<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
AMENDMENT NO. 1 TO FORM 10-K
ON
FORM 10-K405/A
(Mark One)
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 1998
|_| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
Commission file number 1-10726
----------------------------------
WINSTAR COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3585278
(State of Incorporation) (I.R.S. Employer Identification No.)
230 Park Avenue
New York, New York 10169
(212) 584-4000
(Address, including zip code, and telephone number, including
area code, of registrant's executive offices)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock
Rights to Purchase Series B Preferred Stock
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 check mark 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 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. X
---
State the aggregate market value of the voting and
non-voting common equity held by non-affiliates computed by reference
to the price at which the common equity was sold, or the average bid
and asked price of such, as of a specified date within the past 60
days: As of March 25, 1999, the aggregate market value of such stock
was approximately $1,539.2 million.
Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of the latest practicable
date. As of March 25, 1999, the number of shares of common stock
outstanding was 46,661,356.
<PAGE>
Item 10. Directors and Executive Officers of the Registrant
The directors and executive officers of the Company are:
William J. Rouhana, Jr., 46, has been a director of the Company since its
inception, its Chairman of the Board since February 1991, and its Chief
Executive Officer since May 1994. Mr. Rouhana was President and Chief Executive
Officer of WinStar Companies, Inc., a merchant banking firm which focused on
media and telecommunications investments ("WinStar Companies"), and its
affiliates from 1983 until November 1995. Through WinStar Companies, he served,
from August 1987 to February 1989, as Vice Chairman of the Board and Chief
Operating Officer of Management Company Entertainment Group, Inc., a diversified
distributor of entertainment products and, thereafter, as its Vice Chairman of
the Board until May 1990. Mr. Rouhana was in private legal practice from 1977 to
1984, specializing in the financing of entities involved in the development of
entertainment products and information services. Mr. Rouhana was Vice Chairman
of the Board of Governors of the United Nations Association through 1997 and is
a member of the Board of Directors of Business Executives for National Security.
He also co-founded and is co-Chairman of the Humpty Dumpty Institute and a
member of the Board of the Adopt-A-Minefield program. Mr. Rouhana is a Phi Beta
Kappa graduate of Colby College, a Thomas J. Watson Fellow (1972-1973) and a
graduate of Georgetown University School of Law.
Nathan Kantor, 56, has been a director of the Company since October 1994
and President and Chief Operating Officer of the Company since September 1995.
From 1991 to September 1995, Mr. Kantor was President of ITC Group, Inc.
("ITC"), a company which specialized in the development of emerging competitive
telecommunications companies. Through ITC, Mr. Kantor coordinated all of the
Company's telecommunications operations from June 1994 to September 1995. From
January 1985 to December 1990, he was President of MCI Telecommunications
Corporation (Northeast Division). Mr. Kantor was a founder of MCI International,
Inc., and served as its President and Chief Operating Officer from its founding
in July 1982 to December 1984. From 1972 to 1982, Mr. Kantor held a number of
senior management positions with MCI Communications, including Vice President of
National Operations. Mr. Kantor also is currently the Chairman of the Board and
Chief Executive Officer of Image Telecommunications Corp., a company involved in
the development of information and video servers. Mr. Kantor is a graduate of
Florida State University and the United States Military Academy at West Point.
James I. Cash, 51, has been a director of the Company since January 1997.
Professor Cash has been a member of the faculty of Harvard Business School since
1976, having taught in its Masters of Business Administration, Management
Development and Advanced Management programs. Professor Cash currently serves as
a trustee for Massachusetts General Hospital and the Massachusetts Computer
Software Council, overseer for the Boston Museum of Science, and is a member of
the Board of Directors of Cambridge Technology Partners, The Chubb Corporation,
General Electric Company, Knight-Ridder, Inc., State Street Bank and Trust
Company and Tandy Corporation. Professor Cash has authored numerous articles and
several books on topics related to
2
<PAGE>
information technology and corporate management and structure and writes a
regular column for Information Week magazine. Professor Cash is a graduate of
Texas Christian University, Purdue University's Graduate School of Mathematical
Sciences and Purdue University's Krannert Graduate School of Management.
Bert Wasserman, 66, has been a director of the Company since June 1995.
Mr. Wasserman served as Executive Vice President and Chief Financial Officer of
Time Warner, Inc. from 1990 until his retirement in 1995 and served on the Board
of Directors of Time Warner, Inc. and its predecessor company, Warner
Communications, Inc. ("Warner Communications") from 1981 to 1995. He joined
Warner Communications, Inc. in 1966 and had been an officer of that company
since 1970. Mr. Wasserman is director of several investment companies in the
Dreyfus Family of Funds. He is a director of Malibu Entertainment, Inc., Lillian
Vernon Corporation and PSC Inc. He is a graduate of Baruch College and Brooklyn
Law School.
Steven B. Magyar, 50, has been a director of the Company since June 1993.
Since May 1994, Mr. Magyar has owned and operated a private business which
specializes in financial services for high net worth individuals and business
owners. From 1989 to May 1994, Mr. Magyar was a regional vice president of CIGNA
Insurance Co. and during the preceding fifteen years held various sales and
sales management positions with CIGNA. Mr. Magyar has served on CIGNA's
strategic business development committee and has been a guest lecturer at New
York University. Mr. Magyar also is a Certified Life Underwriter and Chartered
Financial Consultant with the American College of Insurance. Mr. Magyar is a
member of the General Agents and Managers Association, the National Association
of Underwriters and the American Society of CLU and ChFC. Mr. Magyar is a
graduate of Colby College.
William J. vanden Heuvel, 69, has been a director of the Company since June
1995. Since 1984, he has served as Senior Advisor to Allen & Co., an investment
banking firm, as well as counsel to the law firm Stroock & Stroock & Lavan. He
served as a director of Time Warner from 1981 to 1993 and currently is a
director of Zemex Corp., a New York Stock Exchange listed company engaged in the
mining and exploitation of industrial minerals. Ambassador vanden Heuvel also
has been a member of the IRC Group, a Washington D.C.-based consulting group
made up of former United States ambassadors, since 1981. He was Chairman of the
Board of Governors of the United Nations Association since 1993. From 1979 to
1981, Ambassador vanden Heuvel served as United States Deputy Permanent
Representative to the United Nations. From 1977 to 1979, he served as United
States Ambassador to the European Office of the United Nations and various other
international organizations. He was Special Assistant to United States Attorney
General Robert F. Kennedy from 1961 to 1964. Ambassador vanden Heuvel is a
graduate of Deep Springs College, Cornell University and Cornell Law School. He
is President of the Franklin and Eleanor Roosevelt Institute and Chairman of the
Council of American Ambassadors.
3
<PAGE>
Timothy R. Graham, 49, has served as Executive Vice President and General
Counsel of the Company since October 1994 and has been a director of the Company
since January 1999. From October 1990 through September 1994, Mr. Graham was
engaged in the private practice of law and served in various capacities with
National Capital Management Corporation, a company engaged through its
subsidiaries in various businesses, including the ownership of real estate
rental properties, industrial manufacturing and insurance matters, including as
Corporate Secretary and as President of its primary real estate and insurance
subsidiaries. Prior to 1990, Mr. Graham was a partner in the law firm of Nixon,
Hargrave, Devans & Doyle, specializing in corporate finance, regulatory and
business law. Mr. Graham was a Securities Law Editor of Barrister magazine, an
American Bar Association publication, from 1985 to 1986 and has authored a
number of publications, including "Public Offerings in the United States by
Foreign Companies" and "Financing of Foreign Companies through United States
Securities Markets." Mr. Graham also is a member of the Board of Advisors of the
Instructional Television Station of the Archdiocese of New York. Mr. Graham is a
graduate of Fordham Law School and the Georgetown University School of Foreign
Service.
Charles T. Dickson, 44, has served as Executive Vice President and Chief
Financial Officer of the Company since December 1997. For the preceding four
years, Mr. Dickson served as Chief Financial Officer of General Instrument
Corporation. From 1984 to 1993, Mr. Dickson held numerous positions at MCI
Communications Corp., including Vice President, Finance and Administration, for
the National Accounts Division. From 1979 to 1984, Mr. Dickson was a consultant
with ICF, Inc. providing financial analysis to clients in the energy and
telecommunications industries. Mr. Dickson is a Phi Beta Kappa graduate of Clark
University and received a masters degree in public policy from the University of
California at Berkley.
The Company pays each outside director $500 for his attendance at each
meeting of a committee of which he is a member and $1,000 for his attendance at
each meeting of the Board. In addition, on January 13th of each year during the
term of the Company's 1992 Performance Equity Plan (the "1992 Equity Plan"),
assuming there are enough shares then available for grant under the 1992 Equity
Plan, each person who is then a director of the Company is awarded stock options
to purchase 10,000 shares of the Company's Common Stock at the fair market value
thereof (as determined in the accordance with the 1992 Equity Plan), all of
which options are immediately exercisable as of the date of grant and have a
term of ten years.
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers and
persons who beneficially own more than ten percent of the Company's Common Stock
to file with the Securities and Exchange Commission ("SEC") initial reports of
ownership and reports of changes in ownership of Common Stock. Executive
officers, directors and greater-than-ten percent stockholders are required by
SEC regulations to furnish the Company with copies of all such reports they
file. To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required during the year ended December 31, 1998, all filings under
Section 16(a) were made as required.
4
<PAGE>
Item 11. Executive Compensation
The following table shows the compensation for the years ended December 31,
1998, 1997 and 1996 earned by (i) William J. Rouhana, Jr., the Chairman and
Chief Executive Officer of the Company, (ii) Nathan Kantor, Timothy R.
Graham and Charles T. Dickson, the other executive officers of the Company,
and (iii) Steven G. Chrust, former Vice Chairman of the Company (together, the
"named executive officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL
COMPENSATION
------------------ LONG TERM COMPENSATION
FISCAL SALARY BONUS ----------------------
NAME AND PRINCIPAL POSITION YEAR ENDED ($) ($)(1) OPTIONS (# SHARES)
- ---------------------------------------------------- ---------- ------- ------- ----------------------
<S> <C> <C> <C> <C>
William J. Rouhana, Jr. ............................ 12/31/98 554,387 750,000 910,000(2)(4)
Chairman of the Board and 12/31/97 483,658 500,000 10,000(4)
Chief Executive Officer 12/31/96 410,076 400,000 135,000(1)(4)
Nathan Kantor ...................................... 12/31/98 519,237 625,000 510,000(2)(4)
President and Chief Operating Officer 12/31/97 448,085 450,000 10,000(4)
12/31/96 370,769 300,000 60,000(1)(4)
Timothy R. Graham .................................. 12/31/98 284,416 220,000 51,000(1)
Executive Vice President and General Counsel 12/31/97 225,000 225,000 0
12/31/96 217,788 125,000 25,000(1)
Charles T. Dickson ................................. 12/31/98 321,921 150,000 31,000(1)
Executive Vice President 12/31/97 11,923 30,000 250,000(3)
and Chief Financial Officer 12/31/96 -- -- --
Steven G. Chrust(5) ................................ 12/31/98 363,474 200,000 10,000(4)
Former Vice Chairman 12/31/97 336,924 225,000 10,000(4)
12/31/96 317,809 225,000 45,000(1)(4)
</TABLE>
- ------------------
(1) Represents or includes bonuses paid or stock options granted as compensation
for the year indicated, the payment or grant of which was made in the
subsequent calendar year.
(2) Includes options to purchase shares of Common Stock granted pursuant to the
terms of the executive's employment agreement entered into in such year. See
"Employment Agreements."
(3) Represents options granted to Mr. Dickson on the commencement of his
employment in December, 1997. These options vest in equal installments over
a five year period commencing on the first anniversary of the grant date.
(4) Includes or represents options to purchase 10,000 shares of Common Stock
granted annually to directors of the Company under the 1992 Equity Plan.
(5) Mr. Chrust resigned as Vice Chairman and a director of the Company,
effective December 31, 1998.
The Company cannot determine, without unreasonable effort or expense, the
specific amount of certain personal benefits afforded to its employees, or the
extent to which benefits are personal rather than business. The Company has
concluded that the aggregate amounts of such personal benefits which cannot be
specifically or precisely ascertained do not in any event exceed, as to each
individual named in the preceding table, the lesser of $50,000 or 10% of the
compensation reported in the preceding table for such individual, and that such
information set forth in the preceding table is not rendered materially
misleading by virtue of the omission of the value of such personal benefits.
5
<PAGE>
OPTION GRANTS IN 1998
The following table sets forth certain information concerning individual
grants of stock options during 1998 to each of the named executive officers:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
- -------------------------------------------------------------------------------------------------- VALUE
NUMBER OF AT ASSUMED ANNUAL RATES
SECURITIES PERCENT OF OF STOCK PRICE
UNDERLYING TOTAL APPRECIATION
OPTIONS OPTIONS GRANTED EXERCISE OR FOR OPTION TERM
GRANTED TO EMPLOYEES IN BASE PRICE ------------------------
NAME (#) FISCAL YEAR (%) ($) EXPIRATION DATE 5%($) 10%($)
- ------------------------------- ---------- --------------- ------------ --------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
William J. Rouhana, Jr. ....... 10,000 0.14 29.00 1/13/08 182,000 462,000
Chairman of the Board and 500,000 7.19 26.00 (1) 4,097,000 9,235,000
Chief Executive Officer(1) 200,000 2.88 39.00 (1) (832,000) 1,412,000
200,000 2.88 52.00 (1) (3,083,000) (267,000)
-------- ----- ---------- ----------
910,000 13.09 364,000 10,842,000
-------- ----- ---------- ----------
-------- ----- ---------- ----------
Nathan Kantor ................. 10,000 0.14 29.00 1/13/08 182,000 462,000
President and Chief Operating 277,779 3.99 26.00 (2) 634,000 1,092,000
Officer(2) 111,111 1.60 39.00 (2) (1,132,000) (980,000)
111,110 1.60 52.00 (2) (2,416,000) (1,122,000)
-------- ----- ---------- ----------
510,000 7.34 (2,732,000) (548,000)
-------- ----- ---------- ----------
-------- ----- ---------- ----------
Timothy R. Graham ............. 1,000 0.01 20.00 (3) 6,216 14,656
Executive Vice President and
General Counsel
Charles T. Dickson ............ 1,000 0.01 20.00 (3) 6,216 14,656
Executive Vice President and
Chief Financial Officer
Steven G. Chrust .............. 10,000 0.14 29.00 1/13/08 182,000 462,000
Former Vice Chairman(4)
</TABLE>
- ------------------
(1) Reflects stock options granted to Mr. Rouhana in connection with the renewal
of his employment agreement with WinStar on January 6, 1998. These options
expire five years from the date of vesting. See "Employment Agreements."
(2) Reflects options granted to Mr. Kantor in connection with the renewal of his
employment agreement with WinStar on September 6, 1998. These options expire
five years from the date of vesting. See "Employment Agreements."
(3) These options vest in five equal annual installments commencing October 22,
1999 and have a term extending five years from the date of vesting.
(4) Mr. Chrust resigned as Vice Chairman and a director of the Company,
effective December 31, 1998.
6
<PAGE>
AGGREGATED OPTION EXERCISES IN 1998 AND
FISCAL YEAR-END OPTION VALUES
The following table sets forth certain information concerning exercises of
stock options during 1998 by each of the named executive officers and the fiscal
year-end value of unexercised options held by such persons.
<TABLE>
<CAPTION>
VALUE OF
UNEXERCISED
IN-THE-MONEY
OPTIONS AT
NUMBER OF SECURITIES FISCAL
UNDERLYING YEAR-END(1)
UNEXERCISED OPTIONS AT ($'S IN
FISCAL YEAR-END(#) THOUSANDS)
SHARES ACQUIRED VALUE REALIZED -------------------------- -----------
NAME ON EXERCISE (#) ($'S IN THOUSANDS) EXERCISABLE UNEXERCISABLE EXERCISABLE
- ---------------------------------------- --------------- ------------------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C>
William J. Rouhana, Jr. ................ -- -- 1,045,000 675,000 25,236
Chairman of the Board and Chief
Executive Officer
Nathan Kantor .......................... -- -- 1,264,865 363,833 34,047
President and Chief Operating Officer
Timothy R. Graham ...................... 150,000 1,997 70,000 16,000 1,966
Executive Vice President and General
Counsel
Charles T. Dickson ..................... -- -- 50,000 201,000 1,100
Executive Vice President and Chief
Financial Officer
Steven G. Chrust(2) .................... -- -- 627,000 127,000 18,013
Former Vice Chairman
<CAPTION>
VALUE OF
UNEXERCISED
IN-THE-MONEY
OPTIONS AT
FISCAL
YEAR-END(1)
($'S IN
THOUSANDS)
------------
NAME UNEXERCISABLE
- ---------------------------------------- -------------
<S> <C>
William J. Rouhana, Jr. ................ 4,625
Chairman of the Board and Chief
Executive Officer
Nathan Kantor .......................... 2,261
President and Chief Operating Officer
Timothy R. Graham ...................... 424
Executive Vice President and General
Counsel
Charles T. Dickson ..................... 4,419
Executive Vice President and Chief
Financial Officer
Steven G. Chrust(2) .................... 3,909
Former Vice Chairman
</TABLE>
- ------------------
(1) Represents the difference between the aggregate market value at December 31,
1998 of the Common Stock underlying the options, based on a last sale price
of $39.00 on that date, and the options' aggregate exercise price.
(2) Mr. Chrust resigned as Vice Chairman and a director of the Company,
effective December 31, 1998.
EMPLOYMENT AGREEMENTS
In March 1995, William J. Rouhana, Jr. and the Company entered into a
three-year employment agreement. On January 6, 1998, Mr. Rouhana and the Company
entered into a new three year employment agreement, effective March 1, 1998,
pursuant to which Mr. Rouhana continues to serve as the Company's Chairman of
the Board and Chief Executive Officer. The employment agreement provides for a
minimum annual base salary of $537,500, with annual increases as agreed upon by
the Company and Mr. Rouhana. The employment agreement also provides that Mr.
Rouhana is eligible for an annual cash bonus, payable at the discretion of the
Company's Compensation Committee, not to exceed 150% of his base salary then in
effect. At the time of execution of this employment agreement, Mr. Rouhana was
granted: (i) immediately exercisable options to purchase 300,000 shares of
Common Stock for $26 per share, the closing sale price of the Common Stock on
the day immediately preceding the agreement date; (ii) options to purchase
300,000 shares of Common Stock which vest on January 6, 1999, of which 100,000
are exercisable at a price of $26 per share and 200,000 are exercisable at a
price of $39 per share; and (iii) options to purchase 300,000 shares of Common
Stock which vest on January 6, 2000, of which 100,000 are exercisable at a price
of $26 per share and 200,000 are exercisable at a price of $52 per share.
7
<PAGE>
Nathan Kantor became President and Chief Operating Officer of the Company
in September 1995, when he entered into a three-year employment agreement with
the Company. In September 1998, Mr. Kantor entered into a new three-year
employment agreement with the Company. The employment agreement provides for a
minimum annual base salary of $518,350, with annual increases as agreed upon by
the Company and Mr. Kantor. The employment agreement also provides that Mr.
Kantor is eligible for an annual cash bonus, payable at the discretion of the
Chief Executive Officer and the Compensation Committee, not to exceed 125% of
his base salary then in effect. At the time of execution of this employment
agreement, Mr. Kantor was granted: (i) immediately exercisable options to
purchase 166,167 shares of Common Stock for $26 per share, which is greater than
the $21.50 closing sale price of the Common Stock on the business day
immediately preceding the agreement date; (ii) options to purchase 166,917
shares of Common Stock which vest on September 6, 1999, of which 55,806 are
exercisable at a price of $26 per share and 111,111 are exercisable at a price
of $39 per share; and (iii) options to purchase 166,916 shares of Common Stock
which vest on September 6, 2000, of which 55,806 are exercisable at a price of
$26 per share and 111,110 are exercisable at a price of $52 per share.
Steven G. Chrust resigned as Director and Vice Chairman of the Company on
December 31, 1998. In connection with his resignation from these positions,
Mr. Chrust entered into an amendment to his then existing employment agreement
pursuant to which he continues his employment with the Company as a regular,
non-officer employee. Mr. Chrust will make himself available to the Chairman and
senior management of the Company to consult and assist WinStar as needed in
strategic planning, corporate development and other matters. Mr. Chrust
continues to be paid his base salary of $350,000 per year, and is eligible to
participate in the Company's employee benefit programs. He is not eligible to
participate in any bonus, stock option or similar incentive programs for 1999 or
thereafter, nor is he eligible for benefits under his Executive Severance
Agreement with the Company described below. Mr. Chrust's amended employment
agreement expires in January 2000.
In April 1997, the Company entered into Executive Severance Agreements
(each a "Severance Agreement") with each of the named executive officers and
certain other senior officers of the Company and its subsidiaries. The Severance
Agreement generally provides that, if during the two years following a Change of
Control or potential Change of Control of the Company (each as defined in the
Severance Agreement), either (A) the covered executive's employment is
terminated by the Company (other than due to the executive's death or Disability
or for Cause, as defined in the Severance Agreement) or (B) the covered
executive terminates his or her employment with the Company for Good Reason (as
defined in the Severance Agreement), then such executive will be entitled to
receive certain severance benefits, including a cash severance payment equal to
one and one-half times the aggregate of (i) such executive's annual base salary
then in effect plus (ii) such executive's average full-year bonus over the prior
two years. Additional benefits to which a covered executive would be entitled
include continued medical and other insurance benefits for one and one-half
years following termination and career outplacement services. As defined in the
Severance Agreement, "Change of Control of the Company" generally means that a
third party has acquired 35% or more of the Company's voting stock (whether
through a stock purchase, exchange, tender offer or merger) or substantially all
of the Company's assets. A "potential Change of Control" of the Company would
occur if: (w) an agreement is entered into, the consummation of which would
result in a Change of Control; (x) a third party makes a public announcement of
an intention to take action that, if consummated, would result in a Change of
Control of the Company; (y) the Company's Stockholder Rights Plan is triggered;
or (z) the Board makes a good faith determination that a potential Change of
Control has occurred. The Severance Agreement has an initial term of three years
and renews automatically for successive one-year terms unless the Company
notifies the covered executive within six months prior to the end of the then
current term that the Severance Agreement will terminate at the end of such
term.
8
<PAGE>
Compensation Committee Interlocks and Insider Participation
The Board's Compensation Committee is composed of Mr. Rouhana, the
Company's Chairman and Chief Executive Officer, Mr. Magyar, Mr. vanden Heuvel
and Professor Cash. No executive officer of the Company sits on the compensation
committee of another entity, one or more of whose executive officers
serves as a director of the Company or on the Company's Compensation Committee,
nor does any executive officer of the Company serve as a director of another
entity, one or more of whose executive officers serves on the Company's
Compensation Committee.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The table and accompanying footnotes on the following pages set forth
certain information as of April 26, 1999 with respect to the Common Stock
ownership of (i) those persons or groups who beneficially own more than 5% of
the Company's Common Stock, (ii) each director and director-nominee of the
Company, (iii) the Company's Chief Executive Officer and each of the Company's
other executive officers, and (iv) all directors and executive officers of the
Company as a group (in each case, based upon information furnished by such
persons). Shares of Common Stock issuable upon exercise of options which are
currently exercisable or exercisable within 60 days of April 26, 1999 have been
included in the following table.
<TABLE>
<CAPTION>
PERCENT
NUMBER OF SHARES BENEFICIALLY
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED OWNED
- --------------------------------------------------------------------------- ------------------ ------------------
<S> <C> <C>
William J. Rouhana, Jr.(1) ................................................ 2,255,173(2) 4.7
Nathan Kantor(1) .......................................................... 1,001,506(3) 2.1
Timothy R. Graham(1) ...................................................... 460,904(4) 1.0
Charles T. Dickson(1) ..................................................... --(5) --
Steven B. Magyar .......................................................... 75,403(6) *
Two Pine Point
Lloyd Harbor, New York 11742
William J. vanden Heuvel .................................................. 74,000(7) *
812 Park Avenue
New York, New York 10021
Bert Wasserman ............................................................ 110,000(8) *
126 East 56th Street
New York, New York 10022
James I. Cash ............................................................. 70,000(9) *
Harvard University
Graduate School of Business Administration
Baker Library 187, Soldiers Field Road
Boston, Massachusetts 02163
FMR Corp. ................................................................. 4,444,302(10) 9.4
82 Devonshire Street
Boston, MA 02019
GBU Inc. .................................................................. 3,764,023(11) 8.0
GEM Capital Management , Inc.
Gerald B. Unterman
70 East 55th Street
New York, NY 10022
All Directors and Executive Officers as a Group (9 persons) ............... 4,006,986(12) 8.0
</TABLE>
- ------------------
* Less than 1%.
(1) The address of this person is c/o WinStar Communications, Inc., 230 Park
Avenue, New York, New York 10169.
(2) Includes 1,380,000 shares of Common Stock issuable upon exercise of certain
options. Does not include (i) 50,000 shares of Common Stock issuable upon
exercise of options which become exercisable in two equal annual
installments commencing in March 2000 and (ii) 300,000 shares of Common
Stock issuable upon exercise of options which become exercisable in January
2000. Mr. Rouhana has agreed that, during the term of Nathan Kantor's
employment agreement with the Company, he would vote all shares of common
stock he controls in favor of Mr. Kantor as a director of the Company.
(3) Includes 984,865 shares of Common Stock issuable upon exercise of certain
options. Does not include (i) 333,833 shares of Common Stock issuable upon
exercise of options which become exercisable in two equal annual
installments commencing in September 1999 or (ii) 20,000 shares of Common
Stock issuable upon exercise of options which become exercisable in two
equal annual installments commencing in March 2000.
(4) Includes 85,000 shares of Common Stock issuable upon exercise of certain
options. Does not include (i) 10,000 shares of Common Stock issuable upon
exercise of options which become exercisable in two equal annual
installments commencing in March 2000, (ii) 1,000 shares of Common Stock
issuable upon exercise of options which become exercisable in five equal
annual installments commencing in October 1999 or (iii) 50,000 shares of
Common Stock issuable upon exercise of options which become exercisable in
five equal annual installments commencing in April 2000.
(Footnotes continued on next page)
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(5) Does not include (i) 200,000 shares of Common Stock issuable upon exercise
of options exercisable in four equal annual installments commencing in
December 1999, (ii) 1,000 shares of Common Stock issuable upon exercise of
options which become exercisable in five equal annual installments
commencing in October 1999 or (iii) 30,000 shares of Common Stock issuable
upon exercise of options which become exercisable in five equal annual
installments commencing in April 2000.
(6) Includes (i) 1,000 shares of Common Stock owned by Mr. Magyar's spouse,
as to which Mr. Magyar disclaims beneficial ownership, (ii) 1,670 shares of
Common Stock owned by benefit plans of which Mr. Magyar is the sole trustee
and primary beneficiary, and (iii) 60,000 shares of Common Stock issuable
upon exercise of certain options.
(7) Includes 70,000 shares of Common Stock issuable upon exercise of certain
options. Also includes 500 shares owned by Mr. vanden Heuvel's spouse, as
to which he disclaims beneficial ownership.
(8) Includes 100,000 shares of Common Stock issuable upon exercise of certain
options.
(9) Represents 70,000 shares of Common Stock issuable upon exercise of certain
options.
(10) FMR Corp. is the parent holding company of, among others, Fidelity
Management & Research Company ("Fidelity Management"), a registered
investment adviser which acts as investment adviser to various registered
investment companies within the Fidelity family of investment funds. FMR
Corp. and Fidelity Management are deemed to beneficially own shares of
the Company held by those funds over which they exercise control.
Information with respect to this stockholder was derived from its Schedule
13G filed with the SEC in February 1999.
(11) Each of GBU Inc. ("GBU") and GEM Capital Management, Inc. ("GEM Capital"),
is a registered investment adviser which acts as investment adviser to
various funds and managed accounts. Gerald B. Unterman is the President, a
director and principal stockholder of GBU and GEM Capital. Mr. Unterman,
GBU and GEM Capital are deemed to beneficially own shares of the Company
held by those funds and managed accounts over which they exercise control.
Information with respect to these stockholders was derived from their
Schedule 13G filed with the SEC in February 1999.
(12) Includes shares referred to as being included in notes (2) through (9).
Excludes shares referred to in such notes as being excluded.
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Item 13. Certain Relationships and Related Transactions
On October 9, 1998, a subsidiary of the the Company made the following
loans to two executive officers of the the Company: (i) a loan in the amount of
$2.0 million to Steven G. Chrust, who at that time was the the Company's Vice
Chairman; and (ii) a loan in the amount of $5.3 million to William J. Rouhana,
Jr., the the Company's Chairman and Chief Executive Officer. Each of these loans
was payable on demand and bore interest at 1% over the prime rate. The proceeds
of these loans were used to repay margin debt which was secured by shares of the
the Company's common stock owned by these individuals. Mr. Chrust repaid the
entire principal and interest on his loan on November 19, 1998 and Mr. Rouhana
repaid the entire principal and interest on his loan on December 24, 1998.
The Company leases office space located in Westport, Connecticut from KKJ
Properties, LLC, an entity controlled by Nathan Kantor. This is a month-to-month
lease under which the Company pays monthly rent of $6,600, which the Company
believes to be a fair market rate.
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SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this Amendment to be signed on its behalf by the undersigned, thereunto
duly authorized, on the 30th day of April, 1999,
WINSTAR COMMUNICATIONS, INC.
By: /s/ Joseph P. Dwyer
-------------------------------
Joseph P. Dwyer
Senior Vice President - Finance
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