<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to _____________
Commission File Number 0-19728
GRANITE BROADCASTING CORPORATION
(exact name of registrant as specified in its charter)
DELAWARE 13-3458782
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
767 Third Avenue
34th Floor
New York, New York 10017
Telephone number: (212) 826-2530
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes_____X No_____ _______
(APPLICABLE ONLY TO CORPORATE ISSUERS:)
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class A Voting Common Stock, par value $.01 per share - 178,500 shares
outstanding at June 30, 1996; Common Stock (Nonvoting), par value $.01 per share
- - 8,498,966 shares outstanding at June 30, 1996.
<PAGE>
PART I. FINANCIAL INFORMATION
GRANITE BROADCASTING CORPORATION
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
June 30, December 31,
ASSETS 1996 1995
- ------ ------------- -------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,191,735 $ 95,123
Accounts receivable, net 27,197,034 26,186,579
Film contract rights 3,183,925 5,813,366
Other assets 4,667,932 3,854,774
------------ ------------
Total current assets 36,240,626 35,949,842
Property and equipment, net 33,021,295 32,132,126
Film contract rights and other noncurrent assets 4,158,089 3,725,612
Deferred financing fees, net 13,276,798 14,849,529
Intangible assets, net 361,642,870 365,564,029
------------ ------------
$448,339,678 $452,221,138
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable $ 2,156,278 $ 4,770,793
Accrued interest 5,574,376 5,595,610
Other accrued liabilities 3,960,885 3,252,518
Film contract rights and other current liabilities 6,790,741 7,708,442
------------ ------------
Total current liabilities 18,482,280 21,327,363
Long-term debt 346,536,300 341,000,000
Film contract rights payable 3,261,236 3,669,534
Deferred tax and other noncurrent liability 31,773,090 31,869,240
Redeemable preferred stock 45,487,500 45,487,500
Stockholders' equity:
Common Stock: 41,000,000 shares authorized consisting of
1,000,000 shares of Voting Common Stock, $.01 par value,
and 40,000,000 shares of Common Stock (Nonvoting), $.01
par value; 178,500 shares of Voting Common Stock and
8,498,966 shares of Common Stock (Nonvoting) (8,218,240
shares at December 31,1995) issued and outstanding 86,774 83,967
Additional paid-in capital 46,923,331 46,864,202
Accumulated deficit (41,125,645) (36,590,198)
Less: Unearned compensation (2,198,313) (1,490,470)
Note receivable from officer (886,875) ---
------------ ------------
Total stockholders' equity 2,799,272 8,867,501
------------ ------------
$448,339,678 $452,221,138
------------ ------------
</TABLE>
See accompanying notes.
-1-
<PAGE>
GRANITE BROADCASTING CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
1996 1995 1996 1995
------------ ------------ ----------- ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net revenues $33,961,195 $22,669,068 $ 62,590,830 $39,124,869
Station operating expenses 17,009,608 11,908,009 34,527,535 22,246,904
Depreciation expense 1,529,169 835,563 3,002,549 1,640,502
Amortization expense 2,883,335 1,869,352 5,834,613 3,316,900
Corporate expense 1,021,882 652,617 2,011,896 1,464,433
Non-cash compensation expense 115,319 79,834 229,856 160,747
----------- ----------- ---------- -----------
Operating income 11,401,882 7,323,693 16,984,381 10,295,383
Other (income) expenses:
Equity in net income of investee --- (439,033) --- (439,033)
Interest expense, net 9,198,301 4,772,474 18,048,031 8,482,567
Other 219,225 176,740 344,858 271,001
----------- ----------- ---------- -----------
Income (loss) before income taxes
and extraordinary items 1,984,356 2,813,512 (1,408,508) 1,980,848
Provision for income taxes (174,600) (91,000) (235,689) (91,000)
----------- ----------- ---------- -----------
Income (loss) before extraordinary
items 1,809,756 2,722,512 (1,644,197) 1,889,848
Extraordinary gain (loss) 618,902 --- (2,891,250) ---
----------- ----------- ---------- -----------
Net income (loss) $ 2,428,658 $ 2,722,512 $ (4,535,447) $ 1,889,848
=========== =========== ============ ===========
Net income (loss) attributable to
common stockholders $ 1,547,338 $ 1,841,192 $ (6,298,085) $ 91,208
=========== =========== ============ ===========
Per common share:
Income (loss) before extraordinary
items $ 0.10 $ 0.22 $ (0.40) $ 0.01
Extraordinary gain (loss) 0.07 --- (0.34) ---
----------- ----------- ------------ -----------
Net income (loss) $ 0.17 $0.22 $ (0.74) $ 0.01
=========== =========== ============ ===========
Weighted average shares and
equivalents outstanding 9,184,842 8,529,130 8,545,183 8,495,594
</TABLE>
See accompanying notes.
-2-
<PAGE>
GRANITE BROADCASTING CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Six Months Ended June 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Class A Common Additional Total
Common Stock Paid-in Accumulated Unearned Note Receivable Stockholders'
Stock (Nonvoting) Capital Deficit Compensation from Officer Equity
--------------------------------------------------- ----------------------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995 $1,785 $82,182 $46,864,202 $(36,590,198) $(1,490,470) $8,867,501
Dividend on Cumulative
Convertible Exchangeable
Preferred Stock (1,762,638) (1,762,638)
Exercise of Stock Options 2,000 884,875 (886,875) -
Issuance of Common Stock
(Nonvoting) 807 (807) -
Grant of Stock Award Under
Management Stock Plan 937,699 (937,699) -
Stock expense related to
Management Stock Plan 229,856 229,856
Net loss (4,535,447) (4,535,447)
------ ------- ----------- ------------- ----------- --------- -----------
Balance at June 30, 1996 $1,785 $84,989 $46,923,331 $(41,125,645) $(2,198,313) $(886,875) $2,799,272
====== ======= =========== ============ =========== ========= ==========
</TABLE>
See accompanying notes.
-3-
<PAGE>
GRANITE BROADCASTING CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended June 30,
------------------------------
1996 1995
-------------- --------------
(Unaudited)
<S> <C> <C>
Cash flows from operating
activities:
Cash flows from operating
activities:
Net (loss) income $ (4,535,447) $ 1,889,848
Adjustments to reconcile net
(loss) income to net cash
provided by operating activities:
Amortization of intangible
assets and deferred
financing fees 5,834,613 3,316,900
Depreciation 3,002,549 1,640,502
Non-cash compensation expense 229,856 160,747
Equity in net income of investee --- (439,033)
Extraordinary loss 2,891,250 ---
Change in assets and liabilities
net of effects from
acquisitions of stations:
Increase in accounts receivable (1,010,455) (3,725,178)
Increase in accrued liabilities
and interest 687,133 1,734,757
(Decrease) increase in
accounts payable (2,614,515) 1,250,681
Decrease in film contract
rights
and other noncurrent assets 2,196,964 364,423
(Decrease) increase in film
contract rights
payable and other liabilities (1,325,999) 153,981
Increase in other assets (951,601) (2,020,871)
------------- -------------
Net cash provided by operating
activities 4,404,348 4,326,757
Cash flows from investing
activities:
Payment for acquisitions of
stations, net of
cash acquired --- (227,263,218)
Capital expenditures (3,689,327) (4,987,773)
------------- -------------
Net cash used in investing
activities (3,689,327) (232,250,991)
Cash flows from financing
activities:
Proceeds from bank loan 18,500,000 170,250,000
Proceeds from senior subordinated
notes 109,450,000 175,000,000
Repayment of bank debt (107,000,000) (101,500,000)
Repurchase of senior subordinated
notes (15,500,000) ---
Dividends paid (1,762,638) (1,798,640)
Payment of deferred financing fees (3,305,771) (10,003,802)
Proceeds from exercise of stock
options --- 1,500
Redemption of Adjustable Rate
Preferred Stock --- (2,000,000)
------------- -------------
Net cash provided by financing
activities 381,591 229,949,058
------------- -------------
Net increase in cash and cash
equivalents 1,096,612 2,024,824
Cash and cash equivalents,
beginning of period 95,123 1,947,562
------------- -------------
Cash and cash equivalents, end of
period $ 1,191,735 $ 3,972,386
============= =============
Supplemental information:
Cash paid for interest $ 17,957,728 $ 7,261,883
Income taxes paid 42,000 204,250
Non-cash capital expenditures 277,902 123,658
Other non-cash financing activity 886,875 ---
</TABLE>
See accompanying notes.
-4-
<PAGE>
GRANITE BROADCASTING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1 - Basis of presentation
- --------------------------------
The accompanying unaudited consolidated financial statements include the
accounts of Granite Broadcasting Corporation and its subsidiaries (the
"Company"), have been prepared in accordance with the instructions to Form 10-Q
and do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. Operating
results for the three and six-month periods ended June 30, 1996 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1996. For further information, refer to the Company's consolidated
financial statements and notes thereto for the year ended December 31, 1995
which were included in the Company's Form 10-K dated March 28, 1996. All
significant intercompany accounts and transactions have been eliminated. Data
at and for the year ended December 31, 1995 are derived from the Company's
audited consolidated financial statements.
In the opinion of management, all adjustments of a normal recurring nature which
are necessary for a fair presentation of the results for the interim periods
have been made.
Note 2 - Long Term Debt
- -----------------------
On February 22, 1996, the Company completed an offering of $110,000,000
principal amount of its 9-3/8% Series A Senior Subordinated Notes (the "9-3/8%
Notes") due December 1, 2005. Proceeds from the sale of the 9-3/8% Notes were
used to repay all outstanding term loan and revolving credit borrowings under
the Company's existing bank credit agreement and for general working capital
purposes. In connection with the repayment of the term loan (which is not
subject to being reborrowed), the Company incurred an extraordinary loss on the
early extinguishment of debt of $3,510,152 related to the write-off of deferred
financing fees.
On May 6, 1996, the Company purchased $2,000,000 face amount of its 10-3/8%
Senior Subordinated Notes due May 1, 2005 at a discount. On June 19, 1996, the
Company purchased $13,500,000 face amount of its 9-3/8% Notes at a discount. As
a result of these transactions, the Company recognized an extraordinary gain,
after the write-off of a portion of related deferred financing fees, of $618,902
during the second quarter of 1996.
Note 3 - Net income (loss) per common share
- --------------------------------------------
Net income per common share for the three month periods ended June 30, 1996 and
1995 and the six month period ended June 30, 1995 is calculated by dividing net
income attributable to common stockholders by the weighted average number of
shares of common stock and common stock equivalents outstanding. The
calculation assumes the conversion of certain convertible preferred stock and
the exercise of certain outstanding stock options. Net loss per common share for
the six month period ended June 30, 1996 is calculated by dividing net loss
attributable to common stockholders by the weighted average number of shares of
common stock outstanding. The inclusion of additional shares assuming the
exercise of outstanding stock options would have been antidilutive for six
months ended June 30, 1996.
Note 4 - Related Party Transactions
- -----------------------------------
On April 23, 1996, the Company made a loan to an officer in the amount of
$886,875 to pay the exercise price incurred in connection with exercising
options. The loan is a term loan which provides for an annual interest rate of
8%, payable annually on April 23 of each year, with all principal and remaining
interest due on April 23, 2001. The amount of the loan is shown in the balance
sheet at June 30, 1996 as a reduction to stockholders' equity.
-5-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Introduction
The consolidated financial statements of the Company reflect significant
increases between the three and six months ended June 30, 1996 and 1995 in
substantially all line items. The principal reasons for such increases are the
acquisition of WWMT-TV on June 1, 1995, the acquisition of WKBW-TV on June 29,
1995 and improvements in the Company's operations. It is anticipated that the
Company's consolidated financial statements for the year ended December 31, 1996
will reflect significant increases in substantially all line items compared to
the prior year due to the acquisitions of WWMT-TV and WKBW-TV. The Company may
recognize significant taxable income as a result of the acquisition of WKBW-TV.
Such taxable income could potentially eliminate substantially all the Company's
net operating losses for federal income tax purposes available for future
utilization, and could result in the Company being in a taxable position in
present and future years. For financial reporting purposes, any taxes paid
arising from the consummation of the acquisition of WKBW-TV has been considered
additional purchase price and allocated to goodwill.
The Company's revenues are derived principally from local and national
advertising and, to a lesser extent, from network compensation for the broadcast
of programming and revenues from studio rental and commercial production
activities. The primary operating expenses involved in owning and operating
television stations are employee salaries, depreciation and amortization,
programming and advertising and promotion expenses. Numbers referred to in the
following discussion have been rounded to the nearest thousand.
The following table sets forth certain operating data for the three month and
six month periods ended June 30, 1996 and 1995:
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
1996 1995 1996 1995
------------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
Operating income $11,402,000 $ 7,323,000 $16,984,000 $10,295,000
Add:
Depreciation and amortization 4,412,000 2,705,000 8,837,000 4,958,000
Corporate expense 1,022,000 653,000 2,012,000 1,464,000
Non-cash compensation 115,000 80,000 230,000 161,000
----------- ----------- ----------- -----------
Broadcast cash flow $16,951,000 $10,761,000 $28,063,000 $16,878,000
----------- ----------- ----------- -----------
</TABLE>
"Broadcast cash flow" means operating income plus depreciation, amortization,
corporate expense and non-cash compensation. The Company has included broadcast
cash flow data because such data are commonly used as a measure of performance
for broadcast companies and are also used by investors to measure a company's
ability to service debt. Broadcast cash flow is not, and should not be used as,
an indicator or alternative to operating income, net income or cash flow as
reflected in the consolidated financial statements, is not a measure of
financial performance under generally accepted accounting principles and should
not be considered in isolation or as a substitute for measures of performance
prepared in accordance with generally accepted accounting principles.
The Company believes that the adoption of Statement of Financial Accounting
Standards No. 123 (Accounting for Stock Based Compensation) has not, to the
extent in effect, and will not have a material effect on its financial position
and results of operations.
-6-
<PAGE>
Three Months Ended June 30, 1996 and 1995
- -----------------------------------------
Net revenues for the three months ended June 30, 1996 totaled $33,961,000, an
increase of $11,292,000 or 50 percent compared to $22,669,000 for the three
months ended June 30, 1995. Of the increase, $10,178,000 was due to the
inclusion of three months of operations of WKBW-TV and two additional months of
operations of WWMT-TV. The remaining increase was primarily due to increased
local advertising and political spending in an election year and increased
network compensation. Net revenues at the Company's nine stations (including
revenue derived by WKBW-TV and WWMT-TV prior to their acquisition by the
Company) increased $962,000 or 3 percent during the three months ended June 30,
1996 as compared to the same period in 1995.
Station operating expenses totaled $17,010,000, an increase of $5,102,000 or 43
percent compared to $11,908,000 for the three months ended June 30, 1995. Of
the increase, $4,560,000 was due to the inclusion of three months of operations
of WKBW-TV and two additional months of operations of WWMT-TV. The remaining
increase was primarily due to higher programming expenses and increased news
expenses associated with the launch of a news operation at KEYE-TV. Station
operating expenses at the Company's nine stations (including operating expenses
derived by WKBW-TV and WWMT-TV prior to their acquisition by the Company)
decreased $231,000 or 1 percent during the three months ended June 30, 1996 as
compared to the same period in 1995.
Depreciation and amortization increased by $1,708,000, or 63 percent during the
three months ended June 30, 1996 compared to the same period a year earlier
primarily due to the inclusion of three months of operations of WKBW-TV and two
additional months of operations of WWMT-TV. Corporate expense increased
$369,000, or 57 percent during the three months ended June 30, 1996 compared to
the same period a year earlier, primarily due to higher administrative costs
associated with the expansion of the Company's corporate office to manage its
expanded station group.
Net interest expense was $9,198,000 compared to $4,772,000 a year earlier, an
increase of 93 percent, primarily due to higher levels of outstanding
indebtedness as a result of the acquisitions of WKBW-TV and WWMT-TV in 1995.
The Company purchased $2,000,000 face amount of its 10-3/8% Senior Subordinated
Notes due May 1, 2005 (the "10-3/8% Notes") and $13,500,000 face amount of its
9-3/8% Series A Senior Subordinated Notes due December 1, 2005 (the "9-3/8%
Notes") at a discount during the three months ended June 30, 1996. As a result
of these transactions, the Company recognized an extraordinary gain, after the
write-off of a portion of related deferred financing fees, of $618,902 during
the second quarter of 1996.
Broadcast cash flow (operating income before depreciation, amortization,
corporate expense and non-cash compensation) totaled $16,951,000, an increase of
$6,190,000 or 58 percent compared to $10,761,000 for the three months ended June
30, 1995. Of the increase, $5,618,000 was due to the inclusion of three months
of operations of WKBW-TV and two additional months of operations of WWMT-TV.
Broadcast cash flow at the Company's nine stations (including broadcast cash
flow derived by WKBW-TV and WWMT-TV prior to their acquisition by the Company)
increased $1,192,000 or 8 percent during the three months ended June 30, 1996 as
compared to the same period in 1995.
Six Months Ended June 30, 1996 and 1995
- ---------------------------------------
Net revenues for the six months ended June 30, 1996 totaled $62,591,000, an
increase of $23,466,000 or 60 percent compared to $39,125,000 for the six months
ended June 30, 1995. Of the increase, $21,262,000 resulted from the inclusion of
one additional month of operations of KEYE-TV, five additional months of
operations of WWMT-TV and six months of operations of WKBW-TV in 1996. The
remaining increase was primarily a result of increased local advertising and
political spending in an election year and increased network compensation. Net
revenues at the Company's nine stations (including revenue derived by KEYE-TV,
WKBW-TV and WWMT-TV prior to their acquisition by the Company) increased
$2,583,000 or 4 percent during the six months ended June 30, 1996 as compared to
the same period in 1995.
Station operating expenses totaled $34,528,000, an increase of $12,281,000 or 55
percent compared to $22,247,000 for the six months ended June 30, 1995. Of the
increase, $10,648,000 was due to the inclusion of one additional month of
operating expenses of KEYE-TV, five additional months of operating expenses of
WWMT-TV and six months of operating expenses of WKBW-TV. The remaining increase
was primarily due to higher programming expenses and increased news expenses
associated with the launch of a news operation at KEYE-TV. Station operating
expenses at the Company's nine stations (including operating expenses derived by
KEYE-TV, WKBW-TV and WWMT-TV prior to their acquisition by the Company)
decreased $1,845,000 or 2 percent during the six months ended June 30, 1996 as
compared to the same period in 1995.
-7-
<PAGE>
Depreciation and amortization increased by $3,880,000, or 78 percent during the
six months ended June 30, 1996 compared to the same period a year earlier
primarily due to the inclusion of one additional month of operations of KEYE-
TV, five additional months of operations of WWMT-TV and six additional months of
operations of WKBW-TV. Corporate expense increased $547,000, or 37 percent
during the six months ended June 30, 1996 compared to the same period a year
earlier, primarily due to higher administrative costs associated with the
expansion of the Company's corporate office to manage its expanded station
group. Non-cash compensation expense increased $69,000 during the six months
ended June 30, 1996 compared to the same period a year earlier due to the
granting of additional awards payable in cash or Common Stock (Nonvoting) to
certain executive employees under the Company's Management Stock Plan.
Net interest expense was $18,048,000 compared to $8,483,000 a year earlier, an
increase of 113 percent, primarily due to higher levels of outstanding bank
indebtedness as a result of the acquisitions of KEYE-TV, WKBW-TV and WWMT-TV in
1995.
The Company completed an offering of $110,000,000 principal amount of its 9-3/8%
Notes during the first quarter of 1996. The proceeds from this offering were
used to repay all outstanding term loan and revolving credit borrowings under
the Company's existing bank credit agreement and for general working capital
purposes. In connection with the repayment of the term loan (which is not
subject to being reborrowed), the Company incurred an extraordinary loss on the
early extinguishment of debt of $3,510,000 related to the write-off of deferred
financing fees. This extraordinary loss has been partially offset by an
extraordinary gain recognized during the second quarter, resulting in a net
extraordinary loss for the six months ended June 30, 1996 of $2,891,000.
Broadcast cash flow (operating income before depreciation, amortization,
corporate expense and non-cash compensation) totaled $28,063,000, an increase of
$11,185,000 or 66 percent compared to $16,878,000 for the six months ended June
30, 1995. Of the increase, $10,614,000 was due to the inclusion of one
additional month of operations of KEYE-TV, five additional months of operations
of WWMT-TV and a full six months of operations of WKBW-TV. Broadcast cash flow
at the Company's nine stations (including broadcast cash flow derived by KEYE-
TV, WKBW-TV and WWMT-TV prior to their acquisition by the Company) increased
$1,867,000 or 7 percent during the six months ended June 30, 1996 as compared to
the same period in 1995.
Liquidity and Capital Resources
- -------------------------------
On February 22, 1996, the Company completed an offering of $110,000,000
principal amount of its 9 3/8% Notes. The proceeds from this offering were used
to repay all outstanding term loan and revolving credit borrowings under the
Company's existing bank credit agreement and for general working capital
purposes. As of July 31, 1996, the Company had $45,000,000 of the revolving
credit facility under the credit agreement available for working capital
purposes.
Cash flows provided by operating activities were $4,404,000 during the six
months ended June 30, 1996 compared to cash flows provided by operating
activities of $4,327,000 during the six months ended June 30, 1995, an increase
of $77,000 or less than 2 percent.
Cash flows used in investing activities were $3,689,000 during the six months
ended June 30, 1996, compared to $232,251,000 during the six months ended June
30, 1995. Cash flows used in investing activities during the six months ended
June 30, 1995 related primarily to the acquisitions of KEYE-TV, WWMT-TV and
WKBW-TV while cash flows used in investing activities during the six months
ended June 30, 1996 were related entirely to capital expenditures.
Cash flows provided by financing activities were $382,000 during the six months
ended June 30, 1996 compared to cash flows provided by financing activities of
$229,949,000 during the six months ended June 30, 1995. The decrease resulted
primarily from a decrease in net borrowings offset in part by a decrease in
payments for deferred financing fees.
The Company believes that internally generated funds from operations, and
borrowings under its revolving working capital facility, if necessary, will be
sufficient to satisfy the Company's cash requirements for its existing
operations for the next twelve months and for the foreseeable future thereafter.
-8-
<PAGE>
PART II
-------
OTHER INFORMATION
-----------------
ITEM 1. Legal Proceedings
-----------------
Not applicable
ITEM 2. Changes in Securities
---------------------
Not applicable
ITEM 3. Defaults upon Senior Securities
-------------------------------
Not applicable
ITEM 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
Not applicable
ITEM 5. Other Information
-----------------
Not applicable
ITEM 6. Exhibits and Reports on Form 8-K
--------------------------------
a. Exhibits
--------
10.1 Granite Broadcasting Corporation Stock Option Plan, as
amended on July 24, 1996.
10.15 Granite Broadcasting Corporation Management Stock Plan, as
amended on July 24, 1996.
11. Statement of Computation of Per Share Earnings.
-9-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the Registrant has caused this report to be signed by an officer
and the principal accounting officer on its behalf by the undersigned thereunto
duly authorized.
GRANITE BROADCASTING CORPORATION
Registrant
Date August 14, 1996 /s/ W. DON CORNWELL
--------------- -------------------------------
(W. Don Cornwell)
Chief Executive Officer
Date August 14, 1996 /s/ LAWRENCE I. WILLS
--------------- ----------------------------------------
(Lawrence I. Wills)
Vice President, Finance and Controller
(Principal Accounting Officer)
<PAGE>
EXHIBIT 10.1
AMENDED
GRANITE BROADCASTING CORPORATION
STOCK OPTION PLAN
JULY 24, 1996
1. PURPOSE. The purpose of this Stock Option Plan (the "Plan"),
-------
adopted by the Board of Directors of Granite Broadcasting Corporation (the
"Company") on April 17, 1990 and amended on May 10, 1990, November 8, 1990,
September 20, 1991, April 27, 1993, July 25, 1995 and July 24, 1996, is to
provide a means by which certain employees and officers of the Company and its
Affiliates (as defined below) may be given an opportunity to purchase non-voting
common stock of the Company. Options that may be granted under this Plan
include (a) Incentive Stock Options as such term is defined in Section 422A of
the Internal Revenue Code of 1986, as amended (hereinafter the "Code"), and (b)
Nonqualified Stock Options, which would not constitute Incentive Stock Options.
The Plan is intended to advance the interests of the Company by encouraging
stock ownership on the part of certain employees and officers, by enabling the
Company (and its Affiliates) to secure and retain the services of highly
qualified persons, and by providing employees and officers with an additional
incentive to advance the success of the Company (and its Affiliates). For
purposes of this Plan, Affiliate shall mean any parent or subsidiary corporation
of the Company. The term "parent corporation" shall mean any corporation (other
than the Company) in an unbroken chain of corporations ending with the Company
if, on the date of grant of the option in question, each of the corporations
other than the Company owns stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain. The term "subsidiary corporation" shall mean any
corporation in an unbroken chain of corporations beginning with the Company if,
on the date of grant of the option in question, each of the corporations other
than the last corporation in the chain owns stock possessing fifty percent (50%)
or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain. Affiliation shall refer to a group of
Affiliates.
2. STOCK SUBJECT TO OPTION. Subject to adjustment as provided in Sections
-----------------------
4(i) and (j) hereof, options may be granted by the Company from time to time to
purchase up to an aggregate of 2,000,000 shares of the Company's authorized but
unissued Class B Nonvoting Common Stock, par value $0.01 per share ("Common
Stock"). Shares that by reason of the expiration of an option or otherwise are
no longer subject to purchase pursuant to an option granted under the Plan may
be again available for issuance pursuant to options under the Plan.
1
<PAGE>
3. PARTICIPANTS. Persons eligible to be granted Incentive Stock Options
------------
or Nonqualified Stock Options under the Plan shall be limited to key employees
of the Company (or its Affiliates) (including employees who are also officers or
directors, but not including directors who are not also employees) who have
substantial responsibility in the direction and management of the Company or an
Affiliate, as indicated by the action of the Stock Option Committee or the
Compensation Committee (as such terms are defined in Section 5) in granting an
option to such employee.
4. TERMS AND CONDITIONS OF OPTIONS. The Stock Option Committee may grant
-------------------------------
options from time to time pursuant to the Plan. Such options shall be evidenced
by written stock option agreements signed by the Optionee and by the President
of the Company or by any member of the Stock Option Committee (the "Stock Option
Agreements"). The Stock Option Agreements shall be subject to the terms and
conditions of the Plan, shall specify whether the options are Incentive Stock
Options or Nonqualified Stock Options and shall contain such other provisions as
the Stock Option Committee in its discretion shall deem appropriate. Shares of
Common Stock that may be purchased under an option granted pursuant to this Plan
shall sometimes hereinafter be referred to as "Option Shares," and an employee
of the Company to whom options are granted shall sometimes hereinafter be
referred to as an "Optionee."
(A) OPTION PRICE. The option price for each Incentive Stock Option
------------
share shall not be less than the fair market value of a share of the Common
Stock on the date the option is granted. The option price for each
Nonqualified Stock Option share shall be specified by the Stock Option
Committee at the time such option is granted, and may be less than, equal
to or greater than the fair market value of the shares of Common Stock on
the date such option is granted. The option price may include amounts that
are required to be paid by the Optionee, as a down payment of the option
price, prior to his or her exercise of the option. In its sole discretion,
the Stock Option Committee may provide that the price at which shares may
be so purchased shall be more than such fair market value on the date of
grant. However, notwithstanding the foregoing, the option price for
Incentive Stock Options granted to any employee owning stock (including any
attribution of stock ownership under Section 425(d) of the Code) possessing
more than 10% of the total combined voting power of all classes of stock of
the Company or any of its Affiliates on the date such option is granted
(hereinafter a "10% Shareholder"), shall be at least 110% of the fair
market value of the Common Stock on the date the option is granted. The
Stock Option Committee shall, in good faith, determine the fair market
value of the Common Stock on the date the option is granted, and the fair
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<PAGE>
market value may be more or less than the book value of the Common Stock.
(B) TERM OF OPTION. Unless otherwise specifically provided in an
--------------
Optionee's Stock Option Agreement, each option granted under this Plan
shall expire no later than ten years after the date the option is granted
except under the circumstances described in Sections 4(g), 4(j)(2), 4(j)(3)
and 4(k), options may expire and terminate at an earlier date than provided
in this paragraph. If an Incentive Stock Option is granted to an employee
who is a 10% Shareholder, then, for purposes of such Incentive Stock Option
the word "five" shall be substituted for the word "ten" in the immediately
preceding sentence. The term of Nonqualified Stock Options granted
hereunder shall be determined by the Stock Option Committee in its
discretion.
(C) EXERCISE OF OPTION. Except as otherwise specifically provided in
------------------
this Plan, each option will be exercisable according to the provisions of
an Optionee's Stock Option Agreement. All options (whenever granted) of an
Optionee shall become immediately exercisable upon the (i) death or
disability (as defined in Section 4(g)(2) below) of such Optionee; and (ii)
the occurrence of a "Change of Control"; for purposes hereof, a "Change of
Control" shall occur on the date on which W. Don Cornwell no longer owns,
beneficially, in excess of 50% of the issued and outstanding Class A Common
Stock of the Company.
(D) MANNER OF EXERCISE. Shares of Common Stock purchased upon
------------------
exercise of options shall at the time of purchase be paid for in full. To
the extent that an option is exercisable, options may be exercised from
time to time by written notice to the Company stating the full number of
shares with respect to which the option is being exercised, accompanied by
full payment (or the balance due) of the exercise price, for the shares
being purchased, by certified or official bank check or the equivalent
thereof acceptable to the Company. When and if shares of the Company's
Common Stock are traded on either the New York or American Stock Exchanges
or in the NASDAQ/National Market System, the payment of the exercise price
may be in the form of Common Stock, the value of which shall be deemed to
be the closing price on the last trading date prior to date on which the
shares are tendered for payment of the exercise price. The notice required
by this paragraph shall be delivered in person to the President of the
Company, or shall be sent by registered or certified mail, return receipt
requested, to the President of the Company, in which case
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<PAGE>
delivery shall be deemed made on the date such notice is deposited in the
mail. The Company shall, without charge of any transfer or issue tax to
the Optionee (or other person entitled to exercise the option), deliver to
the Optionee (or to such other person) at the principal office of the
Company, or such other place as shall be mutually agreed upon, a
certificate or certificates for the shares being purchased; provided,
however, that the time of delivery may be postponed by the Company for such
period as may be required for it with reasonable diligence to comply with
any requirements of law. Pursuant to Section 6 hereof, the Company may
require that, at the time of exercise, each Optionee: (i) deliver an
investment representation in form acceptable to the Company and its counsel
that the shares are being acquired for investment and not with a view to
their distribution, and (ii) enter into any applicable stockholders'
agreement with the Company and other stockholders of the Company, as deemed
necessary by the Stock Option Committee.
(E) LIMITATION ON AMOUNT. No employee shall be granted Incentive
--------------------
Stock Options which, when first exercisable during any calendar year
(combined with all other incentive stock option plans of the Company and
its Affiliates), will permit such employee to purchase stock that has an
aggregate fair market value (determined as of the time the option is
granted) of more than $100,000.
(F) NON-ASSIGNABILITY OF OPTION RIGHTS. No option shall be
----------------------------------
assignable or transferable other than by will or by the laws of descent and
distribution. Any attempt to sell, assign, transfer, pledge, hypothecate
or otherwise dispose of an option granted pursuant hereto shall be null and
void. During the lifetime of an Optionee, the option is exercisable only
by the Optionee or, in the event of said Optionee's incapacity, by his duly
authorized legal representative.
(G) TERMINATION OF EMPLOYMENT.
-------------------------
(1) In the event that Optionee's employment by the Company and
its Affiliates shall terminate for any reason, with or without cause,
and the provisions of Sections 4(g)(2), 4(g)(3), 4(j) and 4(k) do not
apply, (i) the option for those shares for which such option was
exercisable pursuant to this plan immediately prior to such
termination of employment shall terminate thirty (30) days following
such termination of employment, unless specifically provided otherwise
in such Optionee's Stock Option Agreement, and (ii) the option for
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<PAGE>
those shares for which the option was not exercisable immediately
prior to such termination of employment shall terminate on the date of
termination of employment. In the event that an option terminates
pursuant to the preceding sentence, any amounts paid as a down payment
on the exercise of such option (as provided in Section 4(a)) shall be
returned to the Optionee with respect to shares for which the option
was not exercisable on the date of termination of employment and shall
not be returned to the Optionee with respect to shares for which the
option was exercisable on the date of termination. For purposes of
this Section, whether an authorized leave of absence or absence on
military or government service shall constitute severance of the
employment relationship between the Company (or an Affiliate) and the
Optionee shall be determined by the Stock Option Committee in its sole
discretion at the time thereof.
(2) In the event that Optionee shall die while in the employment
of the Company (or an Affiliate) or if Optionee's employment by the
Company (or an Affiliate) is terminated because Optionee has become
disabled within the meaning of Section 22(e)(3) of the Code, the
Optionee, his personal representative, estate or beneficiary shall
have the right at any time within twelve months after such date of
death or termination due to disability to exercise such Optionee's
options. Notwithstanding the foregoing, the provisions of this
Section 4(g)(2) shall be subject to the provisions of Sections 4(b),
4(j)(3) and 4(k), which may terminate the option earlier.
(3) In the event that any termination of employment by an
Optionee is due to retirement with the consent of his employer, the
Optionee shall have the right to exercise his option at any time
within three months after such retirement to the extent the option was
exercisable immediately prior to retirement. Notwithstanding the
foregoing, the provisions of this Section 4(g)(3) shall be subject to
the provisions of Sections 4(b), 4(j)(3) and 4(k), which may terminate
the option earlier.
(H) CHANGES TO CAPITAL STRUCTURE; NEED FOR ADJUSTMENT. The existence
-------------------------------------------------
of outstanding options shall not affect in any way the right or power of
the Company or its stockholders to make or authorize any or all
adjustments, recapitalizations, reorganizations or other
-5-
<PAGE>
changes in the Company's capital structure or its business, or any merger
or consolidation of the Company, or any issue of bonds, debentures,
preferred or prior preference stock ahead of or affecting the Stock or the
rights thereof, or the dissolution or liquidation of the Company, or any
sale or transfer of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or otherwise.
Except as otherwise expressly provided in Sections 4(i) and 4(j), the
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, for cash or property, or for
labor or services either upon direct sale or upon the exercise of rights or
warrants to subscribe therefor, or upon conversion of shares or obligations
of the Company convertible into such shares or other securities, shall not
affect or necessitate any adjustment to the number, class or price of
shares of stock then subject to outstanding options.
(I) ADJUSTMENT OF OPTIONS ON RECAPITALIZATION. The aggregate number
-----------------------------------------
of shares of Common Stock for which options may be granted to persons
participating under the Plan, the number of shares covered by each
outstanding option, and the exercise price per share for each such option
shall be proportionately adjusted for any increase or decrease in the
number of issued shares of Common Stock of the Company resulting from the
subdivision or consolidation of shares, or the payment of a stock dividend
after the effective date of this Plan, or other increase (excluding any
increase due to conversion of any other outstanding securities of the
Company) or decrease in such shares effected without receipt of
consideration by the Company, such that each Optionee remains entitled upon
exercise of his option(s) to the same total number and class of shares as
he would have received for the same aggregate consideration had he
exercised his options in full immediately prior to the event requiring the
adjustment; provided, however, that any options to purchase fractional
shares resulting from any such adjustment shall be eliminated; and provided
further, that any such adjustment shall be made in a manner so as not to
constitute a "modification" as defined in Section 425(h)(3) of the Code.
(J) ADJUSTMENT OF OPTIONS UPON REORGANIZATION.
-----------------------------------------
(1) If the Company shall at any time merge or consolidate with
or into another corporation and (A) the Company is not the surviving
entity, or (B) the Company is the surviving entity and the
-6-
<PAGE>
shareholders of Company Common Stock are required to exchange their
shares for property and/or securities, the holder of each option will
thereafter receive, upon the exercise thereof, the securities and/or
property to which a holder of the number of shares of Common Stock
then deliverable upon the exercise of such option would have been
entitled upon such merger or consolidation, and the Company shall take
such steps in connection with such merger or consolidation as may be
necessary to assure that the provisions of this Plan shall thereafter
be applicable, as nearly as reasonably may be, in relation to any
securities or property thereafter deliverable upon the exercise of
such option, provided, however that, except as provided in the
following sentence, no option exercise date shall be accelerated in
contemplation of such action. In the event of an Optionee's
termination of employment without cause within twelve (12) months
after the date of a merger or consolidation described in this
paragraph, the Optionee shall have the right to exercise all his then
outstanding options, whether or not then otherwise exercisable, within
the thirty (30) day period following his termination of employment.
For purposes of this paragraph, termination without cause shall mean
(a) termination other than for (i) the Optionee's material failure to
observe or perform any of the requirements of his position with the
Company, or it Affiliate (or successor by merger or consolidation), or
(ii) the Optionee's grossly negligent or willful and continued
misconduct or action on the part of the Optionee that is damaging or
detrimental to the operations of the Company or its Affiliate (or
successor by merger or consolidation), or (b) resignation by the
Optionee within thirty (30) days after a material diminution in duties
or compensation of the Optionee. A sale of all or substantially all
of the assets of the Company for a consideration (apart from the
assumption of obligations) consisting primarily of securities shall be
deemed a merger or consolidation for the foregoing purposes.
Notwithstanding the foregoing, the provisions of this Section 4(j)(1)
shall be subject to Section 4(b).
(2) The resulting Affiliation following any reorganization may
at any time, in its sole discretion, tender substitute options as it
may deem appropriate. However, in no event may the substitute options
entitle an Optionee under the
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<PAGE>
Plan to any fewer shares (or at any greater aggregate price) or any
less other property than the Optionee would be entitled to under the
immediately preceding paragraph upon an exercise of the options held
prior to the substitution of the new option. Any substitution made
under this Section 4(j)(2) shall be made in a manner so as not to
constitute a "modification" as defined in Section 425(h)(3) of the
Code.
(3) With respect to options to acquire stock of an Affiliate of
Optionee's then present employer, if Optionee's then present employer
ceases to be affiliated with the other member(s) of the Affiliation,
then the Affiliation shall give the Optionee written notice of such
fact within thirty (30) days after the date on which Optionee's
employer ceases to be an Affiliate and the option shall expire and
terminate thirty (30) days after the receipt of such notice by
Optionee. Notwithstanding the foregoing, the provisions of this
Section 4(j)(3) shall be subject to Section 4(b) and shall be subject
to Section 4(k) if the Optionee receives notice under Section 4(k) at
a time earlier than the notice provided for herein.
(K) DISSOLUTION OF ISSUER OF OPTION STOCK. In the event of the
-------------------------------------
proposed dissolution or liquidation of the Company, the options granted
hereunder shall terminate as of a date to be fixed by the Stock Option
Committee, provided that not less than thirty (30) days' prior written
notice of the date so fixed shall be given to the Optionee, and the
Optionee shall have the right, during the period of thirty (30) days
preceding such termination, to exercise his option. Notwithstanding the
foregoing, the provisions of this Section shall be subject to Section 4(b)
and shall be subject to Section 4(j)(3) if the Optionee receives notice
under Section 4(j)(3) at a time earlier than the notice provided for
herein.
(L) SUBSTITUTION OPTIONS. Options may be granted under this Plan
--------------------
from time to time in substitution for stock options held by employees of
other corporations who become employees of the Company or an Affiliate as a
result of a merger or consolidation of the employing corporation with the
Company or an Affiliate, or the acquisition by the Company or an Affiliate
of the assets of the employing corporation, or the acquisition by the
Company or an Affiliate of at least 50% of the issued and outstanding stock
of the employing corporation as the result of which it becomes an Affiliate
of the Company.
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<PAGE>
The terms and conditions of the substitute options so granted may vary from
the terms and conditions set forth in this Plan to such extent as the Stock
Option Committee at the time of grant may deem appropriate to conform, in
whole or in part, to the provisions of the stock options in substitution
for which they are granted, but with respect to stock options which are
Incentive Stock Options, no such variation shall be such as to affect the
status of any such substitute option as an "incentive stock option" under
Section 422A of the Code.
(M) RIGHTS AS A SHAREHOLDER. The Optionee shall have no rights as a
-----------------------
shareholder with respect to any shares of Common Stock of the Company held
under option until the date of exercise of the option with respect to such
shares. Except as provided in Section 4(h), no adjustment shall be made
for dividends or other rights for which the record date is prior to the
date of exercise.
(N) TIME OF GRANTING OPTIONS. The grant of an option shall occur
------------------------
only when a written option agreement shall have been duly executed and
delivered by or on behalf of the Company and the employee to whom such
option shall be granted.
(O) STOCK LEGEND. Certificates evidencing shares of the Company's
------------
Common Stock purchased upon the exercise of Incentive Stock Options issued
under the Plan shall be endorsed with a legend in substantially the
following form:
The shares evidenced by this certificate may not be sold or
transferred prior to ________________, 19___, in the absence of a
written statement from Granite Broadcasting Corporation (the
"Company") to the effect that the Company is aware of the fact of such
sale or transfer.
The blank contained in such legend shall be filled in with the date that is
the later of: (1) one year and one day after the date of exercise of such
Incentive Stock Option or (2) two years and one day after the date of grant
of such Incentive Stock Option. Upon delivery to the Company, at its
principal executive office, of a written statement to the effect that such
shares have been sold or transferred prior to such date, the Company does
hereby agree to promptly deliver to the transfer agent for such shares a
written statement to the effect that the Company is aware of the fact of
such sale or transfer. The Company may also require the inclusion of
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<PAGE>
any additional legend which may be necessary or appropriate.
5. ADMINISTRATION.
--------------
(a) Subject to Section 5(f) hereof, the Plan shall be administered by
a Stock Option Committee (the "Stock Option Committee") consisting of not
less than three (3) members of the Board of Directors, to be appointed by
the Board of Directors of the Company. The Board of Directors may, from
time to time, remove members from or add members to the Stock Option
Committee. Vacancies in the Stock Option Committee, however caused, shall
be filled by the Board of Directors. The Stock Option Committee shall
select one of its members as chairman who shall preside at all of its
meetings, and shall designate a secretary (who may or may not be a Stock
Option Committee Member) to keep the minutes of the proceedings and all
records, documents, and data pertaining to the administration of the Plan.
The Stock Option Committee shall hold meetings at such times and places as
it may determine. Subject to the provisions of the Plan and to policies
determined by the Board of Directors, the Stock Option Committee may make
such rules and regulations for the conduct of its business as it shall deem
advisable. A majority of the Stock Option Committee shall constitute a
quorum. All actions of the Stock Option Committee shall be taken by a
majority of the members present at such meeting. Any action may be taken
by a written instrument signed by a majority of the members, and action so
taken shall be fully as effective as if it had been taken by a vote of the
majority of the members at a meeting duly called and held. The Stock
Option Committee and Compensation Committee (as defined below) members
shall be eligible to be granted options; provided that, a Stock Option
Committee member shall abstain from voting with respect to the grant of any
option to such Stock Option Committee member.
(b) Subject to the express terms and conditions of the Plan,
including Section 5(f) hereof, the Stock Option Committee shall have full
power to grant options under the Plan, to construe or interpret the Plan,
to prescribe, amend and rescind rules and regulations relating to it and to
make all other determinations necessary or advisable for its
administration. Any such determinations by a majority of the whole Stock
Option Committee shall be final and binding.
(c) Subject to the provisions of Sections 3, 4 and 5(f) hereof, the
Stock Option Committee may, from time to time, determine which employees of
the Company or its
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<PAGE>
Affiliates shall be granted options under the Plan, the type of option
granted, the number of option shares subject to each option, the time or
times at which options shall be granted and be exercisable, the exercise
price thereof, and the timing of payment of the exercise price, and the
Stock Option Committee may grant such options under the Plan.
(d) The Stock Option Committee or the Compensation Committee, as the
case may be, shall report to the Board of Directors the names of employees
granted options, the number of option shares subject to, and the terms and
conditions of, each option.
(e) No member of the Board of Directors, the Stock Option Committee
or the Compensation Committee shall be liable for any action, determination
or omission of any other member of the Stock Option Committee or for any
action, determination, or omission on his own part, including but not
limited to the exercise of any power or discretion given to him under the
Plan, except those resulting from his gross negligence or willful
misconduct. For this purpose, no action taken in good faith shall
constitute gross negligence or willful misconduct.
(f) Notwithstanding anything herein to the contrary, with respect to
any participants in the Plan who, by virtue of such person's relationship
to the Company, are subject to Section 16(a) and 16(b) of the Securities
Exchange Act of 1934, as amended, in lieu of the Stock Option Committee,
the Compensation Committee of the Board of Directors (the "Compensation
Committee") shall govern all decisions as to such person's rights to
participate, the number of and terms of options granted to them, and all
respects of the administration of the Plan with respect to them and shall
have and exercise all such authority with respect to such persons as is
otherwise granted to the Stock Option Committee hereunder.
6. REQUIREMENTS OF LAW. The Company shall not be required to sell or
-------------------
issue any shares under any option if the issuance of such shares shall
constitute a violation by the Optionee or the Company of any provision of any
law, statute, or regulation of any governmental authority whether it be Federal
or State. Unless a registration statement is in effect under the Securities Act
of 1933, as amended (the "Act") with respect to the shares of Common Stock
covered by an option, the Company shall not be required to issue shares upon
exercise of any option (i) unless the Stock Option Committee has received
evidence satisfactory to it to the
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<PAGE>
effect that the holder of such option is acquiring such shares for investment
and not with a view to the distribution thereof or (ii) unless an opinion of
counsel to the Company has been received by the Company, in a form and substance
which is deemed acceptable by the Stock Option Committee, to the effect that a
registration statement is not required. Any determination in this connection by
the Stock Option Committee shall be final, binding and conclusive. In the event
the shares issuable on exercise of an option are not registered under the Act,
the Company may imprint the following legend or any other legend which counsel
for the Company considers necessary or advisable to comply with the Act:
"The shares of stock represented by this certificate have not been
registered under the Securities Act of 1933 or under the securities
laws of any State and may not be sold or transferred except pursuant
to an effective registration statement or upon receipt by the
Corporation of any opinion of counsel satisfactory to the Corporation,
in form and substance satisfactory to the Corporation, that
registration is not required for such sale or transfer."
The Company may, but shall in no event be obligated to, register any
securities covered hereby pursuant to the Act and, in the event any shares are
so registered, the Company may remove any legend on certificates representing
such shares. The Company shall not be obligated to take any affirmative action
in order to cause the exercise of an option or the issuance of shares pursuant
thereto to comply with any law or regulation of any governmental authority.
7. INTENTION OF PLAN. Incentive Stock Options granted pursuant to this
-----------------
Plan are intended to qualify as Incentive Stock Options within the meaning of
Section 422A of the Code, and the terms of this Plan and options granted
hereunder shall be so construed; provided, however, that nothing in this Plan
-------- ------- ----
shall be interpreted as a representation, guarantee or other undertaking on the
part of the Company that any options granted pursuant to this Plan are, or will
be, determined to be incentive stock options, within the meaning of the Code.
8. USE OF PROCEEDS. The proceeds from the sale of Common Stock pursuant
---------------
to the exercise of options, including any down payments provided in Section
4(a), will be used for the Company's general corporate purposes.
9. INDEMNIFICATION. Each member of the Stock Option Committee, the
---------------
Compensation Committee and the Board of Directors shall be indemnified and held
harmless by the
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<PAGE>
Company for all loss, liabilities, costs and expenses (including the amount of
judgments and the amount of approved settlements made with a view to the
curtailment of costs of litigation, other than amounts paid to the Company
itself) reasonably incurred by him in connection with or arising out of any
action, suit, or proceeding regarding administration of the Plan in which he may
be involved by reason of his being or having been a member of such committee or
the Board of Directors, whether or not he continues to be a member of such
committee or the Board of Directors at the time of incurring such loss,
liabilities, costs and expenses. Notwithstanding any of the foregoing, no
member of such committee or the Board of Directors shall be entitled to such
indemnification from the Company for any loss, liabilities, costs and expenses
incurred by him (a) in respect of matters as to which he shall be finally
adjudged in any such action, suit or proceeding to have been guilty of gross
negligence or willful misconduct in the performance of his duty as a member of
such committee or the Board of Directors, or (b) in respect of any matter in
which any settlement is effected, to an amount in excess of the amount approved
by the Company on the advice of its legal counsel. Moreover, no right of
indemnification under the provisions set forth herein shall be available to or
enforceable against the Company by any member of such committee and the Board of
Directors unless, within sixty (60) days after institution of any such action,
suit or proceeding, he shall have offered the Company, in writing, the
opportunity to handle and defend the same at its own expense. The foregoing
right of indemnification shall inure to the benefit of the heirs, executors or
administrators of each such member of such committee and the Board of Directors
and shall be in addition to all other rights to which the member of such
committee and the Board of Directors may be entitled as a matter of law,
contract or otherwise.
10. WITHHOLDING. The Company's obligation to deliver shares upon the
-----------
exercise of any option hereunder shall be subject to applicable federal, state
and local tax withholding requirements.
11. NO OBLIGATION OF EMPLOYMENT. Nothing in this Plan or contained in an
---------------------------
option granted hereunder or in any Stock Option Agreement shall govern the
employment rights and duties between the Optionee and the Company or Affiliate.
Neither this Plan, nor any grant or exercise pursuant thereto, shall constitute
an employment agreement among such parties. The granting of any option
hereunder shall not impose upon the Company or an Affiliate any obligation to
employ or continue to employ any Optionee. The right of the Company to
terminate the employment of any officer or other employee shall not be
diminished or affected by reason of a grant or the existence of an option
hereunder.
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<PAGE>
12. EFFECTIVE DATE AND TERMINATION.
------------------------------
(a) The effective date of the Plan is April 1, 1990, provided that,
within one year of that date, the Plan shall have been approved by a
majority of the holders of the outstanding voting stock of the Company.
(b) The Plan shall terminate ten years after the effective date of
the Plan and no options shall be granted pursuant to the Plan thereafter.
The Board of Directors may terminate the Plan at any time prior to ten
years after the effective date of the Plan. Termination of the Plan shall
not alter or impair, without the consent of the Optionee, any of the rights
or obligations and any option theretofore granted under the Plan.
13. AMENDMENTS. The Board of Directors of the Company may, from time to
----------
time, alter, amend, suspend, or discontinue the Plan, or alter or amend any and
all option agreements granted thereunder; provided, however, that no such action
-------- ------- ----
of the Board of Directors, without the approval of a majority of the holders of
shares of the Company then entitled to vote, may alter the provisions of the
Plan so as to:
(a) Decrease the minimum option price for Incentive Stock Options;
(b) Extend the term of the Plan beyond ten years or the maximum term
of the options granted beyond ten years;
(c) Withdraw the administration of the Plan from the Stock Option
Committee;
(d) Change the class of eligible employees, officers and directors; or
(e) Increase the aggregate number of shares which may be issued
pursuant to the provisions of the Plan;
Notwithstanding the foregoing, (i) the Board of Directors may amend the
Plan in any respect in order to qualify the Incentive Stock Options granted
pursuant hereto as Incentive Stock Options as defined in Section 422A of the
Code, (ii) no amendment may be made to an outstanding option agreement to the
detriment of the Optionee without the Optionee's consent, and (iii) no amendment
may be made to this Plan (or any option granted hereunder without the consent of
the Optionee) which would constitute a modification of any Incentive Stock
Option outstanding under Section 425(h) of the Code or which would adversely
affect an outstanding Incentive Stock Option's status as an Incentive Stock
Option under Section 422A of the Code.
-14-
<PAGE>
EXHIBIT 10.15
GRANITE BROADCASTING CORPORATION
MANAGEMENT STOCK PLAN
AS AMENDED THROUGH JULY 24, 1996
1. PURPOSE.
The purpose of this plan is to keep senior executives of experience and
ability in the employ of Granite Broadcasting Corporation and to compensate them
for their contributions to the growth and profits of the Company and its
Subsidiaries and thereby induce them to continue to make such contributions in
the future.
2. DEFINITIONS.
For purposes of this Plan, the following terms will have the definitions set
forth below:
(A) "COMPANY". Granite Broadcasting Corporation.
(B) "SUBSIDIARY" OR "SUBSIDIARIES". A corporation or corporations of which
the Company owns, directly or indirectly, shares having a majority of the
ordinary voting power for the election of directors.
(C) "BOARD". The Company's Board of Directors.
(D) "COMMITTEE". The Management Stock Plan Committee as appointed from time
to time by the Board, consisting of not less than two members of the Board. No
member of the Board shall be eligible to become a member of the Committee if, at
any time during the one-year period preceding the date of his appointment, he
has been granted (and, during the period of his service on the Committee, no
member shall be granted) equity securities pursuant to any plan of the Company
or its affiliates, other than pursuant to a formula plan, an ongoing securities
acquisition plan having broad-based employee participation, or a plan permitting
directors to receive directors' fees in cash or stock.
(E) "EFFECTIVE DATE". This Plan is effective as of April 27, 1993.
(F) "PLAN". The Granite Broadcasting Corporation Management Stock Plan.
(G) "BONUS SHARES". The shares of Common Stock (Nonvoting) of the Company
reserved pursuant to Section 3 hereof and any such shares issued to a Recipient
pursuant to this Plan.
<PAGE>
(H) "RECIPIENT". An employee of the Company or a Subsidiary to whom shares
are allocated under this Plan.
3. BONUS SHARE RESERVE.
(A) BONUS SHARE RESERVE. The Company will establish a Bonus Share reserve to
which will be credited 750,000 shares of the Common Stock (Nonvoting) of the
Company, par value $.01 per share. Should such shares, due to a stock split or
stock dividend or combination of shares or any other change, or exchange for
other securities, by reclassification, reorganization, merger, consolidation,
recapitalization or otherwise, be increased or decreased or changed into, or
exchanged for, a different number or kind of shares of stock or other securities
of the Company or of another corporation, the number of shares then remaining in
the Bonus Share reserve shall be appropriately adjusted to reflect such action.
If any such adjustment results in a fractional share, the fraction shall be
disregarded.
(B) ADJUSTMENTS TO RESERVE. Upon the allocation of shares hereunder, the
reserve will be reduced by the number of shares so allocated and, upon the
forfeiture of any previously allocated shares, the reserve shall be increased by
such number of shares, and such Bonus Shares may again be the subject of
allocations hereunder.
(C) ISSUANCE OF BONUS SHARES OR CASH. Distributions of Bonus Shares, as the
Committee shall in its sole discretion determine, may be made from authorized
but unissued shares or from treasury shares. All authorized and unissued shares
issued as Bonus Shares in accordance with the Plan shall be fully paid and non-
assessable shares and free from preemptive rights. The Committee, in its sole
discretion, shall determine the method of payment of Bonus Shares to each
Recipient, which may consist of cash, shares of Common Stock (Nonvoting), or a
combination of the two. Any such cash payment shall be made to the Recipient as
of the date on which the Bonus Share award vested, and shall be equal to the
fair market value of the Bonus Shares on such vesting date multiplied by the
part of the Bonus Share award that is being settled in cash.
4. ELIGIBILITY AND MAKING OF ALLOCATIONS.
(A) ELIGIBLE EMPLOYEES. Any salaried executive employee of the Company or
any Subsidiary (including officers and directors, except for persons serving as
directors only) shall be eligible to receive an allocation of Bonus Shares
pursuant to the Plan.
(B) SELECTION BY THE COMMITTEE. From the employees eligible to receive
allocations pursuant to the Plan, the Committee may from time to time select
those employees to whom to make allocations and the number of Bonus Shares that
should be allocated to each such individual. In selecting those employees to
whom to allocate Bonus
-2-
<PAGE>
Shares and in determining the number of Bonus Shares to allocate, the Committee
shall consider the position and responsibilities of the eligible employees, the
value of their services to the Company and its Subsidiaries and such other
factors as the Committee deems pertinent.
(C) PARTICIPATION IN STOCK OPTION PLANS. A person who has received options
to purchase stock under any stock option plan of the Company or a Subsidiary may
exercise the same in accordance with their terms, and will not by reason thereof
be ineligible to receive Bonus Shares under this Plan.
(D) LIMIT ON NUMBER OF ALLOCABLE SHARES. The total number of Bonus Shares
which may be allocated pursuant to this Plan shall not exceed the amount
available therefor in the Bonus Share reserve.
5. FORM OF ALLOCATIONS.
(A) NUMBER AND DATE SPECIFIED. Each allocation shall specify the number of
Bonus Shares subject thereto, the date or dates as of which such shares shall be
issued to the Recipient, and the number of shares to be issued on each such date
or dates.
(B) FORFEITURE/VESTING ON TERMINATION. If an employee terminates employment
with the Company or its Subsidiaries for any reason (other than death or
disability as defined in Section 22(e)(3) of the Internal Revenue Code of 1986,
as amended), any shares allocated to such employee that were to be issued as of
a date following his date of termination shall be forfeited. If an employee
terminates employment with the Company or its Subsidiaries due to death or
disability (as defined above), all outstanding Bonus Shares (whenever originally
granted) of such employee shall vest as of the date of death or termination of
employment due to disability.
(C) NOTICE. When an allocation is made, the Committee shall advise the
Recipient and the Company thereof by delivery of written notice.
6. INVESTMENT PURPOSE. The Company may require that, in acquiring any Bonus
Shares, the Recipient agree with, and represent to, the Company, in writing,
that the Recipient is acquiring such Bonus Shares for the purpose of investment
and with no present intent to transfer, sell, or otherwise dispose of such
shares except for such distribution by a legal representative as shall be
required by will or the laws of any jurisdiction in winding up the estate of any
Recipient. Such shares shall be transferable thereafter only if the proposed
transfer is permitted under the Plan and if, in the opinion of counsel (who
shall be satisfactory to the Company), such transfer at such time complies with
applicable securities laws.
-3-
<PAGE>
7. ISSUANCE. After the recipient satisfies the requirements of Section 6,
Bonus Shares (and/or, in the Committee's discretion, cash) shall be promptly
issued to the Recipient. The Recipient shall not be required to make any
payment to the Company upon the allocation or issuance of the Bonus Shares,
except that the Company shall withhold all amounts required to be withheld by
law in respect of federal, state and local taxes, social security payments and
the like.
8. FINALITY OF DETERMINATION.
The Committee shall have the full power, discretion, and authority to
administer this Plan and construe its provisions. Any determination by the
Committee in carrying out, administering, or construing this Plan shall be final
and binding for all purposes and upon all interested persons and their heirs,
successors, and personal representatives.
9. LIMITATIONS.
(A) NO RIGHT TO ALLOCATION. No person will at any time have any right to
receive an allocation of Bonus Shares hereunder and no person will have
authority to enter into an agreement for the making of an allocation or to make
any representation or warranty with respect thereto.
(B) RIGHTS OF RECIPIENTS. Recipients of allocations will have no rights in
respect thereof other than those set forth in the Plan and such rights may not
be assigned or transferred. Before issuance of Bonus Shares, no such shares will
be earmarked for the Recipients' accounts nor will such Recipients have any
rights as stockholders with respect to such shares.
(C) NO RIGHT TO CONTINUED EMPLOYMENT. Neither the Company's action in
establishing the Plan, nor any action taken by it or by the Board or the
Committee under the Plan, nor any provision of the Plan, will be construed as
giving to any person the right to be retained in the employ of the Company or
any Subsidiary.
(D) LIMITATION ON ACTIONS. Every right of action by or on behalf of the
Company or by any shareholder against any past, present, or future member of the
Board, the Committee, or any officer or employee of the Company arising out of
or in connection with this Plan shall, regardless of the place where the action
may be brought and regardless of the place of residence of such director,
committee member, officer or employee, cease and be barred by the expiration of
three years from the later of:
(i) the date of the act or omission in respect of which such right of
action arises or
-4-
<PAGE>
(ii) the first date upon which there has been made generally available to
shareholders an annual report of the Company and a proxy statement for the
annual meeting of shareholders following the issuance of such annual report,
which annual report and proxy statement alone or together set forth, for the
related period, the amount of the allocations.
In addition, any and all rights of action by any employee (past, present or
future) against the Company or any member of the Committee arising out of or in
connection with this Plan will, regardless of the place where the action may be
brought and regardless of the place of residence of any Committee member, cease
and be barred by the expiration of three years from the date of the act or
omission in respect of which such right of action arises.
10. AMENDMENT, SUSPENSION OR TERMINATION OF PLAN.
The Board may amend, suspend or terminate the Plan in whole or in part at
any time; provided that such amendment will not affect adversely rights or
obligations with respect to allocations previously made; and provided further,
that no modification of the Plan by the Board without approval of the
stockholders will (i) increase the maximum number of Bonus shares reserved
pursuant to Section 3; (ii) change the provisions of Section 4 with respect to
the total number of Bonus Shares that may be allocated under the Plan; or (iii)
render any member of the Committee eligible to receive an allocation at any time
while he is serving on the Committee.
11. GOVERNING LAW.
The Plan will be governed by the laws of the State of New York.
12. EXPENSES OF ADMINISTRATION.
All costs and expenses incurred in the operation and administration of this
Plan will be borne by the Company.
-5-
<PAGE>
GRANITE BROADCASTING CORPORATION
STATEMENT OF COMPUTATION OF PER SHARE EARNINGS
EXHIBIT 11
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- ---------------------------
1996 1995 1996 1995
------------- ------------ -------------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Primary:
Average shares and
equivalents
outstanding 9,184,842 8,529,130 8,545,183 8,495,594
========== ========== =========== ==========
Income (loss) before
extraordinary item $1,809,756 $2,722,512 $(1,644,197) $1,889,848
Extraordinary gain (loss) 618,902 --- (2,891,250) ---
========== ========== =========== ==========
Net income (loss) $2,428,658 $2,722,512 $(4,535,447) $1,889,848
========== ========== =========== ==========
Net income (loss)
attributable to
common shareholders $1,547,338 $1,841,192 $(6,298,085) $ 91,208
========== ========== =========== ==========
Per common share:
Income (loss) before
extraordinary item $ 0.10 $ 0.22 $ (0.40) $ 0.01
Extraordinary gain (loss) 0.07 - (0.34) -
========== ========== =========== ==========
Net income (loss) $ 0.17 $ 0.22 $ (0.74) $ 0.01
========== ========== =========== ==========
Fully Diluted:
Average shares and
equivalents
outstanding 9,184,842 8,529,130 8,545,183 8,495,594
========== ========== =========== ==========
Income (loss) before
extraordinary item $1,809,756 $2,722,512 $(1,644,197) $1,889,848
Extraordinary gain (loss) 618,902 --- (2,891,250) ---
========== ========== =========== ==========
Net income (loss) $2,428,658 $2,722,512 $(4,535,447) $1,889,848
========== ========== =========== ==========
Net income (loss)
attributable to
common shareholders $1,547,338 $1,841,192 $(6,298,085) $ 91,208
========== ========== =========== ==========
Per common share:
Income (loss) before
extraordinary item $ 0.10 $ 0.22 $ (0.40) $ 0.01
Extraordinary gain (loss) 0.07 - (0.34) -
========== ========== =========== ==========
Net income (loss) $ 0.17 $ 0.22 $ (0.74) $ 0.01
========== ========== =========== ==========
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM GRANITE
BROADCASTING CORPORATION'S SECOND QUARTER FORM 10-Q AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,191,735
<SECURITIES> 0
<RECEIVABLES> 27,197,034
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 36,240,626
<PP&E> 33,021,295
<DEPRECIATION> 0
<TOTAL-ASSETS> 448,339,678
<CURRENT-LIABILITIES> 18,482,280
<BONDS> 346,536,300
45,487,500
0
<COMMON> 86,774
<OTHER-SE> 2,712,498
<TOTAL-LIABILITY-AND-EQUITY> 448,339,678
<SALES> 0
<TOTAL-REVENUES> 62,590,830
<CGS> 0
<TOTAL-COSTS> 45,606,449
<OTHER-EXPENSES> 344,858
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 18,048,031
<INCOME-PRETAX> (1,408,508)
<INCOME-TAX> (235,689)
<INCOME-CONTINUING> (1,644,197)
<DISCONTINUED> 0
<EXTRAORDINARY> (2,891,250)
<CHANGES> 0
<NET-INCOME> (6,298,085)
<EPS-PRIMARY> (0.74)
<EPS-DILUTED> (0.74)
</TABLE>
