<PAGE>
As filed with the Securities and Exchange Commission on August 4, 2000
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
-----------------------------
WINSTAR COMMUNICATIONS, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 13-3585278
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) (Identification Number)
685 THIRD AVENUE
NEW YORK, NEW YORK 10017
(212) 792-9800
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Office)
-----------------------------
TIMOTHY R. GRAHAM
EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
WINSTAR COMMUNICATIONS, INC.
685 THIRD AVENUE
NEW YORK, NEW YORK 10017
(212) 792-9800
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
-----------------------------
Copies to:
DAVID ALAN MILLER, ESQ.
GRAUBARD MOLLEN & MILLER
600 THIRD AVENUE
NEW YORK, NEW YORK 10016
TELEPHONE: (212) 818-8800
FAX: (212) 818-8881
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after the effective date of this Registration Statement.
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. [X]
================================================================================
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
TITLE OF EACH CLASS OF PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common stock, par value $.01 (1) (1) (2) (1)(3) (4)
per share(1)
-------------------------------------------------------------------------------------------------------------
Preferred stock, par value $01 (1) (1) (2) (1)(3) (4)
per share(1)
-------------------------------------------------------------------------------------------------------------
Debt securities(1) (1) (1) (2) (1)(3) (4)
-------------------------------------------------------------------------------------------------------------
Depositary shares representing (1) (1) (2) (1)(3) (4)
preferred stock(1)(5)
-------------------------------------------------------------------------------------------------------------
Total $2,000,000,000 $528,000
-------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents an indeterminate number of shares of our common stock,
preferred stock, debt securities and depositary shares as may be issued
from time to time at indeterminate prices, but with an aggregate
initial offering price not to exceed $2,000,000,000, plus an
indeterminate number of shares of common stock and preferred stock as
may be issued in exchange for, or upon conversion of, debt securities
or preferred stock registered under this registration statement. If
debt securities are issued at original issue discount, this amount
shall be increased so that the net proceeds we receive will be equal to
the amount being registered.
(2) Omitted pursuant to General Instruction II.D of Form S-3.
(3) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o). Any offering of debt securities denominated in
any foreign currency or currency unit will be treated as the equivalent
in U.S. dollars based on the exchange rate applicable to the purchase
of the debt securities.
(4) Calculated pursuant to Rule 457(o) of the rules and regulations under
the Securities Act of 1933, as amended.
(5) To be represented by depositary receipts representing an interest in
all or a specified portion of a share of common or preferred stock.
The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, 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.
EXPLANATORY NOTE
This registration statement consists of two separate prospectuses,
covering:
(1) common stock, preferred stock, debt securities and depository
shares of Winstar Communications, Inc.; and
(2) common stock to be issued under a direct stock purchase plan of
Winstar Communications, Inc.
<PAGE>
PRELIMINARY PROSPECTUS
SUBJECT TO COMPLETION, DATED AUGUST __, 2000
WINSTAR COMMUNICATIONS, INC.
$2,000,000,000 of common stock, preferred stock, debt securities
and depositary shares
By this prospectus, we will offer and sell from time to time our common
stock, preferred stock, debt securities or depositary shares. We will provide
the specific terms of these securities in supplements to this prospectus. You
should read this prospectus and any supplements carefully before you invest.
We expect to use the net proceeds from the sale of shares of common
stock, preferred stock, debt securities or depositary shares to fund working
capital, capital expenditures, operating losses and other general corporate
purposes, including acquisitions and investments.
--------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved 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 ________________, 2000
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 IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
</TABLE>
2
<PAGE>
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with
the Securities and Exchange Commission using a "shelf" registration process.
Under this shelf process, we may, from time to time, sell any combination of the
securities described in this prospectus in one or more offerings up to a total
dollar amount of $2,000,000,000 or the equivalent of this amount in foreign
currencies.
This prospectus provides you with a general description of the
securities we may offer. Each time we sell securities, we will provide a
prospectus supplement that will contain specific information about the terms of
that offering. The prospectus supplement may also add, update or change
information contained in this prospectus. You should read both this prospectus
and any prospectus supplement, together with the additional information
described below under the heading "Where You Can Find More Information."
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement on Form S-3 under the Securities
Act of 1933, as amended, with the SEC. This prospectus is part of that
registration statement and does not contain all of the information included in
the registration statement. For further information about us and our securities,
you may refer to the registration statement and its exhibits and schedules as
well as the documents described below. You can review and copy these documents
at the public reference facilities maintained by the SEC or on the SEC's website
as described below.
We also file annual, quarterly and special reports, proxy statements
and other information with the SEC. Our SEC filings are available to the public
over the Internet at the SEC's web site at http://www.sec.gov. You may also read
and copy any document we file at the SEC's public reference room at 450 Fifth
Street, N.W., Washington, D.C. 20549. These documents are also available at the
public reference rooms at the SEC's regional offices in New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available at the offices
of the Nasdaq National Market in Washington, D.C.
The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. This
prospectus incorporates by reference our documents listed below and any future
filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934:
o Annual Report on Form 10-K, as amended, for the year ended
December 31, 1999;
o Quarterly Report on Form 10-Q filed May 15, 2000;
o Proxy Statement for the Annual Meeting of Stockholders held on
June 28, 2000, filed May 23, 2000;
3
<PAGE>
o Current Report on Form 8-K, filed June 1, 2000; and
o The description of our common stock contained in our registration
statement on Form 8-A, as amended (File No. 1-10726), under the
Exchange Act.
We will provide any person to whom a prospectus is delivered a copy of
any and all of the documents incorporated in this prospectus by reference upon
their written or oral request. If you desire any of these documents, please
contact us as at Winstar Communications, Inc., 685 Third Avenue, New York, New
York, 10017, Attention: Investor Relations, 212-792-9800.
NOTE ON FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements. These
forward-looking statements include statements about our plans, objectives,
expectations, intentions and assumptions and other statements contained in this
prospectus that are not statements of historical fact. You can identify these
statements by words such as "may," "will," "should," "estimates," "plans,"
"expects," "believes," "intends" and similar expressions. We cannot guarantee
future results, levels of activity, performance or achievements. Our actual
results and the timing of certain events may differ significantly from the
results discussed in the forward-looking statements. Factors that may cause
actual results to differ materially from those contemplated by the
forward-looking statements include, without limitation:
o our ability to service our debt or to obtain financing for the
buildout of our domestic and international telecommunications
networks;
o our ability to attract and retain a sufficient revenue-generating
customer base;
o competitive pressures in the telecommunications and technology
industries;
o general economic conditions in the markets in which we operate;
o other risks detailed from time to time in or filings with the
Commission; and
o those items identified under "Risk Factors" in any prospectus
supplement.
We do not undertake to update or revise our forward-looking statements
or risk factors to reflect future events or circumstances.
4
<PAGE>
WINSTAR'S BUSINESS
We provide our customers with broadband services. These services
include traditional telephone service, high-speed Internet access and data
transmission, web design and hosting applications, professional services and
Office.com('r'), a Service From Winstar, the top-ranked online business service
for small- and medium-sized businesses. We offer a comprehensive suite of these
services across our own end-to-end broadband network in the top 60 markets in
the United States. We also offer services in 12 overseas markets, including
Amsterdam, Brussels, Buenos Aires, London and Tokyo.
We are also rapidly building a widely available broadband network which
we believe will enable us to offer broadband services to a majority of the
business market in the United States. The market for broadband services is
projected to grow from approximately $178.0 billion in 1999 to approximately
$360.0 billion by 2009. Our domestic network combines local and long-haul
capacity with voice and data switching facilities and is capable of carrying a
substantial portion of our customers' communications traffic from point of
origin to point of termination.
CORPORATE INFORMATION
We were incorporated under the laws of the State of Delaware in
September 1990. Our principal executive offices are located at 685 Third Avenue,
New York, New York 10017 and our telephone number is (212) 792-9800.
RISK FACTORS
Potential investors are urged to read and consider the risk factors
relating to an investment in Winstar set forth in our SEC filings, including our
Annual Report on Form 10-K for the year ended December 31, 1999, as amended.
RATIO OF EARNINGS TO FIXED CHARGES
For the ten months ended December 31, 1995, the years ended December
31, 1996, 1997, 1998 and 1999 and the three months ended March 31, 1999 and
2000, earnings from continuing operations were insufficient to cover fixed
charges by approximately $13.3 million, $80.1 million, $240.2 million, $427.0
million, $665.8 million, $154.3 million and $160.9 million, respectively. On a
pro forma basis, earnings from continuing operations were insufficient to cover
fixed charges by approximately $789.2 million and $176.5 million for the year
ended December 31, 1999 and the three months ended March 31, 2000, respectively.
USE OF PROCEEDS
Unless otherwise indicated in the applicable prospectus supplement, the
net proceeds from the sale of shares of common stock, preferred stock, debt
securities or depositary shares will be used to fund working capital, capital
expenditures, operating losses and other general corporate purposes, including
acquisitions and investments.
5
<PAGE>
DESCRIPTION OF SHELF SECURITIES
This prospectus is part of a shelf registration statement. Under this
shelf registration statement, we may offer from time to time up to
$2,000,000,000 of any of the following securities, either separately or in
combination with each other:
o Common stock;
o Preferred stock;
o Debt securities, including senior debt, senior subordinated debt
and subordinated debt; and
o Depositary shares.
The following is a general description of each type of security that we may
issue and sell.
COMMON STOCK
We may elect to issue, either separately or together with other
securities, shares of our common stock. Under our certificate of incorporation,
we are authorized to issue up to 400,000,000 shares of our common stock.
Holders of our common stock are entitled to one vote for each share
held of record on all matters submitted to a vote of stockholders. Cumulative
voting is not permitted. Subject to preferences of any preferred stock, holders
of our common stock are entitled to receive dividends as may be declared by our
board of directors. In the event of a liquidation or dissolution, holders of our
common stock are entitled to share in all assets remaining after payment of
liabilities and liquidation preference of our preferred stock. Holders of our
common stock have no preemptive rights. They also have no rights to convert
their common stock into any other securities. There are no redemption or sinking
fund provisions applicable to the common stock. All shares of common stock
offered will, when issued, be fully paid and nonassessable.
Our common stock is listed for trading on the Nasdaq National Market
System under the symbol "WCII."
PREFERRED STOCK
We may elect to issue a series of preferred stock. Our certificate of
incorporation and the Delaware General Corporation Law give our board of
directors the authority, without further stockholder action, to issue a maximum
of 30,000,000 shares of preferred stock.
Our board of directors has the authority to create one or more series
of preferred stock, to issue shares of preferred stock up to the maximum number
of shares of preferred stock authorized, and to determine the preferences,
rights, privileges and restrictions of any series,
6
<PAGE>
including the dividend rights, voting rights, rights and terms of redemption,
liquidation preferences, the number of shares constituting any such series and
the designation of such series.
The applicable prospectus supplement will describe the terms of any
preferred stock being offered, including:
o the number of shares and designation or title of the shares;
o any liquidation preference per share;
o any date of maturity;
o any redemption, repayment or sinking fund provisions;
o any dividend rate or rates payable with respect to the shares;
o any voting rights;
o the terms and conditions upon which the preferred stock is
convertible or exchangeable, if it is convertible or exchangeable;
o any conditions or restrictions on the creation of indebtedness by
us or upon the issuance of any additional stock; and
o any additional voting, dividend, liquidation, redemption and other
rights, preferences, privileges, limitations and restrictions.
All shares of preferred stock offered will, when issued, be fully paid
and non-assessable. Any shares of preferred stock that are issued will have
priority over the common stock with respect to dividend or liquidation rights or
both.
DEBT SECURITIES
We may elect to issue debt securities, either separately or together
with, or upon the conversion of or in exchange for, other securities. The debt
securities are to be issued in one or more series. Each series of debt
securities will be issued pursuant to an indenture, to be entered into by us and
a trustee, who will be legally obligated to carry out the terms of the
indenture. The name(s) of the trustee(s) will be set forth in the applicable
prospectus supplement. We may issue all the debt securities under the same
indenture or under separate indentures, as specified in the applicable
prospectus supplements.
We expect that the indentures governing our debt securities will
contain a number of fairly standard provisions, which are summarized below. The
summary is not complete and particular terms may vary from indenture to
indenture or not be included in a specific indenture. Each indenture will be
filed as an exhibit to the registration statement of which this prospectus is a
part at the time of issuance of the applicable prospectus supplement or will be
incorporated by
7
<PAGE>
reference into the prospectus supplement. The indentures will be subject to and
governed by the Trust Indenture Act of 1939, as amended. You should refer to the
applicable indenture for the provisions which may be important to you.
General
We may issue debt securities up to an aggregate principal amount as we
may authorize from time to time and as limited by the applicable indenture. The
applicable prospectus supplement will describe the terms of any debt securities
being offered, including:
o the designation, aggregate principal amount and authorized
denominations;
o the maturity date;
o the interest rate, if any, and the method for calculating the
interest rate;
o the interest payment dates and the record dates for the interest
payments;
o any mandatory or optional redemption terms or prepayment,
conversion, sinking fund or exchangeability or convertibility
provisions;
o the places where the principal and interest will be payable;
o if other than denominations of $1,000 or multiples of $1,000, the
denominations the debt securities will be issued in;
o whether the debt securities will be issued in the form of global
securities, as defined below, or certificates;
o additional provisions, if any, relating to the defeasance and
covenant defeasance of the debt securities;
o whether the debt securities will be senior debt securities, senior
subordinated debt securities or subordinated debt securities and,
if senior subordinated debt securities or subordinated debt
securities, the subordination provisions and the applicable
definition of "senior indebtedness";
o any applicable material federal tax consequences;
o the dates on which premium, if any, will be payable;
o our right, if any, to defer payment of interest and the maximum
length of the deferral period;
o any listing on a securities exchange;
8
<PAGE>
o if convertible into common stock or preferred stock, the terms on
which the debt securities are convertible;
o the terms of any guarantee of the payment of principal of, and
premium, if any, and interest on debt securities of the series and
any corresponding changes to the provisions of the indenture as
currently in effect;
o the terms of the transfer, mortgage, pledge, or assignment as
security for the debt securities of the series of any properties,
assets, moneys, proceeds, securities or other collateral,
including whether certain provisions of the Trust Indenture Act
are applicable, and any corresponding changes to provisions of the
indenture as currently in effect;
o the initial public offering price; and
o other specific terms.
We may issue debt securities where the purchase price or amount of
principal or premium or interest, if any, payable is denominated in a foreign
currency. In that case, the restrictions, elections, general tax considerations,
specific terms and other information with respect to the debt securities and the
foreign currency will be set forth in the applicable prospectus supplement.
We will comply with Section 14(e) under the Securities Exchange Act, to
the extent applicable, and any other tender offer rules under the Exchange Act
which may then be applicable, in connection with any obligation we might have to
purchase debt securities at the option of the holders. Any obligation applicable
to a series of debt securities will be described in the applicable prospectus.
We may issue debt securities as original issue discount securities to
be sold at a substantial discount below their principal amount. Original issue
discount securities may include zero coupon securities that do not pay any cash
interest for the entire term of the securities. The amount payable to the holder
of an original issue discount security upon an acceleration will be determined
in the manner described in the applicable prospectus supplement. Conditions
pursuant to which principal payments on the debt securities may be accelerated,
as well as any material federal income tax and other considerations applicable
to original issue discount securities, will be set forth in the applicable
prospectus supplement.
Unless otherwise indicated in the applicable prospectus supplement, the
terms of any series of debt securities may differ and we may, without the
consent of the holders of any of the debt securities, reopen a previous series
of debt securities and issue additional debt securities or establish additional
terms for the series.
9
<PAGE>
Covenants
Under the indentures, we will be required to:
o pay the principal, interest and any premium on the debt securities
when due;
o maintain a place of payment;
o deliver a report to the trustee(s) at the end of each fiscal year
reviewing our obligations under the indentures; and
o deposit sufficient funds with any paying agent on or before the
due date for any principal, interest or premium.
Any additional covenants will be described in the applicable prospectus
supplement.
Registration, transfer, payment and paying agent
Unless otherwise indicated in a prospectus supplement, each series of
debt securities will be issued in registered form only, without coupons, and
will be issued in denominations of $1,000 or any integral multiple.
Unless otherwise indicated in a prospectus supplement, the principal of
the debt securities and any applicable premium or interest will be payable, and
debt securities may be surrendered for registration of transfer or exchange, at
an office or agency to be maintained by us in the Borough of Manhattan, The City
of New York. Payments of interest with respect to any registered security,
however, may be made at our option by check mailed to the address of the person
entitled to payment or by transfer to an account maintained by the payee with a
bank located in the United States. No service charge shall be made for any
registration of transfer or exchange of debt securities, but we may require
payment of a sum sufficient to cover any tax or other governmental charge and
any other expenses that may be imposed in connection with the exchange or
transfer.
Unless otherwise indicated in the applicable prospectus supplement, we
will not be required to:
o issue, register the transfer of or exchange debt securities of any
series during a period beginning at the opening of business
fifteen days before any selection of debt securities of that
series of like tenor to be redeemed and ending at the close of
business on the day of that selection;
o register the transfer of or exchange any registered security
called for redemption, except the unredeemed portion of any
registered security being redeemed in part; or
10
<PAGE>
o issue, register the transfer of or exchange any debt security
which has been surrendered for repayment at the option of the
holder, except the portion, if any, of the debt security not to be
repaid.
Ranking
We will issue debt securities as either senior debt securities, senior
subordinated debt securities, or subordinated debt securities. The senior debt
securities will be our senior unsubordinated obligations and will rank equally
in right of payment with all other unsubordinated indebtedness of ours. The
senior subordinated debt securities and subordinated debt securities will be our
general obligations and will be subordinated in right of payment to all existing
and future senior indebtedness. The prospectus supplement will describe the
subordination provisions and set forth the definition of senior indebtedness
applicable to the senior subordinated debt securities or subordinated debt
securities, as the case may be, and the approximate amount of the senior
indebtedness outstanding as of a recent date.
Global debt securities
The debt securities of a series may be issued in whole or in part in
the form of one or more global securities that will be deposited with, or on
behalf of, a depositary identified in the applicable prospectus supplement.
Global debt securities may be issued in either registered or bearer form and in
either temporary or permanent form. Unless and until it is exchanged in whole or
in part for individual certificates evidencing debt securities, a global debt
security may not be transferred except as a whole:
o by the depositary to a nominee of the depositary;
o by a nominee of the depositary to the depositary or another
nominee of the depositary; or
o by the depositary or any nominee to a successor of the depositary
or a nominee of the successor.
The specific terms of the depositary arrangement with respect to a
series of global debt securities will be described in the prospectus supplement.
Outstanding debt securities
In determining whether the holders of the requisite principal amount of
outstanding debt securities have given any request, demand, authorization,
direction, notice, consent or waiver under the relevant indenture, the amount of
outstanding debt securities will be calculated based on the following:
o the portion of the principal amount of an original issue discount
security that shall be deemed to be outstanding shall be the
portion of the principal amount that could
11
<PAGE>
be declared to be due and payable upon a declaration of
acceleration pursuant to the terms of the original issue discount
security as of the date of the determination;
o the principal amount of a debt security denominated in a currency
other than U.S. dollars shall be the U.S. dollar equivalent of the
debt security's principal amount, determined on the date of its
original issue; and
o any debt security owned by us, an affiliate of ours or any obligor
shall be deemed not to be outstanding.
Redemption and repurchase
The debt securities may be redeemable at our option, may be subject to
mandatory redemption pursuant to a sinking fund or otherwise, or may be subject
to repurchase by us at the option of the holders. In each case, the redemption
or repurchase will be upon the terms, at the times and at the prices set forth
in the applicable prospectus supplement.
Conversion and exchange
The terms, if any, on which any series of debt securities is
convertible into or exchangeable for common stock, preferred stock or other debt
securities will be set forth in the applicable prospectus supplement. These
terms may include provisions for conversion or exchange, either mandatory, at
the option of the holders or at our option.
Limitation on indebtedness and liens
The applicable prospectus supplement will specify any prohibitions on
the amount of indebtedness, guarantees or other liabilities that we may incur
and any prohibitions on our ability to create or assume liens on our property.
Unless otherwise provided in a prospectus supplement, the indentures will not
require us to maintain any financial ratios or specified levels of net worth,
revenues, income, cash flow or liquidity. The indentures may contain provisions
that would give holders of the debt securities the right to require us to
repurchase their debt securities in the event of a takeover, recapitalization or
similar restructuring or change in our control.
Consolidation, merger and sale of assets
The indentures generally limit our ability to consolidate or merge with
another corporation or sell, assign, transfer, lease or otherwise dispose of all
or substantially all of our property and assets without protecting the debt
holders in an appropriate manner. This protection could include mandatory
repayment or requiring the surviving or acquiring corporation to assume all of
our responsibilities and liabilities under the indentures.
12
<PAGE>
Limitation on certain subsidiary stock sales and distributions
The indentures may limit the ability of our subsidiaries to sell stock
to third parties. The indentures also may limit the ability of our subsidiaries
to pay dividends or make other distributions or asset transfer to Winstar, as
the holding company of the subsidiaries, and to other subsidiaries.
Limitation on transactions with affiliates
The indentures generally will limit our ability to enter into
transactions with our subsidiaries and our directors, officers and other
affiliates unless the terms of any such transaction on our terms no less
favorable than those that could be obtained from third parties and unless such
transaction meets other criteria.
Events of default
Unless otherwise specified in the applicable prospectus supplement,
each of the following would constitute an event of default, as defined in the
indentures, with respect to the debt securities of any series:
o failure to pay the principal of any debt security of a series when
due upon maturity, redemption, repurchase at the option of the
holder or otherwise;
o failure to pay interest on any debt security of a series when due
and the default continues for a period of time to be specified in
the applicable prospectus supplement;
o failure to make a deposit of any sinking fund payment when due;
o the breach of, or our failure to perform, any other covenant or
warranty in the indenture, other than a covenant or warranty
included solely for the benefit of other series of debt
securities. This will only constitute an event of default,
however, if the default has not been cured for a period to be
specified in the applicable prospectus supplement after notice to
us by the applicable trustee(s) or the holders of not less than a
fixed percentage in aggregate principal amount of the debt
securities of all series issued under the applicable indenture;
o certain events of bankruptcy, insolvency or reorganization; or
o any other event of default that may be set forth in the applicable
prospectus supplement, including, but not limited to, an event of
default based on other debt being accelerated.
An event of default with respect to one series of debt securities does
not necessarily constitute an event of default with respect to any other series
of debt securities. Each indenture will provide that the trustee(s) may withhold
notice of the occurrence of a default, other than a
13
<PAGE>
default in payment of principal or of any applicable premium, interest, or of
sinking fund payments, if the trustee(s) considers it in the interest of the
holders to do so.
Each indenture will provide that if an event of default with respect to
any series of debt securities shall have occurred and is continuing, either the
relevant trustee or the holders of at least a fixed percentage in principal
amount of the debt securities then outstanding may declare the principal amount,
or in the case of original issue discount securities, such lesser amount as may
be specified in the applicable prospectus supplement, of all the debt securities
of such series to be due and payable immediately. Under certain conditions, such
a declaration and its consequences may be rescinded and annulled by the holders
of a majority in principal amount of the debt securities of all series issued
under the applicable indenture.
The applicable prospectus supplement will provide the terms pursuant to
which an event of default shall result in acceleration of the payment of
principal of senior subordinated debt securities or subordinated debt
securities.
In the case of a default in the payment of principal or of any
applicable premium or interest on any senior subordinated or subordinated debt
securities, the applicable trustee, subject to certain limitations and
conditions, may institute a judicial proceeding for collection.
No holder of any debt securities has a right to institute a proceeding
with respect to the indenture or any of its remedies unless:
o the holders of at least a fixed percentage in principal amount of
the outstanding debt securities of the series have made written
request, and offered reasonable indemnity, to the trustee(s) to
institute the proceeding as trustee(s),
o the trustee(s) has failed to institute the proceeding within 60
days after receipt of the notice, and
o the trustee(s) has not within the 60-day period received
directions inconsistent with the holders' written request.
Such limitations do not apply, however, to a suit instituted by a holder of a
debt security for the enforcement of the payment of the principal, interest or
premium on the debt security on or after the respective due dates expressed in
the debt security.
During the existence of an event of default under an indenture, the
trustee(s) is required to exercise the rights and powers vested in it under the
indenture and use the same degree of care and skill in its exercise as a prudent
person would exercise under the circumstances in the conduct of such person's
own affairs. Subject to the provisions of the indenture relating to the duties
of the trustee, if an event of default shall occur and be continuing, the
trustee(s) is not under any obligation to exercise any of its rights or powers
under the indenture at the request or direction of any of the holders unless the
holders have offered to the trustee(s) reasonable security or indemnity. Subject
to certain provisions concerning the rights of the trustee(s), the holders of a
majority in principal amount of the outstanding debt securities of any series
have the right to
14
<PAGE>
direct the time, method and place of conducting any proceeding for any remedy
available to the trustee(s), or exercising any trust, or power conferred on the
trustee(s).
Each indenture will provide that the trustee(s) will, within five
business days after the occurrence of any default, give notice of the default to
the holders of the defaulted debt securities, unless the default shall have been
cured or waived. The trustee(s) will be protected, however, in withholding
notice if it determines in good faith that withholding the notice was in the
interest of the holders, with the exception of defaults in payment of principal
or of any applicable interest or premium.
We are required to provide the trustee(s) with annual statements as to
our compliance with all conditions and covenants under the indentures.
Modification and waivers
When authorized by resolutions of our board of directors, and the
trustee(s), we may amend, waive or supplement the indentures and the relevant
debt securities without the consent of the holders for certain specified
purposes, including, among other things:
o to cure ambiguities, defects or inconsistencies;
o to provide for the assumption of our obligations in the case of a
merger or consolidation;
o to add to our events of default or our covenants or to make any
change that would provide any additional rights or benefits to the
holders of the debt securities;
o to establish the form or terms of debt securities of any series
and any related coupons;
o to add guarantors;
o to secure the debt securities;
o to maintain the qualification of the indenture under the Trust
Indenture Act; or
o to make any change that does not adversely affect the rights of
any holder.
Other amendments and modifications of the indentures or the relevant
debt securities may be made by us and the trustee(s) with the consent of the
holders of not less than a majority of the aggregate principal amount of the
outstanding debt securities of each series that is affected, with each series
voting as a separate class. We cannot modify or amend the indentures or the
relevant debt securities to do any of the following without the consent of the
holder of each outstanding debt security that is affected:
15
<PAGE>
o reduce the principal amount of, or extend the fixed maturity of
the debt securities, or alter or waive any redemption, repurchase
or sinking fund provisions of the debt securities;
o reduce the amount of principal of any original issue discount
securities that would be due and payable upon an acceleration of
its maturity;
o change the currency in which any debt securities or any premium or
accrued interest is payable;
o reduce the percentage in principal amount outstanding of debt
securities of any series which must consent to an amendment,
supplement or waiver or consent to take any action under the
indenture or the debt securities;
o impair the right to institute suit for the enforcement of any
payment on or with respect to the debt securities;
o waive a default in payment with respect to the debt securities or
any guarantee;
o reduce the rate or extend the time for payment of interest on the
debt securities;
o adversely affect the ranking of the debt securities of any series;
o release any guarantor from any of its obligations under its
guarantee or the indenture, except in compliance with the terms of
the indenture; or
o solely in the case of a series of senior subordinated debt
securities or subordinated debt securities, modify any of the
applicable subordination provisions or the applicable definition
of senior indebtedness in a manner adverse to any holders.
The holders of a majority in aggregate principal amount of the
outstanding debt securities of any series may waive compliance by us with
certain restrictive provisions of the applicable indenture to the extent set
forth in the applicable prospectus supplement. The holders of a majority in
aggregate principal amount of the outstanding debt securities of any series may,
on behalf of all holders of debt securities of that series, waive any past
default under the applicable indenture with respect to debt securities of that
series and its consequences, except a default in the payment of the principal of
or of any applicable premium or interest on any debt securities of the series or
in respect of a covenant or provision which cannot be modified or amended
without the consent of a larger fixed percentage.
Discharge, defeasance and covenant defeasance
When we establish a series of debt securities, we may provide that the
series is subject to the defeasance and discharge provisions of the applicable
indenture. If those provisions are made applicable, we may elect to either:
16
<PAGE>
o defease and be discharged from, subject to some limitations, all
of our obligations with respect to those debt securities; or
o be released from our obligations to comply with specified
covenants relating to those debt securities as described in the
applicable prospectus supplement.
To effect a defeasance or covenant defeasance, we must irrevocably
deposit in trust with the relevant trustee an amount in any combination of funds
or government obligations, which, through the payment of principal and interest
in accordance with their terms, will provide money sufficient to make payments
on those debt securities and any mandatory sinking fund or analogous payments on
those debt securities. We will not be released from any obligations that are
specified in the applicable prospectus supplement.
To establish this trust, we must, among other things, deliver to the
relevant trustee an opinion of counsel to the effect that the holders of those
debt securities:
o will not recognize income, gain or loss for U.S. federal income
tax purposes as a result of the defeasance or covenant defeasance;
and
o will be subject to U.S. federal income tax on the same amounts, in
the same manner and at the same times as would have been the case
if the defeasance or covenant defeasance had not occurred. In the
case of defeasance, the opinion of counsel must be based upon a
ruling of the IRS or a change in applicable U.S. federal income
tax law occurring after the date of the applicable indenture.
If we effect a covenant defeasance with respect to any debt securities,
and the debt securities are declared due and payable because of the occurrence
of an event of default or with respect to some other breach, the amount of
deposit with the relevant trustee may not be sufficient to pay amounts due on
the debt securities at the time of any acceleration. However, we would remain
liable to make payment of the amounts due at the time of acceleration.
The applicable prospectus supplement may further describe the
provisions, if any, permitting defeasance or covenant defeasance, including any
modifications to the provisions described above.
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.
Regarding the trustees
The Trust Indenture Act contains limitations on the rights of a
trustee, should it become a creditor of ours, to obtain payment of claims or to
realize on certain property received by it in respect of any claims, as security
or otherwise. Each trustee is permitted to engage in other transactions with us
and our subsidiaries from time to time, provided that if the trustee acquires
17
<PAGE>
any conflicting interest, it must either eliminate the conflict upon the
occurrence of an event of default under the relevant indenture or resign as
trustee.
DEPOSITARY SHARES
We may elect to issue depositary receipts evidencing depositary shares.
Each depositary share will represent a fraction of a share of common or
preferred stock. Shares of common stock and each class or series of preferred
stock represented by depositary shares will be deposited under a separate
deposit agreement among us, the depositary for the common or preferred stock and
the holders of the depositary receipts. Subject to the terms of the deposit
agreement, each owner of a depositary receipt will be entitled, in proportion to
the fraction of a share of common or preferred stock represented by the
depositary shares evidenced by the depositary receipt, to all the rights and
preferences of the common or preferred stock represented by the depositary
shares. In the case of shares of preferred stock represented by depositary
shares, our board of directors determine the preferences, rights, privileges and
restrictions of any class or series of preferred stock, including the dividend
rights, voting rights, rights and terms of redemption or conversion, liquidation
preferences, the number of shares constituting any such class or series and the
designation of such class or series. Immediately following the issuance and
delivery of the common or preferred stock to the applicable depositary, we will
cause the depositary to issue the depositary receipts on our behalf.
We expect that the deposit agreements, the depositary shares and the
receipts representing depositary shares will contain a number of fairly standard
provisions, which are summarized below. The summaries are not complete and
particular terms may vary from each issue of depositary shares. Each deposit
agreement will be filed as an exhibit to the registration statement of which
this prospectus is a part at the time of issuance of the applicable prospectus
supplement or will be incorporated by reference into the prospectus supplement.
You should refer to the applicable deposit agreement for the provisions which
may be important to you.
If depositary shares are offered, the applicable prospectus supplement
will describe the terms of the depositary shares, the deposit agreement and the
depositary receipts, where applicable, including the following:
o the payment of dividends or other cash distributions to the
holders of depositary receipts when dividends or other cash
distributions are made with respect to the common or preferred
stock;
o the voting by a holder of depositary shares of the common or
preferred stock underlying the depositary shares at any meeting
called for that purpose;
o if applicable, the redemption of depositary shares upon a
redemption by us of shares of preferred stock held by the
preferred stock depositary;
o if applicable, the exchange of depositary shares upon an exchange
by us of shares of preferred stock held by the preferred stock
depositary for debt securities or common stock;
18
<PAGE>
o if applicable, the conversion of the shares of preferred stock
underlying the depositary shares into shares of our common stock,
other shares of our preferred stock or our debt securities;
o the terms upon which the deposit agreement may be amended and
terminated;
o a summary of the fees to be paid by us to the applicable
depositary;
o the terms upon which a depositary may resign or be removed by us;
and
o any other terms of the depositary shares, the deposit agreement
and the depositary receipts.
If a holder of depositary receipts surrenders the depositary receipts
at the corporate trust office of the applicable depositary, other than in the
case of a previous redemption, conversion or exchange, the holder will be
entitled to receive at this office the number of shares of common or preferred
stock and any money or other property represented by the depositary shares.
Holders of depositary receipts will be entitled to receive whole and, to the
extent provided by the applicable prospectus supplement, fractional shares of
the common or preferred stock on the basis of the proportion of the shares
represented by each depositary share as specified in the applicable prospectus
supplement. Holders of shares of common or preferred stock received in exchange
for depositary shares will no longer be entitled to receive depositary shares in
exchange for shares of common or preferred stock. If the holder delivers
depositary receipts evidencing a number of depositary shares that is more than
the number of depositary shares representing the number of shares of stock to be
withdrawn, the depositary will issue the holder a new depositary receipt
evidencing the excess number of depositary shares at the same time.
Prospective purchasers of depositary shares should be aware that
special tax, accounting and other considerations may be applicable to depositary
shares.
PLAN OF DISTRIBUTION OF SHELF SECURITIES
We may sell the shelf securities in any one or more of the following
ways:
o through underwriters or dealers;
o directly to a limited number of purchasers or to a single
purchaser; or
o through agents.
A prospectus supplement will set forth the terms of the offering of the
shelf securities, including:
19
<PAGE>
o the name or names of any underwriters and the respective amounts
of any securities underwritten or purchased by each of them;
o the initial public offering price and the proceeds we will
receive;
o any discounts, commissions or concessions allowed or paid to
dealers; and
o any securities exchanges on which the securities may be listed.
Only underwriters named in the prospectus supplement are deemed to be
underwriters in connection with the shelf securities offered.
If underwriters are used in the sale of any shelf securities, the
securities will be acquired by the underwriters for their own account and may be
resold 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. The securities may be either offered to the public through
underwriting syndicates represented by managing underwriters or by underwriters
without a syndicate. Unless otherwise set forth in the applicable prospectus
supplement, the obligations of the underwriters to purchase the securities will
be subject to certain conditions precedent and the underwriters will be
obligated to purchase all of a series if any are purchased. Any initial public
offering price and any discounts or concessions allowed or paid to dealers may
be changed from time to time.
The shelf securities may be sold directly by us or through agents
designated by us from time to time. Any agent involved in the offer or sale of
the securities in respect of which a prospectus supplement is delivered will be
named, and any commissions payable by us to such agent will be set forth, in the
prospectus supplement. Unless otherwise indicated in the prospectus supplement,
any agent will be acting on a best efforts basis for the period of its
appointment.
We may authorize underwriters, dealers or agents to solicit offers by
institutional investors, such as commercial banks and investment companies, to
purchase the shelf securities from us at the public offering price set forth in
the prospectus supplement pursuant to delayed delivery contracts providing for
payment and delivery on a specified date in the future. The conditions to these
contracts and the commissions payable for solicitation of the contracts will be
set forth in the applicable prospectus supplement.
Shelf securities other than common stock may be a new issue of
securities with no established trading market. Any underwriters to whom these
securities are sold by us for public offering and sale may make a market in the
securities, but the underwriters will not be obligated to do so and may
discontinue any market making at any time without notice. We cannot predict the
activity or liquidity of any trading in these securities.
Stockholders may sell their shares through various arrangements
involving mandatorily exchangeable securities, and this prospectus may be
delivered in conjunction with those sales.
20
<PAGE>
Agents and underwriters may be entitled to indemnification by us
against certain civil liabilities, including liabilities under the Securities
Act of 1933, or to contribution with respect to payments which the agents or
underwriters may be required to make in respect of their liabilities. Agents and
underwriters may be our customers, engage in transactions with us, or perform
services for us in the ordinary course of business.
DESCRIPTION OF CERTAIN OTHER INDEBTEDNESS AND STOCK
LUCENT FACILITY
In May 2000, our subsidiary, WVF-I LLC, entered into a new credit
facility with Lucent in an aggregate amount of $2.0 billion. This secured
facility replaced our former facility with Lucent. Up to $1.0 billion of our new
Lucent facility is available to us at any one time for the purchase of network
equipment and related services, of which we had borrowed $248.1 million as of
June 30, 2000. The balance will become available as the first $1.0 billion is
refinanced or syndicated. We and WCI Capital Corp., our subsidiary and the
borrower under the Bank facility described below, are guarantors of this
facility. Amounts borrowed under the facility are secured by a pledge of the
equity of WVF-I and any additional or substitute borrower thereunder and by a
purchase money security interest in the equipment financed under the Lucent
facility.
Interest on loans under the Lucent facility accrues at rates based on
the prime rate or LIBOR, as the borrower under the Lucent facility may elect,
plus an applicable margin. Amounts borrowed under the Lucent facility are to be
repaid in equal quarterly installments beginning on March 31, 2005 and ending on
the maturity of the facility on December 31, 2006. We are to pay an up front
commitment fee equal to a specified percentage of the amount borrowed and an
unused facility fee equal to a percentage of the unused available commitment.
At any time that outstanding loans under the Lucent facility exceed
$500.0 million, Lucent may request that we refinance such loans. If the loans
are not refinanced within a specified period after notice is given, among other
potential adjustments, the interest rate on the outstanding loans will be
increased by a specified percentage per year. Alternatively, after appropriate
notice is given, Lucent and its transferees are entitled under certain
circumstances to convert the loans outstanding under the Lucent facility into
notes of Winstar that will be identical, except for interest rates, to the
senior notes due 2010.
A portion of the proceeds of certain equity offerings by us are
required to be utilized to repay outstanding indebtedness under the Lucent
facility. The Lucent facility contains customary covenants restricting or
limiting our ability to engage in certain activities, including limitations on
debt, liens, investments, restricted payments, transactions with affiliates,
asset sales and dispositions and changes in corporate existence. At varying
times over the term of the Lucent facility, we are required to meet certain
financial, operational and network build out tests.
21
<PAGE>
BANK FACILITY
In May 2000, our subsidiary, WCI Capital Corp., entered into a $1.15
billion revolving credit and term loan agreement with a group of commercial
banks and other financial institutions. This Bank facility provides for a $300.0
million revolving credit facility and two term loans aggregating $850.0 million.
We and certain of our subsidiaries are guarantors under the agreement. We have
fully drawn down the available loans under the Bank facility and used the
proceeds to pay all of the outstanding loans under our former facility with
Lucent.
The Bank facility bears interest at rates based on the prime rate or
LIBOR, as the borrower under the Bank facility may elect, plus applicable
margins. The revolving line of credit will be reduced beginning on December 31,
2004 and is to be fully paid on March 31, 2007. The term loans are to be repaid
in quarterly payments commencing March 31, 2004 and ending on March 31, 2007 in
one instance and on September 30, 2007 in the other instance.
The amounts drawn under the Bank facility are secured by substantially
all of our current and future assets and certain of our subsidiaries, excluding
assets financed under the Lucent facility described above. The Bank facility
contains covenants similar to those governing the Lucent facility described
above.
2000 NOTES
We issued substantially all of our currently outstanding notes in April
and June 2000, as part of a plan of refinancing. The refinancing was comprised
of the new Lucent facility and the Bank facility discussed above and the
following transactions. We undertook the refinancing in order to simplify our
financial structure, provide us with additional capital and increase our
operational and financial flexibility.
Exchange offer
We issued approximately $362.2 million principal amount of our 12-3/4%
senior notes due 2010 and approximately $613.9 million principal amount at
maturity ($300.8 million initial principal amount) of our senior discount notes
due 2010 in exchange for:
o 100.0% of our outstanding 15% senior subordinated deferred
interest notes due 2007;
o 96.4% of our outstanding 10% senior subordinated notes due 2008;
and
o 99.9% of our outstanding 11% senior subordinated deferred interest
notes due 2008.
22
<PAGE>
Cash tender offer
We purchased for an aggregate of $753.3 million in cash:
o 97.0% of our outstanding 14% senior discount notes due 2005;
o 100.0% of our outstanding 14 1/2% senior deferred interest notes
due 2005;
o 99.8% of the outstanding 12 1/2% guaranteed senior secured notes
due 2004 of our subsidiary, Winstar Equipment Corp.; and
o 100.0% of the outstanding 12 1/2% guaranteed senior secured notes
due 2004 of our subsidiary, Winstar Equipment II Corp.
Private placement
We also completed a cash offering of $325.0 million aggregate principal
amount of our senior notes due 2008, an additional $168.3 million of our 12-3/4%
senior notes due 2010 and 'E'200 million aggregate principal amount of our
euro-denominated senior notes. The proceeds of this offering, together with
additional cash drawn from available funds, were used to partially fund the cash
tender offer.
Series C preferred stock exchange
As part of the refinancing, we entered into agreements with the holders
of 98.7% of our then outstanding Series C preferred stock to provide for the
conversion of that stock into our 14-1/4% senior subordinated deferred interest
notes due 2007 and then for the exchange by those holders of such notes for
senior notes due 2010 and senior discount notes due 2010. As a result of these
transactions, no shares of Series C preferred stock remain outstanding, $172.8
million principal amount of the 14-1/4% senior subordinated deferred interest
notes due 2007 was exchanged for $107.2 million principal amount of senior notes
and $313.0 million principal amount at maturity of senior discount notes and
$2.2 million principal amount of the 14-1/4% senior subordinated deferred
interest notes due 2007 remain outstanding.
Terms of new notes
Our notes issued in April and June 2000 were issued under indentures
between us and United States Trust Company of New York, as trustee. The
indentures contain the full legal text of the matters described in this section
and other matters. The indentures are subject to and governed by the Trust
Indenture Act of 1939. These notes have identical terms as the notes for which
they are being exchanged, except with respect to certain rights and penalties
relating to registration under the Securities Act.
23
<PAGE>
Principal, Maturity and Interest
Senior notes due 2008. The senior notes due 2008 will mature on April
15, 2008. Interest on these notes will accrue at the annual rate of 12-1/2% and
will be payable semiannually in arrears on April 15 and October 15, commencing
on October 15, 2000. We will make each interest payment to the holders of record
of the senior notes due 2008 on the immediately preceding April 1 and October 1.
We will pay interest on overdue principal at 1% per annum in excess of the above
rate and will pay interest on overdue installments of interest at such higher
rate to the extent lawful. Interest on the senior notes due 2008 will accrue
from the date of original issuance and will be computed on the basis of a
360-day year comprised of twelve 30-day months.
12-3/4% senior notes due 2010. The 12-3/4% senior notes due 2010 will
mature on April 15, 2010. Interest on these notes will accrue at the annual rate
of 12-3/4% and will be payable semiannually in arrears on April 15 and October
15, commencing on October 15, 2000. We will make each interest payment to the
holders of record of the 12-3/4% senior notes due 2010 on the immediately
preceding April 1 and October 1. We will pay interest on overdue principal at 1%
per annum in excess of the above rate and will pay interest on overdue
installments of interest at such higher rate to the extent lawful. Interest on
the 12-3/4% senior notes due 2010 will accrue from the date of original issuance
and will be computed on the basis of a 360-day year comprised of twelve 30-day
months.
Senior discount notes due 2010. The senior discount notes due 2010 will
mature on April 15, 2010. No cash interest will accrue on the senior discount
notes due 2010 prior to April 15, 2005, although, for U.S. Federal income tax
purposes, holders will recognize a significant amount of original issue
discount, or an original issue discount as it accrues. Interest on the senior
discount notes due 2010 will accrue at the annual rate of 14.75% from April 10,
2000. Cash interest on the senior discount notes due 2010 will be payable
semiannually in arrears on April 15 and October 15, commencing October 15, 2005.
We will make each interest payment to the holders of record of the senior
discount notes due 2010 on the immediately preceding April 1 and October 1
computed on the basis of a 360-day year of twelve 30-day months.
Euro-denominated notes. The principal, maturity and interest terms of
the euro- denominated notes are the same as the 12-3/4% senior notes due 2010.
Optional redemption
Senior notes due 2008. The senior notes due 2008 are not redeemable
prior to maturity.
12-3/4% senior notes due 2010, senior discount notes due 2010 and
euro-denominated notes. Except as set forth below, we will not be entitled to
redeem the 12-3/4% senior notes due 2010, the senior discount notes due 2010 or
the euro-denominated notes at our option prior to April 15, 2005. On and after
April 15, 2005, we will be entitled at our option to redeem all or a portion of
these notes upon not less than 30 nor more than 60 days' notice, at the
redemption prices, expressed in percentages of principal amount, or in the case
of senior discount notes, in percentages of accreted value on the redemption
date, plus accrued interest to the redemption
24
<PAGE>
date, subject to the right of holders of record on the relevant record date to
receive interest due on the relevant interest payment date, if redeemed during
the 12-month period commencing on April 15 of the years set forth below:
<TABLE>
<CAPTION>
12-3/4% senior notes due
2010 and euro-denominated Senior discount notes due
Redemption Period notes redemption price 2010 redemption price
----------------- ---------------------- ---------------------
<S> <C> <C>
2005.................................. 106.375% 107.375%
2006.................................. 104.250 104.917
2007.................................. 102.125 102.458
2008 and thereafter................... 100.000 100.000
</TABLE>
In addition, before April 15, 2003, we may at our option on one or more
occasions redeem the 12-3/4% senior notes due 2010, the senior discount notes
due 2010 and the euro- denominated notes (including additional notes of each
series, if any) in an aggregate principal amount not to exceed 35% of the
aggregate principal amount of the notes of each series (including additional
notes of each series, if any) originally issued at a redemption price, expressed
as a percentage of principal amount, or in the case of the senior discount notes
due 2010, expressed as a percentage of accreted value, of 112.750%, 114.750% and
112.750% for the 12-3/4% senior notes due 2010, the senior discount notes due
2010 and the euro-denominated notes, respectively, plus accrued and unpaid
interest to the redemption date, with the net cash proceeds from one or more
public equity offerings; provided, however, that
o at least 65% of the aggregate principal amount of 12-3/4% senior
notes due 2010, the senior discount notes due 2010 and the
euro-denominated notes (including additional notes of each series,
if any) remains outstanding immediately after the occurrence of
each such redemption, other than 12-3/4% senior notes due 2010,
the senior discount notes due 2010 and the euro-denominated notes
held, directly or indirectly, by us or our affiliates; and
o each redemption occurs within 90 days after the closing date of
the related public equity offering.
Selection and notice of redemption
If we are redeeming less than all of the 12-3/4% senior notes due 2010,
senior discount notes due 2010 or euro-denominated notes at any time, the
applicable trustee will select 12-3/4% senior notes due 2010, senior discount
notes due 2010 or euro-denominated notes, as the case may be, on a pro rata
basis, by lot or by such other method as that trustee, in its sole discretion,
shall deem to be fair and appropriate.
We will redeem notes of $1,000 (or 'E'1,000 in the case of the
euro-denominated notes) or less in whole and not in part. We will cause notices
of redemption to be mailed by first-class mail at least 30 but not more than 60
days before the redemption date to each holder of notes to be redeemed at its
registered address.
25
<PAGE>
If any note is to be redeemed in part only, the notice of redemption
that relates to that note shall state the portion of the principal amount to be
redeemed. We will issue a note in principal amount equal to the unredeemed
portion of the original note in the name of the holder upon cancellation of the
original note. Notes called for redemption become due on the date fixed for
redemption. On and after the redemption date, interest ceases to accrue on notes
or portions of them called for redemption.
No mandatory redemption
We are not required to make any mandatory redemption or sinking fund
payments with respect to the notes issued in April 2000. However, under certain
circumstances, we may be required to offer to purchase the notes.
Ranking
Senior Indebtedness versus new notes. The indebtedness evidenced by the
outstanding notes issued in April 2000 will rank pari passu in right of payment
to one another and to all of our senior indebtedness, including any 14% senior
discount notes due 2005 not tendered in the tender offer and our guaranty of
$323,000 principal amount of Winstar Equipment Corp.'s notes that remain
outstanding. As of March 31, 2000, after giving pro forma effect to the exchange
offer and consent solicitation, the private placement and the tender offer and
consent solicitation which occurred in April 2000, the borrowing of $1.15
billion under the Bank facility, the payment of outstanding debt under our
former facility with Lucent, and the Series C preferred stock exchange, our
senior indebtedness was approximately $2,771.2 million, of which $1,150.3
million was secured.
The notes issued in April 2000 are our unsecured obligations. Secured
debt and other secured obligations incurred by us from time to time, including
obligations with respect to the Lucent facility and the Bank facility will be
effectively senior to the outstanding notes to the extent of the value of the
assets securing such debt or other obligations.
Liabilities of subsidiaries versus new notes. We are a holding company.
Substantially all our operations are conducted through our subsidiaries. Claims
of creditors of our subsidiaries, including trade creditors and creditors
holding indebtedness or guarantees issued by our subsidiaries, and claims of
preferred stockholders of our subsidiaries generally will have priority with
respect to the assets and earnings of our subsidiaries over the claims of our
creditors, including holders of the outstanding notes. Accordingly, the notes
issued on April 2000 will be effectively subordinated to creditors, including
trade creditors, and preferred stockholders, if any, of our subsidiaries.
At March 31, 2000, after giving effect to the exchange offer, private
placement and tender offer consummated in April 2000, the Series C preferred
stock exchange, the Bank facility and the repayment of outstanding debt under
our former Lucent facility, our subsidiaries had approximately $1,843.4 million
of liabilities (excluding intercompany payables to us and each other), including
$1,415.0 million of indebtedness. Although the indentures governing the notes
issued in April 2000 limit the incurrence of indebtedness and preferred stock of
certain of our
26
<PAGE>
subsidiaries, such limitations are subject to a number of significant
qualifications. Moreover, the indentures do not impose any limitation on the
incurrence by such subsidiaries of liabilities that are not considered
indebtedness under the indentures.
Certain Covenants
The indentures governing the outstanding notes issued in April 2000
contain covenants that limit our ability to, among other things:
o incur additional indebtedness;
o create liens;
o engage in sale-leaseback transactions;
o pay dividends or make distributions in respect of our capital
stock;
o redeem capital stock;
o make various types of investments and other restricted payments;
o sell assets;
o issue or sell stock of our restricted subsidiaries; and
o enter into transactions with stockholders or affiliates or effect
a consolidation or merger.
These covenants are subject to important exceptions and qualifications, which
are described in detail in the indentures.
The indentures governing our other notes which were not acquired in the
tender offer or the exchange offer were amended to eliminate similar covenants.
Defaults
Each of the following would constitute an event of default with respect
to the outstanding notes issued in April 2000:
o a default in the payment of interest on the notes of any series
when due, continued for 30 days;
o a default in the payment of principal of any note of any series
when due at its stated maturity, upon optional redemption, upon
required purchase, upon declaration or otherwise;
27
<PAGE>
o the failure by us to comply with our obligations respecting merger
and consolidation transactions;
o certain events of bankruptcy, insolvency or reorganization of ours
or to certain of our subsidiaries;
o indebtedness of us or certain of our subsidiaries that is not paid
within any applicable grace period after final maturity or is
accelerated by the holders thereof because of a default and the
total amount of such indebtedness unpaid or accelerated exceeds
$25.0 million (the "cross acceleration provision");
o any judgment or decree for the payment of money in excess of $25.0
million is entered against us or to certain of our subsidiaries,
remains outstanding for a period of 60 consecutive days following
such judgment and is not discharged, waived or stayed;
o the failure by us to comply for 60 days after notice with our
other agreements contained in the applicable indenture; or
o the failure by us to comply for 30 days after notice with any of
our obligations with respect to change of control events (other
than a failure to purchase the outstanding notes) or with respect
to various other covenants.
However, a default under the last three clauses will not constitute an event of
default until the applicable trustee or the holders of 25% in principal amount
of the outstanding notes of the applicable series notify us of the default and
we do not cure the default within the time specified after receipt of such
notice.
Under the indentures governing our other outstanding notes which were
not acquired in the tender offer or the exchange offer, as amended, only the
first four events listed above will constitute events of default.
If an event of default occurs and is continuing, the applicable trustee
or the holders of at least 25% in principal amount of the outstanding notes of
the applicable series may declare the principal or accreted value of and accrued
but unpaid interest on all the applicable notes to be due and payable. Upon such
a declaration, the default amount shall be due and payable immediately. If an
event of default relating to certain events of bankruptcy, insolvency or
reorganization of us occurs and is continuing, the amount due on all the
applicable notes will ipso facto become and be immediately due and payable
without any declaration or other act on the part of the applicable trustee or
any holders of such notes. Under certain circumstances, the holders of a
majority in principal amount of the outstanding notes may rescind any such
acceleration with respect to such notes and its consequences.
28
<PAGE>
OTHER FINANCINGS
Equipment lease financings and credit lines
Our subsidiaries have entered into certain other financing arrangements
and capital leases of equipment, including fiber. As of March 31, 2000, we owed
an aggregate of $306.3 million under these financing arrangements.
Debt placements
Between October 1995 and March 1998, we issued various series of notes,
most of which were reacquired and canceled in the cash tender offer and the
exchange offer described above. Such notes that remain outstanding are $8.7
million principal amount at maturity of our 14% senior discount notes due 2005,
$7.2 million principal amount of our 10% senior subordinated notes due 2008,
$323,000 principal amount of 12-1/2% guaranteed senior secured notes due 2004
issued by our subsidiary, Winstar Equipment Corp., and guaranteed by us and
$28,000 principal amount of our 11% senior subordinated deferred interest notes
due 2008. As a result of the consent solicitations made in connection with the
cash tender offer and the exchange offer, the indentures governing these
remaining notes were amended to eliminate most of the restrictive covenants and
certain default provisions.
There also remain outstanding $2.2 million principal amount of our
14-1/4% senior subordinated deferred interest notes due 2007 which were not
exchanged for senior notes due 2010 and senior discount notes due 2010 in the
Series C preferred stock exchange transaction. In connection with that
transaction, the indenture governing these notes was amended to eliminate most
of the restrictive covenants and certain default provisions.
COMMON STOCK
Our authorized capital stock includes 400,000,000 shares of common
stock, par value $.01 per share. The holders of our common stock are entitled to
one vote for each share held of record on all matters submitted to a vote of
stockholders. Although we do not currently intend to pay any cash dividends,
holders of our common stock are entitled to receive dividends as may be declared
by our board of directors. In the event of a liquidation or dissolution, holders
of common stock are entitled to share in all assets remaining after payment of
liabilities and liquidation preference of our preferred stock.
Holders of our common stock have no preemptive rights. They also have
no rights to convert their common stock into any other securities. There are no
redemption or sinking fund provisions applicable to the common stock. All of the
outstanding shares of common stock are fully paid and nonassessable.
Our certificate of incorporation:
29
<PAGE>
o provides for a board of directors divided into three classes. Each
class generally serves for a term of three years with only one
class of directors being elected in each year.
o provides that directors may be removed with or without cause.
Directors may be removed only by an affirmative vote of the
holders of at least a majority of our capital stock.
o requires an affirmative vote of the holders of at least two-thirds
of our capital stock to alter, amend or repeal the provisions of
our certificate of incorporation relating to specified matters.
Nominations for our board of directors may be made by our board or by
any holder of common stock. A stockholder entitled to vote for the election of
directors may nominate a person for election as director only if the stockholder
provides written notice of his intent to make a nomination to our Secretary not
later than sixty days in advance of the meeting. Our certificate of
incorporation and by-laws do not provide for cumulative voting rights. This
means that holders of a majority of our capital stock who vote in the election
of directors can elect all of the directors and, in such event, the holders of
the remaining shares will not be able to elect any of our directors. A special
meeting of our stockholders may be called at the request of the holders of at
least 10% of our outstanding capital stock entitled to vote generally in all
matters.
Common stock dividend
In February 2000, we declared a three-for-two stock split, effected in
the form of a 50% common stock dividend. The common stock dividend was
distributed on March 2, 2000 to holders of record as of the close of business on
February 16, 2000. The information in this prospectus gives effect to the common
stock dividend.
PREFERRED STOCK
Our certificate of incorporation and the Delaware General Corporation
Law gives our board of directors the authority, without stockholder approval, to
issue up to 30,000,000 shares of preferred stock. Our board of directors has the
authority to fix the following terms with respect to shares of any series of
preferred stock:
o the designation;
o the number of shares;
o the dividend rate or rates payable with respect to the shares;
o the redemption price or prices, if any, and the terms and
conditions of any redemption;
o the voting rights;
30
<PAGE>
o any sinking fund provisions for the redemption or purchase of the
shares;
o the terms and conditions upon which the shares are convertible or
exchangeable, if they are convertible or exchangeable; and
o any other relative rights, preferences and limitations pertaining
to the series.
Series A preferred stock
In February 1997, we sold in a private placement an aggregate of
4,000,000 shares of our Series A preferred stock. Each share of Series A
preferred stock has a stated value of $25. Each share entitles the holder to
receive dividends from us at a rate per year equal to 6% of the stated value.
Dividends accrue and are cumulative from the date of issuance and are payable in
arrears on March 31, June 30, September 30 and December 31 of each year. We may,
at our election, pay dividends in cash or through the issuance of additional
shares of Series A preferred stock.
The shares of Series A preferred stock are convertible into the number
of shares of our common stock equal to the aggregate stated value of the Series
A preferred stock being converted by $16.67, subject to adjustment. On February
11, 2002, any shares of Series A preferred stock still outstanding will be
automatically converted into shares of our common stock. We may, however, elect
to pay cash instead, in an amount equal to the stated value plus all accrued and
unpaid dividends.
The Series A preferred stock ranks senior to our common stock and
junior to any other series of our outstanding preferred stock. As of March 31,
2000, there were approximately 4,471,000 shares of Series A preferred stock
outstanding.
Series B preferred stock
We have a rights agreement under which the holders of our common stock
received, as a dividend, preferred stock purchase rights at the rate of one
right for each share of our common stock held as of the close of business on
July 14, 1997. One right will also attach to each share of our common stock
issued after that date. Currently, the rights are not separate from our common
stock and are not exercisable. The rights will only separate from our common
stock and become exercisable if a person or group acquires 10% or more of our
outstanding voting stock, or a person launches a tender or exchange offer that
would result in ownership of 10% or more of our outstanding voting stock.
Each right that is not owned by an acquiring person entitles the holder
to buy one one- thousandth of one share of our Series B preferred stock. The
rights agreement provides that each right entitles the holder to purchase, for
$225, units of Series B preferred stock with a market value of $450. However, if
we are involved in a business combination in which we are not the surviving
entity, or sell 50% or more of our assets or earning power to another person,
then the rights agreement provides that each right entitles the holder to
purchase, for $225, shares of the common stock of the acquiring person's
ultimate parent having a market value of $450.
31
<PAGE>
At any time, until ten days following the date on which a person
acquires 10% or more of our voting stock, we may redeem all, but not less than
all, of the rights for $0.0001 per right. The rights expire in July 2002. The
Series B preferred stock will have dividend and liquidation preferences over our
common stock, but will be junior to any other series of our preferred stock.
Series D preferred stock
On March 17, 1998, we sold an aggregate of $200.0 million of our Series
D preferred stock in a private placement.
Dividends at the rate of 7% per year on the Series D preferred stock
are cumulative from the date of issuance and are payable quarterly in arrears on
each March 15, June 15, September 15 and December 15 of each year, commencing
September 15, 1998. Dividends shall be payable, at our option, in cash, or
through the issuance of shares of our common stock.
Holders of the Series D preferred stock have the option to convert
their shares of Series D preferred stock at any time after the issue date into
shares of our common stock at a rate of 1.5119 shares of our common stock for
each share of Series D preferred stock. This is equivalent to a conversion price
of $33.07 for each share of our common stock.
The Series D preferred stock ranks:
o senior to all existing and future capital stock that is junior to
our Series D preferred stock, including our Series A and Series E
preferred stock;
o equal with our Series F and Series G preferred stock and all
future capital stock that is specifically designated by our board
of directors as ranking equally with our Series D preferred stock;
o junior to all future capital stock specifically designated by our
board of directors as being senior to our Series D preferred
stock; and
o junior to all of our indebtedness and that of our subsidiaries.
The Series D preferred stock is not redeemable prior to March 20, 2001.
On or after that date, the Series D preferred stock will be redeemable at our
option. The Series D preferred stock is subject to mandatory redemption on March
15, 2010, at a redemption price of $50.00 per share, plus accrued and unpaid
dividends, if any. Upon the occurrence of a change in control, as defined in the
certificate of designations governing the Series D preferred stock, we will be
obligated to adjust the conversion price as provided in the certificate of
designations.
Series E preferred stock
In connection with an acquisition we consummated in August 1998, we
issued an aggregate of 75,100 shares of our Series E preferred stock. The Series
E preferred stock is non-voting, non-redeemable and does not earn dividends.
Each share of Series E preferred stock has a
32
<PAGE>
liquidation preference of $59.93 per share. The Series E preferred stock is
junior in right to receive distributions in liquidation to all other currently
existing preferred stock and any other class of preferred stock authorized in
the future unless such new class is expressly made junior or equal to the Series
E preferred stock. The holders of the Series E preferred stock may convert their
stock into shares of our common stock at the rate of three shares of common
stock for two shares of Series E preferred stock at any time and we may require
them to do so upon the occurrence of certain conditions.
Series F preferred stock
On June 17, 1999, we and a subsidiary of ours sold an aggregate of
300,000 shares of Series F preferred stock for an aggregate purchase price of
$300.0 million, less customary discounts and expenses.
Each share of Series F preferred stock has a liquidation preference of
$1,000 and entitles the holder to receive dividends at an annual rate of 7-1/4%,
or $72.50, per share. Dividends are payable quarterly on March 15, June 15,
September 15 and December 15 of each year to the record holders of the Series F
preferred stock as of the close of business on the business day next preceding
the date of such dividend payment.
We have the option to pay dividends in either cash or through the
issuance of shares of our common stock. Dividends paid in shares of our common
stock will be calculated by dividing the dollar amount of the dividend by 97% of
the closing bid price of our common stock on Nasdaq on the fourth trading day
prior to the dividend payment date.
Each share of Series F preferred stock is convertible into shares of
our common stock at a conversion rate of 24.2087 shares for each share of Series
F preferred stock converted, equivalent to a conversion price of $41.31 per
share. We will have the option to convert all of the shares of the Series F
preferred stock into common stock if, on or after June 24, 2002, the closing
price of our common stock on Nasdaq has equaled or exceeded 130% of the
conversion price for at least 20 out of 30 prior consecutive trading days.
The Series F preferred stock is not redeemable by us prior to June 24,
2002. Thereafter, each share of Series F preferred stock will be redeemable at
certain prices, at our option, in whole or in part, at any time or from time to
time, upon not less than 30 nor more than 60 days' prior notice mailed by
first-class mail to each holder's registered address.
The Series F preferred stock ranks:
o senior to our common stock and our Series A and Series E preferred
stock;
o senior to each class of capital stock which we may create that
does not expressly rank senior to, or with the same priority as,
our Series F preferred stock;
o equal with our Series D and Series G preferred stock;
33
<PAGE>
o equal with each class of capital stock which we may create that
expressly provides that it ranks equally with our Series F
preferred stock; and
o junior to each class of capital stock which we may create that
expressly provides that it ranks senior to our Series F preferred
stock.
We may not create or increase the amount of any class or series of
capital stock that ranks senior to the Series F preferred stock without the
consent of the holders of at least 66-2/3% of the Series F preferred stock.
However, we may create or increase the amount of any class of stock that ranks
with the same priority as, or junior to, the Series F preferred stock.
Series G preferred stock
On February 1, 2000, we and one of our wholly-owned subsidiaries,
Winstar Credit Corp., sold an aggregate of 900,000 shares of our Series G
preferred stock in a private placement for an aggregate purchase price of $900.0
million. The shares were purchased by Credit Suisse First Boston Equity
Partners, L.P., Welsh, Carson, Anderson & Stowe VIII, L.P., Microsoft and
certain other purchasers.
The Series G preferred stock, which votes on an as-converted basis with
our common stock, currently represents ownership of approximately 19.3% of our
outstanding common shares, 18.1% of our outstanding voting shares, and
approximately 13.0% of our fully diluted common shares on a pro forma basis as
of December 31, 1999.
If any cash dividends are paid on our common stock, the holders of our
Series G preferred stock will be entitled to receive such cash dividends on an
as-converted basis. In addition, the Series G preferred stock pays cumulative
dividends at a rate equal to the excess, if any, of 5.75% per year on its
liquidation preference over the amount of any regular cash dividends per share
of Series G preferred stock that have been paid during the applicable dividend
period on our common stock.
Such dividends will be payable quarterly in arrears on each March 15,
June 15, September 15 and December 15 of each year to the record holders of the
Series G preferred stock as of each March 1, June 1, September 1 and December 1.
If we do not pay such dividends in cash, the amount of such dividends will be
added to the liquidation preference of the Series G preferred stock.
Each share of Series G preferred stock is convertible, at the option of
the holder, into shares of our common stock at a conversion price of $45.00 per
share, subject to certain adjustments. We will have the option to convert all of
the shares of Series G preferred stock into common stock at the conversion price
if, on any date after the third anniversary of the date of issuance of the
Series G preferred stock, the volume-weighted average trading price of our
common stock on Nasdaq for the 20 consecutive trading days immediately prior to
such date is at least equal to 155% of the conversion price on such date.
34
<PAGE>
In the event of any voluntary or involuntary liquidation, dissolution
or winding up of our operations before any payment or distribution of our assets
are made to the holders of any securities ranking junior to the Series G
preferred stock, holders of Series G preferred stock will be entitled to receive
an amount per share equal to the greater of:
o the accreted value of the Series G preferred stock on such date,
plus all dividends accrued to such date, whether or not earned or
declared, since the end of the previous dividend period; and
o the amount that would have been payable on the number of shares of
common stock into which a share of Series G preferred stock was
convertible immediately prior to such date.
Holders of Series G preferred stock will not be entitled to any further payment.
If our assets that are distributable among the holders of Series G preferred
stock are insufficient to pay in full the preferential amount and liquidating
payments on any securities ranking equally with the Series G preferred stock,
then such assets will be distributed among the holders of Series G preferred
stock and any such equally ranked securities ratably in accordance with the
respective amounts that would be payable if all amounts payable thereon were
paid in full.
With respect to dividend rights and rights on liquidation, dissolution
and winding up, the Series G preferred stock ranks:
o senior to our common stock and our Series A and Series E preferred
stock;
o senior to each class of capital stock which we may create that
does not expressly rank senior to, or equally with, our Series G
preferred stock;
o equal with our Series D and Series F preferred stock;
o equal with each class of capital stock which we may create that
expressly provides that it ranks equally with our Series G
preferred stock; and
o junior to each class of capital stock that we may create that
expressly provides that it ranks senior to our Series G preferred
stock.
We may not issue any securities that are senior to the Series G
preferred stock without the consent of the holders of a majority of the
outstanding Series G preferred stock.
On April 1, 2010, we will be required to redeem all of the outstanding
shares of Series G preferred stock. The redemption price per share will be equal
to the greater of the accreted value of the Series G preferred stock on such
date, plus all dividends accrued to such date whether or not earned or declared,
since the most recent dividend payment date and the volume-weighted average
trading price per share of our common stock on Nasdaq for the 20 consecutive
trading days immediately prior to April 1, 2010 multiplied by the number of
shares of common stock into which the Series G preferred stock is convertible on
such date. We have the option to pay the
35
<PAGE>
redemption price in cash or in shares of common stock. If we elect to pay the
redemption price, in whole or in part, in shares of common stock, such shares
will be valued at 97% of the volume-weighted average trading price per share of
our common stock on Nasdaq for the 20 consecutive trading days immediately prior
to April 1, 2010. If we elect to pay the redemption price in shares of common
stock, we have agreed to use our best efforts to register such shares under the
Securities Act of 1933 prior to the delivery of such shares.
In the event of a change of control of Winstar, we will make an offer
to purchase all outstanding shares of Series G preferred stock at a purchase
price ranging from 102% to 105% of the accreted value per share on such date,
plus all dividends accrued to such date, whether or not earned or declared,
since the end of the previous dividend period. We have the option to pay the
change of control amount in cash or shares of common stock. If we elect to pay
the applicable change of control amount in shares of common stock, such shares
will be valued at the volume-weighted average trading price per share of our
common stock on Nasdaq for the 20 consecutive trading days immediately prior to
the date the change of control amount is paid. We have agreed to use our best
efforts to register such shares prior to the delivery of such shares.
Each holder of Series G preferred stock will be entitled to vote on all
matters and will be entitled to that number of votes equal to the number of
shares of common stock into which such holder's shares of Series G preferred
stock could be converted on the record date for the determination of
stockholders entitled to vote on such matter or, if no such record date is
established, on the date such vote is taken or any written consent of
shareholders is solicited. In addition, so long as any of the Series G preferred
stock is outstanding, the affirmative vote of the holders of a majority of the
outstanding shares of Series G preferred stock, voting together as a single
class, will be necessary to:
o amend, alter or repeal any provision of our certificate of
incorporation or by-laws so as to adversely affect the Series G
preferred stock;
o issue any additional Series G preferred stock or create, authorize
or issue any capital stock that ranks senior, whether with respect
to dividends or upon liquidation, dissolution, winding up or
otherwise, to the Series G preferred stock; or
o redeem for cash any junior securities, subject to certain
exemptions.
REGISTRAR AND TRANSFER AGENT
Continental Stock Transfer & Trust Company is the registrar and
transfer agent for our common stock and our Series A, Series D and Series F
preferred stock. Continental is located at 2 Broadway, New York, New York 10004.
LEGAL MATTERS
36
<PAGE>
The validity of the securities offered will be passed on for us by our
counsel, Graubard Mollen & Miller, New York, New York. Certain partners and
employees of Graubard Mollen & Miller own shares of our common stock.
EXPERTS
Our consolidated financial statements as of December 31, 1998 and 1999
and for the years ended December 31, 1997, 1998 and 1999 incorporated by
reference into this prospectus, have been audited by Grant Thornton LLP,
independent certified public accountants, to the extent and for the periods
indicated in their reports thereon.
37
<PAGE>
SUBJECT TO COMPLETION, DATED AUGUST ___, 2000
PROSPECTUS
WINSTAR COMMUNICATIONS, INC.
DIRECT STOCK PURCHASE PLAN
This prospectus relates to our Direct Stock Purchase Plan. Our plan is
designed to provide investors with a convenient and economical way to purchase
shares of our common stock. Once enrolled in our plan by completing the
authorization and enrollment form included in this prospectus, participants may:
o Purchase their first shares of our common stock by making an
initial investment of at least $1,000 and up to $10,000, in $100
increments.
o Purchase additional shares of our common stock by making optional
cash investments at any time of at least $500 and up to a maximum
of $10,000 per month, in $100 increments.
o Make optional investments in excess of $10,000, but only after
submission of a written request - a "Request for Waiver" - has
been made to us and after we have given our written approval,
which we may grant or refuse to grant in our sole discretion.
o Elect to automatically reinvest any cash dividends that we may pay
in the future on all or a portion of their shares of common stock.
Our common stock is quoted on The Nasdaq National Market. On
August ____, 2000, the last sale price of a share of our common stock was
$________________.
Since our inception in 1992, we have never paid cash dividends. We will
not be able to pay any cash dividends in the future until such time as we have
repaid our currently outstanding indebtedness, we generate the capital surplus
that allows us to pay such dividends, and our board of directors determines to
pay dividends from capital surplus rather than reinvesting that surplus in the
continued growth of our infrastructure and operations. It is unlikely that we
will pay cash dividends in the foreseeable future and nothing in this prospectus
is intended to indicate otherwise.
--------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these shares, or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
<PAGE>
The information in this prospectus is not complete and may be changed.
We may not sell these shares until the registration statement filed with the
Securities and Exchange Commission with respect to this plan is effective. This
prospectus is not an offer to sell these shares and it is not soliciting an
offer to buy these shares in any state where the offer or sale is not permitted.
The date of this Prospectus is August , 2000.
<PAGE>
THE COMPANY
We provide our customers with broadband services. These services
include traditional telephone service, high-speed Internet access and data
transmission, web design and hosting applications, professional services and
Office.com('r'), a Service From Winstar, the top-ranked online business service
for small- and medium-sized businesses. We offer a comprehensive suite of these
services across our own end-to-end broadband network in the top 60 markets in
the United States. We also offer services in 12 overseas markets, including
Amsterdam, Brussels, Buenos Aires, London and Tokyo.
We are also rapidly building a widely available broadband network which
we believe will enable us to offer broadband services to a majority of the
business market in the United States. The market for broadband services is
projected to grow from approximately $178.0 billion in 1999 to approximately
$360.0 billion by 2009. Our domestic network combines local and long- haul
capacity with voice and data switching facilities and is capable of carrying a
substantial portion of our customers' communications traffic from point of
origin to point of termination.
We were incorporated under the laws of the State of Delaware in
September 1990. Our principal executive offices are located at 685 Third Avenue,
New York, New York 10017 and our telephone number is (212) 792-9800.
RISK FACTORS
Potential investors are urged to read and consider the risk factors
relating to an investment in Winstar set forth in our SEC filings, including our
Annual Report on Form 10-K for the year ended December 31, 1999, as amended.
DESCRIPTION OF OUR DIRECT STOCK PURCHASE PLAN
The following questions and answers explain and constitute our Direct
Stock Purchase Plan, which we refer to below as our "plan."
1. WHAT IS THE PURPOSE OF THE PLAN?
Our plan is intended to provide participants with a simple, convenient
and economical method of investing in shares of our common stock.
In turn, the plan provides us with an economical and flexible mechanism
to raise equity capital through sales of our common stock. To the extent shares
of common stock are purchased directly from us under the plan, we will receive
proceeds that we will use for our general corporate purposes, including to make
investments, acquire or enter into other business arrangements with other
companies. We will not, however, receive any proceeds from shares of our common
stock that, our plan administrator, may purchase, at our direction, in the open
market or in negotiated transactions with third parties in order to supply
shares issued to participants under our plan.
2
<PAGE>
2. CAN I PURCHASE MY FIRST SHARE OF WINSTAR COMMON STOCK THROUGH THE PLAN
AND ADDITIONAL SHARES THEREAFTER?
Yes. Our plan allows participants to:
o Make initial investments in our common stock in amounts of at
least $1,000 and up to $10,000, in $100 increments;
o Make additional cash investments in our common stock in amounts of
at least $500 and up to $10,000, or more if a Request for Waiver
is granted by us, in $100 increments; and
o Have any common stock dividends that we may pay in the future
automatically reinvested in additional shares of our common stock.
3. WHAT ARE THE ADVANTAGES OF PARTICIPATING IN OUR PLAN?
Participants in our plan will enjoy certain benefits:
o You will be able to purchase our common stock without paying any
brokerage commission and, for purchases in excess of $10,000,
potentially at a discount, at our discretion.
o Your funds will be fully invested because our plan permits
fractions of shares to be credited to your account.
o You can be free of cumbersome safekeeping requirements, as our
custodial service will safely hold your certificates.
o You will have a simple way of making periodic investments in our
company, when and as you choose, in order to build your ownership
over time and also to utilize dollar-cost-averaging if such
technique is part of your general investment strategy.
o You may direct our plan administrator to sell or transfer all or a
portion of the shares held in your plan account and therefore may
find the plan an economical way to liquidate holdings from time to
time.
o You will receive periodic statements reflecting all current
activity in your plan account, including purchases, sales and
latest balances, which will simplify your record keeping.
4. WHAT ARE THE DISADVANTAGES OF MAKING INVESTMENTS IN WINSTAR THROUGH THE
PLAN?
Our plan may present certain disadvantages to a participant as compared
to investing in our company through a brokerage. Each month the plan will issue
shares to participants that have made valid and timely elections to purchase
under the plan during that month.
3
<PAGE>
The price at which all shares are under the plan issued during any
single month for investments not exceeding $10,000 will be equal to the average
of the high and low sale prices of our common stock reported by Nasdaq on the
Investment Date (as defined below). If no trading is reported for that trading
day, we may determine the purchase price on the basis of market quotations as we
deem appropriate.
The price at which all shares are under the plan issued during any
single month for investments exceeding $10,000 will be equal to the average of
the high and low sales prices of a share of our common stock during the twelve
consecutive trading days (fourteen consecutive trading days during October,
November and December 2000) ending on the Investment Date.
The price at which shares are issued under our plan is referred to
herein as the "Investment Price." The trading period over which the
Investment Price is calculated for purchases in excess of $10,000 for the months
is referred to herein as the "Pricing Period." The single date each month on
which shares are issued under our plan to participants who've made purchase
elections for such month is referred to herein as the "Investment Date."
Because the Investment Price represents an average of numerous market
prices, it may actually exceed the price at which you could have purchased
shares in the open market on the Investment Date.
Further, sales of shares for participants that have made valid sale
elections during any month are made at specified times and in a manner designed
to not disrupt the market for our common stock. Accordingly, you may experience
delays in the execution of sales of your shares held in our plan.
IT SHOULD ALSO BE NOTED THAT WE WILL NOT PAY INTEREST ON FUNDS HELD BY
US PENDING INVESTMENT.
5. WHO WILL ADMINISTER THE PLAN?
The plan will be administered by Continental Stock Transfer & Trust
Company or such successor administrator as we may designate. The administrator
acts as agent for participants, keeps records of the accounts of participants,
sends regular account statements to participants, and performs other duties
relating to the plan. Shares purchased for each participant under the plan will
be held by the administrator and will be registered in the name of such
participant unless and until a participant requests that a stock certificate for
all or part of such shares be issued, as more fully described in this
prospectus. Correspondence with the administrator should be sent to:
4
<PAGE>
Winstar Direct Stock Purchase Plan
Continental Stock Transfer & Trust Company
2 Broadway
19th Floor
New York, New York 10028
Telephone No.: ______________
Fax No.: ___________________
Web info: __________________
6. WHO IS ELIGIBLE TO PARTICIPATE IN THE PLAN?
Our existing stockholders (both registered holders and beneficial
owners), as well as persons seeking to purchase their first shares in our
company, may participants in our plan.
A "registered holder" (which means a stockholder whose shares of common
stock are registered in the stock transfer books of Winstar in his or her name)
or a "beneficial owner" (which means a stockholder whose shares are registered
in the stock transfer books of Winstar in a name other than his or her name, for
example, in the name of a broker, bank, or other nominee), may participate in
the plan. A registered holder may participate in the plan directly; a beneficial
owner must either become a registered holder by having such shares transferred
into his or her name or by making arrangements with his or her broker, bank or
other nominee to participate in the plan on the participant's behalf.
An interested investor that is not currently a stockholder may
participate in the plan by making an initial optional cash investment in our
common stock of not less than $1,000 or more than $10,000, in increments of
$100. In certain circumstances, however, we may permit greater optional cash
investments, if an appropriate waiver is filed with us and accepted.
The right to participate in our plan is not transferable to another
person. We reserve the right to exclude from participation in the plan persons
who use our plan to engage in short-term trading activities that cause
aberrations in the trading volume of our common stock. In addition, we reserve
the right to treat optional cash investments submitted on forms reflecting
participants with the same name, address or social security or taxpayer
identification number as a single investment for purposes of determining whether
the $10,000 limit would be exceeded.
Participants residing in jurisdictions in which their participation in
the plan would be unlawful will not be eligible to participate in the plan.
7. HOW DOES AN ELIGIBLE PERSON PARTICIPATE IN THE PLAN?
A person may participate in the plan by following the appropriate
procedure set forth below. Any person desiring to participate in our plan will
be responsible for paying to the plan administrator an initial enrollment and
processing fee of $_____, by delivering a check payable to Continental Stock
Transfer & Trust Company, together with the other documents and payments
required below.
5
<PAGE>
OUR REGISTERED HOLDERS:
Each eligible registered holder of our common stock may enroll in our
plan and become a participant by:
o completing and signing the authorization and enrollment form
(attached as Annex A to this prospectus);
o returning it to the administrator at the address set forth in
Question 5.
Please note, that if the shares you currently own are registered in
more than one name (e.g., joint tenants, trustees), all registered holders of
such shares must sign the authorization and enrollment form exactly as their
names appear on the account registration.
OUR BENEFICIAL OWNERS:
Beneficial owners of our common stock desiring to participate in the
plan must:
o contact the registered holder who holds the shares of common stock
on your behalf;
o have your registered holder become a participant in the plan by
completing an authorization and enrollment form and returning it
to our plan administrator; and
o have such registered holder sign and return a beneficial owner
authorization form, as described in this prospectus.
Alternatively, a beneficial holder may instruct the registered holder
of his or her shares to have all or a portion of those shares registered
directly in the holder's name. The holder would then follow the procedures
described above for registered holders.
INTERESTED INVESTORS WHO DO NOT CURRENTLY OWN OUR COMMON STOCK.
An interested investor who is not presently one of our stockholders,
but desires to become a participant in our plan by making an initial investment
in our common stock, may join the plan by:
o signing an authorization and enrollment form; and
o forwarding it, together with a check in the amount of the initial
investment, to the administrator at the address set forth in
Question 5.
6
<PAGE>
8. WHAT IF I'VE LOST OR DON'T HAVE THE AUTHORIZATION AND ENROLLMENT FORM?
Persons interested in participant in our plan may obtain information
and the necessary authorization and enrollment form at any time by calling the
administrator at ______________ or by writing the administrator at the address
set forth in Question 5.
9. WHAT IS THE PURPOSE AND EFFECT OF COMPLETING AND FORWARDING THE
AUTHORIZATION AND ENROLLMENT FORM?
The authorization and enrollment form will appoint the administrator as
your agent for purposes of your participation in our plan. It will direct the
administrator to apply any optional cash investments made by you (whether
transmitted with the authorization and enrollment form or made at dates
subsequent to your enrollment) to the purchase on your behalf of full and
fractional shares of our common stock in accordance with the plan.
The authorization and enrollment form provides for the purchase of our
common stock through the following investment options:
o Optional cash investments. This option allows you to direct the
administrator to make specified optional cash investments on your
behalf and directs the administrator to apply such investments
towards the purchase of common stock in accordance with the plan.
o Full dividend reinvestment. This option allows you to direct the
administrator to reinvest automatically all cash dividends
received on all shares of our common stock registered in your
name.
o Partial dividend reinvestment. This option allows you to direct
the administrator to reinvest automatically only the cash
dividends received on a specified number of shares of our common
stock registered in your name and to receive dividends on any
remaining shares of common stock in cash.
Any one of the above three options may be selected. In each case, cash
dividends, if any, will be reinvested on all shares designated for participation
in the plan until the participant specifies otherwise or withdraws from the plan
altogether, or until the plan is terminated. Notwithstanding this, it is
unlikely that we will pay cash dividends in the foreseeable future and nothing
in this prospectus is intended to indicate otherwise.
A participant may change his or her election at any time by completing
and signing a new authorization form and returning it to the administrator.
Any participant who returns a properly executed authorization and
enrollment form to the administrator without electing an investment option will
be enrolled as having selected full dividend reinvestment.
7
<PAGE>
10. WHEN DOES PARTICIPATION IN THE PLAN BEGIN?
If you do not currently own any shares of our common stock, you may
join the plan after receiving a copy of this prospectus and returning to the
administrator a completed enrollment form along with your initial investment of
at least $1,000. Any offer to make an initial investment greater than $10,000
will require you submitting a request for waiver to us and your receiving our
prior approval, and must be made in accordance with the procedures described in
"Request for Waiver" below. Investment must be made in $100 increments. Some
state securities laws require that a registered broker-dealer send information
to their residents. A registered broker-dealer will forward this prospectus and
the enrollment form to residents of those states rather than the administrator's
providing that information directly to those residents.
If you already own shares of our common stock and those shares are
registered in your name, you may join the plan after receiving a copy of this
prospectus and returning a completed enrollment form. Registered shareholders
should be sure to sign their names on the enrollment form exactly as they appear
on their stock certificates.
If you hold your shares of our common stock in a brokerage, bank or
other intermediary account - that is, in "street name" - you may participate in
the plan by instructing your broker, bank or other intermediary account to
register the shares in your name or by making arrangements with the broker, bank
or other intermediary account to participate on your behalf. The broker, bank or
other intermediary account may also be required to provide a broker and nominee
form to the administrator. As another option, you may request a copy of this
prospectus from the administrator and return a completed enrollment form along
with an initial investment of at least $1,000 to the administrator.
11. WHEN ARE NEW SHARES DEEMED ISSUED UNDER THE PLAN?
Dividends, if any, and optional cash investments will be reinvested or
invested, as the case may be, on the Investment Date. For optional cash
investments, the Investment Date will be the last trading day of the Pricing
Period. For dividend reinvestments, the Investment Date will be the first
Investment Date applicable to optional cash investment occurring after the
payment date of the dividend. Please see SCHEDULE A for information with respect
to Pricing Periods, Investment Dates and other information.
12. WHAT ARE THE SOURCES OF THE SHARES ISSUED TO PARTICIPANTS UNDER THE
PLAN?
Purchases of shares of our common stock by the administrator for
participants in the plan may be made, at our election, either (1) directly from
us out of our authorized but unissued shares of common stock or (2) in the open
market or (3) in negotiated transactions with third parties. Under the terms of
our outstanding bonds and other financing arrangements, we are currently
prohibited from repurchasing shares of our common stock. Therefore, for the
foreseeable future, all purchases of our common stock under the plan would be
made directly from us.
8
<PAGE>
13. HOW MUCH WILL A PARTICIPANT PAY FOR EACH SHARE PURCHASED UNDER THE
PLAN?
The price to participants for each share purchased during any month
with optional cash investments or with cash dividends will be equal the
Investment Price calculated for the Pricing Period.
14. HOW ARE OPTIONAL CASH INVESTMENTS FOR AMOUNTS OF $10,000 OR LESS MADE?
All registered holders, including brokers, banks and nominees with
respect to shares registered in their name on behalf of beneficial owners, that
have submitted signed authorization and enrollment forms are eligible to make
optional cash investments at any time.
A broker, bank or nominee, as record holder on behalf of a beneficial
owner, may utilize an authorization and enrollment form for optional cash
investments unless it holds the shares in the name of a securities depository.
In that event, the optional cash investment must be accompanied by a beneficiary
authorization form. This form provides the sole means by which a broker, bank or
other nominee holding shares on behalf of beneficial owners in the name of a
securities depository may make optional cash investments on behalf of such
beneficial owner. Beneficiary authorization forms will be furnished by the
administrator upon request.
Other interested investors that are not stockholders of our company are
also eligible to make initial investments in our common stock through optional
cash investments by submitting authorization and enrollment forms and funds
representing their desired initial investments.
The administrator will apply all optional cash investments, for which
good funds are received on or before 12:00 (Noon) Eastern Time on the business
day immediately preceding the first day of the Pricing Period, to the purchase
of shares of our common stock on the next following Investment Date. All
optional cash investments are subject to collection by the administrator for
full face value in U.S. dollars.
There is no obligation to make an optional cash investment at any time,
and the amount of such investments may vary from time to time.
Good clean funds for optional cash investments and initial cash
investments must be received by the administrator no later than two business
days prior to the Investment Date.
All optional cash investments made by check should be made payable to:
"Winstar Direct Stock Purchase Plan"
and mailed to the administrator at the address set forth in Question 5. Any
checks not drawn on a United States bank or not payable in United States dollars
will be returned to the participant, as will any third party checks. Other forms
of payment, such as wire transfers, may be made, but only if approved in advance
by the administrator. Inquiries regarding other forms of payments and all other
written inquiries should be directed to the administrator at the address set
forth in this prospectus above.
9
<PAGE>
15. HOW ARE OPTIONAL CASH INVESTMENTS OF MORE THAN $10,000 MADE?
Optional cash investments in excess of $10,000 per month may be made
only pursuant to a request for waiver (a "Request for Waiver") accepted by us.
Participants who wish to make an optional cash investment in excess of $10,000
for any Investment Date, including those whose proposed investments have been
aggregated so as to exceed $10,000 as described above, must obtain our prior
written approval and a copy of such written approval must accompany any such
optional cash investment. Good clean funds for such optional investment must be
received by the administrator no later than _____ business days prior to the
beginning of the Pricing Period. A Request for Waiver should be made directly to
our Treasurer at:
Winstar Communications, Inc.
685 Third Avenue
New York, New York 10017
Attention: Treasurer
Re: Request for DSPP Waiver
Fax No: ________________
We also will maintain a website at https://drip.winstar.com, which will
contain information on whether or not we will accept optional investments
pursuant to Requests for Waiver in the current month. The website will also
contain a form for submitting a Request for Waiver via electronic mail through
the website.
We have sole discretion to grant any approval for optional cash
investments in excess of the allowable maximum amount. In deciding whether to
approve a Request for Waiver, we will consider relevant factors including, but
not limited to:
o our need for additional funds,
o the attractiveness of obtaining such additional funds through the
sale of our common stock as compared to other sources of funds,
o the purchase price likely to apply to any sale of common stock,
the participant submitting the request,
o the extent and nature of such participant's prior participation in
the plan,
o the number of shares held of record by such participant and
o the aggregate amount of optional cash investments in excess of
$10,000 for which Requests for Waiver have been submitted by all
participants.
If Requests for Waiver are submitted for any Investment Date for an
aggregate amount in excess of the amount we are then willing to accept, we may
honor such requests in order of receipt, pro rata or by any other method that we
determine, in our sole discretion, to be
10
<PAGE>
appropriate. Upon granting any Request for Waiver, we may, in our sole
discretion, agree to different Discounts among persons to whom we have granted a
Request for Waiver.
We reserve the right to modify, suspend or terminate participation in
the plan by otherwise eligible registered holders or beneficial owners of our
common stock for any reason whatsoever including elimination of practices that
are not consistent with the purposes of the plan.
THRESHOLD PRICE WITH RESPECT TO OPTIONAL CASH INVESTMENTS MADE PURSUANT
TO REQUESTS FOR WAIVER
We may establish for any Pricing Period a Threshold Price applicable to
optional cash investments made pursuant to Requests for Waiver. At least three
trading days prior to the first day of the applicable Pricing Period, we will
determine whether to establish a Threshold Price and, if a Threshold Price is
established, its amount, and will so notify the administrator. This
determination will be made by us in our sole discretion after a review of
current market conditions, the level of participation in the plan, and current
and projected capital needs. Participants may ascertain whether a Threshold
Price has been set or waived for any given pricing period and any applicable
discount by telephoning us at __________ or at such other number as may be
established by us from time to time.
If established for any Pricing Period, the Threshold Price will be
stated as a dollar amount that the average of the sale prices of our common
stock as reported by Nasdaq must equal or exceed on each trading day of the
relevant Pricing Period. In the event that the Threshold Price is not satisfied
for a trading day in the Pricing Period, then that trading day will be excluded
from the Pricing Period with respect to optional cash investments made pursuant
to Requests for Waiver, and all trading prices for that day will be excluded
from the determination of the purchase price. A day will also be excluded if no
trades of our common stock are made on Nasdaq for that day. For example, if the
Threshold Price is not satisfied for three of the ten trading days in a Pricing
Period, then the purchase price will be based upon the remaining seven trading
days on which the Threshold Price was satisfied.
In addition, a pro rata portion of each optional cash investment made
pursuant to a Request for Waiver will be returned for each trading day of a
Pricing Period on which the Threshold Price is not satisfied or for each trading
day on which no trades of shares or common stock are reported on Nasdaq. The
returned amount will equal one-twelfth (one-fourteenth during October, November
and December 2000) of the total amount of such optional cash investment (not
just the amount exceeding $10,000) for each trading day that the Threshold Price
is not satisfied. Thus, for example, if in January 2000, the Threshold Price is
not satisfied or no such sales are reported for three of the twelve trading days
in a Pricing Period, 3/12ths (i.e., 25%) of such optional cash investment will
be returned to the participant without interest.
The establishment of the Threshold Price and the possible return of a
portion of the investment applies only to optional cash investments made
pursuant to a Request for Waiver but applies to the entire amount thereof,
including the first $10,000. Setting a Threshold Price for a Pricing Period
shall not affect the setting of a Threshold Price for any subsequent Pricing
Period. For any particular month, we may waive our right to set a Threshold
Price. Neither we nor the
11
<PAGE>
administrator shall be required to provide any written notice to participants as
to the Threshold Price for any Pricing Period. Participants may, however,
ascertain whether a Threshold Price has been set or waived for any given Pricing
Period and any applicable discount by telephoning us at _____________ or at such
other number as may be established by us from time to time.
DISCOUNT
Each month, at least one trading day prior to the first day of the
applicable Pricing Period, we may establish a discount from the Investment Price
applicable to shares purchased under our plan pursuant to a waiver during that
month. Such discount (the "Discount") may be up to 3% of the Investment Price
and may vary each month. The Discount may be increased, decreased or eliminated
by us. We also reserve the right to establish a reverse auction procedure by
which participants seeking to make optional cash investments under a waiver may
submit to us a "bid" with respect to the Discount at which they are willing to
make the optional cash investment. Participants may obtain the Discount
applicable to the next Pricing Period by telephoning us at _________ or at such
other number as may be established by us from time to time. Setting a Discount
for a particular month shall not affect the setting of a Discount for any
subsequent month.
16. WHAT LIMITATIONS AND EXCEPTIONS APPLY TO OPTIONAL CASH INVESTMENTS?
MINIMUM/MAXIMUM LIMITS
For any Investment Date, optional cash investments made by our
stockholders are subject to a minimum of $500 and a maximum of $10,000 (except
as noted below), and optional cash investments made by interested investors who
are not then stockholders of our company are subject to a minimum initial
investment of $1,000 and a maximum of $10,000 (except as noted below).
Investment will only be accepted in increments of $100.
Optional cash investments of less than the allowable monthly minimum
amount and that portion of any optional cash investment that exceeds the
allowable monthly maximum amount will be returned, except as noted below,
promptly to participants, without interest. Optional cash investments submitted
by brokerage firms or other nominees on behalf of a participant will be
aggregated for purposes of determining whether the $10,000 limit will be
exceeded. In addition, we reserve the right to treat optional cash investments
submitted on forms reflecting participants with the same name, address or social
security or taxpayer identification number as a single investor for purposes of
determining whether the $10,000 limit would be exceeded.
17. WHAT IF A PARTICIPANT HAS MORE THAN ONE ACCOUNT IN THE PLAN?
For the purpose of the limitations discussed in this prospectus, we
reserve the right to aggregate all optional cash investments for participants
with more than one account using the same name, address or social security or
taxpayer identification number. For participants unable to supply a social
security or taxpayer identification number, participation may be limited by us
to only one plan account. Also for the purpose of such limitations, all plan
accounts that we believe to be under common control or management or to have
common ultimate beneficial ownership
12
<PAGE>
may be aggregated. In the event we exercise our right to aggregate investments
and the result would be an investment in excess of $10,000 without an approved
Request for Waiver, we will return, without interest, as promptly as
practicable, any amounts in excess of the investment limitations.
18. WILL CERTIFICATES BE ISSUED TO PARTICIPANTS FOR THE SHARES OF OUR
COMMON STOCK PURCHASED UNDER OUR PLAN?
All shares purchased pursuant to the plan will be held in "book entry"
form through accounts maintained by the administrator. This serve protects
against the loss, theft, or destruction of certificates evidencing shares. Upon
written request of a participant or upon withdrawal of a participant from the
plan or upon termination of the plan, the administrator will have certificates
issued and delivered for all full shares credited to that participant's account.
Certificates will be issued only in the same names as those enrolled in the
plan. In no event will certificates for fractional shares be issued. See
questions 18, 19 and 20.
19. MAY A PARTICIPANT DEPOSIT WITH THE ADMINISTRATOR CERTIFICATES FOR
SHARES WHICH HE OR SHE ALREADY OWNS OUTSIDE THE PLAN?
Yes. Whether or not the participant has previously authorized
reinvestment of dividends, certificates registered in the participant's name may
be surrendered to the administrator for deposit in the participant's plan
account. We will automatically reinvest all dividends, if any, on any shares of
our common stock evidenced by certificates deposited in accordance with the
plan.
If a participant requests a certificate for whole shares of our common
stock held in his or her account, distributions on those shares will continue to
be reinvested under the plan in the same manner as prior to the request so long
as the shares of common stock remain registered in the participant's name.
The participant should contact our administrator at the address set
forth in this prospectus above for the proper procedure to deposit certificates.
20. CAN PARTICIPANT SELL SHARES HELD UNDER THE PLAN?
Participants may request that all or a portion of the shares held in
their accounts by the plan (including shares held for safekeeping) be sold.
Following receipt of written instructions from a participant, the administrator
will sell, through an independent broker or institution, those shares as soon as
practicable and will remit a check for the proceeds of such sale, less
applicable brokerage charges, trading fees, service charges and any taxes.
Shares to be sold will be aggregated by the administrator and generally
sold once per week at then current market prices in transactions carried out
through one or more brokerage firms.
The initial trading fee for sales of shares will be $_________ per
transaction plus $________ per share.
13
<PAGE>
21. WHAT REPORTS ARE SENT TO PARTICIPANTS?
After an investment is made for a participant's plan account, the
participant will be sent a statement which will provide a record of the costs of
the shares of our common stock purchased for that account, the purchase date and
the number of shares of common stock in that account. We recommend that you
retain these statements for income tax and general record keeping purposes.
In addition, each participant will be sent our annual report, notice of
annual meeting and proxy statement and income tax information for reporting
distributions received. All reports and notices from the administrator will be
addressed to the participant's last known address. Partici pants should notify
our administrator promptly in writing of any change of address.
22. MAY A PARTICIPANT WITHDRAW FROM THE PLAN?
Yes, by providing written notice instructing the administrator to
terminate the participant's plan account, which notice is received by the
administrator at least ten business days prior to the first day of the next
Pricing Period. Thereafter all cash dividends, if any, on shares owned by such
participant will be sent to the participant.
In the event that a purchase of shares on behalf of a participant
pursuant to the plan is pending, such participant may not terminate enrollment
until after the Investment Date relating to such Pricing Period. Any fractional
shares held in the plan at the time of termination will be converted to cash on
the basis of the last applicable Investment Price. If a participant's plan
account balance falls below one full share, the administrator reserves the right
to liquidate the fraction and remit the proceeds, less any applicable fees, to
the participant at its address of record.
23. WHAT HAPPENS WHEN A PARTICIPANT TERMINATES AN ACCOUNT?
If a participant's notice of termination is received by the
administrator at least five business days prior to the record date for the next
dividend payment, reinvestment of dividends will cease as of the date the notice
of termination is received by the administrator. If the administrator receives
the notice of termination later than five business days prior to the above date,
the termination may not become effective until after the reinvestment of any
dividends on that dividend payment date. As soon as practicable after notice of
termination is received, the administrator will send to the participant (1) a
certificate evidencing all whole shares of our common stock held in the account
and (2) a check representing the value of any fractional shares of our common
stock held in the account. After an account is terminated, we will pay all
distributions for the terminated account to the participant unless the
participant re-elects to participate in the plan.
When terminating an account, the participant may request that all
shares of our common stock, both whole and fractional, held in the plan account
be sold, or that certain of the shares of such common stock be sold and a
certificate be issued for the remaining shares. The administrator will remit to
the participant the proceeds of any sale of shares of our common stock, less any
14
<PAGE>
related trading fees, transfer tax or other fees incurred by it allocable to the
sale of those shares of common stock.
24. WHEN MAY A FORMER PARTICIPANT RE-ELECT TO PARTICIPATE IN THE PLAN?
Generally, any former participant may re-elect to participate at
anytime. However, the administrator reserves the right to reject any
authorization form on the grounds of excessive joining and withdrawing. This
reservation is intended to minimize unnecessary administrative expense and to
encourage use of the plan as a long-term investment service.
25. HOW MAY PARTICIPANTS WITHDRAW FROM THE PLAN?
Except as set forth below, a participant may terminate enrollment in
the plan by giving written notice to the administrator, which notice is received
at least ten business days prior to the first day of the next Pricing Period,
and thereafter all cash dividends, if any, on shares owned by such participant
will be sent to the participant. In the event that a purchase of shares on
behalf of a participant pursuant to the plan is pending, such participant may
not terminate enrollment until after the Investment Date relating to such
Pricing Period. Any fractional shares held in the plan at the time of
termination will be converted to cash on the basis of the then last applicable
Investment Price.
If a participant's plan account balance falls below one full share, the
administrator reserves the right to liquidate the fraction and remit the
proceeds, less any applicable fees, to the participant at its address of record.
26. WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF PARTICIPATING IN THE
PLAN?
The tax consequences resulting from optional cash investments are
unclear. Participants may be treated as having received a distribution from us
upon the purchase of shares pursuant to the plan with an optional cash
investment in an amount equal to the excess, if any, of the fair market value of
the shares acquired on the Investment Date over the optional cash investment.
Any such deemed distribution will be treated as a taxable dividend to the extent
attributable to our current or accumulated earnings and profits. The purchased
shares will have a tax basis equal to the amount of the optional cash investment
plus the amount of the deemed distribution, if any, which is treated as a
dividend. The fair market value of shares acquired on an Investment Date is
likely to differ from the amount of optional cash investment.
Participants will be treated as having received a distribution from the
us equal to the fair market value on the Investment Date of the shares, if any,
acquired with reinvested dividends pursuant to the plan. Such distribution will
be treated as a dividend to the extent attributable to our current or
accumulated earnings and profits. Any excess will first be treated as a tax-free
return of capital, causing a reduction in the basis of existing shares, and the
balance will be treated as capital gain recognized on a sale or exchange. A
participant's tax basis in the dividend shares will equal the fair market value
of such shares on the Investment Date.
15
<PAGE>
A participant's holding period for shares acquired pursuant to the plan
will begin on the day following the Investment Date. When a participant receives
certificates for whole shares credited to the participant's account under the
plan, the participant will not realize any taxable income. However, a
participant that receives a cash adjustment for a fraction of a share will
realize a gain or loss with respect to such fraction. A gain or loss also will
be realized by the participant whenever whole shares are sold, either pursuant
to the participant's request, upon withdrawal from the plan or after withdrawal
from the plan. The amount of such gain or loss will be the difference between
the amount that the participant receives for the shares or fraction of a share
and the tax basis of the participant in the shares.
THE FOREGOING IS ONLY A SUMMARY OF THE FEDERAL INCOME TAX CONSEQUENCES
OF PARTICIPATION IN THE PLAN AND DOES NOT CONSTITUTE TAX ADVICE. THIS SUMMARY
DOES NOT REFLECT EVERY POSSIBLE OUTCOME THAT COULD RESULT FROM PARTICIPATION IN
THE PLAN AND, THEREFORE, PARTICIPANTS ARE ADVISED TO CONSULT THEIR OWN TAX
ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES APPLICABLE TO THEIR PARTICULAR
SITUATIONS.
27. WHAT HAPPENS IF A PARTICIPANT SELLS OR TRANSFERS SHARES OR ACQUIRES
ADDITIONAL SHARES?
If a participant has elected to have dividends automatically reinvested
in the plan and subsequently sells or transfers all or any part of the shares
registered in the participant's name, automatic reinvestment will continue as
long as shares are registered in the name of the participant or held for the
participant by the administrator or until termination of enrollment. Similarly,
if a participant has elected the "Full Dividend Reinvestment" option under the
plan and subsequently acquires additional shares registered in the participant's
name, dividends paid on such shares will automatically be reinvested until
termination of enrollment. If, however, a participant has elected the "Partial
Dividend Reinvestment" option and subsequently acquires additional shares that
are registered in the participant's name, dividends paid on such shares will not
be automatically reinvested under the plan. Participants may, however, change
their dividend reinvestment elections by submitting new authorization and
enrollment forms.
28. HOW ARE THE PARTICIPANT'S SHARES OF COMMON STOCK VOTED AT STOCKHOLDER
MEETINGS?
Shares of common stock held for a participant in the plan will be voted
at stockholder meetings as that participant directs by proxy. Participants will
receive proxy materials from us. Shares of our common stock held in a
participant's plan account may also be voted in person at the meeting.
29. WHO PAYS THE EXPENSES OF THE PLAN?
There is no fee for enrolling in the program. Participation is
voluntary and a participant may discontinue its participation at any time.
However, there are fees associated with the plan and the administrator's
services. Shares for the plan purchased directly from us, will not involve
trading fees or service charges in connection with purchases of shares.
Participants that request
16
<PAGE>
the sale of any of their shares held in the plan must pay a fee initially equal
to $_____ per transaction plus $_____ per share plus any applicable taxes and
brokerage charges. The administrator may effect any sales of shares for the
plan through a broker-dealer, in which case such broker-dealer will receive a
commission for effecting such transactions. The administrator may also charge
participants for additional services not provided under the plan or where
specified charges are indicated. Any fees may be changed by the administrator at
any time, without notice to participants. Participants may obtain a current
listing of all applicable administrative fees by contacting the administrator at
the address or telephone number listed in Question 5 above. Brokers or nominees
that participate on behalf of beneficial owners for whom they are holding shares
may also charge such beneficial owners fees in connection with such
participation, for which neither the administrator nor we will be responsible.
30. WHAT IS THE RESPONSIBILITY OF WINSTAR AND THE ADMINISTRATOR UNDER THE
PLAN?
OUR COMPANY AND THE ADMINISTRATOR, IN ADMINISTERING THE PLAN, ARE NOT
LIABLE FOR ANY ACT DONE IN GOOD FAITH OR FOR ANY GOOD FAITH OMISSION TO ACT,
INCLUDING, WITHOUT LIMITATION, ANY CLAIM OF LIABILITY; OR WITH RESPECT TO THE
PRICES AND TIMES AT WHICH SHARES OF OUR COMMON STOCK ARE PURCHASED OR SOLD FOR A
PARTICIPANT; OR WITH RESPECT TO ANY FLUCTUATION IN MARKET VALUE BEFORE OR AFTER
ANY PURCHASE OR SALE OF SHARES OF OUR COMMON STOCK; OR ARISING OUT OF ANY
FAILURE TO TERMINATE A PARTICIPANT'S ACCOUNT UPON THAT PARTICIPANT'S DEATH PRIOR
TO THE ADMINISTRATOR'S RECEIPT OF NOTICE IN WRITING OF THE DEATH. NEITHER OUR
COMPANY NOR THE ADMINISTRATOR CAN PROVIDE ANY ASSURANCE OF A PROFIT, OR PROTECT
A PARTICIPANT FROM A LOSS, ON SHARES OF OUR COMMON STOCK PURCHASED UNDER THE
PLAN. THESE LIMITATIONS OF LIABILITY DO NOT AFFECT ANY LIABILITIES ARISING UNDER
THE FEDERAL SECURITIES LAWS, INCLUDING THE SECURITIES ACT OF 1933. THE
ADMINISTRATOR MAY RESIGN AS ADMINISTRATOR OF THE PLAN AT ANY TIME, IN WHICH CASE
WE WILL APPOINT A SUCCESSOR ADMINISTRATOR. IN ADDITION, WE MAY REPLACE THE
ADMINISTRATOR WITH A SUCCESSOR ADMINISTRATOR AT ANY TIME.
31. WHAT HAPPENS IF WE MAKE A DISTRIBUTION OF SHARES OF COMMON STOCK OR
SPLIT OUR SHARES?
If there is a distribution payable in shares of our common stock or a
common stock split, The administrator will receive and credit to the
participant's plan account the applicable number of whole and/or fractional
shares of common stock based on the number of shares of common stock held in the
participant's plan account.
32. WHAT HAPPENS IF WE HAVE A RIGHTS OFFERING?
If we have a rights offering in which separately tradable and
exercisable rights are issued to registered holders of shares of our common
stock, we will transfer the rights attributable to
17
<PAGE>
whole shares of our common stock held in a participant's plan account to the
plan participant as promptly as practicable after the rights are issued.
33. MAY A PARTICIPANT PLEDGE OR TRANSFER SHARES OF COMMON STOCK HELD IN THE
PLAN?
A participant may not pledge, sell or otherwise transfer shares of our
common stock held in the plan, and any such purported pledge or sale will be
void. A participant who wishes to pledge, sell or transfer shares of our common
stock must request that a certificate for those shares first be issued in the
participant's name or transferred into a brokerage account (i.e., to be held in
"street name").
34. MAY WE SUSPEND OR TERMINATE THE PLAN?
While we expect to continue the plan indefinitely, we may suspend or
terminate the plan at any time. We also reserve the right to modify, suspend,
terminate or refuse participation in the plan to any person at any time.
35. MAY WE AMEND THE PLAN?
We may amend or supplement the plan at any time. Any amendment or
supplement will only be effective upon mailing appropriate written notice at
least 30 days prior to the effective date thereof to each participant. Written
notice is not required when an amendment or supplement is necessary or
appropriate to comply with the rules or policies of the Securities and Exchange
Commission, the Internal Revenue Service or other regulatory authority or law,
or when an amendment or supplement does not materially affect the rights of
participants. The amendment or supplement will be deemed to be accepted by a
participant unless, prior to the effective date thereof, The administrator
receives written notice of the termination of a participant's plan account. Any
amendment may include an appointment by The administrator or by us of a
successor bank or agent, in which event we are authorized to pay that successor
bank or agent for the account of the participant all distributions and
distributions payable on shares of our common stock held by the participant for
application by that successor bank or agent as provided in the plan.
36. WHAT HAPPENS IF WE TERMINATE THE PLAN?
If the plan is terminated, each participant will receive (1) a
certificate for all whole shares of our common stock held in the participant's
plan account and (2) a check representing the value of any fractional shares of
our common stock held in the participant's plan account and any uninvested
distributions held in the account. As an alternative to number (1) above, a
participant may direct the administrator to issue the shares in the name of a
brokerage firm (i.e., in "street name").
18
<PAGE>
37. WHO INTERPRETS AND REGULATES THE PLAN?
We are authorized to issue such interpretations, adopt such regulations
and take such action as we may deem reasonably necessary to effectuate the plan.
Any action we or the administrator take to effectuate the plan in the good faith
exercise of our judgment will be binding on participants.
USE OF PROCEEDS
The proceeds from the sale of our common stock offered pursuant to the
plan will be added to our available funds and used for working capital and
general corporate purposes, including to make investments, acquire or enter into
other business arrangements with companies which may not be involved in the
telecommunications business.
PLAN OF DISTRIBUTION
Subject to the discussion below, we will distribute newly issued shares
of our common stock sold under the plan, rather than through an underwriter,
broker or dealer. There are no brokerage commissions or service charges
allocated to participants in the plan in connection with their purchases of such
newly issued shares of common stock.
In connection with the administration of the plan, we may be requested
to approve investments made pursuant to Requests for Waiver by or on behalf of
participants or other investors who may be engaged in the securities business.
Persons who acquire shares of common stock through the plan and resell
them shortly after acquiring them, including coverage of short positions, under
certain circumstances, may be participating in a distribution of securities that
would require compliance with Regulation M under the Securities Exchange Act of
1934 and may be considered to be underwriters within the meaning of the
Securities Act of 1933. We will not extend to any such person any rights or
privileges other than those to which it would be entitled as a participant, nor
will we enter into any agreement with any such person regarding the resale or
distribution by any such person of the shares of our common stock so purchased.
We may, however, accept investments made pursuant to Requests for Waiver by such
persons.
From time to time, financial intermediaries, including brokers and
dealers, and other persons may engage in positioning transactions in order to
benefit from any waiver discounts applicable to investments made pursuant to
Requests for Waiver under the plan. Those transactions may cause fluctuations in
the trading volume of our common stock. Financial intermediaries and such other
persons who engage in positioning transactions may be deemed to be underwriters.
We have no arrangements or understandings, formal or informal, with any person
relating to the sale of shares of our common stock to be received under the
plan. We reserve the right to modify, suspend or terminate participation in the
plan by otherwise eligible persons to eliminate practices that are inconsistent
with the purpose of the plan.
19
<PAGE>
We will pay any and all brokerage commissions and related expenses
incurred in connection with purchases of our common stock under the plan. Upon
withdrawal by a participant from the plan by the sale of shares of our common
stock held under the plan, the participant will receive the proceeds of that
sale less a nominal brokerage commission and any required tax withholdings or
transfer taxes.
Our common stock may not be available under the plan in all states. We
are not making an offer to sell our common stock in any state where the offer or
sale is not permitted.
SALES OF SHARES BY PARTICIPANTS
Participants that request the sale of any of their shares of common
stock held in the plan must pay a fee initially equal to $____ per transaction
plus any applicable taxes and, if the sale is through a broker-dealer, a
commission. Shares of our common stock may not be available under the plan in
all states. This prospectus does not constitute an offer to sell, or a
solicitation of an offer to buy, any shares of our common stock or other
securities in any state or any other jurisdiction to any person to whom it is
unlawful to make such offer in such jurisdiction.
LEGAL MATTERS
Certain legal matters in connection with the validity of the common
stock offered under this prospectus have been passed upon for us by Graubard
Mollen & Miller, New York, New York. Certain partners and employees of Graubard
Mollen & Miller own shares of our common stock.
EXPERTS
Our consolidated financial statements as of December 31, 1998 and 1999
and for the years ended December 31, 1997, 1998 and 1999 incorporated by
reference into this prospectus, have been audited by Grant Thornton LLP,
independent certified public accountants, to the extent and for the periods
indicated in their reports thereon.
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995 with respect to our
financial condition, results of operations and business. The words "anticipate,"
"believe," "estimate," "expect," "plan," "intend," "predict," "project," "will,"
"could" and similar terms and expressions, as they relate to us, are intended to
identify forward-looking statements. These statements reflect our current views
with respect to future events and are subject to numerous risks, uncertainties
and assumptions. We cannot assure you that any of our expectations will be
realized. Factors that
20
<PAGE>
may cause actual results to differ materially from those contemplated by
forward-looking statements include, without limitation:
o our ability to service our debt or to obtain financing for the
buildout of our domestic and international telecommunications
networks;
o our ability to attract and retain a sufficient revenue-generating
customer base;
o competitive pressures in the telecommunications and technology
industries;
o general economic conditions; and
o the other risks described in this prospectus under the caption
"Risk Factors."
We do not undertake to update our forward-looking statements or risk
factors to reflect future events or circumstances.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement on Form S-3 under the Securities
Act of 1933, as amended, with the Securities and Exchange Commission ("SEC").
This prospectus is part of that registration statement and does not contain all
of the information included in the registration statement. For further
information about us and our securities you may refer to the registration
statement and its exhibits and schedules as well as the documents described
below. You can review and copy these documents at the public reference
facilities maintained by the SEC or on the SEC's website as described above.
We also file annual, quarterly and special reports, proxy statements
and other information with the SEC. Our SEC filings are available to the public
over the Internet at the SEC's web site at http://www.sec.gov. You may also read
and copy any document we file at the SEC's public reference room at 450 Fifth
Street, N.W., Washington, D.C. 20549. These documents are also available at the
public reference rooms at the SEC's regional offices in New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available at the offices
of the Nasdaq National Market in Washington, D.C.
The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. This
prospectus incorporates by reference our documents listed below and any future
filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934:
21
<PAGE>
o Annual Report on Form 10-K, as amended, for the year ended
December 31, 1999;
o Quarterly Report on Form 10-Q filed May 15, 2000;
o Proxy Statement for the Annual Meeting of Stockholders held on
June 28, 2000, filed May 23, 2000;
o Current Report on Form 8-K, filed June 1, 2000; and
o The description of our common stock contained in our registration
statement on Form 8-A, as amended (File No. 1-10726), under the
Exchange Act.
We will provide any person to whom a prospectus is delivered a copy of
any and all of the documents incorporated in this prospectus by reference upon
their written or oral request. If you desire any of these documents, please
contact us as at Winstar Communications, Inc., 685 Third Avenue, New York, New
York, 10017, Attention: Investor Relations, 212-792-9800.
22
<PAGE>
SCHEDULE A
IMPORTANT DATES FOR OPTIONAL CASH INVESTMENTS
(2000-2001)
23
<PAGE>
IMPORTANT TELEPHONE NUMBERS
<TABLE>
<CAPTION>
TO OBTAIN CALL
--------- ----
<S> <C>
Information Concerning Your Plan Account
Authorization and enrollment forms, B/N Forms and
Gift/Transfer Forms
Price and Discount Information
Requests for Waiver
</TABLE>
24
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses in connection with the sale of the securities
being registered hereby, are as follows:
<TABLE>
<S> <C>
SEC registration fee......................................... $ 528,000.00
Legal fees and expenses...................................... 25,000.00
Accounting fees and expenses................................. 30,000.00
Miscellaneous................................................ 5,000.00
-----------------
Total................................................... $ 588,000.00
=================
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our certificate of incorporation provides that all of our directors,
officers, employees and agents shall be entitled to be indemnified by us to the
fullest extent permitted by law.
Section 145 of the Delaware General Corporation Law concerning
indemnification of officers, directors, employees and agents is set forth below.
"Section 145. Indemnification of officers, directors, employees and
agents; insurance.
(1) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the corporation, and with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
(2) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the
II-1
<PAGE>
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable for negligence or misconduct in the performance of
his duty to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
(3) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
(4) Any indemnification under sections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsections (a) and (b) of this
section. Such determination shall be made (1) by the board of directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (2) if such a quorum is not obtainable, or, even
if obtainable, a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (3) by the stockholders.
(5) Expenses incurred by an officer or director in defending a civil or
criminal action, suite or proceeding may be paid by the corporation in advance
of the final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer, to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the corporation as authorized in this section. Such expenses incurred by other
employees and agents may be so paid upon such terms and conditions, if any, as
the board of directors deems appropriate.
(6) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
(7) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted
II-2
<PAGE>
against him and incurred by him in any such capacity, or arising out of his
status as such, whether or not the corporation would have the power to indemnify
him against such liability under this section.
(8) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under this section with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
(9) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee or
agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith an in a manner he reasonably
believed to be in the interest of the participants and beneficiaries of an
employee benefit plan shall be deemed to have acted in a manner "not opposed to
the best interests of the corporation" as referred to in this section.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to our directors, officers, and controlling persons
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by us of expenses incurred or paid by a
director, officer or controlling person in a successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, we will, unless in the
opinion of our counsel the matter has been settled by controlling precedent,
submit to the court of appropriate jurisdiction the question whether such
indemnification by us is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-3
<PAGE>
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
1.1 Form of Debt Securities Underwriting Agreement**
1.2 Form of Preferred Stock Underwriting Agreement**
1.3 Form of Common Stock Underwriting Agreement**
1.4 Form of Depositary Shares Underwriting Agreement**
4.3 Form of Indenture relating to Senior Debt Securities, including form of Debt
Security, to be issued hereunder*
4.4 Form of Indenture relating to Subordinated Debt Securities and Junior
Subordinated Debt Securities, including form of Debt Security, to be issued
hereunder*
4.5 Form of Deposit Agreement**
5.1 Opinion of Graubard Mollen & Miller*
12.1 Ratio of Earnings to Fixed Charges'D'
23.1 Consent of Grant Thornton LLP
23.2 Consent of Graubard Mollen & Miller (included in its opinion filed as Exhibit
5.1)*
24 Power of Attorney (set forth on signature page)
25.1 Statement of Eligibility of Trustee for Senior Debt Securities*
25.2 Statement of Eligibility of Trustee for the Subordinated Debt Securities and
Junior Subordinated Debt Securities*
</TABLE>
--------------------
* To be filed by amendment.
** To be incorporated by reference herein in connection with the offering
of each series of securities.
'D' Incorporated by reference from the exhibit of the same number as filed
in the Company's Registration Statement on Form S-3 (333-38492).
ITEM 17. UNDERTAKINGS.
II-4
<PAGE>
(1) The undersigned registrant hereby undertakes:
(1) 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 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(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;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment 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.
(3) 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.
(2) 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 Section 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 that time shall be deemed to be the initial bona fide offering thereof.
II-5
<PAGE>
(3) 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.
(4) For purposes of determining any liability under the Securities Act
of 1933, the 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.
(5) 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.
(f) The undersigned Registrant hereby undertakes to file an application
for the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance with the
rules and regulations prescribed by the Commission under Section 305(b)(2) of
the Act.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
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 3rd day of
August, 2000.
WINSTAR COMMUNICATIONS, INC.
By: /s/ William J. Rouhana, Jr.
----------------------------------------
William J. Rouhana, Jr.
Chairman of the Board of Directors
and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints William J. Rouhana, Jr. and Timothy R.
Graham his true and lawful attorneys-in-fact and agents, each acting alone, with
full power of substitution and re-substitution, for him and in his name, place
and stead, in any and all capacities, to sign any or all amendments to this
Registration Statement, including post-effective amendments, and to file the
same, with all exhibits thereto, and all documents in connection therewith, with
the Commission, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, and hereby ratifies and
confirms all that said attorneys-in-fact and agents, each acting alone, or their
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
Name Position Date
---- -------- ----
<S> <C> <C>
/s/ William J. Rouhana, Jr.
------------------------------------ Chairman of the Board and Chief Executive August 3, 2000
William J. Rouhana, Jr. Officer (principal executive officer)
/s/ Nathan Kantor
------------------------------------ President, Chief Operating Officer and August 3, 2000
Nathan Kantor Director
/s/ Timothy R. Graham
------------------------------------ Executive Vice President, Secretary and August 3, 2000
Timothy R. Graham Director
</TABLE>
II-7
<PAGE>
<TABLE>
<CAPTION>
Name Position Date
---- -------- ----
<S> <C> <C>
/s/ Richard J. Uhl
------------------------------------ Group Executive and Chief Financial Officer August 3, 2000
Richard J. Uhl (principal financial and accounting officer)
/s/ Bert W. Wasserman
------------------------------------ Director August 3, 2000
Bert W. Wasserman
/s/ William J. vanden Heuvel
------------------------------------ Director August 3, 2000
William J. vanden Heuvel
/s/ Steven B. Magyar
------------------------------------ Director August 3, 2000
Steven B. Magyar
/s/ Hartley R. Rogers
------------------------------------ Director August 3, 2000
Hartley R. Rogers
/s/ Lawrence B. Sorrel
------------------------------------ Director August 3, 2000
Lawrence B. Sorrel
/s/ James I. Cash
------------------------------------ Director August 3, 2000
James I. Cash
</TABLE>
II-8
<PAGE>
EXHIBIT INDEX
<TABLE>
<S> <C>
1.1 Form of Debt Securities Underwriting Agreement**
1.2 Form of Preferred Stock Underwriting Agreement**
1.3 Form of Common Stock Underwriting Agreement**
1.4 Form of Depositary Shares Underwriting Agreement**
4.3 Form of Indenture relating to Senior Debt Securities, including form of Debt
Security, to be issued hereunder*
4.4 Form of Indenture relating to Subordinated Debt Securities and Junior
Subordinated Debt Securities, including form of Debt Security, to be issued
hereunder*
4.5 Form of Deposit Agreement**
5.1 Opinion of Graubard Mollen & Miller*
12.1 Ratio of Earnings to Fixed Charges'D'
23.1 Consent of Grant Thornton LLP
23.2 Consent of Graubard Mollen & Miller (included in its opinion filed as Exhibit
5.1)*
24 Power of Attorney (set forth on signature page)
25.1 Statement of Eligibility of Trustee for Senior Debt
Securities*
25.2 Statement of Eligibility of Trustee for the Subordinated Debt Securities and
Junior Subordinated Debt Securities*
</TABLE>
--------------------
* To be filed by amendment.
** To be incorporated by reference herein in connection with the offering
of each series of securities.
'D' Incorporated by reference from the exhibit of the same number as filed
in the Company's Registration Statement on Form S-3 (333-38492).
STATEMENT OF DIFFERENCES
The registered trademark symbol shall be expressed as.......................'r'
The dagger symbol shall be expressed as.....................................'D'
The Euro symbol shall be expressed as.......................................'E'
II-9
