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Exhibit 10.16
 
RETENTION BONUS AGREEMENT FOR W.K.L. “SCOTT” FERGUSON
 
This (“Agreement”) is entered into by and between you, W.K.L. “Scott” Ferguson,
Jr., and Grande Communications Networks LLC, a Delaware limited liability
company and successor-in-interest to Grande Communications Networks, Inc. (the
“Company”), and is effective as of September 14, 2009 (the “Effective
Date”).  In the event the Grande Communications Transaction (as defined herein)
is not consummated, this Agreement shall be null and void.
 
In consideration of the mutual promises and considerations set forth herein, the
parties agree as follows:
 
1.          CHANGE IN POSITION.     In connection with the Grande Communications
Transaction, the Company will change your title and position with the
Company.  The Company acknowledges and agrees that such change in title and
position involves a material diminution in your duties and responsibilities with
the Company and will constitute a “Good Reason Termination” under the Employment
Agreement entered into between you and Grande Communications Networks, Inc.,
dated as of June 28, 2006, as amended as of February 5, 2008 (the “Employment
Agreement”). By entering into this Agreement, the Company acknowledges and
agrees that you have provided the Company with written notice of the occurrence
of this condition that may constitute a Good Reason Termination within ninety
days of its initial occurrence, as required under Section 9(b)(3) of the
Employment Agreement.  The Company does not intend to cure this condition that
constitutes Good Reason Termination and hereby waives its right to cure such
condition as is otherwise provided under Section 9(b)(3) of the Employment
Agreement.  In the event that you provide sixty days notice of your intent to
terminate employment within one year of the Effective Date as required under
Section 9(b)(3) of the Employment Agreement, the Company agrees to fulfill its
obligations under the Employment Agreement under Section 9(b)(5) for Severance
Pay (as defined under the Employment Agreement), provided all other conditions
thereunder to receipt of Severance Pay have been satisfied.  You agree that, at
any time after the date hereof, the Company may terminate your employment and,
upon such termination, shall be responsible for all obligations associated with
such termination as set forth under the Employment Agreement.
 
2.          RETENTION BONUS.  If (i) you remain in continuous employment with
the Company through the date that is one hundred eighty (180) days following the
Effective Date (the “Bonus Date”) or (ii) your employment is terminated without
Cause (as defined below) by the Company after the Effective Date but on or
before the Bonus Date (each, a “Bonus Triggering Event”), the Company will pay
you a retention bonus equal to $225,000 (less payroll taxes and other applicable
withholdings and deductions) (the “Retention Bonus”), subject to your execution
of a release on a form prepared by the Company (the “Release”). Upon the
occurrence of a Bonus Triggering Event, the Retention Bonus will be paid in a
single payment within ten (10) business days following the eighth (8th) day
after you sign and deliver the Release; provided that if you revoke the Release
within such eight (8) day period or do not execute and deliver the Release to
the Company within thirty (30) business days after the Bonus Triggering Event,
you will not be entitled to any Retention Bonus under this Agreement.  You are
not eligible for the Retention Bonus if you terminate your employment with the
Company prior to the Bonus Date, including if you terminate it as described in
Section 1 above.

 
 

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3.          GRANDE COMMUNICATIONS TRANSACTION DEFINED.  For purposes of this
Agreement, the “Grande Communications Transaction” means the consummation of 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.
 
4.          TERMINATION BY DEATH OR PERMANENT DISABILITY.  In the event of your
death or Disability, your employment will terminate, and neither you nor your
estate will receive the Retention Bonus described above in Section
2.  “Disability” means if you become mentally or physically incapacitated to the
extent that you are unable to perform the usual and normal duties of your
occupation or involvement in the Company for a period of three (3) months, as
determined by the Company following consultation with and the advice of your
attending or family physician or other qualified physician.
 
5.          TERMINATION FOR CAUSE.  If your employment is terminated by the
Company for Cause before or after the Bonus Date, the Company shall not have any
other or further obligations to you under this Agreement and you shall not
receive the Retention Bonus. For purposes of this Agreement, “Cause” shall mean:
(i) your commission of a felony or a crime involving moral turpitude or the
commission of any other act involving dishonesty, disloyalty or fraud; (ii)
conduct by you tending to bring the Company into substantial public disgrace or
disrepute; (iii) your failure to perform (in any material respect) your
obligations under this Agreement, your obligations under the Employee
Confidentiality Information and Invention Assignment Agreement between you and
the Company dated as of May 23, 2000 (the “Confidentiality Agreement”), or the
reasonable directives of the Chief Executive Officer or the Board, provided,
that the Chief Executive Officer or the Board shall give you notice of such
failure and you 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 your employment; (iv) your gross negligence or
willful misconduct in providing the services required under the Employment
Agreement; or (v) any substance abuse of the Executive in any manner interferes
with the performance of his duties.
 
6.          CONFIDENTIALITY AND OTHER COVENANTS.  The Company’s obligations
under this Agreement are contingent upon your performance of your obligations
set forth in the Release, Section 10 of the Employment Agreement, and the
obligations as set forth in the Confidentiality Agreement. Any breach of such
obligations under the Release, Section 10 of the Employment Agreement, or the
Confidentiality Agreement will result in an immediate termination of the
Company’s obligation under this Agreement, in addition to all other remedies
available to the Company at law or in equity. You further agree to hold
confidential, and not to disclose to anyone, any confidential information gained
in the course of your employment with the Company and any of its subsidiaries or
affiliates except as necessary and proper for carrying out your job duties. You
also agree to hold confidential, and not to disclose to anyone, the contents of
this Agreement, including its terms and any monetary consideration paid herein,
except as required by lawful subpoena, for purposes of enforcing this Agreement,
to your attorney, or to your tax advisor.

 
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7.          CANCELLATION OF STOCK OPTIONS.          You hereby acknowledge
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 Grande Communications Transaction pursuant to Section
15(c)(iii) of the Grande Communications Holdings, Inc. 2000 Stock Incentive
Plan.  You further acknowledge and agree that it is your sole responsibility to
exercise the vested portion of any options under the Plan that you hold 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.
 
8.          ENTIRE AGREEMENT.  You understand and agree that this Agreement
contains and constitutes the entire understanding and agreement between you and
the Company with respect to its subject matter, that all prior agreements and
understandings, written or oral, with respect to the subject matter of this
Agreement are superseded and canceled (except that any prior written agreements
signed by you regarding confidential information and intellectual property will
remain in full force and effect), and that this Agreement may not be modified in
any manner except by a written document signed by all the parties to this
Agreement.
 
9.          SEVERABILITY OF ANY UNENFORCEABLE PROVISION.  You understand and
agree that if any provision of this Agreement is held to be unenforceable, such
provision shall be severed from the other remaining provisions of this Agreement
and it shall not affect the validity or enforceability of the remaining
provisions.
 
10.         409A.  Notwithstanding any provision of this Agreement to the
contrary, if all or any portion of the payments and/or benefits under this
Agreement upon a termination of employment 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
you are 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 your termination of employment (with the first such
payment being a lump sum equal to the aggregate payments and/or benefits you
would have received during such six-month period if no such payment delay had
been imposed.)  For purposes of this Section 10, “termination of employment”
shall mean your “separation from service”, as defined in Section 1.409A-1(h) of
the Treasury Regulations, including the default presumptions thereunder.
 
11.         PARACHUTE LIMITATIONS.          Notwithstanding any other provision
of this Agreement or of any other agreement, contract, or understanding
heretofore or hereafter entered into by you 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 you, whether
or not such compensation is deferred, is in cash, or is in the form of a benefit
to or for you (a “Benefit Arrangement”), if you are 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 you under this Agreement, all Other Agreements,
and all Benefit Arrangements, would cause any payment or benefit to you 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 you 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 you 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 you under any Other Agreement or any
Benefit Arrangement would cause you to be considered to have received a
Parachute Payment under this Agreement that would have the effect of decreasing
the after-tax amount that you receive as described in clause (ii) of the
preceding sentence, then you shall have the right, in your 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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12.         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.
 
13.         EMPLOYMENT AT-WILL.  Except as explicitly provided in this
Agreement, your employment with the Company is “at will,” and either the Company
or you may terminate the employment relationship at any time, with or without
cause, for any or no reason.
 
14.         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 Employee, 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 78666, to the attention of its President.
 
15.         MISCELLANEOUS.
 
(a)         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.
 
(b)         The waiver by any party hereto of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of subsequent breach by
any party. The language of this Agreement shall be construed as a whole,
according to its fair meaning, and shall not be construed strictly for or
against either of the parties.
 
(c)         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.

 
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(d)         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.
 
[Signature page follows]

 
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BY SIGNING THIS AGREEMENT, YOU ACKNOWLEDGE THAT YOU HAVE READ AND UNDERSTOOD ITS
TERMS AND MEANING, THAT YOU HAVE CONFERRED WITH OR HAD THE OPPORTUNITY TO CONFER
WITH AN ATTORNEY REGARDING THE TERMS AND MEANING OF THIS AGREEMENT, THAT NO
REPRESENTATIONS HAVE BEEN MADE TO YOU TO INDUCE YOU TO SIGN THIS AGREEMENT, AND
THAT YOU HAVE SIGNED THIS AGREEMENT KNOWINGLY AND VOLUNTARILY.

GRANDE COMMUNICATIONS NETWORKS LLC
 
EMPLOYEE
       
By:
/s/ Michael L. Wilfley
 
/s/ W.K.L. “Scott” Ferguson, Jr.
Name:
Michael L. Wilfley
 
W.K.L. “Scott” Ferguson, Jr.
Title:
Chief Financial Officer
 
Date
 
Date:
       

 
Signature Page to Ferguson Retention Bonus Agreement
 
 

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