<PAGE>
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 March 31, 1998
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 March 31, 1998; Common Stock (Nonvoting), par value $.01 per
share - 9,538,052 shares outstanding at March 31, 1998.
<PAGE>
PART I. FINANCIAL INFORMATION
GRANITE BROADCASTING CORPORATION
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 1998 1997
------------- -------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 3,945,201 $ 2,170,927
Accounts receivable, net 28,832,415 35,308,464
Film contract rights 8,154,601 10,097,262
Other assets 13,587,055 10,958,742
------------- -------------
Total current assets 54,519,272 58,535,395
Property and equipment, net 35,507,667 36,004,876
Film contract rights and other noncurrent assets 6,316,633 7,041,000
Deferred financing fees, net 9,832,635 10,213,314
Intangible assets, net 518,266,104 521,819,428
------------- -------------
$ 624,442,311 $ 633,614,013
============= =============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 3,319,818 $ 3,885,239
Accrued interest 10,444,670 4,387,546
Other accrued liabilities 7,164,147 5,682,202
Film contract rights and other current liabilities 11,094,476 13,779,691
------------- -------------
Total current liabilities 32,023,111 27,734,678
Long-term debt 385,790,035 392,779,025
Film contract rights payable 5,964,237 6,905,486
Deferred tax and other noncurrent liabilities 30,499,692 31,751,733
Commitments
Redeemable preferred stock 209,421,264 207,699,808
Stockholders' deficit:
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 9,538,052 shares of Common Stock (Nonvoting) (8,676,157
shares at December 31,1997) issued and outstanding 97,165 88,546
Additional paid-in capital 22,668,842 24,529,712
Accumulated deficit (58,358,896) (54,411,868)
Less: Unearned compensation (2,729,264) (2,529,232)
Treasury stock (47,000) (47,000)
Note receivable from officer (886,875) (886,875)
------------- -------------
Total stockholders' deficit (39,256,028) (33,256,717)
------------- -------------
$ 624,442,311 $ 633,614,013
============= =============
</TABLE>
See accompanying notes.
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<PAGE>
GRANITE BROADCASTING CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1998 1997
------------ ------------
(Unaudited)
<S> <C> <C>
Net revenue $ 36,724,036 $ 32,297,811
Station operating expenses 22,315,368 19,796,761
Time brokerage agreement fees 150,000 150,000
Depreciation expense 1,364,619 1,375,476
Amortization expense 3,583,722 3,170,736
Corporate expense 2,017,063 1,473,754
Non-cash compensation expense 332,520 192,336
------------ ------------
Operating income 6,960,744 6,138,748
Other expenses:
Equity in net loss of investee 486,720 400,000
Interest expense, net 9,208,738 9,778,119
Non-cash interest expense 474,789 575,555
Other 241,525 191,696
------------ ------------
Loss before income taxes and extraordinary item (3,451,028) (4,806,622)
Provision for income taxes 496,000 150,150
------------ ------------
Loss before extraordinary item (3,947,028) (4,956,772)
Extraordinary loss on early extinguishment of debt -- (320,804)
------------ ------------
Net loss $ (3,947,028) $ (5,277,576)
============ ============
Net loss attributable to common stockholders $(10,060,463) $ (9,474,380)
============ ============
Per common share:
Basic and diluted loss before extraordinary item $ (1.06) $ (1.05)
Basic and diluted extraordinary loss -- (0.04)
------------ ------------
Basic and diluted net loss $ (1.06) $ (1.09)
============ ============
Weighted average common shares outstanding 9,475,600 8,735,879
</TABLE>
See accompanying notes.
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<PAGE>
GRANITE BROADCASTING CORPORATION
STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
THREE MONTHS ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
Class A Common Additional
Common Stock Paid-in Accumulated Unearned Note Receivable
Stock (Nonvoting) Capital Deficit Compensation from Officer
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1997 $1,785 $86,761 $24,529,712 $(54,411,868) $(2,529,232) $(886,875)
Dividends on redeemable
preferred stock (5,988,398)
Accretion of offering costs
related to Cumulative
Exchangeable Preferred Stock (125,037)
Exercise of stock options 416 141,865
Conversion of redeemable
preferred stock into Common
Stock (Nonvoting) 7,199 3,592,326
Issuance of Common Stock
(Nonvoting) 1,004 (1,004)
Repurchase of redeemable
preferred stock
Grant of Stock Award Under
Management Stock Plan 532,552 (532,552)
Stock expense related to
Management Stock Plan (13,174) 332,520
Net loss (3,947,028)
------------ ------------ ------------ ------------ ------------ ------------
Balance at March 31, 1998 $1,785 $95,380 $22,668,842 $(58,358,896) $(2,729,264) (886,875)
============ ============ ============ ============ ============ ============
<CAPTION>
Total
Treasury Stockholders'
Stock Deficit
------------ ------------
<S> <C> <C>
Balance at December 31, 1997 $(47,000) $(33,256,717)
Dividends on redeemable
preferred stock (5,988,398)
Accretion of offering costs
related to Cumulative
Exchangeable Preferred Stock (125,037)
Exercise of stock options 142,281
Conversion of redeemable
preferred stock into Common
Stock (Nonvoting) 3,599,525
Issuance of Common Stock
(Nonvoting) --
Repurchase of redeemable
preferred stock --
Grant of Stock Award Under
Management Stock Plan --
Stock expense related to
Management Stock Plan 319,346
Net loss (3,947,028)
------------ ------------
Balance at March 31, 1998 $(47,000) $(39,256,028)
============ ============
</TABLE>
See accompanying notes.
-3-
<PAGE>
GRANITE BROADCASTING CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1998 1997
------------- -------------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (3,947,028) $ (5,277,576)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Amortization of intangible assets 3,583,722 3,170,736
Depreciation 1,364,619 1,375,476
Non-cash compensation expense 332,520 192,336
Non-cash interest expense 474,789 575,555
Extraordinary loss -- 320,804
Equity in net loss of investee 486,720 400,000
Change in assets and liabilities net of effects from acquisitions of stations:
Decrease (increase) in accounts receivable 6,476,049 (658,886)
Increase in accounts payable and accrued liabilities 6,973,648 4,497,915
Decrease in film contract rights and other noncurrent assets 2,430,308 1,848,637
(Decrease) increase in film contract rights payable and other liabilities (4,878,504) 3,311,182
Increase in other assets (2,867,316) (1,058,641)
------------- -------------
Net cash provided by operating activities 10,429,527 8,697,538
Cash flows from investing activities:
Payment for acquisitions of stations, net of cash acquired -- (172,713,906)
Investment in Datacast (250,000) (250,000)
Capital expenditures (647,725) (657,289)
------------- -------------
Net cash used in investing activities (897,725) (173,621,195)
Cash flows from financing activities:
Proceeds from bank financing -- 41,500,000
Repayment of bank debt (7,000,000) --
Retirement of senior subordinated notes -- (19,405,000)
Dividends paid (805,283) (881,320)
Other financing activities, net 47,755 (208,307)
Proceeds from issuance of preferred stock -- 144,742,500
------------- -------------
Net cash (used in) provided by financing activities (7,757,528) 165,747,873
------------- -------------
Net increase in cash and cash equivalents 1,774,274 824,216
Cash and cash equivalents, beginning of period 2,170,927 555,753
------------- -------------
Cash and cash equivalents, end of period $ 3,945,201 $ 1,379,969
Supplemental information:
Cash paid for interest $ 3,302,011 $ 5,444,816
Income taxes paid 79,213 166,594
Non-cash capital expenditures 219,685 208,307
Non-cash dividends 5,195,943 3,240,625
</TABLE>
See accompanying notes.
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<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 month period ended March 31, 1998 are not necessarily
indicative of the results that may be expected for the year ended December 31,
1998. For further information, refer to the Company's consolidated financial
statements and notes thereto for the year ended December 31, 1997 which were
included in the Company's Annual Report on Form 10-K for the year ended December
31, 1997. All significant intercompany accounts and transactions have been
eliminated. Data at and for the year ended December 31, 1997 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 - Acquisition and dispositions
On October 3, 1997, the Company entered into a definitive agreement with Pacific
FM Incorporated ("Pacific"), a California corporation, James J. Gabbert and
Michael P. Lincoln to acquire 51% of the outstanding stock of Pacific, the owner
of KOFY-TV, the WB affiliate serving the San Francisco-Oakland-San Jose,
California television market. It is a condition to the closing of the purchase
that the Company acquire the remaining 49% of the stock of Pacific. The total
purchase price for all the stock of Pacific will be $143,750,000 in cash,
subject to certain adjustments. In addition, the Company will pay $30,000,000
to the principal shareholders of Pacific for a covenant not to compete in the
San Francisco-Oakland-San Jose television market for a period of five years from
the closing of the acquisition. The proposed acquisition is subject to approval
by the Federal Communications Commission (the "FCC") and other customary closing
conditions and is expected to close in the third quarter of this year. Because
the Company already owns a television station with an overlapping service area,
KNTV, the Company has requested a permanent waiver of the FCC's local television
multiple ownership rule to permit it to own both KNTV and KOFY-TV.
On February 19, 1998, the Company entered into a definitive agreement with
Freedom Communications, Inc. ("Freedom") whereby Freedom will acquire the assets
of WWMT-TV, the CBS affiliate serving Grand Rapids-Kalamazoo-Battle Creek,
Michigan, and WLAJ-TV, the ABC affiliate serving Lansing, Michigan, for
$170,000,000 in cash, payable in cash at the closing of the transaction. The
Company currently operates WLAJ-TV pursuant to a time brokerage agreement. It is
anticipated that proceeds from the sale of WWMT-TV and WLAJ-TV, after payment of
the purchase price for WLAJ-TV, will be used to fund part of the purchase price
of KOFY-TV.
The consummation of the sale of WWMT-TV and WLAJ-TV is expected to occur in the
second quarter of this year and is contingent on, approval by the FCC and
satisfaction of other customary closing conditions. Because WWMT-TV and WLAJ-TV
operate in overlapping service areas, Freedom will be required to obtain a
waiver from the FCC of its local television multiple ownership rules.
Note 3 - Basic and diluted net loss per common share
Basic and diluted net loss per common share for the three months ended March 31,
1998 and 1997 is computed in accordance with Statement of Financial Accounting
Standards No. 128 "Earnings per Share" and 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 of common stock
equivalents would have been antidilutive for both periods presented.
-5-
<PAGE>
Note 4 - Recent pronouncements
In June 1997, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 130 "Reporting Comprehensive
Income" which is effective for fiscal periods beginning after December 15, 1997.
SFAS No. 130 establishes standards for reporting and displaying comprehensive
income and its components. The Company believes SFAS No. 130 will not have an
effect on the manner in which the Company currently reports.
In June 1997, the FASB issued SFAS No. 131 "Disclosures About Segments of an
Enterprise and Related Information" which is effective for fiscal periods
beginning after December 15, 1997. SFAS No. 130 establishes standards for
reporting information about operating segments and for related disclosures about
products, services, geographic areas and major customers. The Company has not
yet made a determination of the effect, if any, that SFAS will have on the
manner in which the Company currently reports.
-6-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Introduction
The Company is a group broadcaster which operates eleven network-affiliated
television stations and one radio station. 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. It is anticipated that comparisons of the Company's consolidated
financial statements for the year ended December 31, 1998 against prior periods
will be affected by the pending acquisition of KOFY-TV and the pending sale of
WWMT-TV and WLAJ-TV. Numbers referred to in the following discussion have been
rounded to the nearest thousand.
Certain sections of this Form 10-Q contain various foward looking statements
within the meaning of Section 21E of the Securities Exchange Act of 1934, which
represent the Company's expectations or beliefs concerning future events. The
forward looking statements include, without limitation, the Company's ability to
meet its future liquidity needs. The Company cautions that these forward
statements are further qualififed by important factors that could cause actual
results to differ materially from those in the forward looking statements. Such
factors include, without limitation, general economic conditions, competition in
the markets in which the Company's stations are located, technological change
and innovation in the broadcasting industry and proposed legislation.
The following table sets forth certain operating data for the three months ended
March 31, 1998 and 1997:
<TABLE>
<CAPTION>
Three months ended March 31,
----------------------------
1998 1997
----------- -----------
<S> <C> <C>
Operating income $ 6,961,000 $ 6,139,000
Add:
Time brokerage agreement fees 150,000 150,000
Depreciation and amortization 4,949,000 4,546,000
Corporate expense 2,017,000 1,474,000
Non-cash compensation 332,000 192,000
----------- -----------
Broadcast cash flow $14,409,000 $12,501,000
=========== ===========
</TABLE>
"Broadcast cash flow" means operating income plus time brokerage agreement fees,
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.
Three months ended March 31, 1998 and 1997
Net revenue for the three months ended March 31, 1998 totaled $36,724,000, an
increase of $4,426,000 or 14 percent compared to $32,298,000 for the three
months ended March 31, 1997. Of this increase, $1,193,000 was due to the
inclusion of one additional month of operations of WDWB-TV. The remaining
increase was primarily due to significant increases in advertising revenue
driven by Olympic spending at the Company's CBS affiliated stations, substantial
advertising revenue growth at WDWB-TV, increased political advertising revenue
in an election year, and strong non-political local advertising in virtually all
Granite markets.
-7-
<PAGE>
Station operating expenses totaled $22,315,000 for the three months ended March
31, 1998, an increase of $2,518,000 or 13 percent compared to $19,797,000 for
the three months ended March 31, 1997. Of this increase, $733,000 was due to the
inclusion of one additional month of operations of WDWB-TV. The remaining
increase was primarily due to investments made in programming, promotion and
sales at WDWB-TV, as well as investments made in programming, news and sales at
the Company's other stations.
Depreciation and amortization increased $403,000, or 9 percent during the three
months ended March 31, 1998 compared to the same period a year earlier primarily
due to the inclusion of one additional month of operations of WDWB-TV. Corporate
expense increased $543,000 or 37 percent during the three months ended March 31,
1998 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 $140,000 or 73 percent during the three months ended March 31, 1998
compared to the same period a year earlier due to the granting of additional
awards payable in Common Stock (Nonvoting) to certain executive employees of the
Company under the Management Stock Plan.
The equity in net loss of investee of $487,000 for the three months ended March
31, 1998 resulted from the Company recognizing its pro rata share of the net
loss of Datacast, LLC under the equity method of accounting.
Net interest expense was $9,209,000 compared to $9,778,000 a year earlier, a
decrease of $569,000 or 6 percent. This decrease was achieved despite higher
levels of outstanding indebtedness during the three months ended March 31, 1998
as compared to the same period a year earlier. During 1997, the Company was able
to reduce its cost of borrowing when it repurchased $79,405,000 of its
high-yield debt with borrowings under its credit agreement, which bear interest
at a lower rate.
Loss before extraordinary item for the three months ended March 31, 1998 totaled
$3,947,000 compared to a loss before extraordinary item of $4,957,000 for the
same period a year earlier, a decrease of $1,010,000. The decrease was primarily
due to the changes in the line items discussed above.
During the three months ended March 31, 1997, the Company purchased $19,405,000
face amount of its 9-3/8% Senior Subordinated Notes, due December 1, 2005, at a
discount and replaced it with borrowings under its credit agreement which bear
interest at a lower rate, thereby reducing its cost of borrowing. In conjunction
with the repurchase of this debt, the Company recognized an extraordinary loss,
after the write-off of a portion of related deferred financing fees, of
$321,000.
Liquidity and Capital Resources
On October 3, 1997, the Company entered into a definitive agreement to acquire
KOFY-TV for $143,750,000 in cash and the assumption of certain liabilities. In
addition, the Company will pay $30,000,000 for a covenant not to compete in the
San Francisco-Oakland-San Jose television market for a period of five years from
the closing of the acquisition. The acquisition is expected to close in the
third quarter of this year.
On February 19, 1998, the Company entered into a definitive agreement with
Freedom Communications, Inc. ("Freedom") whereby Freedom will acquire the assets
of WWMT-TV and WLAJ-TV for $170,000,000 payable in cash at the closing of the
transaction. The closing of the sale is expected to occur in the second quarter
of this year. The Company anticipates recognizing a taxable gain of $70,000,000
which will utilize substantially all of the Company's net operating loss
carryforwards. The Company anticipates paying state and federal alternative
minimum taxes of approximately $2,400,000 relating to the sale. It is
anticipated that the net proceeds from the sale will be used to fund part of the
purchase price of KOFY-TV.
-8-
<PAGE>
The WB Network agreed to enter into a ten-year affiliation agreement with the
Company, instead of with another television station in the San Francisco market,
in return for total consideration of $22,500,000. The Company will pay
$12,500,000 to the WB Network at the closing of the KOFY-TV purchase and the
remaining $10,000,000 is to be paid in equal installments over a five year
period.
The Company's existing credit agreement allows for revolving credit borrowings
of $200,000,000 and permits borrowings of up to $300,000,000 in the aggregate.
The revolving credit facility can be used to fund future acquisitions of
broadcast stations and for general corporate purposes. As of April 24, 1998, the
Company had $135,000,000 of the revolving credit facility borrowings
outstanding and approximately $23,000,000 of borrowings available for
acquisitions and working capital purposes. The Company expects to enter into a
new credit agreement prior to consummation of the acquisition of KOFY-TV that,
among other things, will increase the amount of the Company's permitted
indebtedness to 7.25 times its earnings before interest, taxes, depreciation and
amortization ("EBITDA"), as defined therein, for the most recent four fiscal
quarters. At March 31, 1998, after giving effect to the acquisition of KOFY-TV,
and the related borrowings under the new credit agreement and the disposition of
WWMT-TV and WLAJ-TV, the Company's ratio of total indebtedness to EBITDA, as
expected to be defined in the new credit agreement, would have been 7.09 times.
Cash flows provided by operating activities were $10,430,000 during the three
months ended March 31, 1998 compared to cash flows provided by operating
activities of $8,698,000 during the three months ended March 31, 1997, an
increase of $1,732,000 or 20 percent. The increase was primarily due to higher
broadcast cash flow.
Cash flows used in investing activities were $898,000 during the three months
ended March 31, 1998 compared to $173,621,000 during the three months ended
March 31, 1997. Cash flows used in investing activities during the three months
ended March 31, 1998 related to capital expenditures and the investment in
Datacast while cash flows used in investing activities during the three months
ended March 31, 1997 related primarily to the acquisition of WDWB-TV. The
Company anticipates that future requirements for capital expenditures will
include those incurred during the ordinary course of business, which include
costs associated with the implementation of digital television technology.
Cash flows used in financing activities were $7,758,000 during the three
months ended March 31, 1998 compared to cash flows provided by financing
activities of $165,748,000 during the three months ended March 31, 1997. The
decrease resulted primarily from the issuance of the 12-3/4% Cumulative
Exchangeable Preferred Stock during the three months ended March 31, 1997
and a net decrease in long term borrowings for the three months ended March 31,
1998.
The computer applications which the Company utilizes in its operations are not
complex. Any modification of the Company's software that may be needed in order
to handle the upcoming change in the century is covered under the software's
licensing agreement. The Company has determined that there will be no material
costs incurred to modify its applications in order to handle the upcoming change
in the century.
The Company believes that internally generated funds from operations and
borrowings under its credit agreement, 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. The Company expects
that any future acquisistions of television stations would be financed through
funds generated from operations and additional debt and equity financings.
-9-
<PAGE>
PART II
OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
a. Exhibits
4.48 Third Amendment, dated April 16, 1998, to the Third Amended
and Restated Credit Agreement, dated September 4, 1996,
among Granite Broadcasting Corporation, the Lenders named
therein, Bankers Trust Company, as Agent, and The Bank of
New York, First Union National Bank of North Carolina,
Goldman Sachs Credit Partners L.P. and Union Bank of
California, as Co-Agents.
10.19 Granite Broadcasting Corporation Directors' Stock Option
Plan, as amended on August 25, 1997.
11. Statement of Computation of Per Share Earnings
27. Financial Data Schedule
-10-
<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: May 1, 1998 /s/ W. DON CORNWELL
-------------------------------------
(W. Don Cornwell)
Chief Executive Officer
Date: May 1, 1998 /s/ LAWRENCE I. WILLS
--------------------------------------
(Lawrence I. Wills)
Vice President, Finance and Controller
(Principal Accounting Officer)
<PAGE>
EXHIBIT 4.48
EXECUTION
GRANITE BROADCASTING CORPORATION
THIRD AMENDMENT
TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
This THIRD AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT (this
"Amendment") is dated as of April 16, 1998 and entered into by and among Granite
Broadcasting Corporation, a Delaware corporation ("Company"), the Guarantors
listed on the signature pages hereof (the "Guarantors"), the financial
institutions listed on the signature pages hereof ("Lenders"), Bankers Trust
Company, as agent for Lenders (in such capacity , "Agent"), and The Bank of New
York, First Union National Bank of North Carolina, Goldman Sachs Credit Partners
L.P. and Union Bank of California, N.A., as co-agents (in such capacity,
"Co-Agents"), and is made with reference to that certain Third Amended and
Restated Credit Agreement dated as of September 4, 1996, as amended by that
certain First Amendment to Third Amended and Restated Credit Agreement dated as
of June 6, 1997 and that certain Second Amendment to Third Amended and Restated
Credit Agreement dated as of February 17, 1998 (as so amended, the "Credit
Agreement"), by and among Company, Lenders, Agent and Co-Agents. Capitalized
terms used herein without definition shall have the same meanings herein as set
forth in the Credit Agreement.
RECITALS
WHEREAS, Company and Lenders desire to amend the Credit Agreement to make
certain amendments as set forth below.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, and pursuant to subsection 10.6 of
the Credit Agreement, the parties hereto agree as follows:
SECTION 1. AMENDMENTS TO THE CREDIT AGREEMENT
Amendments to Section 7: Negative Covenants
Section 7 of the Credit Agreement is hereby amended by amending and
restating subsection 7.1(xi) thereof in its entirety as follows:
"(xi) so long as at the time of incurrence thereof no Event of Default
or Potential Event of Default has occurred and is continuing or would be
caused thereby, Company may from time to time following the Closing Date
issue debt Securities subordinate in right and time of payment to the
Obligations (the "Additional Subordinated Indebtedness"); provided that (a)
such Additional Subordinated Indebtedness is unsecured, (b) the maturity of
such Additional Subordinated Indebtedness is no earlier than December 31,
2003, (c) such Additional Subordinated Indebtedness includes
representations and warranties, covenants, events of default and other
provisions that are not more restrictive or burdensome to Company than any
other Subordinated Indebtedness, (d) the subordination provisions of such
Additional Subordinated Indebtedness are no less favorable to the Lenders
than the subordination provisions of any other Subordinated Indebtedness,
(e) the mandatory
<PAGE>
redemption, retirement, sinking fund or payment provisions of such
Additional Subordinated Indebtedness do not require redemption, repurchase
or payment of any amount in any circumstances which any other Subordinated
Indebtedness would not require redemption, repurchase or similar payment of
any amount, (f) Company can demonstrate in form and substance satisfactory
to Agent that, immediately after giving effect to such Additional
Subordinated Indebtedness, Company is in compliance on a Pro Forma Basis
with all covenants set forth in Section 6 and 7 of this Agreement through
the Revolving Loan Commitment Termination Date, and (g) Company applies the
Net Debt Proceeds of such Additional Subordinated Indebtedness to prepay
the Loans and reduce the Commitments pursuant to subsection 2.4B(iii)(c) to
the extent required thereby."
SECTION 2. CONDITIONS TO EFFECTIVENESS
This Amendment shall become effective (the "Third Amendment Effective
Date") only upon receipt by Agent of counterparts hereof duly executed by
Company, Guarantors and Requisite Lenders or, in the case of any Lender,
telecopy or telephone confirmation from such Lender of its execution hereof.
SECTION 3. COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Requisite Lenders to enter into this Amendment and to
amend the Credit Agreement in the manner provided herein, Company represents and
warrants to each Lender that the following statements are true, correct and
complete:
A. Authorization; Binding Obligations. Company has all requisite
corporate power and authority to enter into this Amendment. The execution,
delivery and performance of this Amendment have been duly authorized by all
necessary corporate action by Company. This Amendment has been duly
executed and delivered by Company and is the legally valid and binding
obligation of Company, enforceable against Company in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting
creditors' rights generally and by equitable principles relating to
enforceability.
B. No Conflict. The execution and delivery by Company of this
Amendment do not and will not (i) violate any provision of any law or any
governmental rule or regulation applicable to Company or any of its
Subsidiaries, the Certificate or Articles of Incorporation or Bylaws of
Company or any of its Subsidiaries or any order, judgment or decree of any
court or other agency of government binding on Company or any of its
Subsidiaries, (ii) conflict with, result in a breach of or constitute (with
due notice or lapse of time or both) a default under any Contractual
Obligation of Company or any of its Subsidiaries, (iii) result in or
require the creation or imposition of any Lien upon any of the properties
or assets of Company or any of its Subsidiaries (other than any Liens
created under any of the Loan Documents in favor of Agent on behalf of
Lenders), or (iv) require any approval of stockholders or any approval or
consent of any Person under any Contractual Obligation of Company or any of
its Subsidiaries.
C. Governmental Consents. The execution and delivery by Company of
this Amendment do not and will not require any registration with, consent
or approval of, or notice to, or other action to, with or by, any federal,
state or other governmental authority or regulatory body, except to the
extent that Company is required to file this Amendment with the FCC.
D. Incorporation of Representations. Each representation and warranty
of Company contained in each of the Loan Documents is true, correct and
complete in all material
2
<PAGE>
respects on and as of the Third Amendment Effective Date to the same extent
as though made on and as of the Third Amendment Effective Date except to
the extent such representations and warranties relate to an earlier date,
in which case they were true, correct and complete in all material respects
as of such earlier date.
E. Absence of Default. No event has occurred and is continuing or
would result from the execution, delivery or performance of this Amendment
that constitutes or would constitute an Event of Default or a Potential
Event of Default after giving effect to this Amendment.
SECTION 4. ACKNOWLEDGEMENT AND CONSENT
Each Guarantor hereby acknowledges that it has read this Amendment and
consents to the terms thereof and further hereby confirms and agrees that,
notwithstanding the effectiveness of this Amendment, the obligations of such
Guarantor under the Subsidiary Guaranty shall not be impaired or affected and
the Subsidiary Guaranty is, and shall continue to be, in full force and effect
and is hereby confirmed and ratified in all respects.
SECTION 5. MISCELLANEOUS
A. Reference to and Effect on the Credit Agreement and the Other Loan
Documents.
(i) On and after the Third Amendment Effective Date, each reference in
the Credit Agreement to "this Agreement", "hereunder", "hereof", "herein"
or words of like import referring to the Credit Agreement, and each
reference in the other Loan Documents to the "Credit Agreement",
"thereunder", "thereof" or words of like import referring to the Credit
Agreement shall mean and be a reference to the Credit Agreement, as amended
by this Amendment.
(ii) Except as specifically amended by this Amendment, the Credit
Agreement and the other Loan Documents shall remain in full force and
effect and are hereby ratified and confirmed.
(iii) The execution, delivery and performance of this Amendment shall
not, except as expressly provided herein, constitute a waiver of any
provision of, or operate as a waiver of any right, power or remedy of Agent
or any Lender under, the Credit Agreement or any of the other Loan
Documents.
B. Fees and Expenses. Company acknowledges that all costs, fees and
expenses as described in subsection 10.2 of the Credit Agreement incurred by
Agent and its counsel with respect to this Amendment and the documents and
transactions contemplated hereby shall be for the account of Company.
C. Headings. Section and subsection headings in this Amendment are included
herein for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose or be given any substantive effect.
D. Applicable Law. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT
LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF
3
<PAGE>
THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
E. Counterparts. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
COMPANY: GRANITE BROADCASTING CORPORATION
By: /s/ ELLEN MC CLAIN
--------------------------------
Ellen McClain
Vice President
4
<PAGE>
SUBSIDIARIES: GRANITE RESPONSE TELEVISION, INC.
KBVO, INC.
KBVO LICENSE, INC.
KNTV, INC.
KNTV LICENSE, INC.
RJR COMMUNICATIONS, INC.
KBJR LICENSE, INC.
SAN JOAQUIN COMMUNICATIONS
CORPORATION
KSEE LICENSE, INC.,
WPTA-TV, INC.
WPTA-TV LICENSE, INC.
WTVH, INC.
WTVH LICENSE, INC.
WWMT-TV, INC.
WWMT-TV LICENSE, INC.
WKBW-TV, INC.
WKBW-TV LICENSE, INC.
QUEEN CITY BROADCASTING, INC.
QUEEN CITY BROADCASTING
OF NEW YORK, INC.
WXON, INC.
WXON LICENSE, INC.
By: /s/ ELLEN MC CLAIN
----------------------
Ellen McClain
QUEEN CITY III LIMITED PARTNERSHIP
By: WKBW-TV, INC.,
its General Partner
By: /s/ ELLEN MCCLAIN
---------------------
Ellen McClain
5
<PAGE>
LENDERS:
BANKERS TRUST COMPANY,
individually and as Agent
By: /s/ PATRICIA HOGAN
--------------------------------
Name: Patricia Hogan
Title: Principal
GOLDMAN SACHS CREDIT PARTNERS L.P.,
as a Co-Agent and a Lender
By: /s/ STEPHEN B. KING
--------------------------------
Name: Stephen B. King
Title: Authorized Signatory
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA,
as a Co-Agent and a Lender
By: /s/ BREE LOFTIN
--------------------------------
Name: Bree Loftin
Title: Senior Vice President
6
<PAGE>
THE BANK OF NEW YORK,
as a Co-Agent and a Lender
By: /s/ BRIAN C. WASHINGTON
-----------------------------------
Name: Brian C. Washington
Title: Assistant Vice President
UNION BANK OF CALIFORNIA, N.A.,
as a Co-Agent and a Lender
By: /s/ KRISTINA MOUZARIS
-----------------------------------
Name: Kristina Mouzaris
Title: Assistant Vice President
THE BANK OF TOKYO-MITSUBISHI TRUST
COMPANY,
as a Lender
By: /s/ GLEN B. ECKERT
-----------------------------------
Name: Glenn B. Eckert
Title: Vice President
NATEXIS BANQUE
as a Lender
By: /s/ FRANK H. MADDEN
-----------------------------------
Name: Frank H. Madden
Title: Vice President
By: /s/ WILLIAM C. MAIER
-----------------------------------
Name: William C. Maier
Title: Vice President-Group Manager
7
<PAGE>
THE SUMITOMO BANK, LIMITED,
as a Lender
By: /s/ J.R. BREADLEY
-----------------------------------
Name: J.R. Breadley
Title: Vice President New York Office
By: /s/ BRIAN M. SMITH
-----------------------------------
Name: Brian M. Smith
Title: Senior Vice Presidnt & Regional Manager
DRESDNER BANK AG, NEW YORK AND GRAND
CAYMAN BRANCHES,
as a Lender
By: /s/ WILLIAM E. LAMBERT
-----------------------------------
Name: William E. Lambert
Title: Assistant Vice President
By: /s/ JANE A. MAJESKI
-----------------------------------
Name: Jane A. Majeski
Title: First Vice President
ABN AMRO BANK N.V., NEW YORK BRANCH,
as a Lender
By: /s/ ANN SCHWALBENBERG
-----------------------------------
Name: Ann Schwalbenberg
Title: Vice President
By: /s/ THOMAS T. ROGERS
-----------------------------------
Name: Thomas T. Rogers
Title: Vice President
8
<PAGE>
HELLER FINANCIAL, INC.,
as a Lender
By: /s/ PATRICK HAYES
-----------------------------------
Name: Patrick Hayes
Title: Vice President
MICHIGAN NATIONAL BANK,
as a Lender
By: /s/ STEPHANE LUBILA
-----------------------------------
Name: Stephane Lubila
Title: Relationship Manager
BANQUE PARIBAS,
as a Lender
By: /s/ WILLIAM B. SCHINK
-----------------------------------
Name: William B. Schink
Title: Director
By: /s/ ERROL R. ANTZIS
-----------------------------------
Name: Errol R. Antzis
Title: Managing Director, Group Head
THE BANK OF NOVA SCOTIA,
as a Lender
By: /s/ MARGOT C. BRIGHT
-----------------------------------
Name: Margot C. Bright
Title: Authorized Signatory
9
<PAGE>
BANQUE NATIONALE DE PARIS,
as a Lender
By: /s/ SERGE DESRAYAUD
-----------------------------------
Name: Serge Desrayaud
Title: Vice President
By: /s/ STEPHANIE R. ROGERS
-----------------------------------
Name: Stephanie R. Rogers
Title: Vice President
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE,
as a Lender
By: /s/ MARCUS EDWARD
-----------------------------------
Name: Marcus Edward
Title: Vice President
By: /s/ ANTHONY ROCK
-----------------------------------
Name: Anthony Rock
Title: Vice President
<PAGE>
EXHIBIT 10.19
GRANITE BROADCASTING CORPORATION
DIRECTORS' STOCK OPTION PLAN
As amended through August 25, 1997
ARTICLE I
GENERAL
1.01. Purpose. The purpose of the Granite Broadcasting Corporation Directors'
Stock Option Plan (the "Plan") is to promote the overall financial objectives of
Granite Broadcasting Corporation (the "Company") and its stockholders by
aligning the interests of the Company's stockholders and its Non-Employee
Directors (as defined in Article IV) through the grant of options to acquire
shares of the Company's Common Stock (Nonvoting), par value $.01 per share, and
any other stock or security resulting from the adjustment thereof or
substitution therefor pursuant to Section 8.02 ("Common Stock (Nonvoting)"). The
Plan is also intended to attract and retain well-qualified persons for service
as Non-Employee Directors. The Plan is designed to comply with the provisions of
Rule 16b-3 ("Rule 16b-3") promulgated under Section 16 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
1.02. Options. For the purposes of the Plan, the right to acquire a specified
number of shares of Common Stock (Nonvoting) at a stated price in accordance
with the terms of this Plan and an Option Agreement (as defined in Section 6.02)
shall be referred to as an "Option." Options granted under the Plan will not
qualify as "Incentive Stock Options" within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code").
1.03. Effective Date of Plan. This Plan shall become effective on March 1, 1994
(the "Effective Date"); provided, however, that the approval by a majority (or
such other proportion as may be required by state law or the Certificate of
Incorporation of the Company) of the outstanding shares of Voting Common Stock,
par value $.01 per share, of the Company (the "Voting Common Stock"), voted
either in person or by proxy, at a duly held stockholders meeting or by written
consent is obtained within twelve (12) months of such adoption.
ARTICLE II
ADMINISTRATION OF THE PLAN
The Plan shall be implemented and administered by the Board. Subject to the
terms and conditions of the Plan, the Board shall have the power to construe the
provisions of the Plan, to determine all questions arising thereunder, and to
adopt and amend
<PAGE>
such rules and regulations for administering the Plan as the Board deems
desirable. In construing, amending and administering the Plan, the Board shall
have full and final discretion in all of its actions under the Plan only to the
extent consistent with Rule 16b-3(c)(2)(ii) promulgated under the Exchange Act.
All expenses of administering the Plan shall be borne by the Company.
ARTICLE III
STOCK SUBJECT TO THE PLAN
3.01. Number of Shares. The stock subject to the Options granted under this Plan
shall be the Common Stock (Nonvoting). Under the Plan, Options may be granted to
purchase up to 300,000 shares of Common Stock (Nonvoting), subject to adjustment
as provided in Section 8.02. The shares of Common Stock (Nonvoting) to be issued
upon the exercise of Options may be authorized but unissued shares, or shares
issued and reacquired by the Company.
3.02. Release of Shares. If any Option granted hereunder shall be cancelled,
expire or terminate for any reason without having been exercised in full, the
shares of Common Stock (Nonvoting) subject to such Option shall thereafter again
be available to be granted under the Plan.
3.03. Stockholder Rights. No person shall have any rights of a stockholder of
the Company with respect to shares of Common Stock (Nonvoting) subject to an
Option until, after proper exercise of the Option, such shares have been
recorded on the Company's official stockholder records as having been issued or
transferred to the party exercising the Option. No adjustment shall be made for
dividends or other rights for which the record date is prior to the date such
shares are recorded as issued or transferred (to the party exercising the
Option) in the Company's official stockholder records, except as provided in
Section 8.02. The Company shall cause its transfer agent to record the shares as
issued or transferred.
3.04. Stock Valuation. If and when the value or closing price of Common Stock
(Nonvoting) shall be required to be determined, it shall be the closing price
reported on the NASDAQ National Market or the principal securities exchange on
which the Common Stock (Nonvoting) may then be traded, as the case may be, or,
if there is no such sale on the relevant date, then on the last previous day on
which a sale was reported (which value or closing price shall be referred to
herein as the "Fair Market Value per share," or for a group of shares, as the
total "Fair Market Value").
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<PAGE>
ARTICLE IV
ELIGIBILITY
Each member of the Board who is not an employee, either full-time or
part-time, of the Company (each a "Non-Employee Director") shall be eligible to
receive Options to purchase shares of Common Stock (Nonvoting) in accordance
with Article V. A person to whom an Option hereunder is granted shall be
referred to hereinafter as an "Optionee" and such term shall include any person
who is appointed as a guardian of the Optionee's estate, any legal
representative of the Optionee's estate and any person to whom the Option is
transferred pursuant to the applicable laws of descent and distribution.
ARTICLE V
GRANT OF OPTIONS
5.01. Director Service Awards.
(a) During the five (5) day period commencing on the Effective Date, each
Director shall have the right to make an irrevocable three-year election to
receive Options as compensation payable to such Director for attendance at
regular quarterly meetings ("Regular Board Meetings") of the Board (an "Option
Election"). Each Director making an Option Election shall receive an Option to
purchase 10,800 shares of Common Stock (Nonvoting) ("1994 Awards") in lieu of
the cash compensation that he would otherwise receive for attending Regular
Board Meetings during the period from and including the Effective Date until the
earlier to occur of: (i) termination of such Director's membership on the Board
("Completion of Service"); or (ii) the day immediately preceding the next
Triennial Period Commencement Date (as defined below) (the "Triennial Period
Completion Date"). Each Director who received 1994 Awards shall be granted an
Option, dated July 25, 1995, to purchase 3,600 shares of Common Stock
(Nonvoting) ("1995 Awards"), which number of shares equals 600 multiplied by the
number of Regular Board Meetings from July 24, 1995 until the next occurring
Triennial Period Completion Date, as compensation for attendance at Regular
Board Meetings during the period from and including the Date of Grant of the
Option until the earlier to occur of: (i) his or her Completion of Service; or
(ii) the next occurring Triennial Completion Date. On February 25, 1997 and each
third year anniversary thereof (each of such dates and the Effective Date, a
"Triennial Period Commencement Date"), each Director then in office shall be
granted an Option to purchase 18,000 shares of Common Stock (Nonvoting), which
Option shall serve as the Director's Compensation for attendance at Regular
Board Meetings during the period from and including the Date of Grant of the
Option until the earlier to occur of: (i) his or her Completion of Service; or
(ii) the next occurring Triennial Completion Date.
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<PAGE>
Any compensation for attendance at any other meetings of the Board shall be only
in cash.
(b) Each person who first becomes a Director after the Effective Date
(other than on a Triennial Period Commencement Date) shall be granted, on the
date such Director is first elected a Director of the Company, an Option to
purchase a number of shares equal to: 1,500 multiplied by the number of Regular
Board Meetings scheduled from the date of his or her commencement of service as
a Director until the next occurring Triennial Period Completion Date, which
Option shall serve as the Director's compensation for attendance at Regular
Board Meetings during the period from and including his or her election as a
Director until the earlier to occur of: (i) his or her Completion of Service; or
(ii) the next occurring Triennial Period Completion Date.
5.02. Committee Service Awards.
(a) On the Effective Date and on the first anniversary of the Effective
Date, each Director shall be granted an Option to purchase 400 shares of Common
Stock (Nonvoting) (an "Annual Committee Award") as compensation for service on
each committee of the Board on which he or she serves, if any.
(b) On July 25, 1995, each Director who is then a member of the Company's
Audit Committee or Compensation Committee (each such Committee and only such
Committees being a "Board Committee") shall be granted an Option to purchase
6,000 shares of Common Stock (Nonvoting) (a "1995 Committee Award") for service
on each Board Committee on which he or she is a member. On each Triennial Period
Commencement Date (other than the Effective Date), each Director who is then a
member of a Board Committee shall be granted an Option to purchase 9,000 shares
of Common Stock (Nonvoting) for service on each Board Committee on which he or
she is a member. Each person who becomes a member of a specific Board Committee
for the first time after July 25, 1995 (other than on a Triennial Period
Commencement Date), shall be granted an Option to purchase a number of shares of
Common Stock (Nonvoting) equal to 9,000 minus 1,500 multiplied by the number of
complete 180 day periods from the Triennial Period Commencement Date immediately
preceding the Date of Grant of such Option until the Date of Grant. All Options
granted pursuant to this Section 5.02(b) shall serve as compensation to Board
Committee members for attendance at Regularly Scheduled Committee Meetings of
the Board Committee for which the Option was granted occurring from the Date of
Grant of such Options until the earlier to occur of: (i) termination of such
Director's membership on the Board Committee; or (ii) the next occurring
Triennial Completion Date. For purposes of this Plan, Regularly Scheduled
Committee Meetings shall mean up to two meetings per calendar year of a Board
Committee occurring on, or within 30 days' prior to, a Regular Board Meeting.
-4-
<PAGE>
ARTICLE VI
TERMS AND CONDITIONS OF OPTIONS
6.01. Exercise Price. The price per share of each share of Common Stock
(Nonvoting) purchased upon the exercise of an Option shall be the Fair Market
Value per share of the Common Stock (Nonvoting) on the date the Option is
granted (the "Date of Grant").
6.02. Option Agreement. Each Option granted under this Plan shall be evidenced
by an option agreement (an "Option Agreement"), which shall embody the terms and
conditions of such Option and which shall be subject to the express terms and
conditions set forth in the Plan.
6.03. Term of Option; Exercisability.
(a) With respect to all awards granted on or prior to the initial Triennial
Period Completion Date (other than Annual Committee Awards), subject to the
provisions of Articles VII and IX and Section 8.02, on the first anniversary of
the date of attendance, in person, at each Regular Board Meeting or Regularly
Scheduled Committee Meeting, as applicable, held prior to the Triennial Period
Completion Date for the period covered by such award, Options to purchase 1,500
(900 shares with respect to the 1994 Grants and 600 shares with respect to the
1995 Grants) shares of Common Stock (Nonvoting) shall become fully exercisable.
All Annual Committee Service Awards shall become fully exercisable on the first
anniversary of the Date of Grant thereof.
(b) With respect to all awards granted on or after the second Triennial
Period Commencement Date, subject to the provisions of Article VII and IX and
Section 8.02, Options to purchase 1,500 shares of Common Stock (Nonvoting) shall
become fully exercisable on the date of attendance, in person, at each Regular
Board Meeting or Regularly Scheduled Committee Meeting, as applicable, held
prior to the Triennial Completion Date for the period covered by the award.
(c) In addition, subject to the provisions of Articles VII and IX and
Section 8.02, Options granted pursuant to Section 5.01 (other than 1995 Awards)
to purchase 500 shares of Common Stock (Nonvoting) shall become fully
exercisable on the date of attendance (or the first anniversary of the date of
attendance with respect to 1994 Awards) by telephonic means at a Regular Board
Meeting of duration longer than 30 minutes held prior to the Triennial
Completion Date for the period covered by the Options.
(d) Notwithstanding anything to the contrary contained in this Section
6.03, no Options shall become exercisable prior to the amendment of the
Company's Certificate of Incorporation to increase
-5-
<PAGE>
the authorized number of shares of Common Stock (Nonvoting) to at least
30,000,000 shares. Once exercisable, all Options, unless earlier terminated
pursuant to the provisions of the Plan, shall remain exercisable until ten (10)
years from the Date of Grant (the "Option Period"). An exercisable Option, or
portion thereof, may be exercised in whole or in part only with respect to whole
shares of Common Stock (Nonvoting).
(e) All Options (whenever granted, that could become exercisable as a
result of attendance at a future Regular Board Meeting or Regularly Scheduled
Committee Meeting or that, upon the passage of time following attendance at a
prior Regular Board Meeting or Regularly Scheduled Committee Meeting, would
become exercisable) shall become immediately exercisable upon: (i) the death or
disability (as defined in Section 22(e)(3) of the Code) 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."
6.04. Method of Exercise. An Option may be exercised: (i) by giving written
notice to the Company's Secretary at the Company's main office, 767 Third
Avenue, New York, New York 10019 (or any office which is the successor main
office or which is otherwise designated as the office to which such notice is to
be given), specifying the number of whole shares to be purchased and accompanied
by payment therefor in full in a method provided in Section 6.05 below; and (ii)
by executing such documents as the Company may reasonably request to satisfy the
Optionee's obligations under the Plan and the Option Agreement. No shares of
Common Stock (Nonvoting) shall be issued until the full purchase price therefor
has been paid and the withholding obligations described in Article XII have been
satisfied. The Company shall 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 the law. Pursuant to Article IX, the Company may also
require that, at the time of exercise, each Optionee 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.
6.05. Method of Payment. The purchase price of the shares of Common Stock
(Nonvoting) as to which an Option shall be exercised, shall be paid to the
Company: (i) in cash; (ii) in previously owned whole shares of Common Stock
(Nonvoting)(for which the director has good title free and clear of all liens
and encumbrances) having a Fair Market Value determined as of the date of
exercise; or (iii) a
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<PAGE>
combination of (i) and (ii).
6.06. Non-assignability. Options under the Plan will not be transferable by an
Optionee except by will or the laws of descent and distribution. During the
lifetime of the Optionee, the Option is exercisable only by the Optionee or, in
the event of the Optionee's incapacity, by his duly authorized legal
representative. Notwithstanding the foregoing, the Board may, in its discretion,
authorize all or a portion of the Option granted to a Optionee to be on terms
which permit transfer by such Optionee to (i) the spouse, children or
grandchildren of such Optionee ("Immediate Family Members"), (ii) a trust or
trusts for exclusive benefit of such Immediate Family Members, or (iii) a
partnership or limited liability company in which such Immediate Family Members
are the only partners or members, as applicable, provided that (x) there may be
no consideration for any such transfer, (y) the Option agreement pursuant to
which such Options are granted must be approved by the Board and must expressly
provide for transferability in a manner consistent with this Section, and (z)
subsequent transfers of transferred Options shall be prohibited except those
occurring by laws of descent and distribution. Following transfer, any such
Options shall continue to be subject to the same terms and conditions as were
applicable immediately prior to transfer, provided that for purposes of the
Plan, the term Optionee shall be deemed to refer to the transferee; provided,
however, that, the Option shall continue to be exercisable and shall terminate
in accordance with its terms as if the transferor (Non-Employee Director)
remained the holder of the Option. Options under the Plan may not be pledged,
mortgaged, hypothecated or otherwise encumbered, and shall not be subject to the
claims of creditors.
ARTICLE VII
TERMINATION
7.01. Disability or Death. If a Non-Employee Director's directorship terminates
by reason of Disability (as defined herein) or death, any Option granted under
the Plan and held by the Non-Employee Director may thereafter be exercised by
such Director (or the duly appointed guardian of the director's estate or the
legal representative of the director's estate or the person to whom the Option
is transferred pursuant to applicable laws of descent and distribution) at any
time prior to the earlier to occur of six (6) months after the date of such
termination of the Non-Employee's Director's directorship and the expiration of
the Option Period, but, subject to Section 6.03(e), only to the extent of the
number of shares for which Options were then exercisable by him on the date of
termination. If a Non-Employee Director dies during the six (6) month period
following termination of such director's directorship by reason of Disability,
any Option held by the Non-Employee Director may thereafter be exercised by the
legal
-7-
<PAGE>
representative of the Director's estate (or the person to whom the Option is
transferred pursuant to applicable laws of descent and distribution) for a
period of six (6) months from the date of death. A Disability shall mean a
permanent physical or mental incapacity which, in the reasonable determination
of the Board, renders the Optionee unable to perform the duties of a director of
the Company.
7.02. Other Termination. If a Non-Employee Director's directorship terminates
for any reason other than Disability or death, any Option held by the
Non-Employee Director (excluding any Option which, as of the date of the
termination of directorship, was not then exercisable) may thereafter be
exercised at any time prior to the first to occur of ninety (90) days after such
date and the expiration of the Option Period.
7.03. Automatic Termination. Any Option or any portion thereof that does not
become exercisable within four (4) years after the Date of Grant thereof shall
automatically terminate on such fourth anniversary of the Date of Grant.
ARTICLE VIII
PROVISIONS APPLICABLE TO THE PLAN
8.01. Duration of the Plan. The Plan shall continue in effect until it is
terminated by action of the Board, but such termination shall not affect the
terms of any then-outstanding Options.
8.02. Adjustments.
(a) 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 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 Common Stock (Nonvoting) 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 (b) or (c) of this
Section 8.02, 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
-8-
<PAGE>
price of shares of Common Stock (Nonvoting) then subject to outstanding Options.
(b) Adjustment of Options on Recapitalization. The aggregate number of
shares of Common Stock (Nonvoting) 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 (Nonvoting) 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 any other distribution to all holders of Common
Stock (Nonvoting) other than normal cash dividends; provided, however, that any
Options to purchase fractional shares resulting from any such adjustment shall
be eliminated.
(c) Adjustment of Options Upon Reorganization.
(i) 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 shareholders of Common Stock (Nonvoting)
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 (Nonvoting) 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.
(ii) The resulting corporation 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 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.
8.03. Amendments of the Plan. The Board may amend this Plan as it shall deem
advisable, subject to any requirements of stockholder approval imposed by
applicable law; provided, however, that no amendment shall be made to any of
this Section 8.03, Articles IV or V or Sections 6.01, 6.02, or 6.03 more than
once every six months other than to comply with changes in the Code, the
Employment Retirement Income Securities Act, as amended, or the rules
thereunder, nor may the Plan be otherwise amended in a manner which
-9-
<PAGE>
fails to comply with Rule 16b-3(c)(2)(ii)(B) promulgated under Section 16 of the
Exchange Act. No amendment may impair the rights of a holder of an outstanding
Option without the consent of such holder.
ARTICLE IX
REQUIREMENTS OF LAW
9.01. The Company shall not be required to sell or issue any shares upon the
exercise of 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 (Nonvoting)
covered by an Option, the Company shall not be required to issue shares upon
exercise of any Option unless: (i) the Company has received evidence
satisfactory to it to the effect that the holder of such Option is acquiring
such shares for investment and not with a view to the distribution thereof; or
(ii) an opinion of counsel to the Company has been received by the Company, in a
form and substance which is deemed acceptable by the Company, to the effect that
a registration statement is not required. Any determination in this connection
by the Company 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 that 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 an
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.
ARTICLE X
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<PAGE>
USE OF PROCEEDS
10.01. The proceeds of the sale of Common Stock (Nonvoting) pursuant to the
exercise of the Options will be used for the Company's general corporate
purposes.
ARTICLE XI
INDEMNIFICATION OF THE
BOARD OF DIRECTORS
11.01. Each member of the Board shall be indemnified and held harmless by the
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 the Board, whether
or not he continues to be a member of the Board at the time of incurring such
loss, liabilities, costs and expenses. Notwithstanding any of the foregoing, no
member of the Board shall be entitled to such indemnification from the Company
for any loss, liabilities, costs and expenses incurred by him: (i) 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 the Board; or (ii) 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 such member the Board 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 member of the
Board and shall be in addition to all other rights to which such member of the
Board may be entitled as a matter of law, contract or otherwise.
ARTICLE XII
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-
<PAGE>
ARTICLE XIII
GENERAL PROVISIONS
13.01. Effect on Service. Neither the adoption of this Plan, its operation, nor
any documents describing or referring to this Plan (or any part thereof) shall
confer upon any Participant any right to continue service as a member of the
Board.
13.02. Unfunded Plan. The Plan, insofar as it provides for grants, shall be
unfunded, and the Company shall not be required to segregate any assets that may
at any time be represented by grants under this Plan. Any liability of the
Company to any person with respect to any grant under this Plan shall be based
solely upon any contractual obligations that may be created pursuant to this
Plan. No such obligation of the Company shall be deemed to be secured by any
pledge of, or other encumbrance on, any property of the Company.
13.03. Rules of Construction. Headings are given to the articles and sections of
this Plan solely as a convenience to facilitate reference. The reference to any
statute, regulation, or other provision of law shall be construed to refer to
any amendment to or successor of such provision of law.
13.04. Applicable Law. The Plan shall be construed, governed and enforced in
accordance with the laws of the State of Delaware, without regard to choice of
law principles.
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<PAGE>
EXHIBIT 11
GRANITE BROADCASTING CORPORATION
STATEMENT OF COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1998 1997
------------ ------------
(Unaudited)
<S> <C> <C>
Basic:
Average shares of common stock
outstanding 9,475,600 8,735,879
============ ============
Loss before extraordinary item $ (3,947,028) $ (4,956,772)
Extraordinary loss -- (320,804)
------------ ------------
Net loss $ (3,947,028) $ (5,277,576)
============ ============
Net loss attributable to common stockholders $(10,060,483) $ (9,474,380)
============ ============
Per common share:
Loss before extraordinary item $ (1.06) $ (1.05)
Extraordinary loss -- (0.04)
------------ ------------
Net loss $ (1.06) $ (1.09)
============ ============
Diluted:
Average shares of common stock
outstanding 9,475,600 8,735,879
============ ============
Loss before extraordinary item $ (3,947,028) $ (4,956,772)
Extraordinary loss -- (320,804)
------------ ------------
Net loss $ (3,947,028) $ (5,277,576)
============ ============
Net loss attributable to common stockholders $(10,060,483) $ (9,474,380)
============ ============
Per common share:
Loss before extraordinary item $ (1.06) $ (1.05)
Extraordinary loss -- (0.04)
------------ ------------
Net loss $ (1.06) $ (1.09)
============ ============
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM GRANITE
BROADCASTING CORPORATION'S 1ST QUARTER 1998 10-Q AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 3,945,201
<SECURITIES> 0
<RECEIVABLES> 28,832,415
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 54,519,272
<PP&E> 35,507,667
<DEPRECIATION> 0
<TOTAL-ASSETS> 624,442,311
<CURRENT-LIABILITIES> 32,023,111
<BONDS> 385,790,035
209,421,264
0
<COMMON> 97,165
<OTHER-SE> (39,353,193)
<TOTAL-LIABILITY-AND-EQUITY> 624,442,811
<SALES> 0
<TOTAL-REVENUES> 36,724,036
<CGS> 0
<TOTAL-COSTS> 29,763,292
<OTHER-EXPENSES> 944,843
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,466,929
<INCOME-PRETAX> (3,451,028)
<INCOME-TAX> 496,000
<INCOME-CONTINUING> (3,947,028)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,947,028)
<EPS-PRIMARY> 1.06
<EPS-DILUTED> 1.06
</TABLE>
