Document:

Exhibit 10.1

 

SEPARATION AGREEMENT

 

This Separation Agreement (“Agreement”), dated as of September
21, 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 are
referred to collectively as the “Parties.”

 

RECITALS:

 

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

 

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

 

AGREEMENT:

 

NOW, THEREFORE, in
consideration of the mutual promises that are contained in this Agreement and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by Executive, and to resolve any and all disputes or
potential 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 an
employee and officer of Granite and as an employee, director and officer, as
applicable, of each of Granite’s subsidiaries and affiliates, and Granite
hereby accepts such resignation. 
Notwithstanding any provision of the Employment Agreement to the
contrary, such resignation shall not be deemed to be a breach by Executive of
the Employment Agreement, and the Employment Agreement shall terminate as of
the Separation Date.  Executive shall
continue to serve as a member of Granite’s Board until a successor is duly
elected and qualified or until his prior death, resignation, removal or
disqualification.

 

2.                                       Severance Payment and Other Benefits.

 

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

 

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

 

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

 

(c)           Stock Options.  Executive and Granite are parties to the
stock option agreements listed on Schedule A-1 attached hereto (the “Stock
Option Agreements”), pursuant to which Executive holds options (“Options”)
to purchase shares of the Granite’s Common Stock (Nonvoting), par value $0.01
per share (“Common Stock (Nonvoting)”). 
Notwithstanding any provision in any Stock Option Agreement to the
contrary (i) all unvested Options held by Executive as of the Separation Date
under 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’s
continuous service on the Granite’s Board and (B) the fixed date on which each
such Option was initially set to expire (the “Option Termination Date”),
and (ii) all vested Options held by Executive as of the Separation Date under
any Stock Option Agreement and all Options that vest pursuant to Section
2(c)(i) of this Agreement shall remain exercisable until the Option
Termination Date, and thereafter any such Options that remain unexercised shall
terminate and cease to be exercisable. 
For purposes of clarification, Schedule A-2 attached hereto sets
forth the unexercised Options that have been granted to Executive as of the
date immediately prior to the Separation Date.

 

(d)           Amendment of
Performance Award Agreement and Deferral Letter.  The Performance Award Agreement, dated as of
February 25, 2003, by and between Executive and Granite (the “Performance
Award Agreement”), is hereby amended as set forth on Schedule B
hereto, and the Deferral Letter Agreement, dated as of December 8, 2003, by and
between Executive and Granite (the “Deferral Letter” and, together with
the Performance Award Agreement, the “Performance Award Documents”), is
hereby amended as set forth on Schedule C hereto.  Except as specifically provided herein, the
provisions of the Performance Award Documents shall remain in full force and
effect and are hereby ratified and confirmed. 
Granite acknowledges that the Compensation Committee of its Board of
Directors (the “Compensation Committee”) (i) certified that the
performance objective set forth in the Performance Award Agreement and other
material terms of the performance award of $3,286,065.00 evidenced by the
Performance Award Agreement (the “Performance Award”) were achieved or
met by December 22, 2003, and (ii) irrevocably determined that the Performance
Award shall be paid in cash.  The Parties
acknowledge that, as set forth in the Performance Award Documents, unless
Granite’s Compensation Committee determines to pay any amount of the
Performance Award earlier or any such amounts are otherwise paid earlier under
the terms of the Performance Award Documents, the full amount of the
Performance Award (i.e., $3,286,065.00), minus $221,200.00 that is
payable to Executive in connection with the maturity of Executive’s promissory
note 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 A
Voting Common Stock for Common Stock (Nonvoting).  Executive acknowledges that he currently owns
80,250 shares of Granite’s Class A Voting Common Stock, par value $0.01 per
share (“Class A Voting Common Stock”), which are evidenced by a stock
certificate currently in Executive’s possession.  On the Effective Date, each share of Class A
Voting Common Stock owned by Executive shall be exchanged by Executive for one
share of Granite’s Common Stock (Nonvoting) from Granite.  In connection with the foregoing issuance to
Executive of Common Stock (Nonvoting), Executive makes the representations to
the Company set forth on Schedule D attached hereto.  On the Separation Date or such later date to
which the Parties agree, (A) Executive shall deliver to Granite the originally
signed stock certificate evidencing all shares of Class A Voting Common Stock
held by Executive executed in blank or accompanied by a stock power executed in
blank, and (B) Granite shall deliver to Executive a duly executed stock
certificate evidencing 80,250 shares of Common Stock (Nonvoting) issued to
Executive pursuant to this Section 2(e).

 

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

 

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

 

(h)           Compensation for
Board Service.  Beginning on the
Separation Date, while Executive serves as a non-employee director on Granite’s
Board, Executive shall be entitled to the compensation and expense
reimbursements Granite provides to non-employee directors prorated from the
Separation Date.

 

(i)            Withholding of
Taxes.  The Company may withhold from
any benefits or compensation payable under this Agreement all federal, state,
city or other taxes as may be required pursuant to any law or governmental
regulation or ruling.

 

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

 

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(k)           Payoff of Promissory
Note.  The Parties acknowledge and
agree that, as determined by Granite’s Compensation Committee in accordance
with the terms of the Performance Award Agreement, $221,200.00 of the
Performance Award that is payable by Granite to Executive in connection with
maturity of the Promissory Note shall be off-set on a dollar for dollar basis
by the amount of $221,200.00 that Executive owes Granite under the Promissory
Note in connection with its maturity.  On
the maturity date of the Promissory Note, or such later date to which Executive
agrees, Granite shall deliver to Executive the originally signed Promissory
Note, marked paid-in-full, and such other evidence of settlement of the
transactions referenced in this Section 2(k), as Executive reasonably
requests.

 

3.             Taxability.  Executive expressly acknowledges that the
Company has made no representations to him regarding the tax consequences of
any benefits or compensation payable under this Agreement, and that such
benefits and compensation likely will be considered to be taxable income and
subject to disclosure to the appropriate taxing authorities.  Executive agrees that he is solely and
entirely responsible for the payment and discharge of all federal, state, and
local taxes, if any, that by law are due from or owed by Executive with respect
to any benefits or compensation payable under this Agreement.  Executive agrees that in the event it should
be subsequently determined that withholding or payment of taxes on any amounts
received by him under this Agreement, or any part thereof, should have been
made, he personally shall be solely responsible for all such taxes that by law
are due from or owed by Executive, as well as for any related penalties or
interest that may be due.

 

4.             Confidential
Information.  Executive
acknowledges that, during his employment with the Company, he had access to
and/or acquired information that is confidential to the Company (“Confidential
Information”).  Such Confidential
Information includes, but is not limited to: trade secrets; plans for acquiring
or disposing of certain assets; program purchasing information; advertising and
promotional programs and plans; financial or statistical data; sales and
account information; customer information; sales and marketing plans and
strategies; pricing strategies and reports; personnel information; legal
matters, dealings, and claims; and any other information of a similar nature
that is not known or made available to the public or to the Company’s
competitors that, if misused or disclosed, could adversely affect the business
or goodwill of the Company.  Executive
agrees not to disclose any Confidential Information to any person (including
any Company employee who does not need to know such Confidential Information),
agency, institution, company, or other entity, or to use any such proprietary
information 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 required
by court order or subpoena, without first obtaining the written consent of
Granite.  Executive acknowledges and
agrees that these duties and obligations shall continue at least for so long as
such Confidential Information remains confidential to the Company, but shall
not apply to Confidential Information that becomes publicly known through no
fault of Executive.  Executive further
acknowledges and agrees that any breach of this provision is a material breach
of this Agreement.

 

5.                                       Non-Competition;
Non-Solicitation.

 

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

 

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period beginning on the
Separation 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 to
any person, engaged in a Competitive Business (defined below); or (ii) become
associated 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 other
relationship or capacity.  For purposes
of this Agreement, “Competitive Business” shall mean any television
broadcasting business that is located in any Designated Market Area (as defined
by Nielsen Media Research, Inc., “DMA”) within the continental United
States where the Company either (A) currently owns or operates a television
broadcasting business or (B) acquires or commences operations of a television
broadcasting business prior to Executive engaging in any of the activities set
forth in clauses (i) or (ii) of this Section 5(a) with respect to any other
television broadcasting business in such DMA.

 

(b)           To protect the goodwill
of the Company and the Company’s legitimate business interests and in partial
consideration 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 or
controlling five percent (5%) or more of any class of equity) or employee,
consultant, agent, or otherwise, on his own behalf or on behalf of another
person, do any of the following in competition with the Company, without the
prior written consent of the Company: (i) divert or attempt to divert any
advertiser’s business from the Company or its affiliates, or otherwise
interfere with the business relationship between the Company or its affiliates
and any of their respective advertisers, television networks, employees, or
program suppliers; or (ii) solicit the employees of the Company or any of their
affiliates to terminate their relationship with the Company or its affiliates
(or to modify such relationship in a manner that is adverse to the interests of
the Company or its affiliates), or to violate any valid contracts they may have
with the Company or its affiliates.

 

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

 

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

 

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agrees that, in any such event,
the Company shall be entitled to have the provisions of this Agreement
specifically enforced by any court having jurisdiction, without being required
to post a bond or other security and without having to provide the inadequacy
of the available remedies at law.  In
addition, the Company shall be entitled to avail itself of all such other
actions and remedies available to it under law or in equity and shall be
entitled 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 under
this Agreement, including, without limitation, Section 2(d) hereof, in
the event of a material breach of this Agreement by Executive which breach is
not cured within 30 days of written notice from Granite to Executive.

 

(e)           The Parties acknowledge
that the type and periods of restriction imposed on Executive pursuant to the
provisions of this Section 5 are fair and reasonable, and are reasonably
required for the protection of the Company and the goodwill associated with the
business of the Company.  It is the
express desire and intent of the Parties that the provisions of Section 5
be enforced to the fullest extent permissible. 
If any of the covenants in Section 5, or any part thereof, is
hereafter constructed to be invalid or unenforceable, the same shall not affect
the 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 part
thereof, is held to be unenforceable because of the duration of such provision
or the area covered thereby, the Parties hereby expressly agree that the court
making such determination shall have the power to reduce the duration of such
provision and/or areas to which any such provision shall apply, and, in its
reduced or limited form, said provision shall then be enforceable.  The parties hereto intend to and hereby
confer jurisdiction to enforce the covenants contained in Section 5 upon
the courts of any state within the geographical scope of such covenants.  If the courts of any one or more of such
states shall hold any of the previous covenants unenforceable by reason of the
breadth of such scope or otherwise, it is the intention of the parties hereto
that such determination not bar or in any way affect the Company’s rights to
the relief provided above in the courts of any other states within the
geographical scope of such covenants, as to breaches of such covenants in such
other respective jurisdictions, the above covenants as they relate to each state
being, for this purpose, severable into diverse and independent covenants.

 

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

 

6.                                       Release By Executive.

 

(a)           Executive, on behalf of
himself 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 all
of their present and former directors, officers, employees, fiduciaries, employee
benefit 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, or
liability of any nature whatsoever, known or unknown, that Executive has or may
have that arise out of, concern, or relate in any way to any acts or omissions
done or occurring prior to and including the date of this Agreement, including,
without limitation, claims arising out of his employment with the

 

6

 

Company and/or the termination
thereof; claims arising under the United States and New York Constitutions, the
Fair Labor Standards Act (29 U.S.C. §§ 201, et seq.), the Equal Pay Act (29
U.S.C. § 206(a) and interpretive regulations), Title VII of the Civil Rights
Act of 1964, as amended (42 U.S.C. §§ 2000e, et seq.), the Civil Rights Act of
1866 (42 U.S.C. § 1981), the Civil Rights Act of 1871 (42 U.S.C. § 1985), the
Age Discrimination in Employment Act of 1967, including the Older Workers
Benefit Protection Act (29 U.S.C. §§ 621, et seq.) (the “Age Discrimination
in 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), including
whistle-blowing claims under 18 U.S.C. §§ 1514A and 1513(e); claims for
wrongful or constructive discharge, retaliation, harassment, and discrimination;
claims for breach of express or implied contract, including breach of the
covenant of good faith and fair dealing; claims for unpaid wages, commissions,
bonuses, incentive compensation, stock options, or any other compensation; any
actions or claims arising out of any and all employee handbooks, policy and
procedure manuals, pension plans, and other policies, plans, and practices of
the Company from the beginning of Executive’s employment with the Company to
the present; claims for attorneys’ fees and costs; and any and all claims
arising under any other federal, state, or local laws, statutes, regulations,
or ordinances, as well as any and all common law legal or equitable
claims.  It is agreed and understood that
this release by Executive is a general release and is to be construed in the
broadest sense possible under the law.

 

(b)           Excluded from this
waiver 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 Executive
under, and claims arising out of breach by the Company of, this Agreement, the
Stock Option Agreements and the Performance Award Documents; (iii) any claims
for indemnity or contribution pursuant to the Company’s Certificate of
Incorporation or By-laws, director and officer liability insurance or pursuant
to applicable law; (iv) any claim for benefits to which the Executive may be
entitled under Granite’s Employees’ Profit Sharing and Savings (401(k)) Plan or
Granite’s Employee Stock Purchase Plan, in accordance with the provisions of
such plans; (v) any claim for benefits to which Executive may be entitled under
any welfare plan of Granite in which Executive participates, in accordance with
the provisions of such plan, or by application of any federal or state law
providing for the continuation of welfare benefits, including but not limited
to, COBRA and state insurance conversion requirements; and (vi) any claim for
reimbursement in accordance with the Company’s policies with respect to an
expense incurred prior to the Separation Date.

 

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

 

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

 

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

 

7.             No
Improper Actions Or Omissions. 
Executive represents and warrants that he has no knowledge of any
improper or illegal actions or omissions by the Company, nor does he know of
any basis on which any third party or governmental entity could assert such a
claim.  This expressly includes any and
all conduct that potentially could give rise to claims under the Sarbanes-Oxley
Act of 2002 (Public Law 107-204). 
Executive further represents and warrants that he has fulfilled his
duties to the Company to the best of his abilities and in a reasonable and prudent
manner, and that he has not knowingly engaged, directly or indirectly, in any
actions or omissions that could be perceived as improper or unlawful, nor has
he failed to report any such actions or omissions.

 

8.             Cooperation
With The Company. 
Executive shall cooperate fully with the Company in its defense or
prosecution of litigation, administrative hearings, and related matters with
respect to issues arising during Executive’s tenure with the Company, or
arising out of acts or omissions of Executive during his tenure with the
Company, as may be required by the Company in connection with any formal or
informal state and/or federal administrative, governmental, or judicial
inquiry, internal or external investigation by or of the Company, or other
proceeding.  The Company agrees that
Executive shall be entitled to reasonable costs (including, but not limited to,
attorney’s fees and expenses of separate counsel, if appropriate) related to
such cooperation.

 

9.             No Other
Representations.  The
Parties represent and acknowledge that in executing this Agreement, no Party
has relied on any representations or warranties of any other Party or by any of
the other Party’s attorneys, agents, or representatives, with regard to the
subject matter, basis, or effect of this Agreement or otherwise, other than the
representations or warranties expressly set forth in this Agreement.

 

10.           Assignment.  This Agreement is binding on Executive and
the 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 and
obligations of the Company under this Agreement may be assigned to a successor
entity which assumes (either by operation of law or otherwise) the Company’s
obligations hereunder.  Any such
assignment by the Company will not release the Company unless and until all
obligations to Executive hereunder are fully discharged.  No rights or obligations of Executive
hereunder may be assigned by Executive to any other person or entity, except by
will or the laws of descent and distribution. 
In the event of Executive’s death prior to receipt by Executive of all
amounts payable by the Company hereunder, such amounts shall be payable to
Executive’s designated beneficiaries on the same schedule as provided for in
this Agreement.

 

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11.           Severability.  Should any provision of this Agreement be
finally declared or determined by any court of competent jurisdiction to be
wholly or partially illegal, invalid, or unenforceable, that part shall be
ineffective to the extent of such illegality, invalidity, or unenforceability
only, without in any way affecting the remaining parts of said provision or the
remaining provisions of this Agreement.

 

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

 

13.           Entire
Agreement.  This Agreement
together with the Stock Option Agreements, the Performance Award Agreement and
the Deferral Letter, each as amended hereby, set forth the Parties’ entire
agreement in respect of the subject matter contained herein and supersedes all
prior 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 provided
in this Agreement together with the Stock Option Agreements, the Performance
Award Agreement and the Deferral Letter, each as amended hereby. This Agreement
may not be revised or modified without the mutual written consent of the
Parties.

 

14.           Notices.  For purposes of this Agreement, unless otherwise
provided in this Agreement, notices and all other communications provided for
herein shall be in writing and shall be deemed to have been duly given when
personally delivered, sent by facsimile or when mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed to such address or sent to such facsimile number as each Party may
furnish to the other in writing from time to time.

 

15.           Construction;
Governing Law.  This
Agreement shall be interpreted in accordance with the plain meaning of its
terms and not strictly for or against any of the Parties hereto.  The Section headings in this Agreement are
for ease of reference only and do not modify, alter, or limit the provisions or
terms of this Agreement.  This Agreement
is deemed to have been jointly drafted by the Parties, and, in the event of a
dispute, shall not be construed in favor of or against any Party by reason of
such Party’s contribution to the drafting of the Agreement.  Moreover, this Agreement shall be governed
by, and construed and interpreted in accordance with, the substantive laws of
the State of New York, without regard to principles of conflict of laws. In any
litigation, each Party hereto waives personal service of any summons, complaint
or other process and agrees that the service thereof may be made by certified
mail directed to such Party at his or its address for purposes of notice under Section
14 hereof.

 

16.           Specific
Performance.  Executive
acknowledges and agrees that the Company would be damaged irreparably if any
provision of this Agreement to be performed by Executive is not performed by
Executive in accordance with its specific terms or is otherwise breached by
Executive.  Accordingly, Executive agrees
that the Company will be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement by Executive and to enforce
specifically this Agreement and its terms and provisions in any proceeding
instituted in any court

 

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

 

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

 

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

 

19.           Knowing
And 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 this
Agreement, that he understands that in agreeing to this document he is
releasing 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, and
that he was given the opportunity to consider the terms of this Agreement and
discuss them with his counsel.

 

 

[Signature page follows]

 

10

 

IN WITNESS HEREOF, the Parties hereto have executed
this 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

  
				

 

11

 

SCHEDULE A-1

 

Stock Option Agreements

 

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

 

2.                                       Stock Option Agreement (135,000 shares @ $7.00/share) dated as of April
25, 1995, between Granite Broadcasting Corporation and Stuart J. Beck

 

3.                                       Stock Option Agreement (91,000 shares @ $11.25/share) dated as of April
23, 1996, between Granite Broadcasting Corporation and Stuart J. Beck, as
amended by Amendment to Granite Broadcasting Corporation Stock Option Agreement
1996 Grant (91,000 shares @ $7.563/share) dated July 24, 2001, between Granite
Broadcasting Corporation and Stuart J. Beck

 

4.                                       Stock Option Agreement (135,000 shares @ $8.375/share) dated as of April
29, 1997, between Granite Broadcasting Corporation and Stuart J. Beck

 

5.                                       Stock Option Agreement (108,600 shares @ $11.125/share) dated as of April
28, 1998, between Granite Broadcasting Corporation and Stuart J. Beck, as
amended by Amendment to Granite Broadcasting Corporation Stock Option Agreement
1998 Grant (108,600 shares @ $7.563/share) dated July 24, 2001, between Granite
Broadcasting Corporation and Stuart J. Beck

 

6.                                       Stock Option Agreement (121,000 shares @ $6.875/share) dated as of January
8, 1999, between Granite Broadcasting Corporation and Stuart J. Beck

 

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

 

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

 

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

 

10.                                 Stock Option Agreement (60,000 shares @ $2.70/share) dated as of February
26, 2002, between Granite Broadcasting Corporation and Stuart J. Beck

 

11.                                 Stock Option Agreement (153,000 shares @ $2.45/share) dated as of February
26, 2002, between Granite Broadcasting Corporation and Stuart J. Beck

 

12

 

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

  	
   

  

 

13

 

SCHEDULE B

 

COMPOSITE

AS AMENDED BY SEPARATION AGREEMENT

 

PERFORMANCE AWARD AGREEMENT

 

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

 

RECITALS

 

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

 

B.            The
Participant has been selected by the Committee to receive a Performance Award
under the Plan, subject to the terms and conditions of this Agreement and the
Plan, a copy of which is attached hereto as Annex A and is incorporated
herein for all purposes.

 

C.            The
Plan contemplates that an Award may be evidenced by a written agreement, at the
discretion of the Committee, between the Company and the Participant
incorporating the terms and conditions set forth in the Plan, together with
such other terms and conditions not inconsistent with the Plan.

 

AGREEMENT

 

NOW,
THEREFORE, in consideration of the foregoing, the terms and conditions
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

 

Definitions.  Capitalized terms used herein but
not defined herein shall have the respective meanings set forth in the Plan.

 

Performance
Award.

 

(a)           Performance
Award Amount.  Subject to the terms of this Agreement and
the Plan, the Participant is hereby awarded a Performance Award in the form of
a bonus equal to the amount of Three Million Two Hundred Eighty-Six Thousand
and 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 the
Performance Objective set forth below on or before April 15, 2004. Such
Performance Award shall be reflected in a book account maintained by the
Company during the Performance Period.

 

14

 

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

 

(c)           Performance
Period.  The “Performance Period” shall be the period
beginning on the Grant Date and ending on April 15, 2004 or such earlier date
that the Participant achieves the Performance Objective set forth in this
Agreement.

 

(d)           Award
Achievement Date.  The “Award Achievement Date” is such date
that the Participant achieves the Performance Objective, and the Committee has
certified that the Performance Objective has been achieved in accordance with
Section 5(c) of the Plan.

 

(e)           Payment
of Award.  If the Participant achieves the Performance
Objective, the Participant shall be paid (i) Two Hundred Twenty-One Thousand
Two Hundred Dollars ($221,200.00) in cash five (5) business days prior to the
maturity of the Participant’s promissory note dated January 1, 2001, issued to
the Company and (ii) the remainder of the Performance Award (“Performance
Award Balance”) in one-third increments of One Million Twenty-One Thousand Six
Hundred 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’s
annual portion of the Participant’s Performance Award Balance, as soon as
practicable after each relevant anniversary date; provided, that,
notwithstanding the foregoing, any unpaid portion of the Performance Award
shall be payable upon a Change in Control (as defined in that certain Indenture
(as amended, amended and restated, supplemented or otherwise modified from time
to time), by and among the Company, the guarantors party thereto and The Bank
of New York, as trustee, pursuant to which the Company issued its 9-3/4% senior
secured notes due December 1, 2010) and shall be paid to Participant within
five (5) business days following such Change in Control.

 

Qualified
Performance Based Compensation.  The Performance Award, if paid, is intended
to constitute qualified “performance based compensation” for purposes of
Section 162(m) of the Code and this Agreement shall be interpreted in
accordance with such intent.  The
Committee shall have the authority to make any amendment to this Agreement, if
deemed necessary, such that the Award satisfies the requirements under Section
162(m) of the Code.

 

Termination
of Employment During Performance Period.  If the Participant’s employment with the
Company and/or its Subsidiaries terminates during the Performance Period for
any reason, the Award granted under this Agreement will be forfeited on the
date of such termination of employment.

 

Heirs
and Successors; Non-Transferability.  This Agreement shall be binding upon, and
inure to the benefit of, the Company and its successors and assigns, and upon
any person acquiring, whether by merger, consolidation, purchase of assets or
otherwise, all or substantially all of the Company’s assets and business.  No Award shall be assignable or transferable
by the Participant, otherwise than by will or the laws of descent and
distribution.

 

15

 

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

 

Plan
Governs.  Notwithstanding anything in this Agreement to
the contrary, the terms of this Agreement shall be subject to the terms of the
Plan.  In the event of any conflict or
inconsistency between the terms and conditions of this Agreement and the Plan,
the Plan shall govern and control.

 

Amendment.  This Agreement may
be amended by written agreement of the Participant and the Company.

 

Offset.  Notwithstanding any
other provision contained herein or the Plan, the Company may off-set on a
dollar for dollar basis any amounts payable or otherwise due hereunder to the
Participant against amounts that the Company determines in good faith that such
Participant owes the Company.  All
determinations under this paragraph 9 shall be made by the Committee in its
sole discretion and any such determination shall be final and binding on all
parties.

 

Severability.  If any portion of
this Agreement is declared invalid, the remainder of the Agreement shall remain
in full force and effect.

 

Governing
Law.  This Agreement shall be governed by the laws
of the State of New York without regard to its conflict of laws rules.

 

Counterparts.  This Agreement may
be executed in two counterparts, each of which shall be deemed an original for
all purposes and both of which together shall constitute one and the same
agreement.

 

16

 

SCHEDULE C

 

COMPOSITE

AS 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 Corporation
Management Stock Plan (the “Plan”) pursuant to the terms and conditions set
forth in the Performance Award Agreement between you and the Company dated
February 25, 2003 (as amended, the “Award Agreement”).  Pursuant to Section 12(a) of the Plan, the
Compensation 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 the
Performance Award prior to the date such Performance Award is otherwise payable
and vested.  By
electing to defer payment of such award, the deferred portion shall not earn
interest or any rate of return during the deferral period unless otherwise
determined by the Committee.

 

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

 

Except as provided below, by
signing this election below, you hereby irrevocably elect to defer receipt of
100% of each of Tranche 1 and Tranche 2 until December 22, 2006 (the “Deferred
Amount”).  Upon a Change in Control (as
defined in that certain Indenture (as amended, amended and restated,
supplemented or otherwise modified from time to time), by and among the
Company, 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 due
December 1, 2010), you shall be paid the amount, if any, you would have
previously been paid by the Company under the Award Agreement but for this
election to defer payment, less amounts, if any, previously paid to you, within
five (5) business days following such Change in Control.  If unvested amounts are still due to be paid
to you under the Award Agreement on or following a Change in Control, such
amounts shall be paid to you at the time contemplated under the Award Agreement
without giving any effect to the deferral of payment under this election.

 

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

 

17

 

thereof as determined by the
Committee in its discretion.  If the
Committee 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 the
Company 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 date
of payment.

 

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

 

18

 

SCHEDULE D

 

Representations by Executive to Company

 

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

 

2.             Executive
acknowledges that the Shares are listed on the Over-The-Counter Bulletin Board
and the Company is therefore required to publish certain business and financial
information pursuant to the reporting requirements of the U.S. Securities
Exchange Act of 1934 (collectively, the “Exchange Information”), which
includes a description of the nature of the Company’s business and the Company’s
most recent balance sheet and profit and loss account, and similar statements
for preceding financial year, and that Executive is able to obtain or access
the Exchange Information without undue difficulty.  Executive and his advisors, if any, have been
afforded the opportunity to ask questions of the Company.  Executive understands that an investment in
the Shares involves a significant degree of risk, including the risk of a total
loss of investment.

 

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

 

4.             Executive
understands and acknowledges that the Shares are being offered and sold to
Executive without registration under the Securities Act in a transaction that
is exempt from the registration provisions of the Securities Act under Section
4(2) of the Securities Act or Regulation D promulgated thereunder and the
availability of such exemption depends in part on, and the Company will rely upon
the accuracy and truthfulness of, the representations set forth herein and
Executive hereby consents to such reliance.

 

5.             Executive
understands that no United States federal or state agency or any other
government or governmental agency or authority has passed upon or made any
recommendation or endorsement of the Shares.

 

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

 

19

 

7.             Executive
understands that the Shares and, until such time as the Shares have been
registered under the Securities Act or otherwise may be sold by Executive under
Rule 144, the certificates for the Shares, may bear a restrictive legend in
substantially the following form:

 

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

 

20Exhibit 10.2

 

May 20, 2004

Modified August 31,
2004

Modified October 8,
2004

Modified October 27,
2004

 

Via telecopier
(212-826-2858) and by

First class mail

 

Mr. Larry Wills

Chief Financial Officer

Granite Broadcasting
Corporation

34th Floor

767 Third Avenue

New York, New York 10017

 

Dear Larry:

 

Reference
is made to that Station Affiliation Agreement dated as of February 1, 1997
(the “Agreement”) under which station WDWB in the Detroit Designated Market
Area (“Station”) is affiliated with The WB Television Network.  It is understood and acknowledged that the
Station is owned and controlled by Granite Broadcasting Corporation (“Granite”).

 

•                  Paragraph 9 of the Agreement is
hereby amended so that the Term of the WB primary affiliation is extended for
three (3) years from May 31, 2004 the date of on which the Agreement is set to
expire so that the primary affiliation at the Station will terminate on May 31,
2007, subject to the following terms and conditions:

 

•                  Paragraph 4 of the Agreement is
hereby amended so that during “Sweeps” rating periods Station agrees to run at
least one 30-second promotional spot promoting WB Network programming on the
Station during each 30 minutes of programming broadcast by the Station between
6 p.m. and 7:55 p.m. Monday through Friday.

 

•                  Station shall adopt The WB 2004
Graphics Package.

 

•                  The attached “Schedule 1” shall
be incorporated into the Agreement.

 

 

Aside
and apart from the specific amendments to the Agreement, as set forth in the
bullet points set forth immediately above, each and every other term and
condition contained in the Agreement will remain in full force and effect.

 

Each
party specifically acknowledges that it has the right to enter into this letter
agreement.

 

Please
sign as indicated below evidencing your agreement to the foregoing.

 

Sincerely,

 

Dennis Dort

 

IT IS SO
AGREED:

 

 

	
  The WB
  Television Network

  	
  Granite
  Broadcasting Corporation

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
    /s/ Dennis Dort

  	
   

  	
  By:

  	
    /s/ Lawrence I. Wills

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Its:

  	
  VP Legal Affairs
  

  	
   

  	
  Its:

  	
  Chief Financial
  Officer

  	
   

  

 

 

Schedule 1

 

1)                                      Substitution/Cure:

 

If any
of the obligations of this Schedule 1 cannot be met under circumstances
beyond Station’s control, Station shall substitute a commitment of equal value
or otherwise cure the default.  The
substitution or other cure shall be subject to the approval of The WB.  These obligations shall be in addition to all
other obligations set forth in the Agreement and otherwise by agreement of the
parties.  Specifically, and without
limitation, Station shall not decrease its participation in the co-op program
below that of the 2003-2004 broadcast year. 
In addition to the specific provisions of this Schedule 1, Station
will endeavor to fulfill all other requests from The WB for inclusion in the
promotional commitments between Station and Palace Sports & Entertainment.

 

2)                                      Station
Pistons Commitment:

 

(a)                                  Station
(also referred to herein as “WB20”) has a license agreement (“License Agreement”)
with the Detroit Pistons basketball team (“Pistons”) to broadcast Piston
basketball games (“Games”) for each of the basketball seasons 2004-2005,
2005-2006, and 2006-2007.  Station may
not exercise any renewal options under the License Agreement during the term of
this Agreement between Station and The WB without prior consultation with The
WB.

 

(b)                                 Under
The License Agreement, Station has the right to broadcast a maximum of
forty-three Games, including both regular season and post-season Games.  Each Game will require clearance of a three
hour block and may be scheduled on any day of the week at any time during and
outside of The WB network prime-time schedule, including the Easy View and
Beginnings time periods (“The WB Schedule”). 
The maximum number of hours of The WB Schedule that may be
preempted during the term of this Agreement (including both regular season and
post-season games) shall be 258 hours.

 

(c)                                  Station
will consult with The WB upon release of the Pistons schedule prior to the
creation of the Pistons broadcast schedule each year to determine
priorities and procedures for that season’s preemptions.

 

(d)                                 The
schedule of Station broadcasts of Games will be negotiated between Station
and the Pistons as set forth in paragraph 3, below.

 

3)                                      Preemption
of The WB Schedule:

 

(a)                                  Notwithstanding
The WB’s Recommended Procedures Governing Preemptions (“Procedures”), Station
shall retain the right to preempt The WB Schedule provided that it does so
only to the extent specifically required by the

 

 

terms of the license
agreement between the Pistons and Station. 
If, during the negotiation of the license agreement between the Pistons
and Station, Station believes that it will be required to make commitments in
violation of either the Procedures or of any term or condition of this
Agreement Station shall, before making said commitment, notify The WB.  Station and The WB shall consult regarding
said commitments and The WB shall consider in good faith accepting non-material
variations from the Procedures or of any term or condition of this Agreement.  If such a variation is accepted by The WB,
Station shall, in addition to its make-good responsibilities under 2(e) of the
Agreement, substitute a commitment of equal value, which shall be subject to
the approval of The WB.

 

(b)                                 To
the extent that Station controls the decision to schedule specific Games,
it shall do so in accordance with the policies outlined in the Procedures, the
priorities set forth in this paragraph and in accordance with the consultations
with The WB in accordance with paragraph 2(c) above.  Specifically and without limitation, Station
shall avoid, to the extent within the control of Station, the selection of
weekday Games to be broadcast during The WB Schedule and shall, in order
of priority, protect Monday, Tuesday and Wednesday nights.  To the extent the selection process is not
within the control of Station, Station shall use best efforts to follow the
Procedures and the priorities set forth in this paragraph and as the result of
consultations with The WB in accordance with paragraph 2(c) above.

 

4)                                      Station
Notification of Preemptions Resulting from Game Broadcasts:

 

(a)                                  During
each Game, Station will broadcast at least once at the beginning of the hour
(and additionally at the half hour for half hour programs) a graphic crawl or
snipe informing viewers of the schedule for the broadcast of the
programming preempted by the broadcast of the Game.

 

(b)                                 During
each Game, the Game announcers shall inform viewers of the schedule for
the broadcast of the programming preempted by the broadcast of the Game.  It is understood that Pistons have committed
only to use best efforts to require Game announcers to inform viewers as
required above.  Occasional non-material
breaches of this requirement by the Game announcers shall not constitute a
terminable breach of this Agreement by Station, if Station adequately notifies
WB and Pistons of any continuing problems.

 

(c)                                  Specifically,
and without limiting Station’s obligations hereunder, Station will implement a
week-prior strategy as set forth in Section IV(2) of the “Procedures”.

 

5)                                      Promotional
Commitments:

 

(a)                                  During
the Term, Station shall (either itself or by third-party agreement) promote The
WB as set forth in this paragraph.

 

 

(b)                                 Each
mention of WB20 in game broadcasts, radio advertising, and cable advertising
shall include a reference to a prime-time television series, such as “WB20,
your home for (name of WB network series), airing (day) at (time)”, or some
shorter form of this phrase.

 

(c)                                  Four
15-second WB20 promos shall be broadcast within every Game broadcast on
television and/or cable.  75% of these
promos will be used to promote specific prime-time programming of The WB.

 

(d)                                 Station
shall sponsor/brand one in-Game segment during each broadcast. (e.g. Dunk of
the Game).  Station sponsorship
identifications will include language substantially in the form  “Brought to you by WB20, your home for (name
of WB network series), airing (day) at (time)”, as appropriate for the time and
the audience.

 

(e)                                  Station
shall require Pistons to provide one WB20/The WB in-arena or video interactive
promotion subject to the approval of The WB during home Games.  In the event that Pistons, instead of the
Station, provide the promotions, Station will provide all Piston-provided
promotions to The WB for approval and The WB will approve at least one.  It will not be necessary for Station to
produce said promotion itself.  Station
promotional identifications will include language substantially in the
form  “Brought to you by WB20, your home
for (name of WB network series), airing (day) at (time)”, as appropriate for
the time and the audience; provided that failure by Pistons not caused by
Station to include said language shall not be a terminable breach of this
Agreement.  It is understood that Station
and Pistons may be unable to include language of the form required above.  This shall be taken into account by The WB
during the approval process.

 

(f)                                    WB20
station promos shall be exhibited on the Palace LED screen above the scoreboard
during home Games.  These promos will be
used to promote specific prime-time programming of The WB.

 

(g)                                 WB20
station promos shall be exhibited on PalaceVision throughout the arena on Game
nights.  Any promos whose content is
under the control of WB20 will be used to promote specific prime-time
programming of The WB.  It is understood
that Station and Pistons may be unable to include the specific language
required above and that policies for the use of PalaceVision may render this
commitment impossible to fulfill.  The WB
shall consider in good faith accepting variations from this requirement.  If no such variation is accepted by The WB or
able to be offered, Station shall substitute a commitment of equal value, which
shall be subject to the approval of The WB.

 

 

(h)                                 Station
shall require Pistons to include the WB20 logo, as attached, in all Pistons
newspaper advertisements relating to game broadcasts on WB20 throughout the
season.

 

(i)                                     If
signage placement is permitted by Pistons, under the Pistons agreement with
WB20 or otherwise, WB20/The WB signage shall be placed on concession-stand televisions
and other venues throughout the arena. 
This signage will be used for objectives related to the promotion of the
prime-time programming of The WB as determined by The WB, taking into account
the fact that this signage may only be able to be changed once or twice a
season.  The WB will assist in the
creative direction of the signage, and all materials shall be subject to the
approval of The WB.  The WB will
reimburse Station for half of all direct out-of-pocket costs associated with
the production of these prime-time programming-focused branded materials, if
approved by The WB.

 

(j)                                     Station
shall require Pistons to promote WB20 and The WB during Pistons radio
advertising for Games that will be broadcast on Station.  Said promotion shall be substantially in the
form “WB 20, your home for (name of WB network series).”  If possible and where time permits, said
promotion shall be substantially in the form “WB20, Detroit’s WB, your home for
(name of WB network series) airing (day) at (time)” as appropriate for the time
and audience.

 

(k)                                  WB20
shall be promoted by means of audio drop-ins within Games being broadcast on
local radio.  50% of these audio drop-ins
will be used to promote specific prime-time programming of The WB.

 

(l)                                     WB20
shall be promoted by means of cable drop-ins within Games being telecast on
cable.  To the extent that WB20 is ever
permitted to use these cable drop-ins for promotion of specific prime-time
programming of The WB, 50% of these cable drop-ins will be used to promote
specific prime-time programming of The WB. 
It is understood that, as of the date of this agreement, WB20 is not
permitted to use these cable drop-ins for that purpose.

 

(m)                               WB20
shall be promoted on the board at DTE by means of a :30 WB block spot or other
:30 WB episodic spot to be changed out in accordance with the schedule set
by Pistons.  The choice of :30 spot
should be based upon the schedule of the DTE events and the priorities
outlined in the Week at a Glance. It is understood by The WB that, as the
result of matters beyond the control of Station, it may be necessary to use WB
image spots rather than specific episodic spots in fulfillment of this
requirement.

 

(n)                                 Station
shall use its best efforts to promote, to the extent possible, specific
prime-time programming of The WB on the LED Marquee Signage outside the area,
on each Game-day.

 

 

(o)                                 Station
shall sponsor the Pistons Kids Club.  The
sponsorship announcement will include language substantially in the form  “Brought to you by WB20, your home for (name
of WB network series), airing (day) at (time)”, as appropriate for the time and
the audience of children.

 

(p)                                 Station
shall sponsor three Game-day give-away promotions.  Two of these promotions will be used to
promote specific prime-time programming of The WB (e.g. “One Tree Hill”
basketballs) and shall be subject to the approval of The WB.  The WB will reimburse Station for half of all
direct out-of-pocket costs associated with the production of these prime-time
programming-focused branded materials, if approved by The WB.

 

(q)                                 Station
shall sponsor three Palace family events. 
If these events involve give-aways, Station will use its best efforts to
promote, to the extent possible, to promote specific prime-time programming of
The WB related to the event (e.g. goggles promoting “The Mountain” if the event
involves motorcross or extreme sports) and shall be subject to the approval of
The WB.  The WB will reimburse Station
for half of all direct out-of-pocket costs associated with the production of
these prime-time programming-focused branded materials, if approved by The WB.

 

In any
event, the sponsorship announcement will include language substantially in the
form  “Brought to you by WB20, your home
for (name of WB network series), airing (day) at (time)”, as appropriate for
the time and the audience.

 

(r)                                  The
Pistons team website shall display the WB20 logo (as attached) and shall link
to the WB20 website.

 

(s)                                  Station
shall use its best efforts to cause Pistons to provide team members for WB20
promotions.  Use of these players in
station ID’s will not replace use of station ID’s focused on promotion of
specific prime-time programming of The WB, and will not decrease the on-air
promotion commitment of Station to The WB.  
Station shall use best effort to incorporate team members into the green
screen image campaign.

 

(t)                                    Except
as provided in the WB20 logo hereto attached, in the separate rules and
procedures for use of the Michigan J. Frog live character, and as approved by
The WB, neither Station nor any third party shall use the Michigan J. Frog
character in promotional activities undertaken in accordance with this Schedule 1.

 

6)                                      Additional
Preemptions:

 

Following
prior notice and consultation with The WB, Station will preempt The WB Schedule for
the telethon of the Muscular Dystrophy Association.

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