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Exhibit 10.1
 
Execution Copy

CONTRIBUTION, ASSIGNMENT AND ASSUMPTION AGREEMENT

THIS CONTRIBUTION, ASSIGNMENT AND ASSUMPTION AGREEMENT (this “Agreement”), is
made on September 14, 2009 (“Effective Date”), by and among Grande
Communications Holdings, Inc., a Delaware corporation (“Grande Holdings”),
Grande Communications Networks LLC, a Delaware limited liability company
(“Grande Operating”), Grande Investment L.P., a Delaware limited partnership
(“Ultimate Parent”), and Grande Parent LLC, a Delaware limited liability company
and wholly-owned subsidiary of Ultimate Parent (“Parent,” together with Ultimate
Parent and ABRY, the “ABRY Parties”),.  The parties to this Agreement are
collectively referred to herein as the (“Parties.”)

R E C I T A L S

WHEREAS, the Parties have entered into that certain Recapitalization Agreement
(the “Recapitalization Agreement”), dated as of August 27, 2009, by and among
ABRY Partners VI, L.P., a Delaware limited partnership (“ABRY”), Ultimate
Parent, Parent, Grande Holdings and Grande Operating (capitalized terms used in
this Agreement but not otherwise defined shall have the meanings ascribed to
them in the Recapitalization Agreement);

WHEREAS, Grande Holdings currently owns all of the outstanding Equity Securities
of Grande Operating;

WHEREAS, pursuant to the terms and conditions of the Recapitalization Agreement,
on the Closing Date, Grande Holdings or a wholly-owned subsidiary thereof
designated by Grande Holdings will acquire a general partner interest in
Ultimate Parent and Grande Operating will become a wholly-owned subsidiary of
Parent;

WHEREAS, as a condition to entering into and performing their respective
obligations under the Recapitalization Agreement, the Parties are requiring
Grande Holdings and Grande Operating to enter into this Agreement pursuant to
which Grande Holdings will assign to Grande Operating certain assets used in the
Business and Grande Operating will assume certain obligations related thereto.

NOW, THEREFORE, in consideration of the premises and the representations,
warranties and agreements contained herein, the Parties hereto agree as follows:

ARTICLE 1
CONTRIBUTION OF ASSETS

Section 1.1             Contribution and Assignment of the Grande Holdings
Assets.  Subject to the terms and conditions of this Agreement, Grande Holdings
hereby contributes, assigns, transfers, conveys and delivers to Grande
Operating, and Grande Operating hereby accepts from Grande Holdings, free and
clear of any Encumbrances other than Permitted Encumbrances, all of Grande
Holdings’ right, title and interest in, to and under all of its assets other
than the Excluded Assets (as defined in Section 1.2 below), as each thereof
exists on the Effective Date (collectively, the “Transferred Assets”).  Without
limiting the foregoing, the Transferred Assets shall include the following
specified items except to the extent included in the Excluded Assets:

 
 

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(a)            All Cash and Cash Equivalents.  All cash and cash equivalents and
rights thereto held by or for the account of Grande Holdings as of the Effective
Date, except as provided in Section 1.2(a);

(b)            Tangible Personal Property.  All machinery, equipment, furniture,
fixtures, tools, spare parts, supplies, maintenance equipment and materials; all
computers, servers, routers, and other computer networking components; and all
other items of tangible personal property of every description held by Grande
Holdings, if any, as of the Effective Date and used in connection with the
Business (collectively, the “Tangible Personal Property”);

(c)            Inventory and Supplies.  All inventory and supplies, if any,
owned by Grande Holdings as of the Effective Date and used with respect to the
Business including all hardware, software, devices, tools, and other products of
every kind held for sale, license or other form of distribution to customers in
whatever form and media (collectively, the “Inventory”);

(d)            Contracts and Licenses.  To the extent related to the Business,
all rights and benefits under all contracts, governmental approvals, and other
documents, commitments, arrangements, undertakings, or authorizations, including
the contracts set forth in Schedule 1.1(d) (collectively, the “Transferred
Contracts”);

(e)            Permits.  All of Grande Holdings’ rights in each of the licenses
and permits, if any, used in the operation of the Business, to the extent such
licenses and permits may be transferred or assigned;

(f)             Intellectual Property.  All of Grande Holdings’ right, title and
interest, if any, in and to all of the intellectual property used in the
Business (collectively, the “Intellectual Property”);

(g)            Names.  All of Grande Holdings’ right, title and interest, if
any, to all Web sites to the extent relating to the Business; all corporate and
trade names relating to the Business; all Internet domain names in all forms
that include in whole or in part any words consisting of or similar to the names
set forth in Schedule 1.1(g) and all content in electronic and other forms with
respect to Internet web sites relating to the Business; and all telephone and
facsimile numbers and post office boxes relating to the Business;

(h)            Receivables and Prepaids. To the extent relating to the Business,
any and all accounts receivable, general intangibles, deposits, refunds,
unbilled costs and fees, any items prepaid by Grande Holdings, rights of
set-off, promissory notes and other obligations of any kind payable to Grande
Holdings, and other receivables of any kind;

(i)             Litigation Claims.  All claims, demands, rights defenses,
actions, causes of action, suits, contracts, obligations, accounts, defenses,
offsets, powers, privileges, licenses and franchises of any kind or character
whatsoever, known or unknown, suspected or unsuspected, arising prior to, the
Effective Date, in contract or in tort, at law or in equity, or under any other
theory of law, held by Grande Holdings against any Person and relating to the
Transferred Assets or Assumed Liabilities, including (i) rights of setoff,
counterclaim, or recoupment, and claims on contracts or for breaches of duties
imposed by Law and (ii) such claims and defenses as fraud, mistake, duress and
usury; and

 
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(j)             Benefit Plans. All rights and interests in and to the Grande
Benefit Plans (other than the Grande Communications Holdings, Inc. Second
Amended and Restated 2000 Stock Incentive Plan, as amended, and all predecessors
of such Plan, and all Stock Option Agreements entered into with grantees of
options and restricted stock thereunder).

Section 1.2             Excluded Assets.  Notwithstanding anything to the
contrary contained in Section 1.1 or elsewhere in this Agreement, Grande
Operating shall not receive any right, title or interest in or to the following
assets of Grande Holdings, which are not part of the transactions contemplated
under this Agreement and which shall remain the property of Grande Holdings
after the Effective Date (the “Excluded Assets”):

(a)            Bank accounts, but not any other cash or cash equivalent or right
thereto or deposited or credited to any such account except for an amount equal
to the Distribution Amount of the cash and other cash equivalents held by Grande
Holdings or distributed by Grande Operating to Grande Holdings on or prior to
the Effective Date;

(b)            all minute books, stock records and corporate seals of Grande
Holdings, and all Contracts between Grande Holdings and any Securityholder or
other holder of Equity Securities of Grande Holdings relating to its ownership
of such Equity Securities, and all related records;

(c)            all shares of capital stock of Grande Holdings held in treasury;

(d)            all Contracts of Grande Holdings for legal, investment advisory
and accounting services other than those set forth on Schedule 1.1(d);

(e)            all insurance policies related to directors and officers
insurance and all rights thereunder;

(f)             all records that Grande Holdings is required by Law to retain in
its possession or that related to the Excluded Assets;

(g)            all rights of Grande Holdings under this Agreement, the
Recapitalization Agreement, the Ancillary Agreements and the other documents and
instruments delivered thereunder except for the Note Purchase Agreement;

(h)            all refunds for federal taxes of any kind, including taxes
related to any consolidated group that includes Grande Holdings and Grande
Operating (or a predecessor or any member of such consolidated group);

(i)             all refunds for state or local taxes of any kind relating to
Grande Holdings (including Delaware franchise tax); and

(j)             the other assets reflected on Schedule 1.2.

Section 1.3             Power of Attorney.  Grande Holdings constitutes and
appoints Grande Operating the true and lawful agent and attorney in fact of
Grande Holdings, with full power of substitution and resubstitution, in whole or
in part, in the name and stead of Grande Holdings but on behalf and for the
benefit of Grande Operating and their respective successors and assigns, from
time to time:

 
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(a)            to demand, receive and collect any and all of the Transferred
Assets and to give receipts and releases for and with respect to the same, or
any part thereof;

(b)            to institute and prosecute, in the name of Grande Holdings or
otherwise, but at the expense and for the benefit of Grande Operating, any and
all proceedings at law, in equity or otherwise, which Grande Operating or their
respective successors and assigns may deem proper to collect or reduce to
possession any of the Transferred Assets and to collect or enforce any claim or
right of any kind hereby assigned or transferred, or intended so to be; and

(c)            to do all things legally permissible, required, or reasonably
required, to recover and collect the Transferred Assets.

                      Grande Holdings declares that the foregoing powers are
coupled with an interest and are and will be irrevocable by Grande Holdings.

Section 1.4             Communications.  Grande Operating shall forward any and
all communications received by it that are intended for Grande Holdings,
including mail, faxes and other communications whether received from
stockholders of Grande Holdings, their Affiliates or their respective officers,
directors, stockholders, managers, members, employees, agents or representatives
or otherwise.

Section 1.5             Name Change:  Grande Holdings will change its name to
Rio Holdings, Inc., within ten (10) business days after the consummation of the
transactions contemplated by the Recapitalization Agreement; provided, Grande
Holdings may thereafter refer to itself as “formerly known as Grande
Communications Holdings, Inc.” as necessary to conduct its business.

ARTICLE 2
ASSUMPTION OF LIABILITIES

Section 2.1             Assumed Liabilities.  Grande Operating hereby assumes
all liabilities of Grande Holdings related to the Business, whether accrued,
absolute, contingent, known, unknown or otherwise, except to the extent included
in the Excluded Liabilities, including the following (the liabilities so
assumed, the “Assumed Liabilities”):

(a)            All liabilities and obligations of Grande Holdings under any of
the Transferred Assets, including the Transferred Contracts, Tangible Personal
Property, Inventory and Intellectual Property; and

(b)            All liabilities and obligations of Grande Holdings under any
licenses or permits held by Grande Operating which are assigned or transferred
to Grande Operating pursuant to this Agreement;

 
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(c)            All liabilities and obligations of Grande Holdings relating to or
arising from any Action arising out of or related to the Transferred Assets, the
Assumed Liabilities or the operation of the Business;

(d)            All liabilities and obligations of Grande Holdings or Grande
Holdings Investor under any guarantees with respect to the Business, Grande
Operating or its Contracts, including the Grande Holdings Lease Guarantees;

(e)            All environmental, health and safety liabilities and obligations
arising out of or relating to the operation of the Business or the leasing,
ownership or operation of real property by Grande Holdings or Grande Operating
or any predecessor thereto;

(f)            All liabilities and obligations arising under any Employee
Benefit Plan (other than the Stock Plan) or relating to payroll, vacation, sick
leave, workers’ compensation, unemployment benefits, pension benefits, health
care plans or benefits or any other employee plans or benefits of any kind for
Grande Employees or Legacy Employees or both (other than liabilities and
obligations arising under the Transaction Bonus Plan to the extent the
Recapitalization Agreement provides that such liabilities and obligations will
be Grande Holdings Transaction Expenses); and

(g)            All liabilities and obligations arising under any employment,
severance, retention or termination agreement with any Grande Employee or Legacy
Employee (other than liabilities and obligations arising under the Executive
Employment Agreements to the extent the Recapitalization Agreement provides that
such liabilities and obligations will be Grande Holdings Transaction Expenses).

Section 2.2              Excluded Liabilities.  Grande Holdings shall retain all
liabilities not included in the Assumed Liabilities, including all liabilities
and obligations relating or arising out of the Excluded Assets (the “Excluded
Liabilities”).

ARTICLE 3
INDEMNIFICATION

Section 3.1             Indemnification by Grande Operating.  Ultimate Parent,
Parent and Grande Operating shall, jointly and severally, indemnify and hold
harmless Grande Holdings, each of its Affiliates and their respective
successors, assigns and their respective past, present and future officers,
directors, stockholders, managers, members, employees, agents and
representatives (each, an “Indemnified Party”) from and against any and all
costs, losses, claims, suits, Actions, assessments, liabilities, fines,
penalties, damages and expenses (including expenses of investigation, court
costs and reasonable attorneys’ fees) (collectively, “Damages”) suffered or
incurred by such Indemnified Party arising out of, caused by, or otherwise in
respect of or in connection with:

(a)            any breach of any covenant or agreement of Grande Operating
contained in this Agreement;

(b)            the Assumed Liabilities;

 
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(c)            the Transferred Assets; or

(d)            any failure by Grande Operating to perform or observe in full, or
to have performed or observed in full, any covenant, agreement or condition to
be performed or observed by Grande Holdings or Grande Operating under the
Transferred Contracts.

Section 3.2             Notification; Opportunity to Defend.  As soon as
reasonably practicable after an Indemnified Party becomes aware of any claim (a
“Liability Claim”) for which it may seek indemnification under this Article 3,
such Indemnified Party shall give notice thereof (each, a “Claims Notice”) to
the party from whom indemnification is sought (such party, the “Indemnifying
Party”), which notice shall describe the Liability Claim in reasonable detail
and indicate the basis for such request for indemnification under this
Agreement.  No delay in or failure to give a Claims Notice by the Indemnified
Party to the Indemnifying Party pursuant to this Section 3.2 shall adversely
affect any of the other rights or remedies which the Indemnified Party has under
this Agreement, or alter or relieve the Indemnifying Party of its obligation to
indemnify the Indemnified Party.  The Indemnifying Party shall have the right,
exercisable by written notice to the Indemnified Party, within 30 days of
receipt of the applicable Claim Notice, to assume and conduct the defense of
such Liability Claim, in accordance with the limits set forth in this Agreement,
with counsel selected by the Indemnifying Party (who shall be reasonably
acceptable to the Indemnified Party).  If the Indemnifying Party does not assume
the defense of a Liability Claim in accordance with this Section 3.2, the
Indemnified Party may continue to defend the Liability Claim.  If the
Indemnifying Party assumes the defense of a Liability Claim as provided in this
Section 3.2, the Indemnifying Party shall not be liable for any legal expenses
subsequently incurred by the Indemnified Party in connection with the defense
thereof; provided, however, that if (i) the Indemnifying Party fails to take
reasonable steps necessary to defend diligently such Liability Claim, or (ii) in
the Indemnified Party’s reasonable judgment a conflict of interest between the
Indemnified Party and the Indemnifying Party may exist with respect to a
Liability Claim, the Indemnified Party may assume its own defense, and the
Indemnifying Party shall be liable for all reasonable costs or expenses paid or
incurred by the Indemnified Party in connection therewith.  The Indemnifying
Party or the Indemnified Party, as the case may be, shall have the right to
participate in (but not control), at its own expense, the defense of any
Liability Claim which the other is defending as provided in this Agreement.  The
Indemnifying Party, if it shall have assumed the defense of any Liability Claim
as provided in this Section 3.2, shall not, without the prior written consent of
the Indemnified Party, consent to a settlement of, or the entry of any judgment
arising from, such Liability Claim which: (i) does not include as an
unconditional term thereof the giving by the claimant or the plaintiff to the
Indemnified Party a complete release from all liability in respect of such
Liability Claim; (ii) grants any injunctive or equitable relief; or (iii) may
reasonably be expected to have a material adverse effect on the Indemnified
Party or its business.  The Indemnified Party shall have the right to settle any
Liability Claim, the defense of which has not been assumed by the Indemnifying
Party.

Section 3.3              Insurance.  Grande Operating shall include Grande
Holdings as a named insured on all of Grande Operating existing and future
insurance policies that insure against Assumed Liabilities for a period of at
least six years after the Closing Date.

 
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ARTICLE 4
RELEASE

Section 4.1             Release by Grande Holdings.  Effective on and as of the
Effective Date, Grande Holdings, for itself and its respective successors and
assigns, hereby unconditionally and irrevocably releases, waives and forever
discharges Grande Operating and its Affiliates and their respective agents,
employees, representatives, officers, directors, managers, partners,
stockholders, members and owners, past and present, and the heirs, successors
and assigns of all of the foregoing (collectively, the “Grande Operating
Released Parties”), from any and all debts, liabilities, claims, demands,
losses, actions and causes of action, suits, judgments and controversies of any
kind whatsoever which Grande Holdings may now have, whether known or unknown,
anticipated or unanticipated and whether accrued or hereafter to accrue, against
the Grande Operating Released Parties, other than any tax obligation of Grande
Operating arising during any period that Grande Holdings and Grande Operating
(or their predecessors) were members of a consolidated group for federal income
tax purposes, after utilization of any available consolidated net operating
losses, caused by or arising out of or in any way related to the business,
affairs, actions or omissions of Grande Holdings and/or the officers or
directors or any other employee or independent contractor of Grande Holdings
through the Effective Date (collectively, the “Grande Operating Released
Claims”).  Grande Holdings further agrees not to file or bring any claim, suit,
action, complaint or arbitration with respect to any Grande Operating Released
Claim.  Notwithstanding anything in this Section 4.1 to the contrary, nothing
contained in this Section 4.1 will operate to release, relieve or otherwise
limit any obligations of Grande Operating arising under this Agreement,
including Article 3, the Recapitalization Agreement or any Ancillary Agreement.

Section 4.2             Release by Grande Operating.  Effective on and as of the
Effective Date, Grande Operating, for itself and its respective successors and
assigns, hereby unconditionally and irrevocably releases, waives and forever
discharges Grande Holdings and its Affiliates and their respective agents,
employees, representatives, officers, directors, managers, partners,
stockholders, members and owners, past and present, and the heirs, successors
and assigns of all of the foregoing (collectively, the “Grande Holdings Released
Parties”), from any and all debts, liabilities, claims, demands, losses, actions
and causes of action, suits, judgments and controversies of any kind whatsoever
which Grande Operating may now have, whether known or unknown, anticipated or
unanticipated and whether accrued or hereafter to accrue, against the Grande
Holdings Released Parties, caused by or arising out of or in any way related to
the business, affairs, actions or omissions of Grande Operating and/or the
officers or directors or  any other employee or independent contractor of Grande
Operating through the Effective Date  (collectively, the “Grande Holdings
Released Claims”).  Grande Operating further agrees not to file or bring any
claim, suit, action, complaint or arbitration with respect to any Grande
Holdings Released Claim.  Notwithstanding anything in this Section 4.2 to the
contrary, nothing contained in this Section 4.2 will operate to release, relieve
or otherwise limit any obligations of Grande Holdings arising under this
Agreement, the Recapitalization Agreement or any Ancillary Agreement.

 
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ARTICLE 5
GENERAL PROVISIONS

Section 5.1             Subject to Recapitalization Agreement;
Modification.  This Agreement is being executed pursuant to the Recapitalization
Agreement and is subject to the terms and conditions contained in the
Recapitalization Agreement.  This Agreement may not be changed, modified,
discharged or terminated in any manner other than by a written agreement signed
by the Parties to this Agreement or their respective successors and assigns. In
the event of any express conflict between the provisions of this Agreement and
the provisions of the Recapitalization Agreement, the provisions of the
Recapitalization Agreement shall control.

Section 5.2            Costs; Taxes.  Grande Operating shall be responsible for
recording and filing documents associated with the transfer of the Transferred
Assets to it and for all costs and fees associated therewith, including (i)
filing the assignments with appropriate federal, state and local Governmental
Authorities as required by applicable Law and (ii) the payment of any and all
stamp, documentary, real property transfer, sales, gross receipts, use or
similar Taxes or assessments (if any) arising out of the conveyance of the
Transferred Assets as contemplated by this Agreement.  Each Party shall
cooperate with the other in timely making all filings, returns, reports and
forms as may be required in connection with the payment of the expenses, fees
and costs contemplated by the previous sentence, including delivering all
instruments and certificates as are reasonably necessary to minimize such
expenses, fees and costs and to enable the other Party to timely comply with the
filing of any tax return that relates to such expenses, fees and costs.

Section 5.3             Assignment; Survival; Binding Effect; Third Party
Beneficiaries.

(a)            No party may assign either this Agreement or any of its rights,
interests or obligations hereunder without the prior written approval of the
other Parties; provided, that without the written consent of the other parties,
Grande Holdings may make any such assignment after the Effective, to any Person
who acquires its partnership interest in Ultimate Parent (or any successor or
transferee thereof) in accordance with the Ancillary Agreements, and (c) all
rights of Grande Holdings under this Agreement and any Ancillary Agreement shall
inure to the benefit of, and be enforceable by, any of the stockholders of
Grande Holdings upon any liquidation or other distribution by Grande Holdings to
its stockholders after the Effective Date of its partnership interest in
Ultimate Parent (or any successor or transferee thereof).

(b)            The rights and obligations of the Parties to this Agreement shall
survive the Closing indefinitely, except to the extent explicitly stated
otherwise.

(c)            All of the terms, agreements, covenants and conditions of this
Agreement are binding upon, and inure to the benefit of and are enforceable by,
the Parties and their respective successors and permitted assigns.

(d)            The Indemnified Parties shall be third party beneficiaries of
Article 3.  The Grande Operating Released Parties and the Grande Holdings
Released Parties shall be third party beneficiaries of Section 4.1 and Section
4.2 respectively.  Except as provided in the preceding sentence, there are no
third party beneficiaries having rights under or with respect to this Agreement.

 
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Section 5.4             Governing Law.  This Agreement shall be construed,
interpreted, and governed in accordance with the laws of the State of Delaware
without reference to rules relating to conflicts of law that would cause the
laws or any other jurisdiction to be applied, provided, however, that matters
concerning title to the Transferred Assets shall be governed and construed in
accordance with the laws of the jurisdiction where such Transferred Assets are
located.
 
Section 5.5             Counterparts.  This Agreement may be executed in any
number of counterparts with the same effect as if all Parties had signed the
same document.  All counterparts shall be construed together and shall
constitute one and the same instrument.  Execution and delivery of this
Agreement by exchange of facsimile or other electronically transmitted
counterparts bearing the signature of a Party shall be equally as effective as
delivery of a manually executed counterpart by such Party.

Section 5.6             Further Assurances.  Each Party hereby agrees that it
will, at any time and from time to time after the date hereof, and without
further consideration, take all such further actions, and execute and deliver
all such further instruments or documents, as may be reasonably requested by the
other Party to effectuate the purposes of this Agreement

[Signature Page Follows]

 
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.

 
GRANDE COMMUNICATIONS HOLDINGS, INC.
                         
By:
/s/ Michael L. Wilfley
   
Name:
Michael L. Wilfley
   
Title:
Chief Financial Officer
                 
GRANDE COMMUNICATIONS NETWORKS LLC
                         
By:
/s/ Michael L. Wilfley
   
Name:
Michael L. Wilfley
   
Title:
Chief Financial Officer
                 
GRANDE INVESTMENT L.P.
         
By:
Grande Manager, LLC,
   
Its General Partner
                         
By:
/s/ Patrick Bratton
   
Name:
Patrick Bratton
   
Title:
Chief Financial Officer
                         
GRANDE PARENT
         
By:
Grande Investment L.P.,
   
Its Sole Member
                         
By:
/s/ Patrick Bratton
   
Name:
Patrick Bratton
   
Title:
Chief Financial Officer

 
 

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