10022
Primerica High Yield Fund,
Inc........................... c/o State Street Bank & 4,400 4,400 0
1776 Heritage Drive
No. Quincy, MA 02171
Prudential High Yield Fund,
Inc. ......................... c/o State Street Bank & 29,920 29,920 0
1776 Heritage Drive
No. Quincy, MA 02171
Prudential Securities
Incorporated.................. c/o ADP 1,760 1,760 0
51 Mercedes Way
Edgewood, NY 11717
</TABLE>
16
<PAGE> 21
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
SHARES NUMBER OF SHARES
BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO BEING OWNED AFTER
NAME OF SELLING STOCKHOLDER ADDRESS OF SELLING STOCKHOLDER THE OFFERING OFFERED THE OFFERING
--------------------------- ------------------------------ -------------- --------- ------------
<S> <C> <C> <C> <C>
PS Retirement Sys City of
St. Louis, MO................. c/o Credit Suisse Asset 704 704 0
Management
153 E. 53 Street
New York, NY 10022
Rickel & Associates, Inc........ c/o Wolman, Babbitt & King, 22,068 22,068 0
LLP
521 Fifth Avenue
New York, New York 10175
RJR Tobacco Co -- Domestic
High Yield.................... c/o Credit Suisse Asset 739 739 0
Management
153 E. 53 Street
New York, NY 10022
SEI Global -- High Yield
Fixed Income.................. c/o Credit Suisse Asset 704 704 0
Management
153 E. 53 Street
New York, NY 10022
SEI Institutional Managed
Trust......................... c/o Credit Suisse Asset 4,928 4,928 0
Management
153 E. 53 Street
New York, NY 10022
Smith, Elliot J................. 400 East 56th Street 39,574 39,574 0
New York, NY 10022
Smith, Gregg A.................. 599 Lexington Avenue 32,729 32,729 0
New York, NY 10022
State Street Bank & Trust
Company....................... 1776 Heritage Drive 85,546 85,546 0
No. Quincy, MA 02171
Texaco, Inc..................... c/o Credit Suisse Asset 1,056 1,056 0
Management
153 E. 53 Street
New York, NY 10022
The Common Fund................. c/o Credit Suisse Asset 1,232 1,232 0
Management
153 E. 53 Street
New York, NY 10022
Total Return Portfolio
Inc. -- Managed Fund.......... American Express Trust 12,003 12,003 0
as Custodian
733 Marquette Avenue
Minneapolis, MN 55402
Vail............................ c/o Credit Suisse Asset 1,232 1,232 0
Management
153 E. 53 Street
New York, NY 10022
Warburg Pincus High Yield
Fund.......................... c/o Credit Suisse Asset 2,112 2,112 0
Management
153 E. 53 Street
New York, NY 10022
</TABLE>
17
<PAGE> 22
PLAN OF DISTRIBUTION
The selling stockholders, including any distributees, donees or pledgees
who receive shares from a selling stockholder, may offer their Globix shares of
common stock at various times in one or more of the following transactions
(which may involve block transactions, ordinary brokerage transactions and
transactions in which brokers solicit purchases):
- on the Nasdaq National Market where our common stock is listed;
- in the over-the-counter market;
- in negotiated transactions or otherwise, including an underwritten
offering;
- in connection with short sales of the shares of common stock;
- by pledge to secure debts and other obligations;
- in connection with the writing of non-traded and exchange-traded call
options, in hedge transactions and in settlement of other transactions in
standardized or over-the-counter options, if permitted under the
securities laws; or
- in a combination of any of the above transactions.
The selling stockholders may sell their shares at market prices prevailing
at the time of sale, at prices related to such prevailing market prices, at
negotiated prices or at fixed prices.
The selling stockholders may sell their shares directly to purchasers or
may use broker-dealers to sell their shares. Broker-dealers who sell the shares
may receive compensation in the form of discounts, concessions, or commissions
from the selling stockholders or they may receive compensation from purchasers
of the shares for whom they acted as agents or to whom they sold the shares as
principal, or both. (The compensation as to a particular broker-dealer might be
in excess of customary commissions.)
The selling stockholders and these broker-dealers may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, as amended. Any
commissions received by such broker-dealers and any profit on the resale of the
shares sold by them while acting as principals might be deemed to be
underwriting discounts or commissions under the Securities Act of 1933.
Globix will pay all fees and expenses incurred in connection with preparing
and filing this prospectus and the registration statement. The selling
stockholders will pay any brokerage commissions and similar selling expenses, if
any, attributable in connection with the sale of the shares of common stock
including stock transfer taxes due or payable in connection with the sale of the
shares.
Globix will indemnify the selling stockholders and any person deemed to be
an underwriter acting on behalf of a selling stockholder against certain
liabilities, including liabilities under the Securities Act of 1933. The selling
stockholders may agree to indemnify any agent, dealer or broker-dealer that
participates in transactions involving sales of the shares against certain
liabilities, including liabilities under the Securities Act of 1933.
LEGAL MATTERS
The validity of the issuance of the common stock offered hereby has been
passed upon for Globix by Milberg Weiss Bershad Hynes & Lerach LLP, One
Pennsylvania Plaza, New York, New York 10119.
EXPERTS
The financial statements incorporated in this Prospectus by reference to
Globix's Form 10-KSB/A for the year ended September 30, 1998 have been audited
by Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said report.
18
<PAGE> 23
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses in connection with this offering are as follows:
<TABLE>
<CAPTION>
AMOUNT
-------
<S> <C>
SEC Registration Fee........................................ $ 6,651
-------
Legal Fees and Expenses..................................... 25,000
-------
Accounting Fees and Expenses................................ 5,000
-------
Miscellaneous............................................... 13,349
-------
Total....................................................... $30,000
-------
</TABLE>
The Company's Certificate of Incorporation limits the liability of
Directors to the maximum extent permitted by Delaware General Corporation Law.
Delaware law provides that the directors of a corporation will not be personally
liable to such corporation or its stockholders for monetary damages for breach
of their fiduciary duties as directors, except for liability (i) for any breach
of their duty of loyalty to the corporation or its stockholders; (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law; (iii) for unlawful payments of dividends or unlawful
stock repurchases or redemptions as provided in Section 174 of the Delaware
General Corporation Law; or (iv) for any transaction from which the director
derives an improper personal benefit. The Company's By-laws provide that the
Company shall indemnify its directors and officers under certain circumstances,
including those circumstances in which indemnification would otherwise be
discretionary, and the Company is required to advance expenses to its officers
and directors as incurred in connection with proceedings against them for which
they may be indemnified.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
3.1 Certificate of Incorporation of Globix, as amended.(16)
3.2 By-laws of Globix, as amended.(11)
4.1 Specimen Stock Certificate.(2)
4.2 Form of Underwriter's Warrant issued to Rickel & Associates,
Inc.(2)
4.3 Indenture between Globix and Marine Midland Bank, as
Trustee, dated April 30, 1998.(8)
4.4 Form of $160,000,000 13% Senior Note, Series A, due 2005.(8)
4.5 Form of $160,000,000 13% Senior Notes, Series B, due
2005.(10)
4.6 Form of Warrant to purchase Common Stock expiring May 1,
2005.(8)
5 Opinion of Milberg Weiss Bershad Hynes & Lerach LLP.*
10.1 Purchase Agreement between Globix and ING Baring (U.S.)
Securities, Inc., dated April 24, 1998.(8)
10.2 Warrant Agreement between Globix and Marine Midland Bank, as
Warrant Agent, dated as of April 30, 1998.(8)
10.3 Registration Rights Agreement between Globix and ING Baring,
(U.S.) Securities, dated as of April 30, 1998.(8)
10.4 Warrant Registration Rights Agreement between Globix and ING
Baring, (U.S.) Securities, dated as of April 30, 1998.(8)
</TABLE>
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<PAGE> 24
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
10.5 Escrow and Security Agreement between Marine Midland Bank,
as Escrow Agent, Marine Midland Bank, as Trustee, and
Globix, dated as of April 30, 1998.(8)
10.6 1995 Stock Option Plan, adopted September 29, 1995.(1)
10.7 1998 Stock Option Plan, adopted April 16, 1998.(9)
10.8 Irrevocable Proxy Agreement between Harpoon Holdings Ltd.
and Marc H. Bell, dated as of October 1, 1995.(1)
10.9 Employment Agreement between Marc H. Bell and Globix, dated
as of April 10, 1998.(13)
10.10 Share Deposit Agreement between Marc H. Bell, Harpoon
Holdings Ltd., the Company, and Rickel & Associates Inc.(2)
10.11 Agreement of Lease between Globix and Puck Associates, dated
as of July 23, 1996.(3)
10.12 Loan and Security Agreement between Finova Capital
Corporation (Finova) and Globix, dated as of May 1, 1997.(4)
10.13 Guaranty by NAFT in favor of Finova, dated as of May 1,
1997.(4)
10.14 Guaranty by NAFT Computer Service Corp. in favor of Finova,
dated as of May 1, 1997.(4)
10.15 Guaranty by Bluestreak Digital, Inc., in favor of Finova,
dated as of May 1, 1997.(4)
10.16 Guaranty by PFM Communications, Inc., in favor of Finova,
dated as of May 1, 1997.(4)
10.17 Promissory Notes to Globix, from Marc H. Bell, dated April
2, 1997 and June 30, 1997.(6)
10.18 Agreement by and between Globix and Value Management &
Research GmbH for the sale of an aggregate of 382,609 shares
of Common Stock, dated as of September 24, 1997.(5)
10.19 Agreement between Globix, and Cisco Systems Capital
Corporation granting credit approval for $1,000,000 for
leasing transactions, dated as of December 15, 1997.(7)
10.20+ Purchase Agreement between Hanover Equities, Inc. and Globix
dated as of June 2, 1998.(12)
10.21+ Purchase Agreement between Young Woo and Globix dated as of
June 2, 1998.(12)
10.22 Lease between Mission Plaza LLC and Globix dated as of July
24, 1998.(13)
10.23 First Amendment to Lease by and between Mission Plaza LLC
and Globix dated October 8, 1998 and effective as of July
24, 1998.(13)
10.24 Lease by and between Corston Holdings Limited, Globix
Limited and Globix dated October 15, 1998.(13)
10.25 Deed of Guaranty between Bank Leumi (UK) Plc, Corston
Holdings Limited, and Globix Limited dated October 15,
1998.(13)
10.26 IRU Agreement between Qwest Communications Corporation and
Globix dated as of October 5, 1998.(13)
10.27 Letter Agreement between Princeton Capital LLC, Hanover
Equities, Inc. and Globix, dated January 8, 1999.(14)
10.28 Operating Agreement of BLP Acquisition LLC dated as of July
2, 1998.(14)
10.29 Amendment to Marc H. Bell Employment Agreement, dated as of
March 2, 1999.(16)
10.30 Stock Option Agreement between Globix and Marc H. Bell,
dated as of March 26, 1999.(16)
10.31 1999 Stock Option Plan, adopted April 23, 1999.(17)
</TABLE>
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<PAGE> 25
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
21 List of Subsidiaries.(13)
23.1 Consent of Milberg Weiss Bershad Hynes & Lerach LLP
(included in Exhibit 5).
23.2 Consent of Arthur Andersen LLP.*
</TABLE>
- ---------------
* Filed herewith.
+ Confidential treatment granted for certain portions of this Exhibit pursuant
to Rule 406 promulgated under the Securities Act.
(1) Incorporated by reference to Registration Statement on Form SB-2 (File No.
33-98978) (the Registration Statement) filed November 3, 1995.
(2) Incorporated by reference to Amendment No. 2 to the Registration Statement
filed January 23, 1996, declared effective January 24, 1996.
(3) Incorporated by reference to Globix's Annual Report on Form 10-KSB/A for
the year ended September 30, 1996.
(4) Incorporated by reference to Globix's Report on Form 8-K/A filed July 18,
1997.
(5) Incorporated by reference to Globix's Report on Form 8-K filed October 8,
1997.
(6) Incorporated by reference to Amendment No. 4 filed November 6, 1997 to
Registration Statement (File No. 333 23259) filed March 13, 1997.
(7) Incorporated by reference to Globix's Annual Report on Form 10-KSB for the
year ended September 30, 1997.
(8) Incorporated by reference to Globix's Report on Form 8-K filed May 11,
1998.
(9) Incorporated by reference to Globix's Proxy Statement on Schedule 14A filed
on March 16, 1998.
(10) Incorporated by reference to Globix's Registration Statement on Form S-4
(File No. 333-57993) filed June 29, 1998.
(11) Incorporated by reference to Amendment No. 1 filed August 7, 1998 to
Registration Statement (File No. 333-57993) filed June 29, 1998.
(12) Incorporated by reference to Globix's Report on Form 8-K/A filed September
16, 1998.
(13) Incorporated by reference to Globix's Annual Report on Form 10-KSB filed
December 29, 1998.
(14) Incorporated by reference to Amendment No. 1 filed March 4, 1999 to
Registration Statement on Form S-1 (File No. 333-70375) filed January 11,
1999.
(15) Incorporated by reference to Amendment No. 2 filed March 17, 1999 to
Registration Statement on Form S-1 (File No. 333-70375) filed January 11,
1999.
(16) Incorporated by reference to Globix's Quarterly Report on Form 10-QSB filed
May 17, 1999.
(17) Incorporated by reference to Globix's Proxy Statement on Schedule 14A filed
on March 24, 1999.
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes that it will:
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to include any
additional or changed material information on the plan of distribution.
II-3
<PAGE> 26
(2) For determining liability under the Securities Act of 1933, treat
each post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that time to be
the initial bona fide offering.
(3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable.
II-4
<PAGE> 27
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable ground to believe that it meets all
the requirements for filing on Form S-3 and has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
GLOBIX CORPORATION
By /s/ MARC H. BELL
------------------------------------
Marc H. Bell
President and Chief Executive
Officer
Dated: November 2, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<S> <C>
Dated: November 2, 1999 /s/ MARC H. BELL
---------------------------------------------
Marc H. Bell
President, Chief Executive Officer
and Director
Date: November 2, 1999 /s/ ROBERT B. BELL
---------------------------------------------
Robert B. Bell
Executive Vice President and Director
Date: November , 1999
---------------------------------------------
Martin Fox
Director
Date: November 2, 1999 /s/ TSUYOSHI SHIRAISHI
---------------------------------------------
Tsuyoshi Shiraishi
Director
Date: November 2, 1999 /s/ RICHARD VIDEBECK
---------------------------------------------
Richard Videbeck
Director
Date: November 2, 1999 /s/ SID PATERSON
---------------------------------------------
Sid Paterson
Director
</TABLE>
II-5
<PAGE> 28
<TABLE>
<S> <C>
Date: November , 1999 -------------------------------------------------------
Lord Anthony St. John
Director
Date: November 2, 1999 /s/ BRIAN L. REACH
-------------------------------------------------------
Brian L. Reach
Senior Vice President and
Chief Financial Officer
Date: November 2, 1999 /s/ ALAN LEVY
-------------------------------------------------------
Alan Levy
Treasurer and Chief
Accounting Officer
</TABLE>
II-6
<PAGE> 1
EXHIBIT 5
MILBERG WEISS BERSHAD HYNES & LERACH LLP
ATTORNEYS AT LAW
November 2, 1999
Globix Corporation
139 Centre Street
New York, New York 10013
Re: Globix Corporation
Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as counsel for Globix Corporation, a Delaware corporation
(the "Company"), in connection with the preparation and filing by the Company of
Registration Statement Form S-3 (the "S-3") under the Securities Act of 1933,
relating to the 563,200 shares of the Company's Common Stock, par value $.01 per
share (the "Common Stock") which may be issued upon the exercise of the warrants
issued in connection with the Company's debt financing in April 1998 (the
"Warrants"). The S-3 also relates to 101,373 shares of Common Stock which may be
issued upon the exercise of the warrants constituting the Underwriter's Warrant,
which was issued to Rickel & Associates, Inc., (the "Underwriter") pursuant to
the terms of a warrant (the "Underwriter's Warrant") entitling the Underwriter
or its distributees to purchase such securities.
We have examined the Certificate of Incorporation and the By-Laws of the
Company, the Warrant Agent Agreement with respect to the Underwriter's Warrant,
the Warrant Agreement with respect to the Warrants, forms of certificates
evidencing the Common Stock, the Warrants and the Underwriter's Warrant,
originals or copies of such records of the Company, agreements, certificates of
public officials, certificates of officers and representatives of the Company
and others, and such other documents, certificates, records, authorizations,
proceedings, statutes and judicial decisions as we have deemed necessary to form
the basis of the opinion expressed below. In such examination, we have assumed
the genuineness of all signatures, the authenticity of all documents submitted
to us as originals and the conformity to originals of all documents submitted to
us as copies thereof.
As to various questions of fact material to this opinion, we have relied
upon statements and certificates of officers and representatives of the Company
and others.
Based on the foregoing, we are of the opinion that:
1. The 563,200 shares of Common Stock issuable upon exercise (assuming
payment of the exercise price) of the Warrants will, upon issuance and sale
thereof in the manner contemplated by the S-3, be legally issued, fully
paid and nonassessable.
2. The 101,373 shares of Common Stock issuable upon exercise (assuming
payment of the exercise price) of the warrants constituting the
Underwriter's Warrant will, upon issuance and sale thereof in the manner
contemplated by the S-3, be legally issued, fully paid and non-assessable.
3. We hereby consent to be named in the S-3 and the Prospectus as
attorneys who have passed upon legal matters in connection with the
offering of the securities offered thereby under the caption "Legal
Matters."
4. We further consent to your filing a copy of this opinion as an
Exhibit to the S-3.
Very truly yours,
MILBERG WEISS BERSHAD HYNES & LERACH
LLP
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our report dated December 14,
1998 included in Globix Corporation's Form 10-KSB/A for the year ended September
30, 1998 and to all references to our Firm included in this registration
statement.
ARTHUR ANDERSEN LLP
November 1, 1999
New York, New York
