**Exhibit 10.1**

 

**SEPARATION AGREEMENT**

 

This Separation Agreement (“Agreement”), dated as of September21, 2004, is made and entered into by and between Stuart J. Beck (“Executive”)and Granite Broadcasting Corporation, a Delaware corporation (“Granite”and together with its subsidiaries and affiliates, the “Company”).  The signatories to this Agreement arereferred to collectively as the “Parties.”

 

**RECITALS:**

 

A.            Executive is a founderand member of the Board of Directors (the “Board”), of Granite, andExecutive and Granite are parties to an Employment Agreement dated as ofSeptember 20, 1991, as amended (the “Employment Agreement”), pursuant towhich Executive serves as President and Secretary of Granite.

 

B.            By mutual agreementbetween Executive and the Company, Executive shall resign, effective as ofSeptember 21,2004 (the “Separation Date”), as an employee and officer ofGranite and as a employee, director and officer, as applicable, of each of theGranite’s subsidiaries and affiliates.

 

**AGREEMENT:**

 

**NOW, THEREFORE**, inconsideration of the mutual promises that are contained in this Agreement andother good and valuable consideration, the receipt and sufficiency of which arehereby acknowledged by Executive, and to resolve any and all disputes orpotential disputes between the Parties, it is agreed as follows:

 

1.                                       **Resignation and Termination of Employment;Continued Service as Director**. Executive hereby resigns, effective as of the Separation Date, as anemployee and officer of Granite and as an employee, director and officer, asapplicable, of each of Granite’s subsidiaries and affiliates, and Granitehereby accepts such resignation. Notwithstanding any provision of the Employment Agreement to thecontrary, such resignation shall not be deemed to be a breach by Executive ofthe Employment Agreement, and the Employment Agreement shall terminate as ofthe Separation Date.  Executive shallcontinue to serve as a member of Granite’s Board until a successor is dulyelected and qualified or until his prior death, resignation, removal ordisqualification.

 

2.                                       **Severance Payment and Other Benefits**.

 

(a)                                  SeverancePayment; Accrued Salary.  From theSeparation Date through the 18-month anniversary of the Separation Date,Granite will pay you, as a severance payment, an annualized amount equal toyour current base annual salary, subject to any withholding pursuant to Section2(i) of this Agreement, through consecutive regular Granite payrollinstallments (collectively, the “Severance Payment”), with the firstinstallment of the Severance Payment to be paid to you on the first Granite payday that occurs after the Effective Date (defined in Section 6(d)).  On the Separation Date (or the first payrollperiod which occurs following such date), Granite shall pay Executive (i) theunpaid portion of Executive’s salary that

 

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he has been earned through theSeparation Date and (ii) to the extent permitted under Granite’s polices, apayment for accrued, but unused vacations days as of the Separation Date,subject to standard payroll deductions and withholdings.  The Parties acknowledge and agree that theaggregate gross amount payable to Executive under the first sentence of this Section2(b) (i.e., the Severance Payment) is $1,008,000.

 

(b)           Prorated 2004 Bonus.  Executive shall receive a bonus for 2004pursuant to the terms of Executive’s 2004 Incentive Award Model prorated to theSeparation Date (the “2004 Bonus”). Such bonus payment, if any, shall be made on approximately the same dateas the payment of a 2004 bonus, if any, is made to the Chief Executive Officerof Granite.

 

(c)           Stock Options.  Executive and Granite are parties to thestock option agreements listed on Schedule A-1 attached hereto (the “StockOption Agreements”), pursuant to which Executive holds options (“Options”)to purchase shares of the Granite’s Common Stock (Nonvoting), par value $0.01per share (“Common Stock (Nonvoting)”). Notwithstanding any provision in any Stock Option Agreement to thecontrary (i) all unvested Options held by Executive as of the Separation Dateunder any Stock Option Agreement shall continue to vest until the earlier of(A) the later of January 2, 2007 and 30 days after the last day of Executive’scontinuous service on the Granite’s Board and (B) the fixed date on which eachsuch Option was initially set to expire (the “Option Termination Date”),and (ii) all vested Options held by Executive as of the Separation Date underany Stock Option Agreement and all Options that vest pursuant to Section2(c)(i) of this Agreement shall remain exercisable until the OptionTermination Date, and thereafter any such Options that remain unexercised shallterminate and cease to be exercisable. For purposes of clarification, Schedule A-2 attached hereto setsforth the unexercised Options that have been granted to Executive as of thedate immediately prior to the Separation Date.

 

(d)           Amendment ofPerformance Award Agreement and Deferral Letter.  The Performance Award Agreement, dated as ofFebruary 25, 2003, by and between Executive and Granite (the “PerformanceAward Agreement”), is hereby amended as set forth on Schedule Bhereto, and the Deferral Letter Agreement, dated as of December 8, 2003, by andbetween Executive and Granite (the “Deferral Letter” and, together withthe Performance Award Agreement, the “Performance Award Documents”), ishereby amended as set forth on Schedule C hereto.  Except as specifically provided herein, theprovisions of the Performance Award Documents shall remain in full force andeffect and are hereby ratified and confirmed. Granite acknowledges that the Compensation Committee of its Board ofDirectors (the “Compensation Committee”) (i) certified that theperformance objective set forth in the Performance Award Agreement and othermaterial terms of the performance award of $3,286,065.00 evidenced by thePerformance Award Agreement (the “Performance Award”) were achieved ormet by December 22, 2003, and (ii) irrevocably determined that the PerformanceAward shall be paid in cash.  The Partiesacknowledge that, as set forth in the Performance Award Documents, unlessGranite’s Compensation Committee determines to pay any amount of thePerformance Award earlier or any such amounts are otherwise paid earlier underthe terms of the Performance Award Documents, the full amount of thePerformance Award (i.e., $3,286,065.00), minus $221,200.00 that ispayable to Executive in connection with the maturity of Executive’s promissorynote dated January 1, 2001, issued to Granite (the “Promissory Note”),shall be paid on December 22, 2006.

 

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(e)           Exchange of Class AVoting Common Stock for Common Stock (Nonvoting).  Executive acknowledges that he currently owns80,250 shares of Granite’s Class A Voting Common Stock, par value $0.01 pershare (“Class A Voting Common Stock”), which are evidenced by a stockcertificate currently in Executive’s possession.  On the Effective Date, each share of Class AVoting Common Stock owned by Executive shall be exchanged by Executive for oneshare of Granite’s Common Stock (Nonvoting) from Granite.  In connection with the foregoing issuance toExecutive of Common Stock (Nonvoting), Executive makes the representations tothe Company set forth on Schedule D attached hereto.  On the Separation Date or such later date towhich the Parties agree, (A) Executive shall deliver to Granite the originallysigned stock certificate evidencing all shares of Class A Voting Common Stockheld by Executive executed in blank or accompanied by a stock power executed inblank, and (B) Granite shall deliver to Executive a duly executed stockcertificate evidencing 80,250 shares of Common Stock (Nonvoting) issued toExecutive pursuant to this Section 2(e).

 

(f)            Insurance Benefits.If Executive, his spouse and other eligible dependents are enrolled in theCompany’s group health plan immediately prior to the Separation Date and electcontinued healthcare coverage under Section 4980B of the Internal Revenue Codeof 1986, as amended (“COBRA”), the Company shall contribute such portionof Executive’s COBRA premiums (including the premiums of his spouse and othereligible dependents, if applicable) at the same cost sharing between theCompany and Executive as a similarly situated active employee for the lesser of(A) 18 months, (B) until Executive (and Executive’s spouse and othereligible dependents) are no longer eligible for COBRA continuation coverage, or(C) until Executive obtains comparable healthcare benefits from any otheremployer, whereupon the Company shall have no further liability or obligationto Executive under this clause (f).

 

(g)           Reimbursement.  Subject to Section 2(h) of thisAgreement, Granite shall reimburse only those reasonable business expensesincurred prior to the Separation Date in accordance with Granite’s writtenpolicies for expense reimbursements. Executive agrees and acknowledges that,from and after the Separation Date, except as expressly provided for in thisAgreement, Executive shall not be entitled to any payments, reimbursements orbenefits of any kind, from Granite, other than in connection with Executive’sservice on Granite’s Board in accordance with Granite’s written policies forexpense reimbursements for directors.

 

(h)           Compensation forBoard Service.  Beginning on theSeparation Date, while Executive serves as a non-employee director on Granite’sBoard, Executive shall be entitled to the compensation and expensereimbursements Granite provides to non-employee directors prorated from theSeparation Date.

 

(i)            Withholding ofTaxes.  The Company may withhold fromany benefits or compensation payable under this Agreement all federal, state,city or other taxes as may be required pursuant to any law or governmentalregulation or ruling.

 

(j)            No FurtherCompensation.  Except as provided, orreferred to, in this Agreement or as otherwise may be required by law,Executive shall not be entitled to receive any other payments, benefits orseverance amounts from the Company following the Separation Date.

 

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(k)           Payoff of PromissoryNote.  The Parties acknowledge andagree that, as determined by Granite’s Compensation Committee in accordancewith the terms of the Performance Award Agreement, $221,200.00 of thePerformance Award that is payable by Granite to Executive in connection withmaturity of the Promissory Note shall be off-set on a dollar for dollar basisby the amount of $221,200.00 that Executive owes Granite under the PromissoryNote in connection with its maturity.  Onthe maturity date of the Promissory Note, or such later date to which Executiveagrees, Granite shall deliver to Executive the originally signed PromissoryNote, marked paid-in-full, and such other evidence of settlement of thetransactions referenced in this Section 2(k), as Executive reasonablyrequests.

 

3.             **Taxability**.  Executive expressly acknowledges that theCompany has made no representations to him regarding the tax consequences ofany benefits or compensation payable under this Agreement, and that suchbenefits and compensation likely will be considered to be taxable income andsubject to disclosure to the appropriate taxing authorities.  Executive agrees that he is solely andentirely responsible for the payment and discharge of all federal, state, andlocal taxes, if any, that by law are due from or owed by Executive with respectto any benefits or compensation payable under this Agreement.  Executive agrees that in the event it shouldbe subsequently determined that withholding or payment of taxes on any amountsreceived by him under this Agreement, or any part thereof, should have beenmade, he personally shall be solely responsible for all such taxes that by laware due from or owed by Executive, as well as for any related penalties orinterest that may be due.

 

4.             **ConfidentialInformation**.  Executiveacknowledges that, during his employment with the Company, he had access toand/or acquired information that is confidential to the Company (“ConfidentialInformation”).  Such ConfidentialInformation includes, but is not limited to: trade secrets; plans for acquiringor disposing of certain assets; program purchasing information; advertising andpromotional programs and plans; financial or statistical data; sales andaccount information; customer information; sales and marketing plans andstrategies; pricing strategies and reports; personnel information; legalmatters, dealings, and claims; and any other information of a similar naturethat is not known or made available to the public or to the Company’scompetitors that, if misused or disclosed, could adversely affect the businessor goodwill of the Company.  Executiveagrees not to disclose any Confidential Information to any person (includingany Company employee who does not need to know such Confidential Information),agency, institution, company, or other entity, or to use any such proprietaryinformation for his own benefit or for the benefit of any person, agency,institution, company, or entity other than the Company, and except as may be requiredby court order or subpoena, without first obtaining the written consent ofGranite.  Executive acknowledges andagrees that these duties and obligations shall continue at least for so long assuch Confidential Information remains confidential to the Company, but shallnot apply to Confidential Information that becomes publicly known through nofault of Executive.  Executive furtheracknowledges and agrees that any breach of this provision is a material breachof this Agreement.

 

5.**                                       Non-Competition;Non-Solicitation.**

 

(a)           In light of theacknowledgements set forth above in Section 4 and in partialconsideration of the compensation and benefits provided to Executive hereunder,for a

 

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period beginning on theSeparation Date and ending December 22, 2006 (the “Restricted Period”),Executive, without the prior written consent of the Company, shall not,directly or indirectly, (i) enter into the employ of or render any services toany person, engaged in a Competitive Business (defined below); or (ii) becomeassociated with or interested in any Competitive Business as an individual, 5%or greater partner, 5% or greater shareholder, creditor, director, officer,principal, agent, employee, trustee, consultant, advisor or in any otherrelationship or capacity.  For purposesof this Agreement, “Competitive Business” shall mean any televisionbroadcasting business that is located in any Designated Market Area (as definedby Nielsen Media Research, Inc., “DMA”) within the continental UnitedStates where the Company either (A) currently owns or operates a televisionbroadcasting business or (B) acquires or commences operations of a televisionbroadcasting business prior to Executive engaging in any of the activities setforth in clauses (i) or (ii) of this Section 5(a) with respect to any othertelevision broadcasting business in such DMA.

 

(b)           To protect the goodwillof the Company and the Company’s legitimate business interests and in partialconsideration of the compensation and benefits provided to Executive hereunder,during the Restricted Period, Executive shall not, as proprietor or partner,member or shareholder (in each case, directly or indirectly owning orcontrolling five percent (5%) or more of any class of equity) or employee,consultant, agent, or otherwise, on his own behalf or on behalf of anotherperson, do any of the following in competition with the Company, without theprior written consent of the Company: (i) divert or attempt to divert anyadvertiser’s business from the Company or its affiliates, or otherwiseinterfere with the business relationship between the Company or its affiliatesand any of their respective advertisers, television networks, employees, orprogram suppliers; or (ii) solicit the employees of the Company or any of theiraffiliates to terminate their relationship with the Company or its affiliates(or to modify such relationship in a manner that is adverse to the interests ofthe Company or its affiliates), or to violate any valid contracts they may havewith the Company or its affiliates.

 

(c)           Executive acknowledges(i) that the services he rendered are of a special, unique, extraordinary andintellectual character, (ii) that Executive developed a personalacquaintanceship and relationship with many of the advertisers and televisionnetworks doing business with the Company, as well as an intimate knowledge ofthe requirements of such advertisers and television networks, (iii) that theCompany’s relationships with established advertisers and television networkshave been placed in Executive’s hands, (iv) that Executive’s position with theCompany placed him in a position of utmost confidence and trust with respect tothe advertisers and television networks, (v) the Company will suffer substantialdamage which will be difficult to compute if, during the Restricted Period, theExecutive should violate Sections 5(a) or (b), (vi) the provisions ofthis Agreement are reasonable and necessary for the protection of the businessof the Company, (vii) the Company would not have entered into this Agreement,including, without limitation, Section 2(d) hereof, unless Executiveagreed to this Section 5 and (viii) the provisions of this Section 5will not preclude Executive from other gainful employment.

 

(d)           The Parties recognize,acknowledge and agree that, if Executive commits a breach or the Company hasreasonable evidence that Executive is about to commit a breach, of any of theprovisions of this Section 5, the Company will suffer irreparable harmand injury, and money damages will not provide an adequate remedy to theCompany.  Accordingly, Executive

 

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agrees that, in any such event,the Company shall be entitled to have the provisions of this Agreementspecifically enforced by any court having jurisdiction, without being requiredto post a bond or other security and without having to provide the inadequacyof the available remedies at law.  Inaddition, the Company shall be entitled to avail itself of all such otheractions and remedies available to it under law or in equity and shall beentitled to such damages as it sustains by reason of such breach.  In addition, without limiting the foregoing,Executive shall cease to be provided any further benefits or payments underthis Agreement, including, without limitation, Section 2(d) hereof, inthe event of a material breach of this Agreement by Executive which breach isnot cured within 30 days of written notice from Granite to Executive.

 

(e)           The Parties acknowledgethat the type and periods of restriction imposed on Executive pursuant to theprovisions of this Section 5 are fair and reasonable, and are reasonablyrequired for the protection of the Company and the goodwill associated with thebusiness of the Company.  It is theexpress desire and intent of the Parties that the provisions of Section 5be enforced to the fullest extent permissible. If any of the covenants in Section 5, or any part thereof, ishereafter constructed to be invalid or unenforceable, the same shall not affectthe remainder of the covenant or covenants, which shall be given full effect,without regard to the invalid portions. If any of the covenants contained in Section 5 or any partthereof, is held to be unenforceable because of the duration of such provisionor the area covered thereby, the Parties hereby expressly agree that the courtmaking such determination shall have the power to reduce the duration of suchprovision and/or areas to which any such provision shall apply, and, in itsreduced or limited form, said provision shall then be enforceable.  The parties hereto intend to and herebyconfer jurisdiction to enforce the covenants contained in Section 5 uponthe courts of any state within the geographical scope of such covenants.  If the courts of any one or more of suchstates shall hold any of the previous covenants unenforceable by reason of thebreadth of such scope or otherwise, it is the intention of the parties heretothat such determination not bar or in any way affect the Company’s rights tothe relief provided above in the courts of any other states within thegeographical scope of such covenants, as to breaches of such covenants in suchother respective jurisdictions, the above covenants as they relate to each statebeing, for this purpose, severable into diverse and independent covenants.

 

(f)            If any action at lawor in equity is necessary to enforce or interpret the terms of this Section5, the prevailing Party shall be entitled to reasonable attorney’s fees andexpenses in addition to any other relief to which such Party may be entitled.

 

6.                                       **Release By Executive**.

 

(a)           Executive, on behalf ofhimself and his heirs, spouse, children, insurers, assigns, transferees,representatives, principals, agents, executors, administrators, and counsel,hereby releases and forever discharges the Company and its predecessors,successors, parents, subsidiaries, affiliates, assigns, and divisions, and allof their present and former directors, officers, employees, fiduciaries, employeebenefit plans, employee benefit plan administrators, shareholders, insurers,representatives, assigns, and counsel (collectively, the “Releasees”),of and from, and hereby waives, any and all claims, demands, damages, orliability of any nature whatsoever, known or unknown, that Executive has or mayhave that arise out of, concern, or relate in any way to any acts or omissionsdone or occurring prior to and including the date of this Agreement, including,without limitation, claims arising out of his employment with the

 

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Company and/or the terminationthereof; claims arising under the United States and New York Constitutions, theFair Labor Standards Act (29 U.S.C. §§ 201, et seq.), the Equal Pay Act (29U.S.C. § 206(a) and interpretive regulations), Title VII of the Civil RightsAct of 1964, as amended (42 U.S.C. §§ 2000e, et seq.), the Civil Rights Act of1866 (42 U.S.C. § 1981), the Civil Rights Act of 1871 (42 U.S.C. § 1985), theAge Discrimination in Employment Act of 1967, including the Older WorkersBenefit Protection Act (29 U.S.C. §§ 621, et seq.) (the “Age Discriminationin Employment Act”), the Americans With Disabilities Act (42 U.S.C. §§12101, et seq.), the Family and Medical Leave Act (29 U.S.C. §§ 2601, et seq.);all claims under the Sarbanes-Oxley Act of 2002 (Public Law 107-204), includingwhistle-blowing claims under 18 U.S.C. §§ 1514A and 1513(e); claims forwrongful or constructive discharge, retaliation, harassment, and discrimination;claims for breach of express or implied contract, including breach of thecovenant of good faith and fair dealing; claims for unpaid wages, commissions,bonuses, incentive compensation, stock options, or any other compensation; anyactions or claims arising out of any and all employee handbooks, policy andprocedure manuals, pension plans, and other policies, plans, and practices ofthe Company from the beginning of Executive’s employment with the Company tothe present; claims for attorneys’ fees and costs; and any and all claimsarising under any other federal, state, or local laws, statutes, regulations,or ordinances, as well as any and all common law legal or equitableclaims.  It is agreed and understood thatthis release by Executive is a general release and is to be construed in thebroadest sense possible under the law.

 

(b)           Excluded from thiswaiver and release are (i) any claims or rights which cannot be waived by law,including claims arising after the date of this Agreement; (ii) rights of Executiveunder, and claims arising out of breach by the Company of, this Agreement, theStock Option Agreements and the Performance Award Documents; (iii) any claimsfor indemnity or contribution pursuant to the Company’s Certificate ofIncorporation or By-laws, director and officer liability insurance or pursuantto applicable law; (iv) any claim for benefits to which the Executive may beentitled under Granite’s Employees’ Profit Sharing and Savings (401(k)) Plan orGranite’s Employee Stock Purchase Plan, in accordance with the provisions ofsuch plans; (v) any claim for benefits to which Executive may be entitled underany welfare plan of Granite in which Executive participates, in accordance withthe provisions of such plan, or by application of any federal or state lawproviding for the continuation of welfare benefits, including but not limitedto, COBRA and state insurance conversion requirements; and (vi) any claim forreimbursement in accordance with the Company’s policies with respect to anexpense incurred prior to the Separation Date.

 

(c)           Executive understandsthat he is being provided with a period of at least 21 days to consider theterms of this release, and in the event he decides to execute this Agreement infewer than 21 days, he has done so with the express understanding that he hasbeen given and declined the opportunity to consider this release for a full 21days.  Executive acknowledges that hisdecision to sign the Agreement in fewer than 21 days was not induced by theCompany through fraud, misrepresentation, or a threat to withdraw or alter theoffer prior to the expiration of the 21-day time period.

 

(d)           Executive furtherunderstands that he may revoke the release contained in this Section only(regarding claims under the Age Discrimination in Employment Act) at any timeduring the 7 days following the date of execution of this Agreement, and therelease

 

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contained in this Section onlyshall not become effective or enforceable until such revocation period hasexpired (the “Effective Date”). Notice shall be provided to W. Don Cornwell, by facsimile and certifiedmail, return receipt requested, to Granite Broadcasting Corporation, 767 ThirdAvenue, 34th Floor, New York, New York 10017, facsimile number (212)826-2858.  One-eighth of the SeverancePayment made to Executive under this Agreement constitutes consideration forthis release of claims under the Age Discrimination in Employment Act.

 

7.             **NoImproper Actions Or Omissions**. Executive represents and warrants that he has no knowledge of anyimproper or illegal actions or omissions by the Company, nor does he know ofany basis on which any third party or governmental entity could assert such aclaim.  This expressly includes any andall conduct that potentially could give rise to claims under the Sarbanes-OxleyAct of 2002 (Public Law 107-204). Executive further represents and warrants that he has fulfilled hisduties to the Company to the best of his abilities and in a reasonable and prudentmanner, and that he has not knowingly engaged, directly or indirectly, in anyactions or omissions that could be perceived as improper or unlawful, nor hashe failed to report any such actions or omissions.

 

8.             **CooperationWith The Company**. Executive shall cooperate fully with the Company in its defense orprosecution of litigation, administrative hearings, and related matters withrespect to issues arising during Executive’s tenure with the Company, orarising out of acts or omissions of Executive during his tenure with theCompany, as may be required by the Company in connection with any formal orinformal state and/or federal administrative, governmental, or judicialinquiry, internal or external investigation by or of the Company, or otherproceeding.  The Company agrees thatExecutive shall be entitled to reasonable costs (including, but not limited to,attorney’s fees and expenses of separate counsel, if appropriate) related tosuch cooperation.

 

9.             **No OtherRepresentations**.  TheParties represent and acknowledge that in executing this Agreement, no Partyhas relied on any representations or warranties of any other Party or by any ofthe other Party’s attorneys, agents, or representatives, with regard to thesubject matter, basis, or effect of this Agreement or otherwise, other than therepresentations or warranties expressly set forth in this Agreement.

 

10.           **Assignment.**  This Agreement is binding on Executive andthe Company and upon their heirs, spouses, representatives, transferees,principals, executors, administrators, predecessors, successors, parents,subsidiaries, affiliates, permitted assigns, agents, insurers, officers,directors, and employees; provided, however, that the rights andobligations of the Company under this Agreement may be assigned to a successorentity which assumes (either by operation of law or otherwise) the Company’sobligations hereunder.  Any suchassignment by the Company will not release the Company unless and until allobligations to Executive hereunder are fully discharged.  No rights or obligations of Executivehereunder may be assigned by Executive to any other person or entity, except bywill or the laws of descent and distribution. In the event of Executive’s death prior to receipt by Executive of allamounts payable by the Company hereunder, such amounts shall be payable toExecutive’s designated beneficiaries on the same schedule as provided for inthis Agreement.

 

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11.           **Severability**.  Should any provision of this Agreement befinally declared or determined by any court of competent jurisdiction to bewholly or partially illegal, invalid, or unenforceable, that part shall beineffective to the extent of such illegality, invalidity, or unenforceabilityonly, without in any way affecting the remaining parts of said provision or theremaining provisions of this Agreement.

 

12.           **No Waiver.**  No failure by either Party hereto at any timeto give notice of any breach by the other party of, or to require compliancewith, any condition or provision of this Agreement shall (i) be deemed a waiverof similar or dissimilar provisions or conditions at the same or at any prioror subsequent time or (ii) preclude insistence upon strict compliance in thefuture.

 

13.           **EntireAgreement**.  This Agreementtogether with the Stock Option Agreements, the Performance Award Agreement andthe Deferral Letter, each as amended hereby, set forth the Parties’ entireagreement in respect of the subject matter contained herein and supersedes allprior agreements, promises, covenants, arrangements, communications,representations or warranties, whether oral or written, by any officer,employee or representative of either Party hereto, except as otherwise providedin this Agreement together with the Stock Option Agreements, the PerformanceAward Agreement and the Deferral Letter, each as amended hereby. This Agreementmay not be revised or modified without the mutual written consent of theParties.

 

14.           **Notices.**  For purposes of this Agreement, unless otherwiseprovided in this Agreement, notices and all other communications provided forherein shall be in writing and shall be deemed to have been duly given whenpersonally delivered, sent by facsimile or when mailed by United Statesregistered or certified mail, return receipt requested, postage prepaid,addressed to such address or sent to such facsimile number as each Party mayfurnish to the other in writing from time to time.

 

15.           **Construction;Governing Law**.  ThisAgreement shall be interpreted in accordance with the plain meaning of itsterms and not strictly for or against any of the Parties hereto.  The Section headings in this Agreement arefor ease of reference only and do not modify, alter, or limit the provisions orterms of this Agreement.  This Agreementis deemed to have been jointly drafted by the Parties, and, in the event of adispute, shall not be construed in favor of or against any Party by reason ofsuch Party’s contribution to the drafting of the Agreement.  Moreover, this Agreement shall be governedby, and construed and interpreted in accordance with, the substantive laws ofthe State of New York, without regard to principles of conflict of laws. In anylitigation, each Party hereto waives personal service of any summons, complaintor other process and agrees that the service thereof may be made by certifiedmail directed to such Party at his or its address for purposes of notice under Section14 hereof.

 

16.           **SpecificPerformance**.  Executiveacknowledges and agrees that the Company would be damaged irreparably if anyprovision of this Agreement to be performed by Executive is not performed byExecutive in accordance with its specific terms or is otherwise breached byExecutive.  Accordingly, Executive agreesthat the Company will be entitled to an injunction or injunctions to preventbreaches of the provisions of this Agreement by Executive and to enforcespecifically this Agreement and its terms and provisions in any proceedinginstituted in any court

 

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of the United States or anystate thereof having jurisdiction over the parties and the matter, subject to Section15, in addition to any other remedy to which it may be entitled, at law orin equity.

 

17.           **Affiliate.**  As used in this Agreement, unless otherwiseindicated, “affiliate” shall mean any person or entity which directly orindirectly through any one or more intermediaries owns or controls, is owned orcontrolled by, or is under common ownership or control with the Company.

 

18.           **Counterparts.**  This Agreement may be executed in one or morecounterparts, each of which shall be deemed to be an original, but all of whichtogether shall constitute one and the same Agreement.

 

19.           **KnowingAnd Voluntary Execution**. Executive represents that he has reviewed all aspects of this Agreement,that he carefully has read and fully understands all of the provisions of thisAgreement, that he understands that in agreeing to this document he isreleasing the Company from any and all claims he may have against the Company,that he voluntarily agrees to all of the terms set forth in this Agreement,that he knowingly and willingly intends to be legally bound by the same, andthat he was given the opportunity to consider the terms of this Agreement anddiscuss them with his counsel.

 

 

[Signature page follows]

 

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IN WITNESS HEREOF, the Parties hereto have executedthis Agreement as of the date first written above.

 

 
|   | /s/ Stuart J. Beck                            |   |
|--------|-----------------------------------------------|--------|
|   | STUART J. BECK, individually                  |
|   |                                          |
|   |                                          |
|   | GRANITE BROADCASTING CORPORATION              |
|   |                                          |
|   |                                          |
|   | /s/W. Don Cornwell                            |   |
|   | Name: W. Don Cornwell                         |
|   | Title: Chairman & Chief Executive Officer |
|        |                                               |        |  |

 

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**SCHEDULE A-1**

 

**Stock Option Agreements**

 

1.                                       Incentive Stock Option Agreement (157,500 shares @ $3.00/share) dated asof April 27, 1993, between Granite Broadcasting Corporation and Stuart J. Beck

 

2.                                       Stock Option Agreement (135,000 shares @ $7.00/share) dated as of April25, 1995, between Granite Broadcasting Corporation and Stuart J. Beck

 

3.                                       Stock Option Agreement (91,000 shares @ $11.25/share) dated as of April23, 1996, between Granite Broadcasting Corporation and Stuart J. Beck, asamended by Amendment to Granite Broadcasting Corporation Stock Option Agreement1996 Grant (91,000 shares @ $7.563/share) dated July 24, 2001, between GraniteBroadcasting Corporation and Stuart J. Beck

 

4.                                       Stock Option Agreement (135,000 shares @ $8.375/share) dated as of April29, 1997, between Granite Broadcasting Corporation and Stuart J. Beck

 

5.                                       Stock Option Agreement (108,600 shares @ $11.125/share) dated as of April28, 1998, between Granite Broadcasting Corporation and Stuart J. Beck, asamended by Amendment to Granite Broadcasting Corporation Stock Option Agreement1998 Grant (108,600 shares @ $7.563/share) dated July 24, 2001, between GraniteBroadcasting Corporation and Stuart J. Beck

 

6.                                       Stock Option Agreement (121,000 shares @ $6.875/share) dated as of January8, 1999, between Granite Broadcasting Corporation and Stuart J. Beck

 

7.                                       Stock Option Agreement (327,000 shares @ $6.125/share) dated as ofFebruary 23, 1999, between Granite Broadcasting Corporation and Stuart J. Beck

 

8.                                       Stock Option Agreement (250,000 shares @ $10.000/share) dated as ofFebruary 23, 1999, between Granite Broadcasting Corporation and Stuart J. Beck

 

9.                                       Stock Option Agreement (250,000 shares @ $10.000/share) dated as ofFebruary 23, 1999, between Granite Broadcasting Corporation and Stuart J. Beck

 

10.                                 Stock Option Agreement (60,000 shares @ $2.70/share) dated as of February26, 2002, between Granite Broadcasting Corporation and Stuart J. Beck

 

11.                                 Stock Option Agreement (153,000 shares @ $2.45/share) dated as of February26, 2002, between Granite Broadcasting Corporation and Stuart J. Beck

 

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**SCHEDULE A-2**

 

**Unexercised Options**

 
| **Agr.  No.** | ** ** | **Grant  Date** | ** ** | **Option  Termination  Date** | ** ** | **No. of  Options  Granted** | ** ** | **Exercise  Price** | ** ** | **Options  O/S on  Separation  Date** | ** ** | **Options  Vested on  Separation  Date** | ** ** | **Vesting Schedule** | ** **                                                                     |
|---------------|------------|-----------------|------------|-------------------------------|------------|------------------------------|------------|---------------------|------------|---------------------------------------|------------|------------------------------------------|------------|----------------------|--------------------------------------------------------------------------------|
| 1             |       | 4/27/1993       |       | 4/23/2005                     |       | 157,500                      |       | $                   | 3.000      |                                  | 157,500    |                                     | 157,500    |                 | fully vested                                                                   |   |
| 2             |       | 4/25/1995       |       | 4/23/2005                     |       | 135,000                      |       | $                   | 7.000      |                                  | 135,000    |                                     | 135,000    |                 | fully vested                                                                   |   |
| 3             |       | 4/23/1996       |       | 4/23/2005                     |       | 91,000                       |       | $                   | 7.563      |                                  | 91,000     |                                     | 91,000     |                 | fully vested                                                                   |   |
| 4             |       | 4/29/1997       |       | 4/29/2007                     |       | 135,000                      |       | $                   | 8.375      |                                  | 135,000    |                                     | 135,000    |                 | fully vested                                                                   |   |
| 5             |       | 4/28/1998       |       | 4/28/2008                     |       | 108,600                      |       | $                   | 7.563      |                                  | 108,600    |                                     | 108,600    |                 | fully vested                                                                   |   |
| 6             |       | 1/8/1999        |       | 1/8/2009                      |       | 121,000                      |       | $                   | 6.875      |                                  | 121,000    |                                     | 121,000    |                 | fully vested                                                                   |   |
| 7             |       | 2/23/1999       |       | 2/23/2009                     |       | 327,000                      |       | $                   | 6.125      |                                  | 327,000    |                                     | 327,000    |                 | fully vested                                                                   |   |
| 8             |       | 2/23/1999       |       | 2/23/2009                     |       | 250,000                      |       | $                   | 10.000     |                                  | 250,000    |                                     | 0          |                 | vests when stock price trades at $15 or  more for 10 consecutive business days |   |
| 9             |       | 2/23/1999       |       | 2/23/2009                     |       | 250,000                      |       | $                   | 10.000     |                                  | 250,000    |                                     | 0          |                 | vests when stock price trades at $20 or  more for 10 consecutive business days |   |
| 10            |       | 2/26/2002       |       | 2/26/2007                     |       | 60,000                       |       | $                   | 2.700      |                                  | 60,000     |                                     | 40,000     |                 | 20,000 vests on each of 12/31/02, 12/31/03  and 12/31/04                       |   |
| 11            |       | 2/26/2002       |       | 2/26/2012                     |       | 153,000                      |       | $                   | 2.450      |                                  | 153,000    |                                     | 76,500     |                 | 38,250 vests on each of 12/31/02, 12/31/03,  12/31/04 and 12/31/05             |   |

 

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**SCHEDULE B**

 

**COMPOSITEAS AMENDED BY SEPARATION AGREEMENT**

** **

**PERFORMANCE AWARD AGREEMENT**

** **

ThisPerformance Award Agreement (this “Agreement”), dated as of February 25, 2003(the “Grant Date”), is by and between Stuart J. Beck (the “Participant”) andGranite Broadcasting Corporation, a Delaware corporation (the “Company”).

 

**RECITALS**

** **

A.            TheCompany maintains the Granite Broadcasting Corporation Management Stock Plan,as amended and restated January 1, 2003 (the “Plan”), for the purpose ofkeeping senior executives of experience and ability in the employ of theCompany and to compensate them for their contributions to the growth andprofits of the Company and its Subsidiaries and thereby induce them to continueto make such contributions in the future.

 

B.            TheParticipant has been selected by the Committee to receive a Performance Awardunder the Plan, subject to the terms and conditions of this Agreement and thePlan, a copy of which is attached hereto as Annex A and is incorporatedherein for all purposes.

 

C.            ThePlan contemplates that an Award may be evidenced by a written agreement, at thediscretion of the Committee, between the Company and the Participantincorporating the terms and conditions set forth in the Plan, together withsuch other terms and conditions not inconsistent with the Plan.

 

**AGREEMENT**

** **

NOW,THEREFORE, in consideration of the foregoing, the terms and conditionscontained herein, and other good and valuable consideration, the receipt andsufficiency of which are hereby acknowledged, the parties hereto agree asfollows:

 

Definitions.  Capitalized terms used herein butnot defined herein shall have the respective meanings set forth in the Plan.

 

PerformanceAward.

 

(a)           PerformanceAward Amount.  Subject to the terms of this Agreement andthe Plan, the Participant is hereby awarded a Performance Award in the form ofa bonus equal to the amount of Three Million Two Hundred Eighty-Six Thousandand Sixty-Five Dollars ($3,286,065.00), payable in cash, shares of Common Stock(Nonvoting) or a combination thereof at the discretion of the Committee,according to the terms set forth herein, provided the Participant achieves thePerformance Objective set forth below on or before April 15, 2004. SuchPerformance Award shall be reflected in a book account maintained by theCompany during the Performance Period.

 

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# (b)           PerformanceObjective.  The Performance Objective shall be that theParticipant, either alone or together with others, obtains on behalf of theCompany, on or before April 15, 2004, the refinancing of the Company’s currentsenior debt, as reflected in the Company’s Amended and Restated CreditAgreement dated as of April 30, 2002 (the “Credit Agreement”), such that thematurity date with respect to the Company’s senior debt is extended for atleast two (2) years from its current maturity.

#  

# (c)           PerformancePeriod.  The “Performance Period” shall be the periodbeginning on the Grant Date and ending on April 15, 2004 or such earlier datethat the Participant achieves the Performance Objective set forth in thisAgreement.

#  

# (d)           AwardAchievement Date.  The “Award Achievement Date” is such datethat the Participant achieves the Performance Objective, and the Committee hascertified that the Performance Objective has been achieved in accordance withSection 5(c) of the Plan.

#  

# (e)           Paymentof Award.  If the Participant achieves the PerformanceObjective, the Participant shall be paid (i) Two Hundred Twenty-One ThousandTwo Hundred Dollars ($221,200.00) in cash five (5) business days prior to thematurity of the Participant’s promissory note dated January 1, 2001, issued tothe Company and (ii) the remainder of the Performance Award (“PerformanceAward Balance”) in one-third increments of One Million Twenty-One Thousand SixHundred Twenty-One and 67/100 Dollars ($1,021,621.67) on each of the first,second and third anniversaries of the Award Achievement Date.  The Company shall pay the Participant’sannual portion of the Participant’s Performance Award Balance, as soon aspracticable after each relevant anniversary date; provided, that,notwithstanding the foregoing, any unpaid portion of the Performance Awardshall be payable upon a Change in Control (as defined in that certain Indenture(as amended, amended and restated, supplemented or otherwise modified from timeto time), by and among the Company, the guarantors party thereto and The Bankof New York, as trustee, pursuant to which the Company issued its 9-3/4% seniorsecured notes due December 1, 2010) and shall be paid to Participant withinfive (5) business days following such Change in Control.

#  

# QualifiedPerformance Based Compensation.  The Performance Award, if paid, is intendedto constitute qualified “performance based compensation” for purposes ofSection 162(m) of the Code and this Agreement shall be interpreted inaccordance with such intent.  TheCommittee shall have the authority to make any amendment to this Agreement, ifdeemed necessary, such that the Award satisfies the requirements under Section162(m) of the Code.

#  

# Terminationof Employment During Performance Period.  If the Participant’s employment with theCompany and/or its Subsidiaries terminates during the Performance Period forany reason, the Award granted under this Agreement will be forfeited on thedate of such termination of employment.

#  

# Heirsand Successors; Non-Transferability.  This Agreement shall be binding upon, andinure to the benefit of, the Company and its successors and assigns, and uponany person acquiring, whether by merger, consolidation, purchase of assets orotherwise, all or substantially all of the Company’s assets and business.  No Award shall be assignable or transferableby the Participant, otherwise than by will or the laws of descent anddistribution.

 

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# Administration.  The authority tomanage and control the operation and administration of this Agreement shall bevested in the Committee, and the Committee shall have all powers with respectto this Agreement as it has with respect to the Plan. Any interpretation of theAgreement by the Committee and any decision made by it with respect to theAgreement are final and binding.

#  

# PlanGoverns.  Notwithstanding anything in this Agreement tothe contrary, the terms of this Agreement shall be subject to the terms of thePlan.  In the event of any conflict orinconsistency between the terms and conditions of this Agreement and the Plan,the Plan shall govern and control.

#  

# Amendment.  This Agreement maybe amended by written agreement of the Participant and the Company.

#  

# Offset.  Notwithstanding anyother provision contained herein or the Plan, the Company may off-set on adollar for dollar basis any amounts payable or otherwise due hereunder to theParticipant against amounts that the Company determines in good faith that suchParticipant owes the Company.  Alldeterminations under this paragraph 9 shall be made by the Committee in itssole discretion and any such determination shall be final and binding on allparties.

#  

# Severability.  If any portion ofthis Agreement is declared invalid, the remainder of the Agreement shall remainin full force and effect.

#  

# GoverningLaw.  This Agreement shall be governed by the lawsof the State of New York without regard to its conflict of laws rules.

#  

# Counterparts.  This Agreement maybe executed in two counterparts, each of which shall be deemed an original forall purposes and both of which together shall constitute one and the sameagreement.

 

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**SCHEDULE C**

 

**COMPOSITEAS AMENDED BY SEPARATION AGREEMENT**

 

**Granite Broadcasting Corporation**

 

Stuart J. Beck,

 

As a valued employee of Granite Broadcasting Corporation (the “Company”)you were granted a Performance Award under the Granite Broadcasting CorporationManagement Stock Plan (the “Plan”) pursuant to the terms and conditions setforth in the Performance Award Agreement between you and the Company datedFebruary 25, 2003 (as amended, the “Award Agreement”).  Pursuant to Section 12(a) of the Plan, theCompensation Committee of the Board of Directors of the Company (the “Committee”)has decided to permit you to defer payment of all or a portion of thePerformance Award prior to the date such Performance Award is otherwise payableand vested.  ***Byelecting to defer payment of such award, the deferred portion shall not earninterest or any rate of return during the deferral period unless otherwisedetermined by the Committee.***

 

Pursuant to the terms and conditions of the Award Agreement, once theCommittee certifies that the Performance Objectives set forth in such agreementhave been attained, you will be eligible to be paid a bonus of (i) Two HundredTwenty-One Thousand Two Hundred Dollars ($221,200.00) in cash five (5) businessdays prior to the maturity of your promissory note dated January 1, 2001,issued to the Company (the “Promissory Note”) and (ii) One Million Twenty-OneThousand Six Hundred Twenty-One and 67/100 Dollars ($1,021,621.67) on each ofthe first, second and third anniversaries of the date that the PerformanceObjectives have been attained (each such payment to be referred to as “Tranche1”, “Tranche 2” and “Tranche 3”, respectively), unless otherwise determined bythe Committee that any such amount be paid earlier.

 

Except as provided below, bysigning this election below, you hereby irrevocably elect to defer receipt of100% of each of Tranche 1 and Tranche 2 until December 22, 2006 (the “DeferredAmount”).  Upon a Change in Control (asdefined in that certain Indenture (as amended, amended and restated,supplemented or otherwise modified from time to time), by and among theCompany, the guarantors party thereto and The Bank of New York, as trustee,pursuant to which the Company shall issue its 93⁄4% senior secured notes dueDecember 1, 2010), you shall be paid the amount, if any, you would havepreviously been paid by the Company under the Award Agreement but for thiselection to defer payment, less amounts, if any, previously paid to you, withinfive (5) business days following such Change in Control.  If unvested amounts are still due to be paidto you under the Award Agreement on or following a Change in Control, suchamounts shall be paid to you at the time contemplated under the Award Agreementwithout giving any effect to the deferral of payment under this election.

 

Other than with respect to the Two Hundred Twenty-One Thousand TwoHundred Dollars ($221,200.00) payable five (5) business days prior to thematurity of the Promissory Note which shall be paid in cash, any other amountsto be paid by the Company under the Award Agreement and this election may bepaid in cash, shares of Common Stock (Nonvoting) or a combination

 

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thereof as determined by theCommittee in its discretion.  If theCommittee elects to pay any portion of such amounts in shares of Common Stock(Nonvoting), you shall receive such number of shares of Common Stock (Nonvoting)equal to a fraction where the numerator is equal to the dollar amount theCompany wishes to pay in shares and the denominator is the Fair Market Value(as defined in the Plan) of one share of Common Stock (Nonvoting) on the dateof payment.

 

The Plan, the Award Agreement, this election and the Deferred Amountsare intended to constitute an “unfunded” plan for incentive and deferredcompensation and nothing contained herein shall give you any rights that aregreater than those of a general unsecured creditor of the Company.  The Performance Award shall continue to besubject to all of the terms of the Plan and the applicable Award Agreement,except as otherwise specifically set forth herein.

 

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**SCHEDULE D**

 

**Representations by Executive to Company**

 

1.             Executivehereby confirms that the shares of Common Stock (Nonvoting) issuable toExecutive pursuant to this Agreement (the “Shares”) will be acquired forExecutive’s own account and not with a present view to or for distributing orreselling the Shares or any part thereof or interest therein in violation ofthe Securities Act of 1933, as amended (the “Securities Act”).

 

2.             Executiveacknowledges that the Shares are listed on the Over-The-Counter Bulletin Boardand the Company is therefore required to publish certain business and financialinformation pursuant to the reporting requirements of the U.S. SecuritiesExchange Act of 1934 (collectively, the “Exchange Information”), whichincludes a description of the nature of the Company’s business and the Company’smost recent balance sheet and profit and loss account, and similar statementsfor preceding financial year, and that Executive is able to obtain or accessthe Exchange Information without undue difficulty.  Executive and his advisors, if any, have beenafforded the opportunity to ask questions of the Company.  Executive understands that an investment inthe Shares involves a significant degree of risk, including the risk of a totalloss of investment.

 

3.             Executivehas such knowledge and experience in financial and business matters that he iscapable of evaluating the merits and risks of an investment in the Company, orExecutive has employed the services of an independent investment advisor,attorney or accountant to read all of the relevant Exchange Information, and toevaluate the merits and risks of such an investment on Executive’s behalf.

 

4.             Executiveunderstands and acknowledges that the Shares are being offered and sold toExecutive without registration under the Securities Act in a transaction thatis exempt from the registration provisions of the Securities Act under Section4(2) of the Securities Act or Regulation D promulgated thereunder and theavailability of such exemption depends in part on, and the Company will rely uponthe accuracy and truthfulness of, the representations set forth herein andExecutive hereby consents to such reliance.

 

5.             Executiveunderstands that no United States federal or state agency or any othergovernment or governmental agency or authority has passed upon or made anyrecommendation or endorsement of the Shares.

 

6.             Executiveunderstands that (i) the Shares have not been registered under theSecurities Act or any state securities laws, and may not be transferred unless(A) subsequently registered thereunder, or (B) Executive shall havedelivered to the Company an opinion of counsel reasonably acceptable to theCompany to the effect that the Shares to be sold or transferred may be sold ortransferred under an exemption from such registration, or (C) sold underRule 144 promulgated under the Securities Act, or (D) sold or transferredto an affiliate of Executive pursuant to an exemption under the Securities Act;and (ii) neither the Company nor any other person is under any obligationto register such Shares under the Securities Act or any state securities lawsor to comply with the terms and conditions of any exemption thereunder.

 

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7.             Executiveunderstands that the Shares and, until such time as the Shares have beenregistered under the Securities Act or otherwise may be sold by Executive underRule 144, the certificates for the Shares, may bear a restrictive legend insubstantially the following form:

 

THE SHARES REPRESENTED BY THISCERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.  THE SHARES HAVE BEEN ACQUIRED FOR INVESTMENTAND MAY NOT BE PLEDGED OR HYPOTHECATED, AND MAY NOT BE SOLD OR TRANSFERRED INTHE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER THE SECURITIESACT OF 1933 OR AN OPINION OF COUNSEL OF THE COMPANY THAT REGISTRATION IS NOTREQUIRED UNDER SAID ACT OR ANY APPLICABLE STATE SECURITIES LAW.

 

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