Document:

Exhibit 10.1

    
      

    

    Exhibit
      10.1

     

    
      
        

        THIRD
          AMENDMENT TO CREDIT AGREEMENT 

        

        THIS
          THIRD AMENDMENT TO CREDIT AGREEMENT (this
          “Amendment”) is entered into as of this 29th day of June, 2006, by and among
THERAGENICS
          CORPORATION,
          a
          Delaware corporation (the “Original Borrower”), C.P.
          MEDICAL CORPORATION,
          an
          Oregon corporation (the "Additional Borrower"; the Original Borrower and
          the
          Additional Borrower are referred to herein individually as a "Borrower"
          and
          collectively as the "Borrowers"), and WACHOVIA
          BANK, NATIONAL ASSOCIATION,
          successor by merger to SouthTrust Bank (“Bank”).

         

        R
          e c
          i t a l s:

         

        A.    Bank
          and
          Borrowers are parties to that certain Credit Agreement dated October 29,
          2003,
          as amended by that certain Borrower Party Joinder Agreement dated as of
          May 6, 2005, and that certain Second Amendment dated August 12, 2005 (the
“Credit Agreement”). 

         

        B.    Borrowers
          and Bank have hereby agreed to amend the Credit Agreement, subject to the
          terms
          and conditions contained in this Amendment. 

         

        NOW
          THEREFORE, in consideration of the recitals and other good and valuable
          consideration, the receipt and sufficiency of which is acknowledged by
          the
          parties, the parties hereto agree as follows:

         

        1.    Defined
          Terms.
          Capitalized terms used, but not defined, in this Amendment shall have that
          meaning assigned to them in the Credit Agreement.

         

        2.    Amendments
          to Credit Agreement.
          Borrowers and Bank agree that the Credit Agreement is hereby amended as
          follows:

         

        (a)    The
          following new definitions are hereby added to Section 1.1 of the Credit
          Agreement in their appropriate alphabetical order as follows: 

         

        “Consolidated
          Fixed Charges”
means
          the sum of interest expense, including the interest component of any payments
          with respect to Capitalized Lease obligations, plus rent and lease expense
          plus
          taxes plus current maturities of long-term Indebtedness. 

         

        "Daily
          Adjusted LIBOR Rate"
          means,
          for each day, an interest rate equal to the sum of (i) the applicable Daily
          LIBOR Rate, plus (ii) the Applicable Margin. 

         

        "Daily
          LIBOR Rate"
          means,
          for any day, a per annum rate of interest equal to the quotient obtained
          (stated
          as an annual percentage rate rounded upward to the next higher 100th of
          1%) by
          dividing (A) the London Interbank Offered Rate ("LIBOR") as determined
          by Bank
          from Telerate for the 30-Day LIBOR Rate on such day (or such other reasonably
          similar source as Bank may select if such a rate index is not available
          from
          Telerate), by (B) 1.00 minus any Reserve Requirement for a 30-Day LIBOR
          Rate
          Interest Period (expressed as a decimal). 

         

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      "Daily
        LIBOR Rate Notice"
        means a
        written notice given to Bank by a Borrower's Representative providing for
        Borrower's election for all or any portion (but if a portion, in increments
        of
        not less than $1,000,000.00) of the outstanding principal balance of the
        Note to
        bear interest at the applicable Daily Adjusted LIBOR Rate thereafter, such
        notice to be given at least two (2) Business Days prior to and specifying
        the
        date of the commencement thereof; provided, however, that, except as may
        be
        waived by Bank in Bank's discretion, (i) in no event may the Daily LIBOR
        Rate
        apply until the expiration of any current LIBOR Rate Interest Period, (ii)
        if
        any such Daily LIBOR Rate Notice would cause there to be more than four (4)
        Interest Rates in effect with respect to the Note on the day of the commencement
        of the Daily LIBOR Rate, then such Daily LIBOR Rate Notice shall not be
        effective with respect to such Note, and (iii) if any such Daily LIBOR Rate
        Notice is not timely received or is otherwise not properly made, such Daily
        LIBOR Rate Notice, at Bank's election, shall not be effective. 

       

      “Fixed
        Charge Coverage Ratio”
means,
        for each fiscal quarter and the immediately preceding 3 fiscal quarters,
        the sum
        of (x) earnings before interest, taxes, depreciation and amortization, plus
        rent
        and lease expense minus Capital Expenditures minus Restricted Payments, divided
        by (y) Consolidated Fixed Charges. 

       

      “Restricted
        Payments”
means
        any payment for the purpose of (i) paying dividends or making distributions
        to
        shareholders of Theragenics Corporation, (ii) purchasing, redeeming or otherwise
        acquiring any stock or other equity interests, (iii) paying or acquiring
        any
        debt subordinate to the Loans, or (iv) acquiring or repaying any notes, advances
        or loans to affiliates, shareholders and employees of Borrower. 

       

      “Senior
        Liabilities”
means
        the sum of total Liabilities, including capitalized leases and all reserves
        for
        deferred taxes and other deferred sums appearing on the liabilities side
        of the
        balance sheet, in accordance with Generally Accepted Accounting Principles
        applied on a consistent basis, excluding Subordinated Debt. 

       

      “Telerate”
means
        Telerate page 3750 as of 11:00 a.m., London time. 

       

      "Third
        Amendment Date"
        means
        June 29, 2006. 

       

      (b)   The
        following definitions contained in Section 1.1 of the Credit Agreement are
        hereby amended to read in their entirety as follows:

       

      "Applicable
        Margin"
        means
        1.00% per annum. 

       

      "Base
        Rate Notice"
        means a
        written notice given to Bank by a Borrower's Representative providing for
        Borrower's election for a LIBOR Rate Borrowing to no longer bear interest
        at, as
        applicable, the Daily Adjusted LIBOR Rate, the 30-Day Adjusted LIBOR Rate,
        the
        60-Day Adjusted LIBOR Rate or the 90-Day Adjusted LIBOR Rate, such notice
        (other
        than with respect to a Daily Adjusted LIBOR Rate) to be given at least two
        (2)
        Business Days prior to the expiration of the applicable LIBOR Rate Interest
        Period; provided, however, that, except as may be waived by Bank in Bank's
        discretion, if any such Base Rate Notice is not timely received or is otherwise
        not properly made, such Base Rate Notice, at Bank's election, shall not be
        effective. 

       

      
        
          
          

        

        
          -2-

          
            

          

        

        
          
          

        

      

       

      “LIBOR
        Rate Borrowing"
        means
        any borrowing with respect to which Borrower has properly given a Daily LIBOR
        Rate Notice, a 30-Day LIBOR Rate Notice, a 60-Day LIBOR Rate Notice or a
        90-Day
        LIBOR Rate Notice. 

       

      "LIBOR
        Rate Notice"
        means
        any applicable Daily LIBOR Rate Notice, 30-Day LIBOR Rate Notice, 60-Day
        LIBOR
        Rate Notice or 90-Day LIBOR Rate Notice. 

       

      "Maturity
        Date"
        means
        October 31, 2009. 

       

      "Payment
        Due Date"
        means,
        with respect to Loan Advances bearing interest at the Base Rate or Daily
        Adjusted LIBOR Rate, the first (1st) day of each month during the term of
        this
        Agreement, and with respect to Loan advances bearing interest at a 30-Day
        Adjusted LIBOR Rate, 60-Day Adjusted LIBOR Rate or 90-Day Adjusted LIBOR
        Rate,
        the last day of the relevant interest period. 

       

      "Permitted
        Acquisition"
        means
        Acquisitions after the Third Amendment Date if (i) the business acquired
        is a
        Permitted Line of Business; (ii) consideration for such Acquisition, plus
        the
        consideration paid for all Acquisitions on a cumulative basis on and after
        the
        Third Amendment Date, does not exceed the aggregate amount of $7,500,000
        (which
        consideration shall include, without limitation, securities issued by Borrower,
        Borrower's property (such securities and property to be valued at their fair
        market value on the date of such Acquisition), cash, and the amount of all
        Indebtedness assumed in the case of each asset purchase or acquired in the
        case
        of each equity purchase); (iii) immediately after the Acquisition, the business
        so acquired (and the assets constituting such business) shall be owned and
        operated by a Borrower and if acquired via an equity purchase, such Person
        shall
        contemporaneously comply with the Joinder Requirements; and (iv) Borrower
        shall
        have delivered to Bank a pro-forma compliance certificate demonstrating that,
        on
        a pro-forma basis, after giving effect to the Acquisition, such Acquisition
        would not give rise to a Default as of the consummation of the Acquisition,
        or a
        Financial Covenant Default as of the four Quarter-Ends immediately following
        the
        Acquisition based on such pro-forma projections. 

       

      "Tangible
        Net Worth"
        means
        total assets minus intangible assets (as defined below) minus Senior
        Liabilities. For purposes of this definition, “intangible assets” has the
        meaning under Generally Accepted Accounting Principles, including, without
        limitation, the book value of goodwill, franchises, licenses, non-competition
        agreements, patents, trademarks, trade names, copyrights, service marks,
        and
        brand names, plus the amount of any accounts, notes, advances and/or loans
        to
        affiliates, shareholders, and employees of the Borrowers shall be subtracted
        from total assets. 

       

      “Threshold
        Amount”
means
        $1,000,000.00.

       

      
        
          
          

        

        
          -3-

          
            

          

        

        
          
          

        

      

       

      (c)   Section
        1.7 of the Credit Agreement is hereby amended to read in its entirety as
        follows: 

       

      1.7    Computation
        of Financial Covenants.

       

      For
        purposes of computation of the financial covenants set forth in this Agreement,
        such computation shall be (i) determined by Bank as of each Quarter-End,
        based
        on the Compliance Certificate most recently delivered by Borrower in accordance
        with the terms of this Agreement, and (ii) based on an Annualized Rolling
        Period, if applicable.

       

      (d)   Section
        2.4 of the Credit Agreement is hereby amended to read in its entirety as
        follows: 

       

      2.4    Interest
        Rate.
        Interest on the Loan shall be calculated as follows:

       

      (A)    During
        the entire term of the Note, except with respect to LIBOR Rate Borrowings,
        the
        outstanding principal balance of the Note shall bear interest at the Base
        Rate,
        to fluctuate daily with any change in the Base Rate.

       

      (B)    A
        Borrower's Representative may from time to time deliver to Bank (i) a 30-Day
        LIBOR Rate Notice, in which case the applicable LIBOR Rate Borrowing shall
        bear
        interest at the applicable 30-Day Adjusted LIBOR Rate during the applicable
        30-Day LIBOR Rate Interest Period, (ii) a 60-Day LIBOR Rate Notice, in which
        case the applicable LIBOR Rate Borrowing shall bear interest at the applicable
        60-Day Adjusted LIBOR Rate during the applicable 60-Day LIBOR Rate Interest
        Period, (iii) a 90-Day LIBOR Rate Notice, in which case the applicable LIBOR
        Rate Borrowing shall bear interest at the applicable 90-Day Adjusted LIBOR
        Rate
        during the applicable 90-Day LIBOR Rate Interest Period or (iv) a Daily LIBOR
        Rate Notice, in which case the applicable LIBOR Rate Borrowing shall bear
        interest at the applicable Daily Adjusted LIBOR Rate thereafter until another
        notice is delivered with respect to the Interest Rate. Following the expiration
        of any applicable LIBOR Rate Interest Period, if a Borrower's Representative
        shall not have timely and properly delivered a Base Rate Notice or a LIBOR
        Rate
        Notice for a LIBOR Rate Interest Period to commence as of the expiration
        of the
        applicable expiring LIBOR Rate Interest Period, then any LIBOR Rate Borrowing
        shall bear interest at the Daily Adjusted LIBOR Rate thereafter until another
        notice is delivered with respect to the Interest Rate.

       

      (e)    Section
        4.6 of the Credit Agreement is hereby amended to read in its entirety as
        follows: 

       

       4.6    Indemnification.
        If Borrower makes any payment of principal with respect to any portion of
        the
        Loan not bearing interest at the Base Rate or Daily Adjusted LIBOR Rate on
        any
        other date than the last day of an interest period applicable thereto, or
        if
        Borrower fails to borrow the Loan after notice has been given to Bank to
        borrow
        at the 30-Day Adjusted LIBOR Rate, the 60-Day Adjusted LIBOR Rate or the
        90-Day
        Adjusted LIBOR Rate in accordance with this Agreement, or if Borrower fails
        to
        make any payment of principal or interest in respect of the Loan when due,
        Borrower shall reimburse Bank on demand
        for any resulting loss or expense incurred by Bank, including without limitation
        any loss incurred by Bank in obtaining, liquidating or employing deposits
        from
        third parties, whether or not Bank shall have funded or committed to fund
        the
        Loan. A statement as to the amount of such loss or expense, prepared in good
        faith and in reasonable detail by Bank and submitted by Bank to Borrower,
        shall
        be conclusive and binding for all purposes absent manifest error in computation.
        Calculation of all amounts payable to Bank under this Section shall be made
        as
        though Bank shall have actually funded or committed to fund the portion of
        the
        Loan so prepaid or not borrowed through the purchase of an underlying deposit
        in
        an amount equal to the amount of the Loan in the relevant market and having
        a
        maturity comparable to the related interest period and through the transfer
        of
        such deposit to a domestic office of Bank in the United States; provided,
        however, that Bank may fund the Loan in any manner it sees fit and the foregoing
        assumption shall be utilized only for the purpose of calculation of amounts
        payable under this Section.

      
         

        
          
            
            

          

          
            -4-

            
              

            

          

          
            
            

          

        

        
           

        

      

      (f)    A
        new
        Section 7.1(C)(6) of the Credit Agreement is hereby added in its entirety
        as
        follows: 

       

      (6) Not
        later
        than the sixtieth (60th)
        day
        after the commencement of each fiscal year, deliver Projections (as hereinafter
        defined) to Bank for the Borrowers and their Subsidiaries for such fiscal
        year.
        "Projections" means forecasted consolidated and consolidating (i) balance
        sheets
        prepared on an annual basis, (ii) profit and loss statements prepared on
        a month
        by month basis, and (iii) cash flow statements prepared on an annual basis,
        all
        prepared on a consistent basis with Borrowers’ historical financial statements,
        together with appropriate supporting details and a statement of underlying
        assumptions. 

       

      Accordingly,
        (i) the word “and” at the end of Section 7.1(C)(4) is deleted and (ii) the
        period at the end of Section 7.1(C)(5) is deleted and in its place is
        substituted “; and”.

       

      (g)    Section
        7.3(A) of the Credit Agreement is hereby amended to read in its entirety
        as
        follows: 

       

       (A)   Ratios.
        During
        the term of this Agreement, Borrowers will maintain or cause to be maintained,
        tested as of the end of each fiscal quarter:

       

       (1)    A
        ratio
        of Senior Liabilities to Tangible Net Worth of not more than 0.5 to
        1.0;

       

       (2)    Fixed
        Charge Coverage Ratio of not less than 1.25 to 1.0; and

       

       (3)    Liquid
        Assets of not less than the following amounts during the following
        periods:

       

      

        
          	
                   Period

                   

                	
                   Amount
                    of Liquid Assets

                   

                
	
                   From
                    the Third Amendment Date through and including June 30, 2007

                   

                	
                   $15,000,000

                   

                
	
                   From
                    July 1, 2007 through and including June 30, 2008

                   

                	
                   $17,500,000

                   

                
	
                   From
                    July 1, 2008, and thereafter

                   

                	
                   $20,000,000

                   

                

        

      

      
         

        
          
            
            

          

          
            -5-

            
              

            

          

          
            
            

          

        

        
           

        

      

      (h)   Section
        7.3(E) of the Credit Agreement is hereby amended to read in its entirety
        as
        follows: 

       

      (E)    Capital
        Expenditures.
        Borrowers will not make, incur, create, or assume any Capital Expenditures
        (other than that portion of Permitted Acquisitions consisting of Capital
        Expenditures) exceeding the aggregate amount of $10,000,000 in any fiscal
        year.

       

      (i)    Exhibit
        A
        to the Credit Agreement is amended and restated in its entirety as Exhibit
        A to
        this Amendment.

       

      3.    
Conditions
        Precedent.
        This
        Amendment shall not be effective unless and until each of the parties hereto
        has
        executed and delivered this Amendment. 

       

      4.    
Representations
        and Warranties.
        As a
        material inducement to Bank to modify and amend the terms of the Credit
        Agreement as aforesaid, each Borrower represents and warrants to Bank
        that:

       

      (a)    This
        Amendment constitutes the valid and legally binding obligation of each Borrower
        enforceable in accordance with its respective terms and does not violate,
        conflict with, or constitute any default under any law or regulation binding
        on
        or applicable to either Borrower, either Borrower’s articles, bylaws, or any
        mortgage, lease, credit, loan agreement, contract, or other instrument binding
        upon or affecting either Borrower;

       

      (b)    All
        representations and warranties contained in the Loan Documents are true and
        complete as of the date hereof in all material respects, excluding any
        representations or warranties which by their terms are limited to a specific
        date;

       

      (c)    No
        Event
        of Default or event that, with the passage of time or the giving of notice
        (or
        both) would constitute an Event of Default, under the Loan Documents has
        occurred and is continuing as of the date hereof; and

       

      (d)    No
        setoffs, defenses, claims, recoupments, or counterclaims on the part of either
        Borrower to payment or performance of the Obligations exists as of the date
        hereof.

       

      5.    
Miscellaneous.

       

      (a)    Borrowers
        agree to pay or reimburse Bank for all expenses incurred by Bank in connection
        with the negotiation, preparation, and execution of this Amendment, including,
        without limitation, fees and expenses of Bank’s counsel.

       

      (b)    Notwithstanding
        any provision of the Credit Agreement or Note to the contrary, whenever any
        installment of principal of, or interest on, the Loans or other amount due
        under
        the Loan Documents, as amended, becomes due and payable on a day which is
        not a
        Business Day, the maturity thereof shall be extended to the next succeeding
        Business Day (unless such next succeeding Business Day does not fall within
        the
        same calendar month, in which case the maturity thereof shall be shortened
        to
        the immediately preceding Business Day). In the case of any extension in
        the
        time for payment of any installment of principal, interest shall be payable
        thereon at the rate per annum determined in accordance with the Loan Documents,
        as amended, during such extension.

       

      
        
          
          

        

        
          -6-

          
            

          

        

        
          
          

        

      

      
         

      

      (c)    BORROWER
        AGREES THAT WITH RESPECT TO ANY CLAIM OF BORROWER ARISING UNDER THE CREDIT
        AGREEMENT, AS AMENDED, OR ANY OTHER LOAN DOCUMENT, IN NO EVENT SHALL BORROWER
        HAVE A REMEDY OF, OR SHALL BANK BE LIABLE FOR, INDIRECT, SPECIAL, CONSEQUENTIAL,
        PUNITIVE OR EXEMPLARY DAMAGES, AND BORROWER WAIVES ANY RIGHT OR CLAIM TO
        SUCH
        DAMAGES BORROWER MAY HAVE OR WHICH MAY ARISE IN THE FUTURE IN CONNECTION
        WITH
        THE LOANS OR THE LOAN DOCUMENTS, WHETHER THE SAME IS RESOLVED BY ARBITRATION,
        MEDIATION, JUDICIAL PROCESS OR OTHERWISE.

       

      6.    No
        Novation.
        The
        execution and delivery of this Amendment shall not be interpreted or construed
        as, and in fact does not constitute, a novation, payment, or satisfaction
        of all
        or any portion of the Loans; rather, this Amendment is strictly amendatory
        in
        nature. 

       

      7.    Document
        Protocols.
        This
        Amendment shall be governed by the terms set forth in Articles X and XI of
        the
        Credit Agreement, which are incorporated herein by reference.

       

      [Remainder
        of page intentionally left blank; signature page follows]

       

       

      
        
          
          

        

        
          -7-

          
            

          

        

        
          
          

        

      

      
         

      

      IN
        WITNESS WHEREOF, Borrowers have executed this Amendment under seal as of
        the
        date first above written, with the intention that this Amendment take effect
        as
        an instrument under seal.

      

                                                          BORROWERS:

      
 

                                                          THERAGENICS
        CORPORATION

       

                                                          By:
        /s/
        Francis J. Tarallo

                                                          Name:
        Francis J.
        Tarallo

                                                          Title:
        Chief
        Financial Officer

      

      

                                                          C.P.
        MEDICAL
        CORPORATION

       

                                                          By:
        /s/
        Lynn M. Rogers

                                                          Name:
        Lynn M.
        Rogers

                                                          Title:
        Secretary and
        Treasurer

      

      
         

         

        
          
            
            

          

          
            -8-

            
              

            

          

          
            
            

          

        

        
           

        

      

      IN
        WITNESS WHEREOF, Bank has executed this Amendment under seal as of the date
        first above written, with the intention that this Amendment take effect as
        an
        instrument under seal.

      

       

                                                          BANK:

      

                                                          WACHOVIA
        BANK,
        NATIONAL ASSOCIATION,
        

                                                          successor
        by merger
        to SouthTrust Bank 

       

                                                          By:
        /s/
        Stephen Brothers

                                                          Name:
        Stephen
        Brothers

                                                          Title:
        Vice
        President

      

      

      

      

      
        
           

           

          
            
              
              

            

            
              -9-

              
                

              

            

            
              
              

            

          

          
             

          

        

      

      EXHIBIT
        A

      FORM
        OF COMPLIANCE CERTIFICATE

      COMPLIANCE
        CERTIFICATE

      FOR
        THE PERIOD ENDING _______________

       

            
        To:   Wachovia
        Bank, National Association

                  171
        17th St., 7th Floor

                  Atlanta,
        GA 30363

      

      Pursuant
        to that certain Credit Agreement, dated as of October 29, 2003 (as amended
        from
        time to time, the "Credit Agreement", capitalized terms used herein as therein
        defined), between THERAGENICS
        CORPORATION,
        a
        Delaware corporation and the other “Borrowers” thereto (collectively, the
        "Borrower"), and WACHOVIA
        BANK, NATIONAL ASSOCIATION (the
        "Bank"), the undersigned submits this Compliance Certificate and certifies
        that
        the covenants and financial tests described in the Credit Agreement are as
        follows:

      

      I.    Financial
        Statements and Reports                                             Compliance

       

                                                                      
        (Please Indicate)

      A.    Annual
        CPA audited, Fiscal Year-End financial

       

             
        statements within 120 days after each Fiscal Year-End                                     
Yes        
        No

       

      B.    Quarterly
        unaudited financial statements within 45 days

       

                     
        after each Quarter-End                                                        
Yes        
         No

       

      II.    Senior
        Liabilities to Tangible Net Worth

       

      Maximum
        of 0.5 to 1.0 allowed.

       

      As
        of the
        Quarter ending _______________

       

      $_________  
/$__________
        = ________                                          Yes        
        No

       

      Senior
        Liabilities          TNW        Ratio

       

      
         

         

        
          
            
            

          

          
            -10-

            
              

            

          

          
            
            

          

        

        
           

        

      

      III.    Fixed
        Charge Coverage Ratio

       

       Minimum
        of 1.25 to 1.0 allowed.

       

       As
        of the Quarter ending _______________

       

      
        
          	
                   $____________

                   

                	
                   /$____________

                   

                	
                   =
                    ____________

                   

                	
                  Yes

                   

                	
                  No

                   

                
	
                   earnings
                    before interest, taxes,

                   depreciation
                    and amortization, plus

                   rent
                    and lease expense minus

                   Capital
                    Expenditures minus

                   Restricted
                    Payments

                   

                	
                   Fixed
                    Charges

                   

                	
                  Ratio

                   

                	 	 

        

      

       

       

      IV.    Liquid
        Assets

       

      
        
          	
                   Period

                   

                	
                   Minimum
                    Amount of Liquid Assets

                   

                
	
                   From
                    the Third Amendment Date through and including June 30, 2007

                   

                	
                   $15,000,000

                   

                
	
                   From
                    July 1, 2007 through and including June 30, 2008

                   

                	
                   $17,500,000

                   

                
	
                   From
                    July 1, 2008, and thereafter

                   

                	
                   $20,000,000

                   

                

        

      

       

       

      Actual
        Liquid Assets for this

       

      reporting
        period equals $_____________                                                    Yes     
        No

       

      V.    Capital
        Expenditures

       

      Maximum
        of $10,000,000 per fiscal year

       

      Actual
        Capital Expenditures for this

       

      reporting
        period equals $_____________                                                    
Yes      
        No

      
        
           

           

          
            
              
              

            

            
              -11-

              
                

              

            

            
              
              

            

          

          
             

          

        

      

      A.    The
        undersigned has individually reviewed the provisions of the Credit Agreement
        and
        a review of the activities of Borrower during the period covered by this
        Compliance Certificate has been made in reasonable detail by or under the
        supervision of the undersigned with a view to determining whether Borrower
        has
        kept, observed, performed and fulfilled all of its obligations under the
        Credit
        Agreement.

       

      B.    Such
        review did not disclose, and I have no knowledge of, the existence of any
        Default or Event of Default which has occurred and is continuing [except
        as
        disclosed on the attachment hereto].

       

      Executed
        this ______ day of __________________, 20___.

       

                                                          THERAGENICS
        CORPORATION

       

                                                          By:                                                                      

                                                          Its: 

       

        

       

       

      -12-Amendment to Employment Agreement

 Exhibit 10.1 
 AMENDMENT TO EMPLOYMENT AGREEMENT 
 This Amendment to Employment Agreement (this
“Amendment”) is entered into as of June 28, 2006 (the “Effective Date”) by and between Grande Communications Networks, Inc., a Delaware corporation (the “Company”), and Roy H. Chestnutt (the
“Executive”). 
 WHEREAS, the Company and the Executive entered into an Employment Agreement (the “Agreement”) on
December 31, 2005; and 
 WHEREAS, the Company and the Executive wish to amend the Agreement to comply with Section 409A
of the Internal Revenue Code of 1986, as amended (“Code”). 
 NOW, THEREFORE, the parties agree as follows:

  

	1.	The Agreement is amended by adding the following new “WHEREAS” clause immediately before the “NOW THEREFORE” clause on the first page of the Agreement:

 “WHEREAS, the Company is a subsidiary of Grande Communications Holdings, Inc. (“Parent”), a Delaware
corporation that has agreed to enter into certain stock option agreements with Executive in connection with the employment of Executive by the Company and Executive’s agreement to certain restrictive covenants set forth herein. 
  

	2.	The Agreement is amended by deleting the existing fifth and sixth sentences of Section 4 in their entirety, and replacing those fifth and sixth sentences of Section 4 with
the following three new sentences: 

 “Annual bonuses shall be payable to the Executive within 45 days after the end of the
applicable Bonus Period (or within 30 days of the date on which it is determined that the Annual Goals have been met, exceeded, or not met, whichever is later; provided, however that the determination must be made on or before June 30 of the
year following the year of the Bonus Period). Nothing in this paragraph 4 shall limit the Board of Directors from awarding additional bonuses to the Executive based upon achievement of Company objectives, other than the Annual Goals, during the
Bonus Period, in the sole discretion of the Board. Any such additional discretionary bonus shall be payable to the Executive within 30 days of the date on which the amount of such bonus, if any, is determined; provided, however, that the
determination must be made on or before June 30 of the year following the year of the Bonus Period.” 
  

	3.	The Agreement is amended by deleting the existing Section 7 of the Agreement in its entirety and replacing it with the following new Section 7: 

“7. Stock Options. 
 Executive will be granted options to acquire a certain number of shares of Parent common stock and Series H Preferred Stock pursuant to the terms of the agreements to be entered into by and between the Parent and Executive (the “Option
Agreements”), which Option Agreements will be substantially in the form and substance of the attached Schedules 1 through 6.” 

	4.	Section 10 of the Agreement is amended by deleting the last two sentences of Section 10.a) in their entirety. 

 IN WITNESS WHEREOF, the Company and the Executive have executed this Amendment to be effective as of the Effective Date. 
  

			
	COMPANY:
	
	GRANDE COMMUNICATIONS NETWORKS, INC.
		
	By:	 	 /s/ Michael Wilfley

	Its:	 	 Chief Financial Officer

	
	EXECUTIVE:
	
	 /s/ Roy H. Chestnutt

	ROY H. CHESTNUTT

  

 - 2 - 

 SCHEDULE 1 
 TO AMENDMENT TO EMPLOYMENT AGREEMENT 
  

			
	 Agreement No.
                    
	 	Grant Date:                     , 2006

 INCENTIVE STOCK OPTION AGREEMENT 
 (Series H Preferred Stock) 
 An Incentive Stock Option (the “Option”)
to purchase a total of Four Million (4,000,000) shares of Series H Preferred Stock (collectively, “Option Shares”) of Grande Communications Holdings, Inc. (the “Company”), is hereby granted to Roy H. Chestnutt (the
“Grantee”) at the Option Price determined in this Incentive Stock Option Agreement (this “Award Agreement”) and in all respects subject to the terms, definitions and provisions of the Grande Communications Holdings, Inc. Amended
and Restated 2000 Stock Incentive Plan (the “Plan”), which Plan is incorporated herein by reference, except to the extent otherwise expressly provided in this Award Agreement. 
 1. Option Price. The Option Price is $0.10 for each Option Share, which price is equal to or greater than the Fair Market Value of such
share of Series H Preferred Stock on the Grant Date. 
 2. Vesting of Option Shares. The Option Shares shall vest
(“Vest” and derivations) and become “Vested Option Shares” on the dates set forth in the following Vesting schedule (“Vesting Date”): 
 (i) 25% of the Option Shares on December 31, 2006; 
 (ii) 2.083% of the Option Shares on the last day of each of the first 36 months after the first anniversary of the of the Option
Shares on the last day of each of the 36 consecutive months after December 31, 2006; and 
 (iii) All Option
Shares that have not previously vested under (i) or (ii), on January 1, 2010. 
 Without limitation, Vesting with respect to the
Option Shares will cease on the date of Grantee’s termination of Service. 
 3. Exercisability of Option. 
 A. Date on Which Option Becomes Exercisable. The Option shall not be exercisable prior to the first Vesting Date. On or after the occurrence of the
first Vesting Date (and prior to the termination of the Option), the Option shall be exercisable, in whole or in part, with respect to Vested Option Shares. 
 B. Method of Exercise. Without limitation, the Option shall be exercised by a written notice delivered to a duly authorized officer of the Company, which notice shall: 
 (i) state the election to exercise the Option and the number of Vested Option Shares in respect of which it is being exercised;
and 

 (ii) be signed by the person or persons entitled to exercise the Option and, if
the Option is being exercised by any person or persons other than the Grantee, be accompanied by proof, satisfactory to the Committee, of the rights of such person or persons to exercise the Option. 
 4. Term of Option. Without limitation, the provisions of Section 7.3(i) of the Plan shall not apply to the Option, and the
unexercised portion of the Option shall automatically terminate on the earlier of (i) the date the Option terminates in accordance with the terms of the Plan exclusive of Section 7.3(i), (ii) 90 days from the date of
termination of Service, unless Grantee’s Service is terminated by reason of death or Disability, or Grantee dies within 90 days from the date of termination of Service; (iii) the second anniversary of Grantee’s termination of Service
if such termination of Service is by reason of his death, or if he dies within 90 days of his termination of Service; and (iv) the first anniversary of his termination of Service by reason of Disability. 
 5. Payment. The Option Price of any Vested Option Shares purchased shall be paid in (i) cash, (ii) shares of Stock, or
(iii) a combination of cash and shares of Stock; provided, further, that if the Option Shares are publicly traded on the date the Option is exercised, the Committee may require that all or any portion of the Option Price be paid in cash.

 6. Issuance of Option Shares. No person shall be, or have any of the rights or privileges of, a holder of the Option Shares
subject to the Option unless and until certificates representing such Option Shares shall have been issued and delivered to such person, such issuance, without limitation, being subject to the terms of the Plan. 
 7. Surrender of Option. Upon exercise of the Option in part, if requested by the Committee, the Grantee shall deliver this Award Agreement
and other written agreements executed by the Company and the Grantee with respect to the Option to a duly authorized officer of the Company, who shall endorse or cause to be endorsed thereon a notation of such exercise and return such agreements to
the Grantee. 
 8. Forfeiture, Repurchase Rights and Parachute Limitations. Without limiting the generality of the general
incorporation of the Plan provisions, this Award Agreement expressly incorporates by reference the provisions of Section 12 (Restrictions on the Transfer Of Shares Of Stock and Repurchase Rights) and Section 13 (Parachute
Limitations and Forfeitures). 
 9. Other Agreements. Without limiting the generality of the provisions of the Plan and this
Award Agreement, all Option Shares shall be subject to any other agreements between the Grantee and the Company (collectively, “Other Agreements”) in effect at the time of reference; and provided further that the Company, in its
sole discretion, shall have the power and ability to exercise some or all of its rights under either this Award Agreement (including, without limitation, the provisions of the Plan incorporated by reference), or the Other Agreements, or both, with
respect to some or all of the Option Shares. 
  

 2 

 10. Law Governing. WITHOUT LIMITATION, THIS AWARD AGREEMENT SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE. 
 11. Incentive Stock Options. The Option is issued
under the Plan and is intended to be an incentive stock option under Section 422 of the Internal Revenue Code and will be interpreted accordingly. 
 12. Repurchase Rights of the Company; Fair Market Value Determination. If Grantee’s Service is terminated by reason of a Voluntary Termination or for Cause, then, in its sole discretion, the Company
may purchase all or any portion of the Option Shares which have been exercised by Grantee prior to or in connection with such termination of Grantee’s Service. The Fair Market Value of such Vested Option Shares shall be, for purpose of this
Section, determined by the Board in its sole discretion as of the effective date of Grantee’s termination of Service. If Grantee disagrees with the Board’s determination of the Fair Market Value (the “Board Determination”), then
Grantee shall notify the Board in writing (the “Dispute Notification”) that Grantee wishes to dispute the determination. If the dispute is not resolved between the Board and Grantee within fifteen (15) days of receipt of the Dispute
Notification, then the Board shall appoint a third-party expert in valuing companies that are comparable to the Company to conduct a determination of the Fair Market Value (the “Third Party Determination”). The Third Party Determination
shall be conclusive and binding upon the Board and Grantee. If the Third Party Determination is within ten percent (10%) of the Board Determination, then Grantee shall bear the costs incurred in obtaining the Third Party Determination. If the
Third Party Determination differs from the Board Determination by ten percent (10%) or more, then the Company shall bear such costs. 
 13. Change of Control. The “Change of Control” definition of the Plan shall apply to the Option, except that the following provisions will be substituted in the place of existing Section 2.9(ii) and
Section 2.9(iii) of the Plan: 
 “(ii) a change in the effective control of the Company, whereby either: 
 (a) a Person acquires (or has acquired during the preceding twelve (12) month period ending on the date of the most recent
acquisition by such Person), directly or indirectly, ownership of a number of shares of Capital Stock of the Company which constitutes fifty percent (50%) or more of the combined voting power of the Capital Stock; provided, however, that if a
Person already owns fifty percent (50%) or more of the combined voting power of the Capital Stock, the acquisition of additional Capital Stock by such Person is not considered a Change of Control of the Company; or 
 (b) as a result of, or in connection with any tender offer, merger or other business combination, sale of assets or contested election, or
any combination of the foregoing transactions, a majority of the persons who were members of the Board is, within a twelve (12) month period, replaced by individuals whose appointment or election to the Board is not endorsed by a majority of
the Board prior to the appointment or election; or 
  

 3 

 (iii) a change in the ownership of the assets of the Company, whereby a Person acquires
(or has acquired during a twelve (12) month period ending on the date of the most recent acquisition by such Person) assets of the Company that have a total gross fair market value equal to more than fifty percent (50%) of the total gross
fair market value of all of the assets of the Company as determined by the Board immediately prior to such acquisition or acquisitions; provided, however, that there is no Change of Control if assets are transferred to an entity that is controlled
by the shareholders of the Company immediately after the transfer, nor is it a Change of Control if the Company transfers assets to: 
 (a) a shareholder of the Company (immediately before the asset transfer) in exchange for or with respect to the shareholder’s capital stock in the Company; 
 (b) an entity, fifty percent (50%) or more of the total value or voting power of which is owned, directly or indirectly, by the
Company; 
 (c) a Person that owns, directly or indirectly, fifty percent (50%) or more of the total value or voting
power of all the outstanding Capital Stock; or 
 (d) an entity, at least fifty percent (50%) of the total value or
voting power of which is owned, directly or indirectly, by a Person described in subparagraph (iii)(c) of this Section 2.9.” 
 14. At-Will Employment. Nothing in this Award Agreement shall be implied or construed to create a contract for employment. Unless expressly provided for in a separate written agreement executed by Grantee and a duly authorized
representative of the Company on behalf of the Company, if Grantee is an employee of the Company, Grantee’s employment is terminable “at-will.” 
 Dated as of this              day of             , 2006. 
  

			
	 GRANDE COMMUNICATIONS HOLDINGS, INC.

		
	By:	 	  

	Printed Name:	 	  

	Title:	 	  

 Acknowledgment 
 The undersigned hereby acknowledges (i) my receipt of this Award Agreement and the Option, (ii) my opportunity to review the Plan, this Award
Agreement and the 

  

 4 

 
Option (iii) my opportunity to discuss the Plan, this Award Agreement and the Option with a representative of the Company, and my personal advisors, to
the extent I deem necessary or appropriate, (iv) my understanding of the terms and provisions of the Plan, this Award Agreement and the Option, (iii) my understanding that, by my signature below, I am agreeing to be bound by all of the
terms and provisions of the Plan, this Award Agreement and the Option. 
 Without limitation, the undersigned hereby acknowledges that by my
signature below, I expressly agree to the effectiveness of all of the terms and provisions of Section 8 of this Award Agreement. 
 Without limitation, I agree to accept as binding, conclusive and final all decisions or interpretations (including, without limitation, all interpretations of the meaning of provisions of the Plan, this Award Agreement and the Option) of
the Committee upon any questions arising with respect to the Plan, this Award Agreement or the Option. 
 Dated as of this
     day of             , 20    . 
  

	
	  

	 Grantee

  

 5 

 SCHEDULE 2 
 TO AMENDMENT TO EMPLOYMENT AGREEMENT 
  

			
	 Agreement No.
                    
	 	Grant Date June             , 2006

 NONQUALIFIED STOCK OPTION AGREEMENT 
 (Series H Preferred Stock) 
 A Nonqualified Stock Option (the
“Option”) to purchase a total of One Million Seven Hundred Fifty Thousand (1,750,000) shares of Series H Preferred Stock (collectively, “Option Shares”) of Grande Communications Holdings, Inc. (the “Company”), is
hereby granted to Roy H. Chestnutt (the “Grantee”) at the Option Price determined in this Nonqualified Stock Option Agreement (this “Award Agreement”) and in all respects subject to the terms, definitions and provisions of the
Grande Communications Holdings, Inc. Amended and Restated 2000 Stock Incentive Plan (the “Plan”), which Plan is incorporated herein by reference, except to the extent otherwise expressly provided in this Award Agreement. 
 1. Option Price. The Option Price is $0.10 for each Option Share, which price is equal to or greater than the Fair Market Value of such
share of Series H Preferred Stock on the Grant Date. 
 2. Vesting of Option Shares. The Option Shares shall vest
(“Vest” and derivations) and become “Vested Option Shares” on February 13, 2007. Without limitation, Vesting with respect to the Option Shares will cease on the date of Grantee’s termination of Service. 
 3. Exercisability of Option. 
 A. Date on Which Option Becomes Exercisable. The Option shall not be exercisable prior to the first Vesting Date. On or after the occurrence of the first Vesting Date (and prior to the termination of the Option), the Option shall be
exercisable with respect to Vested Option Shares only during its Applicable Exercise Period (as specified in Section 3C of this Award Agreement). 
 B. Exercise Date. The “Exercise Date” of the Option shall be the first to occur of: 
 (i) the date of a Change of Control; 
 (ii) the date of a termination of Grantee’s Service, other than a
termination of Service by reason of a Voluntary Termination, or a termination of Service for Cause; and 
 (iii) the date of a
termination of Grantee’s Service by reason of a Voluntary Termination; and 
 (iv) the date of a termination of
Grantee’s Service for Cause; and 
 (v) March 16, 2009. 

 C. Applicable Exercise Period. The Applicable Exercise Period of the Option is: 
 (i) if the Exercise Date is described in Section 3B(i) of this Award Agreement, the Applicable Exercise Period is the period
beginning 90 days prior to the Change in Control and ending 75 days after the Change in Control (but if all or any portion of the actual exercise of the Option occurs prior to the Change in Control, it shall be conditioned on the actual occurrence
of a Change in Control); 
 (ii) if the Exercise Date is described in either Section 3B(ii) or
Section 3B(iii) of this Award Agreement, then the Applicable Exercise Period shall begin on such Exercise Date and shall end on the date the Option terminates under Section 4 of this Award Agreement; 
 (iii) if the Exercise Date is described in Section 3B(iv) of this Award Agreement, there shall be no Applicable Exercise
Period and the Option shall be null and void as of such Exercise Date; and 
 (iv) if the Exercise Date is the date described
in Section 3B(v) of this Award Agreement, then the Applicable Exercise Period shall begin on March 16, 2009 and shall end on the earlier of (i) March 15, 2010 and (ii) the date on which the Option terminates under
Section 4 of this Award Agreement. 
 D. Method of Exercise. Without limitation, the Option may only be exercised during
the Applicable Exercise Period. During such Applicable Exercise Period, the Option shall be exercised by a written notice delivered to a duly authorized officer of the Company, which notice shall: 
 (i) state the election to exercise the Option and the number of Vested Option Shares in respect of which it is being exercised; and

 (ii) be signed by the person or persons entitled to exercise the Option and, if the Option is being exercised by any
person or persons other than the Grantee, be accompanied by proof, satisfactory to the Committee, of the rights of such person or persons to exercise the Option. 
 4. Term of Option. Without limitation, the unexercised portion of the Option shall automatically terminate on the date the Option terminates in accordance with the terms of the Plan, including without
limitation Section 7.3 of the Plan. 
 5. Payment and Withholding. The Option Price of any Vested Option
Shares purchased, and applicable withholding, shall be paid in (i) cash, (ii) shares of Stock, or (iii) a combination of cash and shares of Stock; provided, further, that if the Option Shares are publicly traded on the date the Option
is exercised, the Committee may require that all or any portion of the Option Price and the applicable withholding be paid in cash. 
  

 2 

 6. Issuance of Option Shares. No person shall be, or have any of the rights or privileges
of, a holder of the Option Shares subject to the Option unless and until certificates representing such Option Shares shall have been issued and delivered to such person, such issuance, without limitation, being subject to the terms of the Plan.

 7. Surrender of Option. Upon exercise of the Option in part, if requested by the Committee, the Grantee shall deliver this
Award Agreement and other written agreements executed by the Company and the Grantee with respect to the Option to a duly authorized officer of the Company, who shall endorse or cause to be endorsed thereon a notation of such exercise and return
such agreements to the Grantee. 
 8. Forfeiture, Repurchase Rights and Parachute Limitations. Without limiting the generality
of the general incorporation of the Plan provisions, this Award Agreement expressly incorporates by reference the provisions of Section 12 (Restrictions on the Transfer Of Shares Of Stock and Repurchase Rights) and Section 13
(Parachute Limitations and Forfeitures). 
 9. Other Agreements. Without limiting the generality of the provisions of the Plan
and this Award Agreement, all Option Shares shall be subject to any other agreements between the Grantee and the Company (collectively, “Other Agreements”) in effect at the time of reference; and provided further that the Company,
in its sole discretion, shall have the power and ability to exercise some or all of its rights under either this Award Agreement (including, without limitation, the provisions of the Plan incorporated by reference), or the Other Agreements, or both,
with respect to some or all of the Option Shares. 
 10. Law Governing. WITHOUT LIMITATION, THIS AWARD AGREEMENT SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE. 
 11. Repurchase Rights of the Company; Fair Market Value
Determination. If Grantee’s Service is terminated by reason of a Voluntary Termination or for Cause, then, in its sole discretion, the Company may purchase all or any portion of the Option Shares which have been exercised by Grantee
prior to or in connection with such termination of Grantee’s Service. The Fair Market Value of such Vested Option Shares shall be, for purpose of this Section, determined by the Board in its sole discretion as of the effective date of
Grantee’s termination of Service. If Grantee disagrees with the Board’s determination of the Fair Market Value (the “Board Determination”), then Grantee shall notify the Board in writing (the “Dispute Notification”)
that Grantee wishes to dispute the determination. If the dispute is not resolved between the Board and Grantee within fifteen (15) days of receipt of the Dispute Notification, then the Board shall appoint a third-party expert in valuing
companies that are comparable to the Company to conduct a determination of the Fair Market Value (the “Third Party Determination”). The Third Party Determination shall be conclusive and binding upon the Board and Grantee. If the Third
Party Determination is within ten percent (10%) of the Board Determination, then Grantee shall bear the costs incurred in obtaining the Third Party Determination. If the Third Party Determination differs from the Board Determination by ten
percent (10%) or more, then the Company shall bear such costs. 
  

 3 

 12. Change of Control. The “Change of Control” definition of the Plan shall apply to the Option,
except that the following provisions will be substituted in the place of existing Section 2.9(ii) and Section 2.9(iii) of the Plan: 
 “(ii) a change in the effective control of the Company, whereby either: 
 (a) a Person
acquires (or has acquired during the preceding twelve (12) month period ending on the date of the most recent acquisition by such Person), directly or indirectly, ownership of a number of shares of Capital Stock of the Company which constitutes
fifty percent (50%) or more of the combined voting power of the Capital Stock; provided, however, that if a Person already owns fifty percent (50%) or more of the combined voting power of the Capital Stock, the acquisition of additional
Capital Stock by such Person is not considered a Change of Control of the Company; or 
 (b) as a result of, or in connection
with any tender offer, merger or other business combination, sale of assets or contested election, or any combination of the foregoing transactions, a majority of the persons who were members of the Board is, within a twelve (12) month period,
replaced by individuals whose appointment or election to the Board is not endorsed by a majority of the Board prior to the appointment or election; or 
 (iii) a change in the ownership of the assets of the Company, whereby a Person acquires (or has acquired during a twelve (12) month period ending on the date of the most recent acquisition by such Person) assets
of the Company that have a total gross fair market value equal to more than fifty percent (50%) of the total gross fair market value of all of the assets of the Company as determined by the Board immediately prior to such acquisition or
acquisitions; provided, however, that there is no Change of Control if assets are transferred to an entity that is controlled by the shareholders of the Company immediately after the transfer, nor is it a Change of Control if the Company transfers
assets to: 
 (a) a shareholder of the Company (immediately before the asset transfer) in exchange for or with respect to the
shareholder’s capital stock in the Company; 
 (b) an entity, fifty percent (50%) or more of the total value or
voting power of which is owned, directly or indirectly, by the Company; 
 (c) a Person that owns, directly or indirectly,
fifty percent (50%) or more of the total value or voting power of all the outstanding Capital Stock; or 
  

 4 

 (d) an entity, at least fifty percent (50%) of the total value or voting power of
which is owned, directly or indirectly, by a Person described in subparagraph (iii)(c) of this Section 2.9.” 
 13. At-Will Employment.
Nothing in this Award Agreement shall be implied or construed to create a contract for employment. Unless expressly provided for in a separate written agreement executed by Grantee and a duly authorized representative of the Company on behalf of the
Company, if Grantee is an employee of the Company, Grantee’s employment is terminable “at-will.” 
 Dated as of this
             day of June, 2006. 
  

			
	GRANDE COMMUNICATIONS HOLDINGS, INC.
		
	By:	 	  

	Printed Name:	 	  

	Title:	 	  

 Acknowledgment 
 The undersigned hereby acknowledges (i) my receipt of this Award Agreement and the Option, (ii) my opportunity to review the Plan, this Award
Agreement and the Option (iii) my opportunity to discuss the Plan, this Award Agreement and the Option with a representative of the Company, and my personal advisors, to the extent I deem necessary or appropriate, (iv) my understanding of
the terms and provisions of the Plan, this Award Agreement and the Option, (iii) my understanding that, by my signature below, I am agreeing to be bound by all of the terms and provisions of the Plan, this Award Agreement and the Option.

 Without limitation, the undersigned hereby acknowledges that by my signature below, I expressly agree to the effectiveness of all of the
terms and provisions of Section 8 of this Award Agreement. 
 Without limitation, I agree to accept as binding, conclusive and
final all decisions or interpretations (including, without limitation, all interpretations of the meaning of provisions of the Plan, this Award Agreement and the Option) of the Committee upon any questions arising with respect to the Plan, this
Award Agreement or the Option. 
 Dated as of this      day of
            , 20    . 
  

	
	  

	Grantee

  

 5 

 SCHEDULE 3 
 TO AMENDMENT TO EMPLOYMENT AGREEMENT 
  

			
	 Agreement No.
                    
	 	Grant Date June             , 2006

 NONQUALIFIED STOCK OPTION AGREEMENT 
 (Series H Preferred Stock) 
 A Nonqualified Stock Option (the
“Option”) to purchase a total of One Million Seven Hundred Fifty Thousand (1,750,000) shares of Series H Preferred Stock (collectively, “Option Shares”) of Grande Communications Holdings, Inc. (the “Company”), is
hereby granted to Roy H. Chestnutt (the “Grantee”) at the Option Price determined in this Nonqualified Stock Option Agreement (this “Award Agreement”) and in all respects subject to the terms, definitions and provisions of the
Grande Communications Holdings, Inc. Amended and Restated 2000 Stock Incentive Plan (the “Plan”), which Plan is incorporated herein by reference, except to the extent otherwise expressly provided in this Award Agreement. 
 1. Option Price. The Option Price is $0.10 for each Option Share, which price is equal to or greater than the Fair Market Value of such
share of Series H Preferred Stock on the Grant Date. 
 2. Vesting of Option Shares. The Option Shares shall vest
(“Vest” and derivations) and become “Vested Option Shares” on February 13, 2008. Without limitation, Vesting with respect to the Option Shares will cease on the date of Grantee’s termination of Service. 
 3. Exercisability of Option. 
 A. Date on Which Option Becomes Exercisable. The Option shall not be exercisable prior to the first Vesting Date. On or after the occurrence of the first Vesting Date (and prior to the termination of the Option), the Option shall be
exercisable with respect to Vested Option Shares only during its Applicable Exercise Period (as specified in Section 3C of this Award Agreement). 
 B. Exercise Date. The “Exercise Date” of the Option shall be the first to occur of: 
 (i) the date of a Change of Control; 
 (ii) the date of a termination of Grantee’s Service, other than a
termination of Service by reason of a Voluntary Termination, or a termination of Service for Cause; and 
 (iii) the date of a
termination of Grantee’s Service by reason of a Voluntary Termination; and 
 (iv) the date of a termination of
Grantee’s Service for Cause; and 
 (v) March 16, 2010. 

 C. Applicable Exercise Period. The Applicable Exercise Period of the Option is: 
 (i) if the Exercise Date is described in Section 3B(i) of this Award Agreement, the Applicable Exercise Period is the period
beginning 90 days prior to the Change in Control and ending 75 days after the Change in Control (but if all or any portion of the actual exercise of the Option occurs prior to the Change in Control, it shall be conditioned on the actual occurrence
of a Change in Control); 
 (ii) if the Exercise Date is described in either Section 3B(ii) or
Section 3B(iii) of this Award Agreement, then the Applicable Exercise Period shall begin on such Exercise Date and shall end on the date the Option terminates under Section 4 of this Award Agreement; 
 (iii) if the Exercise Date is described in Section 3B(iv) of this Award Agreement, there shall be no Applicable Exercise
Period and the Option shall be null and void as of such Exercise Date; and 
 (iv) if the Exercise Date is the date described
in Section 3B(v) of this Award Agreement, then the Applicable Exercise Period shall begin on March 16, 2010 and shall end on the earlier of (i) March 15, 2011 and (ii) the date on which the Option terminates under
Section 4 of this Award Agreement. 
 D. Method of Exercise. Without limitation, the Option may only be exercised during
the Applicable Exercise Period. During such Applicable Exercise Period, the Option shall be exercised by a written notice delivered to a duly authorized officer of the Company, which notice shall: 
 (i) state the election to exercise the Option and the number of Vested Option Shares in respect of which it is being exercised; and

 (ii) be signed by the person or persons entitled to exercise the Option and, if the Option is being exercised by any
person or persons other than the Grantee, be accompanied by proof, satisfactory to the Committee, of the rights of such person or persons to exercise the Option. 
 4. Term of Option. Without limitation, the unexercised portion of the Option shall automatically terminate on the date the Option terminates in accordance with the terms of the Plan, including without
limitation Section 7.3 of the Plan. 
 5. Payment and Withholding. The Option Price of any Vested Option
Shares purchased, and applicable withholding, shall be paid in (i) cash, (ii) shares of Stock, or (iii) a combination of cash and shares of Stock; provided, further, that if the Option Shares are publicly traded on the date the Option
is exercised, the Committee may require that all or any portion of the Option Price and the applicable withholding be paid in cash. 
  

 2 

 6. Issuance of Option Shares. No person shall be, or have any of the rights or privileges
of, a holder of the Option Shares subject to the Option unless and until certificates representing such Option Shares shall have been issued and delivered to such person, such issuance, without limitation, being subject to the terms of the Plan.

 7. Surrender of Option. Upon exercise of the Option in part, if requested by the Committee, the Grantee shall deliver this
Award Agreement and other written agreements executed by the Company and the Grantee with respect to the Option to a duly authorized officer of the Company, who shall endorse or cause to be endorsed thereon a notation of such exercise and return
such agreements to the Grantee. 
 8. Forfeiture, Repurchase Rights and Parachute Limitations. Without limiting the generality
of the general incorporation of the Plan provisions, this Award Agreement expressly incorporates by reference the provisions of Section 12 (Restrictions on the Transfer Of Shares Of Stock and Repurchase Rights) and Section 13
(Parachute Limitations and Forfeitures). 
 9. Other Agreements. Without limiting the generality of the provisions of the Plan
and this Award Agreement, all Option Shares shall be subject to any other agreements between the Grantee and the Company (collectively, “Other Agreements”) in effect at the time of reference; and provided further that the Company,
in its sole discretion, shall have the power and ability to exercise some or all of its rights under either this Award Agreement (including, without limitation, the provisions of the Plan incorporated by reference), or the Other Agreements, or both,
with respect to some or all of the Option Shares. 
 10. Law Governing. WITHOUT LIMITATION, THIS AWARD AGREEMENT SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE. 
 11. Repurchase Rights of the Company; Fair Market Value
Determination. If Grantee’s Service is terminated by reason of a Voluntary Termination or for Cause, then, in its sole discretion, the Company may purchase all or any portion of the Option Shares which have been exercised by Grantee
prior to or in connection with such termination of Grantee’s Service. The Fair Market Value of such Vested Option Shares shall be, for purpose of this Section, determined by the Board in its sole discretion as of the effective date of
Grantee’s termination of Service. If Grantee disagrees with the Board’s determination of the Fair Market Value (the “Board Determination”), then Grantee shall notify the Board in writing (the “Dispute Notification”)
that Grantee wishes to dispute the determination. If the dispute is not resolved between the Board and Grantee within fifteen (15) days of receipt of the Dispute Notification, then the Board shall appoint a third-party expert in valuing
companies that are comparable to the Company to conduct a determination of the Fair Market Value (the “Third Party Determination”). The Third Party Determination shall be conclusive and binding upon the Board and Grantee. If the Third
Party Determination is within ten percent (10%) of the Board Determination, then Grantee shall bear the costs incurred in obtaining the Third Party Determination. If the Third Party Determination differs from the Board Determination by ten
percent (10%) or more, then the Company shall bear such costs. 
  

 21 

 12. Change of Control. The “Change of Control” definition of the Plan shall apply to the Option,
except that the following provisions will be substituted in the place of existing Section 2.9(ii) and Section 2.9(iii) of the Plan: 
 “(ii) a change in the effective control of the Company, whereby either: 
 (a) a Person
acquires (or has acquired during the preceding twelve (12) month period ending on the date of the most recent acquisition by such Person), directly or indirectly, ownership of a number of shares of Capital Stock of the Company which constitutes
fifty percent (50%) or more of the combined voting power of the Capital Stock; provided, however, that if a Person already owns fifty percent (50%) or more of the combined voting power of the Capital Stock, the acquisition of additional
Capital Stock by such Person is not considered a Change of Control of the Company; or 
 (b) as a result of, or in connection
with any tender offer, merger or other business combination, sale of assets or contested election, or any combination of the foregoing transactions, a majority of the persons who were members of the Board is, within a twelve (12) month period,
replaced by individuals whose appointment or election to the Board is not endorsed by a majority of the Board prior to the appointment or election; or 
 (iii) a change in the ownership of the assets of the Company, whereby a Person acquires (or has acquired during a twelve (12) month period ending on the date of the most recent acquisition by such Person) assets
of the Company that have a total gross fair market value equal to more than fifty percent (50%) of the total gross fair market value of all of the assets of the Company as determined by the Board immediately prior to such acquisition or
acquisitions; provided, however, that there is no Change of Control if assets are transferred to an entity that is controlled by the shareholders of the Company immediately after the transfer, nor is it a Change of Control if the Company transfers
assets to: 
 (a) a shareholder of the Company (immediately before the asset transfer) in exchange for or with respect to the
shareholder’s capital stock in the Company; 
 (b) an entity, fifty percent (50%) or more of the total value or
voting power of which is owned, directly or indirectly, by the Company; 
 (c) a Person that owns, directly or indirectly,
fifty percent (50%) or more of the total value or voting power of all the outstanding Capital Stock; or 
  

 4 

 (d) an entity, at least fifty percent (50%) of the total value or voting power of
which is owned, directly or indirectly, by a Person described in subparagraph (iii)(c) of this Section 2.9.” 
 13. At-Will Employment.
Nothing in this Award Agreement shall be implied or construed to create a contract for employment. Unless expressly provided for in a separate written agreement executed by Grantee and a duly authorized representative of the Company on behalf of the
Company, if Grantee is an employee of the Company, Grantee’s employment is terminable “at-will.” 
 Dated as of this
     day of June, 2006. 
  

			
	 GRANDE COMMUNICATIONS HOLDINGS, INC.

		
	By:	 	  

	Printed Name:	 	  

	Title:	 	  

 Acknowledgment 
 The undersigned hereby acknowledges (i) my receipt of this Award Agreement and the Option, (ii) my opportunity to review the Plan, this Award
Agreement and the Option (iii) my opportunity to discuss the Plan, this Award Agreement and the Option with a representative of the Company, and my personal advisors, to the extent I deem necessary or appropriate, (iv) my understanding of
the terms and provisions of the Plan, this Award Agreement and the Option, (iii) my understanding that, by my signature below, I am agreeing to be bound by all of the terms and provisions of the Plan, this Award Agreement and the Option.

 Without limitation, the undersigned hereby acknowledges that by my signature below, I expressly agree to the effectiveness of all of the
terms and provisions of Section 8 of this Award Agreement. 
 Without limitation, I agree to accept as binding, conclusive and
final all decisions or interpretations (including, without limitation, all interpretations of the meaning of provisions of the Plan, this Award Agreement and the Option) of the Committee upon any questions arising with respect to the Plan, this
Award Agreement or the Option. 
 Dated as of this      day of
            , 20    . 
  

	
	  

	Grantee

  

 5 

 SCHEDULE 4 
 TO AMENDMENT TO EMPLOYMENT AGREEMENT 
  

			
	 Agreement No.
                    
	 	Grant Date June             , 2006

 NONQUALIFIED STOCK OPTION AGREEMENT 
 (Series H Preferred Stock) 
 A Nonqualified Stock Option (the
“Option”) to purchase a total of One Million Seven Hundred Fifty Thousand (1,750,000) shares of Series H Preferred Stock (collectively, “Option Shares”) of Grande Communications Holdings, Inc. (the “Company”), is
hereby granted to Roy H. Chestnutt (the “Grantee”) at the Option Price determined in this Nonqualified Stock Option Agreement (this “Award Agreement”) and in all respects subject to the terms, definitions and provisions of the
Grande Communications Holdings, Inc. Amended and Restated 2000 Stock Incentive Plan (the “Plan”), which Plan is incorporated herein by reference, except to the extent otherwise expressly provided in this Award Agreement. 
 1. Option Price. The Option Price is $0.10 for each Option Share, which price is equal to or greater than the Fair Market Value of such
share of Series H Preferred Stock on the Grant Date. 
 2. Vesting of Option Shares. The Option Shares shall vest
(“Vest” and derivations) and become “Vested Option Shares” on February 13, 2009. Without limitation, Vesting with respect to the Option Shares will cease on the date of Grantee’s termination of Service. 
 3. Exercisability of Option. 
 A. Date on Which Option Becomes Exercisable. The Option shall not be exercisable prior to the first Vesting Date. On or after the occurrence of the first Vesting Date (and prior to the termination of the Option), the Option shall be
exercisable with respect to Vested Option Shares only during its Applicable Exercise Period (as specified in Section 3C of this Award Agreement). 
 B. Exercise Date. The “Exercise Date” of the Option shall be the first to occur of: 
 (i) the date of a Change of Control; 
 (ii) the date of a termination of Grantee’s Service, other than a
termination of Service by reason of a Voluntary Termination, or a termination of Service for Cause; and 
 (iii) the date of a
termination of Grantee’s Service by reason of a Voluntary Termination; and 
 (iv) the date of a termination of
Grantee’s Service for Cause; and 
 (v) March 16, 2011. 

 C. Applicable Exercise Period. The Applicable Exercise Period of the Option is: 
 (i) if the Exercise Date is described in Section 3B(i) of this Award Agreement, the Applicable Exercise Period is the period
beginning 90 days prior to the Change in Control and ending 75 days after the Change in Control (but if all or any portion of the actual exercise of the Option occurs prior to the Change in Control, it shall be conditioned on the actual occurrence
of a Change in Control); 
 (ii) if the Exercise Date is described in either Section 3B(ii) or
Section 3B(iii) of this Award Agreement, then the Applicable Exercise Period shall begin on such Exercise Date and shall end on the date the Option terminates under Section 4 of this Award Agreement; 
 (iii) if the Exercise Date is described in Section 3B(iv) of this Award Agreement, there shall be no Applicable Exercise
Period and the Option shall be null and void as of such Exercise Date; and 
 (iv) if the Exercise Date is the date described
in Section 3B(v) of this Award Agreement, then the Applicable Exercise Period shall begin on March 16, 2011 and shall end on the earlier of (i) March 15, 2012 and (ii) the date on which the Option terminates under
Section 4 of this Award Agreement. 
 D. Method of Exercise. Without limitation, the Option may only be exercised during
the Applicable Exercise Period. During such Applicable Exercise Period, the Option shall be exercised by a written notice delivered to a duly authorized officer of the Company, which notice shall: 
 (i) state the election to exercise the Option and the number of Vested Option Shares in respect of which it is being exercised; and

 (ii) be signed by the person or persons entitled to exercise the Option and, if the Option is being exercised by any
person or persons other than the Grantee, be accompanied by proof, satisfactory to the Committee, of the rights of such person or persons to exercise the Option. 
 4. Term of Option. Without limitation, the unexercised portion of the Option shall automatically terminate on the date the Option terminates in accordance with the terms of the Plan, including without
limitation Section 7.3 of the Plan. 
 5. Payment and Withholding. The Option Price of any Vested Option
Shares purchased, and applicable withholding, shall be paid in (i) cash, (ii) shares of Stock, or (iii) a combination of cash and shares of Stock; provided, further, that if the Option Shares are publicly traded on the date the Option
is exercised, the Committee may require that all or any portion of the Option Price and the applicable withholding be paid in cash. 
  

 2 

 6. Issuance of Option Shares. No person shall be, or have any of the rights or privileges
of, a holder of the Option Shares subject to the Option unless and until certificates representing such Option Shares shall have been issued and delivered to such person, such issuance, without limitation, being subject to the terms of the Plan.

 7. Surrender of Option. Upon exercise of the Option in part, if requested by the Committee, the Grantee shall deliver this
Award Agreement and other written agreements executed by the Company and the Grantee with respect to the Option to a duly authorized officer of the Company, who shall endorse or cause to be endorsed thereon a notation of such exercise and return
such agreements to the Grantee. 
 8. Forfeiture, Repurchase Rights and Parachute Limitations. Without limiting the generality
of the general incorporation of the Plan provisions, this Award Agreement expressly incorporates by reference the provisions of Section 12 (Restrictions on the Transfer Of Shares Of Stock and Repurchase Rights) and Section 13
(Parachute Limitations and Forfeitures). 
 9. Other Agreements. Without limiting the generality of the provisions of the Plan
and this Award Agreement, all Option Shares shall be subject to any other agreements between the Grantee and the Company (collectively, “Other Agreements”) in effect at the time of reference; and provided further that the Company,
in its sole discretion, shall have the power and ability to exercise some or all of its rights under either this Award Agreement (including, without limitation, the provisions of the Plan incorporated by reference), or the Other Agreements, or both,
with respect to some or all of the Option Shares. 
 10. Law Governing. WITHOUT LIMITATION, THIS AWARD AGREEMENT SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE. 
 11. Repurchase Rights of the Company; Fair Market Value
Determination. If Grantee’s Service is terminated by reason of a Voluntary Termination or for Cause, then, in its sole discretion, the Company may purchase all or any portion of the Option Shares which have been exercised by Grantee
prior to or in connection with such termination of Grantee’s Service. The Fair Market Value of such Vested Option Shares shall be, for purpose of this Section, determined by the Board in its sole discretion as of the effective date of
Grantee’s termination of Service. If Grantee disagrees with the Board’s determination of the Fair Market Value (the “Board Determination”), then Grantee shall notify the Board in writing (the “Dispute Notification”)
that Grantee wishes to dispute the determination. If the dispute is not resolved between the Board and Grantee within fifteen (15) days of receipt of the Dispute Notification, then the Board shall appoint a third-party expert in valuing
companies that are comparable to the Company to conduct a determination of the Fair Market Value (the “Third Party Determination”). The Third Party Determination shall be conclusive and binding upon the Board and Grantee. If the Third
Party Determination is within ten percent (10%) of the Board Determination, then Grantee shall bear the costs incurred in obtaining the Third Party Determination. If the Third Party Determination differs from the Board Determination by ten
percent (10%) or more, then the Company shall bear such costs. 
  

 3 

 12. Change of Control. The “Change of Control” definition of the Plan shall apply to the Option,
except that the following provisions will be substituted in the place of existing Section 2.9(ii) and Section 2.9(iii) of the Plan: 
 “(ii) a change in the effective control of the Company, whereby either: 
 (a) a Person
acquires (or has acquired during the preceding twelve (12) month period ending on the date of the most recent acquisition by such Person), directly or indirectly, ownership of a number of shares of Capital Stock of the Company which constitutes
fifty percent (50%) or more of the combined voting power of the Capital Stock; provided, however, that if a Person already owns fifty percent (50%) or more of the combined voting power of the Capital Stock, the acquisition of additional
Capital Stock by such Person is not considered a Change of Control of the Company; or 
 (b) as a result of, or in connection
with any tender offer, merger or other business combination, sale of assets or contested election, or any combination of the foregoing transactions, a majority of the persons who were members of the Board is, within a twelve (12) month period,
replaced by individuals whose appointment or election to the Board is not endorsed by a majority of the Board prior to the appointment or election; or 
 (iii) a change in the ownership of the assets of the Company, whereby a Person acquires (or has acquired during a twelve (12) month period ending on the date of the most recent acquisition by such Person) assets
of the Company that have a total gross fair market value equal to more than fifty percent (50%) of the total gross fair market value of all of the assets of the Company as determined by the Board immediately prior to such acquisition or
acquisitions; provided, however, that there is no Change of Control if assets are transferred to an entity that is controlled by the shareholders of the Company immediately after the transfer, nor is it a Change of Control if the Company transfers
assets to: 
 (a) a shareholder of the Company (immediately before the asset transfer) in exchange for or with respect to the
shareholder’s capital stock in the Company; 
 (b) an entity, fifty percent (50%) or more of the total value or
voting power of which is owned, directly or indirectly, by the Company; 
 (c) a Person that owns, directly or indirectly,
fifty percent (50%) or more of the total value or voting power of all the outstanding Capital Stock; or 
  

 4 

 (d) an entity, at least fifty percent (50%) of the total value or voting power of
which is owned, directly or indirectly, by a Person described in subparagraph (iii)(c) of this Section 2.9.” 
 13. At-Will Employment.
Nothing in this Award Agreement shall be implied or construed to create a contract for employment. Unless expressly provided for in a separate written agreement executed by Grantee and a duly authorized representative of the Company on behalf of the
Company, if Grantee is an employee of the Company, Grantee’s employment is terminable “at-will.” 
 Dated as of this
     day of June, 2006. 
  

			
	GRANDE COMMUNICATIONS HOLDINGS, INC.
		
	By:	 	  

	Printed Name:	 	  

	Title:	 	  

 Acknowledgment 
 The undersigned hereby acknowledges (i) my receipt of this Award Agreement and the Option, (ii) my opportunity to review the Plan, this Award
Agreement and the Option (iii) my opportunity to discuss the Plan, this Award Agreement and the Option with a representative of the Company, and my personal advisors, to the extent I deem necessary or appropriate, (iv) my understanding of
the terms and provisions of the Plan, this Award Agreement and the Option, (iii) my understanding that, by my signature below, I am agreeing to be bound by all of the terms and provisions of the Plan, this Award Agreement and the Option.

 Without limitation, the undersigned hereby acknowledges that by my signature below, I expressly agree to the effectiveness of all of the
terms and provisions of Section 8 of this Award Agreement. 
 Without limitation, I agree to accept as binding, conclusive and
final all decisions or interpretations (including, without limitation, all interpretations of the meaning of provisions of the Plan, this Award Agreement and the Option) of the Committee upon any questions arising with respect to the Plan, this
Award Agreement or the Option. 
 Dated as of this      day of
            , 20    . 
  

	
	  

	Grantee

  

 5 

 SCHEDULE 5 
 TO AMENDMENT TO EMPLOYMENT AGREEMENT 
  

			
	 Agreement No.             
	 	Grant Date June     , 2006

 NONQUALIFIED STOCK OPTION AGREEMENT 
 (Series H Preferred Stock) 
 A Nonqualified Stock Option (the
“Option”) to purchase a total of One Million Seven Hundred Fifty Thousand (1,750,000) shares of Series H Preferred Stock (collectively, “Option Shares”) of Grande Communications Holdings, Inc. (the “Company”), is
hereby granted to Roy H. Chestnutt (the “Grantee”) at the Option Price determined in this Nonqualified Stock Option Agreement (this “Award Agreement”) and in all respects subject to the terms, definitions and provisions of the
Grande Communications Holdings, Inc. Amended and Restated 2000 Stock Incentive Plan (the “Plan”), which Plan is incorporated herein by reference, except to the extent otherwise expressly provided in this Award Agreement. 
 1. Option Price. The Option Price is $0.10 for each Option Share, which price is equal to or greater than the Fair Market Value of such
share of Series H Preferred Stock on the Grant Date. 
 2. Vesting of Option Shares. The Option Shares shall vest
(“Vest” and derivations) and become “Vested Option Shares” on February 13, 2010. Without limitation, Vesting with respect to the Option Shares will cease on the date of Grantee’s termination of Service. 
 3. Exercisability of Option. 
 A. Date on Which Option Becomes Exercisable. The Option shall not be exercisable prior to the first Vesting Date. On or after the occurrence of the first Vesting Date (and prior to the termination of the Option), the Option shall be
exercisable with respect to Vested Option Shares only during its Applicable Exercise Period (as specified in Section 3C of this Award Agreement). 
 B. Exercise Date. The “Exercise Date” of the Option shall be the first to occur of: 
 (i) the date of a Change of Control; 
 (ii) the date of a termination of Grantee’s Service, other than a
termination of Service by reason of a Voluntary Termination, or a termination of Service for Cause; and 
 (iii) the date of a
termination of Grantee’s Service by reason of a Voluntary Termination; and 
 (iv) the date of a termination of
Grantee’s Service for Cause; and 
 (v) March 16, 2012. 

 C. Applicable Exercise Period. The Applicable Exercise Period of the Option is: 
 (i) if the Exercise Date is described in Section 3B(i) of this Award Agreement, the Applicable Exercise Period is the period
beginning 90 days prior to the Change in Control and ending 75 days after the Change in Control (but if all or any portion of the actual exercise of the Option occurs prior to the Change in Control, it shall be conditioned on the actual occurrence
of a Change in Control); 
 (ii) if the Exercise Date is described in either Section 3B(ii) or
Section 3B(iii) of this Award Agreement, then the Applicable Exercise Period shall begin on such Exercise Date and shall end on the date the Option terminates under Section 4 of this Award Agreement; 
 (iii) if the Exercise Date is described in Section 3B(iv) of this Award Agreement, there shall be no Applicable Exercise
Period and the Option shall be null and void as of such Exercise Date; and 
 (iv) if the Exercise Date is the date described
in Section 3B(v) of this Award Agreement, then the Applicable Exercise Period shall begin on March 16, 2012 and shall end on the earlier of (i) March 15, 2013 and (ii) the date on which the Option terminates under
Section 4 of this Award Agreement. 
 D. Method of Exercise. Without limitation, the Option may only be exercised during
the Applicable Exercise Period. During such Applicable Exercise Period, the Option shall be exercised by a written notice delivered to a duly authorized officer of the Company, which notice shall: 
 (i) state the election to exercise the Option and the number of Vested Option Shares in respect of which it is being exercised; and

 (ii) be signed by the person or persons entitled to exercise the Option and, if the Option is being exercised by any
person or persons other than the Grantee, be accompanied by proof, satisfactory to the Committee, of the rights of such person or persons to exercise the Option. 
 4. Term of Option. Without limitation, the unexercised portion of the Option shall automatically terminate on the date the Option terminates in accordance with the terms of the Plan, including without
limitation Section 7.3 of the Plan. 
 5. Payment and Withholding. The Option Price of any Vested Option
Shares purchased, and applicable withholding, shall be paid in (i) cash, (ii) shares of Stock, or (iii) a combination of cash and shares of Stock; provided, further, that if the Option Shares are publicly traded on the date the Option
is exercised, the Committee may require that all or any portion of the Option Price and the applicable withholding be paid in cash. 
  

 2 

 6. Issuance of Option Shares. No person shall be, or have any of the rights or privileges
of, a holder of the Option Shares subject to the Option unless and until certificates representing such Option Shares shall have been issued and delivered to such person, such issuance, without limitation, being subject to the terms of the Plan.

 7. Surrender of Option. Upon exercise of the Option in part, if requested by the Committee, the Grantee shall deliver this
Award Agreement and other written agreements executed by the Company and the Grantee with respect to the Option to a duly authorized officer of the Company, who shall endorse or cause to be endorsed thereon a notation of such exercise and return
such agreements to the Grantee. 
 8. Forfeiture, Repurchase Rights and Parachute Limitations. Without limiting the generality
of the general incorporation of the Plan provisions, this Award Agreement expressly incorporates by reference the provisions of Section 12 (Restrictions on the Transfer Of Shares Of Stock and Repurchase Rights) and Section 13
(Parachute Limitations and Forfeitures). 
 9. Other Agreements. Without limiting the generality of the provisions of the Plan
and this Award Agreement, all Option Shares shall be subject to any other agreements between the Grantee and the Company (collectively, “Other Agreements”) in effect at the time of reference; and provided further that the Company,
in its sole discretion, shall have the power and ability to exercise some or all of its rights under either this Award Agreement (including, without limitation, the provisions of the Plan incorporated by reference), or the Other Agreements, or both,
with respect to some or all of the Option Shares. 
 10. Law Governing. WITHOUT LIMITATION, THIS AWARD AGREEMENT SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE. 
 11. Repurchase Rights of the Company; Fair Market Value
Determination. If Grantee’s Service is terminated by reason of a Voluntary Termination or for Cause, then, in its sole discretion, the Company may purchase all or any portion of the Option Shares which have been exercised by Grantee
prior to or in connection with such termination of Grantee’s Service. The Fair Market Value of such Vested Option Shares shall be, for purpose of this Section, determined by the Board in its sole discretion as of the effective date of
Grantee’s termination of Service. If Grantee disagrees with the Board’s determination of the Fair Market Value (the “Board Determination”), then Grantee shall notify the Board in writing (the “Dispute Notification”)
that Grantee wishes to dispute the determination. If the dispute is not resolved between the Board and Grantee within fifteen (15) days of receipt of the Dispute Notification, then the Board shall appoint a third-party expert in valuing
companies that are comparable to the Company to conduct a determination of the Fair Market Value (the “Third Party Determination”). The Third Party Determination shall be conclusive and binding upon the Board and Grantee. If the Third
Party Determination is within ten percent (10%) of the Board Determination, then Grantee shall bear the costs incurred in obtaining the Third Party Determination. If the Third Party Determination differs from the Board Determination by ten
percent (10%) or more, then the Company shall bear such costs. 
  

 3 

 12. Change of Control. The “Change of Control” definition of the Plan shall apply to the Option,
except that the following provisions will be substituted in the place of existing Section 2.9(ii) and Section 2.9(iii) of the Plan: 
 “(ii) a change in the effective control of the Company, whereby either: 
 (a) a Person
acquires (or has acquired during the preceding twelve (12) month period ending on the date of the most recent acquisition by such Person), directly or indirectly, ownership of a number of shares of Capital Stock of the Company which constitutes
fifty percent (50%) or more of the combined voting power of the Capital Stock; provided, however, that if a Person already owns fifty percent (50%) or more of the combined voting power of the Capital Stock, the acquisition of additional
Capital Stock by such Person is not considered a Change of Control of the Company; or 
 (b) as a result of, or in connection
with any tender offer, merger or other business combination, sale of assets or contested election, or any combination of the foregoing transactions, a majority of the persons who were members of the Board is, within a twelve (12) month period,
replaced by individuals whose appointment or election to the Board is not endorsed by a majority of the Board prior to the appointment or election; or 
 (iii) a change in the ownership of the assets of the Company, whereby a Person acquires (or has acquired during a twelve (12) month period ending on the date of the most recent acquisition by such Person) assets
of the Company that have a total gross fair market value equal to more than fifty percent (50%) of the total gross fair market value of all of the assets of the Company as determined by the Board immediately prior to such acquisition or
acquisitions; provided, however, that there is no Change of Control if assets are transferred to an entity that is controlled by the shareholders of the Company immediately after the transfer, nor is it a Change of Control if the Company transfers
assets to: 
 (a) a shareholder of the Company (immediately before the asset transfer) in exchange for or with respect to the
shareholder’s capital stock in the Company; 
 (b) an entity, fifty percent (50%) or more of the total value or
voting power of which is owned, directly or indirectly, by the Company; 
 (c) a Person that owns, directly or indirectly,
fifty percent (50%) or more of the total value or voting power of all the outstanding Capital Stock; or 
  

 4 

 (d) an entity, at least fifty percent (50%) of the total value or voting power of
which is owned, directly or indirectly, by a Person described in subparagraph (iii)(c) of this Section 2.9.” 
 13. At-Will Employment.
Nothing in this Award Agreement shall be implied or construed to create a contract for employment. Unless expressly provided for in a separate written agreement executed by Grantee and a duly authorized representative of the Company on behalf of the
Company, if Grantee is an employee of the Company, Grantee’s employment is terminable “at-will.” 
 Dated as of this
     day of June, 2006. 
  

			
	 GRANDE COMMUNICATIONS HOLDINGS, INC.

	By:	 	  

	Printed Name:	 	  

	Title:	 	  

 Acknowledgment 
 The undersigned hereby acknowledges (i) my receipt of this Award Agreement and the Option, (ii) my opportunity to review the Plan, this Award
Agreement and the Option (iii) my opportunity to discuss the Plan, this Award Agreement and the Option with a representative of the Company, and my personal advisors, to the extent I deem necessary or appropriate, (iv) my understanding of
the terms and provisions of the Plan, this Award Agreement and the Option, (iii) my understanding that, by my signature below, I am agreeing to be bound by all of the terms and provisions of the Plan, this Award Agreement and the Option.

 Without limitation, the undersigned hereby acknowledges that by my signature below, I expressly agree to the effectiveness of all of the
terms and provisions of Section 8 of this Award Agreement. 
 Without limitation, I agree to accept as binding, conclusive and
final all decisions or interpretations (including, without limitation, all interpretations of the meaning of provisions of the Plan, this Award Agreement and the Option) of the Committee upon any questions arising with respect to the Plan, this
Award Agreement or the Option. 
 Dated as of this      day of
            , 20    . 
  

	
	  

	Grantee

  

 5 

 SCHEDULE 6 
 TO AMENDMENT TO EMPLOYMENT AGREEMENT 
  
  

			
	 Agreement No.
                    
	 	Grant Date June             , 2006

 NONQUALIFIED STOCK OPTION AGREEMENT 
 (Common Stock – Executive Compensation Shares) 
 A Nonqualified Stock
Option (the “Option”) to purchase a total of Seven Million (7,000,000) shares of common stock constituting Executive Compensation Shares (collectively, “Option Shares”) of Grande Communications Holdings, Inc. (the
“Company”) is hereby granted to Roy H. Chestnutt (the “Grantee”) at the Option Price determined in this Nonqualified Stock Option Agreement (this “Award Agreement”) and in all respects subject to the terms, definitions
and provisions of the Grande Communications Holdings, Inc. Amended and Restated 2000 Stock Incentive Plan (the “Plan”), which Plan is incorporated herein by reference, except to the extent otherwise expressly provided in this Award
Agreement. 
 1. Option Price. The Option Price is $0.05 for each Option Share, which price is equal to or greater than the
Fair Market Value of such share of Common Stock on the Grant Date. 
 2. Vesting of Option Shares. The Option Shares shall vest
(“Vest” and derivations) and become “Vested Option Shares” on the dates set forth in the following Vesting schedule (“Vesting Date”): 
 (i) 25% of the Option Shares on the first anniversary of February 13, 2006. 
 (ii) 2.1% (approximately 1/48th) of the Option Shares on the last day of each of the first 35 months after the first anniversary of
February 13, 2006. 
 (iii) 1.5% of the Option Shares on the last day of the 36th month after the first
anniversary of February 13, 2006. 
 Without limitation, Vesting with respect to the Option Shares will cease on the date of
Grantee’s termination of Service. 
  

	3.	Exercisability of Option. 

 A. Date on
Which Option Becomes Exercisable. The Option shall not be exercisable prior to the first Vesting Date. On or after the occurrence of the first Vesting Date (and prior to the termination of the Option), the Option shall be exercisable, in whole
or in part, with respect to Vested Option Shares. 
 B. Method of Exercise. Without limitation, the Option shall be exercised by a
written notice delivered to a duly authorized officer of the Company, which notice shall: 
 (i) state the election to
exercise the Option and the number of Vested Option Shares in respect of which it is being exercised; and 

 (ii) be signed by the person or persons entitled to exercise the Option and, if
the Option is being exercised by any person or persons other than the Grantee, be accompanied by proof, satisfactory to the Committee, of the rights of such person or persons to exercise the Option. 
 4. Term of Option. Without limitation, the unexercised portion of the Option shall automatically terminate on the date the Option
terminates in accordance with the terms of the Plan. 
 5. Payment and Withholding. The Option Price of any Vested Option
Shares purchased, and applicable withholding, shall be paid in (i) cash, (ii) shares of Stock, or (iii) a combination of cash and shares of Stock; provided, further, that if the Option Shares are publicly traded on the date the Option
is exercised, the Committee may require that all or any portion of the Option Price and the applicable withholding be paid in cash. 
 6.
Issuance of Option Shares. No person shall be, or have any of the rights or privileges of, a holder of the Option Shares subject to the Option unless and until certificates representing such Option Shares shall have been issued and
delivered to such person, such issuance, without limitation, being subject to the terms of the Plan. 
 7. Surrender of Option.
Upon exercise of the Option in part, if requested by the Committee, the Grantee shall deliver this Award Agreement and other written agreements executed by the Company and the Grantee with respect to the Option to a duly authorized officer of the
Company, who shall endorse or cause to be endorsed thereon a notation of such exercise and return such agreements to the Grantee. 
 8.
Forfeiture, Repurchase Rights and Parachute Limitations. Without limiting the generality of the general incorporation of the Plan provisions, this Award Agreement expressly incorporates by reference the provisions of
Section 12 (Restrictions on the Transfer Of Shares Of Stock and Repurchase Rights) and Section 13 (Parachute Limitations and Forfeitures). 
 9. Other Agreements. Without limiting the generality of the provisions of the Plan and this Award Agreement, all Option Shares shall be subject to any other agreements between the Grantee and the Company
(collectively, “Other Agreements”) in effect at the time of reference; and provided further that the Company, in its sole discretion, shall have the power and ability to exercise some or all of its rights under either this Award
Agreement (including, without limitation, the provisions of the Plan incorporated by reference), or the Other Agreements, or both, with respect to some or all of the Option Shares. 
 10. Law Governing. WITHOUT LIMITATION, THIS AWARD AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF
THE STATE OF DELAWARE. 
  

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 11. Repurchase Rights of the Company; Fair Market Value Determination. If Grantee’s
Service is terminated by reason of a Voluntary Termination or for Cause, then, in its sole discretion, the Company may purchase all or any portion of the Option Shares which have been exercised by Grantee prior to or in connection with such
termination of Grantee’s Service. The Fair Market Value of such Vested Option Shares shall be, for purpose of this Section, determined by the Board in its sole discretion as of the effective date of Grantee’s termination of Service. If
Grantee disagrees with the Board’s determination of the Fair Market Value (the “Board Determination”), then Grantee shall notify the Board in writing (the “Dispute Notification”) that Grantee wishes to dispute the
determination. If the dispute is not resolved between the Board and Grantee within fifteen (15) days of receipt of the Dispute Notification, then the Board shall appoint a third-party expert in valuing companies that are comparable to the
Company to conduct a determination of the Fair Market Value (the “Third Party Determination”). The Third Party Determination shall be conclusive and binding upon the Board and Grantee. If the Third Party Determination is within ten percent
(10%) of the Board Determination, then Grantee shall bear the costs incurred in obtaining the Third Party Determination. If the Third Party Determination differs from the Board Determination by ten percent (10%) or more, then the Company
shall bear such costs. 
 12. Change of Control. The “Change of Control” definition of the Plan shall apply to the
Option, except that the following provisions will be substituted in the place of existing Section 2.9(ii) and Section 2.9(iii) of the Plan: 
 “(ii) a change in the effective control of the Company, whereby either: 
 (a) a Person
acquires (or has acquired during the preceding twelve (12) month period ending on the date of the most recent acquisition by such Person), directly or indirectly, ownership of a number of shares of Capital Stock of the Company which constitutes
fifty percent (50%) or more of the combined voting power of the Capital Stock; provided, however, that if a Person already owns fifty percent (50%) or more of the combined voting power of the Capital Stock, the acquisition of additional
Capital Stock by such Person is not considered a Change of Control of the Company; or 
 (b) as a result of, or in connection
with any tender offer, merger or other business combination, sale of assets or contested election, or any combination of the foregoing transactions, a majority of the persons who were members of the Board is, within a twelve (12) month period,
replaced by individuals whose appointment or election to the Board is not endorsed by a majority of the Board prior to the appointment or election; or 
 (iii) a change in the ownership of the assets of the Company, whereby a Person acquires (or has acquired during a twelve (12) month period ending on the date of the most recent acquisition by such Person) assets
of the Company that have a total gross fair market value equal to more than fifty percent (50%) of the 
  

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 total gross fair market value of all of the assets of the Company as determined by the Board immediately
prior to such acquisition or acquisitions; provided, however, that there is no Change of Control if assets are transferred to an entity that is controlled by the shareholders of the Company immediately after the transfer, nor is it a Change of
Control if the Company transfers assets to: 
 (a) a shareholder of the Company (immediately before the asset transfer) in
exchange for or with respect to the shareholder’s capital stock in the Company; 
 (b) an entity, fifty percent
(50%) or more of the total value or voting power of which is owned, directly or indirectly, by the Company; 
 (c) a
Person that owns, directly or indirectly, fifty percent (50%) or more of the total value or voting power of all the outstanding Capital Stock; or 
 (d) an entity, at least fifty percent (50%) of the total value or voting power of which is owned, directly or indirectly, by a Person described in subparagraph (iii)(c) of this Section 2.9.” 

13. At-Will Employment. Nothing in this Award Agreement shall be implied or construed to create a contract for employment. Unless expressly
provided for in a separate written agreement executed by Grantee and a duly authorized representative of the Company on behalf of the Company, if Grantee is an employee of the Company, Grantee’s employment is terminable “at-will.”

 Dated as of this      day of June, 2006. 
  

			
	GRANDE COMMUNICATIONS HOLDINGS, INC.
		
	By:	 	  

	Printed Name:	 	  

	Title:	 	  

 Acknowledgment 
 The undersigned hereby acknowledges (i) my receipt of this Award Agreement and the Option, (ii) my opportunity to review the Plan, this Award
Agreement and the Option (iii) my opportunity to discuss the Plan, this Award Agreement and the Option with a representative of the Company, and my personal advisors, to the extent I deem necessary or appropriate, (iv) my understanding of
the terms and provisions of the Plan, this Award Agreement and the Option, (iii) my understanding that, by my signature below, I am agreeing to be bound by all of the terms and provisions of the Plan, this Award Agreement and the Option.

  

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 Without limitation, the undersigned hereby acknowledges that by my signature below, I expressly agree to
the effectiveness of all of the terms and provisions of Section 8 of this Award Agreement. 
 Without limitation, I agree to
accept as binding, conclusive and final all decisions or interpretations (including, without limitation, all interpretations of the meaning of provisions of the Plan, this Award Agreement and the Option) of the Committee upon any questions arising
with respect to the Plan, this Award Agreement or the Option. 
 Dated as of this      day of
            , 20    . 
  

	
	  

	 Grantee

  

 5

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