As filed with the Securities and Exchange Commission on August 27, 2001
Registration No. 333-_______
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
GLOBIX CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 7373 13-3781263
(State or other jurisdiction of (Primary standard industrial (I.R.S. employer
incorporation or organization) classification number) identification number)
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)
---------------
Peter L. Herzig
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)
---------------
Copies to:
Arnold N. Bressler, Esq.
Milberg Weiss Bershad Hynes & Lerach LLP
One Pennsylvania Plaza
New York, New York 10119
(212) 594-5300
---------------
Approximate date of commencement of proposed sale to the public: From time to
time after this Registration Statement becomes effective as determined by market
conditions and other factors.
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 statement 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, check the following box and list the Securities Act
registration statement 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. [_]
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Title of Each Class Maximum Maximum
of Securities To Amount To Be Offering Price Aggregate Amount of
Be Registered Registered (1) (2) per Security (2) Offering Price (2) Registration Fee(3)
--------------------------------------------------------------------------------------------------------------
Debt Securities(4)....
--------------------------------------------------------------------------------------------------------------
Preferred Stock, par
value $0.01 per
share(5)..............
--------------------------------------------------------------------------------------------------------------
Common Stock, par
value $0.01 per
share(6)..............
--------------------------------------------------------------------------------------------------------------
Warrants(7)...........
--------------------------------------------------------------------------------------------------------------
Total................. $150,000,000.00 $150,000,000 $150,000,000 $37,500
--------------------------------------------------------------------------------------------------------------
(footnotes on following page)
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 shall specifically state that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933, as amended, or until the
Registration Statement shall become effective on such date as the Securities
and Exchange Commission, acting pursuant to said Section 8(a), may determine.
(footnotes from cover)
(1) The initial public offering price of any securities denominated in any
foreign currencies or currency units shall be the U.S. dollar equivalent thereof
based on the prevailing exchange rates at the respective times such securities
are first offered. For securities issued with an original issue discount, the
amount to be registered is the amount as shall result in aggregate gross
proceeds of $150,000,000.
(2) Pursuant to General Instruction II.D to Form S-3, the Amount To Be
Registered, Proposed Maximum Offering Price Per Security and Proposed Maximum
Aggregate Offering Price has been omitted for each class of securities which are
registered hereby.
(3) The registration fee has been calculated in accordance with Rule 457(o)
under the Securities Act of 1933, as amended, and reflects the maximum offering
price of securities that may be issued rather than the principal amount of any
securities that may be issued at a discount.
(4) An indeterminate number of debt securities are covered by this Registration
Statement. Debt securities may be issued (a) separately or (b) upon exercise of
warrants to purchase debt securities which are registered hereby.
(5) An indeterminate number of shares of preferred stock, par value $0.01 per
share, are covered by this Registration Statement. Shares of preferred stock may
be issued (a) separately, (b) upon the conversion of debt securities which are
registered hereby or (c) upon exercise of warrants to purchase shares of
preferred stock which are registered hereby.
(6) An indeterminate number of shares of common stock, par value $0.01 per
share, are covered by this Registration Statement. Common stock may be issued
(a) separately, (b) upon the conversion of either the debt securities or the
shares of preferred stock, each of which are registered hereby or (c) upon
exercise of warrants to purchase shares of common stock. Shares of common stock
issued upon conversion of the debt securities and the preferred stock will be
issued without the payment of additional consideration.
(7) An indeterminate number of warrants, each representing the right to
purchase an indeterminate number of debt securities, shares of preferred stock
or shares of common stock, each of which are registered hereby, are covered by
this Registration Statement.
PROSPECTUS
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities and is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to completion, dated August 27, 2001
[LOGO OF GLOBIX CORPORATION]
Globix Corporation
$150,000,000
Debt Securities
Preferred Stock
Common Stock
Warrants
This prospectus includes a general description of the debt securities,
shares of preferred stock, shares of common stock and warrants we may issue from
time to time. We will provide specific terms of these securities in supplements
to this prospectus. You should read this prospectus and each supplement
carefully before you invest.
Our common stock trades on the Nasdaq National Market under the symbol
"GBIX".
Investing in our securities involves risks, which we describe in the "Risk
Factors" section beginning on page 10 of this prospectus and any prospectus
supplement to which this prospectus is attached.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is , 2001.
You should rely only on the information contained or incorporated by
reference in this prospectus and any prospectus supplement. We have not
authorized anyone to provide you with different information. We are not making
an offer to sell these securities in any state where the offer is not permitted.
You should not assume that the information contained in this prospectus or any
prospectus supplement is accurate as of any date other than the date on the
front cover of those documents. Our business, financial condition, results of
operations and prospects may have changed from that date.
TABLE OF CONTENTS
Page
----
About This Prospectus................................................ i
Where You Can Find More Information.................................. ii
Incorporation by Reference........................................... iii
Summary.............................................................. 1
Risk Factors......................................................... 10
Disclosure Regarding Forward-Looking Statements...................... 17
Use of Proceeds...................................................... 17
Dividend Policy...................................................... 17
Deficiency of Earnings to Fixed Charges and Preferred Dividends...... 18
Description of Debt Securities....................................... 19
Description of Preferred Stock....................................... 29
Description of Common Stock.......................................... 31
Description of Warrants.............................................. 33
Plan of Distribution................................................. 35
Legal Matters........................................................ 36
Experts.............................................................. 36
Unless the context otherwise requires, the terms "we," "our," "us," "the
company" and "Globix" refer to Globix Corporation, a Delaware corporation.
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
SEC using a shelf registration process. Under the shelf registration process, we
may offer from time to time debt securities, shares of preferred stock, shares
of common stock and warrants up to an aggregate amount of $150,000,000. This
prospectus provides you with a general description of the securities we may
offer. Each time we offer securities, in addition to this prospectus we will
provide you with a prospectus supplement that will contain specific information
about the securities being offered. The prospectus supplement may also add,
update or change information contained in this prospectus. Before purchasing any
securities, you should read both this prospectus and any accompanying prospectus
supplement as well as additional information described under "Where You Can Find
More Information" immediately below.
i
WHERE YOU CAN FIND MORE INFORMATION
Because we are subject to the informational requirements of the Exchange
Act, we file reports, proxy statements and other information with the SEC. You
may read and copy these reports, proxy statements and other information at the
public reference facilities maintained by the SEC at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549. You may also obtain copies of those
materials at prescribed rates from the public reference section of the SEC at
450 Fifth Street, Washington, D.C. 20549. You may obtain information on the
operation of the public reference room by calling the SEC at (800) SEC-0330. In
addition, we are required to file electronic versions of those materials with
the SEC through the SEC's EDGAR system. The SEC maintains a web site at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the SEC.
We have filed with the SEC a registration statement on Form S-3 under the
Securities Act with respect to the securities offered under this prospectus.
This prospectus does not contain all of the information in the registration
statement, parts of which we have omitted, as allowed under the rules and
regulations of the SEC. You should refer to the registration statement for
further information with respect to us and our securities. Statements contained
in this prospectus as to the contents of any contract or other document are not
necessarily complete and, in each instance, we refer you to the copy of each
contract or document filed as an exhibit to the registration statement. Copies
of the registration statement, including exhibits, may be inspected without
charge at the SEC's principal office in Washington, D.C., and you may obtain
copies from this office upon payment of the fees prescribed by the SEC.
We will furnish without charge to each person to whom a copy of this
prospectus is delivered, upon written or oral request, a copy of any and all of
these filings (except exhibits, unless they are specifically incorporated by
reference into this prospectus). You should direct any requests for copies to:
Globix Corporation
139 Centre Street
New York, New York 10013
Attention: Secretary
Telephone: (212) 334-8500
ii
INCORPORATION BY REFERENCE
The SEC allows us to incorporate by reference the information we file with
them, which means that we can disclose important information to you by referring
you to those documents. We incorporate by reference in this prospectus the
information contained in the following documents:
. our annual report on Form 10-K for the year ended September 30, 2000
filed with the SEC on December 29, 2000;
. our quarterly reports on Form 10-Q for the quarters ended December 31,
2000, March 31, 2001 and June 30, 2001 filed with the SEC on February
13, 2001, May 14, 2001 and August 14, 2001, respectively;
. our definitive proxy statement filed with the SEC on March 23, 2001;
. the description of our common stock contained in our registration
statement on Form 8-A filed with the SEC on March 22, 1999 under
Section 12(g) of the Exchange Act, including any amendment or report
filed for the purpose of updating such description; and
. all documents that we file with the SEC under Sections 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934 until all the
securities that we may offer under this prospectus are sold.
You may obtain copies of those documents from us, free of cost, by
contacting us at the address or telephone number provided in "Where You Can Find
More Information" immediately above.
Information that we file later with the SEC and that is incorporated by
reference in this prospectus will automatically update and supersede information
contained in this prospectus. You will be deemed to have notice of all
information incorporated by reference in this prospectus as if that information
was included in this prospectus.
iii
SUMMARY
This summary highlights some information included in this prospectus. Because
this is only a summary, it does not contain all of the information that may be
important to you. Therefore, you should also read the entire prospectus,
especially "Risk Factors," any prospectus supplement to which this prospectus is
attached, the consolidated financial statements and the notes to those
statements and the documents we have referred you to.
Globix Corporation
Business
We are a leading full-service provider of sophisticated Internet solutions
to businesses. Our solutions include:
. secure and fault-tolerant Internet data centers;
. high performance network services, which provide high performance
network connectivity to the Internet;
. complex Internet based managed and application services, which include
dedicated hosting, streaming media, content delivery services, and
messaging services.
These elements of our total Internet solution combine to provide our
customers with the ability to create, operate and scale their increasingly
complex Internet operations in a cost efficient manner.
Our business was recently reorganized into a single operating group to more
effectively utilize our personnel and better serve our customers. This operating
group has two key components, the "Technology Services Group" and the
"Application Services Group". The Technology Services Group is comprised of our
Internet data centers and network services and incorporates our managed services
offerings. The Application Services Group is comprised of our dedicated hosting,
streaming media, content delivery services and messaging services.
Our customers primarily use our services to maintain complex computer
equipment in a secure, fault-tolerant environment with connectivity to a high-
speed, high-capacity, direct link to the Internet and to support complex
Internet applications. We currently offer our services from our Internet data
center facilities in New York City, London and Santa Clara, California. Our
teams of account managers, computer system and network administrators and
customer support specialists are located at each of these locations. We also
maintain an Internet data center in Atlanta. Our strong local market presence
enables us to evaluate the needs of our customers and quickly respond with
tailored solutions. We also provide our customers the ability to outsource the
systems administration and technical management of their Internet presence. Our
products are flexible and scalable, allowing us to modify the size and breadth
of the services we provide. We believe that our ability to offer a broad range
of Internet services, combined with our local sales and support professionals
and high performance Internet data center facilities and network, differentiates
us from our competitors.
1
The Globix Solution
Globix provides its customers with a comprehensive range of Internet
solutions. Many of Globix's customers do not have the network infrastructure or
Internet expertise to build, maintain and support critical Internet operations.
Globix's comprehensive range of services enable its customers to address their
needs cost-effectively without having to assemble services from different
suppliers, Internet service providers and information technology firms, thereby
significantly increasing the customer's ability to take advantage of the
Internet on a timely basis. Key components of the Globix solutions are:
Internet Data Centers
Internet Data Centers. Globix built and operates Internet data centers in
New York City, London, and Santa Clara, as follows:
. 340,000 approximate gross square feet facilities located in New York
City;
. 60,000 approximate gross square feet facility located in Santa Clara,
California; and
. 240,000 approximate gross square feet facilities located in London's
West End district.
Through the acquisition of Comstar.net, Inc. in August 2000 we also
acquired Internet data centers in Atlanta of approximately 10,000 gross square
feet and the Washington, D.C. suburb of McLean, Virginia of approximately 12,000
gross square feet. In order to gain operational efficiencies, we have determined
that it would be most cost effective to deactivate our McLean, Virginia data
center and exit our space in 295 Lafayette Street in New York City. In addition
we are in the process of reducing our office space in Atlanta and McLean,
Virginia. These reductions in space will have no effect on the efficiency of our
network and should not result in any significant loss of revenue.
The Globix Internet data centers in New York, Santa Clara and London have
state-of-the-art facilities. Those facilities include electrical
infrastructures, precision environmental control systems, fire suppression
systems and comprehensive security systems.
Co-Location. Globix offers co-location solutions for customers who choose
to own and maintain their own servers, but require the physically secure,
climate-controlled environment of the Globix Internet data centers and
connectivity to the Globix network. A Globix customer can choose to co-locate in
a cabinet, a cage or a GLOBOX, Globix's proprietary secured cage. A data
cabinet, the smallest co-location service offering, can house multiple servers.
The cabinet is locked and outfitted for multiple, redundant network hand-offs
and two power feeds. A cage serves the needs of a larger customer usually
deploying more complex solutions. The GLOBOX co-location offering is identical
to the cage except that its walls are solid, two-ply steel and is available with
a variety of security devices for the customer demanding the highest security
and anonymity.
Globix supports a number of leading Internet networking, server, storage
and application platforms, including those from Check Point Software, Cisco,
Compaq, Critical Path, EMC, Juniper, Microsoft, MicroMuse, Netscape, Network
Appliance, Nortel, Storage Technologies and Sun Microsystems. This multi-vendor
flexibility enables Globix to offer its customers a broad
2
range of technology best suited to serve their particular needs.
Internet Server and Software Sales. Server and software sales are an
integral part of providing our customers with a sophisticated end-to-end
solution. As part of Globix's integrated approach through our strategically
located Internet data centers, we offer our customers both the servers and the
software they need in order to operate and expand their Internet presence.
Globix also provides the integration services to configure both servers and
software to customer needs.
Network Services
Network Infrastructure. The Globix network infrastructure is designed to
meet the service and quality requirements of businesses with mission critical
Internet-based operations. Globix's network infrastructure is designed for high
availability and low latency, and utilizes a single autonomous system number
globally performing cold-potato routing. Cold potato routing is a technique
whereby Globix's network equipment monitors and interprets additional routing
information supplied by its peers. By using this information, the Globix
infrastructure carries the traffic on its network to common peering or traffic
exchange points nearest the origination point of the traffic request. This way,
traffic is carried on a Globix-controlled network to the greatest extent
possible and therefore does not suffer from the congestion or high latency of
public networks, which causes communications on the Internet to slow. In fact,
the design and performance of the global network allows Globix to offer superior
quality commitments and applications like our EarthCache content distribution
network solution.
Backbone. The domestic Globix backbone is a Packet over SONET Network that
will operate at speeds up to OC-48 (2.4Gbs). The OC-48 Globix domestic backbone
connects to the New York and Santa Clara data centers and the backbone points of
presence ("POPs") in Atlanta, Boston, Chicago, Los Angeles, Seattle and
Washington, D.C.
The Globix European backbone is a Packet over SONET network currently
connecting London, Amsterdam, Frankfurt, and Paris. The domestic and European
networks are connected by two OC-3 transatlantic crossings.
Both of these Globix network sections interconnect to numerous network
access points, commercial Internet exchanges, and other Internet, application,
and network service providers.
Peering. Globix has established numerous peering relationships with other
Internet, application, and network service providers. These peering
relationships take the form of either public or private peering connections.
Public peering takes place at a network access point or commercial Internet
exchange, designed for the exchange of traffic between service providers.
Private peering involves an agreement between service providers allowing traffic
to pass between each other's networks using connections that do not have to
traverse either the public Internet or public peering points. Globix currently
has agreements to peer with more than 570 organizations that represent over 940
peering connections, making it one of the largest Internet peering networks.
Network Operations. Globix has constructed a global operations center
located at the Internet data center in New York City. The global operations
center serves as the command, control and communications center for all of
Globix's network operations, customer support centers, and points of presence.
The global operations center is staffed 24X7 by teams dedicated to maintaining
the highest quality of service. Network administrators located in the global
operations center monitor Globix's entire network infrastructure. The network
administrators are
3
able to identify and correct network problems either themselves or by
dispatching system engineers located at Globix's customer support centers. The
global operations center utilizes state-of-the-art equipment and technologies,
including custom applications and commercial software for the monitoring and
management of network and systems services, a suite of commercial tools
customized for problem identification and resolution.
Customer Support Center. The customer support center's call center is
operated 24X7, and equipped with advanced telecommunications systems capable of
automatic call distribution, automatic number identification, quality assurance
recording and archiving, and intelligent call routing. A sophisticated trouble
ticketing and knowledge database of customer information and history aids to
ensure that Globix's customer base is well serviced.
Dedicated Internet Access. Globix offers a variety of dedicated Internet
access solutions, which provide businesses high-speed continuous access to the
Internet. Globix provides dedicated Internet access services to customers at
transmission speeds up to 155Mbps. Many of Globix's Internet access customers
purchase 1.5Mbps or higher levels of bandwidth. In addition, Globix provides
other valuable services, such as domain name registration, local loop
provisioning, Internet address assignment, router configuration, e-mail
configuration and management and technical consulting services. Globix also
provides Internet-access technologies, such as digital subscriber lines, and
intends to deploy additional connectivity-related enhanced services as such
services become commercially viable.
Managed Services
Managed Services. Globix provides full-life-cycle system and network
administration. At project inception, Globix installs and configures
applications and equipment designed by Globix solutions architects, as specified
by the customer. Generally, Internet business strategies require dedicated,
highly-skilled technical resources available 24X7. Most of our customers do not
have these resources internally available. Globix offers administration,
maintenance, and problem resolution services for a variety of popular operating
systems databases, Internet-based applications, Internet network devices, and
hardware and software security solutions.
Application Services
Dedicated Hosting. Globix offers hosting solutions on both the NT and UNIX
platforms, in a dedicated server environment. Dedicated hosting is designed to
meet a customer's price point and business requirement. This service includes
providing hardware, software, bandwidth and application requests to meet
customer-specific needs. Globix's dedicated hosting services are tailored to
Internet presences that require high availability and scalability without
significant infrastructure and related overhead costs.
Streaming Media. Globix is a leading provider of streaming media services
to corporations who are utilizing this application as a business communications
tool. Our core streaming media services are encoding, hosting and collaboration
solutions, which are the mainstays of streaming media technology. This
technology involves capturing video and/or audio recordings of an event, such as
a music performance, conference calls, sports competitions or business meetings,
converting the recorded or live audio/visual signal content into a format that
can be transmitted over the Internet and provides hosting services which enable
Internet users on the web to access the live or on-demand encoded content.
Globix is certified at the highest level of the RealNetworks partnership program
and is a certified Microsoft Windows
4
Media Service Provider.
Globix has delivered these services to a wide assortment of customers
including: Microsoft, Cisco, House of Blues, Clear Channel, V2 Records, Giorgio
Armani, Practising Law Institute, MSN, Honeywell, Compaq, Razorfish, Space.com,
and International Television Network (ITN).
EarthCache. The content distribution system (EarthCache) complements the
existing Globix network infrastructure and provide businesses with improved web
site and application performance, faster content delivery times, and better
customer content management. Globix believes EarthCache has several advantages
over other content delivery networks because of its ability to leverage the
network infrastructure that Globix has built along with its extensive worldwide
peering network of more than 940 peering-connection agreements with some 570
organizations. With the source content being transmitted over the Globix network
infrastructure, Globix is able to maintain better control over the quality of
service and the network's ability to redirect and manage customer content.
Messaging Services. Globix offers a broad set of messaging solutions to
meet its customer's needs. Globix's Messaging Services product line consists of
GlobixMail, Microsoft Hosted Exchange and Value Added Services. GlobixMail is an
open-standard compliant email application with a low cost of ownership. The
GlobixMail service is designed to perform as a high availability application on
a Globix-managed infrastructure. Globix launched its Microsoft Hosted Exchange
service in June 2001 targeting the needs of its enterprise accounts. This
service offers a robust set of messaging and collaboration features including e-
mail, calendaring and instant messaging.
Facilities in Operation
In July 1998, Globix purchased the land and the approximately 155,000 gross
square foot building located at 139 Centre Street, New York, New York.
Construction at this facility was completed in July 1999 and the building houses
an Internet data center and offices for executive, technical, sales and
administrative personnel.
Globix also leases approximately 32,000 gross square feet at 295 Lafayette
Street, New York, New York. To promote cost efficiency, Globix plans to exit
from these premises.
In July 1998, Globix signed a lease commencing January 15, 1999 for
approximately 60,000 gross square feet of space in Santa Clara, California. In
October 1998, Globix signed a lease for the rental of approximately 38,000 gross
square feet of space at Prospect House, 80 New Oxford Street, London, England.
Construction at both of these facilities was completed in July 1999 and each
houses an Internet data center and offices for technical, sales and
administrative personnel.
In July 2000, Globix entered into a lease for its second London Internet
data center, containing approximately 206,000 gross square feet of space.
Construction and fit-out of one floor of Internet data center space has been
completed and the facility became operational in June 2001.
In August 2000, Globix closed its acquisition of Comstar.net, Inc. which
resulted in the acquisition of existing leases for Internet data centers
containing approximately 10,000 gross square feet of space in Atlanta and
approximately 12,000 gross square feet of space in the
5
Washington D.C. area. Also acquired were leases for office facilities in
Atlanta. In order to gain operational efficiencies, Globix has determined that
it would be more cost effective to close its McLean, Virginia data center and to
close certain office facilities in Atlanta. These closings will have no effect
on the efficiency of Globix's network and should not result in any significant
loss of revenue.
In September 2000, Globix purchased the land and the approximately 185,000
gross square foot building located at 415 Greenwich Street, New York, New York
to serve as its newest New York City Internet data center. Reconstruction of two
floors of Internet data center space have been completed and Globix opened the
facility to customers in June 2001.
Additionally, leases were entered into during 2000 in Boston, Seattle and
Los Angeles for planned Internet data centers. However, as a result of the
tightening in the capital markets and the increased costs and capital investment
associated with Internet data center construction, Globix has entered into lease
termination agreements with respect to the Boston and Los Angeles facilities;
and it intends to terminate or otherwise reduce its obligations with respect to
the Seattle facility.
Market Opportunity
The Internet has experienced rapid growth and has emerged as a global
medium for communications and commerce. Internet access, which is considered
part of our network services group, and value-added Internet application
services, represent two of the fastest growing segments of the
telecommunications services market. The Internet's growth is driven by a number
of factors, including:
. the large and increasing number of personal computers in the office
and in the home linked to the Internet,
. advances in network designs,
. increased availability of Internet-based software and applications,
. the emergence of useful content and electronic commerce technologies,
and
. faster and inexpensive Internet access.
International Data Corp., an independent research firm, has reported that,
in a June 2001 Forecast Update, it expects U.S. web hosting services revenue to
grow 33.4% annually, from $3.8 billion in 2000 to approximately $16.2 billion in
2005.
According to a May 2001 joint Industry Analysis by JP Morgan H&Q and
McKinsey & Co., co-location and connectivity-related services, which made up 90%
of revenue in 2000, are expected to drop to 60% by 2005 as they give way to
strong anticipated growth in managed services. Revenues from managed services
represented only 10% of the total hosting revenues in 2000, but are expected to
grow 92% annually, to represent 40% of total hosting revenues by 2005.
Many businesses have chosen to outsource Internet application development,
implementation and support, particularly the hosting and management of their
Internet-based applications, to increase performance, provide continuous
operation and reduce Internet
6
operating expenses. This follows an overall movement toward outsourcing of
information technology services. According to a May 2000 Forrester Research
report, 44% of the Global 2500 firms surveyed have outsourced the management of
their web sites. Forrester reports that companies outsource web site management
primarily due to scarcity of technical skills, better performance and speed of
implementation.
The rapidly growing need for Internet access and other Internet services
has resulted in a highly fragmented industry with the proliferation of Internet
Service Providers (ISPs) operating worldwide as well as within the United
States. These ISPs primarily consist of large national and global ISPs and
smaller local and regional ISPs. Large national and global ISPs generally focus
on Internet access and rely on indirect sales, telemarketing and remote network
operation centers to serve their customers. These large national and global ISPs
typically do not offer a full range of services. Smaller local or regional ISPs
typically focus on serving their local market and lack the resources to provide
and support a full range of Internet services. Accordingly, Globix believes that
the needs of businesses for comprehensive Internet services are not being met by
the larger national and global or smaller local and regional ISPs that
constitute most of Globix's competitors.
Internet access provides companies with a basic gateway to the Internet,
allowing them to transfer e-mail, access information, and connect with
employees, customers and suppliers. Gartner/Dataquest, an independent research
firm, predicts, in a March 2001 Forecast Report that corporate Internet access
revenue in North America will increase 22% annually from approximately $3.6
billion in 1999 to approximately $9.8 billion in 2004. Dataquest also predicts
that corporate Internet access in Europe will increase 31% annually from
approximately $2.5 billion in 1999 to approximately $9.7 billion in 2004.
Additionally, according to a May 2001 Market Forecast by International Data
Corp., the total number of Internet users worldwide reached approximately 400
million in 2000 and is forecast to reach nearly 1 billion by 2005. International
Data Corp. has also estimated that by 2005 almost 50% of worldwide Internet
users will access the Internet from business locations. According to Dataquest's
March 2001 Forecast Report, total worldwide Internet service provider revenues,
including both corporate and residential access, are projected to grow from
approximately $21.1 billion in 1999 to approximately $56.1 billion in 2004.
Customers
We have established a diversified base of customers in a variety of
Internet-intensive industries, such as media and publishing, financial services,
retail, healthcare and technology. Since we initiated Internet services in
December 1995, our customer base has grown to over 3,600 business customer
accounts, including Acclaim Entertainment, Clear Channel, Walmart.com, NY
Post.com, Ebookers.com, EDGAR Online, Microsoft, ITN, Salvation Army, Major
League Soccer, VNU, American Red Cross, BEA Systems, Comedy Central, Juvenile
Diabetes Research Foundation, Charming Shoppes and Lifetime TV.com.
Focus on Cost Management
Globix has made a concerted effort to bring down its network costs by
reducing network infrastructure and operation costs through contract
renegotiation and more efficient routing of traffic. In addition, Globix has
implemented an action plan to further reduce ongoing costs by:
. consolidating operational functions,
7
. revamping its sales commission structure,
. increasing its collection capabilities,
. exiting from certain real estate locations, and
. reducing personnel.
Globix will continue to monitor its costs and implement timely and
reasonable measures to reduce them.
Business Strategy
Our primary objective is to become the leading provider of sophisticated
Internet solutions to businesses in our three major markets, New York, Santa
Clara, California and London. To achieve this objective, we intend to:
. continue to identify business enterprise customers and grow our
customer base;
. expand our service offerings;
. sell additional services to existing customers; and
. enhance the Globix brand name in those markets.
We believe our concentration in these three markets will provide us with a
competitive advantage as we leverage our existing infrastructure and brand
awareness to achieve our goals for revenue growth and profitability.
_________________
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 prospectus belongs to its respective owner.
8
The Securities We May Offer
Each time we offer securities under this prospectus, we will provide you
with a prospectus supplement that will contain the specific terms of the
securities being offered. The following is a summary of the securities we may
offer under this prospectus.
Debt Securities
We may offer unsecured general obligations, which may be either senior or
subordinated and may be convertible into shares of our common stock or preferred
stock. In this prospectus, we refer to the senior debt securities and the
subordinated debt securities together as the "debt securities." The senior debt
securities will have the same rank as all our other unsecured and unsubordinated
debt. The subordinated debt securities will be entitled to payment only after
payment on our senior debt. Of course, any unsecured debt would rank below
secured debt in any liquidation of our assets. Our board of directors will
determine the terms of each series of debt securities being offered.
We would issue the debt securities under an indenture or indentures between
us and a trustee we will identify in a prospectus supplement. In this document,
we have summarized general features of the debt securities from the indentures.
We encourage you to read the indentures which are exhibits to the registration
statement of which this prospectus is a part.
Preferred Stock
We may issue shares of our preferred stock, par value $0.01 per share, in
one or more series. Our board of directors will determine the dividend, voting,
conversion and other rights of the series of shares of preferred stock being
offered.
Common Stock
We may issue shares of our common stock, par value $0.01 per share. In this
prospectus, we provide a general description of, among other things, our
dividend policy and the transfer and voting restrictions that apply to holders
of our common stock.
Warrants
We may issue warrants for the purchase of debt securities, shares of
preferred stock or shares of common stock. Our board of directors will determine
the terms of the warrants.
9
RISK FACTORS
Before investing in our securities, you should carefully consider the risks
described below and in any accompanying prospectus supplement as well as the
other information included or incorporated by reference in this prospectus. This
prospectus contains forward-looking statements that involve risk and
uncertainties, such as statements of our plans, objectives, expectations and
intentions. The cautionary statements made in this prospectus should be read as
being applicable to all related forward-looking statements wherever they appear
in this prospectus. These risk factors could cause our future results to differ
materially from those expressed or implied in any forward-looking statements
made by us. The risks and uncertainties described below are not the only ones we
face. Additional risks and uncertainties not presently known to us or that we
currently deem immaterial may also harm our business.
As a result of our large outstanding debt obligations we have significant
ongoing debt service requirements which may adversely affect our financial and
operating flexibility.
As of June 30, 2001, our total outstanding debt obligations were
approximately $635.1 million. This substantial leverage may have important
consequences for us, 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 enhance our network, expand our
service offerings and attract new customers which may require additional
financing. 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.
After September 2002, we may not have sufficient cash flow to service our debt
and operate 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 period ending
September 30, 2002. After that time, we may not be able to 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, including our existing indebtedness,
and operate our business. Our ability to raise additional capital may be limited
by a number of factors, including market conditions and the terms governing our
existing indebtedness.
10
We have a history of operating losses which we expect to continue and increase
for the near future. We cannot assure you that we will ever become profitable.
We have experienced significant losses since we began operations. We expect
to continue to incur significant losses for the foreseeable future. We have
incurred net losses of approximately $132.2 million, $43.4 million and $11.2
million for the years ended September 30, 2000, 1999 and 1998, respectively. As
of June 30, 2001, our accumulated deficit was approximately $327.3 million. We
cannot assure you that our revenues will increase. 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 these cases, our business, financial conditions and
results of operations will be materially and adversely affected.
We may experience significant fluctuations in the results of our operations.
Our results of operations may experience significant fluctuations due to:
. demand for and market acceptance of our services;
. reliable continuity of service and network availability;
. the ability to increase bandwidth as necessary on our network and at
interconnection points with other networks;
. customer retention and satisfaction;
. capacity utilization of our Internet data centers; and
. timing and success of marketing efforts and service introductions by
us and our competitors.
Our success will depend on our ability to integrate, operate and maintain and
upgrade our network and facilities.
A key element of our business strategy is the maintenance and upgrading of
our facilities and network, which has required, and will continue to require, a
great deal of management time and the expenditure of large amounts of money.
Any interruption in our ability to deliver services over our network due to
market disruptions or third party insolvencies may make us less attractive to
future customers and may hamper our ability to retain our current customers,
which in turn could adversely affect our entire business.
We cannot assure you that our telecommunications providers will continue to
service us or that we could replace them on comparable terms or at all.
Our existing network relies entirely on a limited number of third party
data communications and telecommunications providers. These carriers are subject
to price constraints, including tariff controls, that in the future may be
relaxed or lifted. Price increases or the lack of service availability could
have a material and adverse effect on the costs of maintaining our network and
our ability to maintain or grow our business.
11
If we fail to maintain adequate peering relationships our operating costs will
increase.
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 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 or canceled by the provider over time. While we currently have
agreements to peer with approximately 570 organizations that represent over 940
peering connections, we may not be able to maintain a favorable cost structure
for data transmission with our peering partners.
Insolvencies of Internet related businesses may have an adverse effect on our
business operations.
Insolvencies of Internet related businesses are growing at an increasing
rate. Insolvencies of our customers, suppliers, network counterparties,
telecommunications providers or software licensors may adversely affect our
ability to operate our business without disruption.
We may not be successful in international markets.
Because we have limited experience operating in markets outside the United
States and London, we may have difficulty adapting our services to different
international market needs. We may also be unsuccessful in our efforts to market
and sell these 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 United States operations. If we fail to
successfully address these risks, our international operations may be materially
and adversely affected.
We may not be able to obtain computer hardware and software on the scale and at
the times we need at an affordable cost.
We rely on outside vendors to supply us with computer hardware, software
and networking equipment. We primarily buy these products from Cisco, Compaq,
Juniper Networks and Sun Microsystems. Consequently, our expertise is
concentrated in products from these manufacturers. We also rely on Cisco for
network design and installation services. If we were unable over an extended
period of time to obtain the products and services that we need on a timely
basis and at affordable prices, it would have a material adverse effect on our
business, financial condition and results of operations.
We may make investments or acquisitions that are not successful.
We may make investments in or acquire complementary businesses, products,
services or technologies. Consequently, we are subject to the following risks:
. we may not be able to make investments or acquisitions on terms which
prove advantageous;
. acquisitions may cause a disruption in our ongoing business, distract
our management and other resources and make it difficult to maintain
the operations, organization and procedures of Globix or the acquired
business; and
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. we may not be able to retain key employees of the acquired companies
or maintain good relations with its customers or suppliers.
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 facilities in New York City, London
and Santa Clara, California. While we have taken precautions against systems
failure, interruptions could result from natural disasters as well as power
loss, our inability to acquire fuel for our backup generators,
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 ability to attract and retain
customers may 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 services.
Our business depends on the continued growth, use and improvement of the
Internet.
Our 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
service introductions. Accordingly, you should consider the risks and
difficulties frequently encountered in new and rapidly evolving markets.
Critical issues concerning the commercial use of the Internet remain
unresolved and may affect the growth of Internet use, especially in the market
we target. Despite growing interest in the many commercial uses of the Internet,
many businesses have been deterred from purchasing Internet services for a
number of reasons, including:
. inadequate protection of the confidentiality of stored data and
information moving across the Internet;
13
. inconsistent quality of service;
. inability to integrate business applications on the Internet;
. the need to deal with multiple vendors, whose products are frequently
incompatible;
. lack of availability of cost-effective, high-speed services; and
. concern over the financial viability of Internet Services Providers.
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.
Significant technological changes could render our existing services obsolete.
We must adapt to our rapidly changing market by continually improving the
responsiveness, functionality and features of our services to meet our
customers' 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.
Because we offer a broad range of services, we encounter competition from
numerous other businesses which provide one or more similar services.
Competition for the Internet services that we provide is intense and we
expect that competition will continue to intensify.
Our competitors include other Internet service providers with a significant
national or global presence that focus on business customers, such as DIGEX,
Digital Island, Exodus Communications, Genuity, NaviSite and UUNet.
Our competitors also include telecommunications companies, such as AT&T,
British Telecom, Cable & Wireless, Level 3, MCI WorldCom, Qwest and Sprint.
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.
New competitors, including large computer hardware, software, media and
other
14
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 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.
Competition for qualified personnel is intense and we may not be able to attract
or retain the personnel we need in each of the critical areas of our business.
Our future success depends on our ability to attract and retain key
personnel for management, technical, sales and marketing, and customer support
positions. The failure to attract or retain qualified personnel in each of these
critical areas could adversely affect the ability of our business to perform its
functions.
Changes in government regulations related to the Internet could restrict our
activities, expose us to liability or otherwise 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 content and
information received from or transmitted over the Internet, user privacy and
security, taxation, enforcing online contracts, consumer protection and other
issues concerning services. The government may also seek to regulate some
aspects of our activities as basic telecommunications services. Moreover, the
applicability to the Internet of existing laws governing copyright, trademark,
trade secret, obscenity, libel, consumer protection, 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.
We may be liable for violating the intellectual property rights of third
parties.
Intellectual property rights, such as patents, technology, software,
copyrights, trademarks and domain names, are very important to companies engaged
in Internet-related businesses. We do not believe 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 and we may be forced to pay for a
license to continue using the intellectual property. There is no guarantee that
we could obtain such a license, or that it would be available on reasonable
terms. Alternatively, 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 adequate protection.
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. While
we have taken steps contractually to limit our
15
liability, we may become subject to legal claims relating to the content of 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. We may take additional measures to
reduce our exposure to these risks, which could be costly or result in some
customers not doing business with us. In addition, defending ourselves against
claims, or paying damage awards to third parties, could strain our management
and financial resources.
Our common stock may be subject to significant price volatility.
The market price of our common stock has fluctuated in the past and is
likely to continue to be highly volatile and could be subject to wide
fluctuations. In addition, the stock market has experienced extreme price and
volume fluctuations. The market prices of the securities of Internet-related
companies have been especially volatile and accordingly the trading price of our
common stock is likely to be affected by this activity.
If our common stock is delisted from Nasdaq it could result in difficulties in
disposing of shares of our common stock owned by investors.
Our common stock is currently listed on the Nasdaq National Market. Because
of the decline in our stock price we have been notified by Nasdaq that we will
be delisted from the Nasdaq National Market if the minimum bid price for our
stock is not at least $3.00 for ten consecutive trading days prior to October
15, 2001. If we are unable to maintain our Nasdaq listing, our common stock
would likely be traded on the OTC Bulletin Board if at all. You would find it
more difficult to dispose of, or to obtain accurate quotations as to the market
value of, our common stock.
16
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act. When used
in this prospectus, the words "anticipate," "believe," "estimate," "will,"
"may," "intend" and "expect" and similar expressions generally identify forward-
looking statements. Although we believe that our plans, intentions and
expectations reflected in the forward-looking statements are reasonable, we
cannot be sure that they will be achieved. Forward-looking statements in this
prospectus include those relating to the expansion of our network through the
opening of additional Internet Data Centers and the timing of openings, the
upgrading of our telecommunications infrastructure, our planned introduction of
various new services, the possibility of acquiring complementary businesses,
products, services and technologies and our ability to make required payments on
our current and future debt instruments. Actual results, performance or
achievements could differ materially from those contemplated by the forward-
looking statements contained in this prospectus. Important factors that could
cause actual results to differ materially from our forward-looking statements
are set forth in this prospectus, including under the heading "Risk Factors."
These factors are not intended to represent a complete list of the general or
specific factors that may affect us. It should be recognized that other factors,
including general economic factors and business strategies, may be significant,
presently or in the future, and the factors set forth in this prospectus may
affect us to a greater extent than indicated. All forward- looking statements
attributable to us or persons acting on our behalf are expressly qualified in
their entirety by the cautionary statements set forth in this prospectus. Except
as required by law, we undertake no obligation to update any forward-looking
statement, whether as a result of new information, future events or otherwise.
USE OF PROCEEDS
We will use the net proceeds from the sale of securities that we may offer
under this prospectus and any accompanying prospectus supplement for general
corporate purposes. General corporate purposes may include repayment of debt,
capital expenditures, possible acquisitions, investments, repurchase of our
capital stock and any other purposes that we may specify in any prospectus
supplement. We may invest the net proceeds temporarily or use them to repay
short-term debt until needed for their stated purpose.
DIVIDEND POLICY
We do not anticipate paying dividends on our common stock in the
foreseeable future. The terms of some of our debt instruments place limitations
on our ability to pay dividends. Future dividends on our common stock, if any,
will be at the discretion of our board of directors and will depend on, among
other things, our operations, capital requirements and surplus, general
financial condition, contractual restrictions and such other factors as our
board of directors may deem relevant.
17
DEFICIENCY OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS
The table below presents our historical deficiency of earnings to fixed
charges and preferred dividends for the periods indicated.
Nine-Months
Year-Ended September 30, Ended June 30,
--------------------------- ----------------
1996 1997 1998 1999 2000 2000 2001
------- -------- -------- ------- --------- ------- -------
(in thousands)
Deficiency of
earnings to fixed
charges and
preferred dividends.............. $(1,923) $(3,115) $(12,254) $(47,152) $(133,591) $(101,744) $(158,140)
--------------------------------------------------------------------------
For the purpose of this computation, deficiency of earnings to fixed
charges and preferred dividends is defined as the difference between the pre-tax
loss and the total fixed charges and preferred dividends. Fixed charges consist
of interest charges and amortization of debt discount and offering costs,
whether expensed or capitalized, and one-third of rental expense which we
believe to be representative of the interest. Preferred dividends relate to our
Series A 7.5% Convertible Preferred Stock.
18
DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the debt securities summarizes
some general terms that will apply to the debt securities. The description is
not complete, and we refer you to the indentures, which we filed with the SEC as
exhibits to the registration statement of which this prospectus is a part.
General
The debt securities will be either our senior debt securities or our
subordinated debt securities. We will issue our debt securities under one or
more separate indentures between us and a trustee that we will identify in a
prospectus supplement. Senior debt securities will be issued under a senior
indenture and subordinated securities will be issued under a subordinated
indenture. Together the senior indenture and the subordinated indenture are
called the "indentures." A copy of the form of each type of indenture will be
filed as an exhibit to the registration statement of which this prospectus is a
part. The indentures may be supplemented by one or more supplemental indentures.
We refer to the indentures, together with any supplemental indentures, as the
"indentures" throughout the remainder of this prospectus.
The indentures do not limit the amount of debt securities that we may
issue. The indentures provide that debt securities may be issued up to the
principal amount that we authorize from time to time. The senior debt securities
will be unsecured and will have the same rank as all of our other unsecured and
unsubordinated debt. The subordinated debt securities will be unsecured and will
be subordinated and junior to all senior indebtedness. The terms of the
indentures do not contain any covenants or other provisions designed to give
holders of any debt securities protection against changes in our operations,
financial condition or transactions involving us, but those provisions may be
included in the documents that include the specific terms of the debt
securities.
We may issue the debt securities in one or more separate series of senior
debt securities and subordinated debt securities. The prospectus supplement
relating to the particular series of debt securities being offered will specify
the particular amounts, prices and terms of those debt securities. These terms
may include:
. the title of the debt securities;
. any limit upon the aggregate principal amount of the debt securities;
. if other than United States dollars, the currency or currencies,
including the euro and other composite currencies, in which payments
on the debt securities will be payable and whether the holder may
elect payment to be made in a different currency;
. the date or dates when payments on the principal must be made or the
method of determining that date or dates;
. interest rates, and the dates from which interest, if any, will
accrue, and the dates when interest is payable and the maturity;
. the right, if any, to extend the interest payment periods and the
duration of the extensions;
19
. the places where payments may be made and the manner of payments;
. any mandatory or optional redemption provisions;
. any subordination provisions;
. the denominations in which debt securities will be issued;
. the terms applicable to any debt securities issued at a discount from
their stated principal amount;
. the currency or currencies of payment of principal or interest; and
the period, if any, during which a holder may elect to pay in a
currency other than the currency in which the debt securities are
denominated;
. if the amount of payments of principal or interest is to be determined
by reference to an index or formula, or based on a coin or currency
other than that in which the debt securities are stated to be payable,
the manner in which these amounts are determined and the calculation
agent, if any;
. whether the debt securities will be issued in fully registered form
without coupons or in bearer form, with or without coupons, or any
combination of these, and whether they will be issued in the form of
one or more global securities in temporary or definitive form;
. whether and on what terms we will pay additional amounts to holders of
the debt securities that are not United States persons in respect of
any tax, assessment or governmental charge withheld or deducted and,
if so, whether and on what terms we will have the option to redeem the
debt securities rather than pay the additional amounts;
. the certificates or forms required for the issuance of debt securities
in definitive form;
. the trustees, depositaries, authenticating or paying agents, transfer
agents or registrars of the debt securities;
. any deletions of, or changes or additions to, the events of default or
covenants;
. conversion or exchange provisions, if any, including conversion or
exchange prices or rates and adjustments to those prices and rates;
and
. any other specific terms of the debt securities.
If any debt securities are sold for any foreign currency or currency unit
or if any payments on the debt securities are payable in any foreign currency or
currency unit, the prospectus supplement will contain any restrictions,
elections, tax consequences, specific terms and other information with respect
to the debt securities and the foreign currency or currency unit.
20
Some of the debt securities may be issued as original issue discount debt
securities. Original issue discount securities may bear no interest or bear
interest at below-market rates and will be sold at a discount below their stated
principal amount and may bear no or below market interest. The applicable
prospectus supplement will also contain any special tax, accounting or other
information relating to original issue discount securities other kinds of debt
securities that may be offered, including debt securities linked to an index or
payable in currencies other than United States dollars.
Senior Debt Securities
Payment of the principal of, premium, if any, and interest on senior debt
securities will rank on a parity with all of our other unsecured and
unsubordinated debt.
Subordinated Debt Securities
Payment of the principal of, premium, if any, and interest on subordinated
debt securities will be junior in right of payment to the prior payment in full
of all of our unsubordinated debt, including senior debt securities. We will
state in the applicable prospectus supplement relating to any subordinated debt
securities the subordination terms of the securities as well as the aggregate
amount of outstanding debt, as of the most recent practicable date, that by its
terms would be senior to the subordinated debt securities. We will also state in
such prospectus supplement limitations, if any, on issuance of additional senior
debt. In addition, the subordinated debt securities will be effectively
subordinated to creditors and preferred shareholders of our subsidiaries.
Registrar and Paying Agent
The debt securities may be presented for registration of transfer or for
exchange at the corporate trust office of the security registrar or at any other
office or agency that we maintain for those purposes. In addition, the debt
securities may be presented for payment of principal, interest and any premium
at the office of the paying agent or at any office or agency that we maintain
for those purposes.
Our designated security registrar and paying agent for the debt securities will
be identified in the applicable prospectus supplement.
Global Securities
We may issue a series of debt securities in whole or in part in the form of
one or more global certificates that will be deposited with a depositary we will
identify in a prospectus supplement. We may issue global debt securities in
either registered or unregistered form and in either temporary or definitive
form. We will describe the specific terms of the depositary arrangement with
respect to any series of debt securities in the prospectus supplement.
Conversion or Exchange Rights
Debt securities may be convertible into or exchangeable for shares of our
equity securities or equity securities of our subsidiaries or affiliates. The
terms and conditions of conversion or exchange will be stated in the applicable
prospectus supplement. The terms will include:
21
. the conversion or exchange price;
. the conversion or exchange period;
. provisions regarding the convertibility or exchangeability of the debt
securities, including who may convert or exchange;
. events requiring adjustment to the conversion or exchange price;
. provisions affecting conversion or exchange in the event of our
redemption of the debt securities; and
. any anti-dilution provisions, if applicable.
Registered Global Securities
Unless and until it is exchanged in whole or in part for debt securities in
definitive registered form, a registered global security may not be transferred
except as a whole:
. by the depositary for that registered global security to its nominee;
. by a nominee of the depositary to the depositary or another nominee of
the depositary; or
. by the depositary or its nominee to a successor of the depositary or a
nominee of the successor.
The prospectus supplement relating to a series of debt securities will
describe the specific terms of the depositary arrangement involving any portion
of the series represented by a registered global security.
We anticipate that the following provisions will apply to all depositary
arrangements for debt securities:
. ownership of beneficial interests in a registered global security will
be limited to persons that have accounts with the depositary for that
registered global security, these persons being referred to as
"participants," or persons that may hold interests through
participants;
. upon the issuance of a registered global security, the depositary for
the registered global security will credit, on its book-entry
registration and transfer system, the participants' accounts with the
respective principal amounts of the debt securities represented by the
registered global security beneficially owned by the participants;
. any dealers, underwriters or agents participating in the distribution
of the debt securities will designate the accounts to be credited; and
. ownership of beneficial interest in that registered global security
will be shown on, and the transfer of that ownership interest will be
effected only through, records maintained by the depositary for that
registered global security for
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interests of participants and on the records of participants for
interests of persons holding through participants.
The laws of some states may require that specified purchasers of securities
take physical delivery of the securities in definitive form. These laws may
limit the ability of those persons to own, transfer or pledge beneficial
interests in registered global securities.
So long as the depositary for a registered global security, or its nominee,
is the registered owner of that registered global security, the depositary or
that nominee will be considered the sole owner or holder of the debt securities
represented by the registered global security for all purposes under the
indenture. Except as stated below, owners of beneficial interests in a
registered global security:
. will not be entitled to have the debt securities represented by a
registered global security registered in their names;
. will not receive or be entitled to receive physical delivery of the
debt securities in definitive form; and
. will not be considered the owners or holders of the debt securities
under the indenture.
Accordingly, each person owning a beneficial interest in a registered
global security must rely on the procedures of the depositary for the registered
global security and, if the person is not a participant, on the procedures of a
participant through which the person owns its interest, to exercise any rights
of a holder under the indenture.
We understand that under existing industry practices, if we request any
action of holders or if an owner of a beneficial interest in a registered global
security desires to give or take any action that a holder is entitled to give or
take under the indenture, the depositary for the registered global security
would authorize the participants holding the relevant beneficial interests to
give or take the action, and the participants would authorize beneficial owners
owning through the participants to give or take the action or would otherwise
act upon the instructions of beneficial owners holding through them.
We will make payments of principal and premium, if any, and interest, if
any, on debt securities represented by a registered global security registered
in the name of a depositary or its nominee to the depositary or its nominee as
the registered owners of the registered global security. None of us, the trustee
or any other of our agents or agents of the trustee will be responsible or
liable for any aspect of the records relating to, or payments made on account
of, beneficial ownership interests in the registered global security or for
maintaining, supervising or reviewing any records relating to the beneficial
ownership interests.
We expect that the depositary for any debt securities represented by a
registered global security, upon receipt of any payments of principal and
premium, if any, and interest, if any, in respect of the registered global
security, will immediately credit participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the registered
global security as shown on the records of the depositary. We also expect that
standing customer instructions and customary practices will govern payments by
participants to owners of beneficial interests in the registered global security
held through the participants, as is now the case with the securities held for
the accounts of customers in bearer form or registered in "street
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name". We also expect that any of these payments will be the responsibility of
the participants.
If the depositary for any debt securities represented by a registered
global security is at any time unwilling or unable to continue as depositary or
stops being a clearing agency registered under the Exchange Act, we will appoint
an eligible successor depositary. If we fail to appoint an eligible successor
depositary within 90 days, we will issue the debt securities in definitive form
in exchange for the registered global security. In addition, we may at any time
and in our sole discretion decide not to have any of the debt securities of a
series represented by one or more registered global securities. In that event,
we will issue debt securities of the series in a definitive form in exchange for
all of the registered global securities representing the debt securities. The
trustee will register any debt securities issued in definitive form in exchange
for a registered global security in the name or names as the depositary, based
upon instructions from its participants, will instruct the trustee.
We may also issue bearer debt securities of a series in the form of one or
more global securities, referred to as "bearer global securities". We will
deposit these securities with a common depositary, or with a nominee for the
depositary identified in the prospectus supplement relating to the series. The
prospectus supplement relating to a series of debt securities represented by a
bearer global security will describe the applicable terms and procedures. These
will include the specific terms of the depositary arrangement and any specific
procedures for the issuance of debt securities in definitive form in exchange
for a bearer global security, in proportion to the series represented by a
bearer global security.
Merger, Consolidation or Sale of Assets
Under the terms of indentures, we may consolidate or merge with another
company, or sell, lease or convey all or substantially all our assets to another
company, if Globix is either the continuing entity or, if Globix is not the
continuing entity:
. the successor entity is organized under the laws of the United States
of America and expressly assumes all payments on all of the debt
securities and the performance and observance of all the covenants and
conditions of the applicable indenture; and
. the merger, sale of assets or other transaction must not cause a
default on the debt securities and we must not already be in default.
Events of Default
Unless otherwise provided for in the prospectus supplement, the term "event
of default", when used in the indentures means any of the following:
. failure to pay interest for 30 days after the date payment is due and
payable; however, if we extend an interest payment period under the
terms of the debt securities, the extension will not be a failure to
pay interest;
. failure to pay principal or premium, if any, on any debt security when
due, either at maturity, upon any redemption, by declaration or
otherwise;
. failure to make sinking fund payments, if any, when due;
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. failure to perform other covenants for 60 days after notice that
performance was required;
. events in bankruptcy, insolvency or reorganization of our company; or
. any other event of default provided in the applicable resolution of
our board of directors or the supplemental indenture under which we
issue a series of debt securities.
An event of default for a particular series of debt securities does not
necessarily constitute an event of default for any other series of debt
securities issued under an indenture. If an event of default relating to the
payment of interest, principal or any sinking fund installment involving any
series of debt securities has occurred and is continuing, the trustee or the
holders of not less than 25% in aggregate principal amount of the debt
securities of each affected series may declare the entire principal of all the
debt securities of that series to be due and payable immediately.
If an event of default relating to the performance of other covenants
occurs and is continuing for a period of 60 days after notice of that event of
default, or if any other event of default occurs and is continuing involving all
of the series of senior debt securities, then the trustee or the holders of not
less than 25% in aggregate principal amount of all of the series of senior debt
securities may declare the entire principal amount of all of the series of
senior debt securities due and payable immediately.
Similarly, if an event of default relating to the performance of other
covenants occurs and is continuing for a period of 60 days after notice, or if
any other event of default occurs and is continuing involving all of the series
of subordinated debt securities, then the trustee or the holders of not less
than 25% in aggregate principal amount of all of the series of subordinated debt
securities may declare the entire principal amount of all of the series of
subordinated debt securities due and payable immediately.
If, however, the event of default relating to the performance of other
covenants or any other event of default that has occurred and is continuing is
for less than all of the series of senior debt securities or subordinated debt
securities, then, the trustee or the holders of not less than 25% in aggregate
principal amount of each affected series of the senior debt securities or the
subordinated debt securities, as the case may be, may declare the entire
principal amount of all debt securities of that affected series due and payable
immediately. The holders of not less than a majority, or any applicable
supermajority, in aggregate principal amount of the debt securities of a series
may, after satisfying conditions, rescind and annul any of the above-described
declarations and consequences involving the series.
If an event of default relating to events in bankruptcy, insolvency or
reorganization occurs and is continuing, then the principal amount of all of the
debt securities outstanding, and any accrued interest, will automatically become
due and payable immediately, without any declaration or other act by the trustee
or any holder.
Each indenture imposes limitations on suits brought by holders of debt
securities against us. Except for actions for payment of overdue principal or
interest, no holder of debt securities of any series may institute any action
against us under each indenture unless:
. the holder has previously given to the trustee written notice of
default and
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continuance of that default;
. the holders of at least 25% in principal amount of the outstanding
debt securities of the affected series have requested that the trustee
institute the action;
. the requesting holders have offered the trustee reasonable indemnity
for expenses and liabilities that may be incurred by bringing the
action;
. the trustee has not instituted the action within 60 days of the
request; and
. the trustee has not received inconsistent direction by the holders of
a majority in principal amount of the outstanding debt securities of
the series.
We will be required to file annually with the trustee a certificate, signed
by an officer of our company, stating whether or not the officer knows of any
default by us in the performance, observance or fulfillment of any condition or
covenant of an indenture.
Discharge, Defeasance and Covenant Defeasance
We can discharge or defease our obligations under the indentures as stated
below or as provided in the prospectus supplement.
Unless otherwise provided in the applicable prospectus supplement, we may
discharge obligations to holders of any series of debt securities that have not
already been delivered to the trustee for cancellation and that have either
become due and payable or are by their terms to become due and payable, or are
scheduled for redemption, within one year. We may effect a discharge by
irrevocably depositing with the trustee cash or United States government
obligations, as trust funds, in an amount certified to be enough to pay when
due, whether at maturity, upon redemption or otherwise, the principal of,
premium, if any, and interest on the debt securities and any mandatory sinking
fund payments.
Unless otherwise provided in the applicable prospectus supplement, we may
also discharge any and all of our obligations to holders of any series of debt
securities at any time, which we refer to as "defeasance". We may also be
released from the obligations imposed by any covenants of any outstanding series
of debt securities and provisions of the indentures, and we may omit to comply
with those covenants without creating an event of default under the trust
declaration, which we refer to as "covenant defeasance". We may effect
defeasance and covenant defeasance only if, among other things:
. we irrevocably deposit with the trustee cash or United States
government obligations, as trust funds, in an amount certified to be
enough to pay at maturity, or upon redemption, the principal, premium,
if any, and interest on all outstanding debt securities of the series;
. we deliver to the trustee an opinion of counsel from a nationally
recognized law firm to the effect that (a) in the case of covenant
defeasance, the holders of the series of debt securities will not
recognize income, gain or loss for United States federal income tax
purposes as a result of the defeasance, and will be subject to tax in
the same manner and at the same times as if no covenant defeasance had
occurred and (b) in the case of defeasance, either we have received
from, or there has been published by, the Internal Revenue Service a
ruling or there has
26
been a change in applicable United States federal income tax law, and
based on that ruling or change, the holders of the series of debt
securities will not recognize income, gain or loss for United States
federal income tax purposes as a result of the defeasance and will be
subject to tax in the same manner as if no defeasance had occurred;
and
. in the case of subordinated debt securities, no event or condition
will exist that, based on the subordination provisions applicable to
the series, would prevent us from making payments of principal of,
premium, if any, and interest on any of the applicable subordinated
debt securities at the date of the irrevocable deposit referred to
above or at any time during the period ending on the 91st day after
the deposit date.
Although we may discharge or decrease our obligations under the indentures
as described in the two preceding paragraphs, we may not avoid, among other
things, our duty to register the transfer or exchange of any series of debt
securities, to replace any temporary, mutilated, destroyed, lost or stolen
series of debt securities or to maintain an office or agency in respect of any
series of debt securities.
Modification of the Indenture
Except as provided in the applicable prospectus supplement, each indenture
provides that we and the trustee may enter into supplemental indentures without
the consent of the holders of debt securities to:
. secure any debt securities;
. evidence the assumption by a successor corporation of our obligations
and the conversion of any debt securities into the capital stock of
that successor corporation, if the terms of those debt securities so
provide;
. add covenants for the protection of the holders of debt securities;
. cure any ambiguity or correct any inconsistency in the indenture;
. establish the forms or terms of debt securities of any series; and
. evidence and provide for the acceptance of appointment by a successor
trustee.
Each indenture also provides that we and the trustee may, with the consent
of the holders of not less than a majority in aggregate principal amount of debt
securities of all series of senior debt securities or of subordinated debt
securities then outstanding and affected, voting as one class, add any
provisions to, or change in any manner, eliminate or modify in any way the
provisions of, the indenture or modify in any manner the rights of the holders
of the debt securities. We and the trustee may not, however, without the consent
of the holder of each outstanding debt security affected:
. extend the stated maturity of any debt security;
. reduce the principal amount or premium, if any;
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. reduce the rate or extend the time of payment of interest;
. reduce any amount payable on redemption;
. change the currency in which the principal, unless otherwise provided
for a series, premium, if any, or interest is payable;
. reduce the amount of the principal of any debt security issued with an
original issue discount that is payable upon acceleration or provable
in bankruptcy;
. impair the right to institute suit for the enforcement of any payment
on any debt security when due; or
. reduce the percentage of holders of debt securities of any series
whose consent is required for any modification of the indenture for
any such series.
Concerning the Trustee
Each indenture provides that there may be more than one trustee under the
indenture, each for one or more series of debt securities. If there are
different trustees for different series of debt securities, each trustee will be
a trustee of a trust under the indentures separate and apart from the trust
administered by any other trustee under the indenture. Except as otherwise
indicated in this prospectus or any prospectus supplement, any action permitted
to be taken by a trustee may be taken by that trustee only on the one or more
series of debt securities for which it is the trustee under the indenture. Any
trustee under the indentures may resign or be removed from one or more series of
debt securities. All payments of principal of, premium, if any, and interest on,
and all registration, transfer, exchange, authentication and delivery of, the
debt securities of a series will be effected by the trustee for that series at
an office designated by the trustee of that series in New York, New York.
If the trustee becomes a creditor of our company, each indenture places
limitations on the right of the trustee to obtain payment of claims or to
realize on property received in respect of any such claim as security or
otherwise. The trustee may engage in other transactions. If it acquires any
conflicting interest relating to any duties concerning the debt securities,
however, it must eliminate the conflict or resign as trustee.
The holders of a majority in aggregate principal amount of any series of
debt securities then outstanding will have the right to direct the time, method
and place of conducting any proceeding for exercising any remedy available to
the trustee concerning the applicable series of debt securities, so long as the
direction:
. would not conflict with any rule of law or with the applicable
indenture;
. would not be unduly prejudicial to the rights of another holder of the
debt securities; and
. would not involve any trustee in personal liability.
Each indenture provides that if an event of default occurs, is not cured
and is known to any trustee, the trustee must use the same degree of care as a
prudent person would use in the conduct of his or her own affairs in the
exercise of the trust's power. The trustee will be under no
28
obligation to exercise any of its rights or powers under the indenture at the
request of any of the holders of the debt securities, unless they have offered
to the trustee security and indemnity satisfactory to the trustee.
No Individual Liability of Incorporators, Stockholders, Officers or Directors
Each indenture provides that no incorporator and no past, present or future
stockholder, officer or director of our company or any successor corporation in
those capacities will have any individual liability for any of our obligations,
covenants or agreements under the debt securities or such indenture.
Governing Law
The indentures and the debt securities will be governed by, and construed
in accordance with, the laws of the State of New York.
DESCRIPTION OF PREFERRED STOCK
Under our certificate of incorporation we have authorized 5,000,000 shares
of preferred stock, par value $0.01 per share. At June 30, 2001, we had 84,587
shares of preferred stock issued and outstanding. Our board of directors has the
authority to issue preferred stock in one or more classes or series and to fix
the rights, preferences, privileges and restrictions thereof, including dividend
rights, dividend rates, conversion rights, exchange rights, voting rights, terms
of redemption, redemption prices, liquidation preferences and the number of
shares constituting any class or series or the designation of such class or
series, without any further action by the stockholders. Preferred stock, if
issued, will not be entitled to any preemptive or similar rights.
Each time that we issue a new series of preferred stock, we will file with
the SEC a definitive certificate of designations. In addition, the prospectus
supplement relating to that new series of preferred stock will specify the
particular amount, price and other terms of that new series. These terms will
include:
. the designation of the title of the series;
. dividend rates;
. redemption provisions, if any;
. special or relative rights in the event of liquidation, dissolution,
distribution or winding up of Globix;
. sinking fund provisions, if any;
. whether the preferred stock will be convertible into our common stock
or any other of our securities or exchangeable for securities of any
other person;
. voting rights; and
. any other preferences, privileges, powers, rights, qualifications,
limitations and restrictions, not inconsistent with our by-laws.
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The shares of any series of preferred stock will be, when issued, fully
paid and non-assessable. The holders of the preferred stock will not have
preemptive rights.
Ranking
Each new series of preferred stock will rank with respect to each other
series of our preferred stock as specified in the prospectus supplement relating
to that new series of preferred stock.
Dividends
Holders of each new series of preferred stock will be entitled to receive
cash dividends or dividends in kind, if declared by our board of directors out
of funds legally available for dividends. For each series of preferred stock, we
will specify in the prospectus supplement:
. the dividend rates;
. whether the rates will be fixed or variable or both;
. the dates of distribution of the cash dividends; and
. whether the dividends on any series of preferred stock will be
cumulative or non-cumulative.
Conversion and Exchange
The prospectus supplement for any new series of preferred stock will state
the terms and other provisions, if any, on which shares of the new series of
preferred stock are convertible into shares of our common stock or exchangeable
for securities of a third party.
Redemption
We will specify in the prospectus supplement relating to each new series of
preferred stock:
. whether that new series will be redeemable at any time, in whole or in
part, at our option or at the option of the holder of the shares of
preferred stock;
. whether that new series will be subject to mandatory redemption under
a sinking fund or on other terms; and
. the redemption prices.
Liquidation Preference
Upon our voluntary or involuntary liquidation, dissolution or winding up,
holders of each series of preferred stock will be entitled to receive:
. distributions upon liquidation in the amount provided in the
prospectus supplement of that series of preferred stock; plus
30
. any accrued and unpaid dividends.
These payments will be made to holders of preferred stock out of our assets
available for distribution to stockholders before any distribution is made on
any securities ranking junior to the preferred stock regarding liquidation
rights.
After payment of the full amount of the liquidation preference to which
they are entitled, the holders of each series of preferred stock will not be
entitled to any further participation in any distribution of our assets.
Voting Rights
The holders of shares of any series of preferred stock will have no voting
rights except as indicated in the certificate of designations and prospectus
supplement relating to that series or as required by law.
Transfer Agent and Registrar
We will specify each of the transfer agent, registrar, dividend disbursing
agent and redemption agent for shares of each new series of preferred stock in
the prospectus supplement relating to that series.
DESCRIPTION OF COMMON STOCK
The following summary is a description of the material terms of our common
stock, does not purport to be complete and is subject in all respects to the
applicable provisions of Delaware law and of our constituent documents and of
the constituent documents of our subsidiaries. Our restated certificate of
incorporation and bylaws are incorporated by reference as exhibits to the
registration statement of which this prospectus is a part.
General
Our restated certificate of incorporation provides that we have authority
to issue 500,000,000 shares of common stock, par value $0.01 per share. As of
June 30, 2001, there were 42,006,229 shares of common stock outstanding. Common
stockholders are entitled to one vote for each share held on all matters
submitted to a vote of stockholders. They do not have cumulative voting rights.
Common stockholders do not have preemptive, subscription, redemption or
conversion rights. The outstanding shares of common stock are fully paid and
nonassessable. The rights, preferences and privileges of common stockholders are
subject to the rights of the shareholders of any series of preferred stock which
we may designate and issue in the future. We will describe the specific terms of
any common stock we may offer in a prospectus supplement.
Charter Provisions
The board of directors currently consists of nine members. At each annual
meeting of stockholders, directors are elected for a term of one year.
Our certificate of incorporation, as amended, includes provisions
eliminating the personal liability of our directors for monetary damages
resulting from breaches of their
31
fiduciary duty to the extent permitted by law. Our bylaws include provisions
indemnifying our directors and officers to the fullest extent permitted by
Delaware law, including under circumstances in which indemnification is
otherwise discretionary, and permitting the board of directors to grant
indemnification to employees and agents to the fullest extent permitted by
Delaware law.
Our bylaws require that nominations for the board of directors made by the
stockholders and proposals by stockholders seeking to have any business
conducted at a stockholders' meeting comply with particular notice procedures. A
notice by a stockholder of a planned nomination or of proposed business must
generally be given not later than 60 days nor earlier than 90 days prior to the
date of the meeting. A stockholder's notice of nomination must include
particular information about the stockholder, the nominee and any beneficial
owner on whose behalf the nomination is made, and a notice from a stockholder
proposing business to be brought before the meeting must describe such business
and include information about the stockholder making the proposal, any
beneficial owner on whose behalf the proposal is made, and any other stockholder
known to be supporting that proposal.
Our certificate of incorporation, as amended, and bylaws provide that any
action required or permitted to be taken by the stockholders shall be taken only
at a duly called annual or special meeting of the stockholders. Special meetings
may be called by the board of directors, the chairman of the board, the chief
executive officer or the holders of Globix shares that are entitled to cast not
less then 10% of the total number of votes entitled to be cast by all
stockholders at such meeting. In addition, our restated certificate of
incorporation and bylaws provide that the board of directors may, from time to
time, fix the number of directors constituting the board of directors, and only
the directors are permitted to fill vacancies on the board of directors.
Under Delaware law, the affirmative vote of a majority of the shares
entitled to vote on any matter is required to amend a corporation's certificate
of incorporation or bylaws, unless a corporation's certificate of incorporation
or bylaws, as the case may be, requires a greater percentage. Our certificate of
incorporation, as amended, and bylaws do not require a greater percentage. In
addition, our certificate of incorporation, as amended, and bylaws provide that
the board of directors shall have the power to amend or repeal our bylaws.
The provisions of the certificate of incorporation, as amended, and bylaws
discussed above could make more difficult or discourage a proxy contest or the
acquisition of control of a substantial block of our stock or the removal of any
incumbent member of the board of directors. Such provisions could also have the
effect of discouraging a third party from making a tender offer or otherwise
attempting to obtain control of Globix, even though such an attempt might be
beneficial to Globix and our stockholders.
Change of Control
We are subject to Section 203 of the Delaware General Corporation Law which
under certain circumstances, may make it more difficult for a person who would
be an "Interested Stockholder," as defined in Section 203, to effect various
business combinations with us for a three-year period. Under Delaware law, a
corporation's certificate of incorporation or bylaws may exclude a corporation
from the restrictions imposed by Section 203. Our certificate of incorporation,
as amended, and bylaws do not exclude us from the restrictions imposed under
Section 203.
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Transfer Agent
The transfer agent, registrar, dividend disbursing agent and redemption
agent for the shares of our common stock will be Mellon Investor Services.
DESCRIPTION OF WARRANTS
We may issue warrants, including debt warrants, which are warrants to
purchase debt securities, and equity warrants, which are warrants to purchase
common stock or preferred stock.
Each series of warrants will be issued under a separate warrant agreement
to be entered into between us and a warrant agent. The warrant agent will act
solely as our agent in connection with a series of warrants and will not assume
any obligation or relationship of agency for or with holders or beneficial
owners of warrants. The following describes the general terms and provisions of
the warrants offered by this prospectus. The applicable prospectus supplement
will describe any other terms of the warrant and the applicable warrant
agreement.
Debt warrants
The applicable prospectus supplement will describe the terms of any debt
warrants, including the following:
. the title and aggregate number of the debt warrants;
. any offering price of the debt warrants;
. the number of debt warrants and debt securities that will be
separately transferable;
. any date on and after which the debt warrants and debt securities will
be separately transferable;
. the title, total principal amount, ranking and terms, including
subordination and conversion provisions, of the underlying debt
securities that may be purchased upon exercise of the debt warrants;
. the time or period when the debt warrants are exercisable, the minimum
or maximum amount of debt warrants which may be exercised at any one
time and the final date on which the debt warrants may be exercised;
. the principal amount of underlying debt securities that may be
purchased upon exercise of each debt warrant and the price, or the
manner of determining the price, at which the principal amount may be
purchased upon exercise;
. the terms of any right to redeem or call the debt warrants;
. any book-entry procedure information;
. any currency or currency units in which the offering price and the
exercise price are payable; and
33
. any other terms of the debt warrants not inconsistent with the
provisions of the debt warrant agreement.
Equity warrants
The applicable prospectus supplement will describe the terms of any equity
warrants, including the following:
. the title and aggregate number of the equity warrants;
. any offering price of the equity warrants;
. if applicable, the designation and terms of any shares of preferred
stock that are purchasable upon exercise of the equity warrants;
. if applicable, the designation and terms of the securities with which
the equity warrants are issued and the number of the equity warrants
issued with each security;
. if applicable, the date from and after which the equity warrants and
any securities issued with those warrants will be separately
transferable;
. the number of shares of common stock or preferred stock purchasable
upon exercise of an equity warrant and the price;
. the time or period when the equity warrants are exercisable and the
final date on which the equity warrants may be exercised and terms
regarding any of our rights to accelerate this final date;
. if applicable, the minimum or maximum amount of the equity warrants
exercisable at any one time;
. any currency or currency units in which the offering price and the
exercise price are payable;
. any applicable anti-dilution provisions of the equity warrants;
. any applicable redemption or call provisions; and
. any additional terms of the equity warrants not inconsistent with the
provisions of the equity warrant agreement.
34
PLAN OF DISTRIBUTION
We may sell our debt securities, shares of preferred stock, shares of
common stock and warrants in any of three ways:
. through underwriters;
. through agents; or
. directly to a limited number of institutional purchasers or to a
single purchaser.
The prospectus supplement for the securities we sell will describe that
offering, including:
. the name or names of any underwriters;
. the purchase price and the proceeds to us or the selling stockholders
from that sale;
. any underwriting discounts and other items constituting underwriters'
compensation;
. any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers; and
. whether the securities will trade on any securities exchanges or the
Nasdaq National Market.
Underwriters
If underwriters are used in the sale, we will execute an underwriting
agreement with those underwriters relating to the securities that we will offer.
Unless otherwise provided in the applicable prospectus supplement, the
obligations of the underwriters to purchase these securities will be subject to
conditions. The underwriters will be obligated to purchase all of these
securities if any are purchased.
The securities subject to the underwriting agreement will be acquired by
the underwriters for their own account and may be resold by them from time to
time in one or more transactions, including negotiated transactions, at a fixed
public offering price or at varying prices determined at the time of sale.
Underwriters may be deemed to have received compensation from us in the form of
underwriting discounts or commissions and may also receive commissions from the
purchasers of these securities for whom they may act as agent. Underwriters may
sell these securities to or through dealers. These dealers may receive
compensation in the form of discounts, concessions or commissions from the
underwriters and/or commissions from the purchasers for whom they may act as
agent. Any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers may be changed from time to time.
We also may sell the securities in connection with a remarketing upon their
purchase, in connection with a redemption or repayment, by a remarketing firm
acting as principal for its own account or as our agent. Remarketing firms may
be deemed to be underwriters in connection with the securities that they
remarket.
35
We may authorize underwriters to solicit offers by institutions to purchase
the securities subject to the underwriting agreement from us at the public
offering price stated in the prospectus supplement under delayed delivery
contracts providing for payment and delivery on a specified date in the future.
If we sell securities under these delayed delivery contracts, the prospectus
supplement will state that as well as the conditions to which these delayed
delivery contracts will be subject and the commissions payable for that
solicitation.
Agents
We may also sell any of the securities through agents designated by us from
time to time. We will name any agent involved in the offer or sale of these
securities and will list commissions payable by us to these agents in the
prospectus supplement. These agents will be acting on a best efforts basis to
solicit purchases for the period of their appointment, unless we state otherwise
in the applicable prospectus supplement.
Direct Sales
We may sell any of the securities directly to purchasers. In this case, we
will not engage underwriters or agents in the offer and sale of these
securities.
Indemnification
We may indemnify underwriters, dealers or agents who participate in the
distribution of the securities against certain liabilities, including
liabilities under the Securities Act, and agree to contribute to payments which
these underwriters, dealers or agents may be required to make.
LEGAL MATTERS
Certain legal matters with respect to the securities will be passed upon
for us by Milberg Weiss Bershad Hynes & Lerach LLP, New York, New York.
EXPERTS
The consolidated financial statements of Globix Corporation as of September
30, 2000 and 1999 and for each of the years in the three-year period ended
September 30, 2000 incorporated by reference in this prospectus and elsewhere in
the registration statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their report in respect thereto, and are
included herein in reliance upon the authority of said firm as experts in
accounting and auditing.
36
$150,000,000
Globix Corporation
Debt Securities
Preferred Stock
Common Stock
Warrants
[LOGO OF GLOBIX CORPORATION]
PROSPECTUS
_________________, 2001
PART II
Item 14. Other Expenses of Issuance and Distribution.
SEC registration fee............................................ $ 37,500
Printing and engraving expenses................................. 5,000
Accounting fees and expenses.................................... 10,000
Legal fees and expenses......................................... 15,000
Miscellaneous................................................... 32,500
--------
Total $100,000
The foregoing items, except for the registration fee to the Securities and
Exchange Commission, are estimated. All expenses of the offering, other than
selling discounts, commissions and legal fees incurred by securityholders, will
be paid by Globix.
Item 15. Indemnification of Directors and Officers.
As permitted by Section 145 of the Delaware General Corporation Law,
Globix's Certificate of Incorporation, as amended, includes a provision that
eliminates the personal liability of its directors to Globix or its stockholders
for monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
that involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law or (iv) for any transaction
from which the director derived an improper personal benefit. In addition, as
permitted by Section 145 of the Delaware General Corporation Law, the Bylaws of
Globix provide that: (i) Globix is required to indemnify its directors and
executive officers to the fullest extent permitted by the Delaware General
Corporation Law; (ii) Globix may, in its discretion, indemnify other officers,
employees and agents as set forth in the Delaware General Corporation Law; (iii)
upon receipt of an undertaking to repay such advances if indemnification is
determined to be unavailable, Globix is required to advance expenses, as
incurred, to its directors and executive officers to the fullest extent
permitted by the Delaware General Corporation Law in connection with a
proceeding (except if a determination is reasonably and promptly made by the
Board of Directors by a majority vote of a quorum consisting of directors who
were not parties to the proceeding or, in certain circumstances, by independent
legal counsel in a written opinion that the facts known to the decision-making
party demonstrate clearly and convincingly that such person acted in bad faith
or in a manner that such person did not believe to be in, or not opposed to, the
best interests of the corporation); (iv) the rights conferred in the Bylaws are
not exclusive and Globix is authorized to enter into indemnification agreements
with its directors, officers and employees and agents; (v) Globix may not
retroactively amend the Bylaw provisions relating to indemnity; and (vi) to the
fullest extent permitted by the Delaware General Corporation Law, a director or
executive officer will be deemed to have acted in good faith and in a manner he
or she reasonably believed to be in, or not opposed to, the best interests of
Globix and, with respect to any criminal action or proceeding, to have had no
reasonable cause to believe that his or her conduct was unlawful if his or her
action is based on the records or books of account of the corporation or on
information supplied to him or her by officers of the corporation in the course
of their duties or on the advice of legal counsel for the corporation or on
information or records given or reports made to the corporation by independent
certified public accountants or appraisers or other experts.
The indemnification provision in the Bylaws may be sufficiently broad to
permit
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indemnification of Globix's executive officers and directors for liabilities
arising under the Securities Act of 1933, as amended.
As authorized by Globix's Bylaws, Globix, with approval by the Board,
maintains director and officer liability insurance.
The following is a complete list of Exhibits filed as part of this
Registration Statement, which are incorporated herein:
Exhibit
Number Exhibit Description
------ -------------------
1.01 Form of Underwriting Agreement for [Common Stock] [Preferred Stock].*
1.02 Form of Underwriting Agreement for [Convertible] [Senior] [Subordinated]
Debt Securities.*
4.01 Certificate of Incorporation of Globix, as amended (filed as Exhibit 3.1
to Globix's Form 10-Q, filed with the Securities and Exchange Commission
on May 15, 2000, and incorporated by reference herein).
4.02 Bylaws of Globix (filed as Exhibit 3.2 to Globix's Form 10-K, filed with
the Securities and Exchange Commission on December 29, 2000, and
incorporated by reference herein).
4.03 Form of Senior Indenture.*
4.04 Form of Senior Debt Security.*
4.05 Form of Subordinated Indenture.*
4.06 Form of Subordinated Debt Security.*
4.07 Form of Standard Stock Warrant Provisions.*
4.08 Form of Standard Debt Securities Warrant Provisions.*
5.01 Opinion of Milberg Weiss Bershad Hynes & Lerach LLP.*
12.01 Statement Regarding Computation of Ratios.*
23.01 Consent of Milberg Weiss Bershad Hynes & Lerach LLP. (included in Exhibit
5.01).*
23.02 Consent of Arthur Andersen LLP, independent public accountants.
24.01 Power of Attorney (see the signature page to this Registration
Statement).
* To be filed, as applicable to a particular offering of securities, as an
exhibit to a Current Report on Form 8-K pursuant to Regulation S-K, Item 601(b).
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Item 17. Undertakings.
(1) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at the time shall be deemed to be
the initial bona fide offering thereof.
(2) 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. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(3) The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective Registration Statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
(b) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(c) For purposes of determining any liability under the Securities Act of
1933, the
II-3
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(d) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York, on this 24th day of
August, 2001.
GLOBIX CORPORATION
By: /s/ Peter L. Herzig
--------------------------
Peter L. Herzig
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS THAT each individual whose signature
appears below appoints Peter L. Herzig and Brian L. Reach, and each of them, as
his or her true and lawful attorneys-in-fact and agents, with full power of
substitution, for him or her and in his or her name, place and stead, in any and
all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement on Form S-3 and to sign any
registration statement for the same offering covered by this Registration
Statement that is to be effective upon filing pursuant to Rule 415 promulgated
under the Securities Act of 1933 and all post-effective amendments thereto, and
to file the same, with all exhibits thereto and all other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent full power and authority to do and perform each
and every act and anything appropriate or necessary to be done, as fully and for
all intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent or his or her substitute or
substitutes may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Date: August 27, 2001 /s/ Marc H. Bell
-------------------------------
Marc H. Bell
Chairman and Director
II-4
Date: August 27, 2001 /s/ Peter L. Herzig
-------------------------------------
Peter L. Herzig
Chief Executive Officer
Date: August 27, 2001 /s/ Marc Jaffe
-------------------------------------
Marc Jaffe
Chief Operating Officer
Date: August 27, 2001 /s/ Brian L. Reach
-------------------------------------
Brian L. Reach
Chief Financial Officer
Date: August 27, 2001 /s/ Shawn P. Brosnan
-------------------------------------
Shawn P. Brosnan
Senior Vice President, Corporate Controller
and Chief Accounting Officer
Date: August 27, 2001 /s/ Anthony St. John
-------------------------------------
Anthony St. John
President of Sales and Marketing
and Director
Date: August 27, 2001 /s/ Robert B. Bell
-------------------------------------
Robert B. Bell
Director
Date: _______ ___, 2001 _____________________________________
Martin Fox
Director
Date: _______ ___, 2001 _____________________________________
Jack Furst
Director
II-5
Date: _______ ___, 2001 _____________________________________
Michael Levitt
Director
Date: August 27, 2001 /s/ Sid Paterson
-------------------------------------
Sid Paterson
Director
Date: _______ ___, 2001 _____________________________________
Harshad Shah
Director
Date: August 27, 2001 /s/ Richard Videbeck
-------------------------------------
Richard Videbeck
Director
II-6
EXHIBIT INDEX
Exhibit
Number Exhibit Description
------- -------------------
1.01 Form of Underwriting Agreement for [Common Stock] [Preferred Stock].*
1.02 Form of Underwriting Agreement for [Convertible] [Senior] [Subordinated]
Debt Securities.*
4.01 Certificate of Incorporation of Globix, as amended (filed as Exhibit 3.1
to Globix's Form 10-Q, filed with the Securities and Exchange Commission
on May 15, 2000, and incorporated by reference herein).
4.02 Bylaws of Globix (filed as Exhibit 3.2 to Globix's Form 10-K, filed with
the Securities and Exchange Commission on December 29, 2000, and
incorporated by reference herein).
4.03 Form of Senior Indenture.*
4.04 Form of Senior Debt Security.*
4.05 Form of Subordinated Indenture.*
4.06 Form of Subordinated Debt Security.*
4.07 Form of Standard Stock Warrant Provisions.*
4.08 Form of Standard Debt Securities Warrant Provisions.*
5.01 Opinion of Milberg Weiss Bershad Hynes & Lerach LLP.*
12.01 Statement Regarding Computation of Ratios.*
23.01 Consent of Milberg Weiss Bershad Hynes & Lerach LLP. (included in Exhibit
5.01).*
23.02 Consent of Arthur Andersen LLP, independent public accountants.
24.01 Power of Attorney (see the signature page to this Registration
Statement).
* To be filed, as applicable to a particular offering of securities, as an
exhibit to a Current Report on Form 8-K pursuant to Regulation S-K, Item 601(b).
II-7