Exhibit
10.1





SEPARATION
AGREEMENT AND FULL AND FINAL RELEASE OF CLAIMS





Jeffrey
A. Brennan, (“Employee”) and Grande Communications Networks, Inc., a Delaware
corporation (the “Company”), enter into this Separation Agreement and Full and
Final Release of Claims (this “Agreement”), (Employee and the Company are,
collectively, the “Parties”), and the Parties agree as follows:





1.           Employee
was separated from his/her employment with the Company effective August 15, 2008
(the “Separation Date”) due to the elimination of his position by the Company,
thereby discontinuing any employer/employee relationship between the Company and
Employee.  Employee acknowledges and agrees that his/her employment
relationship with the Company has been permanently and irrevocably severed and
that the Company and its parent and affiliate companies do not have any
obligation, contractually or otherwise, to reemploy or hire Employee in the
future.





2.           The
parties mutually wish to professionally address any outstanding issues relating
to Employee’s employment and separation from employment.





3.           Employee
hereby releases and forever discharges the Company and its parent and subsidiary
entities, affiliates, predecessors, successors and assigns and each of their
partners, members, officers, directors, agents, investors, attorneys and
employees (collectively, the Company and each of such entities and individuals
are referred to as the “Released Parties”) from any and all claims, liabilities,
costs, and damages of any nature whatsoever, both known and unknown, including,
but not limited to, any claims based on any right under the Civil Rights Act of
1964, as amended, 42 U.S.C. §§ 2000e, et seq.; the Americans with Disabilities
Act, 42 U.S.C. §§ 12101, et seq.; the Age Discrimination in Employment Act; the
Texas Commission on Human Rights Act, Tex. Labor Code §§ 21.001, et seq.
(prohibiting discrimination based upon age, race, sex, religion, national
origin, disability), the Family and Medical Leave Act (FMLA), the Consolidated
Omnibus Budget Reconciliation Act of 1985, § 4980B of the Internal Revenue Code
of 1986, as amended. (“COBRA.”), the Employee Retirement Income Security Act
(ERISA), the Worker Adjustment and Retraining Notification Act, 29 U.S.C. §§
2101 et seq. (WARN), the National Labor Relations Act, as amended, 42 U.S.C. §§
1981-1983, and any and all applicable federal, state and local laws and
regulations; and any and all statutory claims and common law causes of action
for breach of contract or tort, including but not limited to claims of wrongful
discharge, fraud, promissory estoppel, intentional infliction of emotional
distress, defamation, and assault, which he/she has or may have against the
Company or any Released Party based on or arising out of, or alleged to have
been suffered by, in or as a consequence of any alleged act or omission or
Employee’s employment, separation from employment or relationship with any
Released Party which occurred on or at any time prior to the date of Employee’s
execution of this Agreement.











4.           This
Agreement specifically includes, without limitation, all claims that might be
asserted by or on behalf of Employee in any suit or claim against any or all of
the Released Parties for or on account of any matter whatsoever up to and
including the time that Employee executes this Agreement.  Employee
represents and warrants that, to the best of his/her knowledge, no other person
or entity other than Employee is entitled to assert any claims of any kind or
character based on or arising out of, or alleged to have been suffered by, in or
as a consequence of Employee’s employment, separation from employment or
relationship with any Released Party.  Excluded from this Agreement
are any claims which cannot be waived by law; however, Employee does waive
his/her right to any monetary recovery should any agency pursue claims against
the Company on Employee’s behalf.





5.           Employee
agrees never to institute, directly or indirectly, any action or proceeding of
any kind against any of the Released Parties based on or arising out of, or
alleged to have been suffered by, in or as a consequence of Employee’s
employment, separation from employment or relationship with any Released
Party.





6.           In
consideration of the promises and the covenants set forth in this Agreement,
including but not limited to, Employee’s compliance with Sections 8, 9, 10 and
11 of this Agreement, the Company agrees as follows:





a.
            The
      Company agrees to pay to Employee wages in lieu of notice equal to 52
      weeks of Employee’s weekly salary at the Employee’s weekly salary rate in
      effect as of the Separation Date.  This additional compensation
      will be paid in 26 equal lump sum payments of $7,711.42 each, less
      applicable taxesand
      other payroll deductions/adjustments pursuant to Company policy, on a
      bi-weekly basis.  The first such payment shall be made on the
      Company’s first regular bi-weekly payroll payment date that is at least
      five (5) business days after the Effective Date (as defined in Section 23
      of this Agreement).  The subsequent 25 payments will be paid on
      the Company’s regular bi-weekly payroll payment dates following the first
      payment.





b.
            The
      Company agrees to pay to Employee an amount equal to the cost of 52 weeks
      of coverage under the Company’s medical and dental health plans pursuant
      to COBRA.  This additional compensation will be paid to Employee
      in a one-time lump sum amount of $11,529.44, less applicable taxes and
      other payroll deductions/adjustments pursuant to Company policy, on the
      first regular bi-weekly payroll payment date that is at least five (5)
      business days after the Effective Date.  Employee acknowledges
      that if Employee elects to continue such coverage after the Separation
      Date pursuant to COBRA, then Employee must make the necessary elections,
      make the required payments directly to Grande’s third party COBRA
      administrator and take the necessary actions in order to elect such
      coverage.





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d.
            While
      making no representation as to Employee’s qualification for unemployment
      compensation benefits, the Company agrees to not contest any claim for
      unemployment benefits Employee might make with the Texas Workforce
      Commission.





Employee
acknowledges and agrees that the Company’s obligations under this Section 6 are
contingent upon Employee’s performance of his/her obligations set forth in this
Agreement, as well as Employee’s continuing post-employment obligations as set
forth in the Employee Confidential Information and Invention Assignment
Agreement between the Company and Employee (the “Confidentiality
Agreement”).  Any breach of such obligations under this Agreement or
the post-employment obligations under the Confidentiality Agreement will result
in an immediate termination of the Company’s obligation to pay any unpaid
amounts under this Section 6, in addition to all other remedies available to the
Company at law or in equity.  Employee acknowledges that his/her
violation or attempted violation of any of the obligations in Section 8, 9, 10
or 11 of this Agreement or the Confidentiality Agreement will cause irreparable
damage to the Company, and Employee therefore agrees that the Company shall be
entitled as a matter of right to an injunction, out of any court of competent
jurisdiction, restraining any violation or further violation of any such
provisions or agreements by Employee or others acting on his/her
behalf.  The Company’s right to injunctive relief will be cumulative
and in addition to any other remedies provided by law or in equity.





7.           As
indicated on the attached Attachment A, Company and Employee hereby acknowledge
that Employee was granted options to purchase shares of the Company’s Common
Stock (Executive Compensation Shares) and Series H Preferred Stock under
Company’s Second Amended and Restated 2000 Incentive Stock Compensation Plan
(the “Plan”), pursuant to the option award agreements described in Attachment A
(the “Option Agreements”).  Attachment A sets forth the number of
shares of the Company’s Common Stock and Series H Preferred Stock to which the
Employee’s right to purchase was vested as of the Separation Date (the “”Vested
Option Shares”) and the number of shares of the Company’s Common Stock and
Preferred Stock to which the Employee’s right to purchase was not vested as of
the Separation Date (the “Unvested Option Shares”).  Employee hereby
acknowledges that by termination of his/her employment with the Company, the
Employee has irrevocably forfeited any right to purchase the Unvested Option
Shares pursuant to the terms and conditions of the Plan.Employee hereby
acknowledges that Attachment A sets forth an accurate accounting of the number
of Vested Option Shares and the number of Unvested Option
Shares.  Employee hereby acknowledges that he/she understands that if
he/she desires to purchase the Vested Option Shares, he/she must purchase them
for the exercise price associated with such shares within the
applicable  time period specified in each Option Agreement in
accordance with the exercise procedure set forth in the attached Attachment
B.  Employee hereby acknowledges that he/she will forever relinquish
and disclaim any and all rights that he/she may have to purchase any Vested
Option Shares if he/she does not purchase them in accordance with such
procedures within the applicable time period specified in the corresponding
Option Agreement.  Employee further represents and warrants to Company
that he/she has not transferred, pledged, hypothecated, assigned or otherwise
encumbered or granted any interest whatsoever in any options granted to his/her
by the Company, any Vested Option Shares or any Unvested Option Shares prior to
the date hereof and that he/she has no other equity interest, or claim with
respect to, any of Company’s securities or options to acquire any debt or equity
interest therein.





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8.           Employee
agrees that, for a period of 52 weeks after the Separation Date, he/she will not either directly or
indirectly, on his/her own account or as an agent, stockholder, owner, employer,
employee or otherwise:




a.
            Solicit
      any business from any customer or distributor of Company for purposes of
      providing products or services similar to those offered by Company or any
      products or services, which prior to the Separation Date Company evidenced
      an intention to offer in the future;
or




b.
            Contact
      or approach either directly or indirectly for his/her own individual
      purposes or those of another, any employee of Company for the purpose of
      attempting to or actually soliciting or hiring that employee on his/her
      own account, or on account of another, or inducing the employee of Company
      to terminate the employee’s relationship with the
  Company.




For
purposes of this Section, the term “customer” includes those persons or entities
that are customers of Company at the time of Employee’s Separation Date; or that
are past or potential customers of Company that Employee may have contacted or
otherwise have knowledge of during his/her employment, and the term “employee”
includes any person who is an employee of the Company at the time of or within
the one year period prior to the solicitation, hiring, attempt to solicit or
hire, or the inducement.





9.           Employee
and the Company agree that this Agreement may be used as evidence in a
subsequent proceeding in which any of the parties allege a breach of this
Agreement.  However, Employee agrees that the fact that Employee and
the Company have reached this Agreement and its terms, specifically including,
but not limited to, the amount paid hereunder, will be treated as a strictly
confidential matter between the Parties, and will not be disclosed by Employee
to any person or entity other than to his/her spouse, accountant or tax advisor,
except as may be otherwise required by law or as necessary in filing tax
returns. This confidentiality provision is a material and substantial term of
this Agreement.




10.           Employee
further reaffirms that he/she understands and acknowledges his/her obligation to
keep confidential all confidential and proprietary information of the
Company.  Employee represents and warrants to the Company that he/she
has returned all property and information belonging to the Company, including,
but not limited to, the Company laptop computer that he used as an employee of
the Company, all technical information, customer information, pricing
information, brochures, specifications, quotations, marketing strategies,
inventory records and sales records.  Employee acknowledges that
he/she has not kept any copies, nor made or retained any abstracts or notes of
such information.  This Section is continuing in nature and the
obligations, representations and warranties in this Section shall survive this
Agreement.





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11.           Employee
agrees that he/she will not make any statement, oral or written, that may be
considered derogatory or harmful to any of the Released Parties or detrimental
to the reputation or goodwill of any of the Released Parties, and he/she will
not take any action that might be harmful or damaging to the business or
personal affairs of any of the Released Parties.





12.           The
terms of this Agreement are a compromise and settlement of any disputed claims,
the validity, existence, or occurrence of which are expressly denied by the
Company.  This Agreement does not constitute, and shall not be
construed as, an admission by the Company of any breach of contract or other
violation of any right of Employee, or any harm to his/her of any kind
whatsoever, or of any violation of any federal, state, or local statute, law, or
regulation.  To the contrary, the Company denies any liability
whatsoever to Employee.





13.           Effective
at the close of business on the Separation Date, Employee’s participation in and
entitlement to all fringe benefits or employee benefit plans or programs of the
Company ceased.  No leave accrued for any period of time not
worked.  Nothing in this Agreement is intended to waive or abridge any
rights Employee has in any Company retirement or 401k plan which were vested on
or before the date of separation, or any right of Employee under
COBRA.





14.           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 “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
Employee 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 commence no earlier than the first day of
the seventh month following Employee’s termination of employment (with the first
such payment being a lump sum equal to the aggregate payments and/or benefits
Employee would have received during such six-month period if no such payment
delay had been imposed.)  For purposes of this Section 14,
“termination of employment” shall mean Employee’s “separation from service”, as
defined in Section 1.409A-1(h) of the Treasury Regulations, including the
default presumptions thereunder.  Whenever payments to which this
Section applies are to be made in installments, each such installment shall be
deemed to be a separate payment for purposes of Code Section
409A.  Employee understands that certain payments under this Agreement
may be subject to Code Section 409A, and that if this Agreement does not comply
with the requirements of Code Section 409A and the applicable guidance
thereunder, including any subsequent amendments of this Agreement, then Employee
may incur adverse tax consequences under Code Section 409A.  Employee
acknowledges and agrees that (i) Employee is solely responsible for all
obligations arising as a result of the tax consequences associated with payments
under this Agreement, including without limitation, any taxes, interest or
penalties associated with Code Section 409A, (ii) Employee is not relying upon
any written or oral statement or representation of the





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Company
or any of their respective employees, directors, officers, attorneys or agents
(collectively, the “Company Parties”) regarding the tax effects associated with
the execution of the this Agreement and any payments under this Agreement, and
(iii) in deciding to enter into this Agreement, Employee is relying on his own
judgment and the judgment of the professionals of his choice with whom he may
consult.  Employee hereby releases, acquits and forever discharges the
Company Parties from all actions, causes of actions, suits, debts, obligations,
liabilities, claims, damages, losses, costs and expenses of any nature
whatsoever, known or unknown, on account of, arising out of, or in any way
related to the tax effects associated with the execution of the this Agreement
and any payment under this Agreement.





15.           This
Agreement may be executed in a number of identical counterparts, each of whom
shall be deemed an original for all purposes.





16.           The
undersigned affirm that the terms stated herein constitute the only
consideration for their signing this Agreement, that no other promises or
agreements of any kind have been made by any person or entity to cause them to
execute this Agreement, and that they fully understand the meaning and intent of
this Agreement, including, but not limited to, its final and binding
effect.





17.           This
Agreement is entered into in the State of Texas, and shall in all respects be
interpreted, enforced, and governed by the internal laws of the State of
Texas.  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.





18.           Should
any provision of this Agreement be determined to be illegal, invalid, or
otherwise unenforceable, the validity of the remaining terms and provisions
hereof will not be affected thereby but such will remain valid and enforceable,
and the illegal or invalid terms or provisions shall be deemed not to be a part
of this Agreement.





19.           This
Agreement contains the entire understanding between the parties hereto
concerning the subject matter contained herein and supersedes any prior
employment or similar agreements between the parties, except for the
Confidentiality Agreement and the Option Agreements.





20.           The
Employee and the Company mutually consent to the resolution by arbitration of
any and all claims or controversies arising in connection with either the
interpretation, scope, and/or the enforcement of this “Separation Agreement and
Full and Final Release of Claims,” and mutually agree that such arbitration
shall be in accordance with the then-current Model Employment Arbitration
Procedures of the American Arbitration Association before an arbitrator who is
licensed to practice law.





21.           Employee
acknowledges that the consideration recited in this Agreement is adequate to
make it final and binding, and is in addition to payments or benefits to which
Employee would otherwise be entitled as a former employee of the
Company.





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22.           Company
and Employee agree that the covenants and/or provisions of this Agreement may
not be modified by any subsequent agreement unless the modifying agreement is in
writing and is signed by both parties.





23.           Employee
acknowledges that the terms of this Agreement fully comply with the Older
Workers’ Benefits Protection Act of 1990, and that such terms therefore are
final and binding.  Specifically, Employee acknowledges
that:





a.
            The
      terms of this Agreement not only are understandable, but they also are
      fully understood by Employee;





b.
            This
      Agreement specifically refers to Employee’s rights and claims under the
      federal Age Discrimination in Employment Act, as well as to state laws
      prohibiting age discrimination, and Employee understands that such rights
      and claims are irrevocably being waived by
  Employee;





c.
            The
      consideration recited in this Agreement is adequate to make it final and
      binding, and is in addition to payments or benefits to which Employee
      would otherwise be entitled as a former employee of the
      Company;





d.
            Employee
      has been advised of his/her right to consult with an attorney before
      entering this Agreement, and Employee has exercised his/her right to
      consult with an attorney to the extent he/she wishes to do
    so;





e.
            Employee
      has been given adequate time, up to twenty-one (21) days after the
      Separation Date if he/she so desires, to consider this Agreement, and
      Employee understands and acknowledges that any changes made to this
      Agreement, whether material or immaterial, will not re-start this
      twenty-one (21) day period; and





f.
            Employee
      understands that he/she may not execute this Agreement prior to the
      Separation Date.  Employee understands that if he/she decides to
      execute this Agreement, then he/she must sign and deliver it within the
      twenty-one (21) day period following the Separation Date to a Company
      employee in the Company’s Human Resources
  Department.




g.
            Employee
      understands that this Agreement may be revoked by Employee up to seven (7)
      days after its execution.  In order to revoke this Agreement,
      Employee must deliver a signed written statement of revocation to a
      Company employee in the Company’s Human Resources
      Department.  Employee further understands that if he/she does
      not revoke this Agreement during such seven (7) day period, it shall be
      deemed accepted and shall be effective as of the eighth (8th)
      day after Employee's execution and delivery of this Agreement pursuant to
      phrase (g) of this Section 23 (such eighth (8th) day shall be the
      "Effective Date").





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24.           EMPLOYEE
FURTHER STATES THAT HE/SHE HAS CAREFULLY READ THE FOREGOING “SEPARATION
AGREEMENT AND FULL AND FINAL RELEASE OF CLAIMS” AND THAT HE/SHE KNOWS AND
UNDERSTANDS THE CONTENTS THEREOF AND THAT HE/SHE EXECUTES THE SAME AS HIS/HER
OWN FREE ACT AND DEED.





[SIGNATURE
PAGE FOLLOWS]




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DELIVERED
TO EMPLOYEE THIS THE 15th DAY OF
AUGUST, 2008.





EMPLOYEE:






/s/  Jeffrey A.
      Brennan
                          
                          Date:
                          
                          August 15, 2008Jeffrey
      A. Brennan








WITNESS:
(Must be employed by the Company)





/s/ Janet McCann
                        
                        Date:
                        
                        August 15, 2008





THE
COMPANY:





Grande
Communications Networks, Inc.





By:
                                          /s/ Kay Stroman
                                          
                                          Date:
                                          August 15, 2008Name:
                                          Kay StromanTitle:
                                          Vice President of Human
      Resources