UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2004
COMMISSION FILE NO. 1-14168
GLOBIX CORPORATION
------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 13-3781263
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
139 CENTRE STREET, NEW YORK, NEW YORK 10013
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 334-8500
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
------------------- -----------------------------------------
Common Stock, $.01 par value Over the Counter Bulletin Board
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No |_|
Indicate by checkmark if disclosure of delinquent filers pursuant to
item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the registrant's knowledge in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. |_|
Indicate by check mark whether the registrant is an accelerated filer
(as defined in Exchange Act Rule 12b-2). Yes |_| No |X|
As of March 31, 2004, the aggregate market value of voting stock held
by non-affiliates of the registrant, based upon the closing sales price for the
registrant's common stock, as reported on the Over the Counter Bulletin Board
Market, was approximately $45.8 million (calculated by excluding shares owned
beneficially by directors and named executive officers).
Number of shares of registrant's common stock outstanding as of
December 15, 2004 was 16,460,000.
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes |X| No |_|
DOCUMENTS INCORPORATED BY REFERENCE: None.
================================================================================
GLOBIX CORPORATION
FISCAL YEAR 2004
FORM 10K/A
TABLE OF CONTENTS
PAGE
----
EXPLANATORY NOTE...............................................................1
PART III.......................................................................1
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT..............1
ITEM 11. EXECUTIVE COMPENSATION..........................................5
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS.................9
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.................13
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.........................13
PART IV.......................................................................14
ITEM 15. EXHIBITS.......................................................14
EXPLANATORY NOTE
This Amendment No. 1 on Form 10-K is being filed to amend Items 10
through 14 of Part III of Globix's Annual Report on Form 10-K for the fiscal
year ended September 30, 2004, filed on December 17, 2004 (the "Original 10-K").
This Amendment No. 1 does not otherwise alter the disclosures set forth in the
Original 10-K and does not reflect events occurring after the filing of the
Original 10-K. This Amendment No. 1 is effective for all purposes as of the date
of the filing of the Original 10-K.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Set forth below is the name, age as of January 20, 2005, and a brief
account of the business experience of each person who is a director of Globix.
Name Age Position
---- --- --------
Peter K. Stevenson 44 President, Chief Executive Officer and Director
Peter L. Herzig (1) 41 Vice Chairman of the Board of Directors
Steven Lampe 45 Director
Steven G. Singer 43 Chairman of the Board of Directors
Raymond L. Steele (1) 69 Director
Peter Brodsky 34 Director
Steven Van Dyke (1) 45 Director
(1) Member of the Audit Committee
OUR BOARD OF DIRECTORS
The number of directors on our board of directors is seven. Our
directors are elected at each annual stockholders' meeting, and serve until the
next annual stockholders' meeting or the election and qualification of their
respective successors. Five of the current members of our board of directors
were selected in accordance with the terms of the plan of reorganization under
Chapter 11 of the U.S. Bankruptcy Code approved April 8, 2002 to serve as the
directors of Globix following the effective date of the plan. Mr. Steele was
appointed to our board of directors in June 2003. Mr. Van Dyke was appointed to
our Board of Directors by our current board of directors in October 2002. The
board of directors met 12 times in fiscal year 2004.
Peter K. Stevenson joined Globix as president and chief executive
officer in April 2002 and also serves as a member of our board of directors. Mr.
Stevenson has over 20 years of experience in the communications industry. Prior
to joining Globix, Mr. Stevenson was a senior consultant to Communication
Technology Advisors LLC, from January 2002 through April 2002, a restructuring
boutique focusing on distressed telecommunications companies through the
provision of strategic planning advice, restructuring assistance and overall
business advice. CTA currently provides Globix with a wide array of business
advisory services. Mr. Stevenson is a founder of Net One Group, Inc., a northern
Virginia based telecom investment and management company focused on developing
and operating next generation broadband services networks. From January 2001 to
January 2002, Mr. Stevenson served as a strategic advisor to the board of
directors of Net Uno, one of the largest cable television, CLEC and ISP carriers
in Venezuela. From January 1998 to December 2000, Mr. Stevenson was a corporate
officer of Net Uno and president and chief operating officer of Net Uno's Data
and Telephone Group. From February 1996 to June 1998, Mr. Stevenson was partner
in, and vice president for, Wave International, an international
telecommunications investment and management firm focused on developing
companies in international markets. Mr. Stevenson graduated with a Bachelor of
Science degree from Saint Francis University in Loretto, Pennsylvania.
1
Peter L. Herzig has served as vice chairman of our board of directors
since May 2002. From August 2001 through April 2002, Mr. Herzig served as our
chief executive officer. Mr. Herzig joined Globix in October 2000, served as
chief operating officer from March 2001 through August 2001 and served as senior
vice president and chief operating officer-Application Services Group from
October 2000 through March 2001. Prior to joining Globix, Mr. Herzig served as
executive vice president and chief financial officer at iWon.com from March 2000
to October 2000, where his responsibilities included managing iWon's
relationship with Globix. Prior to joining iWon.com, Mr. Herzig was a senior
managing director and head of global capital markets services for Bear, Stearns
& Co. Inc. from February 1998 through March 2000, where he provided strategic
capital-structure advisory services to a broad spectrum of domestic and
international clients, including many new media technology companies
experiencing growth with the expansion of the Internet. Prior to Bear Stearns,
Mr. Herzig worked at Goldman Sachs & Co. from July 1989 through February 1998.
Mr. Herzig has a Bachelor of Arts degree from Dartmouth College and a Masters in
Business Administration degree from Columbia University.
Steven Lampe has been a director of Globix since April 2002. Mr. Lampe
is a managing member of Lampe, Conway & Co. LLC, an investment management
company which he co-founded in June 1999. Prior to his work at Lampe, Conway,
Mr. Lampe managed Lone Star Securities Fund, a distressed investment fund, from
June 1997 through June 1999. Prior to his employment with Lone Star, Mr. Lampe
worked at Smith Management, a private investment company, from February 1988
through June 1997. Mr. Lampe has a Bachelor of Arts degree from Middlebury
College and a Masters in Business Administration degree from Harvard University.
Steven G. Singer has been a director of Globix since April 2002.
Effective December 15, 2002, Mr. Singer became chairman of our board of
directors. Mr. Singer is the chairman and chief executive officer of American
Banknote Corporation, a publicly-traded corporation and 200 year-old global
security printer of documents of inherent value, including currency, passports,
credit cards, stock and bond certificates, and related products and services. On
January 19, 2004 American Banknote Corporation filed a petition for relief under
Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the
District of Delaware. Mr. Singer also serves as the non-executive chairman of
the board of Motient Corporation, a publicly traded corporation, and as the
Chapter 7 Trustee of American Pad & Paper Company. From 1993 through November
2000, Mr. Singer was the executive vice president and chief operating officer of
Romulus Holdings, Inc., a family-owned investment vehicle, and, from 1994
through the present, has served as the chairman of Pure 1 Systems, a
manufacturer and distributor of water treatment products. Mr. Singer has a
Bachelor of Arts degree, summa cum laude, from the University of Pennsylvania
and a Juris Doctor degree from the Harvard Law School.
Raymond L. Steele has been a director of Globix since June 2003. Mr.
Steele is a retired businessman. In addition to our company, Mr. Steele is a
member of the board of directors of Dualstar Technologies Corporation and
American Banknote Corporation. From August 1997 until October 2000, Mr. Steele
served as a board member of Video Services Corp. Prior to his retirement, Mr.
Steele held various senior positions such as executive vice president of
Pacholder Associates, Inc. (from August 1990 until September 1993), executive
advisor at the Nickert Group (from 1989 through 1990), and vice president, trust
officer and chief investment officer of the Provident Bank (from 1984 through
1988).
Peter S. Brodsky has been a director of Globix since October 2001. Mr.
Brodsky is a partner of Hicks, Muse, Tate & Furst Incorporated and has been with
Hicks Muse since 1995. At Hicks Muse, Mr. Brodsky has focused on Hicks Muse's
media investments, specifically in radio, television, sports and software, and
serves as a director of several of Hicks Muse's portfolio companies. Prior to
joining Hicks Muse, Mr. Brodsky was employed in the investment banking
department of CS First Boston Corporation in New York. In addition to Globix,
Mr. Brodsky is a director of RCN Corporation, a publicly-traded company, and
Activant Solutions, Inc. Mr. Brodsky received a Bachelor of Arts degree from
Yale University.
2
Steven A. Van Dyke has been a director of Globix since October 2002.
Mr. Van Dyke is the founder and co-managing principal of Bay Harbour Management,
L.C. Mr. Van Dyke joined Bay Harbour's predecessor firm in Louisville in 1986.
Mr. Van Dyke purchased the predecessor firm in 1987 and transitioned it to one
with a dedicated focus on distressed securities management. Mr. Van Dyke sold a
minority interest in the predecessor firm in December 1996 and changed the name
of the predecessor firm to Bay Harbour Management. Mr. Van Dyke currently serves
on the board of directors of Barneys New York, Inc., American Banknote
Corporation, a publicly traded corporation, and Buckhead America Corp. Mr. Van
Dyke graduated from the University of Kentucky in 1981 with his Bachelor of
Business Administration degree in Finance. He is a Chartered Financial Analyst,
and is a member of The Financial Analysts Society of Central Florida and the
Association for Investment Management and Research.
GLOBIX DIRECTORS' COMPENSATION
Under our compensation program for directors, our directors are
entitled to receive:
o $2,000 per month for directors and $4,000 per month for the
Chairman;
o an additional $250 per month for service on the Compensation
Committee of our board of directors (or $500 per month for the
Chairman of the Compensation Committee);
o an additional $500 per month for service on the Audit Committee of
our board of directors (or $1,000 per month for the Chairman of
the Audit Committee); and
o an additional $1,000 for each board of directors or committee
meeting in excess of four per year.
AUDIT COMMITTEE
The current members of the Audit Committee are Messrs. Steele (chair),
Herzig and Van Dyke. All of the members of the Audit Committee have been
determined by the board of directors to be "independent" as defined under the
rules of the NASDAQ Stock Market, Section 10A(m)(3) of the Securities Exchange
Act of 1934 and the rules and regulations of the Securities and Exchange
Commission, except Mr. Herzig who would not be deemed independent under the
rules of the NASDAQ Stock Market because he served as our Chief Executive
Officer from August 2001 through April 2002. All three members of the Audit
Committee have been determined by the board of directors to be "financial
experts" as defined by the Securities and Exchange Commission. The Audit
Committee operates under a written charter adopted by the board of directors.
This charter was amended and restated on July 1, 2003.
3
OTHER EXECUTIVE OFFICERS
Name Age Position
Robert M. Dennerlein 45 Vice President and Chief Financial Officer
H. Jameson Holcombe 42 Senior Vice President, Operations, Chief Technology
Officer and Secretary
John D. McCarthy 40 Senior Vice President, Business Development and U.S.
Sales and Marketing
Philip J. Cheek 39 Managing and Finance Director of Globix U.K. Ltd.
James C. Schroeder 57 Vice President and General Counsel
Robert M. Dennerlein joined Globix in January 2003 as vice president
and corporate controller and became our chief financial officer on May 12, 2003.
Prior to joining Globix, from August 2001 until January 2003, Mr. Dennerlein
served as vice president and controller for OpNext, a global optical components
joint venture created by a spinoff from Hitachi and a venture capital investment
by Clarity Partners. From July 1999 until August 2001, Mr. Dennerlein served as
the director of accounting and external reporting for Agere Systems (formerly
the Microelectronics division of Lucent Technologies). From June 1992 until July
1999, Mr. Dennerlein held various management positions at International
Specialty Products, a global specialty chemicals manufacturer. He served as
senior director, ISP Financial Services from July 1997 until July 1999 and prior
to that controller, ISP International Operations from May 1995 until July 1997.
Mr. Dennerlein is a Certified Public Accountant and received a Masters in
International Business degree from Seton Hall University. He also holds a
Bachelor of Science in Accounting from Seton Hall University.
H. Jameson Holcombe joined Globix in July 2002 as senior vice president
of operations, a position he continues to hold. In April, 2003 he became our
corporate secretary and on August 11, 2003 he became our chief technology
officer. Prior to joining Globix, Mr. Holcombe served as chief information
officer of Cambrian Communications from February 2000 through July 2002. From
August 1997 to January 2000, Mr. Holcombe served as a senior principal
consultant at C-Change, Inc. in San Rafael CA, leading project teams to deliver
e-commerce initiatives for entertainment, telecommunications and financial
services clients. Mr. Holcombe received a Masters degree in Computer Science
from George Washington University in Washington, D.C. and a Masters in Business
Administration degree from Chaminade University in Honolulu. Mr. Holcombe
received his undergraduate degree from the United States Military Academy at
West Point.
John D. McCarthy has served as senior vice president, business
development since September 2002 and as senior vice president of US sales and
marketing since October 2003. Prior to that, he served as acting chief financial
officer from March 2002 through September 2002. Mr. McCarthy also resumed the
duties of acting chief financial officer from November 2002 to May 2003. Mr.
McCarthy served as vice president of financial planning and analysis from August
2001 through March 2002 and as managing director for the Application Services
Group from the time he joined Globix in March 2001 through August 2001. Prior to
joining Globix, Mr. McCarthy served as vice president, finance for LC39 Venture
Group LLC, a New York based technology incubator and venture capital fund, from
April 2000 to March 2001. From November 1998 through April 2000, he held
management positions with an e-commerce startup and acted as a consultant to
several entrepreneurial ventures. From 1996 to 1998, Mr. McCarthy was vice
president, director of business affairs with divisions of Young & Rubicam. Mr.
McCarthy received a Masters in Business Administration degree from The Wharton
School of Business of the University of Pennsylvania and a Masters degree in
International Studies from Wharton's Lauder Institute. Mr. McCarthy received his
undergraduate degree from Connecticut College.
Philip J. Cheek joined our United Kingdom subsidiary, Globix Ltd., in
July 2000 as European finance director. Mr. Cheek was subsequently appointed to
the additional position of managing director of Globix Ltd. on July 12, 2001. He
currently serves on the Globix Ltd. United Kingdom board of directors. Prior to
his joining Globix Ltd., Mr. Cheek served in various financial positions with
Fritz Companies, an international freight company (now part of UPS) from April
1996 through July 2000. Mr. Cheek graduated as a qualified ACCA in 1992 with a
professional training practice at Maxwells Chartered Accountants.
4
James C. Schroeder joined Globix in February 2000 as Deputy General
Counsel. In December 2003 he was promoted to General Counsel and is responsible
for overseeing all of Globix's legal activities including real estate and sales
contracts. Prior to joining Globix, Mr. Schroeder was in private practice.
Earlier in his career Mr. Schroeder served as in-house counsel for Philips
Electronics NA and McKesson, Inc. Mr. Schroeder holds a BA from the University
of Southern California. He received his JD from Pepperdine University and his
LLM from New York University.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The federal securities laws require Globix directors and executive
officers, and persons who own more than ten percent of the outstanding shares of
common stock, to file with the Securities and Exchange Commission initial
reports of ownership and reports of changes in ownership of any equity
securities of Globix on Forms 3, 4, and 5. To our knowledge, based on review of
copies of such reports furnished to Globix and representations by these
individuals that no other reports were required, all required reports have been
filed on a timely basis on behalf of all persons subject to these requirements
except that Mr. Lampe did not timely file Form 4 Statement of Changes in
Beneficial Ownership relating to a purchase in September 2003. The required Form
4 was filed in October 2003.
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following summary compensation table sets forth the total
compensation for the fiscal years ended September 30, 2004, September 30, 2003
and September 30, 2002 for Globix's Chief Executive Officer, Globix's four other
most highly compensated executive officers during the fiscal year ended
September 30, 2004 who held office as of September 30, 2004.
5
ANNUAL COMPENSATION
SECURITIES
UNDERLYING
SALARY BONUS OTHER ANNUAL OPTIONS/ ALL OTHER
NAME AND PRINCIPAL POSITION YEAR ($) ($)(2) COMPENSATION($) SARs (#) COMPENSATION
--------------------------- ---- --- --- --------------- -------- ------------
Peter K. Stevenson(1) 2004 308,000 284,250 --- --- ---
PRESIDENT AND CHIEF 2003 284,684 150,000 79,105(4) 548,667(3) ---
EXECUTIVE OFFICER 2002 127,333 75,000 50,000(5) --- 1,459(6)
Robert M. Dennerlein(7) 2004 176,250 69,050 --- --- ---
CHIEF FINANCIAL OFFICER 2003 108,077 42,916 --- 100,000 ---
H. Jameson Holcombe(8) 2004 185,000 65,807 --- --- ---
SENIOR VICE PRESIDENT 2003 170,000 53,125 79,623(9) 106,582 ---
OF OPERATIONS, CORPORATE 2002 34,375 --- 27,621(10) --- ---
SECRETARY AND CHIEF
TECHNOLOGY OFFICER
John D. McCarthy(11) 2004 190,000 70,807 --- --- ---
SENIOR VICE PRESIDENT, 2003 190,000 62,938 --- 146,316 ---
CORPORATE DEVELOPMENT 2002 190,000 27,000 --- 100,000(12) ---
Philip J. Cheek(13) 2004 197,134 25,287 3,584(14) --- 19,893(15)
MANAGING AND FINANCE 2003 178,333 41,625 3,213(16) 30,000 17,833(15)
DIRECTOR, GLOBIX U.K. LTD. 2002 119,662 18,097 2,955(17) --- 11,966(15)
(1) Mr. Stevenson became our President and Chief Executive Officer on April
15, 2002.
(2) Amounts shown include a special one-time bonus paid in April 2004
occasioned by the successful completion of the sale of the property at
415 Greenwich Street in New York, New York in the amount of $168,750
for Mr. Stevenson, $13,000 for Messrs. Dennerlein and Holcombe and
$18,000 for Mr. McCarthy.
(3) Pursuant to Mr. Stevenson's employment agreement dated as of April 15,
2002, we agreed to grant to Mr. Stevenson options to acquire 548,667
shares of our common stock, which options were granted to Mr. Stevenson
on March 14, 2003 pursuant to our 2003 Stock Option Plan.
(4) Represents the amount that we reimbursed Mr. Stevenson for his housing
and travel costs in the fiscal year ended September 30, 2003, including
amounts reimbursed for taxes associated with these payments, as his
permanent residence is located outside of the New York area.
(5) Represents the amount that we reimbursed Mr. Stevenson for his housing
and travel costs in the fiscal year ended September 30, 2002, as his
permanent residence is located outside of the New York area.
(6) Represents the amount of premiums for life insurance benefits for Mr.
Stevenson paid by Globix in the five month period ended September 30,
2002.
(7) Mr. Dennerlein became our Chief Financial Officer on May 12, 2003. He
joined Globix in January 2003.
(8) Mr. Holcombe joined Globix in July 2002 as Senior Vice President of
Operations. He became our Corporate Secretary in April 2003 and our
Chief Technology Officer on August 11, 2003.
(9) Represents the amount that we reimbursed Mr. Holcombe for his housing
and travel costs in the fiscal year ended September 30, 2003, including
amounts reimbursed for taxes associated with these payments, as his
permanent residence is located outside of the New York area.
(10) Represents the amount that we reimbursed Mr. Holcombe for his housing
and travel costs in the fiscal year ended September 30, 2002, as his
permanent residence is located outside of the New York area.
6
(11) Mr. McCarthy has served as our Senior Vice President, Corporate
Development since September 2002. He joined Globix on March 5, 2001.
(12) These options were granted prior to the effective date of our plan of
reorganization and were cancelled on the effective date of the plan of
reorganization.
(13) Mr. Cheek joined our U.K. subsidiary, Globix Ltd., in July 2000. He was
appointed Managing and Finance Director of Globix Ltd. on July 12,
2001.
(14) Represents the amount that we reimbursed Mr. Cheek for his travel costs
in the fiscal year ended September 30, 2004, as his permanent residence
is located outside of the London area.
(15) Represents the amount contributed by Globix Ltd. to its profit sharing
plan.
(16) Represents the amount that we reimbursed Mr. Cheek for his travel costs
in the fiscal year ended September 30, 2003, as his permanent residence
is located outside of the London area.
(17) Represents the amount that we reimbursed Mr. Cheek for his travel costs
in the fiscal year ended September 30, 2002, as his permanent residence
is located outside of the London area.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL AND FISCAL YEAR-END OPTION VALUES
The following table presents information concerning options granted to
the officers included in the Summary Compensation Table during the fiscal year
ended September 30, 2004.
VALUE
NUMBER OF REALIZED NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES (MARKET PRICE UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/SARS
ACQUIRED AT EXERCISE EXERCISE OPTIONS AT FISCAL YEAR END AT FISCAL YEAR END(1)
ON LESS EXERCISE PRICE --------------------------- -----------------------------
NAME EXERCISE PRICE) ($/SHARE) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- ------ --------- ----------- ------------- ----------- -------------
Peter K. Stevenson --- --- 3.04 548,667 --- $ 115,220 $ ---
Robert M. Dennerlein --- --- 3.04 50,000 50,000 10,500 10,500
H. Jameson Holcombe --- --- 3.04 53,291 53,291 11,191 11,191
John D. McCarthy --- --- 3.04 73,158 73,158 15,363 15,363
Philip J. Cheek --- --- 3.04 15,000 15,000 3,150 3,150
(1) Based on a sales price of $3.25 per share of our common stock on the
OTC Bulletin Board on September 30, 2004.
7
EMPLOYMENT AGREEMENTS
PETER K. STEVENSON. Effective April 15, 2002, we entered into an
employment agreement with Peter K. Stevenson for his services as our President
and Chief Executive Officer. The original term of the agreement extended until
July 31, 2003. As of August 1, 2003, the agreement was amended to extend the
term until July 31, 2004, subject to extension for successive six month periods
with the mutual consent of Globix and Mr. Stevenson, and to make certain other
changes in Mr. Stevenson's compensation and severance arrangements. Under the
amended agreement, Mr. Stevenson's base salary is $308,000 per year. Mr.
Stevenson is also eligible for an annual bonus in an amount up to 50 percent of
his base salary, payable at the discretion of the Compensation Committee, if he
achieves the targets (objective and subjective) established by the Compensation
Committee. In addition, under the terms of Mr. Stevenson's employment agreement
we agreed to grant to Mr. Stevenson options to acquire 548,667 shares of our
common stock, or 3 percent of the outstanding shares of our common stock on a
fully diluted basis. One hundred percent of these options have vested.
Mr. Stevenson's employment agreement provides that in the event that we
terminate his employment with Globix for any reason other than cause, or if Mr.
Stevenson terminates his employment with Globix for good reason, then Mr.
Stevenson is entitled to twelve months' salary.
H. JAMESON HOLCOMBE. On July 15, 2002, we entered into an agreement
with H. Jameson Holcombe outlining the terms of Mr. Holcombe's employment as our
Vice President, Operations. Mr. Holcombe's base salary is $165,000 per year,
which will be increased no less frequently than once per year in accordance with
our policies. Mr. Holcombe is also eligible to receive a bonus of 30 percent of
his base salary, which is contingent upon Globix meeting certain performance
targets mutually agreed upon by Globix and Mr. Holcombe. Further, we are
required to reimburse Mr. Holcombe for his travel each week to New York and his
reasonable living expenses while in New York. Our agreement with Mr. Holcombe
also provides that he is eligible to receive stock options under our 2003 Stock
Option Plan. We are entitled to terminate Mr. Holcombe's employment at any time.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Singer, the Chairman of Globix's board of directors and a member of
the compensation committee of the board of directors, was paid a success fee by
Globix in the amount of $169,000 in connection with sale by Globix of the
property located at 415 Greenwich Street, New York, New York in January 2004.
8
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
EQUITY COMPENSATION PLAN INFORMATION TABLE
The following table provides information about shares of our common
stock that may be issued upon the exercise of options and rights under existing
equity compensation plans as of September 30, 2004.
Number of securities remaining
Number of Securities to available for future issuance
be issued upon exercise Weighted-average exercise under equity compensation plans
of outstanding options, price of outstanding (excluding securities reflected
warrants and rights options, warrants and rights in column (a))
Plan Category (a) (b) (c)
-------------------------- -------------------------- ----------------------------- ---------------------------------
Equity compensation 1,184,853 $3.20 644,036
plans approved by
security holders (1)
Equity compensation 500,000 $3.00 0
plans not approved by
security holders (2)
Total: 1,684,853 $3.14 644,036
(1) Represents awards issued under the Globix Corporation 2003 Stock Plan.
(2) Represents a warrant issued to affiliates of Communications Technology
Advisors, a firm engaged by Globix to provide restructuring advice. The warrant
was purchased for $25,000.
PRINCIPAL HOLDERS OF COMMON STOCK
The following table and the accompanying notes set forth certain
information, as of December 1, 2004 (except as set forth below), concerning the
beneficial ownership of our common stock by: (1) each person who is known by us
to beneficially own more than five percent of our common stock, (2) each current
director of Globix, (3) each officer of Globix named in the Summary Compensation
Table and (4) all current directors and executive officers as a group.
NAME AND ADDRESS NUMBER OF PERCENT OF
OF BENEFICIAL OWNER SHARES (1,2) CLASS
------------------- ------------ -----
Goldman, Sachs & Co. 1,405,513(3) 8.54%
85 Broad Street
New York, NY 10004
HM Parties(4) 2,304,400(5) 4.00%
c/o Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
MacKay Shields LLC 2,482,491(6) 5.08%
c/o MacKay Shields Financial Corp.
9 West 57th Street
New York, NY 10019
JGD Management Corp. 1,027,733(7) 6.24%
350 Park Avenue
New York, New York 10022
9
NAME AND ADDRESS NUMBER OF PERCENT OF
OF BENEFICIAL OWNER SHARES (1,2) CLASS
------------------- ------------ -----
Kingdon Capital Management, LLC 1,397,076(8) 8.49%
152 West 57th Street, 50th Floor
New York, NY 10019
Peter S. Brodsky ---(9) *
Peter L. Herzig --- *
Steven Lampe 1,219,817(10) 7.41%
Steven G. Singer 1,138,007(11) 6.91%
Raymond L. Steele --- *
Peter K. Stevenson 548,667(12) 3.23%
Steven Van Dyke 168,609(13) 1.02%
Robert M. Dennerlein 55,833(14) *
H. Jameson Holcombe 65,221(15) *
John D. McCarthy 97,546(16) *
Philip J. Cheek 15,000(17) *
All directors and executive officers
as a group (12 persons) 3,317,034(18) 19.23%
* Less than 1%.
(1) The information regarding beneficial ownership of our common stock has
been presented in accordance with the rules of the Securities and
Exchange Commission. Under these rules, a person may be deemed to
beneficially own any shares as to which such person, directly or
indirectly, has or shares voting power or investment power and also any
shares of our common stock as to which such person has the right to
acquire voting or investment power within 60 days through the exercise
of any stock option or other right. The percentage of beneficial
ownership as to any person as of a particular date is calculated by
dividing (a) (i) the number of shares beneficially owned by such person
plus (ii) the number of shares as to which such person has the right to
acquire voting or investment power within 60 days by (b) the total
number of shares outstanding as of such date, plus any shares that such
person has the right to acquire from Globix within 60 days. For
purposes of calculating the beneficial ownership percentages set forth
above, the total number of shares of our common stock deemed to be
outstanding as of December 1, 2004 was 16,460,000. As used in this
Amendment No. 1, "voting power" is the power to vote or direct the
voting of shares and "investment power" is the power to dispose or
direct the disposition of shares. Except as noted, each stockholder
listed has sole voting and investment power with respect to the shares
shown as being beneficially owned by such stockholder.
10
(2) On June 25, 2002, we entered into a Stipulation and Order with the lead
plaintiffs in the class action lawsuit described in the section of the
Original 10-K entitled "Item 3. Legal Proceedings". The Stipulation and
Order provides that 229,452 shares of our common stock and $1.968
million in aggregate principal amount of our 11% senior notes will be
held in reserve in escrow pending the outcome of the class action
lawsuit. In the event that any judgment or settlement entered into in
connection with the class action lawsuit requires us to pay an amount
in excess of our liability insurance, we will be required to issue to
the class action litigants and their attorneys all (in the event that
this excess is $10 million or greater) or a portion of (in the event
that this excess is less than $10 million) the shares of our common
stock and the notes being held in escrow. On August 12, 2004, the
United States District Court for the Southern District of New York
approved the settlement of the class action lawsuit in an amount which
would be covered by liability insurance. Although the settlement
remains subject to appeal, Globix believes that its liability insurance
is sufficient to cover any judgment or settlement in the class action
lawsuit and that the shares of Globix common stock and the notes being
held in escrow will be distributed in accordance with the plan or
reorganization rather than to the class action litigants and their
attorneys. Accordingly, MacKay Shields LLC and Goldman Sachs & Co. (and
each other former holder of our 12.5% notes on the effective date of
the plan of reorganization) will be entitled to receive a portion of
these 229,452 shares of common stock based on its percentage ownership
of the 12.5% notes on the effective date of the plan of reorganization.
(3) This information is as of August 31, 2004 and based on information
provided to us by Goldman Sachs & Co.
(4) "HM Parties" refers collectively to HM4 Globix Qualified Fund, LLC, HM4
Globix Private Fund, LLC, HM PG-IV Globix, LLC, HM 4-EQ Globix
Coinvestors, LLC and HM 4-SBS Globix Coinvestors, LLC. Of the 2,304,400
shares held by the HM Parties: (i) 2,092,487 of these shares are owned
of record by HM4 Globix Qualified Fund, LLC; (ii) 14,831 of these
shares are owned of record by HM4 Globix Private Fund, LLC; (iii)
111,430 of these shares are owned of record by HM PG-IV Globix, LLC;
(iv) 34,177 of these shares are owned of record by HM4 EQ Globix
Coinvestors, LLC; and (v) 51,475 of these shares are owned of record by
HM4 SBS Globix Coinvestors, LLC.
(5) Thomas O. Hicks is the President and Chief Executive Officer of each of
the HM Parties and is the sole member of the ultimate general partner
of the controlling member of each of the HM Parties and has the
ultimate legal authority over all investment decisions made with
respect to the shares of our common stock owned of record by the HM
Parties. Accordingly, Mr. Hicks may be deemed to beneficially own all
or a portion of the shares of our common stock owned of record by the
HM Parties. Peter S. Brodsky, a director of Globix, Dan H. Blanks, Joe
Colonnetta, Jack D. Furst, a director of Globix from December 1999
through April 2002, Lyndon Lea, John R. Muse, Rick Neuman and Andrew
Rosen are partners of Hicks, Muse, Tate & Furst Incorporated, which is
an affiliate of Mr. Hicks and of the HM Parties, and serve as officers
of each of the HM Parties. In addition, Messrs. Hicks, Muse, Lea and
Furst are members of the management committee of Hicks, Muse Tate &
Furst Incorporated. Consequently, these individuals may be deemed to
beneficially own all or a portion of the shares of our common stock
owned of record by the HM Parties. Each of Messrs. Hicks, Brodsky,
Blanks, Colonnetta, Furst, Lea, Muse, Neuman and Rosen disclaims the
existence of a group and disclaims beneficial ownership of the shares
of our common stock of which he is not the record owner.
(6) This information is as of November 19, 2004 and based on information
provided to us by MacKay Shields LLC, the pecuniary interests in these
shares are held by a number of clients for whom MacKay Shields LLC is
the discretionary investment advisor or subadvisor. MacKay Shields LLC
has voting and investment control over these shares and, accordingly,
is deemed to beneficially own these shares.
(7) According to information provided to us by JGD Management Corp. these
shares are held by certain managed accounts and investment funds for
whom JGD Management Corp. is the discretionary investment advisor.
11
(8) According to information provided to us by Kingdon Capital Management,
LLC, these shares are directly beneficially owned by Kingdon Capital
Management, LLC and held of record by Kingdon Associates, Kingdon
Partners, Kingdon Family Partnership LP and M. Kingdon Offshore N.V.
(9) Mr. Brodsky is a partner of Hicks, Muse, Tate & Furst Incorporated,
which is an affiliate of Mr. Hicks and each of the HM Parties, and
serves as an officer of each of the HM Parties. Consequently, Mr.
Brodsky may be deemed to beneficially own all or a portion of the
shares of our common stock owned of record by each of the HM Parties.
Mr. Brodsky disclaims the existence of a group and disclaims beneficial
ownership of shares of our common stock of which he is not the record
owner.
(10) Mr. Lampe is affiliated with LC Capital Master Fund Ltd., which owns
these shares. Mr. Lampe has voting and investment control over these
shares and, consequently, is deemed to beneficially own these shares.
(11) Mr. Singer is co-trustee of two trusts for the benefit of his brother's
children and as trustee has voting and investment control over the
517,979 shares of our common stock held in the trusts. Mr. Singer and
his sister-in-law, Karen Singer, filed a Schedule 13G to report the
beneficial ownership of these shares and an additional 589,109 shares
held in a trust for the benefit of Mr. Singer's brother's children, for
which Karen Singer serves as sole trustee. Mr. Singer and his
sister-in-law disclaim membership in a group, as such term is defined
in Section 13(d)(3) of the Securities Exchange Act of 1934, and
disclaim any other interest in the common stock held in the Singer
Trusts.
(12) Pursuant to the terms of Mr. Stevenson's employment agreement described
in "Item 11. Executive Compensation - Employment Agreements - Peter K.
Stevenson", on March 14, 2003, we granted to Mr. Stevenson options to
acquire 548,667 shares of our common stock pursuant to our 2003 Stock
Option Plan. As of December 31, 2003, all of these stock options were
vested.
(13) Mr. Van Dyke is the founder and co-managing principal of Bay Harbour
Management L.C. Bay Harbour Management serves as investment advisor for
Bay Harbour 90-1, Ltd., Bay Harbour Partners, Ltd., Zurich
Institutional Benchmarks Master Fund Ltd. and HFR DS Strategic Master
Trust, which collectively owned (as of August 1, 2003) 168,609 shares
of our common stock, or approximately 1.02 percent of the shares of our
outstanding common stock. Bay Harbour Management has voting and
investment control over these shares and, accordingly, may be deemed to
beneficially own these shares. Mr. Van Dyke is the natural person with
voting and investment control over these shares.
(14) Includes options to purchase 55,833 shares that are exercisable within
60 days of December 1, 2004, including 16,667 options which vested on
September 30, 2004.
(15) Includes options to purchase 65,221 shares that are exercisable within
60 days of December 1, 2004, including 17,764 options which vested on
September 30, 2004.
(16) Includes options to purchase 97,544 shares that are exercisable within
60 days of December 1, 2004, including 24,386 options which vested on
September 30, 2004.
(17) Includes options to purchase 15,000 shares that are exercisable within
60 days of December 1, 2004, including 5,000 options which vested on
September 30, 2004.
(18) Includes options to purchase an aggregate of 790,599 shares that are
exercisable within 60 days of December 1, 2004, including 67,984
options which vested on September 30, 2004.
Unless otherwise indicated, the address for the individuals listed
above is c/o Globix Corporation, 139 Centre St., New York, NY 10013.
12
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In September 2002, Globix paid Peter L. Herzig a lump sum of $250,000
in connection with his resignation as Chief Executive Officer of Globix.
In January 2004, Globix paid Steven Singer, the Chairman of Globix's
board of directors and a member of the compensation committee of the board of
directors, a success fee in the amount of $169,000 in connection with sale by
Globix of the property located at 415 Greenwich Street, New York, New York. Mr.
Stevenson, Globix's president and chief executive officer, was also paid a
success fee in the amount of $169,000 by Globix in connection with the sale of
the property. Globix paid similar success fees in lesser amounts to certain
other executive officers in connection with the sale of the property.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following is a description of fees paid to Globix's independent
auditor, Amper, Politziner & Mattia, P.C. ("Amper") or scheduled to be paid
under an engagement agreement for services in fiscal years 2003 and 2004. The
final amounts actually paid for the fiscal year 2004 audit may differ by an
immaterial amount based on the final hourly billing by Amper.
FISCAL YEAR 2003 FISCAL YEAR 2004
----------------- -----------------
Audit Fees $ 212,165 $ 222,337
Audit Related Fees $ 0 $ 162,440 (1)
Tax Fees $ 0 $ 10,630
All Other Fees $ 26,775 (2) $ 26,079 (3)
-------------- ---------------
Total Fees $ 238,940 $ 421,487
============== ===============
____________
(1) Audit-related fees consisted of audit-related services in connection with
the registration statements on Form S-4 filed with the SEC on October 12, 2004
and Form S-1 filed with the SEC on March 23, 2004.
(2) All other fees consisted of audit-related services in connection with the
401(k) profit-sharing plan we maintain for our employees. The Audit Committee
has considered whether the provision of these services is compatible with
maintaining Amper's independence.
(3) All other fees consisted of audit-related services in connection with the
SAS-70 certification.
ADVANCE APPROVAL POLICY
In accordance with the procedures set forth in its charter, the Audit
Committee approves in advance all auditing services and permitted non-audit
services (including the fees and terms of those services) to be performed for
Globix by its independent auditors. Such approval may be accomplished by
approving the terms of the engagement prior to the engagement of the independent
auditors with respect to such services or by establishing detailed
advance-approval policies and procedures to govern such engagement. All of the
fees and services described above were subject to advance approval.
13
PART IV
ITEM 15. EXHIBITS
EXHIBIT NO. EXHIBIT DESCRIPTION
31.1 Certification of Principal Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 Certification of Principal Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
32.1 Certification of Principal Executive Officer Pursuant to
18 U.S.C. Section 1350.
32.2 Certification of Principal Financial Officer Pursuant to
18 U.S.C. Section 1350.
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Date: January 28, 2005 GLOBIX CORPORATION
/s/ Peter K Stevenson
----------------------------------
Peter K. Stevenson
President, Chief Executive Officer