**Exhibit10.31**

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**NON-EMPLOYEEDIRECTORS STOCK PLAN OFGRANITE BROADCASTING CORPORATIONas amended through December 2, 2002**

 

1.                                       **Purpose**.  The purpose of this Non-Employee DirectorsStock Plan (the “Plan”) of Granite Broadcasting Corporation (the “Company”), isto advance the interests of the Company and its stockholders by providing ameans to attract and retain highly qualified persons to serve as non-employeedirectors of the Company and to enable such persons to acquire or increase aproprietary interest in the Company, thereby promoting a closer identity ofinterests between such persons and the Company’s stockholders.

 

2.                                       **Definitions**.  In addition to terms defined elsewhere inthe Plan, the following are defined terms under the Plan:

 

(a)                                  “Code”means the Internal Revenue Code of 1986, as amended from time to time.  References to any provision of the Codeshall be deemed to include regulations thereunder and successor provisions andregulations thereto.

 

(b)                                 “Disability”means a permanent physical or mental incapacity which, in the reasonabledetermination of the Board, renders the Participant unable to perform hisduties as a director of the Company.

 

(c)                                  “FairMarket Value” of a Share on a given date shall mean the closing pricereported on the Nasdaq Small Cap Market or the principal securities exchange onwhich 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 onwhich a sale was reported.

 

(d)                                 “Participant”means a person who, as a non-employee director of the Company, has been grantedShares under the Plan.

 

(e)                                  “Share”means a share of Common Stock (Nonvoting), $.01 par value, of the Company andsuch other securities as may be substituted for such Share or such othersecurities pursuant to Section 8.

 

3.                                       **SharesAvailable Under The Plan**. Subject to adjustment as provided in Section 8, as of any date, thetotal number of Shares issuable under the Plan shall be 600,000.  Such Sharesmay be authorized but unissued Shares, treasury Shares, or Shares acquired inthe market for the account of the Participant. If there are not enough Shares remaining under the Plan to fully satisfyany of the awards contemplated under Section 6 of the Plan, then eachParticipant’s award shall be proportionately reduced unless the Share reserveis increased to account for such awards.

 

4.                                       **AdministrationOf The Plan**.  The Planwill be administered by the Board of Directors of the Company (the “Board”).

 

5.                                       **Eligibility**.  Only directors of the Company who are notemployees of the Company or any subsidiary of the Company shall participate inthe Plan.

 

6.                                       **Grant OfShares**.

 

(a)                                  **Grants toExisting Directors Prior to December 2, 2002**.  On April 29, 1997, April 28, 1998, January1, 1999 and on January 1 of each subsequent calendar year during the term ofthe Plan that occurs prior to December 2, 2002, each Participant shall receivea 

 

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number of Shares equal to $20,000 divided by the Fair Market Value perShare on the date of grant.

 

(b)                                 **Grants to Existing DirectorsFollowing December 2, 2002**.  On January1, 2003 and on each January 1 thereafter during the term of the Plan, eachParticipant shall receive a number of Shares equal to $50,000 divided by theFair Market Value per share on the date of grant (a “Grant”); provided, that,any Participant may elect prior to the grant date to be paid up to $30,000 ofsuch Grant in cash in lieu of Shares having an aggregate Fair Market Valueequal to the amount of such cash payment.

 

(c)                                  **Grants toNew Directors Prior to December 2, 2002**.   As of January 1, 1999, if a person firstbecomes a director of the Company at any time after January 1 of any calendaryear prior to December 2, 2002, and such person is eligible to participate inthe Plan under Section 5 hereof, such person shall receive on the date suchperson is first elected a director of the Company a number of Shares equal to(x) $5,000 multiplied by the number of regular board meetings scheduled fromthe date of his or her commencement of service as a director until December 31of such calendar year divided by (y) the Fair Market Value per Share on thedate of grant.

 

(d)                                 **Grants to New DirectorsFollowing December 2, 2002**.  As ofDecember 2, 2002, if a person first becomes a director of the Company at anytime after January 1 of any calendar year and such person is eligible toparticipate in the Plan under Section 5 hereof, such person shall receive onthe date such person is first elected a director of the Company a number ofShares equal to (x) $12,500 multiplied by the number of regular board meetingsscheduled from the date of his or her commencement of service as a directoruntil December 31 of such calendar year divided by (y) the Fair Market Valueper Share on the date of grant; provided, that, prior to the date of grant, anysuch Participant may elect to receive up to 60% of the value of such grant incash in lieu of Shares having an aggregate Fair Market Value equal to theamount of such cash payment.

 

(e)                                  **Grants to Existing CommitteeChairs Following December 2, 2002**.  OnJanuary 1, 2003 and on each January 1 thereafter during the term of the Plan,each Participant shall receive a number of Shares equal to $5,000 divided bythe Fair Market Value per Share on the date of grant for each committee of theBoard such Participant chairs, if any; provided, that, prior to the date ofgrant, any such Participant may elect to receive such grant in cash in lieu ofShares having an aggregate Fair Market Value equal to the amount of such cashpayment.

 

(f)                                    **Grants to New CommitteeChairs Following December 2, 2002**.  Asof December 2, 2002, if a person first becomes a chair of any committee of theBoard at any time after January 1 of any calendar year and such person iseligible to participate in the Plan under Section 5 hereof, such person shallreceive on the date such person first becomes chair of such committee a numberof Shares equal to (x) $5,000 divided by (y) the Fair Market Value per Share onthe date of grant multiplied by (z) a fraction, the numerator of which is thenumber of regularly scheduled meetings of such committee from the date of hisor her commencement of service as chair until December 31 of such calendar yearand the denominator is the total number of regularly scheduled meetings of suchcommittee for the calendar year; provided, that, prior to the date of grant,any such Participant may elect to receive such grant in cash in lieu of Shareshaving an aggregate Fair Market Value equal to the amount of such cash payment.

 

7.                                       **DeferralOf Shares**.  Each directorof the Company may elect to defer the payment of Shares by submitting anelection form to the Board, in accordance with this Section 7.

 

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(a)                                  **Elections**.  Each director who elects to defer thepayment of Shares for a given calendar year must file an irrevocable writtenelection with the Secretary of the Company no later than December 31 of theyear preceding such calendar year; provided, that, any newly elected orappointed director may file an election for any year not later than 30 daysafter the date such person first became a director, and a director may file anelection for the year in which the Plan became effective not later than 30 daysafter the date of effectiveness of the Plan. An election by a director shall be deemed to be continuing and thereforeapplicable to subsequent Plan years unless the director revokes or changes suchelection by filing a new election form by the due date for such form specifiedin this Section 7(a).  The election mustspecify the following:

 

(i)                                     Apercentage or number of Shares to be deferred under the Plan; and

 

(ii)                                  Thedate on which the commencement of payments of Shares should begin, which dateshall not be later than 10 years from the date the Shares originally werepayable;

 

provided,however, that, notwithstanding an election pursuant to this Section7(a), all Shares of a Participant for which payment has not otherwise occurred,shall be paid upon death, Disability or termination of directorship of theParticipant.

 

(b)                                 **Deferralof Shares**.  The Companywill establish a deferral account for each Participant who elects to deferShares under this Section 7.  At anydate Shares are payable to a Participant who has elected to defer Shares, the Companywill credit such Participant’s deferral account with a number of Shares sodeferred.

 

(c)                                  **CreditingOf Dividend Equivalents**. Whenever dividends are paid or distributions made with respect toShares, a Participant to whom Shares are then credited in a deferral accountshall be entitled, on the dividend payment date, as dividend equivalents, to anamount equal in value to the amount of the dividend paid or propertydistributed on a single Share multiplied by the number of Shares credited tohis or her deferral account as of the record date for such dividend ordistribution.  Such dividend equivalentsshall be credited to the Participant’s deferral account by payment to suchaccount of a number of Shares determined by dividing the aggregate value of suchdividend equivalents by the Fair Market Value of a Share at the payment date ofthe dividend or distribution.

 

(d)                                 **SettlementOf Deferred Shares**.  TheCompany will settle the Participant’s deferral account by delivering to theParticipant (or his or her beneficiary) a number of Shares equal to the numberof whole Shares then credited to his or her deferral account (or a specifiedportion in the event of any partial settlement), together with cash in lieu ofany fractional Share remaining at a time that less than one whole Share iscredited to such deferral account.  Suchsettlement shall be made at the time or times specified in the Participant’selection filed in accordance with Section 7(a); provided, however, that aParticipant may further defer settlement of Shares if counsel to the Companydetermines that such further deferral likely would be effective underapplicable federal income tax laws and regulations.

 

(e)                                  **Nonforfeitability**.  The interest of each Participant in anyShares (and any deferral accountrelating thereto) at all times will be nonforfeitable.

 

(f)                                    **Unsecured Obligation**.  The obligations of the Company to makepayments hereunder shall be contractual only and all such payments shall bemade from the general assets of the Company. Each Participant and any other person(s) claiming a right to paymentshereunder shall rely solely on the unsecured promise of the Company, andnothing 

 

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herein shall beconstrued to give a Participant or any other person(s) any right, title,interest or claim in or to any specific asset, fund, reserve account orproperty of any kind whatsoever owned by the Company or in which it may haveany right, title or interest now or in the future.

 

8.                                       **AdjustmentProvisions**.  In the eventany dividend or other distribution (whether in the form of cash, Shares orother property), recapitalization, forward or reverse split, reorganization,merger, consolidation, spin-off, combination, repurchase, exchange of Shares orother securities of the Company, extraordinary dividend (whether in the form ofcash, Shares, or other property), liquidation, dissolution, or other similarcorporate transaction or event affects the Shares such that an adjustment isappropriate in order to prevent dilution or enlargement of each Participant’srights under the Plan, then an adjustment shall be made, in a manner that isproportionate to the change to the Shares and otherwise equitable, in (i) thenumber and kind of Shares remaining reserved and available for issuance underSection 3, and (ii) the number and kind of Shares to be issued upon settlementof deferred Shares under Section 7.  Inaddition, the Board is authorized to make such adjustments in recognition  of unusual or non-recurring events (including,without limitation, events described in the preceding sentence) affecting theCompany or any subsidiary or the financial statements of the Company or anysubsidiary, or in response to changes in applicable laws, regulations oraccounting principles.  The foregoingnotwithstanding, no adjustment may be made hereunder except as will benecessary to maintain the proportionate interest of the Participant under thePlan and to preserve, without exceeding, the value of outstanding deferredShares.

 

9.                                       **ChangesTo The Plan**.  The Boardmay amend, alter, suspend, discontinue, or terminate the Plan or authority togrant Shares under the Plan without the consent of stockholders orParticipants, except that any amendment or alteration will be subject to theapproval of the Company’s stockholders at or before the next annual meeting ofstockholders for which the record date is after the date of such Board actionif such stockholder approval is required by any federal or state law orregulation or the rules of any stock exchange or automated quotation system asthen in effect, and the Board may otherwise determine to submit other suchamendments or alterations to stockholders for approval; provided, however,that, without the consent of an affected Participant, no such action maymaterially impair the rights of such Participant with respect to any previouslygranted Shares.

 

10.                                 **GeneralProvisions**.

 

(a)                                  **Agreements**.  Any right or obligation under the Plan maybe evidenced by agreements or other documents executed by the Company and theParticipant incorporating the terms and conditions set forth in the Plan,together with such other terms and conditions not inconsistent with the Plan,as the Board may from time to time approve.

 

(b)                                 **ComplianceWith Laws And Obligations**. The Company will not be obligated to issue or deliver Shares in atransaction subject to the registration requirements of the Securities Act of1933, as amended, or any other federal or state securities law, any requirementunder any listing agreement between the Company and any stock exchange orautomated quotation system, or any other law, regulation, or contractualobligation of the Company, until the Company is satisfied that such laws,regulations, and other obligations of the Company have been complied with infull.  Certificates representing Sharesissued under the Plan will be subject to such stop-transfer orders and otherrestrictions as may be applicable under such laws, regulations, and otherobligations of the Company, including any requirement that a legend or legendsbe placed thereon.

 

(c)                                  **LimitationsOn Transferability**. Deferred Shares under the Plan will not be transferable by a Participantexcept by will or the laws of descent and distribution or to a beneficiary inthe event of the Participant’s death. Deferred Shares may not be pledged, 

 

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mortgaged, hypothecated or otherwise encumbered, and shall not besubject to the claims of creditors of the Participant.

 

(d)                                 **No RightTo Continue As A Director**. Nothing contained in the Plan or any agreement hereunder will conferupon any Participant any right to continue to serve as a director of theCompany.

 

(e)                                  **NoStockholder Rights Conferred**. Nothing contained in the Plan or any agreement hereunder will conferupon any Participant (or any person or entity claiming rights by or through aParticipant) any rights of a stockholder of the Company unless and until Sharesare in fact issued to such Participant (or person).

 

(f)                                    **NonexclusivityOf The Plan**.  Neither theadoption of the Plan by the Board nor its submission to the stockholders of theCompany for approval shall be construed as creating any limitations on thepower of the Board to adopt such other compensatory arrangements for directorsas it may deem desirable.

 

(g)                                 **GoverningLaw**.  The validity,construction, and effect of the Plan and any agreement hereunder will bedetermined in accordance with the laws of the State of New York, without givingeffect to principles of conflicts of laws, and applicable federal law.

 

11.                                 **StockholderApproval, Effective Date, And Plan Termination**.  The Plan will be effective as of the date ofits adoption by the Board, subject to stockholder approval if necessary orappropriate, and, unless earlier terminated by action of the Board, shallterminate at such time as no Shares remain available for issuance under thePlan and the Company and Participants have no further rights or obligationsunder the Plan.

 

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