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Exhibit 10.19
 
FORM OF
CONSULTING AGREEMENT
 
This Consulting Agreement (“Agreement”), dated as of __________, 2009, is by and
between Grande Communications Networks LLC, a Delaware limited liability company
and successor-in-interest to Grande Communications Networks, Inc. (the
“Company”), and Roy H. Chestnutt (“Chestnutt”).  In the event the Transaction
(as defined herein) is not consummated, this Agreement shall be null and void.
 
RECITALS
 
WHEREAS, this Agreement shall become effective contemporaneously with the
consummation of the Transaction (the “Effective Time”); the transactions
contemplated by the Recapitalization Agreement dated as of August 27, 2009, by
and among ABRY Partners VI, L.P., Grande Communications Networks, Inc., Grande
Communications Holdings, Inc., ABRY Partners, LLC, Grande Investment L.P., and
Grande Parent LLC are referred to as the “Transaction”;
 
WHEREAS, Chestnutt has served as Chief Executive Officer of Grande
Communications Networks, Inc., pursuant to the terms of an Employment Agreement,
effective as of December 31, 2005, as amended (the “Employment Agreement”);
 
WHEREAS, the Company will terminate Chestnutt’s employment relationship at the
Effective Time;
 
WHEREAS, after termination of such employment relationship, the Company desires
to engage the service of Chestnutt as a consultant and Chestnutt desires to
accept such engagement upon the terms and conditions hereinafter set forth; and
 
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained, and intending to be legally bound hereby, the
parties hereto agree as follows:
 
1.            Termination and Consulting Services.
 
(a)           The Company and Chestnutt acknowledge and agree that Chestnutt’s
employment with the Company is terminated by the Company without Cause (as
defined in the Employment Agreement) at the Effective Time pursuant to Section
10(b)(2) of the Employment Agreement.  As a result, the Company acknowledges and
agrees that upon the Effective Time it will be obligated to commence Severance
Pay and Benefit Continuation (as such terms are defined in the Employment
Agreement) to Chestnutt pursuant to Section 10(b)(5) of the Employment
Agreement.
 
(b)           From the day following the Effective Time until the 180th day
following the Effective Time (such 180th day, the “Consulting End Date”, and
such period, the “Consulting Services Period”), Chestnutt shall render such
consulting services (the “Services”) to the Company as may reasonably be
requested by the Company from time to time.  Notwithstanding anything to the
contrary in this Agreement, the parties intend that the average level of bona
fide services to be provided by Chestnutt during the Consulting Services Period
shall be equal to or less than 20% of the average level of the bona fide
services provided by Chestnutt during the 36-month period immediately preceding
the Effective Time.  Chestnutt shall not incur any travel or other expenses in
performing the Services unless approved in advance by the Chief Executive
Officer of the Company.  Chestnutt may engage in other services, employment or
occupation during the Consulting Services Period as long as such services,
employment or occupation are not contrary to the provisions of this Agreement
and do not materially interfere with his duties and obligations
hereunder.  Chestnutt shall comply with all applicable laws in providing
Services and shall provide such Services in accordance with industry standards.

 
 

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2.            Payment.  As consideration for the provision of the Services in
accordance with this Agreement, a lump sum of $112,500 (less payroll taxes and
other applicable withholdings and deductions) (the “Consulting Bonus”) will be
payable to Chestnutt in accordance with and subject to the terms and conditions
of this Section 2.  Payment of the Consulting Bonus under this Section 2 is
subject to execution and delivery of a release executed by Chestnutt on or after
the Consulting End Date on a form prepared by the Company (the “Release”). The
Consulting Bonus will be paid to Chestnutt in a single payment within ten (10)
business days following the eighth (8th) day after Chestnutt signs and delivers
the Release; provided that if Chestnutt revokes the Release within such eight
(8) day period or does not execute and deliver the Release to the Company within
thirty (30) business days after the Consulting End Date, Chestnutt will not be
entitled to any Consulting Bonus under this Agreement.  Notwithstanding anything
in this Agreement to the contrary, the Company shall have no obligation to make
any payment under this Agreement if (1) Chestnutt is in material breach of
Section 11 of the Employment Agreement; (2) the Company terminates this
Agreement for Cause, or (3) Chestnutt is no longer available to perform Services
prior to the Consulting End Date due to his death or Disability.  For purposes
of this Agreement, “Cause” shall mean (i) the commission by Chestnutt of a
felony or a crime involving moral turpitude or the commission of any other act
involving dishonesty, disloyalty or fraud, (ii) conduct by Chestnutt tending to
bring the Company into substantial public disgrace or disrepute, (iii) failure
of Chestnutt to perform (in any material respect) his obligations under this
Agreement or the reasonable directives of the Chief Executive Officer or the
Board, provided, that the Chief Executive Officer or the Board shall give
Chestnutt notice of such failure and Chestnutt shall have thirty (30) days to
cure such failure, which if such failure is not cured during said thirty (30)
day period, the Company shall have the immediate right to terminate the Services
under this Agreement; (iv) gross negligence or willful misconduct by Chestnutt
in providing the Services; or (v) any substance abuse of Chestnutt in any manner
interferes with the performance of the Services.  For purposes of this
Agreement, “Disability” shall mean Chestnutt has become mentally or physically
incapacitated to the extent that he is unable to perform the Services under this
Agreement for a period of three (3) months, as determined by the Company
following consultation with and the advice of his attending or family physician
or other qualified physician.
 
3.            Independent Contractor.  Nothing herein contained shall be deemed
to create an agency, joint venture, partnership or franchise relationship
between the parties hereto.  Chestnutt acknowledges that, with respect to the
provision of Services during the Consulting Services Period, he will be an
independent contractor, will not be an agent or employee of the Company or any
affiliated entity, will not be entitled to any Affiliated Entity employment
rights or benefits (except as expressly provided herein) and will not be
authorized to act on behalf of the Company or any affiliated entity.  Chestnutt
further acknowledges and agrees that, with respect to the provision of Services
during the Consulting Services Period, he waives any and all rights he has, or
may have, against the Company or any affiliated entity under the Employee
Retirement Income Security Act of 1974.  Chestnutt shall be solely responsible
for any and all tax obligations of Chestnutt arising from or relating to
Section 2 of this Agreement.  Notwithstanding the above, the Company has the
right to withhold amounts from the payment provided in Section 2 if in fact the
Company determines that it is otherwise obligated to withhold such amounts under
applicable laws.

 
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4.            Cancellation of Stock Options.  Chestnutt hereby acknowledges
receipt of the Cancellation Notice from the Board of Directors of the Company,
whereby the Board of Directors communicated its intent to terminate all options
in connection with the Transaction pursuant to Section 15(c)(iii) of the Grande
Communications Holdings, Inc. 2000 Stock Incentive Plan.  Chestnutt further
acknowledges and agrees that it is his sole responsibility to exercise the
vested portion of any options under the Plan that he holds by the Cancellation
Date (as defined in the Cancellation Notice) and that any such vested options
that are not so exercised will expire upon the Cancellation Date.
 
5.            409A.  Notwithstanding any provision of this Agreement to the
contrary, if all or any portion of the payments and/or benefits under this
Agreement are determined to be have been made upon a separation from service and
are determined to be “nonqualified deferred compensation” subject to Section
409A of the United States Internal Revenue Code of 1986, as amended (the
“Code”), and the Company determines that Chestnutt is a “specified employee” as
defined in Section 409A(a)(2)(B)(i) of the Code and the final regulations
promulgated thereunder (the “Treasury Regulations”) and other guidance issued
thereunder, then such payments and/or benefits (or portion thereof) shall be
paid no earlier than the first day of the seventh month following Chestnutt’s
separation from service (with the first such payment being a lump sum equal to
the aggregate payments and/or benefits Chestnutt would have received during such
six-month period if no such payment delay had been imposed.)  For purposes of
this Section 5, “separation from service” will have the meaning as set forth in
Section 1.409A-1(h) of the Treasury Regulations, including the default
presumptions thereunder.
 
6.             Parachute Limitations.  Notwithstanding any other provision of
this Agreement or of any other agreement, contract, or understanding heretofore
or hereafter entered into by Chestnutt with the Company or any affiliate of the
Company, except an agreement, contract, or understanding hereafter entered into
that expressly modifies or excludes application of this paragraph (an “Other
Agreement”), and notwithstanding any formal or informal plan or other
arrangement for the direct or indirect provision of compensation to Chestnutt,
whether or not such compensation is deferred, is in cash, or is in the form of a
benefit to or for Chestnutt (a “Benefit Arrangement”), if Chestnutt is a
“disqualified individual,” as defined in Section 280G(c) of the Internal Revenue
Code of 1986, as amended, (the “Code”), any payment (or portion thereof) under
this Agreement shall not be made (i) to the extent that such payment, taking
into account all other rights, payments, or benefits to or for Chestnutt under
this Agreement, all Other Agreements, and all Benefit Arrangements, would cause
any payment or benefit to Chestnutt under this Agreement to be considered a
“parachute payment” within the meaning of Section 280G(b)(2) of the Code as then
in effect (a “Parachute Payment”) and (ii) if, as a result of receiving a
Parachute Payment, the aggregate after-tax amounts that Chestnutt would receive
from the Company under this Agreement, all Other Agreements, and all Benefit
Arrangements would be less than the maximum after-tax amount that Chestnutt
could receive without causing any such payment or benefit to be considered a
Parachute Payment.  In the event that the receipt of any such right to payment
under this Agreement, in conjunction with all other rights, payments, or
benefits to or for Chestnutt under any Other Agreement or any Benefit
Arrangement would cause Chestnutt to be considered to have received a Parachute
Payment under this Agreement that would have the effect of decreasing the
after-tax amount that Chestnutt would receive as described in clause (ii) of the
preceding sentence, then Chestnutt shall have the right, in Chestnutt’s sole
discretion, to designate those rights, payments, or benefits under this
Agreement, any Other Agreements, and any Benefit Arrangements that should be
reduced or eliminated so as to avoid having the payment or benefit under this
Agreement be deemed to be a Parachute Payment.

 
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7.             Miscellaneous.
 
(a)           No Assignment.  Neither this Agreement nor any right, interest or
obligation hereunder may be assigned (by operation of law or otherwise) by
Employee without the prior written consent of the Company and any attempt to do
so will be void.
 
(b)           Amendments.  This Agreement cannot be modified or amended except
by a written agreement executed by all parties hereto.
 
(c)           Waiver of Provisions; Remedies Cumulative.  Any waiver of any term
or condition of this Agreement must be in writing, and signed by all of the
parties hereto.  The waiver of any term or condition hereof shall not be
construed as either a continuing waiver with respect to the term or condition
waived, or a waiver of any other term or condition hereof.  No party hereto
shall by any act (except by written instrument pursuant to this Section), delay,
indulgence, omission or otherwise be deemed to have waived any right, power,
privilege or remedy hereunder or to have acquiesced in any default in or breach
of any of the terms and conditions hereof.  No failure to exercise, nor any
delay in exercising, on the part of any party hereto, any right, power,
privilege or remedy hereunder shall operate as a waiver thereof.
 
(d)           Survival.  All provisions of this Agreement which by their terms
are intended to survive termination or expiration of this Agreement shall
survive such termination or expiration in accordance with their terms.
 
(e)           Severability; Interpretation.  Any provision of this Agreement
that is found in a final judicial determination by a court of competent
jurisdiction to be prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability (but shall be construed and given effect to the extent
possible), without invalidating the remaining provisions hereof or affecting the
validity or enforceability of such provision in any other jurisdiction.
 
(f)            Governing Law/Venue.  This Agreement shall be construed and
interpreted in accordance with the laws of the State of Texas.  The sole and
exclusive venue for any dispute arising out of this Agreement shall be in a
court of competent jurisdiction located in Travis County, Texas.

 
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(g)           Counterparts.  This Agreement may be executed in one or more
counterparts, each of which will be deemed an original but all of which together
will constitute one and the same instrument.  This Agreement will become
effective when one or more counterparts have been signed by each party and
delivered to the other party, which delivery may be made by exchange of copies
of the signature page by .pdf or other facsimile transmission.
 
(h)           Notices.  Any notice required or permitted to be given under this
Agreement shall be deemed properly given if in writing and personally delivered
or mailed by certified U.S. mail, postage prepaid with return receipt requested,
in the case of notices mailed to Chestnutt, at the address set forth below or,
in the case of notices to the Company, to its principal office at 401 Carlson
Circle, San Marcos, Texas 78766, to the attention of its President.
 
(i)            Entire Agreement.  This instrument contains the entire agreement
of the parties relating to the subject matter hereof and supersedes all prior
agreements and arrangements, both written and oral, with respect to the subject
matter hereof.
 
[Signature page follows]

 
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IN WITNESS WHEREOF, the parties have executed this Agreement to be effective for
all purposes as of the Effective Time.
 

 
GRANDE COMMUNICATIONS NETWORKS LLC
     
By:
       
Michael L. Wilfley, Chief Financial Officer
               
Roy H. Chestnutt
         
Address:  
                   

 
Signature Page to Chestnutt Consulting Agreement
 
 

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